TheWorldBank FOROFFICIAL USEONLY Report No: 31828-HO PROJECTAPPRAISALDOCUMENT ONA PROPOSEDCREDIT INTHEAMOUNT OFSDR 13.3 MILLION (US$20.0 MILLIONEQUIVALENT) TO THE REPUBLICOFHONDURAS FOR A NUTRITIONAND SOCIALPROTECTIONPROJECT May 17,2005 HumanDevelopment Sector Management Unit Central America Country Management Unit Latin America and the Caribbean Region This document has a restricteddistribution and may be usedby recipients only in the performanceof their official duties. Its contents may not be otherwise disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate EffectiveJanuary 31,2005) Currency Unit = Lempira (L) 1Lempira = US$O.OS US$l.OO = L 18.70 FISCAL YEAR ABBREVIATIONS AND ACRONYMS '4ECI SpanishAgency for InternationalCooperation AIN-C Community BasedNutrition (AtencMn Integral a la Niiiez en la Comunidad) AMHON Honduran Association of Municipalities APL Adjustable ProgramLoan BPHS Basic Packageof Health Services CAS Country Assistance Strategy CADERH Advisor Center for Human ResourcesDevelopment CECAP Training Center CESAMO SOHHealthCenter CESAR SOH HealthPost CFAA Country Financial Accountability Assessment CPIA Country Policy and InstitutionalAssessment COHEP HonduranPrivate Sector Confederation CPAR Country ProcurementAssessment Report DCA Development Credit Agreement UDECOFISS Unitfor CoverageExtension andFinanceof Health ServicesofSOH DOE Department of Employment of SLSS EDUCATODOS Education for All alternative formal educationprogram GNI Gross Net Income FM Financial Management FMR Financial ManagementReport FY Fiscal Year GDP Gross Domestic Product GDI GrossDomestic Income GNI GrossNationalIncome GOH Government of Honduras GTZ GermanAgency for Technical Cooperation HDI Human Development Index HIPC Highly IndebtedPoor Countries HOGASA Household ManagedBasic Health Care Program IDA International Development Association IDB Inter-American Development Bank MNFA Honduran Institute for Children andFamilies L O International Labor Organization LMF International Monetary Fund INE National Statistics Institute INFOP Professional Training Institute IPDP Indigenous PeoplesDevelopment Plan KAP Knowledge, attitudes and practices LAC Latin America and the CaribbeanRegion LCS Least-Cost Selection MDC MetropolitanTegucigalpa andComayaguela MDG MillenniumDevelopment Goal MIS ManagementInformation System M&E Monitoring and Evaluation NGO Non Governmental Organization OAS The Organization of American States FOROFFICIAL USEONLY OEI Ibero-American States Organization for Education PCU Project Coordination Unit PHC Primary Health Care PHRD JapanPolicy andHumanResourceDevelopment Fund PAHO The PanAmerican Health Organization PME SchoolLunchProgram PMA World FoodProgram(Program Mundial de Alimento) POA Annual OperatingPlan PRALEBAH Programfor Adult Literacy and Basic Education of Honduras PRAF Family AssistanceProgram (Program deAsignacidn Familiar) PRESS Programfor the Reorganization and Extension of Basic HealthSector Services PROEMPLEO Programfor Employment Promotion (ProgramaPromoci6n a1 Empleo) PROMYPE Programfor Micro, Small andMediumEnterprises PRS PovertyReduction Strategy PRSC PovertyReduction StrategyCredit PRSP Poverty Reduction Strategy Paper PRSP-PR Poverty Reduction Strategy Paperfirst ProgressReport QCBS Quality- and Cost-BasedSelection RPRA Rapid Participatory Rural Appraisal RPUA RapidParticipatory UrbanAppraisal SA SpecialAccount S U F I Honduran GovernmentFinancial Reporting System S I L SectorInvestmentLoan SOE Statementof Expenses SOH Secretariatof Health SOP Secretariatof the Presidency SLSS Secretariatof Labor and Social Security SP Social Protection PCU Project Coordination Unitin SLSS TA Technical Assistance UNAT Technical AssistanceUnitin SOP UPEG Management,Evaluation, and Planning Unitin SOH USAID UnitedStatesAgency for InternationalDevelopment WB World Bank WFP World FoodProgram Vice President: Pamela Cox Country Managermirector: Jane Armitage Country Sector Leader Laura Rawlings Sector Manager: Helena Ribe Task Team Leader: Manuel Salazar .This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. HONDURAS NutritionandSocial ProtectionProject CONTENTS Page A. STRATEGICCONTEXT AND RATIONALE ..................................................... 1 1. Country andsector issues........................................................................................ 1 2. Rationale for Bank involvement ............................................................................. 5 3. Higher levelobjectives to which the project contributes........................................ 6 B . PROJECTDESCRIPTION ..................................................................................... 7 1. Lendinginst~ment ................................................................................................. 7 2. Project development objective and key indicators.................................................. 7 3. Project components................................................................................................. 8 4. Lessonslearned and reflected inthe project design.............................................. 13 5. Alternatives considered and reasonsfor rejection ................................................ 15 C IMPLEMENTATION . .............................................................................................. 17 1.Partnership arrangements.......................................................................................... 17 2. Institutionaland implementation arrangements.................................................... 17 3. Monitoringand evaluation of outcomes/results.................................................... 20 4. Sustainability......................................................................................................... . . . 20 5. Critical risks and possible controversial aspects................................................... 21 6. . Loadcredit conditions andcovenants................................................................... 23 D APPRAISAL SUMMARY . ..................................................................................... 24 1. Economic and financial analyses (Annex 9)......................................................... 24 2. Technical............................................................................................................... 26 3. Fiduciary............................................................................................................... 29 4. Social..................................................................................................................... 30 5. Environment.......................................................................................................... 32 6. Safeguardpolicies ................................................................................................. 32 7. Policy Exceptions andReadiness.......................................................................... 32 Annex 1:Country and Sector Background .................................................................. 33 Annex 2: Major RelatedProjectsFinancedby the Bank and/or other Agencies .....44 Annex 3: Results Framework and Monitoring ............................................................ 46 Annex 4: Detailed Project Description .......................................................................... 50 Annex 5: Project Costs ................................................................................................... 59 Annex 6: Institutionaland Implementation Arrangements ....................................... 61 Annex 7: FinancialManagementand DisbursementArrangements ......................... 71 Annex 8: Procurement .................................................................................................... 77 Annex 9: Economic and FinancialAnalysis ................................................................. 82 Annex 10: Safeguards ..................................................................................................... 90 Annex 11:Project Preparationand Supervision ....................................................... 101 Annex 12: Documentsinthe Project File ................................................................... 102 Annex 13: Statement of Loans and Credits ................................................................ 104 Annex 14: Country at a Glance ................................................................................... 105 Annex 15: Preliminary Results of Evaluation of AIN-C Implementation and Impact 2000-2002 ....................................................................................................................... 107 Annex 16: IBRDMap 33418 ........................................................................................ 111 HONDURAS NUTRITIONAND SOCIAL PROTECTIONPROJECT PROJECTAPPRAISALDOCUMENT LATINAMERICA AND CARIBBEAN LCSHS-DPT May 10,2005 TeamLeader: ManuelSalazar Country Director: Jane Armitage SocialProtection,child nutrition,youth Sector ManagerDirector: HelenaG. Ribe development. ProjectID: PO82242 Environmentalscreeningcategory: Financial IntermediaryAssessment LendingInstrument: Specific InvestmentLoan Safeguardscreeningcategory: Limited impact Project Financing Data [ 1Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other: ForLoans/Credits/Others: TotalBankfinancing(US$m.): 20.00 Source Local Foreign Total BORROWERRECIPIENT 3.3 0.0 3.3 INTERNATIONALDEVELOPMENT 18.4 1.6 20.00 ASSOCIATION(IDA) Total: 21.7 1.6 23.3 Borrower: Republicof Honduras Honduras ResponsibleAgency: Ministry of Presidency RocioTabora DeputyMinister of Presidency Tegucigalpa Does the project depart from the CAS incontent or other significant respects? Ref. PADA.3 []Yes [XINO Does the project require any exceptions from Bank policies? Ref. PAD D.7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [XINO I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? Ref. PAD C.5 [XIYes []No Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ] N o Project development objective Ref. PAD B.2, TechnicalAnnex 3 The project development objective is to improveHonduras' socialsafety net for childrenand 1 'youth. This would be achieved by (i) improvingnutritional and basic health status of young children through and expanding the successfulAIN-C program, and (ii) increasing employability of disadvantagedyouth through piloting a FirstEmployment program. The coordinated implementation of these interventions constitutes the first step towards consolidating the government's institutional and technical capacity to formulate, coordinate, and monitor a comprehensive social safety net. This objective supports government's strategy of fostering human capital investment among poor families inthe poorest municipalities of the country to reducepoverty. The project representsthe initial phase of a concerted effort to improve Honduras' social safety net. With its emphasis on improving the institutionalframework for the two program interventions, the project will help to: (i)create conditions to further expand such programs basedon soundpolicies and strategies and accurate information from monitoring and evaluation mechanisms; (ii)enhancethe GOH's capacity to include additional vulnerable groups and interventions gradually as part of the process to consolidate a national social protectionstructure, and (iii) improve and consolidate a monitoring and evaluation systemfor social protectionprograms. Project description [one-sentence summary of each component] Ref. PAD B.3.a, Technical Annex 4 The project consists o f three components. Component 1: Institutional Strengthening of the social protectionframework for childrenand youth (US$ 1million). The project will support long term efforts to create a coherent institutional structure to make policy decisions, coordinate implementation and budget allocations, and monitor social protection interventions, starting with the children and youth programs. Through these efforts, the creation of adequate institutional, administrative, and technical conditions will enable the government to gradually define and implement additional social protectionprograms Component 2: Consolidation and Expansion of the AIN-C program (US$11.5 million). The objective of this component i s to prevent chronic early childhood malnutritionby strengthening the institutional base and expanding coverage of a community-based program of growth promotion and basic health activities. The first step, with the support of this project, will incorporate an additional 1,000communities incommunities with more than ten children, to reach about 35,000 children under 2 years old and a total of about 85,000 under age 5. Shouldthe project be able to incorporate more than 1000communities, a proposal within its operating plan from the GOHand satisfactory to the World Bank will be sufficient. Component 3: First EmploymentProgramfor Youth at Risk(US$7.5 million). This component aims to promote the labor market insertionof approximately 7,000 poor urban youths who have abandoned the conventionaleducationsystem, and who do not work or who work invery low return informal activities. This pilot programi s part of a largereffort of the Governmentof Honduras, and specifically, the Ministry of Labor and Social Security, to construct a systemfor training and professionaldevelopmentfor youth to improve their possibilities for labor market insertion. Which safeguardpolicies are triggered, if any? Ref. PAD D.6, TechnicalAnnex 10 The O.D. 4.20 is triggeredby the presenceof indigenous peoples inthe project areas. A social assessment was carried out by two teams of local consultants ledby the Ministries of Labor and Health, with technical