Document of The World Bank Report No: 20196-TA PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT IN THE AMOUNT OF SDR 45.5 MILLION (US$ 60 MILLION EQUIVALENT) TO THE GOVERNMENT OF THE UNITED REPUBLIC OF TANZANIA FORA SOCIAL ACTION FUND PROJECT JULY 26, 2000 Human Development 1 Country Department 4 Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective July 20, 2000) Currency Unit = Tanzania Shilling Tshs. 1.00 = US$ 0.00125 US$ 1.00 = Tshs.798.5 FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS AGETIP Agence d'Execution de Travaux d'Interet M&E Monitoring and Evaluation Public Control le Sous-emploi CAS Country Assistance Strategy MIS Management Information Systems CDI Community Development Initiatives MTP-III Third Medium Term Plan CEF Community Education Fund NACP National AIDS Control Programme CHF Community Health Fund NBS National Bureau of Statistics CNA Community Needs Assessment NSC National Steerming Committee CPC Community Project Committee NWMA National Welfare Monitoring and Analysis CSP Conununity Sub-Projects OM Operational Manual DSC District Steering Committee PEU Poverty Eradication Unit DMT District Management Team PO Program Officer EASTC Eastern Africa Statistics Training Center PPF Project Preparation Facility ECD Early Childhood Development PPT Project Preparation Team GOT Government of Tanzania PRA Participatory Rural Appraisal ICB International Competitive Bidding PWP Public Works Program IDA International Development Association QAT Quality Assurance Team IEC Information, Education and Communication SAP Strucural Adjustment Program IMF International Monetary Fund TASAF Tanzania Social Action Fund LACI Loan Administration Change Initiative TMU TASAF Management Unit LGA Local Government Act UDS University of Dar es Salaam LGRP Local Government Reform Program UNDP United Nations Development Programme MASAF Malawi Social Action Fund Vice President: Callisto E. Madavo Country Director: James W. Adams Sector Manager: Dzingai Mutumbuka Team Leader/Task Manager: Norbert 0. Mugwagwa TANZANIA SOCIAL ACTION FUND PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 3 2. Main sector issues and Govemment strategy 3 3. Sector issues to be addressed by the project and strategic choices 4 C. Project Description Summary 1. Project components 6 2. Key policy and institutional reforms supported by the project 9 3. Benefits and target population 9 4. Institutional and implementation arrangements 10 D. Project Rationale 1 Project alternatives considered and reasons for rejection 11 2. Major related projects financed by the Bank and other development agencies 13 3. Lessons learned and reflected in proposed project design 14 4. Indications of borrower commitment and ownership 16 5. Value added of Bank support in this project 17 E. Summary Project Analysis 1. Economic 17 2. Financial 18 3. Technical 19 4. Institutional 19 5. Environmental 22 6. Social 23 7. Safeguard Policies 26 F. Sustainability and Risks 1. Sustainability 27 2. Critical risks 28 3. Possible controversial aspects 29 G. Main Credit Conditions 1. Effectiveness Condition 29 2. Other 30 3. Negotiations Conditions H. Readiness for Implementation 30 I. Compliance with Bank Policies 30 Annexes Annex 1: Project Design Summary 31 Annex 2: Project Description 35 Annex 3: Estimated Project Costs 39 Annex 4: Economic and Financial Analysis 40 Annex 5: Financial Summary 51 Annex 6: Procurement and Disbursement Arrangements 52 Annex 7: Project Processing Schedule 63 Annex 8: Documents in the Project File 65 Annex 9: Statement of Loans and Credits 66 Annex 10: Country at a Glance 68 Annex 11: Summary of Project Workplan 70 Annex 12: Community Needs Assessment 72 Annex 13: Letter of Sector Policy 75 MAP(S) IBRD 27941 TANZANIA SOCIAL ACTION FUND PROJECT Project Appraisal Document Africa Regional Office AFTHi Date: July 26, 2000 Team Leader: Norbert 0. Mugwagwa Country Manager/Director: James W. Adams Sector Manager/Director: Dzingai B. Mutumbuka Project ID: P065372 Sector(s): SA - Social Funds & Social Assistance Lending Instrument: Specific Investment Loan (SIL) Theme(s): Poverty Targeted Intervention: Y Project Financing Data DI Loan Z Credit El Grant O Guarantee C Other (Specify) For Loans/CreditslOthers: Amount (US$m): 60.0 Proposed Terms: Grace period (years): 10 Years to maturity: 40 Commitment fee: 0.5% Service charge: 0.75% GOVERNMENT 3.15 0.00 3.15 IDA 57.85 2.15 60.00 LOCAL COMMUNITIES 8.62 . 0.00 8.62 Total: 69.63 2.15 71.77 Borrower: GOT Responsible agency: GOT (PRESIDENT'S OFFICE) Address: President's Office, State House, P.O. Box 9120, Dar es Salaam, Tanzania Contact Person: Mr. Emmanuel Kamba Tel: 255 51 123583 Fax: 255 51 123582 Email: tasaf@ud.co.tz Otlher Agency(ies): Representative from the Vice-President's Office; Ministries responsible for Finance; Community Development, Women's Affairs and Children; Regional Administration and Local Government; Labour and Youth; representatives of NGOs, research institutions and Interfaith. Estimated disbursements ( Bank FY/US$M): FY Anul 20T 002 200. ........ ... 2004: -.00.5........ Annual 5.4 13.2 24.1 15.1 2.2 Cumulative 5.4 18.6 42.7 57.8 60.0 Project implementation period: 4 years Expected effectiveness date: 12/01/2000 Expected closing date: 06/30/2005 cCS MO Sornl 9e Marchl 2323 A. Project Development Objective 1. Project development objective: (see Annex 1) The objective of the Tanzania Social Action Fund (TASAF) is to increase and enhance the capacities of communities and other stakeholders to prioritize, implement and manage sustainable development initiatives and in the process improve socio-economic services and opportunities. The proposed project will help the Government of Tanzania sustain the momentum of ongoing reforms by facilitating improvements in the socio-economic infrastructure, enhancing capacity and skills among rural and peri-urban communities, and creating a temporary safety net for the poorest sections of communities. In this regard, TASAF activities are designed to improve basic social and economic services and protect vulnerable groups, including young children, while the positive impact of the ongoing structural adjustment and administrative reforms takes hold. Specific attention will be given to the H1V/AIDS epidemic, the involvement of civil society and non-governmental organizations, including faith-based organizations, and rural development issues. In the process, communities will be enabled to take charge of their development process, thereby facilitating the changing role of Government from a provider of services to a facilitator of economic agents. 2. Key performance indicators: (see Annex 1) The performance of the TASAF will be tracked through a set of key indicators which will be updated and reviewed each year in the Annual Work Plan and Budget. The TASAF Logframe provides the framework for defining appropriate performance indicators for monitoring the delivery of TASAF services and their outcome on beneficiaries. Key Performance Indicators will reflect the different stages of implementation as follows (a more complete list of indicators distinguishing between the CDI and PWP components is to be found in Annex 1): Input Indicators (to be monitored through the Management Information System [lMIS]) TASAF support system at district and national level (number of fully staffed and functional district programs and level of development of MIS and accounting systems). * lIMobilization of TASAF funds (counterpart and community) and total disbursements. * Overhead costs as percentage of project cost. Output Indicators (to be monitored through the MIS). * TASAF staff trained (number of courses, person/days). Partner institutions trained (number of courses, person/days). Number of sub-projects submitted, appraised, accepted, completed. * Percentage of sub-projects with 20% cost overrun over appraisal. * Average total community investment as percentage of sub-project costs. * Project processing time by type of project(Standard schedule to be defined): (a) % of projects with 10% time overrun over standard schedule (Submission to financing agreement). (b) % of project with 10% time overrun over standard schedule (financing agreement to implementation). (c) % of project with 10% time overrun over planned schedule (implementation to completion). Outcome Indicators (to be monitored through the MIS, Community Service Delivery Survey [CSDS], and Core Welfare Indicators Questionnaire [CWIQ]). * Numnber of beneficiaries reached. * Ratio of female to male beneficiaries. -2 - Number of beneficiaries trained. Post-completion evaluation (Sub-projects are to be rated in the course of post-completion visits, as follows: (i) Not satisfactory, and no corrective actions being taken; (ii) Not satisfactory, but corrective actions being taken; (iii) Satisfactory). % of sub-projects with 'satisfactory' maintenance rating by communities. % of sub-projects with 'satisfactory' maintenance rating by local authorities. % of projects with 'satisfactory' utilization rating. % of projects with 'satisfactory' beneficiary perception rating. Impact Assessment Increase in social capital (based on qualitative assessments of how community capacity has been strengthened). Greater improvements in living conditions in TASAF communities vis-a-vis non-TASAF communities (based on qualitative assessments, TASAF household surveys and Core Welfare Indicator Questionnaire surveys). B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 16554-TA Date of latest CAS discussion: 06/15/00 The major goal of the Tanzanian CAS (Report No. 16554-TA) is to reduce poverty, stimulate growth, and protect vulnerable groups--these objectives are clearly supported by the proposed project. Specifically, the CAS emphasizes the need to stabilize and then reverse the downward trend in social indicators through measures that decentralize responsibility and increase local resource mobilization and participation. The proposed project supports the CAS's objective of sustainable social and economic growth by (i) strengthening community participation and resource mobilization at the local level; (ii) improving the social and economic infrastructure; and (iii) creating a social safety net through a self-targeting, low-wage public works program. 2. Main sector issues and Government strategy: Recent poverty data indicate that about 50 percent of all Tanzanians live in poor households with an income equivalent of less than $1 per day per person, while 36 percent of households have an income equivalent of less than $0.75 per day. Poverty is particularly prevalent in the rural areas: almost 61 percent of the rural population is poor compared to 39 percent of the urban population. Stark differences exist between the poor and better-off households in their access to water, health and education, with such differences perpetuating inter-generational cycles of poverty. Lack of employment opportunities and income-generating activities in rural areas has led to intensified rural-urban migration, and Government has expressed serious concem about the rising unemployment or underemployment of youth and young adults and the related potential for social discontent. The Government's basic strategy to reduce poverty--supported by the Bank in its Country Assistance Strategy - relies on raising growth performance and improving the access and quality of basic social and economic services. Government's reform measures include reducing the budget deficit and maintaining competitive exchange rate and positive real interest rates. Structural reforms are also being pursued. The Government is disengaging from productive activities, resulting in the privatization of parastatals, and is undertaking civil service reform and public sector retrenchments in order to focus full attention on core public sector activities. To that end, the Govermnent is changing the overall structure of the Central-Local Govemment relationship, evidenced through recent revisions (February 1999) to the Local Government - 3 - Act, and continues to reform its public administration. In 1994, the Government prepared a Social Sector Strategy (The United Republic of Tanzania, Social Sector Strategy, October' 1994) that provides a common framework for the financing, delivery and coordination of activities in the various sectors such as education, health, nutrition, population/family planning, water and sanitation. The Social Sector Strategy provides a point of reference for all donors in coordinating their support. The Strategy highlights the role of households in investing in the health, education and well-being of its members. Rather than being passive recipients of publicly-provided services, households are seen as active participants in choosing and supporting the services that offer concrete benefits to the population. Similarly, the Strategy advocates the active involvement of NGOs and the private sector in supporting these sectors. 3. Sector issues to be addressed by the project and strategic choices: The establishment of TASAF is seen as critical to cushioning the impact of the ongoing economic adjustment measures and maintaining social stability while at the same time supporting ongoing reform efforts. Specifically, TASAF aims to: (i) support community participation and resource mobilization for social and economic development at the district level and in poor peni-urban settlements (ii) accelerate investment in basic social and economic infrastructure; and (iii) provide a temporary social safety net through self-targeting, low-wage, public works projects for the poorest until the positive impact of the ongoing economic refonrs takes hold. TASAF's expected implementation period of four years will allow Government to pursue ongoing economic and administrative reforms while at the same time addressing urgent social issues. The community development activities to be carried out under the proposed project are central to the Government's core responsibilities. The success of TASAF in the 42 districts of project operation could potentially lay the basis for developing a follow-up Adjustable Program of Lending (APL) for ten years or moreaimed at covering the whole country with similar community-development initiatives. Decentralization: The social fund approach promises speed of implementation and optimal community participation. Its short-term objective of employment creation and local resource generation is complemented by, and complementary to, ongoing Govemment efforts related to Local Govemment reform per the revised Local Government Act, No. 6, 1999, and institutional capacity building, particularly in the social sectors. The project will also underscore the Government's commitment to decentralization, transparency, accountability and good governance by supporting the development and implementation of targeted Information, Education and Communication (IEC) initiatives, as well as provide training to build capacity for the shift to decentralized governance. These will stimulate and help sustain the free flow of information amongst stakeholders both with regard to this particular project as well as the government's larger objectives. Poverty reduction: TASAF will support public works programs that transfer cash incomes to targeted poor households in rural and peri-urban areas. Such a program will support government's poverty reduction efforts that target women, youth, and other vulnerable groups during seasons or periods of food insecurity. Income earning will be complemented by the construction of productive assets relevant to the local community, while design and implementation will strengthen collaboration between communities and district administration and build capacity through skills development. In addition, the proposed project will provide institutional support in setting up systems and procedures to make higher quality and more timely poverty data available to policy makers and administrators, including poverty maps for improved targeting. -4 - Health, education and rural water supply: TASAF will help communities and the Govemment counteract inter-generational cycles of deprivation. Preventable illnesses, persistent malnutrition and the increasing number of AIDS orphans continue to prevent children from reaching their full potential. In education, TASAF aims to support rehabilitation and construction of classrooms and teacher's houses in order to reduce declining primary net enrollment rates that have fallen to below 60 percent. TASAF aims to reduce the vulnerability of communities and address the basic needs of young children--43 percent of the latter were stunted in 1997. In water, TASAF seeks to improve access to clean water, currently standing at 49 percent of the total population--65 percent urban and 45 percent rural. There are other on-going community funds in Tanzania funded by the Bank (health, education, and rural water for instance) and other donors (including activities focusing on women and children). The Govemment has expressed interest in pulling these initiatives under one umbrella. To this end, the TASAF team is making a concerted effort to achieve close coordination and collaboration amongst on-going initiatives so as to increase the effectiveness of the project. The Project Preparation Facility (PPF) financed an assessment of existing funds and linkages among them in order to develop an information base in support of these coordination efforts. HIV/AIDS: Tanzania's HIV/AIDS prevalence rates are currently estimated to be between 10 and 12 percent of the adult population. Given these high rates and their adverse effect on development efforts, TASAF aims to address HIV/AIDS. A framework is now being developed by the Africa Region on how to use lending instruments to accelerate the response to AIDS in Sub-Saharan Africa. One of the key instruments is the use of social funds to support, increase and scale up community mobilization against HIV and AIDS. Tanzania has translated its strategic framework for the prevention and control of HIV/AIDS in two Medium-Term Plans III 1998-2002, one for the Mainland and one for Zanzibar. Both of those plans highlight the important role of community-based activities in preventing and coping with the epidemic. Based on and complementing these inputs, the TASAF preparation team made special efforts at the design and pre-testing stages to integrate and mainstrean HIV/AIDS issues in the sub-project cycle. Provision for HIV/AIDS mainstreaming is integral to the project with an emphasis on developing the institutional and procedural requirements needed to support this mainstreaming. The overall aim is to develop HIV/AIDS-competent communities, which are able to assess the reality of lV and AIDS, analyze the specific factors that put them at risk, and act on those factors. Some of the strategies include: (i) integration of HI V/AIDS information into the TASAF IEC campaign; (ii) leaming from groups with Participatory Rural Appraisal (PRA) experience in HIV/AIDS to develop special HIV/AIDS PRA techniques; (iii) incorporating those special techniques into the TASAF Participatory Assessments; (iv) creating special incentives for communities (for instance, earmarking funds, reducing/waiving the co-financing requirement and pulling in other funds/grants); and (v) formulation of sub-projects that address the critical factors of vulnerability and of risk. Those projects might include: (i) the development of youth centers that address the needs of the out-of-school; (ii) direct support to community-based care which could include, provision of reagents, bandages, ointments, supplies of non-prescriptions pain killers; and (iii) funding of training to community-based caregivers. To ensure the effective addressing of HIW/AIDS issues in all steps of the sub-project cycle, TASAF will solicit support from the National AIDS Control Programme (NACP) and from other concerned participants, including UNAIDS. Such support could be provided either directly, or through existing Community Development Agents, including NGOs. TASAF will ensure maximum synergy with other community-based activities such as the Early Childhood Development (ECD) initiative. 