assistanceof the Bank inthe Departments of Copan, Intibuca, Lempira and La Paz (for Am-C) andthe Metropolitan Regions of MDC (which includes Tegucigalpa), SanPedro Sula andLa Ceiba. No significant impact is expectedon the communities affectedby the project. However, careful attention has beenpaid to ensure the culturally differentiated groups of the population, such as the Chorti and the Lenca which account for 40 percent of the affected population, andthe peasantsof Lenca tradition inthe project area which account for another 40 percent, benefit with the AIN-C project ina culturally-adequate manner. A pro-active approachhasbeentaken for the "First Employment" component, to ensure indigenous and Afro-descendant youths living inthe MDC, San Pedro Sula and La Ceiba regions are identifiedand informedabout the opportunity to register inthe EDUCATODOS lists inorder to becomeeligible for project benefits. The indigenous federations have agreedto mobilize their social networks to guide ethnic youth invulnerable situation to sign-up at the registration centers. Significant, non-standardconditions, if any, for: Ref. PAD C.7 Boardpresentation: Boardpresentation is scheduledfor July 5,2005. The final board package should be sent to SECBO by June 6,2005. Loadcredit effectiveness: Declaration of Effectiveness is planned for October 31,2005. Covenantsapplicable to project implementation: NIA. A. STRATEGIC CONTEXTAND RATIONALE 1. Country and sector issues Countrv Issues The Governmentof Honduras (GOH)needs to focus its efforts to sustainably reduce poverty and vulnerability. The challenge to break the intergenerational transmission of poverty is now being addressedby the Honduras Poverty Reduction Strategy,' which proposesto acceleratehuman capital accumulation through an integrated set of social policies (education, health, nutrition, labor) with complementary social protection interventions targetedto the most vulnerable groups andthose that have traditionally beenleft behind. The social protection programs complement the Government's broader efforts to enhance the opportunities providedby economic growth and improved social service delivery to the entire population. The government must meet the challengesof sustaining-and insome cases, expanding-the social protection programs by consolidating their institutional arrangements, (including the administrative and legal frameworks) and ensuring the qualitative and quantitative adequacy of their technical and human resourceinputs. Interventions for poor population groups under 20 years old are particularly important. These groups representa disproportionate majority of the poor population inHonduras and offer the greatest leverage for human capital investments, making them the primary target groups for sustainable poverty reduction efforts. For many Hondurans, economic and human development opportunities remain beyond reach. Honduras continues to be one of the poorest countries inthe hemisphere, with a 2002 per capita GNIof US$920. Nearly two-thirds of the population i s poor and more than half is extremely poor, with a per capita income that i s less than the cost of a food basket designed to meet basic nutritionalrequirements. Inrural areas, almost 70percent of the population i s consideredextremely poor. Despite modest gains inpovertyreduction inthe 1990s, social indicators have largely stagnated since 1998, and the prevalence of vulnerability remains high. Progressinpoverty reduction has slowed due to low GDP growth, increasing inequality, and continued highpopulation growth rates. Even though the prevalence of poverty declined from 75 percent of households in 1991to 64 percent in2004 (INE2004), not all groups have benefited from economic growth. Inparticular, inequality betweenurban andrural areas has increased, exacerbating sharp differences inliving standards. While important gains have beenmade inexpanding the coverage and quality of health and education services, indicators still lag well behindthose of almost all of the other countries in Central America, and there are important inequities inquality and access. Poor young children andyouth are particularly exposedto risks that may cause irreversible lossesofhumancapital. The most vulnerable Hondurans are primarily young children and youth. Individuals inthese groups are the least able to take advantage of opportunities to reducetheir poverty, while at the same time they are exposed to additional risks that increase the probability of beingpoor. While the most important additional risks confronted by these groups vary, they contribute to long-term social problems by undermininghuman capital formation and economic growth. For children less than 6 years of age, the critical additional 'Thefull PRSPwas completedin July 2001, and the secondannual PRSPprogressreport was issuedin February2005. risk factor is chronic malnutrition. For youth 15-19years of age-and especially a subsetof them, school dropouts-the critical additional risk factor i s an inadequate level of skills due to incomplete and poor quality education. Despite government efforts to address these specific problems, these two groups remain especially vulnerable and unprotected, allowing breaks inthe chain of human development. Inthe case of chronic malnutrition, the impact of this break is irreversible. The physical andmental development of children less than two years of age who suffer malnutrition i s compromised forever, throttling potential human capital formation, undermining the potential effectiveness and efficiency of broader social policies and slowing the potential pace of economic development. Inthe case of youth, inadequate skills development limits social and economic potential, undermines hopes and aspirations, while sowing seeds of pessimism and cynicism manifested by the growth in disaffected youth, social anomie and gangs (marus). Sector Issues Social Protection. To reduce the exclusionof vulnerable groups, Honduras' broad economic growth and socialstrategiesmust be complementedby effective interventions targeted to the most vulnerable groups. Honduras' numerous social protection programs have beendesigned, implemented or funded by a myriad of uncoordinated agencies from central and local government, NGOs, and civil society, as well as international agencies. These programs are frequently duplicative and overlapping, yet many groups are excluded. A recent assessment of the Honduran social safety net indicates that the needs of the most vulnerable groups-in particular, infants, preschool children, and youth-remain inadequately addressed. Other weaknesses include the relative neglect of prevention and mitigation interventions and a more systematic approachto program monitoring and evaluation. These factors limit the effectiveness and efficiency of social protection policy. Inorder to promote Honduras' broad economic growth and social strategies and effectively address these high-riskgroups, there is a needto change the focus of public efforts from palliative measuresto specific targeted interventions that aimto prevent malnutrition (young children) and exclusion (youth). Several successfulpilot interventions aim to serve the priority groups o f young children and youth, but the development of a coherent strategy to institutionalize and expand them i s constrained by two factors: (i) inadequate coordination, which has led to both program duplication and exclusion; and (ii) weak institutional arrangements, which impede program coordination, expansion and sustainability. As a result, programs coverage remains limited. Infants andpreschool children. Malnutrition is a key riskjeopardizingthe survival and impedingthe long-term development of children inHonduras. Childrenwho are mildly underweight have a two- fold higher risk of death, and those who are moderately to severely malnourished have a 5- to 8-fold higher risk of death, than those who are better nourished (The Bellagio Group, 2003). More than half of the deaths of children under five in Honduras are attributable to malnutrition4ither directly, or incombination with acute respiratory illnesses or diarrhea. Honduras' highrate of malnutrition may prevent it from achieving its nutritionMillennium Development Goal (MDG) and the MDGgoals to reduce infant and child mortality. 2 Malnutrition is also one of the most important factors affecting the intergenerational transmissionof poverty. Poorly nourished children have concentrationproblems, reduced cognitive skills, and have low school attendance, high dropout and high repetition rates. As a result, they are relativelypoor students, and are less likely to develop job-related skills or social skills, and are more likely to be limitedto lower qualityjobs and a lower income- earning potential. Student malnutritionundermines the effectiveness andefficiency of the education sector and adds to the burden on the health care system. Chronic malnutrition and stunted development, therefore, not only perpetuateindividual and intergenerational chronic poverty; they also slow the potential rate of economic development. Despite some progress, government's overall response to child malnutrition is inadequate. Since 1987, Honduras has reduced the proportion of its children that are chronically malnourished (height-for-age) by 25 percent. Despite this considerable progress, the prevalence of chronic malnutrition among children remains unacceptably highat 32 percent (12-59 months of age). Honduras' rate i s more than twice the Latin American average, and, inCentral America, it i s secondonly to Guatemala, which has one of the highest rates inworld. Much more needsto be done to combat child malnutrition in Honduras and the pace of progressmust be accelerated. Youth-at-socialrisk (15-19years of age). Honduranyouth are at high risk. InHonduras, access to secondary education i s limited and its quality and relevance for poor families i s low, leavingpoor youth at risk of inadequate knowledge and skills to compete inthe labor market. More than 400,000 adolescents aged 15-19 live inextreme poverty. By the time they turn 19 years old, impoverished youth have two years less schooling than the national average (5.4 years vs. 7.4 years), and 55 percent of girls have at least one child. Their underemployment and unemployment rates are twice the national average. Inactivity leaves youth increasingly likely to turn to alternatives such as gangs, drugs, adolescentpregnancy, and crime. Between 15,000-20,000 youth belong to gangs, two-thirds of whom are male. Few programs address low education attendance rates and attainment among youth over age 15. Secondaryeducation i s available to less than 35 percent of all youth, yet there are no significant trainingprograms to improve the skills andemployability o f youth. The returnsto education inHonduras are the lowest inCentral America, reflectinglow quality, and inturn, depressingthe demand for education. As a result, youth are poorly prepared for the labor market. About 25 percent of youth between 15-19 years of age neither attend school nor work (the highest rate in Central America). Those who do find ajob in the labor market are poorly prepared and are trapped inlow productivity, bad qualityjobs that generate low incomes. Inthe long term, only improving human capital formation throughout all stages of life will sustainably reduce the vulnerability o f poor Honduran youth. Yet, there i s a need to addressthis problem inthe short term to prevent additional irreversible losses of human capital. Inadequateand insufficient investment inyouth directly threatens (i) their opportunities to close their skills gap; (ii) poverty reduction efforts; and (iii) ability to their transfer benefits to the next generation. The Government Agenda The GOH's commitment to reducethe vulnerability of particularly underserved groups of the population is expressedinits Poverty ReductionStrategy (PRSP). The fifth pillar 3 of the PRSP(the social protection strategy) emphasizesimprovingthe welfare of disadvantagedgroups of the population by addressingriskfactors among specific groups of greatest vulnerability, includingchildren and youth, to overcome obstacles to their social integration and development. The Government's strategy acknowledges that human development duringchildhood and adolescencerequires specific interventions during the life-cycle, and achieving the maximum benefits inone age group will depend on adequate interventions at other ages. Inthis regard, the GOHrecognizes that a focus on these groups significantly improves the poverty reduction impact of program resources because children and youth are central to the human capital formation chain. Investments inchildren and youth are the required complements to government efforts to improve the effectiveness of basic social services, inparticular basic education. A key priority of the Government's socialprotection strategy is diminishing the gaps in the chainof human capital development of childrenand youth. The first joint IDMMF staff assessmento f the PRSPimplementation progressconcludes that if Honduras i s to meet the PRSPgoals and the MDGs, the country mustdo more to ensure that growth translates into poverty reduction via strengthenedsector strategiesand improved implementation efficiency-including strengthening and rationalizing the social protection strategy. Investments inyoung children and youth will help to close human development gaps by enabling poor groups to take advantage of opportunities offered by economic growth and improvedsocial programs. As outlined inthe PRSPand inIDA'SPoverty Reduction Strategy Credit (PRSC), which supports its implementation, the GOH aims to improve the welfare of poor and