5- C. Project Description Summary 1. Project components (see Amnex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The Government requested, and received, a PPF advance to support the development of the project. Based on the Government's concept note, three main project components have been identified. These components were developed by the Government in consultation with key stakeholders and after undertaking the following studies under the PPF facility: community needs assessment, environmental assessment, financial management systems, management information systems, core welfare indicators, trust funds review and economic analysis. The Project Preparation Team (PPT) has collaborated with the relevant sector ministries and cross-sectoral initiatives working on issues such as rural development, IV/AIDS, ECD, as well as with faith-based non-governmental organizations. The following combination of components is required to simultaneously address the Government's concems: improving the delivery of social and selected economic services to the poor, generating employment and building institutional capacity. The Government also emphasized that these activities should support or enhance food security and address environmental concerns, especially in drought-prone or food-deficient areas. The project components are as follows. (i) Community Development Initiatives Tlhis component will finance and support small demand-based community initiatives in the social sectors, that improve the accessibility to and delivery of social and economic services and enhance the capacity of communities and local development partners. The sub-projects menu will include, inter alia, the improvement of basic health care facilities, such as health posts, village dispensaries and health centres; the construction and rehabilitation of nursery and pre-schools, and of primary and secondary schools; equipping primary and junior schools with essential furniture and equipment; water supply and sanitation initiatives such as construction and rehabilitation of bore holes, dams, latrines, shallow wells; and rehabilitation and construction of economic infrastructure such as crop storage facilities and markets. The component will pay attention to vulnerable groups such as orphans, the handicapped, the elderly, widows, divorced women and unemployed youth. Information, Education and Communication activities under this component will seek to sensitize communities and other stakeholders, ensure transparent functioning and document stakeholder experiences through the use of radio messages, folk drama, posters and newspaper supplements. The average cost for community sub-projects will be $20,000 and will include a minimum community contribution of 20 percent in the form of labor, materials and cash. (ii) Public Works Program This component will finance labor-intensive works as a safety net scheme for targeted poor rural areas. The objective is to provide cash income for the poor, especially women and youth and particularly during periods of seasonal food shortage, through the promotion of job creation related to the construction and rehabilitation of infrastructure facilities. Income-earning will be complemented by the construction of productive assets. The types of works to be financed under this component will include, inter alia, the rehabilitation, in rural areas, of village access roads, water retention structures for small-scale irrigation, foot bridges, water and soil conservation/reclamation programs, afforestation programs, and the construction of terraces. Inurban areas, the types of works to be financed include sewerage systems, access roads, and market places. The component will also include IEC activities using, among other things, radio programs, folk drarna, posters, newspaper supplements. Just as in the CDI component, a - 6 - regional ranking exercise has been undertaken for PWP to determine the regional and district allocations under the PWP component. The average cost of a public works sub-project will be $40,000. (iii) Institutional Development Sub- Component (a): TASAFManagement Unit (TMU) The TASAF Management Unit (TMU) is set to provide the day-to-day operational support that is needed in order for the TASAF districts to respond to the community demand-driven requests emanating from the participatory planning process engendered by TASAF. Activities to be financed by the sub-component will include: incremental staff salaries of the Executive Director and his/her team; systems development and operational costs of the unit as well as the costs of running the district level TASAF Office within the District Executive Director's Office; motor vehicles, equipment and computerization of the unit and district offices. Sub-Component (b): Capacitv Building - Information, Education and Communication/Training Building on the lessons leamed from global development experience, the IEC sub-component will focus on creating and sustaining a symmetrical information environment that will enhance the potential for democratic decentralization, transparency and accountability. The sub-component will effectively be a dynamic knowledge management tool that sensitizes the range of stakeholders about the project's philosophy and methodology, defines the project cycle to all the stakeholders,clearly outlines the mutually complementary roles and responsibilities of the various actors, reports consistently on the implementation of the project, and builds a knowledge base of lessons leamed. Above all, through this process, it will seek to build a partnership and strategic alliances between government officials, NGOs, communities and the private sector. While using media such as radio, newspapers, and posters, a distinct focus of the IEC campaign will be on the use of local culture (folk dramas, songs, etc.) to disseminate information and educate communities. Key activities financed by the project will include: information needs assessment, message development, media costs--radio, television, print--newspapers, flyers, posters, and impact evaluation. Training: The component will focus on orienting stakeholders and partners such as the TMU, sector staff, donors, NGOs, etc. to the dynamics of community development through seminars, workshops, exposure visits, study tours, etc. It will also orient these audiences to the specifics associated with the TASAF approach. Through targeted training, the sub-component will seek to build capacity within communities and district-level staff to manage participatory development. An essential focus will be on financial management through training in basic book-keeping and accountancy. Subcomponent (c): Monitoring and Evaluation (including MIS) The project will put in place effective monitoring and evaluation arrangements to assess the pilot operations, analyze the effects and project outcomes, establish a knowledge base and incorporate these lessons into the design and implementation of future sub-projects. Appropriate monitoring indicators will be developed to monitor the progress and quality of sub-projects. 'Ihe project's MIS will provide data on project types and loan processing indicators. When data from the financial and accounting systems and reports from the District Offices are linked, an assessment of the project's performance (time-lapse between project application and approval, speed of disbursement) and its poverty impact will emerge. The M&E system will also provide data to assess the impact of the sub-projects on vulnerable groups such as the elderly, women, AIDS orphans, and so on. The M&E system will draw on a wide range of information - 7- sources, including participative M&E activities and survey results generated out of the national poverty monitoring program (see subcomponent (d)). A Community Service Delivery Survey will be integrated into the sub-project cycle and will provide the basis for monitoring improvements in the levels of use and satisfaction with TASAF services by beneficiaries. The simple, but efficient Management Information System (MIS) will serve as the primary source of information for the overall M&E system. It will be used as a management tool to track TASAF inputs, processes, outputs and activities and to monitor whether these are being delivered in line with the expectations of the TMU. It will also be used to collect, store and generate information that will be used to measure benefits accruing to recipient communities and to monitor the sustainability of the TASAF approach and the sustainability of community sub-projects. The MIS is needed to provide TASAF managers access to physical and financial information about the progress of project activities, enabling them to track the movement of resources as projects are implemented. Sub-component (d): National Poverty Monitoring andAnalysis TASAF is one of the tools for executing the Government's National Poverty Eradication Strategy. Measuring the extent to which it contributes to improved standards of living is a complex and demanding task involving skills that lie outside its own competencies, but which are available, to a greater or lesser extent, clsewhere in Tanzania. The poverty monitoring and analysis sub-component will complement other Bank-assisted poverty initiatives and will provide selective support for strengthening national capacity to monitor the effects of national poverty alleviation policies. It will support: 3 The development and testing of rapid household and community surveys directed at measuring service delivery and the monitoring of key socioeconomic indicators. e The creation of a capacity in the National Bureau of Statistics (NBS) to plan and implement such surveys using Optical Mark Reader technology (scanners) to speed up data entry and reduce processing delays e The creation of capacity in TASAF districts to integrate the execution of a Community Service Delivery Survey (CSDS) into Community Development Initiatives and Public Works Projects. (The development and piloting of the CSDS will be carried out jointly with the Ministry of Regional Administration and Local Government (MRALG), with the expectation that it may also be adopted and used in non-TASAF communities for monitoring a broad range of public services besides those offered through TASAF). * The integration of an annual indicators survey, using methodologies and approaches tested during the Core Welfare Indicators Questionnaire (CWIQ) pilot, as a core element of the NBS's household survey program. * The progressive refinement of the ranking process through the building of capacity in the National Bureau of Statistics and elsewhere to create poverty maps through the merging of household survey data, population census data and administrative data from sectoral ministries. Criteria While demand-based financing would guide TASAF activities, more so for the CDI component, a clear set of criteria has been developed to assist selection of projects, including guidelines on prioritization among competing interests within a community. The Operational Manual clarifies the activities that may be financed by the social fund, stating tight eligibility criteria, and reinforced by rigorous monitoring and supervision. - 8- The criteria for CDI sub-projects to be approved will include the following: inclusion of vulnerable groups (such as the elderly and orphans); inclusion of 1-IV/AIDS affected persons; sub-projects should be identified, planned, implemented and managed by the village/community; a democratically elected Community Project Committee should be established (40 percent of which should be women); environmental impact and mitigation measures should be in place; the sub-projects should be consistent with sectoral norms and design standards; and there should be clear commitment of communities to contribute at least 20 percent of project costs (except in cases of sub-projects focused on Early Childhood Development or HIV/AIDS). The criteria for PWP sub-projects will include the following: targeting of vulnerable persons/groups in the community through a participatory process using factors such as poverty, vulnerability level, access to services, women-headed households, households with orphans; labor intensity of sub-projects and the consequent large share of wages in total sub-project cost; selection of a Community Project Committee through a democratic process; establishment of appropriate environmental impact and mitigation measures; and consistency with sectoral norms and design standards. Component o is % of Xin X 1. Community Development Social Investment 48.52 67.6 38.00 63.3 Initiatives (Sub-Projects) Funds 2. Public Works Program (Sub Social Investment 15.75 21.9 15.00 25.0 -Projects) Funds 3. Institutional Development Multi Sector 7.50 10.5 7.00 11.7 Total Project Costs 71.77 100.0 60.00 100.0 Total Financing Required 71.77 100.0 60.00 100.0 2. Key policy and institutional reforms supported by the project: The Govemment has revised, and Parliament has approved, in 1999, the Local Government Act which devolves increasing responsibility to Local Government and guides the relationship between Central and Local Government. Benchmarks and targets relating to macro-economic reform, fiscal performance and social sector resource allocation have been discussed and agreed upon in the context of the ongoing programmatic Structural Adjustment Credit (P-SAC) and the First Annual Poverty Reduction and Growth Facility arrangement (PRGF). As the proposed project focuses on poverty reduction through the improvement of basic social and economic infrastructure and service delivery, it is considered part of the Bank's core lending program. 3. Benefits and target population: CDI. The CDI component of TASAF will result in improved social and economic infrastructure and service delivery in poor areas of the country, and address specific developmental issues such as HIV/AIDS. In the process, the project will provide opportunities for communities to participate in and take charge of key decision-making processes at the local level, thereby complementing the Government's ongoing administrative and Local Government reforms. -9- PWP. TASAF's PWP component will also improve social and economic infrastructure in poor areas and build the capacity of communities to organize their development. However, the PWP's main objective is to provide a temporary safety net by providing employment opportunities for the poorest and most vulnerable households. Beneficiaries will be identified by the communities during the PRA exercise and self-selected through the low wage rate. The projectcycle will take variations in seasonal labor demand and food shortage into account when planning the timing and implementation of sub-projects. It is expected that the PWP will encourage and strengthen the philosophy of assisting the more impoverished in the community. Targeting. A regional ranking and district selection methodology was developed for TASAF to assist the identification of poor priority areas for project implementation. The exercise was carried out in collaboration with the Poverty Eradication Unit situated in the Vice-President's Office and utilized inputs from the National Bureau of Statistics, the University of Dar-es-Salaam and the Eastem Africa Statistics Training Center. The methodology starts with a regional ranking exercise using regional poverty, service accessibility, and the rate of AIDS case data. Based on the regional ranking, the number of districts per region (ranging from 3 for the most deprived region down to 1 for the least deprived) were proposed. The second step involved district selection in the regions. Pilot districts and those districts targeted by local government reform were combined with available district-level vulnerability data to identify the vulnerable districts in which TASAF will be operating. Some guidelines for selection beyond the district level (including community-level) are also incorporated. A total number of 42 districts have been targeted for project implementation. While CDI will be implemented in all these districts, PWP coverage will initially be limited to districts of extreme poverty and food insecurity and later broadened as TASAF's capacity and experience is built. The ranking methodology and framework will be updated and modified as more reliable data become available and, when possible, will be disaggregated to lower levels. Details on the methodology, data, rankings of regions and district selection are provided in Annex 4. Tihe project has put in place effective monitoring and evaluation arrangements to assess the pilot operations, analyze the effects, establish a knowledge base and incorporate these lessons into the design and implementation of future sub-projects. Appropriate monitoring indicators will be developed to monitor the progress and quality of sub-projects. The project's MIS will provide data on project types and loan processing indicators. When data from the financial and accounting systems and reports from the District Offices are linked, an assessment of the project's performance (time-lapse between project application and approval, speed of disbursement) and its poverty impact will emerge. The M&E svstem will also provide data to assess the impact of the sub-projects on vulnerable groups such as the elderly, women, and AIDS orphans. The poverty monitoring and analysis sub-component will complement other Bank-assisted poverty initiatives in the context of the PRSP. 4. Institutional and implementation arrangements: Since TASAF will finance community-initiated and implemented sub-projects, communities will constitute the basis for any institutional arrangement. Given the size of the country and the ongoing process of local government reform, another key factor is the role that local govemment institutions will play in project design and implementation. In order to achieve maximum efficiency and impact on the ground, the Govenrnent has established a semi-autonomous apex institution, the TASAF Management Unit (TMU), that will take responsibility for the administration of TASAF. The TMU will be a lean unit with staff at Central and lower levels. The district level will be the focal point for processing the sub-projects cycle, and fund activities will primarily be coordinated at the district level. The Government's project preparation team, with support from the PPF, discussed institutional and implementation arrangements with a number of critical stakeholders and tested options in order to refine the - 10- institutional arrangements. An Operational Manual (OM) and accompanying Handbooks have also been prepared which simultaneously lay down the guidelines and procedures for the Fund's operations; a draft/summary version of the OM has already been provided to the Bank. Adoption by Govemment of the revised and finalized versions of the OM and Handbooks is a condition for effectiveness. A substantial number of government staff at various levels (National Steering Committee, District Committees, District Management Teams) will be involved in the design and implementation of sub-projects under TASAF. There is agreement on the following broad principles which apply to both CDI and PWP components: * A National Steering Committee (NSC), appointed by the President, has been established. It is comprised of Government representatives, civil society and the private sector, whose responsibility will be to: approve workplans and projects above the threshold, plan and manage financial transfers. monitor and evaluate overall projects implementation and impact, and articulate Fund policy. * District Steering Committees (DSC) would be set up to process, recommend, or approve both CDI and PWP sub-projects within nationally defined guidelines and funding ceilings to ensure conformity with regional and community development goals; it is likely that in view of local government regulations, project activities will be coordinated at the district level. * TASAF Program Officers will manage TASAF-related operations covering a number of districts. * Day-to-day management of both CDI and PWP sub-projects will be coordinated by the TASAF District Officer (TDO). The TDO will be appointed by the District Executive Director from among existing qualified staff in accordance with TOR provided by the TMU. The TDO will be supported by the TASAF Program Officer, sector technical experts or any other designated officer under the guidance of the District Executive Director. The TMU will provide functional support as needed especially to ensure adherence to the rules and regulations of the Fund and timely reporting. NGOs, private sector agencies or individuals may be assigned the technical responsibility to manage a sub-project for a fee. A high degree of technical expertise, accountability and the least possible political or bureaucratic delays will be important factors for TASAF's success. - TASAF will focus on the poor and invest in basic social and economic infrastructure and carry out low-wage public works programs. Micro-credit is not part of TASAF. * Funding will be directly available to various community groups but not to individuals. 3 The annual allocation of TASAF funds to support National Bureau of Statistics (NBS) capacity creation will be approved, as with other elements of the TASAF work program and budget, by the TASAF steering committee, based on an annual work program to be agreed jointly between the NBS and TMU. The contractual agreement will be negotiated annually and submitted annually to the TASAF National Steering Committee for approval. * Findings from participatory consultations have been fed into an Operational Manual which spells out systems and procedures for the implementation of TASAF. The Operational Manual has been tested and revised during the implementation of the PPF-financed pilot phase which started in December 1999. It is important to highlight that CDI and PWP will utilize the same organizational and institutional structures outlined above. Under this arrangement, similar core services--for financial management, participatory processes, IEC dissemination, technical supervision, etc.--can be cost-effectively provided for both components. D. Project Rationale 1. Project alternatives considered and reasons for rejection: The Government's draft concept paper has been the basis for discussing project altematives and design - 11 - options. Best practices and findings from similar social funds and public works and employment projects have informed these initial discussions with Government and stakeholders. The Govemment team also undertook a study tour to obtain a first-hand impression of the Malawi Social Action Fund. On the basis of these inputs, the Government strongly emphasizes the need for speedy action, accurate targeting of beneficiaries, accountability, transparency and a demand-driven approach which will allow communities to pro-actively identify their priorities. TASAF is seen as a means which "provides an opportunity for the community to take charge of their social and economic development process, thereby nurturing a sense of self-esteem and self importance while lessening the feeling of powerlessness and dependency," (Government of Tanzania, January 1999, Draft Concept Paper, Tanzania Social Fund Project (TASAF)). Inclusion of a PWP component in TASAF The Government considered, but rejected, the alternative of working through line ministries to implement the sub-projects. Such an approach was evaluated particularly closely for the PWP component since the Ministry of Works already implements significant infrastructure and works programs. However, the ongoing programs have a less than optimal participatory element for the beneficiary community, employ able-bodied workers and are not targeted to the poor, and pay a statutory minimum wage that is higher than the rural wage. Furthermore, they operate according to established, standard universal piece rates which the needy cannot meet, and do not maintain a pre-determined ratio of wages to other costs and therefore typically incur high capital use. Within these parameters, a Ministry of Works implemented program would run a high risk of failing to contribute to the poverty alleviation objective of the target population by creating assets that beneficiary communities consider a priority, e.g. afforestation, land reclamation, earth dams, etc. As a result, the Government adopted the direct implementation of PWP through TASAF. Under this arrangement, TASAF will utilize similar organizational and implementation structures in both CDI and PWP to cost-effectively provide the core services for: participatory planning; Community Project Committee involvement in sub-project management; IEC; evaluation and monitoring of inputs and impacts; and decentralized institutional mechanisms for appraisal, approval and implementation of sub-projects. The AGETIP approach The Government also considered, but rejected, establishing an executing agency along the lines of an Agence d'Execution de Travaux d'Interet Public Contre le Sous-emploi (AGETIP) which would operate on purely private sector lines. Under the agency agreement, municipalities/towns and local authorities would contract the agency to execute projects for them for a fee. The Government opted in favor of the Social Fund approach to allow for a faster response, more participation by beneficiary communities and better targeting of beneficiaries. Furthemmore, TASAF is proceeding in a complementary manner to ongoing structural reform efforts by the Govemment to strengthen the institutional capacity of local government and to address sustainability issues related to the financing and operation of basic social infrastructure in the medium to long term. Location of TASAF There is broad consensus that TASAF must stay free from political influences and bureaucratic interference and that this must be reflected in the Fund's institutional set-up. The need to maintain transparency, accountability and high technical standards requires that TASAF be professionally staffed and given a high degree of autonomy, supported and supervised by a diverse, high-level Steering Committee which should include representatives of the Government, civil society and the private sector. - 12- TASAF's location in the President's Office will give it the necessary credibility and authority to ensure that the decentralized approach it espouses is given the opportunity to develop and take root at the district level. Its location will also signal to communities that they have a right to demand a certain level and quality of services from the Local Government. 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). . . P Latest Supervision Sector Issue Project (PSR) Ratings . (Bankfinanced.projects only) Implementation Development Bank-financed Progress (IP) Objective (DO) Health &Nutrition TZ-PE-02774 S S Urban Sector Rehab. (FY96) TZ-PE-02758 S S SAC 1 (FY97) TZ-PE-02821 S S HRD 1 (FY98) TZ-PE-02789 S S Civil Service Reform (FY00) TZ-PE-60833 S S Rural & Micro Finance (FY00) TZ-PE-50441 S S Health Sector Program (FY00) TZ-PE-58627 SAC 2 (FY00) Primary Education (FYOI) TZ-PE-61107 (under prep) Dar Water Supply & Sanit. (FY01) TZ-PE-59073 (under prep) Rural Water Supply (FY01) Education Rationalization (FY02) Other development agencies Government of Denmark Agriculture Sector Programme Support; UJNDP Assistance to the National Programme Framework for Poverty Eradication; DFID International Development Small Grants Scheme; EU Dodoma Microprojects Programme; Government of Finland Finnish Fund to Support Cultural Projects, and Fund to Support Small-scale Projects; ACT VZW (Belgian NGO), National Income Generation UTNDP, thc Ford Foundation, Programme (INCOFIN); Govemments of Switzerland and Belgium ILO Promoting Primary School Enrollment and Retention, and Tanzania Youth Development and Employment Foundation; CIDA Training Fund for Tanzanian Women; - 13- USAID Social Action Trust Fund; CORDAID (The Netherlands), Social Support to Disabled Governments of the UK and Austria Women. lP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: Social funds and public works and employment operations emerged in Sub-Saharan Africa in the late 1980s and early 1990s in response to emergency situations--natural or manmade disasters, external shocks, deep structural changes in the economy, or some combination of these. Numerous ICRs, studies and evaluations are available from various Bank units, sector networks and the World Bank's Operations Evaluation Department. A recent review of sixteen social funds, a study on social funds and decentralization and nineteen works and employment operations as well as experiences from other ongoing and completed operations have been taken into account in designing the proposed project. Relevant lessons learned from successful operations, and reflected in the proposed project design, include the recommendation to: (i) start with a pilot phase to test and finalize operating procedures, and review/adjust operating procedures throughout implementation, if necessary; (ii) respond to demand and consult clients/stakeholders systematically, using local approaches and capacity in participatory assessments (PRA); (iii) mobilize local resources and ensure community contribution for sustainability, and continue to build local capacity to identify, prioritize, plan, implement, manage and self-evaluate sub-projects; (iv) coordinate across sectors utilizing decentralized local government structures where they are in place and operational; (v) keep short-tenn objectives distinct and develop a long-tenn perspective; (vi) safeguard autonomy. transparency and accountability; (vii) use simple, carefully-piloted and stringently-controlled poverty monitoring surveys that have the greatest chance of full ownership by national institutions; (viii) communities are capable of differentiating between initiatives where communities contribute their own labor (as in CDI) and initiatives where participants are paid for labor (as in PWP) if proper IEC and PRA efforts spell out the objectives and criteria of each initiative; (ix) the same institutional structures can cost-effectively provide core services to both CDI and PWP components. Lessons Learned from Pilot Projects Utilizing PPF financing, TASAF has piloted a total of 17 CDI and PWP sub-projects in eight districts. The following are the lessons learned to date from implementing the sub-project cycle: Overall Implementation Lessons 1. Overall, the autonomous institutional set-up and proposed staffing of the TMU as well as the linkages with the decentralized district systems demonstrated that the CDI and PWP project cycles can be implemented efficiently and with very few bottlenecks. 2. While trained staff exist at district level, i.e., engineers, PRA facilitators, planners, financial management specialists, etc. they lack adequate resources to fully support the development needs - 14- of communities. Organizing TASAF to work through the decentralized structures would complement the Local Government Reform Program by providing resources, and allow greater autonomy and empowerment of local government (and other stakeholders) organs to support communities effectively. 3. There is need for a Memorandum of Understanding (MOU) signed between TASAF as a financier and each targeted district authority to the effect that they will provide other counterpart resources for the implementation of the CDI and PWP. Local Governments have the resources to co-finance TASAF sub-projects because they are activities integral to their development plans thereby obviating the need to delay implementation of TASAF by requiring the fund-strapped Central government to provide counterpart funds. 4. Both the regional and district authorities view TASAF as complementing the Districts' decentralized development efforts and therefore provided immediate support to set up the TASAF offices, assigned the TDO fully funded by the district, as well as other technical and non-technical support staff. 5. The participatory planning tools outlined in the Participatory Planning Guidelines (PPG) allow the PRA teams to stimulate discussion at community level about AIDS and vulnerable groups (topics rarely addressed in the culture), identify vulnerable members and discuss ways in which they can be assisted and in the process make the District-level stakeholders aware of the situation with regard to HIV/AIDS. CDI Pilot Activities 6. The proactive participation of beneficiaries in all stages of the CDI sub-project through the use of a Community Needs Assessment, using the PRA techniques as outlined in the Participatory Planning Guideline (PPG) is crucial not only for mobilizing communities but also for putting in place the key participatory processes necessary for full community involvement throughout the project cycle. 7. In the CDI, the community contribution for sub-projects addressing needs related to Early Childhood Development, HIV/AIDS or other vulnerable groups, should be reduced if these groups are to benefit. 8. The TASAF Management Unit (TMU) is able to transfer funds to the districts which in tum transfer them to the community accounts within a reasonable time. The latter have been able to procure services and materials as well as account for the money. However, a system of direct transfer to accounts rather than issuing checks when transferring the funds should be instituted. PWP Pilot Activities 9. There is experience on the ground in organizing and executing PWP through a strong district-level organization, with District Management Teams (DMT) and District Steering Committees (DSC) organized in every district, and trained personnel in Participatory Rural Appraisal methodologies to guide both the Public Works Project Teams (PPT) and the community. 10. In the PWP. communities demonstrated that they can effectively identify the vulnerable, select works, and engage in works. 11. Just as the CDI community contribution for sub-projects addressing H[V/AIDS or other vulnerable groups should be reduced, the PWP labor participation of vulnerable groups should also be reduced. 12. Rural wage levels vary widely across regions and districts. In one pilot PWP district, the daily wage rate was Tsh 600 per day while in another it was Tsh 1200 per day. There is a need to undertake a study to determine if a uniform country-wide wage rate should be used or if district - 15- variation is desirable. If the latter, a transparent formula for deriving the appropriate self-selecting wage rate will be established. This study will be undertaken prior to project effectiveness and incorporated as a key feature of the Operation Manual, the finalization of which is a condition of project effectiveness. 