vulnerable groups, especially young children and adolescentsvia, inter alia, support for child nutrition and development, and youth education and employment opportunities. e Child Nutrition and Develoument: The government is committed to streamlining its efforts by focusing on priority programs of proveneffectiveness, including inparticular the community-based health and nutritionprogram for children under 5 years old (AIN-C -Atencidn Integral a la Nifiez en la Comunidad). This innovativeprogram, developed in Honduras, i s recognized worldwide as an effective, yet inexpensive preventive health and nutritionprogram. The government has targeted the expansion of AIN-C to the 80 poorest municipalities inthe poorest departments of the country, all of which have chronic child malnutritionrates in excess of 50 percent, well above the national average. A key constraint to be addressedinthe expansion of this programis the needfor sound institutional arrangements in the Secretariat of Health (SOH). The lack of such support inthe pasthas prevented the institutionalizationofthe program and limited its expansion and sustainability. The GOHhas set a goal of covering 10,000 communities by 2015, or approximately 40 percent of all Honduran communities. This expansion of AIN-C i s a key element of the development of the country's social protectionpolicy that will be supportedunder the first component of this project. e Youth Education andEmployment: The efforts outlined inthe PRSP to prevent chronic malnutritionand strengthenthe educational system offer long-term responsesto human development challenges. Butfor those young people who have already left the educational systemor will do so over the next few years, a more immediate approach- providing basic life and vocational skills training, coupled with a first labor market experience and insertion assistance-is needed. The GOH's PRSPdefines support for youth labor market insertion as the primary social protection strategy responsefor this 4 group. To implement this, the GOH is creating the "First Employment" program (Programa Mi Primer Empleo) for disadvantagedyouth. The program draws from international experience, adaptedto domestic conditions. It will be implemented via an alliance between the Secretariat of Labor and Social Security (SLSS), and governmental and non-governmental training organizations, incollaboration with the private sector, and alternative formal education programs. As this will be the first IDA-financedproject to be administered by the SLSS, the project will focus special attention on the institutional arrangements for implementing and scaling-up this intervention. At the policy level, Hondurasneeds to develop a coherent social protectionstrategy that contributes to breakingthe intergenerational transmission of poverty. The GOH considers its current focus on social protection for young children and youth as the entry point to strengthening its social protection strategy. Inorder to addressthe needsof young children and adolescents at risk coherently, social protection interventions must be closely coordinated with other government strategies, inparticular for health, education, and labor. Coordination and direction of policies and programs at the highest level is currently improving under the leadership of the Secretariat of Presidency (SOP), the government agency incharge of the PRSP, but much work remains to develop the strategies and to prepare the line institutions to implement them. 2. Rationalefor Bankinvolvement The World Bank involvement inthe proposed project is the logical next stage to consolidatea broadprocess initiatedseveral years ago and consistingof various elements. First,considerable analytical work has identified the mainissues and near term priorities insocial protection. Second, investment operations, and related technical assistance have providedvaluable inputsto understand the context and needsof the Honduran population. Third, an ongoing policy dialogue between the GOHand the Bank has identified key areas of collaboration. Finally, the proposed Nutrition and Social Protection Project buildson current IDA-financed operations to support the PRSP(PRSC Iand 11)by focusing on children and youth as key groups for poverty reduction. Insum, the GOH and the Bank have worked closely to develop the analytical and operational building blocks to support public efforts to reduce poverty sustainably by including young children and adolescents as elements ina social protection policy. The proposed project i s a logical next step for IDA support and collaboration with the government inthese endeavors. Inthis framework, the GOHhasdefined andis implementinganagendato reducethe vulnerability of unprotected populations, focused especially on childrenand youth. Consistent with the work outlined inthe PRSP, the Secretariat o f the Presidency has taken the lead to improvecross-sectoral coordination, and to identify and prioritize the main vulnerabilities that a social protection strategy should address inthe short term. Inlight of the remaining challenges to develop meaningfulpolicies, efficient institutional structures, and effective instruments and interventions for social protectioningeneral and for infants, pre- school children and youth inparticular, the GOH, through the Secretariat of the Presidency, has requestedIDA support. Specifically, IDA support of this project i s expected to help the GOHconsolidate institutionalarrangementsinthe following three key policy areas: 5 a. The institutionalization and consolidation of the fifth pillar of the PRSPby helping to strengthen the GOH's capacity to formulate, implement and monitor social protection strategiesand programs, starting with young children and youth as entry points. b. Despite a long pioneering experiencewith AIN-C, programexpansion to date has only been achieved via parallel structuresrather than through consolidation of a coherent institutionalframework. The result has been limited coverage and weak sustainability. This project will support the institutionalization of the program within the SOH, and i s expected to buildthe institutional, technical and administrative conditions to expand and sustainit nationally. c. The launch of an innovative and comprehensive model for first-time labor market insertion that provides work skills to disadvantagedyouth and links this support to the labor market, with the development of institutional arrangements to sustainit inthe long term. Finally, World Bank involvement is expected to strengthen the government's capacity for donor coordination inkey sectors. The proposed project i s partof a comprehensive government effort to define and implement a social protection strategy, linkedto current policies inhealth, education, and labor. Through specific additional support, the project will help to consolidate government's programs for infants, preschool children and youth as a vehicle to strengthen a national social safety net. The project aims to work with the other actors financing these two interventions to systematize the many activities underway for children and youth and to improveprogram coordination to maximize the effectiveness of available resources. With AIN-C, the project will support the government's efforts to institutionalize and mainstream a proven, successfulnutrition strategy by strengthening the SOH'Scapacity to administer the program and to coordinate its implementation across all donors and implementing agencies (IDB and USAID). Inthe youth component, the government will develop a sustainablenational youth training system closely linked to the private productive sector for labor market insertion. The project will facilitate donor coordination (including GTZ, AECI, and IDB), improve informationon existing initiatives and provide a means to better prioritize and coordinate these efforts. 3. Higher level objectivesto which the project contributes The current CAS objectivesfor World Bank Group assistance includeongoing investmentsinhumandevelopment and the protection of vulnerable groups. This is one of three areas for IDA support to Honduras' efforts to improve sustainedeconomic growth and reducepoverty and inequality. The proposed project i s part of the CAS basecase lendingprogram, and aims to complement other IDA-financed health and education investments by targeting those importantpopulationgroups who fall through the cracks of the mainstream programs and ensuring that those groups also have opportunities for their human development. The project design buildson IDA'Spast support for Honduras' Social Investment Fund and the findings of both the Honduras Social Safety Nets Assessment (2003) andthe Central America study on Shocks and Social Protection, (2005) and ongoing policy dialogue on social protectionissues. The projectdirectly supports the 5thpillar of the PRSP,and will improveHonduras' chances to meet the MDGsand break the intergenerationaltransmission of poverty. The project will support government efforts to consolidate a realistic mid-term social 6 protection agenda according to the PRSP's fifth pillar. Specifically, the project will address the goals to improve health service coverage, especially AIN-C coverage, and the reduction of chronic malnutrition. Complementing current efforts inHealth and the Educationfur All initiative, also supported by IDA,this project will contribute to PRSP and CAS priorities in improvingthe human capital of the Honduranpopulation by increasing children's learning capacity and offering youth-at-risk opportunities to improve their skills for labor market insertion. The project will set inmotion the PRSC monitoringbenchmark for nutrition2. Working inconjunction with the IDA-financedHealth Project3,this project will develop nutrition program-specific tools for improving the stewardship of nutrition within the health sector. Finally, the implementation of the AIN-C program and the FirstEmployment program will both serve to create and strengthen linksbetween the government, private sector and NGOs operating inthe targetedregions of the country. B. PROJECTDESCRIPTION 1. Lendinginstrument The lending instrumentis a Specific Investment Loan (SIL). A SIL i s the most appropriate choice becausethe project focuses on capacity buildingto create (i) institutional and technical conditions to strengthen and consolidate social protectionimplementing agencies and to scale-up specific interventions; (ii) key elements of a social protection policy, specifically for young children and youth; and (iii) an entry point to gradually enhance government capacity to improve the living conditions of infants, preschool children, and youth through specific well-designed and coordinated interventions. The consolidation of these conditions will pennit the GOH to expand these and other social safety net programs coherently. Once such conditions are inplace, evaluated, and adjusted, a programmatic approachcould be considered inthe future. 2. Project development objective and key indicators The project development objective is to improveHonduras' socialsafety net for childrenand youth. This would be achieved by (i) improving nutritional and basic health status of young children by expanding the successfulAIN-C program, and (ii) increasing employability of disadvantaged youth by piloting aFirstEmployment program. The coordinated implementation of these interventions constitutes the first step towards consolidating the government's institutional and technical capacity to formulate, coordinate, and monitor a comprehensive social safety net. This objective supports the government's strategy to foster human capital investment targeted to poor families inthe poorest areas. The project representsthe initial phase of a concerted effort to improve Honduras' socialsafety net. With its emphasis on improving institutional arrangements for the two program interventions and buildingcapacity in the Ministries of Health and Labor, the project will help to: (i) createconditions to further expand such programs based on sound strategies, and accurateinformation from monitoring and evaluation mechanisms; (ii) ~~ ~ According to the PRSC, the governmentis committed "to inventory all nutrition programs, with emphasis on those serving children underJive years of age, and prepare a cost estimate and implementation planfor expansion of AIN-C to 1,000 communities in the 80 municipalities prioritized in the PRSP." HealthSystem ReformProject (36400-HO) 7 enhance the GOH's capacity to gradually include additional vulnerable groups and interventions in a processto consolidate a national social protection structure, and (iii) improve and consolidate a monitoring and evaluation system for social protection programs. The expected mainoutputs ineach component are summarized as follows: Component 1:(i) an institutional structure capable of administering, coordinating and monitoring public social safety net interventions, initially focused on children and youth; (ii) instruments to supervise and monitor these interventions, and mechanismsto improve inter- institutional coordination; (iii) as part of a national social protection strategy, a draft policy in the areas of children and youth and its three year implementation plan, which defines roles, responsibilities and expectedresults of eachparticipating institution. Component 2: i)1,000 new communities will be participating inAIN-C by the first quarter of 2008, covering 35,000 children younger than two years of age; (ii) percent of the children 90 less than 24 months of age intarget communities will be registeredandparticipating inAIN- C; (iii) years after the programhas begun implementation, child malnutritionrates three among children less than 24 months of age inthe newly participating communities will be 20 percent less than inthe 2005 baseline. Component 3: (i) Approximately 6,000 15-19year old youth participating inthe program; (ii) percentofthetrainingbeneficiarieswillhavetheirfirstlabormarketexperiencevia 80 program training internships; (iii) 40 percent of training beneficiaries will be employed 6 months after completing the program, whether inpaidjobs or incompetitive self- employment. 