4. Indications of borrower commitment and ownership: The Govemment has taken the initiative and full ownership of project preparation including pilot testing in seven regions (and eight districts). The initial policy dialogue regarding the need and potential for establishment of a social fund has been carried out at the highest levels of Government. Project preparation was led and coordinated by the Permanent Secretary in the President's Office. A multi-sectoral project preparation team was established which includes representatives of relevant line ministries such as Education, Health, Community Development and the Vice-President's Office as well as representatives of NGOs and the private sector. The President has already appointed a gender-sensitive and broadly representative National Steering Committee. The project team prepared the draft concept paper providing background information and the project rationale for the Government's request. Issue/sector-specific Task Forces have been established as well as the nucleus of the TMU. The Government has pointed out that its request for support, and the urgency attached to it, are connected to: (i) ongoing fiscal and structural refonns and (ii) the Local Government and civil service reforms. The proposed project is intrinsically linked to and complementary to both. In addition, the Government's transparent and consultative approach to project development augurs well for a social fund that depends on the participation of all key stakeholders. Three national-level consultative workshops were held in addition to several field trips by the project preparation team (PPT) and TMU, all aimed at obtaining broad based views on participation, institutional structures to be put in place, capacity as well as stakeholders' perceptions. From inception, the Government's PPT, supported by the President's Office, has emphasized that high professional standards, transparency and accountability are essential to TASAF's success. The Govemment received an advance from the PPF to finalize preparation and piloting of TASAF with speed. Following on the successful Bagamoyo Workshop to harmonize participatory approaches pilot activities were initiated in December 1999 in eight districts from seven regions i.e. Kagera, Mtwara, Singida, Kiliminjaro, Shinyanga, Coast and Dodoma. Field visits made during appraisal to a few representative pilots sites further confirmed the Government's commitment to and ownership of the proposed project. Competent District Officers had been appointed by the respective District Executive Directors to work full-time on the TASAF pilot projects. In the Districts visited, as regards the CDI sub-projects, District Steering Committees had been formed, a District Management team constituted, a sensitization workshop had been carried out, a PRA had been done, a Community Project Committee had been formed, sub-projects had been prioritized, resources mobilized from the community, accounts had been opened, local contractors had been selected and works had begun with technical advice from the concerned sector ministry. With regard to the PWP sub-projects, there was clear evidence of sustained inputs from the District-level staff: the DSC had utilized poverty indicators to determine the geographical target area and the District Executive Director, the District Management Team and the TASAF District Officer worked together to determine the sub-project area, again based on poverty criteria. The District-level technicians and engineers were active on-site. In terrms of funding, the Districts co-financed up to 8 percent of CDI sub-project costs and 10 percent of PWP sub-project costs. The well-attended meetings and workshops that were held reflected the degree to which the TASAF philosophy - 16- and methodology had been internalized by the communities and the Government, especially at the district level. This high degree of internalization was further obvious during the active participation of the TDOs in the logframe exercise. 5. Value added of Bank support in this project: The Bank's experience in successfully working with social funds during the last decade is key to the Government's request for assistance. In developing the basic concept for TASAF, the Government consulted with Bank staff and utilized Bank documentation to draw upon its cross-country experience. Furthermore, a project preparation team carried out a study tour to Malawi to review its experience with a similar IDA-financed social fund (Malawi Social Action Fund--MASAF). A social fund, because of its multi-sectoral nature, raises cross-cutting issues requiring technical expertise in various sectors. It also requires close donor coordination on substantive issues and with respect to resource mobilization. The Bank's technical expertise in general, as well as specific ongoing IDA-financed operations in relevant sectors such as education, health, roads, water and sanitation, put the Bank in a unique position to assist the Government in addressing these cross-sectoral issues. Regarding donor coordination, the Government has unequivocally taken the lead, while recognizing that Bank support is critical to coordinate and leverage additional resources, if necessary. Finally, the proposed TASAF is linked to ongoing fiscal and macro-economic measures as well as Local Government and civil service reforms. The Bank is a key stakeholder in these areas which has led the Government to request the Bank to take a leading role in establishing the proposed project. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): O Cost benefit NPV=US$ million, ERR= % (see Amnex 4) 0 Cost effectiveness 3 Other (specify) The economic analysis undertaken for TASAF involves several elements that provide an important rationale for the project. Public financing of the Social Fund is justified by high rates of poverty, as well as by the fact that the TASAF supports projects with high social rates but low private rates of return (e.g. education, health, and community mobilization). TASAF's Operational Manual incorporates cost- efficiency and sustainability criteria for the approval of sub-projects, and the low unit costs expected under TASAF relative to other institutions, as well as its expected low overhead, make the project a cost-effective means for executing these activities. With respect to the Public Works Program, its bcneficiaries will be among the poorest Tanzanians. The PWP will primarily operate in food-deficit areas during seasons of food shortages. Remuneration of PWP participants will be below the rural minimum wage and will not create distortions in the wage market. A regional ranking and district selection process has been undertaken in TASAF to identify the priority regions and districts to participate in and benefit from the project (described in detail in Annex 4). The regional ranking exercise utilizesregional poverty, service accessibility, and the rate of AIDS case data. Based on the regional ranking, a number of districts (ranging from 3 for the most deprived region down to 1 for the least deprived) were proposed. Subsequently, pilot districts and those targeted by local government reform were combined with available district-level vulnerability data to identify the vulnerable districts in which TASAF will be operating Such an exercise reinforces the poverty reduction and targeting objectives of the project. - 17- Project benefits will be measured in a thorough and consistent manner in TASAF. Benefit indicators include: level of support provided to vulnerable groups, i.e. elderly, orphans, the disabled, H[V AIDS-affected and-infected; increase in community capacity and skills to plan, manage, and implement sub-projects--thereby strengthening social capital; improvements in income eamings and living conditions of TASAF communities; and changes in participation levels of women as drawn from the MIS. The monitoring and evaluation system will draw on a wide range of information sources, including participative M&E activities and survey results generated out of the national poverty monitoring program, to assess the impact of the sub-projects on poverty and vulnerable groups and provide timely information for measuring the cost-benefit of individual sub-projects and of TASAF as a whole. 2. Financial (see Annex 5): NPV=US$ million; FRR = % (see Annex 4) The accounting and financial system used by TASAF is being developed with the assistance of a consultant on the basis of terms of reference agreed during the pre-appraisal missionand its finalization is one of the conditions of effectiveness. The Bank's Financial Management Specialistscarried out a financial management assessment and have laid out a time-bound plan of action for the enhancement of the financial and accounting systems in order to enable the implementing agency to deliver the required quality and quantity of reports. The necessary orientation training for the newly recruited TASAF Finance and Accounting staff within the TMU will continue and is expected to be completed by December 2000. Additional training on financial management will be provided to district level staff so that they, in turn, can assist communities in establishing and monitoring project accounts. The capacity for financial management and accountability will be one of the key criteria to evaluate district performance and the continued ability of these districts to absorb project financing. Fund accounts will be maintained in accordance with International Accounting Standards while annual financial statements will be audited in accordance with Intemational Standards of Auditing by independent auditors acceptable to IDA. The TASAF Integrated Management Information System is designed to incorporate financial management information in order to provide data for comprehensive monitoring and evaluation of sub-project performance. Fiscal Impact: Several measures (traditionally incorporated in social funds) will be built into the project design to ensure financial sustainability of the facilities and activities financed by the project: (i) communities will be expected to contribute a share of individual CDI sub-project costs (equivalent to 20 percent of the value of the sub-project costs); (ii) as a condition of sub-project approval in both the CDI and PWP components, communities will need to submit a plan for maintenance of the completed asset; (iii) CDI and PWP sub-project proposals will be reviewed as part of the appraisal process, to ensure that sectoral ministries will provide for recurrent expenditures generated by the sub-project and for which the sector has responsibility; and (iv) local governments will make provision within their annual plans and budgetary allocations for co-financing sub-projects. Thus, there is little net fiscal impact, and there may in fact be some fiscal savings as TASAF finances and implements activities within the existing district plans. As important as the community's financial contribution, however, is the philosophy of self-help and ownership that is expected to be developed throughout project identification and implementation. The skills learned by communities during the project to use and account for funds, and to rehabilitate and maintain infrastructure, is expected to lead to more sustainable development. As such, it is expected that: (i) the productive life of the communal asset will be longer than in the non-participatory planning case; and (ii) that the recurrent cost burden on central and local government will be lower than in the non-participatory case. - 18 - 3. Technical: The technical design of the sub-projects will use simple, appropriate and environmentally sound technologies that correspond to the needs and community capabilities for construction, operation and maintenance. The designs and standards of the sub-projects will be based on the norms and standards of the technical ministries involved. Where there is proven technical and economic efficiency, labour-intensive work will be preferred and innovations in designs will be encouraged while keeping in mind the need for technical, financial and implementation viability. In addition, othertechnical issues that are being addressed as part of the economic analysis are: (i) poverty analysis and, related demand and self-targeting; (ii) absorptive capacity at various levels starting from the community; (iii) transparency, accountability and financial management; and (iv) continuous monitoring and evaluation, including the establishment of baseline data. 4. Institutional: The institutional set-up of TASAF, which covers both CDI and PWP, is at three levels: the National Steering Committee (NSC), the District Steering Committee (DSC) and the Community Project Committee (CPC). The composition of the committees reflects the functions assigned to each level by the GOT through the President's Office. In addition, the design recognizes the levels that are functional under the revised Local Government Act (February 1999). These are meant to ensure speedy decision-making through reductions in bureaucratic layers and increased accountability through more transparent organs and processes. The TASAF NSC: The President has appointed a TASAF National Steering Committee responsible for overall policy guidance, operational oversight and irmpact assessment of the Fund. The NSC will ensure that TASAF implements, through the TASAF Management Unit (TMU) activities in accordance with the Operational Manual. To that end, it appoints the key staff to manage TASAF. The NSC comprises of ten members drawn from the public sector, private sector and the NGO community, and the Executive Director, TASAF, as ex-officio member and Secretary, and will have a balanced gender representation. The Permanent Secretary, Vice-President's Office will be the Chairperson. The DSC: The District Commissioner (DC) of a TASAF project district will establish a District Steering Committee whose responsibilities shall include approval of annual work programs, budgets and sub-projects, as well as provision of operational guidance within the District. The DSC will be an additional Committee to the existing standing committees of the District Council and will comprise of: the DC as the Chairperson; chairpersons of the District Council, standing committees on planning and finance, and social services; the District Executive Director (DED), representatives of women's groups and NGOs; Members of Parliament and Councillors; the TASAF District Officer (TDO) as ex-officio member and Secretary, and the TASAF Program Officer (PO) as ex-officio member. The heads of technical agencies at the district level will constitute the District Management Team (DMT), an executive arm of the DSC that performs varying functions at different phases of the sub-projects cycle prior to recommending the sub-projects for approval. Other actors here will include NGOs and private contractors. The CPC: The Community Project Committee is an organ elected by the participating community during a participatory meeting attended by at least 70 percent of the intended beneficiaries of a prioritized need. The meeting is chaired by the Chairperson of the village council and may be facilitated by the village executive officer. The CPC will have the authority of the benefiting community when the minutes of the meeting, at which the office bearers are elected, are signed by all the members who attended the meeting. The CPC's functions shall include: facilitating the planning, implementation and monitoring of sub-projects, mobilizing communities to contribute (in the CDI) or register for works (in the PWP), procurement and management - 19- of funds, seeking technical support from development agencies and competent individuals, and preparing periodic progress reports. The CPC planning role differs depending on whether the sub-project is a CDI or PWP sub-project. In the former, the CPC plays a large role in organizing the community to identify the choice of sub-project that will address its chief development priority. In the PWP, the district identifies the area to receive the PWP sub-project. Following this identification, the CPC chooses from a limited menu of sub-projects before mobilizing workers and monitoring the daily register. 4. 1 Executing agencies: The Executing Agency for TASAF will be a lean autonomous Management Unit (TMU) in the President's Office The apex TMU is organized in a decentralized manner to allow greater autonomy and empowerment to the local government organs and the community. At the national level, the TMU will coordinate and execute the day-to-day activities of the Fund. The TMU will comprise of the Executive Director (ED), Director of Community Development Initiatives (DCDI), Director of Public Works (DPW), Director of Finance (DoF), an Internal Audit Officer, and Heads of Units for Monitoring and Evaluation, Management Information Systems, and Capacity Building comprising Information, Education, Communication (IEC) and Training. Technical Assistance will be provided to the Fund by the sector ministry experts and private consultants as needed to implement specific aspects of the Fund's activities. TASAF Program Officers will support the districts that have weak capacity and allow for effective supervision given the difficulties of coverage from Dar es Salaam. It is envisaged that each Program Officer would cover a minimum of seven districts. Since the CDI will commence in all 42 districts in the first year of implementation, five CDI Program Officers would be initially recruited. Since PWP's first year of implementation will have more limited coverage to allow for the leaming phase, two PWP Project Officers will initially be recruited, possibly increasing to five in subsequent years of implementation. This arrangement is likely to be more cost effective and will also ensure that there is no compromising on the quality, speed and flexibility of the sub-projects design and implementation. At the District level, the District Executive Director, as the head of the Local Government technical team, will provide the needed support to the TASAF management team led by the TASAF District Officer (TDO). Under the PWP, a District PWP Team (DPI) comprised of the district technical heads of the relevant sectors will prepare the sub-projects, test their feasibility, and produce the technical designs, bills of quantities, etc. as well as provide the technical supervision during implementation. The DPT is supported by and reports to the TDO on all matters relating to TASAF sub-projects. The TDO is appointed by the DED from among qualified existing staff in accordance with the TOR provided by the TMU. Her/his functions are to coordinate the day-to-day TASAF activities in the District including: facilitation of communities, scheduling the appraisal of the sub-projects and disbursing funds for approved community projects. The TDO will be a member of the DMT but is functionally accountable to TASAF management so as to ensure compliance and adherence to the Fund rules, regulations and procedures as outlined in the Operational Manual. She/he will serve as Secretary of the DMT meetings on TASAF activities. The TASAF Program Officer will be an ex-officio member of the District Steering Committee. The DED will ensure that the TDO receives administrative and other support, i.e. secretary, driver and guard, from the District's routine budget. Only the Accountant will be paid out of TASAF funds. 