3. Projectcomponents The project consists of three components. Component 1: InstitutionalStrengthening of the social protection framework for children and youth (US$l.O million). This componentseeks to improvegovernment capacity to protect andimprovethe human capital of poor infants, children, and youth inHonduras, as the first stage to consolidatea comprehensivesocialsafety net. The project will support long-term efforts to create a coherent institutional structure to make policy decisions, coordinate implementation and budget allocations, and monitor social protectioninterventions, starting with the children and youth programs. Through these efforts, the creation of adequateinstitutional, administrative, and technical conditions will enable the government to gradually define and implement additional social protection programs. This component has four subcomponents: Subcomponent 1. Social protection policy formulation and coordination: This subcomponent will finance support and technical assistance to consolidate an institutional structure to formulate, implement and monitor social protectionpolicies andprograms, beginning with children and youth. Activities will support a coherentprocess to identify priorities, make decisions, coordinate budgetary appropriations and implementation, and follow-up on programs and interventions. 8 Subcomponent 2. Instruments to improve the effectiveness of social protection expenditures. Activities included inthis subcomponentsupport capacity buildingwithin the social protection institutions through the design and implementation of instruments to improve the effectiveness of public expenditures on social protection. The institutional arrangements supported by the previous subcomponent will be complemented by a set of instruments to improve targeting and beneficiary selection of social protection interventions, monitoring and supervision, and impact evaluation of selectedinterventions. Subcomponent 3. Support to the Secretariatof the Presidency as coordinator of Social Protection Policv, and coordinator of this proiect. The project will provide technical support, assistance, training and equipment for the Secretariatof Presidency and the UNAT (Unidad de Apoyo Tkcnico) as neededto support the above mentioned policy development andproject coordination activities. Subcomponent 4. Social Audit of Social Protection promams. The project will finance technical assistancefor the identificationof community counterparts, and the development of participatory instruments for local level monitoringof social protection programs for children and youth, to obtain feedback on design and impact. Component 2: Consolidation and Expansion of the AIN-C program(US$lS.O millionin project costs; US$12.0 million incredit financing). The objective of this component is to prevent chronic early childhood malnutrition by strengthening the institutionalbase and expanding coverageof a community-based programof growth promotionand basic health activities. The AIN-C programworks via community-based health networks, basedon community volunteers (monitores)who monitor the growth of children younger than two years of age, advise mothers on caring for their babies and toddlers, and provide curative primary health care services to children under age five. The project will support the standardization of the AIN-C model, basedon rigorous evaluations of the currently provided packages. The model will consist of three principal components: i)a preventive component that includes growth monitoring and early stimulation; ii)a component on neonatal care; andiii)a curative component that includes managementof prevalent childhood diseases, such as respiratory and diarrheic diseases. Also, as part of the AIN-C, the project will support the adoption of regular workshops for mothers regarding childcare, home hygiene, water usage, etc., and the full involvement of communities and local governments inthe program to guarantee future sustainability. Ifthe project i s able to incorporate additional AIN-C modules, or conversely, encounters training bottlenecks for inclusionof the neonatal component, then the GOHcan propose a revised operating planconsistent with its operating manual that i s satisfactory to IDA. The Secretariat of Health intends to expandthe programto all communities infour of the six poorest departments prioritizedinthe PRSP. The first step, with the support of this project, will incorporate an additional 1,000 communities, to reach about 35,000 children under age two and a total of about 85,000 childrenunder age five. Ifthe project can incorporate more than 1,000 communities, the GOH can present a proposal within its operating plan that i s satisfactory to IDA.The project will also address the shortfalls identifiedinthe evaluation, by supporting the broader institutionalizationof the program, so that further programexpansion can be supported and sustained. 9 Thiscomponent hastwo subcomponents: (i) coverage expansion of the AIN-C model; and (ii)institutional strengthening of the Secretariat of Health. Subcomponent 1: Coverageexpansion of the AIN-C model: (US$12 million). This subcomponent aims to improve and expandcoverage of AIN-C activities for children under two years of age to no less than 1,000 new communities inthe poorest departmentsof Honduras. The expansion of AIN-C to new communities includes the following activities: (i) the identification of participating communities; (ii) community needs survey; (iii) specific program validation with the community and local/municipal authorities to reinforce their collective responsibility to sponsor the program and to review and enhancethe AIN-C package; (iv) selection of community volunteers (monitores); (v) a broadenedprogram of local level training and workshops inAIN-C activities to improve personnel quality (primarily monitores), (vi) incentives for monitores; (vii) AIN-C materials; and (viii) a communications program (intended to complement a program currently beingimplemented with USAIDfunding) that i s designedto accompany the expansion of AIN-C with general information about nutrition, as well as anexplanation o f how AIN-C works, including the role of the monitores, and how families can participate. The project will operate via several modalities for coverage expansion: (i) contracts with private providers, primarily NGOs and other civil organizations, (ii) municipal execution of the program, and (iii) strengthening the SOHto deliver the services itself. It is expectedthat most of the coverage expansion will be implemented via NGOs. Inall cases, a previous process of certification will guaranteethe suitability of the chosen providers. The SOH will work with the departmental and local levels to choosethe most appropriate service provision modality. The implementation capacity of the municipalitieswill be assessedby the central level of the SOHin collaboration with the HonduranAssociation of Municipalities (AMHON) and the Secretariat of Presidency. To ensure a sound institutionalbasis to support AIN-C expansion, no new communities will be incorporated duringthe project's first year becauseefforts will be devoted to the preparationof administrative systems, including the monitoring, supervision andevaluation designs, the incentive system for the monitores, design o f the private contracting mechanisms and the selection of municipalities that will directly implement the program. The program will expand to 500 new communities in2006,250 more in2007, and another 250 communities in2008 for a total of 1,000 over the life of the project. Subcomponent 2: InstitutionalStrengtheningof the SOH at the central and local levels lUS$3.0 million). This subcomponent will help the SOHto consolidate its capacity to implement the AIN-C program successfully. Inparticular, the project will strengthenthe capacity to plan, implement, supervise and evaluate AIN-C activities at all levels of the Secretariat. These activities will not only create the capacity for the SOHto manage the proposedproject, the institutional strengthening provided by this project will also benefit the AIN-C processesalready underway inother communities. Inaddition, this subcomponent will consolidate the institutionalbasis for the further expansion of AIN-C to other areas of the country, as contemplated inthe PRSP. There are two mainactivities to be financed as describedbelow. 10 a. Strengthening the central level of the SOH, including activities to strengthen the planning, implementation, and supervision and evaluation processesinthe SOH, for a successful expansion of AIN-C. The Unidad de Extensidnde Coberturay Financiamiento de Sewiciosde Salud - UDECOFISS (under the office of the Minister of the SOH) i s the administrative unit through which the SOHwill coordinate, implement, evaluate and administer all resourcesdesignated for the expansion of maternal and child health programs. Strengthening this unit is key for project implementation. The SOH will finance the neededpersonnel, along with logistical and administrative support, while the project will finance those instruments neededfor planning, supervising and evaluating AIN-C activities, human resources, computer equipment for the UDECOFISS, training, technical assistanceand workshops. The project will also strengthen the Direccidn General de Promocio'nde la Salud,which i s in charge of providing technical and normative guidance for AIN-C, includingthe operational structure and guidelines for the program. It will be responsible for coordination with other relevant offices inthe SOH (General Departments of Systems and Health Services, Sanitary Regulation, IntegralHealth to the Family, HealthVigilance, and Regional Departments) and it will be responsible for the following operational aspectsof AIN-C: (i) training departmental facilitators; (ii) monitoring and supervision of the departmental level by the central level; (iii)an information system for AIN-C; (iv) Referralkounter-referral system for AIN-C. b. Strengthening the departmentallevel of the SOHfor AIN-C coverageexpansion. The project will develop a process to strengthen all of the SOH departmental delegations to implement AIN-C, inorder to ensure uniform implementation of the model across the country and to lay the basis for further program expansion beyond the 1,000 communities contemplated inthis project. This process will include improvedservice provider training and supervision and coordination mechanisms with other community groups to ensure AIN-C expansion i s as inclusive as possible. To enhance the GOH's institutionalcapacity to increase AIN-C coverage, the project will finance personnel, technical assistance, training, instruments and methodologies for supervising and monitoring, transport, materials, and equipment, and it will finance quarterly supervision meetings with service providers to determine results andperformance. It will also define the processby which the GOH will gradually assumethe recurrent costs of this model. Component 3: FirstEmployment Pilot Programfor Youth-at-Risk (US$7.3 millionin Projectcosts; US$7.0 million incredit financing). This componentaimsto promotethe labor market insertion of poor urbanyouth who haveabandoned the conventional educationsystem, and who do not work or who work invery low returninformal activities. Thispilot programis partof a larger GOHeffort, specifically of the Secretariat of Labor and Social Security (SLSS), to construct a system for training and professional development for youth to improve their possibilities for labor market insertion. The SLSS i s mandated with this task through its creating law. The pilot focuses on the employability of disadvantaged youth via an integrated approach that would provide (i) orientation for life and work skills, (ii) job training, (iii) internship specific an directly linked to that training, and (iv) support for job search after the traininghntemship. The pilot will be implemented intwo phases. The first phase, financed with the PPFadvance, 11 will set up the basic elements of the model and strengthenthe SLSS's and other participating entities' capacity to implement the pilot. The program would then be scaled-up and refined duringthe secondphase. This approachbuilds on Honduran andinternational experience with youth at risklabor market insertion programs. It would be mandatory for beneficiaries to continue their education inan alternative formal school program while they participate inthe pilot. Of utmost importance inthe implementation of the program i s the close coordination of the government, representedby the SLSS, public and private training institutions, andprivate sector enterprises to offer opportunities for youth-at-risk - a novum inHonduras. The pilot would include four subcomponents: Subcomponent 1. Targeting and selection of beneficiaries: Youth aged 15-19living in selectedmarginalized urban areas of Tegucigalpa, San Pedro Sula, and La Ceiba (and possibly others to be determined by the GOH), and enrolled in aprogramof alternative formal education would be eligible for the program? Eligible youth can apply to participate inthe programeither through apotential training provider or through the Secretariatof Labor's "job orientation services," offered by