4.2 Project management: As discussed, the establishment of a strong and semi-autonomous project management unit will be critical to project success. Equally important is ensuring that the DED and District Management Teams that play the pivotal role in the sub-project cycle are fully oriented to the modalities of implementing TASAF. The TDO, who is an integral member of the DMT, supported by the PO and the IEC Unit at the center, will coordinate the orientation. A draft Operational Manual and supporting Handbooks that detail the processes and procedures were prepared, appraised and made available for Negotiations - these will be finalized - 20 - before credit effectiveness. This Manual and the Handbooks will provide clear implementation guidelines for all actors involved in project implementation. The institutional and project management arrangements as outlined above, have been discussed and agreed upon during appraisal and at negotiations. Since capacity gaps do exist among key actors involved in the implementation of the project, this will require careful consideration especially, but not only, at the district level. The PPF funds have been used to identify these capacity constraints and a strong capacity building component at all levels of project implementation is intended to address this issue. In February 1999, Parliament revised the local government regulations. As these become available, the Government team and the Bank will factor in the implications for TASAF's project design and implementation. However, the revised regulations are expected to enhance, rather than impede, community participation and the building of capacity at the community and district levels. Strengthening Government's monitoring capacity is one of the project objectives, and it is expected that a monitoring and evaluation system with an effective MIS will be established before credit effectiveness. A well-designed monitoring and evaluation system that monitors physical and financial progress and measures impact is necessary to ensure that the program will provide effective support to the Government's poverty reduction program. Such a program would consist of: (i) periodic and independent evaluations of the impact of the program on beneficiaries through both qualitative and quantitative surveys; (ii) monitoring of actual and planned expenditures and physical progress by region; and (iii) evaluating and updating the indicators used to identify the target population. Also, it would be necessary to monitor and evaluate each sub-project activity, and therefore the system should be able to record critical baseline data regarding the community group or village that is being assisted. In all TASAF-supported development activities, the benefiting community will elect a Community Project Committee (CPC) at a participatory planning meeting that must be attended by at least 70 percent of the intended beneficiaries. The meeting is chaired by the Chairperson of the Village Council and may be facilitated by the Village Executive Officer (VEO). A CPC will have the authority of the benefiting community when the minutes of the meeting, at which the office bearers are elected, are signed by all members attending the meeting. 4.3 Procurement issues: The TMU will be responsible for the procurement of goods and consulting services that will be required at the national coordinating office, program office and TASAF District Office (TDO). The TDO will be responsible for the coordination of project activities at the district level and communities will manage all sub-project contracting with the help of the TDO. An Operational Manual (OM), a living document, has been prepared by the Govemment and will be continuously modified, subject to agreements between GOT and IDA, as new lessons are learned and incorporated for future use. More details are described in other developed handbooks such as the Procurement Handbook, a Financial Management Handbook and a Community Implementation Handbook. The TMU will prepare a draft General Procurement Notice (GPN) which will be updated every year and submitted to IDA. The GPN will describe the procurement of goods and service; this will be finalized and published in the United Nations Development Business and in local papers immediately after negotiations. The TMU will monitor all procurement-related infornation for project implementation. The weaknesses in the procurement system and the proposed Action Plans are discussed in Annex 6. - 21 - 4.4 Financial management issues: The Executive Director of TASAF will be accountable to the National Steering Committee for all the financial activities of the Fund. Reporting to him on these matters will be a Director of Finance (DoF). The DoF will also be responsible for the Fund's Staff Regulations, policies and procedures. The TMU will establish a comprehensive computerized financial and management accounting system. This information flow will enable internal reporting, for use in planning, controlling routine operations, and also allow facilitate external reporting to other stakeholders. The TMU will keep proper books of accounts and maintain other financial records which conform to generally accepted international accounting standards. TASAF will establish the necessary bank accounts at the national and district levels. Communities and other implementing agencies will open bank accounts specifically for the project funds and account for them periodically as specified in the OM. The TMU will transfer funds directly into the relevant project account. The TMU will keep a database of all project accounts. In addition to periodic overall audits to be carried out by an Internal Auditor employed by TASAF at the TMU, GOT internal auditors at district level will carry out routine audits to ensure full compliance with financial accountability rules and regulations. 5. Environmental: Environmental Category: F (Financial Intermediary Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Both the Government of Tanzania and the World Bank recognize that though the poor are critically dependent on regenerative natural resources, they are often not in a position to be environmentally "responsible" as their options to do so are constrained by conditions of extreme poverty and need. Consequently, the construction of infrastructure such as school buildings, health posts, boreholes, and other projects eligible under TASAF may assume more importance than the costs of environmental degradation. In this context, TASAF will be pro-active in educating and informing communities about the cost-benefit aspects of environmental conservation through its EEC campaigns. Community members and all other stakeholders will be trained in the environmental impacts of developmental projects, environmental indicators and possible mitigation measures. For all the sub-projects to be funded by TASAF, the potential environmental impacts will be identified early during the initiation of a sub-project. Environmental assessment of a sub-project and measures to avoid or minimize impacts will be incorporated into the Environmental Management Plan (EMP). The communities will participate during all stages of sub-project cycle. TASAF will play an active role in promoting and supporting sub-projects aimed at improving the management of natural resources by poor communities as well as aimed at avoiding at or minimizing environmental hazards associated with the use of pesticides, herbicides and fertilizers in agriculture, or biological wastes from clinics and health centers. The TMU will develop specific guidelines for the appraisal of sub-projects prior to effectiveness. Such guidelines will analyze the environmental impact of individual sub-projects, include procedures for documenting the analysis and list mitigating steps where there is an adverse impact. 5.2 What are the main features of the EMP and are they adequate? For all the TASAF sub-projects to be funded by TASAF, the potential environmental impacts will be identified early during the initiation and scoping stages of the EA of a sub-project, and measures to avoid or minimize impacts will be incorporated into the altematives being considered. 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: N/A 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? - 22 - The project proposes to have a very clear sensitization and capacity building program related to environmental issues. This will take the form of messages to the range of stakeholders as well as training and sensitization workshops. The proposed methods of training community members in both screening and assessments is through the use of PRA and animation techniques. Facilitators will therefore be trained and used throughout the sub-project cycle and, in tum, will train communities to use checklists at each phase of the sub-project cycle. 5.5 What mechanisms have been established to monitor and evaluate the impact of the projcct on the environment'? Do the indicators reflect the objectives and results of the EMIP? Monitoring and evaluation will be done through environmental audits in which the communities will also participate. Indicators will be developed aligned with the objectives and results of the EMP. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. The community needs assessments and stakeholder workshops undertaken during preparation as well as the pilot projects currently under implementation in 8 districts have yielded a wealth of information on the potential social impact of TASAF and how to promote equitable and sustainable development at the local level. TASAF will be implemented in a manner that enables local communities to take greater control and authority over their own affairs. The CDI approach is highly innovative because it gives direct financial control to communities for buying professional services and skills to help them plan and implement a community sub-project that they have chosen themselves. In PWP, the sub-project menu is more limited as projects must meet criteria ensuring labor intensity. However, PWP sub-projects are also managed and monitored by communities, and should encourage and strengthen the philosophy of assisting the more impoverished in the community. Several of the key design features of TASAF ensure the active participation of communities in all phases of the project cycle. One of the critical issues in bringing the entire community together to plan and implement micro projects relates to ensuring an equitable and representative decision-making process. The community needs, capacity and institutional assessments that were carried out during project preparation involved seeking people's perceptions of their key priorities as well as characteristics of the vulnerable and ultra poor within the village community. It also involved getting community feedback on key design assumptions in the project about local organizational capacity and community managed systems. The communities assessed their capacity for financial and organizational management of projects at the community level. The communities also evaluated the existing institutional arrangements for implementation of such projects and suggested the indicators they would like to see in institutions supporting this project. The community members also indicated the indigenous traditions of self-help and resource mobilization which could be used for designing the project. The findings of the community needs, capacity and institutional assessments were used for designing as well as refining specific features of the project (See Annex 12). Key features of the Community Development Initiative (CDI) include putting in place: a village-level micro-planning process to allow all members of a community, especially the more vulnerable groups, including women, to participate in planning and prioritizing needs; an elected community-level organization which will manage the implementation of community sub-projects including managing funds and procuring goods and services; the systematic involvement of district staff including a TASAF District Officer who will provide a direct link between TASAF and communities; autonomous teams at district level who are trained in facilitating participatory processes who will work intensively with communities; and a participatory monitoring and - 23 - evaluation system. A gender action plan will be developed by the Ministry of Community Development, Women and Children to identify the means by which the impact of project activities on women can be enhanced and to ensure a gender-sensitive monitoring and evaluation system. Based on the findings of the community needs assessment and on-going pilot projects TASAF will emphasize targeting of vulnerable groups in communities. According to the assessment, vulnerable groups included landless, disabled, orphans, widows with many children, HIV/AIDS affected and elders without support. It is envisaged that the village-level micro-planning process would specifically facilitate priority identification by vulnerable groups and these activities would be incorporated in the activities funded under TASAF. The project's Early Childhood Development (ECD) initiative will seek to contribute to the growth and development of young children. It will also seek to promote equity by emphasizing care geared towards rural, underserved areas, as well as disadvantaged groups. It will address immediate risk factors, inter alia, the issues of AIDS orphans. Identified as a key stakeholder, the NGO sector (development and faith-based NGOs) will play an important role both at the local and national level. It is envisioned that CBOs and NGOs will be involved throughout the project cycle (preparation, implementation, supervision, evaluation) in areas where they have a comparative advantage and with the aim of transferring skills to and strengthening the capacity of the community. Systematic consultations with the NGO/CBO constituency will provide TASAF with the opportunity to discuss innovations, cross-check and analyze data gathered through the community needs assessments, develop selection criteria, and test key design principles on an on-going basis. An NGO representative was appointed to the National Steering Committee of TASAF and will provide overall guidance to the operations of TASAF. An effective Information, Education and Communication (IEC) system will facilitate the timely dissemination of project-related information. The focus of the IEC campaign will be to ensure transparency and accountability (downwards and upwards) through providing consistent information on the project's objectives, the roles and responsibilities of the various stakeholders and the implementation status of the project so as to sustain a democratic information environment. It will also help by focusing attention on vulnerable groups and the poorest of the poor. Targeted training will seek to build govemance capacity primarily within communities but also within local governments and the central govemment. 6.2 Participatory Approach: How are key stakeholders participating in the project? The primary beneficiaries under the project are poor and "hard-core" poor households mainly in rural but also in peri-urban areas. Given the largely demand-driven nature of the project, they will participate at all relevant stages, from the initial project identification to the final project implementation. In addition to directly seeking inputs from communities through field visits, project preparation involved undertaking a community needs and capacity and institutional assessment with communities in two regions using participatory methods. This assessment was facilitated by experienced Tanzanian practitioners well versed in facilitating participatory methods. The assessment involved seeking people's perceptions of their key priorities and more specifically those of the vulnerable and ultra poor. It also involved getting community feedback on the key design assumptions in the project about local organizational capacity and community managed systems. The communities indicated their state of preparedness for financial and - 24 - organizational management at the country level and evaluated the existing institutional arrangements for implementation of such projects. The key findings of the community needs, capacity and institutional assessment which have been used for designing the project are as follows: * The traditions of self-mobilization and cost sharing for community infrastructure and related activities is fairly widespread in the regions. The extent of self-mobilization of labor and financial resources was found to be very high in all the villages where participatory assessments were undertaken. However, people indicated that they would contribute only to activities identified by them in the village through a participatory process. In response, TASAF design involves the identification of activities to be supported through a village level participatory micro-planning process. * Most of the priorities identified by the communities involve creating and rehabilitating social and productive infrastructure. However, communities emphasized the need to ensure that the quality of service delivery and sustainable mechanisms for maintenance of the infrastructure should be integrated into the design. The capacity building component of TASAF would ensure that these aspects are incorporated and capacity created at the community level to ensure the sustainability of community infrastructure. * The assessment identified the characteristics of vulnerable groups. These included the landless, disabled, orphans, widows with many children, HIV/AIDS affected and elders without support. Several specific activities to deal with support infrastructure for these groups were identified in the assessment. The vulnerable groups in the community stressed the need for targeting specific interventions under TASAF. It is envisaged that the village level micro-planning process methodology would specifically facilitate priority identification by the vulnerable groups and these activities would be incorporated in the activities funded by TASAF. * Most communities had technical skills at the local level e.g. masons, iron smiths, carpenters, house building, mechanics, radio repair and traditional birth attendants. The skill availability at the community level would ensure that community procurement mechanisms proposed in TASAF would be effective and sustainable. - The communities indicated the need for additional training in financial management, accounting, materials and inventory management. In addition, the communities also indicated the need for training in facilitation and group management skills. The capacity building component of the project will address these issues. - The communities indicated their concem with the quality of the services delivered by the support institutions. The two criteria which the community used for evaluating external institutions included the speed of response and accountability and feedback mechanisms. TASAF design and monitoring systems will ensure that these aspects are monitored on a regular basis and that qualitative assessments of TASAF performance are carried out with the communities in a participatory manner. TASAF will also invest in the capacity building of Ward and District-level government staff to so that they are more responsive to the needs of the community. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? * NGOs representatives participated in the initial consultation workshop for designing TASAF. * A separate workshop was held with NGOs on their experiences with demand-driven approaches and working with vulnerable groups and their possible role in TASAF. * A group of NGOs carried out the community needs, capacity and institutional assessment to seek direct community inputs into the design of TASAF. * NGOs with experience in facilitating demand-driven approaches presented their experiences and participated in the Participatory Methodology and Pilot Design Workshop held at Bagamoyo. - 25 - * In addition, many NGOs were consulted individually about the design of the Bagamoyo workshop. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes'? * A village-level microplanning process which allows all people in a village, especially the more vulnerable groups, including women, to participate in planning and prioritization. * A community-level organization which implements and manages community sub-projects. * Trained groups of community facilitators who work intensively with communities to provide support for the development of inclusive institutions. * Institutional set-up involving autonomous teams at the district level who are trained in facilitating participatory processes and institutional development. * An independent and autonomous unit to provide support to the district teams on social issues. * Using a wide range of support institutions including NGOs, particularly for training, facilitation and programs related to vulnerable groups. * Participatory monitoring and evaluation systems (inputs to the Core Welfare Indicators Questionnaire and dissemination of results). * An effective information, education and communication system that facilitates the timely dissemination of project-related information. 6.5 How will the project monitor performance in terms of social development outcomes? Apart from using information generated directly through the MIS, the project will make extensive use of household and community surveys employing both qualitative and quantitative approaches. Some of the critical indicators are as follows * Visible participation of the poor, women and vulnerable households in the identification of key priorities through a village planning process. * Presence of an inclusive community institution to mobilize internal resources, receive external resources and manage community sub-projects in a transparent and accountable manner. * The development of community sub-projects that deal exclusively with vulnerable groups, including the disabled and those affected by AIDS. * The development of local skills for facilitation, planning and management (financial and procurement). * The development of a support structure (local and district govemment) that is responsive and accountable to community organizations. * The establishment of transparent and open information and communication initiatives that enables project-related information to be made available to citizens and participants on a regular basis. 7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the proje C Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) Yes L No Ci Natural habitats (OP 4.04, BP 4.04. GP 4.04) El Yes O No L Forestry (OP 4.36, GP 4.36) LI Yes O No Li Pest Management OP 4.091 L Yes E No L Cultural Property (OPN 11.03) a Yes 1 No El Indigenous Peoples tOD 4.20) - Yes 1 No El Involuntary Resettlement (OD 4.30) L Yes 1 No El Safety of Dams (OP 4.37, BP 4.37) El Yes Z No O Projects in Intemational Waters (OP 7.50, BP 7.50, GP 7.50) EL Yes LK No - 26 - B Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) B Yes B No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. An environmental analysis has been carried out on the basis of which compliance with Bank safeguard policies will be ensured. F. Sustainability and Risks 1. Sustainability: Empirical evidence from similar operations in various regions points to a strong, positive correlation between community participation in identification and design, planning, implementation and management and sustainability of sub-projects. Other factors that ensure sustainability include: (i) setting-up of a strong, autonomous implementing agency whose staff are recmited competitively, provided with adequate incentives and work to set performance targets, to execute the fund with a "sunset clause"; (ii) criteria for selection of sub-prqjects for funding that meet basic needs as articulated and managed by the communities, and to which the community contributes; and (iii) sub-project activities which include capacity building and training of the communities and sub-project management committees and district personnel to ensure that the assets created are maintained. The ongoing Local Government Reform Program provides a unique opportunity for GOT, using the positive lessons from TASAF, to adopt and introduce the broad-based community development strategy it currently advocates. Besides advocacy for the TASAF community demand-driven approaches to be adopted by Government departments, the transfer of skills to district staff, especially as part of the sub-project cycle, during appraisal, implementation, supervision and monitoring will ensure thatthe TASAF processes are sustained. The skills that are likely to be mastered would include: use of harmonized participatory approaches to facilitate communities prioritize and plan to meet their own needs, needs-based ranking of areas within the district in preparation for financing interventions irrespective of the source of the funds, and recognition that communities are both the objectives and vehicles of endogenous development. Ongoing macro-economic reforms which emphasize the regulatory role of the Government to develop a conducive framework for community-based development, coupled with administrative reforms which place greater importance on decentralization of the Government's role in supporting basic social and economic services, also factor in positively. PWP sub-projects will be relatively short lived, with no expectations built among participants that employment opportunities will be provided on an ongoing basis. Community ownership of and commitment to the activity are a very important facet of the sustainability aspects. The design of the project is expected to stimulate community participation in the identification, preparation, implementation, management and maintenance of the sub-project. The Government team conducted a rapid evaluation of the existing activities to design realistic participation and contribution processes for the proposed project that would not tax or disincentivize poor communities, but instead ensure their ownership of, and commitment to the project. In many projects, the community's ability to manage funds has been seen as a key mechanism that enhances such features. Systems and procedures will be developed and incorporated in the project's Operational Manual, and training of project and key Government staff will be conducted to ensure that staff and all partners work together with communities. Capacity building activities for communities will also be financed to ensure that they have the capacity to sustain and manage the activities effectively. - 27 - The sustainability of the community participation approach, adopted under TASAF, will depend to a large extent on the Govemment's capacity to harmonize the multitude of ongoing participation efforts in the country. As part of the TASAF preparation process, a workshop was organized to harmonize participatory approaches among the various stakeholders who are involved in TASAF design and implementation (local authorities, NGOs, donors, etc.). There are however a number of other actors, often working in an isolated fashion, who are also carrying our participatory community work. Various attempts to harmonize participatory approaches have not yet succeeded. As a result, only a very small fraction of villages in Tanzania have access to the community participation process, notwithstanding the very strong (both in quantity and in quality) local capacity. To ensure sustainability of TASAF's community participation beyond the duration of the project, it will be critical that: (i) the Government identifies clearly which entity should take the lead to harmonize the various community participation efforts; (ii) a practical and common understanding among practitioners is reached on a flexible and national approach to community participation; and (iii) an action program is determined to enrich the ongoing community participation efforts in the context of the harmonization efforts. The Ministry of Community Development and Women Affairs and the Ministry of Local Govermnent are launching the harmonization process on a national scale with support from UNDP. the Finnish Embassy, and the World Bank. 2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Rk Risk Raing Risk Minimizaion0UMeasure From Outputs to Objective Given that project success is dependent on H GOT's consultative approach to date suggests the successful implementation of the increasing rather than decreasing momentum. Local Government Reform, loss of The project will provide impetus to GOT's LG momentum of this reform agenda will reform, backed by the revision and approval in constitute a risk. 1999 of the Local Government Act of 1983. Also, the appointment of Program Officers to backstop the TDOs and the provision of support to the TDOs in the form of an Accountant, a vehicle and computers, etc., the signing of the formal MOU between the District Executive Director (DED) and TASAF, and the planned systematic capacity building at the district level will mitigate this risk. Lack of cooperation and trust b/w line M The Participatory Rural Assessments and ministries, Local Government Authorities Information, Education and Communication and communities at district level. (IEC) campaign and training will seek to bring about a convergence on objectives and actions. Competing approaches to poverty M Continuing dialogue with GOT, donors and monitoring by different donors may other interested parties. weaken national statistical capacity. From Components to Outputs Lack of, or delayed, provision of S The formal MOU signed between the DED and counterpart funding. TASAF will mitigate this risk; rigorous supervision will seek to ensure that the provisions of the MOU are adhered to. - 28 - Lack of transparency and need for N PRAs, training and the IEC campaign will accountability and technical quality in address this issue. sub- project management. Political interference and rent seeking. S PRAs, training and the IEC campaigns will seek to mitigate this risk. Sub-project menu too open given M The pilot sub-projects have demonstrated community capacity. community capacity, willingness to participate in and ability to manage these small-scale projects. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) The major risk associated with the option of not undertaking the project is the negative impact on the Government's stated goal of poverty reduction and protection of vulnerable poor. This is especially critical at a time when the Government attempts to maintain the momentum of its reform program to generate the economic growth necessary for sustainable poverty reduction. In particular, the Government is concerned about the prospect of increasing social tensions while awaiting the positive impact of its economic and administrative reform program. Poverty and unemployment are high, and more than 57 percent of the population is less than 20 years of age and exerting increasing pressure on the labor market. Not only could social tensions put political pressure on the Government to abandon its reform program, but social stability and peace are a precondition for building investor confidence. The Government therefore sees TASAF as a critical component of its overall social and economic program - having focused on fiscal stabilization and infrastructure during the early refonn phase - that can be abandoned only at substantial risk. 3. Possible Controversial Aspects: Lack of accurate and disaggregated data may inhibit accurate targeting of the poor below the regional level. G. Main Credit Conditions 1. Effectiveness Condition As conditions of effectiveness, the Government would: (a) Establish an accounting and financial management system satisfactory to the Association. (b) Adopt the project manuals. (c) Furnish to the Association the signed Memoranda of Understanding between (i) TASAF MU and the Bureau of Statistics to formalize its role in the implementation of the subprojects; and (ii) District Executive Directors and TASAF MU (with the exception of the Memoranda of Understanding signed by the concerned District Executive Directors in Zanzibar, which will be due by May 1, 2001) guaranteeing to provide full-time TASAF District Officers, support staff in sufficient numbers, and adequate office space. (d) Confirm that all District Steering Committees have been established (except for the ones in Zanzibar that are to be established by May 1, 2001). (e) Confirm that an operational Management Information System is in place. (f) Confirm that the TASAF Management Unit has been established and will be staffed at all times by key professionals including the Executive Director, Directors for Community Development Initiatives and the Public Works Program, Director for Finance, as well as Heads of Monitoring - 29 - and Evaluation and Capacity Building Units and an Internal Audit Officer. 2. Other [classify according to covenant types used in the Legal Agreements.] The Borrower shall: (a) Undertake, in conjunction with IDA, a joint annual review of the project, or in the case of the Mid-term Review, no later than November 1, 2002. (b) Submit to IDA a formal agreement between the Bureau of Statistics and TASAF MU on the Work Program and timetable. (c) Submit quarterly financial reports to IDA. (d) Submit semi-annual implementation reports to IDA. (e) Submit annual audit reports to IDA. H. Readiness for Implementation E 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. El 1. b) Not applicable. [II] 2. The procurement documents for the firstyear's activities are complete and ready for the start of project implementation Z 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. r 4. The following items are lacking and are discussed under loan conditions (Section G): 1. Compliance with Bank Policies 1 1. This project complies with all applicable Bank policies. B 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. P( 'f'S QXPAJ\X / ______ J Norbert 0. Mugwagwa Dzingai B. Mutumbuka Jamnes W. Adams Ip Team Leader Sector Manager/Director Country Manager/Director - 30 - Annex 1: Project Design Summary TANZANIA: SOCIAL ACTION FUND PROJECT 4L Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) To reduce poverty and GDP increases from 4.75% in Reports from the National Policy enviromnent conducive promote sustainable year 1 to 6.1% in year 4 Bureau of Statistics to promotion of economic development for the poor growth. sections of the communities Reduce % of the population PRSP Draft paper Strong and sustained below poverty line from 48% govermnent commitment to to 42% by year 4 anti-poverty initiatives Project Development Outcome / Impact Project reports: (from Objective to Goal) Objective: Indicators: To increase and enhance the 100% of projects to have Monthly, quarterly, and Continued Govermnent capacities of community and permanent maintenance annual reports conunitment to prudent fiscal slakeliolders to prioritize mechanisms CWIQ Survey policy, resource allocation and implement and manage Efficient back-up services Beneficialy assessment continued public sector sustainable development provided to 100% of the Community Service Delivery reform; Continued political initiatives and in the process communities Survey support for poverty alleviation improve socio economic 60% of population getting and willingness of key services and opportunities services from the constructed stakeholders, including facilities donors, to support the 80% of communities satisfied Govennment's strategy. by the available services - 31 - ieradi $25,000 NCB First five contracts 2. Public Works <$50,000 Community Participation, Post Review (sub-project and Minor Works value) procurement (three quotations) Post Review <$25,000 (individual National Shopping First five contracts contracts) >$25,000 NCB - 57 - 3. Equipment and Furniture < $25,000 Shopping, IAPSO Post Review Supplies and Vehicles $25,000 and NCB First five contracts < $100,000 > $100,000 ICB All contracts 4. Consultant Servicesl/ Firms < $50,000 QCBS (CQ and methods None3/ may be used, subject to prior approval from IDA) >$50,000 QCBS All contracts Individuals < $50,000 Bank Guidelines None3/ >$50,000 Bank Guidelines All contracts ICB = International Competitive Bidding NCB = National Competitive Bidding IS = International Shopping NS = National Shopping IAPSO = United Nations Inter-Agency Procurement Office QCBS = Quality and Cost-Based Selection CQ = Consultant Qualifications-Based Selection 1/ All terms of reference for consulting services, including those specified in the project manuals will be subject to IDA's prior review. 2/ Exemption from prior review does not apply to contracts under Force Account. 3/ Exemption from prior review does not apply to consultant contracts in case of single-source selection of firms and individuals, assignments of critical nature, and amendments to contracts raising the original value above the respective thresholds. Overall Risk Assessment HIGH Frequency of procurement supervision missions proposed: One every Six (6) months (includes special procurement supervision for post-review/audits) - 58 - Weaknesses: (i) TASAF Management Unit (TMU) There is no trained procurement staff (Procurement Expert) to coordinate and supervise the procurement activities at TMU office, and to follow-up on all procurement activities in the districts. The TMU, through implementation of the PPF, have acquired some experience in the planning and procurements of small contract values (mainly procurement of goods through shopping, and selection of short-term consultants). (ii) Procurement Manual No adequate procurement manual exists: TASAF had prepared the first draft document which was reviewed by the appraisal mission. The document was found to be inadequately prepared. The major weakness noted include the following : the manual did not (i) articulate the public procurement procedures and IDA Guidelines; (ii) categorically indicate procurement methods, approval methods, major procurement steps such as advertisement, tender submission and opening, etc.; (iii) prescribe any procurement procedures as regards procurement of goods, works, and selection of consultants; (iv) specify or make reference to Community Based Procurement; and (v) seem to have any convergence with the TASAF Operational Manual. (ii) Districts Procurement responsibilities fragmented in different District Council Departments. Recommendations 1. TASAF to finalize the Procurement Handbook at least before project effectiveness. The Procurement Handbook should: (i) articulate the public procurement procedures and IDA Guidelines; (ii) categorically indicate procurement methods, approval methods, major procurement steps such as advertisement, tender submission and opening, etc.; (iii) prescribe procurement procedures as regards procurement of goods, works, and selection of consultants; (iv) specify or refer to Community Based Procurement; and (v) be prepared in the context of the TASAF Operational Manual. 