the SLSS's Department of Employment, which would be strengthenedunder the project. Subcomponent 2. Training services and preparation for the world of work: Training will be offered by private and public training centers, competitively selected, which will be responsible for defining the specific areas of training they offer, based on the internship opportunities they have previously identified with employers. The three to four month training will be designed so that it will prepare the participant for the internship inan enterprise (also three to four months induration). Preferably, the training and internships would be closely linked to the `clusters' that GOHhas identifiedto have good prospectsin the country's economic development (tourism, maquiladora, etc.). Throughout the training, the program will ensure appropriate supervision of training center performance. The curriculum will also include a basic component of "training for life," which seeks to develop non-academic skills that are valued inthe market place and civil society. Program participants will receive a stipend duringthe training and internship to cover the costs of transportation andfood for each day o f attendance. Subcomponent 3. Promotion, dissemination, and support for labor market insertion: Informationabout this pilot will need to be disseminated to three target groups: potential beneficiaries, training institutions, and employers. Promotion efforts will be led by the SLSS with support from the Secretariat of the Presidency (SOP) and will include socialization workshops with relevant groups of civil society, including ethnic federations. Promotion efforts directed to training institutions and employers will aimto create alliances between the two groups inorder to meet the goals and requirements of the program. Community volunteers working with the EDUCATODOS and other alternative formal education programs would disseminate information about the program inselected neighborhoods. After the training andinternship phase, graduates will be registered inthe Bolsa de Empleo, and Alternative formaleducation programsare definedas those promotedand accreditedby the Honduras Secretariatof Education(e.g. EDUCATODOS, PRALEBAH - ProgramadeAlfabetizacidn y Educacidn Ba`sicadeAdultos en Honduras). This criterionprovidesthe addedincentivefor youth to returnto the educationsystem. 12 they will be eligible to receive counseling services, employment referrals and follow up. Finally, the program will also include activities designed to promote non-risky behaviors of youth inurban areas, and for employers, to emphasizetheir corporate social responsibility. This would be done through mass media, seminars, website information, and other means. Subcomponent 4. Program ManagementandEvaluation: The project will finance the development of a monitoring and evaluation system in the SLSS, to inform and support the development of a youth training andlabor market insertion system as part of a wider youth development strategy. The SLSS's Management Information System (MIS) will be strengthenedand complemented by an impact evaluation, which will encompassthe First Employment and the Proempleo' programs and will include the collection of baseline data and the implementation of a comparative impact evaluation (as far as the programs are comparable). The evaluation would also include an economic analysis of the intervention. Finally, this subcomponent will finance the program's incremental start-up costs for the SLSS, including training activities, technical assistance, equipment and materials for the institutional strengthening of the Secretariat, and some operating costs to implement the pilot. 4. Lessonslearnedand reflectedinthe project design The needto develou an institutional structure to systematize and more adequately supervise the AIN-C program. Initial work on the identificationand design of this project resulted inthe Secretariat of the Presidency concluding that there was marked variation inhow AIN-C i s implemented, which madeearly efforts to develop an inventory of the current program implementation sites and efforts to estimate the current costs of the program difficult. This diversity shows inthe absence of the SOH's institutionalownership of the program or leadership of the program at the national level. While the implementation of AIN-C has beenrelatively widespread, the SOH's perception of the program, its value, and the role of the SOH insupervising and monitoringit vary widely from one local health network or health region to another. Furthermore, although the program has proven effective, there i s still much room for improvement. Comparing the findings of the 2000 and 2002 evaluations reveals some shortcomings and possibly some troubling trends that should be addressed. (See Annex 15)6 AIN-C should be targeted to improve its impact and efficiency. To date, the AIN-C program has not been a well-targeted program. Only 494 (29 percent) of the 1,932 communities which had an AIN-C program at the beginning of 2004 were among the 80poorest municipios of the country that have been prioritizedby the GOH. Although 68 (85 percent) of the 80 municipios had at least one such program, only 10.3 percent of the 3,257 caserios inthe priority departments had an AIN-C. Thus, the way the program has been implemented-generally injust afew communities inonly some of the municipios in only 11of 18 of Honduras' departments-means the program has been spreadthinly about Proempleo(Programfor HumanCapitalandTechnicalEducation), financedby the IDB, is arecentlylaunchedon- the-jobtrainingprogramfor youngadults. It is unlikely that one can directly compare the findings of the two evaluationsof AIN-C that havebeenconducted becausethey are cross-sectionsof differenthouseholds with populationsthat may vary systematically-most importantlyby thosecharacteristics relatedto healthandnutrition status-who have beenexposedto possibly significantly different versions of AIN-C. 13 the country. This has servedto lesson administrative burdens, but it has increased the overhead costs of training and supervision, while it has diffused the amount of attention and resources devoted to the program. This effect has beenunderscoredby the still relatively small scale of the program which after more than ten years still covers less than 10percent of Honduran children under the age of two. AIN-C monitores should receive periodic retraining. One of the key lessonslearned from other community volunteer-basedprograms that have been able to maintain highcoverage and participation rates i s the importance of retraining or refresher training. The total absence of retraining inthe program to date, in combination with its inadequatelevel of supervision, appear to be the primary reasons why some of the program's performance indicators faltered between 2000 and 2002. (See Annex 15.) There i s a needfor periodic, quasi-experimental design-basedevaluations to better understand how the programi s being implemented (its processes) and its outcomes/impacts. In2000, arigorous processevaluation of AIN-C was conducted. Itfound significant differences in how programs were implemented with differential impacts on mothers' knowledge, attitudes andpractices regarding child nutrition and child-rearing practices. It did not, however, document children's nutritionalor health status. Thus, it was not possible to understand what the significance of the differences inprogram implementation was in terms of their impacts on children's nutritional status and health. Conversely, in2002 there was an outcome evaluation that did not investigate whether or not there were differences in implementing agencies or, more specifically, how the program was implemented that accounted for the differences inthe program outcomes/impacts. An evaluation that investigates both processand outcome i s essential to understanding how and how well the program functions and constituting an effective feedback mechanism to improve its performance. The proposed project has set aside adequateresources to undertake a rigorous impact evaluation. The 2002 evaluation found that there was a dose-response relationship between the level of AIN-C participation and its impact on nutrition status. This i s an important lessonthat has been taken into account indeveloping indicators for this project. There i s a needto build a comprehensive strategy to support vouth-at-risk inHonduras. Inthe design of the pilot FirstEmployment Program, lessonslearned and reflectedinclude consciously linkingthis First Employment Program with other relevant activities (e.g. Bolsa de Trubajo) and other programs (e.g. Proempleo) inthe sector, thus providing the building blocks for a more comprehensive government strategy to help disadvantagedyouth build human capital and integrate into the labor market. By giving these youth a chance to become productive members of society, risky behaviors are expected to be prevented. International best practices in youth programs need to be adequateto the Honduran context and conditions of the target population. The basic design of the FirstEmploymentPilot Program draws on the accumulated lessons learned inLatin America, particularly the ChiEeJoven, Peru Joven and ColombianJdvenes enAccidn programs, which have been evaluated rigorously and have shown to be effective mechanismsto improve youth labor market insertion. Key lessonsfrom those experiences include the needfor effective targeting, a focus on incorporating "life skills" (proyecto de vidu) and vocational skills, the importance of the internship as a signal of training pertinence 14 and as a key factor inraising participant employability, the mobilizationof private and public actors to supply training services, and payment for results. Inadapting this approachto Honduras, several innovations have beenintroduced: 0 usingalternative formal education programs as an entry point for targeting the youth population that has dropped out of the formal system; 0 more flexible rules for the size and level of formality of internshipemployers; 0 the requirement for beneficiaries to continue their participation in an alternative formal education program to create a link and culture of continuingeducation for employment, and to ensure that the program focus on the poorest youth does not overly limit the employability of program graduates; and 0 connecting graduatesto active labor market support services for labor market insertion offered by various institutions inthe country. This adaptation aims to meet the objectives of the PRSPand to avoid the tendency of similar programs to serve the best educatedand more socially integrated training candidates. Later phases of this program may consider including a component for self employment, but the mechanismsand strategies to do so have not yet been defined. 5. Alternatives considered and reasons for rejection LendingInstrument. Several alternatives were considered inproject design. For the selection of lending instrument,the decision to use a SIL insteadof an APL reflects the focus of this project on creating the institutionalbasis upon which further programs can build. While the use of an APL assumes a basic institutional structure inplace which can then coordinate and implement a program of action, the S I L allows the project to focus more specifically on the creation of that institutional presence. This SIL aims to provide the basis for apossible APL inthe future. Proiect Design and General Arrangements. Similarly, the project team decided infavor of institutional implementation of the project rather than creating a Project Coordinating Unit (PCU), becausethis option would strengthen the core institutional competencies of the participating government agencies. While all three implementingagencies are weak, the project will provide substantial support for project execution. Inparticular, the project will strengthenthe Secretariat of the Presidency to assume its role as coordinator of social policy ingeneraland social protectionpolicy inparticular as a basic objective of this project. For example, by creating the conditions to enable the Secretariat of the Presidency to implement the policy component directly, the project supports that objective. A similar argument applies to the health and labor ministries as implementingagencies. Additional alternatives considered for proiect design include: (i) to work through the Programa deAsignaciones Familiares (PRAF)7for AIN-C implementation. Although the PRAFis an agile institution, the task team decided against this option infavor of the SOH, becauseof the importance of strengthening the line agency and integrating this work as part of core government responsibilities. Inaddition, PRAF's performance inimplementing the AIN-C program has shown several weaknesses. (ii) The task team also discussedthe GOH's The PRAFhas the institutional mission to target benefits to poor populations through direct conditional cashtransfers (vouchers); it is located in the Secretariat of Presidency. 15 decision to adopt a young children and adolescents approach or to target other vulnerable groups -the sexually exploited, orphans, disabled, etc. While all of these groups are an important part o f the social protection agenda, the team agreed with the GOH to concentrate on the largest size groups-early childhood and youth-which meritlarger scale interventions where the World Bank has a comparative advantage, and to maximize project impact. The decision to create three accounts for the proiect instead of one account coordinated under the main leadership of the Secretariatof the Presidency, further supports the institutional strengthening approach of this project. While the Secretariat of the Presidency will be responsible for reporting on project accounts, each implementing agency will have responsibility over the execution of its funds. There are other projects already under implementation ineachof the institutions that canprovide the basic account management infrastructure, a feature that convinced the project team of the feasibility of this design option. AIN-C component. Inthe technical design of the AIN-C component, one option considered was to have the SOH act as the principal AIN-C service provider. Since the health sector reform programi s supporting the development of new modalities of service delivery inorder to reachpoor and remote populations, this project includes the option for private sector providers to deliver AIN-C. This design option i s superior becauseit conserves the limited institutional capacity inthe SOH for supervision, an area of weakness inprior experiences with AIN-C. Another AIN-C design option considered was to include the delivery of the AIN-C model within the packageof basic health care delivered byprivate service providers, as it i s in other countries (e.g., El Salvador, Guatemala). The problem with this option inHonduras i s that AIN-C i s a model basedinthe community that requires frequent contact and interaction, at a level much higher than that contemplated within the basic health model inthe country. To put AIN-C within this model would incur the riskthat AIN-C would not receive the attention it needs for success, especially inthe areaof counseling of mothers, and thereby could reduce project impact. Nevertheless, consolidating the program administration under direct responsibility of the SOH guarantees its coherence with the basic health system. The AIN-C Program was originally intended to target only those poor children inthe communities served. The logistical and social problems posed by targeting only some children in the community did notjustify the risk of not including non-poor children inthe program, especially considering that the municipalities being targeted are among the poorest inthe country with ratesofmalnutrition well above the national average. Therefore, the project opted to cover all children inthe municipalities targeted according to their vulnerability inmalnutrition. FirstEmplovment component. Inthe youth employment component, severalpossible institutional arrangements were considered before reaching the current design, the most important of which was to execute via the Programa de Asignacidn FamiEiar (PRAF). PRAF has good technical and administrative capacity for program implementation, and it i s already implementing a youth training program for poor youth. However, this option was discarded infavor of locating the program inits logical home inthe SLSS, which holds the legal mandate in this area, and where the corresponding institutional structures should be 16 consolidated. Inaddition, the operating mechanismsof the PRAF are not entirely compatible with those o f the proposedprogram, which could create confusion among beneficiary populations. For this same reason, the proposed project will operateindifferent locations than the PRAF. Finally, the strong linksof the SLSS to the private sector and to training institutions improves the probability of component success inthe social inclusionof youth and breaking the intergenerational transmission of poverty. C. IMPLEMENTATION 1.Partnershiparrangements Thisproject hasno formal cofinancing arrangementswith other donors. Inboththe AIN-C and First Employment components, however, considerable coordination i s contemplated with other donors active in the sectors. The government has taken the lead to coordinate AIN-C donors, both interms of geographic areas of intervention and the standardization of the intervention model, and this project will support that continued coordination. Particularly important has been coordination with other supply-side health and child and maternal care programs, especially those supportedby the Bank (the Health System ReformProject) and the IDB (Mejoramiento del Nivel de Salud de la Poblacidn Hondurelia). Also, there has been extended coordination with IDB's third social protectionoperation implemented by PRAF, which provides conditional cash transfers as demand subsidiesto poor families to encourage them to use the AIN-C package. Duringproject preparation, the Bank worked with the GOH, IDB, andUSAIDto cultivate active coordination with bothdonors and their implementing agencies to ensure common goals, a shared agenda, and an agreed division of labor. Similarly, during preparation of the FirstEmploymentpilot program, the Bank and the GOH organized a series of workshops and meetings with the sector's major stakeholders, donors and NGOs to pursue synergies and collaboration with other projects that support activities for youth-at-risk related to the labor market. These include the IDB's Proempleo Project, the GTZ's project for small andmediumenterprise development (Programade la Micro, Pequelia y Medianu Empresa - PROMYPE/GTZ), and several projects supported by the Spanishdevelopment cooperation. The pilot program will be implemented via national institutions and NGOs, but it will interact directly with a number of donor-supported programs, including the US AID-supported programs of alternative formal education (e.g., EDUCATODOS). Becausethe design o f the component encourages open architecture, further links will be cultivated during implementation. The project will support the SLSS to take a leadership role in coordinating programs for youth labor market insertion under the National Labor Training System. Finally, project implementation will entail considerable operational coordination with the IDB, as single unitsinthe SLSS and SOHwill be responsible for project administration, financial managementandprocurement for both the World Bank and IDBprojects. 2. Institutionalandimplementationarrangements This project respondsto the social protectionpriorities of the PRSP, under the coordination of the Secretariatof Presidency. The SOP will have overall responsibility for project coordination and implementation incollaboration with the Secretariatsof Health and Labor. 17 Withinthe SOP, the project will strengthenUNAT's capacity to coordinate ongoing project administration with the Secretariats of Health andLabor. Component 1: The SOP is the implementing agency for this component, which will support the institutional strengthening of the Secretariatto fulfill its role incoordinating overall social policy, including social protection. The SOP will benefit from technical assistanceto help develop the instruments and mechanismsfor the design, coordination, finance and evaluation of social protection actions. The SOP will also be responsible for coordination of the implementation of this project with the two line agencies, the SOH and the SLSS, and to consolidate M&Eand other progressreports for proper oversight and supervision of project implementation. Component 2: The SOH i s the implementing agency of the AIN-C program. Within the Secretariat, the UDECOFISS will be responsible for administering the program. Its functions include: (i) administering and evaluating performance contracts and agreements for coverage expansion; (ii) administering resources from international cooperation. The SOH i s currently inthe processof institutionalizingvarious project execution unitsinorder to develop aSector Wide Approach in health and better harmonize the use of donor resources. As part of this process, inJanuary 2005, the SOH created the UDECOFISS. To ensure adequatemaintenance of AIN-C financial accounts, the UDECOFISS will be supportedby the Directorate of Finance and Administration of the SOH. The SOH already has some financial andadministrative experience with contracting for private service provisionbecausethe Program for the InstitutionalReorganization and Extension of Basic HealthSector Services (PRESS) has contracted NGOs. Component 3: The FirstEmployment pilot program will be implemented by the Secretariat of Labor and Social Security. The general coordination of the pilot program and its financial administration will be camed out by the Secretariat's Coordination Project Unit (CPU), which is also responsible for implementingparts of the IDB-financed Proempleo Project and others. While the CPU will be responsible for general management of the subcomponents 1, 2 and4, the Department of Employment (DOEor Divisidn de Empleo) will beresponsible for assistingthe SPUtechnically, and for offering the expandedjob market orientation and placement services. This arrangement offers three advantages.First, from the beginning, the pilot program works through the Secretariat's unitsthat are incharge of the public policy for training and labor market insertion. Second, the arrangementscoincide and reinforce two large reforms that are currently taking place: the modernization of the SLSS which intends, inter alia,to strengthenthe Secretariat's active role in labor market orientation and regulation (supported under the IDA-financed Competitiveness Project), and the creation of the National Systemfor Labor Market Training, which seeks to bringgovernment, the private sector and private andpublic training institutionscloser together. Finally, the additional burden of setting up apilot program would be sharedby the CPU, which is composed of long-term consultants to manage the start-up phase, and the SLSS, staffed by permanent employees and will be strengthenedover time to runthe programs once it i s consolidated. The training services under subcomponent 2 will be contracted through a competitive bidding process. The administration of these services (request for proposals, evaluation of proposals and recommendationsabout their eligibility, contracting, supervision of contracts, reporting, 18 etc.) will be delegated (through a service contract) to a managementagency. The most likely candidate i s the Advisory Center for Human ResourcesDevelopment (CADERH), a non- profit organization which has contributed to the development of a network of 31independent training centers with a long track record of excellence inthe training sector and close links to the private sector. Finally, the SLSS will establish agreementswith relevant programs for alternative formal education, includingEDUCATODOS and PRALEBAH, supported by USAIDand the Ibero- American States Organization for Education respectively to (i) reach out to their beneficiaries with information and the promotioncampaign about the pilot, and (ii) allow for exchange of data sets on potential and actual participants. Basisfor Selectionof InstitutionalArrangements: Although these agencies are institutionally weak, they have shown recent improvement inimplementation capacities, and the Project will emphasize institutional strengthening. More importantly, these are the correct institutions -they have the legal mandatesintheir respective areas, andthe political support to carry project initiatives forward. The Secretariat of the Presidency has taken the lead inpreparing, monitoring, and coordinating implementation of the Poverty Reduction Strategy, inkeeping with its mandateto serve as the coordinator and technical secretariat of the social cabinet. Inthis latter capacity, the SOP collaborates with a Consultative Group (Consejo Consultive) that meetsperiodically and whose members include Civil Society representatives. Finally, the SOP managesimplementation of the PRSP's fifth pillar (Social Protection strategy), starting with a processto identify vulnerable groups and their mainrisks (Annex 1). To fulfill these mandates, the SOP'SUNAT (Unidud de Apoyo TLcnico) i s being strengthened, and will be further strengthenedunder the project. These arrangementsensure a high level of Government commitment to leadpolicy formulation and appropriate institutional coordination mechanismsto achieve successful implementation. Working with implementing agencies, the SOP i s defining appropriate interventions to close the gaps between the needs of these groups and available programresponses. The two main components of this project -Children and Youth- play a major role in fulfilling these objectives. Despite this progress, further efforts are also neededto develop a comprehensive social protection approach, including better coordination mechanisms for program design, budget allocations, and implementation. The Secretariat of Healthplays a key role within the PRSP and the Social Protection strategy. The SOH prepared the NationalPlanto Reduce Infant, Child, and Maternal Mortality, which prioritizes tackling chronic malnutritionby expanding and improving AIN-C program quality, and i s consistent with the PRSP's SP priorities. To support AIN-C expansion, this Project will help the SOHdevelop a process to institutionalizeAIN-C within the Secretariat. SOH has worked closely with the main AIN-C service provider, and has received further support for this process duringproject preparation. With PHRDproject preparationfunds and a PPFadvance, the SOH has identified and i s implementing key interventions to improve institutional capacity. The SOH i s expected to be ready to implement the AIN-C component and start the process o f institutionalization by project effectiveness. After aprocess of 'The complete Spanish name for this organization is; Organizaci6n de Estados Iberoamericanos para la EducacGn, laCiencia y la Cultura (OEI). Decreto Ejecutivo No. PCM-011-99andLey del Fondopara la Reduccidn de la Pobreza (Decreto Legislativo No. 70-2002). 