2. TMU to recruit the Procurement Expert to head the procurement unit prior to project effectiveness. The Procurement Expert will report directly to the Director of Finance subject to review after the first six months. 3. Each District Council should assign one Supplier Officer and Storekeeper Assistant to assist the TDO on TASAF procurements. In addition, each District Council should set aside a room to store tools and materials designed for TASAF's PWP activities. Tools procured by districts for the first PWP sub-project will probably be used for the subsequent sub-projects until they become unusable. 4. TASAF, in collaboration with IDA, to organize a 2-3 day workshop on procurement familiarization exclusively for district personnel (Secretary to Tender Board--Treasurer; TDO; Supplies Officer; and Storekeeper), and TMU, who will deal with TASAF procurements. This workshop should be conducted prior to or at the time of launching the project. - 59 - Disbursement Allocation of credit proceeds (Table C) The proposed allocation of proceeds is shown in Table 6 C. Disbursement will be made directly to the local bank accounts opened in the name of the sub-project by the Community Project Committee (CPC) or Implementing Agencies. This procedure would allow a decentralized approach combined with monitored autonomy in the management and implementation of sub-projects. Disbursement will be made upon receipt by TASAF of the following documents: * a summary appraisal report with recommendation/approval signed by the DSC or NSC; * details of the bank account to which the funds must be transferred; * documentary evidence of cash deposit by community into a bank account; * a procurement plan for the sub-project. Upon such conditions being fulfilled, TASAF will transfer the project funds to the respective communities in three installments of 30%, 40% and 30% of total project costs, respectively. The second and third installments will be transferred upon TASAF receiving: * a statement of expenditures of all purchases made by the IA; * a bank statement for the sub-project which reconciles these expenditures; * a brief report (format to be prepared) on planned and actual progress; and - the procurement plan for the next phase. The second installment will only be paid after the community has accounted for at least 70% of the first installment and the third installment will only be disbursed if 70% of the second installment and 100% of the first installment has been accounted for. Before the third installment is disbursed, a re-assessment of the remaining requirements will be undertaken by the TASAF District Officer in collaboration with the implementing agency to arrive at a revised budget for the completion of the project. Originals of the purchase order, payment voucher and expenditure documentation will be kept in the project file by the CPC. Copies of the purchase order, payment voucher, and expenditure documentation will be submitted to TASAF. With regard to the Public Works Project sub-projects, the TASAF District Accountant will open a project local bank account. The disbursement to the sub-project will be in three tranches: 30%, 40% and 30%. Release of the subsequent tranches will be made on 70% justification of the previous tranche. The TASAF District Accountant, under the supervision of the District Executive Director and the sector officer responsible, e.g. from the Ministry of Works for roads, will be responsible for disbursing the tranches. Disbursements for Public Works sub-projects will be made on receipt of evidence of direct transfers to the District Council Accounts and evidence here will constitute a Bank transfer instruction to the respective Bank account of the District Council. The Tanzania Social Action Fund (TASAF) is an integral part of GOT's decentralization program. Its unique design feature is that it utilizes fully funded local government institutions and staff. Under the Local Government Reform Program, the district is the focal point for all development interventions and has the authority to allocate resources within its jurisdiction. Accordingly, resources for community level interventions will be channeled via the districts. Since TASAF funding complements district development programs that are part of the district development plans, districts have undertaken to co-finance the sub-projects from their annual budgetary allocations. The demonstrated level of co-financing (this ranged - 60 - between 8% and 10% in the pilot areas) obviates the need for GOT to be obligated to put up counterpart funds. The commitment to co-finance sub-projects has been formalized through a Memorandum of Understanding that the districts will sign with the TMU. The MOU articulates and details the local authorities involvement and responsibilities throughout the TASAF sub-project cycle. This undertaking reaffirms TASAF's transparency and accountability principles as well as guarantees quality, cost effectiveness and sustainability of the assets created. The autonomous nature of TASAF eliminates any major role for the central government except as exercised through the broad based National Steering Committee whose function is to provide policy guidelines, approve annual workplans and financial transfers to districts, and monitor and evaluate overall project implementation and impact. Central-level GOT contribution would therefore include the funding of the NSC members, the provision of national office space and technical guidance from the desk officers of the different ministries as provided through routine supervision of the district level technical staff. In addition, GOT funding of other organs of government such as regional staff and functionaries, coupled with indirect district financing of the District Steering Committees (DSC) District Management Teams (DMT), village and ward executives (all of whom will undertake significant appraisal and supervision of sub-projects) is estimated at between USD $500-800,000 per annum which is adequate to cover the indirect tax element of TASAF. Table C: Allocation of Credit Proceeds ~Ex ditur cgory Amount in US$im Wfln Fg-V -.t. Community Sub-Projects 30.78 95% of amounts paid by TASAF MU Public Works 12.31 95% of amounts paid by TASAF MU Equipment, furmiture, supplies and 2.63 100% of foreign expenditures and 90 % Vehicles of local expenditures Consultant Services, Training, 4.14 100% Workshops, Studies and Audits Operating Costs 4.14 90% of Local expenditure Refunding of Project Preparation 1.20 Amount due pursuant to DCA Advance Unallocated 4.80 Total Project Costs 60.00 Total 60.00 Use of statements of expenditures (SOEs): All applications to withdraw proceeds from the credit will be fully documented, except for: (i) expenditures of contracts with an estimated value of US$ 100,000 each or less for civil works; (ii) US$ 100,000 or less for goods, consulting firms, training, workshops and studies; and (iii) US$50,000 or less for individual consultants and incremental operating costs, which may be claimed on the basis of certified Statements of Expenditure (SOEs). Documentation supporting expenditures claimed against SOEs will be retained by the TMU and will be available for review when requested by IDA supervision missions and project auditors. All disbursements are subject to the conditions of the Development Credit Agreement and the procedures defined in the Disbursement Letter. - 61 - Special account: To facilitate disbursements of eligible expenditures for works, goods and services, the Government will open a special account in a commercial bank to cover part of IDA's share of eligible expenditures to be managed and administered by the TMU. Authorized allocation of the special account would be US$ 1,000,000 covering an estimated 4 months of eligible expenditures financed by IDA. The TMU will be responsible for submitting monthly replenishment applications with appropriate supporting documents for expenditures. To the extent possible, all of IDA's share of expenditures should be paid through the special account. As funds get utilized both at TASAF-HQ/District level and community level, the reporting of the funds utilized as per each sub-project/activity of project category together of bank reconciliation will be done on a monthly basis to allow the Project Accountant at TMU to submit a withdrawal application to IDA for replenishment of funds to the IDA Special Account. In cases where the mode of disbursement is based on PMR, TASAF will be required within 45 days after the end of the quarter to submit to IDA the withdrawal application and the PMRs together with the bank reconciliation; and a six-month cash forecast. ( Refer LACI implementation Handbook, DCA, and Disbursement letteo. For all expenditure claimed under SOE procedure or PMR, all supporting documents will be retained at the respective project implementing agencies for intemal and external audit review including IDA mission review as agreed. - 62 - Annex 7: Project Processing Schedule TANZANIA: SOCIAL ACTION FUND PROJECT Time taken to prepare the project (months) 12 First Bank mission (identification) 02/09/99 02/09/99 Appraisal mission departure 04/17/2000 04/17/2000 Negotiations 06/19/2000 06/19/2000 Planned Date of Effectiveness 12/01/2000 12/01/2000 Prepared by: Tanzania Social Action Fund-Management Unit, Government of Tanzania Preparation assistance: PPF No. Q157-0 TA = approx. $1,200,000 Bank staff who worked on the project included: Name Specialityj:- Norbert Mugwagwa Pr. Operations Officer/Team Leader Prasad C. Mohan Co-Task Manager and Communications Specialist Emmanuel Malangalila Co-Task Manager and Program Officer, Social Sectors David Bruns Economist V.S. Krishnakumar Sr. Procurement Specialist Pascal Tegwa Procurement Analyst Ghazali Raheem Information Tech. Analyst Parmesh Shah Coordinator, Participation Yisgedullish Amde Sr. Operations Analyst Samantha De Silva Operations Officer Florian Fichtl Operations Officer Said Al Habsy Sr. Counsel Timothy Marchant Pr. Statistician Jean-Roger Mercier Pr. Environmental Specialist Susan Opper Consultant Pascale Dubois Counsel Mercy Sabai Financial Management Specialist Steen Jorgensen Peer Reviewer Laura Frigenti Peer Reviewer Luisa Ferreira Peer Reviewer Jan Weetjens Rural Sociologist Elizabeth Sakaya Disbursement Assistant Rest Lasway Education Specialist Victoria Fofanah Program Assistant Evelyne Kapya Secretary, Social Sector - 63 - Gladys Minja Secretary, Social Sector Rosalie Ferrao External Affairs Assistant - 64 - Annex 8: Documents in the Project File* TANZANIA: SOCIAL ACTION FUND PROJECT A. Project Implementation Plan 1. Operational Manual and Handbooks for Tanzania Social Action Fund B. Bank Staff Assessments 1. Economic Analysis 2 Aide Memoire - Identification Mission - February 17, 1999 3. Aide Memoire - Pre-appraisal Mission - April 28, 1999 4. Aide Memoire and Annexes- Appraisal Mission - April 16, 2000 5. Financial Management Capacity Assessment and Action Plan 6. Procurement Capacity Assessment and Action Plan C. Other 1. Tanzania's Growth Potential: A background paper for the Country's 1995 Economic Memorandum (CEM) by Haji Semboja and Samuel Wangwe, May 1995, Economic and Social Research Foundation (ESRP) Discussion Paper Series No. 004. 2. Levels and Determinants of Expenditures on the Treatment of HIV/AIDS in Tanzania by Paula Tibandebage, Samuel M. Wangwe, Phare Mujinja and Richard Bail, ESRF Discussion paper No. 13. 3. Managing Tanzania's Economy in Transition to Sustained Development by Benno J. Ndulu and Samuel M.Wangwe, ESRF Discussion Paper No. 14. 4. The Management of Foreign Aid in Tanzania by Samuel M. Wangwe, ESRF Discussion paper No. 15. 5. Operational Manual, August 1999. 6. National AIDS Control Programme H1V/AIDS/STD Surveillance, Report No. 12, December 1997, Ministry of Health, Tanzania Mainland. 7. Strategic Framework for the Third Medium Term Plan (MTP-III) for Prevention and Control of HIV/AIDS/STDS 1998-2002, National AIDS Control program, Ministry of Health, Tanzania (Mainland), Dar es Salaam, July 1998. 8. Report of Bagamoyo Workshop, 1999. 9. Environmental Analysis of TASAF-funded subprojects. 10. Memorandum of Understanding between District Executive Director and TASAF. *Including electronic files - 65 - Annex 9: Statement of Loans and Credits TANZANIA: SOCIAL ACTION FUND PROJECT Difference between expected and actual Ortginal Amount in US$ Millions disbursements Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd TZ-PE-47761 1999 GOVT TAX ADMINISTRATION 0.00 40.00 0.00 38.27 0.00 0.00 TZ-PE-2789 1998 GOVT HUMAN RESOURCE DEV 1 0.00 20.90 0.00 14.68 1.50 0.00 TZ-PE-2804 1998 GOVT AGRIC RESEARCH 0.00 21.80 0.00 18.94 0.63 0.00 TZ-PE-2753 1997 GOVERNMENT NATEXTPROJPH.II 0.00 31.10 000 18.82 7.42 0.00 TZ-PE-2821 1997 GOVT OF TANZANIA SAC I 0.00 131.50 0.00 24.15 24.98 27.46 TZ-PE-38570 1997 GOVT RIVER BASIN MGM.SMAL 0.00 26.30 0.00 17.41 4.39 0.00 TZ-PE-46837 1997 GOVERNMENT LAKE VICTORIA ENV. 0.00 10.10 0.00 6.98 1.57 0.00 TZ-PE-2758 1996 GOT URBAN SECTOR REHAB 0.00 105.00 0.00 76.50 16.21 0.00 TZ-PE-2812 1995 MINISTRY OF ENERGY MINERAL SECTOR DEV. 0.00 12.50 000 2.97 1.41 0.00 TZ-PE-2770 1994 GOVTOFTANZANIA ROADSII 0.00 170.20 0.00 146.15 142.95 0.00 TZ-PE-2801 1994 GOVT OFTANZANIA ASMP 0.00 24.50 2.48 5.87 5.70 0.00 TZ-PE-2756 1993 GOVT. POWER VI 0.00 20000 0.00 37.48 15.32 0.00 TZ-PE-2780 1993 GOVT TELECOM III 0.00 74.45 0.00 15.57 16.15 16.07 TZ-PE-2788 1993 PRIV. PUB. SECT. MGT 0.00 34.90 0.00 2.73 0.66 0.00 TZ-PE-2817 1993 FIN&LEGALMGT PROJ 0.00 20.00 0.68 3.87 4.07 2.58 TZ-PE-2757 1991 RAILWAYS RESTRUCTURI 0.00 76.00 1097 18 33 25.43 -1 80 TZ-PE-2786 1991 PETROL REHAB 000 44.00 0.00 14.77 12.60 12.29 Total: 0.00 1,043.25 14.13 463.49 280.99 56.60 - 66 - TANZANIA STATEMENT OF IFC's Held and Disbursed Portfolio 3 1-Jul-1999 In Millions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1989 TASCO 0.88 0.00 0.00 0.00 0.88 0.00 0.00 0.00 1991 Mufindi Tea 0.43 0.00 0.00 0.00 0.43 0.00 0.00 0.00 1991/97 TPS Zanzibar 1.01 0.10 0.19 0.00 1.01 0.10 0.19 0.00 1993 TPS (Tanzania) 7.00 1.04 0.87 0.00 7.00 1.04 0.87 0.00 1993/96 AEF Tanganyika 0.19 0.00 0.00 0.00 0.19 0.00 0.00 0.00 1994 AEF Moshi Lthr 0.00 0.00 0.25 0.00 0.00 0.00 0.19 0.00 1994 AEF Nomad Safari 0.05 0.00 0.00 0.00 0.05 0.00 0.00 0.00 1994 AEF Raffia Bags 0.33 0.00 0.00 0.00 0.33 0.00 0.00 0.00 1994 Eurafrican Bank 0.00 0.00 0.73 0.00 0.00 0.00 0.73 0.00 1994 Tanzania Brewery 0.00 0.00 6.00 0.00 0.00 0.00 6.00 0.00 1994 ULC Leasing 1.88 0.00 0.95 0.00 1.88 0.00 0.76 0.00 1995 AEF MIC Tanzania 0.30 0.00 0.00 0.00 0.30 0.00 0.00 0.00 1995 AEF Tanbreed 0.70 0.00 0.00 0.00 0.70 0.00 0.00 0.00 1996 AEF Contiflora 0.35 0.00 0.00 0.00 0.35 0.00 0.00 0.00 1996 AEF Milcafe 0.21 0.00 0.00 0.00 0.21 0.00 0.00 0.00 1996 AEF Zainab Grain 0.80 0.00 0.00 0.00 0.80 0.00 0.00 0.00 1996 iHP 1.41 0.00 0.60 0.00 1.41 0.00 0.60 0.00 1997 AEF Aquva Ginner 0.68 0.00 0.00 0.00 0.68 0.00 0.00 0.00 1997 AEF Hort. Farms 0.70 0.00 0.00 0.00 0.70 0.00 0.00 0.00 1997 DATEL 2.25 0.00 0.51 0.00 1.35 0.00 0.48 0.00 1997/99 AEF Pallsons 0.78 0.00 0.00 0.00 0.78 0.00 0.00 0.00 1998 AEF Blue Bay 1.50 0.00 0.00 0.00 0.50 0.00 0.00 0.00 1998 AEF Drop Zanziba 0.32 0.00 0.00 0.00 0.32 0.00 0.00 0.00 1998 AEF Maji Masafi 1.00 0.00 0.00 0.00 1.00 0.00 0.00 0.00 1998 Tanzania Jubilee 0.00 0.00 0.29 0.00 0.00 0.00 0.29 0.00 TotalPortfolio: 22.77 1.14 10.39 0.00 20.87 1.14 10.11 0.00 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic Total Pending Commitment: 0.00 0.00 0.00 0.00 - 67 - Annex 10: Country at a Glance TANZANIA: SOCIAL ACTION FUND PROJECT Sub- 9/22/99 POVERTY and SOCIAL Saharan Low- Tanzania Africa income Development dlamond' 1998 Poosulation mid-vear(millionsl 32 1 628 3515 Life expectancy GNP Der canita (Atlas method. US$) 210 480 520 GNP (Atlas method US$ billions) R 7 3n4 1 R44 Averane annual arowth. 1992-98 Poeulation (%) 2 8 2 6 1.7 Labor force (%i 1 9 2 6 1 9 GNP Gross Most recent estimate ilatest vear available. 1992-981 capita prnirynt Povertv 1% of ooDulation below national Dovertv line) Urban ooDulation (% of total DoDulationl 26 33 31 Life exnectancv at birth (vears) 48 51 63 Infant mortalitv toer 1.000 live births) 85 91 69 Child malniutrition f% /of children under 5) 31 Access to safe water Access to safe water 1% of DoDulation) 49 47 74 Illiteracv (% of ooDulation ane 15+1 28 42 32 Gross orimarv enrollment (% of school-aae DoDulatiDn) 66 77 108 Tanzania Male 67 84 113 Low-income group Female 66 69 103 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1977 1987 1997 1998 Economic ratios' GDP fUS5 billions) 3 8 71 7 9 Gross domestic investmentlGDP 39.8 163 160 Fynnrts nf nnnds and sPrvircs/GnP 107 176 1 R Trade Gross domestic savinos/GDP 20 1 5 4 6 0 Gross national savinoslGDP 16.2 4 3 4 4 T Current acnount halanne./GnP -27 -11 9 -14 1 Interest oavments/GDP 1 2 0 6 0 5 Domestic Investment Total debtlGDP 146 0 101 6 894 Savings \ Total debt service/exDorts 8 3 35.4 120 135 Present value of debtlGDP 75.3 Present value of debtleynorts 405.0 Indebtedness 1977-87 1988-98 1997 1998 1999-03 (averaoe annual arowth) GDP 2.9 4 0 3 4 5 3 Tanzania GNP oer caoita 0.1 1.4 0 2 2 6 Low-income group Exnorts of ooods and services 103 -12.3 -12.8 5 4 STRUCTURE of the ECONOMY 1977 1987 1997 1998 Growth rates of output and Investment (%) (% of GDP) Aariculture 59 2 473 46 3 Industrv 11.9 143 141 1inO Manufacturina 6 8 7 1 6 8 D Services 28.9 384 39 5 10 93 Private consumotion 67.2 84.6 85 2 -20 General oovernment consumotion 127 10.0 88 8GDI e*GDP Imoorts of ooods and services 30.0 285 257 1977-87 1988-98 1997 1998 Growth rates of exports and Imports (%) faveraae annual orowfhl Aoriculture 3 5 31 2 7 so Industrv 2 1 67 6 8 40 Manufacturina 1 7 49 4 9 20 Services 23 34 2 3 Private consumotion 2 8 2 6 2 1 20 93 94 9 General covernment consumotion -5 0 -18 3 -9 8 Gross domestic investment -0 2 -1 1 1 9 40 Imoorts of aoods and services 0 2 -17 7 -15 0 Exports - Imporits Gross national oroduct 3 1 4 2 29 Note: 1998 data are preliminary estimates. Thp diarmnnnd shnw foiur kpv indicatnrs in thp cnintrv (in hnlil orrmonared with its innmPe-ornur, avpranp If data arp missin. thp diAmond will he innomnlptp - 68 - Tanzania PRICES and GOVERNMENT FINANCE 1977 1987 1997 1993 Inflatlon(%) Domestic prices (% change) so Consumer prices 11 6 29.9 16 1 10.4 4D Implicit GDP deflator .. 20.0 15.3 3r Governmentifnance -o ( aofGDP, mnctudes current grants) 0 Current revenue .. 16.1 13.5 12.3 93 94 95 96 97 98 Current budget balance -21 1 0 1.5 GDP deflator -CPI Overall surplus/deficit .. -8.5 -1.6 -2.2 TRADE (US$ millions) 1977 1987 1997 1998 Export and Import levels (US$ mililons) Total exports (fob) 426 794 645 1 600 Coffee .. 147 118 111 Cotton 3 8 9 ,0 Manufactures . 51 102 68 Total imports (cif) .. 1,099 1,388 1,402 Soo Food 8 7 8 0 Fuel and energy . 