19 consolidating sound institutional arrangements duringthe first year of the project, the Secretariat will start AIN-C expansion to new communities inthe secondyear. The selection of the SLSS to implement the youth employment component reflects the GOH's desire to focus thiselement of the social protection strategy on buildingthe employability and employment of youth, since the SLSS holds the legal mandate to implement policies and programs in the areas of training and employment. This decision supports two reforms underway in the public sector. First, the SLSS i s being modernized to play a more active role in the orientation and regulation of labor markets. The SLSS will retain responsibility to guide the component, but will partner with a management agency, which will be responsiblefor organizing the competitive contracting processfor training providers and maintaining the registry of accredited providers. Second, the SLSS has created the National Labor Training System, which aims to increasethe participation of employers and training service providers to complement public sector resourcesin this area. 3. Monitoringand evaluation of outcomeshesults Monitoring and evaluation systems are being developed ineach of the three implementing agencies that will permit the collection and analysis of outcome andresults indicators. The M&Esystemswill generatereports that will be consolidated andanalyzed inthe two line ministries incoordination with the SOP, as part of its role in supervising the implementation of the PRSPpriorities, and as the agency ultimately responsible for the social protection strategy and the implementation of this project. The M&Einformation systems will include data on the physical and financial progress of each component, the indicators defined for the baseline of the project, a component of community-based monitoring and social audit, and external impact evaluations. Inparticular, the project will finance baselines and impact evaluations for the two main components. Since the existing AIN-C programwas evaluated recently, it will be important to evaluate the effects and impacts of the strengthenedaspects of AIN-C design to be supported by this project. For the First Employment pilot, a baseline survey and impact evaluation will be designed with a focus on labor market insertion of the participants, and will also include the Proempleo program as far as it is comparable. The evaluation would also include an economic analysis of the intervention. The results and findings of theseM&Esystems are intended to help the implementing agencies determine the next steps for further program development and possible expansion. Project M&Eindicators are presentedinAnnex 3. To the extent feasible, the project will consolidate arrangementsto further evaluate other critical social protection programs, according to government priorities. Also with the support of this project, the SOP will implement a social audit schemefor social protection programs, as part of the overall M&Esystem o f the project. 4. Sustainability The Government of Honduras has demonstrated very strong ownership of this project, and a high level support to lead and coordinate this project from the Vice Minister of the Presidency. The GOH has committed to assume the recurrent costs of this project on a declining basisfor the life of the project to ensure that the programs will be able to continue after project completion. 20 Project design also includes consideration of severalissues to maximize the probability of project success and sustainability. Inthe AIN-C component, limited sustainability was identifiedas one of the main weaknesses of the program duringthe 2000-02 period, as shown by the decline in key output indicators (see Annex 15). Inresponse, a major focus of this project i s to strengthenthe institutional framework for AIN-C inorder to ensure that adequate supervision and follow up are a central part of implementation, and that the capacity i s in place to lead further expansionsof AIN-C coverage, as contemplated under the PRSP. In addition, while the initial investments incapacity building, training, and the buildingof systems and evaluation capacity will be considerable, the recurrent costs of the AIN-C program, once inplace, are fairly small due to the extensive implementation work via community volunteers and existing structuresof the Secretariat of Health. Inaddition, prior to coverage expansion, the project will support government efforts to reach an agreement with AMHON to involve local governments inbothexpansion of the AIN-C at the early stages and program sustainability inthe mediumterm. Inthe First Employment component, the project will support the creation of the institutional framework to coordinate the existing programs" for youth labor market insertion under the SLSS, and thereby contribute to greaterefficiency in the use of resourcesalready dedicated to this area. This result will be supported by the First Employment program becauseit i s designedto integrate the services of these interventions to ensure that beneficiaries can progressthrough all the steps inthe system, rather than only benefitingfrom one or another part of it. Finally, becausethis project supports investments inhuman capital as the most powerful mechanism to prevent and mitigate social risks, the beneficiary results are sustainable; beneficiaries of the AIN-C component receive improved nutritional status, causing sustainable gains incognitive development. Disadvantaged youth who participate successfully inthe training and first job experience, along with support to develop life skills, are more likely to become productive members of society. 5. Critical risks and possiblecontroversial aspects Risks: The mainrisks toproject success involvethe overall weak implementation capacity of the Honduran government, andpotential resistanceto institutional changes supported by the project. Mitigationmeasures: The project will deal with these risks inthree ways. First, it will provide intensive support to the administrative unitsresponsible for project implementation duringthe life of the project. Second, it will reducethe administrative burden on the implementing agencies by usingNGOs for delivery of the AIN-C package and the youth training courses and for the administration of the training contracts. Third, initially the project will emphasizethe consolidation of sound institutional arrangements (particularly in the case of AIN-C) and implementation of a pilot in the First Employment component, prior to scaling upboth interventions. Nevertheless, given the current institutional weakness for loInthe public sector, this includes INFOP, the Military Technical School, and the institutions for vocationaltechnical education and higher technical education. Inthe private sector, there are private and non-profit training centersas well as in-house enterprise training programs for continual education. 21 project implementation and the fact that 2005 i s an election year and a new administration will implement most of the project, the overall risk rating i s Substantial R i S k S RiskMitigation Measures Risk -ating with Mitigation To achievingproject developmentactivities Weak policy formulation - Strongsupport for these actionsfrom the Presidency. M andfollow through - Ongoingsupport under the projectto strengthenandtrainthe key capacity at all levels of administrativeunitsat the different levelsof the govemment. govemmentcan limit the - World Bank support andfollow up with the GOHvia other Bank impact of overall efforts tc instrumentssuch as PRSC. reformand strengthen social protectionsector management. To achievingcomponent results Weak implementation - Considerableemphasis on strengtheningthe institutionalcapacity of the capacity of the SOH SOH to administer andexpand AIN-C is included. (including local level). - Expansionof AIN-C coverageto an additional 1,000communities will start in the secondyear of the project, once the institutionalstrengthening activitiesare well advanced. - Support for the government's efforts to improvecoordinationamong donors financingprogramsto diminish infant andmatemal mortality, -which will facilitatethe administrationandexpansionof interventions. Commitment of the SOH to strengthenthe AIN-C unit, projectsupport for institutionalstrengtheningat the policy andoperationallevels, and training at all levels. - Developmentof a comprehensive work planfor the SOH Department of CoverageExtensionandFinance of HealthServicesto ensure that the demands onpersonnelto implementWorld Bank, IDBandother projects are adequatelyanticipatedandpreparedfor. - Frequentreportingof the progressof this unit by the SOH authorities to avoidbacklogs. - Contractingof outside serviceproviders. Weak implementation - The project will strengthenthe existing institutionalcapacity with a capacity of the SLSS. youth-at-riskdevelopment focus, providing technicalassistancefor administrativecoordinationof the project, andwill use asmallpilot activity to start with, which canbe scaledupover time as results warrant. - Training serviceswill be providedby outsidetraining centersrather thanby the SLSS andthe component will be implementedinpartnership with the NGOCADERH, which has extensiveexperienceintrainingand Links with the productivesector to help the SLSS to institutionalizethe programgradually. -Thiscomponent will implement intwo phasesas a pilot. Once the first phaseis implementedand evaluated, the secondphase will start implementation. Improvementsto AIN-C -Preparationof atraining calendarthat indicatesthe incorporationof modelare too many too :ach of the training modulesfor each groupofmonitores. Focuson fast andoverwhelmthe jeepeningtraining inpreventiveactivities first beforeexpandingfurther capacity of the monitores. intocurativeactivities. .Expansionof the AIN-C programto new communitieswill start inthe secondyear of project,concentratinginitial effortsto implement institutionalstrengthening inthe first year of implementation. The SOH's limited .Considerableemphasisonstrengtheningcapacity for administeringand experiencewith and :xpanding the component i s included inthe project. possible reluctanceto .Intensivepreparationandsupport for procurement andfinancial contract out service nanagementaspects, developed incoordinationwith IDA andthe IDB- provisionto NGOs. Ynanced projects, which are already strengtheningthe SOH's nstitutionalcapacities for purchasinga more broadlydefinedpackageof 22 health services. - Inclusionof contractingarrangements in the DevelopmentCredit -Agreement. The projectsupportsthe expansionof an already existingsuccessful programand many implementationmechanismsare alreadydesigned. - The SOH localunits will be allowedto compete for service provision contracts. Limited interest of service - Clearly defined rules of the game to make sure providershaveall M providersinAIN-C bid. delivery. -informationneededtodefinition of communitylotsfor feasibility of Carefulattentionto coverage. - Ample advance publicationof bidding processesand criteria to enable privateproviders to obtain accreditation. Poor performanceof AIN- -Installationof apermanent supervision system, basedon aM&E M C providersreduces informationsystem, which will includeoutcome indicatorsandprocess programquality. indicators. - Strengthenedsupervisionby the SOH. -- Contract renewalslinked to performance. Consider including apenalty for poorperformancein contracts. - Designingandadoptingan improvedsystem for providers' -certification. Improvingtraining for providers Weak employment - Developmentof broadandflexible training cumculato permit labor M generationinthe mobility and skills to adapt to change. Honduraneconomy limits employment of program -- Inclusionof pertinenttraining, linked to employer needs. Follow up support for job placement. graduates. - Orientationof training towards those clusters definedby the GOH competitivenessprogram. Sustainabilityof the - Medium-termreallocationof funds from other programsto priority programbenefitsdelivered social protectionareas. via NGOs. - Focuson supervisionof quality of servicedelivery andon strengtheningcommunityinvolvementto ensurecontinuity. Difficulty infollowing -- Prior experiencewith this modeldemonstratessustained benefits. IDA-financedaccompanyingprogrammaticlending(PRSC, etc.) will throughwith the supportthese changes. institutionalchanges - Strong support for these changes fromthe Presidency requiredfor better service delivery. Overall Risk 6. Loadcredit conditions and covenants Effectiveness conditions: Adoption of Project Operational Manual satisfactory to IDA. This manual will consist of two elements: general elements that will apply to all components of the project (fiduciary aspects, etc.) and separatepresentations for the operation of each component. Definition of a detailed implementation plan for each component of the project satisfactory to IDA, and includingthe trainingplan for the expansion of AIN-C. Signature of a formal agreement between the Secretariat of Labor and a management agency for administering training contracts. Evidence, satisfactory to IDA, that the UDECOHSS inthe Secretariat of Healthhas commencedoperations. Methodology for the baseline for components 2 and 3 presented and satisfactory to IDA. Evidence, satisfactory to IDA, of the strengthening of each of the project execution units, including: (i) professional staff and project management informationsystems inplace, (ii) installation of accounting software capable of supporting project requirements, (iii) 23 hiringof procurement andaccounting staff adequatefor project needs, and (iv) installation o f systems for planning and supervising procurement processes and contracts, ineach of the executing agencies. 