1 57 1 94 138 Capital goods 86 t 981 Exoort orice Index (1995=1001 92 93 94 95 9c 97 go Imoort orice index (1995=1001 5Exportns *Imports Terms of trade (1995=1001 BALANCE of PAYMENTS (US$ mitlions) 1977 1987 1997 199l Current account balance to GDP ratio (%) Exports of goods and services 645 442 1,274 1,125 0 Imports o goods and services811 1277 2040 2118 Resource baiance -165 -834 -767 -993 Net income 1 Net current transfers1126 3 1 Current account balance -70 -102 -842 -1,120 20 Financing items (net) 230 97 1,114 1,120 25 Changes in net reserves -160 5 -272 -t :0 Memo: Reserves includinc aold (USS militons) 460 502 Conversion rate (DEC. Iocal/USS) 51 2 599.5 637 8 EXTERNAL DEBT and RESOURCE FLOWS 1977 1987 1997 1998 (US$ millions) ComposItlon of total debt, 1 998 (USs millions) Total debt outstanding and disbursed 3,527 5,508 7,177 7,077 IBRD 113 325 34 34 A:34 IDA 145 801 2,306 2,306 G. 837 Total debt service 55 157 1 58 1 58 F. 289 IBRD 9 47 24 24 IDA 4 10 32 32 Composition of net resource flows Official grants 135 481 434 Officiai creditors 189 140 189 1189 Prvate creditors 30 38 -15 -15 E: 2,866 246 Foreign direct investment 0 -1 158 - Portfolio equity 0 0 0 D 499 World Bank program Commitments 102 23 150 150 A-IBRD E -Bilateral Disbursements 63 95 183 183 B - IDA 0- Other multilateral F -Priate Principal repayments 4 28 36 36 C-IMF G-Short-term Net flows 59 S7 147 147 Interest payments 9 29 20 20 Net transfers 50 38 127 127 Development Economics 9/22199 - 69 - ADDITIONAL ANNEXES Annex 11 Summary of Project Workplan 00 101 02 03 04 05 ID O Task Name Duration Finish 01 Q2 Q3 Q4 Q1 Q2 Q31 04 1 02 Q3 Q4 0Q 02 Q3 Q4 01 02 Q3 04 01 Q2 1 TASAF Plan of Action 1354 days 6/11/05 2 TASAF MU ACTIVITIES 169 days 11/1/00 3 Advertise 4 days 3/29100 IV 8 Recruit 30 days 5/4/00 W 15 Procure 159 days 11/1100 21 Move 2 days 3/27100 ' 23 Launch 4 days 11/1100 . 25 OUTREACH and DISSEMINATION 1131 days 11/1/04 : 26 Design 49 days 9/7/00 31 Pre-Test 24 days 10/11/00 34 Produce 123 days 4/2/01 42 Disseminate 41 days 5/29101 . 1 49 Evaluate 36 days 7/18/01 0 O . 56 Train 858 days 11/1104 . 63 COMMUNITY DEVELOPMENT INITIATIVE 1108 days 11/1104 64 Needs Assesment 133 days 2/5/01 7n Preparation 60 days 4/30101 . w. 75 Appraisal 21 days 5/29101 . 79 Launch 14 days 6/18/01 . 82 Implementation 85 days 10/15/01 93 Completion 0 days 11/1104 .. 95 PUBLIC WORKS PROGRAMME ACTIVITIES 1086 days 11/1104 ' 96 Needs Assesment 145 days 3/23101 103 Appraisal 33 days 5/9/01 . 108 Implementation 112 days 10/12/01 Task E Summary Rolled Up Progress Project: POAALLGRMAY25 Split Rolled Up Task E .- .:.| External Tasks Date: 6/20/00 Progress Rolled Up Split Project Summary _ Milestone Rolled Up Milestone 0 Page 1 00 01 02 03 104 105 ID 0 Task Name Duration I Finish Q1Q23Q4Q1Q2Q3IQ4|Q1|Q2Q31Q4Q1Q|Q2 Q3lQ4Q1Q|Q20310Q4IQ1|Q2 116 Completion 796 days 11/1104 119 MIS COORDINATION ACTIVITIES 1202 days 1111/04 120 System Analysis 9 days 4/5600 y 134 Develop computerized outputs 4 days 3/29/00 139 Systems Procurement and Customization 12 days 4/10/00 * 145 Develop Training Plan 14 days 4/12100 l 154 Prepare bidding documents/Request Prepara 4 days 3/29/00 . 164 Test Equipment 66 days 6/23/00 172 System Operational 1202 days 11/1/04 _ ' 176 MONITORING AND EVALUATION 218 days 5/21/01 177 Finalize key performance indicators 16 days 8/10100 185 Project completion report 142 days 2/26101 193 Annual CSDS report 40 days 4/23101 1 197 Evaluate 20 days 6/21101 1 199 Project Completion 0 days 5121101 i* 521 201 Project Closing 0 days 611/05 Task [ Summary _ Rolled Up Progress Project: POAALLGRMAY25 Split Rolled Up Task | Z.Z:I.Z -| External Tasks Date: 6/20/00 Progress Rolled Up Split Project Summary Milestone Rolled Up Milestone O Page 2 Annex 12: Community Needs Assessment TANZANIA: SOCIAL ACTION FUND PROJECT TASAF Goal The primary beneficiaries under this project are the poor households in the poorest regions in rural and peri-urban areas. In addition to directly seeking inputs from communities through field visits, project preparation involved undertaking a community needs, capacity and institutional assessment with communities in two regions using participatory methods. Objectives To obtain community perceptions regarding: (a) Community capacity to articulate demand, implement activities relating to the demand and manage community level activities if funded; (b) Community organization and its potential contribution to better identify, plan, implement, and manage community development interventions in a sustainable manner; (c) Community perceptions of extemal institutions and whether or not these institutions contribute to the development of the communities; (d) Willingness to contribute to own development and thereby meaningfully participate, by the communities, and the size of that contribution; (e) Nature of community priorities; and (f) The extent to which communities deal with vulnerability among them - wellbeing and wealth ranking. Findings and Recommendations Community Capacity The community's local technical skills, are as follows: Masons, iron smiths, carpenters, Village house builders Traditional birth attendants Traditional healers Bicycle repairs, mechanics Log servers Radio repairs However, there is weak capacity with respect to managerial skills to oversee finance, accounting and store management. - 72 - Community Organization Customary institutions and networks exist at the community level, which complement and work hand-in-hand with formal structures. These institutions offer different socio-economic, traditional and non-traditional opportunities' to various segments of the society, e.g. labor mobilization, musical performance, traditional celebrations, investment and credit societies and schemes. The various organizational units provide a variety of entry points, which TASAF could utilize. Government through the district councils has introduced modem forms of village organization, which included the village assembly, as well as the variety of village level committees to handle specific sectoral activities such as water, health, education, agriculture, etc. What is not obviously visible is the form of organization that addresses the vulnerable groups within the communities. Internal traditional coping mechanisms enable the vulnerable, e.g. the landless, the disabled, the orphans, the widows and the elders, to be catered for by their relatives. However, with the increased severity of the HIV/AIDS pandemic, these coping mechanisms are breaking down and showing signs of inability to provide for the many orphans. Community Perceptions of External Institutions The communities were able to identify and list the existing external institutions that they interact with, e.g. district councils, village development committees, NGOs, churches, mosques, party structures, etc. After establishing criteria for assessing how they perform, the majority of the institutions were rated as not performing to the satisfaction of the purported beneficiary communities. Even the government institutions that deliver essential public services such as education, health and local administration ranked very poorly. The communities indicated their concern with the quality of the services delivered by the support institutions. The two criteria which the community used for evaluating external institutions included the speed of response and accountability and feedback mechanisms. TASAF design and monitoring systems would ensure that these aspects are monitored on a regular basis and that qualitative assessments of TASAF performance are carried out with the communities in a participatory manner. TASAF also envisages investing in the capacity building of ward and District level govemment staff to be more responsive to the needs of the community. Willingness to Contribute to Own Development Cost sharing in community activities is a well-understood concept and willingness to contribute exists provided that: (i) the intervention towards which the contribution is required is identified as a priority need by the community after community consultations show that without it a sub- optimal situation would arise (that they would be severely worse-off); (ii) the communities would participate in the resource identification, plan the whole intervention and define the role of their resource contribution; and (iii) the community would map out the way to monitor progress of implementation of the activity. Full ownership and control of the full sub-project cycle by the communities enhances their willingness to contribute. The findings show that communities are Traditional local organizations include: Ireka, ngoi, ikhanda, iman and kurikha for Uhamaka, Mkumi, likamba, ligango Chipelekani, dodndoa and Chama in Lwelu; and, chipelegani likampela, chingalangwanja and ngongoti in Makukwe. Economic groups were found in all villages which include women's groups implementing a goat project (Mpetu and Makukwe). aware that they jointly own natural resources and have the responsibility to manage them to their mutual benefit, e.g. water, land, forests, etc. Vulnerable groups The assessment identified the characteristics of vulnerable groups. These included landless, disabled, orphans, widows with many children, HIV/AIDS affected and elders without support. Many specific activities to deal with support infrastructure for these groups were identified in the assessment. The vulnerable groups in the community stressed the need for targeting specific interventions under TASAF. It is envisaged that the village level micro-planning process methodology would specifically facilitate priority identification by the vulnerable groups and that these activities would be incorporated in the activities funded by TASAF. Conclusions and Next Steps (a) Communities are willing to use their resource base to improve their socio-economic conditions; (b) Any development intervention at community level should include capacity building at village, ward and district levels as an integral part of that effort; (c) Direct support to vulnerable groups should be considered as part of development interventions at community level; and (d) Equal access to information is an integral part of development and therefore information dissemination should take into account how the poor communities can be reached. Issue: To what extent can the participatory methodology used by the TA/Investigating Team be harmonized for use throughout Tanzania to ensure that communities are consulted as an integral part of the planning process. Additional Annexes Annex 13 - Letter of Sector Po-icy THE UNIT RPUBLIC OF tANZANA MINISTRY OF FE;NCE Tulogmml "TRiA3rsuy", DAa 3s SALAM, P.O. Bx. 911I, Tel., 11117416, Fax: UOM26, Tolexo 41329. V . INt SALAA. (AU Ofcial nwounications should be uddrssdtotbe 'rransntcSCtey to r rn the Trnsury and NOT to indiVidlaa7s). Tu reply please quote: TYC/BI40155/02 21" June,2000 Mr. James W. Adams, Country Director for Tanzania and Uganda, The World Bank Country Office, DAR ES SALAAM. Dear Mr. Adams, Re, THE PROPOSED TANZANIA SOCIAL ACTION FUND (TASAF) - POLICY LETTER I1 I am writing to request, on behalf of the Government of the United Republic of Tanzania, a credit of US$ 60 million equivalent, from the Intemational Development Association (IDA) to finance various components of the proposed Tanzania Social Action Fund Project. 2. The government has decided to make ststainable poverty reduction its central objective in the absence of a responsive institutional framework for comnmunity development. This is well articulated in the National Poverty Eradication Strategy (NPES). The National Poverty Eradication Strategy is based on a participatory approach and promotes movement away from the traditional central governmnent approach in addressing poverty issues. TASAF Objectives 3. The Objectives of the project are to enhance and sustain the provision and use of resource endowments by Beneficiaries which will - 75 - contribute to Poverty Reduction through: (i) the improvement of socio-econornic in tucture and basic social and economic services; (ii) the increase in capacity and skills among rural and peri-urban communities; and (iii) the creation of temporary safety-net programmes for the poorest and most vulnerable sections of the conmmunities. In order to facilitate the collection of data on project perfornmance and impact as well as monitor changes to national poverty levels, TASAF will fund a sub-component to be implemented in conjunction with the Bureau of Statistics and the Vice President's Office. 4. As mentioned in our Letter of Development Policy reference number TYC/I/210/2/01 dated 8h May, 2000, the government will continue to implement targets related to macroeconomic reforms, fiscal performance and social sector resource allocation in the context of the ongoing Structural Adjustment Programme and Poverty Reduction and Growth Facility (PRGF) arrangement sponsored by IvI. The aim is to address poverty pervasiveness which continues to undermine the sustenance of the very reforms we are implementing. We are embarking on a more aggressive poverty reduction strategy, which emphasises both higher growth and more effective public service delivery. 5. The proposed TASAF is expected to result in improved social and economic infrastructure, and service delivery, provide employment opportunities for poor households, target vulnerable groups in both rural and urban areas including unemployed youth and address specific issues such as HIV/AIDS. The govemment will ensure that in the process. the project will provide opportunities for communities to participate and take charge of key decision making processes at the local level, thereby complementing the Government's ongoing administrative and local government reforms. This is evidenced clearly in the Poverty Reduction Strategy Paper (PRSP) stakeholders workshops currently underway in the country which are drawing participants from the grassroots. TASAF and RIV/AI)S 6. Tanzania understands that HIV/AIDS epidemic is a serious multi- sectoral development problem in the country. HIV/AIDS particularly targets the poor. The epidemic has overwhelmingly hit the world's poorest countries and those with the greatest disparities of income. Although people at all income levels are vulnerable to HIV, the poor have suffered the most economically, as the costs of care, foregone income and finerals are substantial. The poor also have less access to basic health care. The epidemic has been found to exacerbate both income inequality and absolute poverty. It is therefore government's commitment to continue addressing the HIV/AIDS epidemic during the implementation of TASAP. Special attention will be given to the victims of the epidemic i.e. the orphans who have lost both parents by creation of temporary safety- net programmes for the poorest and most vulnerable sections of the communities and this is consistent with the objectives of TASAF. TASAF Community Focus and Decentralization 7. It is the Government's clear intention to ensure that TASAF will allocate funds for programmes targeted at the poor, promotes development by involving communities in project selection, preparation, implementation and encourage NGO's, private institutions and Government agencies to provide facilitation where needed. The fund will provide quick disbursing and community responsive mechanisms to channel funds directly to projects identified and managed by the communities themselves. The aim is to empower communities; ensure ownership and promote real endogenous and sustainable development. The participatory n4ture of TASAP will facilitate and complement the process of decentralisation, which will empower communities to take charge of their development process. The government is conumitted to adopt and introduce the broad based community development strategy thfrough the on-going Local Govermment Reform Programme. By makin&TASAF an integral pat of the Local Government Reform Prograrn, GOT will minimize duplication of efforts at community level and thereby ensure that maximum gains and mutual benefits go to the needy. TASAF and Direct Financing 8. The Government is committed to ensure that TASAF will operate as a quick disbursing and direct financing mechanism. The government will provide enabling enviroznent through ensuring that there is less bureaucracy in the process of implementation and financing the agreed activities. It will be responsive to community needs articulated by the commnunity through projects identified, managed and implemented by the community. The comTnunity would participate from project concept, to project preparation implementation, monitoring and evaluation. Community commitment will be reflected by demonstration of community willingness to contribute to the project in the form of cash, materials and labour. TASAF and Governance 9. Good Governance is a key determinant of economic growth and a precondition for sustainable social development, The government will undertake all necessary measures to strengthen economic govenance and enhance the effectiveness, efficiency and quality of service delivery during the implementation of TASAF in order to provide a solid foundation for sustainable poverty reduction and growth. The proposed measures include actions in the following areas (a) improved management of public finances including social funds; (b) anti-corruption measures and enhanced financial accountability in TASAF financial management; and (c) increased efficiency and effectiveness in the delivery of public services. In addition, the government will continue to emphasise a rasparent and consultative approach to project development which augurs well for a social fund that depends on the participation of all key stakeholders. 10. Finally, the goverunent will act as a regulator and facilitator of TASAF implementation to ensure that the components of the projects i.e. (i) Community Development Initiatives; (ii) Public Works Programme; and (iii) Institutional Development; are implemented in the most rational way, with maximum participation of the target groups of the poor population. In addition the govemment is committed to strengthening and accelerating the imnplementation processes of TASAF. The Government views the partnership with IDA, particularly through the.proposed Tanzania Social Action Fund, as a continuation of your institution's support in these efforts. Yours sincerely, / ), G.S. Mgonja For PERMANENT SECRETARY ( 2' _.__ 34- 36 38' Lk ctoria 7- f \ ukoba * n. RWANDA KAG KENY o tron AFRtCA A~~~~~~~~~ BURUNDIv SHNYANGA Manongo M onyora KlLMi NJARO 4" t X n R , OMA t/KX/,w 9 \ / \ ) X~~~~~SINGIDA 3\X Lake (ARese INDtAN The bou'esre cobr's. Mbey reP{//t& otenr inftonms ond sown 9sX- or1 of o wy teMtof 6oundctnpeL TAN8Z^|lANIAW /; ;/ UdQi -.- - MAIN POADS t)REGON CAPITAS , < r RAILROADS NATIONAL CAPITAL RA _ 1e 8 RIYERS RECION BOUNDARIES fSne MWR -INTERNATIONAL BOUNDARIES RUVUMA - 9S a C 0 100 200 y t3 30. 1amOMElER5 3< =_r 8~ 3W O BIQU E