0 Opening o f the special accounts. D. APPRAISAL SUMMARY 1.Economicandfinancial analyses(Annex 9) AIN-C Component: Direct benefits. The AIN-C component of the PROJECT will generate cost savings as a result of the mothers and caretakers of children underfive substituting AIN-C monitor/u care for Secretariatof Healthpreventive and curative care provision. USAIDevaluations of the AIN- C Program found that mothers who participated inthe AIN-C Program substituted their local monitores' care and consultation for visits to the SOH. The study found the following effects: (a) a 29.6% reduction inthe number of SOH outpatient consultations for respiratory illness and (b) a 49% reduction inthe number of SOHoutpatient consultations for diarrheal disease. Indirect Benefits. For the AIN-C component of the project, two types of indirect benefits are estimated: (a) enhancedphysical strength and stamina, (b) enhancedcognitive capability and (c) children's lives savedfrom reduced vitamin A deficiency. Establishment o f "without proiect" and "with Droiect" scenarios. Two scenarios are analyzed inestimating direct and indirect benefits: without project and with project. Inthe "without project" scenario the performance variables of interest are analyzed assuming rates (and rates of improvement) that exist in2004. Inthe "with project" scenario estimates of changes are basedon rates of change in coverage that the Project anticipates making. The difference betweenthese rates may be interpreted as the savings generatedby the project. This is aconservative, low-end estimate of benefits. Due to the difficulties inquantifying some of the expectedbenefits, this analysis produces what should be regarded as minimum benefit estimates, and does not take into account all possible benefits. Inparticular, it excludes any benefit attributable to: (1) more general impacts on child mortality other than those attributable to vitamin A deficiency (2)improved efficiency of the education system, owing to better nourished children starting school earlier, learning more and lower frequency of grade repetition (Hoddinott & Quisumbing, Behrman et al., 2003), (3) reduced travel time and expensesof caretakers (to take children to SOH and other care providers), (4) caretakers' lost days of work, (5) reduced duration and severity of respiratory and diarrheal illnesses due to heightened access to care. These unquantified benefits, together with the conservative assumptions made incalculating those benefits that are here estimated, mean that the project i s considerably more desirable than indicated by the conservative, low-end estimates presentedinthis economic analysis. Results. The Nutrition and Social Protection Project's proposed AIN-C interventions will generatea cumulative net economic benefit of US$26.1 million, inpresent value terms, over the course of the 10-yearevaluative horizon. 16% of total benefits represent the valuation of the direct benefits of reduced SOHrecurrent cost savings and 84% representsindirect benefits of improved nutrition and children's lives saved. The internal rate of returnof the Nutrition and Social Protection Project i s 116%, which exceeds the 12% discount rate. In 24 other words, other possible alternative uses of the project's investments would obtain 12% versus 116% generated by investing inthe proposedinterventions. When alternative discount rates are employed, the project generateseven higher net benefits, reaching a maximum of US$33.8 million when usingan 8% discount rate. This project's cost benefit ratio i s 2.36, which implies US$2.36 in benefits for every dollar invested inthe project. These results provide ample evidenceto declare the project economically feasible, by virtue of its highreturn. The following section presents an analysis of alternative scenarios, in order to investigate the sensitivity of the rate of return to changesin some of the Project's critical assumptions. The fiscal impact of this component would be quite modest. Recurring project costs, to be assumedby SOHafter the Nutrition and Social Protection Project disbursementsare completed, represent an averageof 3% of the Secretariat's projected expenditures. The estimated annual costs represent less than 1.5% of the SOH'Sbudget and less than 2% of the current expenditures. As aproportionof GDP, project costs represent a relatively small amount that does not exceed0.2% of GDP, which, together with cost flow analyses, benefits andprofitability, make the Project not only viable, but an attractive option, from an economic perspective. YouthFirstEmploymentComponent The economic rationale for investing inyouth at-risk inHonduras i s based on two considerations: (a) improved employability and productivity of the beneficiaries generates bothprivate and social returns on investments, and (b) the labor market insertion of youth who neither work nor study will diminishthe probability of them engaging in anti-social and risky behaviors, which inturn will decrease future expenses for rehabilitationand treatment related to these behaviors. Direct benefits: Emplovabilitv and productivity. More than 400,000 adolescents aged 15-19 live inextreme poverty inHonduras, and under- as well as unemployment rates for youth aged 15-24 i s at least twice the national average. The private and social costs to youth unemployment are substantial, as potential economic output i s idle, and thus not enjoyed by the individual, hidher family, and society as a whole. Based on surveys invarious Caribbean countries, the forgone productivity due to an idle factor of production--youth unemployment- -ranges from zero to more than 7 percent of GDP. Earnings forgone are the direct economic costs of unemployment to the individual. Direct costs to the stateresult from the tax revenues forgone. Indirectcosts such as social exclusion and loss o f social capital, or engagementin illegal activities, further exclude the young person from society. Unemploymenti s also correlated with behaviors such as violence, substance abuse, and risky sexual behavior that impose costs on the individual and society. Results from impact evaluations of the direct benefits of programs similar to this in Argentina, Chile, Colombia, Costa Rica, Peru, Mexico and Uruguay indicate that access to a first employment will have a positiveimpact on the employment situation and/or earnings of the participating youth. InColombia, the employment rate of the graduates after the completion of the "Jovenes en Accia'n" program reached the average employment rate of all youth inthe same occupational stream (40%) and significantly exceeded that of the control population's (22%). Inaddition, the proportion of disadvantaged youth inthe formal sector increasedsignificantly, from 18 to 38 percent. The evaluation of Peru's Projoven program shows that the employment rate for the beneficiaries of the project was 6% higher than it was 25 for the control group, andthat the programbeneficiaries' incomes were 18% higher than the control group's. The evidence suggests that 18 months after the training's end, the program's effects were still substantial. Furthermore, a cost-benefit analysis of Peru's Projoven Program that gauged the program's social rate of return, found that the internal rate of return of this program i s between 13 and 36 percent. A conservative scenario would be 20 percent. Using adiscount rate of 5%, each of these scenarioswould require lessthan seven years to acquire apositive net present value. Indirect benefits: Savings on Costs of Crime and Violence. Youth gangs and the crime and violence they engender have becomeone o f the most serious problems facing Central America, and particularly Honduras. Deprived of opportunities for gainful employment and outlets for healthy expression, youth often turn to violence to express their identities and escapethe vicious circle of poverty. InHonduras, between 15,000 and 20,000 young people are members of gangs, and since the government in 2003 amendedapenal code to make mere membership of gangs a criminal offence, more than 1,000 young people have been jailed. Youth violence has substantial costs to youth, their families, society, and economic growth. The total cost of crime committed by youth cannot be accurately estimated becausemany of the crimes includeimmeasurable losses, such as those resultingfrom murder, sexual offenses, and drugtrafficking. Furthermore, criminal activity at a young age has long-term implications for a person's future criminal activity and his or her integration into society. Datafrom some Caribbeancountries indicates the range of costs ofjuvenile crime. Total estimated social costs of youth crime reach 0.04 percent of GDP inJamaica and 0.45 percent inSt. Lucia. The total private economic coststo citizens are estimatedto beequivalent to 11 percent of GDPinJamaica and 0.92 percent in St Lucia. According to an Inter-American Development Bank study on costs of violence insix Central American countries, violence against goods andpeople in the region accumulates to a destruction and transfer of resources of approximately 14.2 percent of the GDP. 2. Technical International experience shows that effective interventions for children and youth are the most powerful mechanismsto prevent risks that may cause irreversible damage, such as malnutrition and the lack of early stimulation, etc. Tackling malnutritiondirectly reduces child mortality and improves the likelihood of better lifetime earnings. Youth-focused programs improve health and reduce poverty. Interventions for youth also addressthe risk of transferring vulnerability and thus benefit future generations. As mentioned inthe World Bank's Childrenand Youth approach, targeting interventions to these groups represents the highest leverage point for investments to buildhuman capital and break the intergenerational transmission ofpoverty. Supporting a social protectionstrategy basedon targeted interventions for infants, young children and youth i s the most effective way to effectively link suchastrategy to poverty reduction andeconomic development. This isparticularly important inHonduras since about three-quarters of the poor population i s younger than 20 years of age. 26 The AIN-C model was first developed inHonduras. The antecedents to the program date from 1991, when the SOH beganimplementing an integrated child nutritionprogram. The specific, standardizedapproachand content of what came to be the known as AIN-C were developed with assistancefrom the USAID Basic Support for InstitutionalizingChild Survival/BASICS Project. After reviewinglessons learned and key practices ingrowth promotion (Griffiths, Dickin and Favin, 1996) from other countries, the Honduran program was further refined, and launched inlate 1996. Among the innovations were: (i) a mechanism for involving the community in the program by creating a team approach to improving community health. Insteadof leadership resting on one individual, a small group of volunteers i s chosen by the community and this group helps the community as a whole analyze child growth and create a healthier physical environment for young children to live and grow in. (ii)the supplanting of the traditional growth indicator ofany weight gain with the use ofadequate weight gain, and thereby establishing a means for more closely monitoring the dynamics of child health and enabling the identificationo f problems early-on, inorder to take preventive actions, rather than waiting untilamajorhealth problem developed. (iii) a well developed set of tools to aid workers indeveloping an action plan for each child basedon the child's growth, which includes counseling, home visits, and referral. (iv) a simple, highly-structured and well-documented, job-based trainingprogramfor community volunteers, predicated on the premise that the community volunteer i s the heart and soul of the program (BASICS 1999, page 6). The program i s effective in changing mothers' knowledge, attitudes and practice related to child nutrition, child rearing (more generally) and care seeking and inimproving the nutritional status of children (see Annex 15 for details). The program focuses on the nutrition status of children less than two years of age, which is essential, and should be included in every country's health priorities for a number of reasons. First, nutrition i s a necessary condition for improving health status. Children who are mildly underweight have a two-fold higher risk of death, and those who are moderately to severely malnourished have a 5 to 8- fold higher riskof deaththan those who are better nourished. Malnutritioni s an underlying cause of 53 percent of child deaths, worldwide (The Bellagio Group, 2003). Honduras' high rate of malnutrition may prevent it from achieving not only its nutrition-specific Millennium Development Goal (MDG), but also its MDGgoals of reducing infant and child mortality. The AIN-C model includes most of the relatively small number of interventions that the prestigious Bellagio Child Survival Study Group identified as having an acceptable scientifically-based level of evidence of effect (2003a-20030 (see Table below). Diarrhea Pneumonia PreventiveInterventions I Breastfeeding Complementaryfeeding X (AIN Water, sanitation, hygiene Vitamin A Zinc X X HibVaccine X I TreatmentInterventions I 27 Oral rehydrationtherapy Antibioticsfor pneumonia Antibioticsfor dysentery X Zinc X Total includedinAIN-C 4of8 3 o f 5 Second, nutritionprograms must target children less than 24 months of age becausethis i s when children are generally beingweaned and are at greatestrisk of becoming malnourished. Children that have suffered chronic malnutrition before they are 24 months of age are biologically unable to catch-up: regardless of what their food intake status is subsequently, they remain stuntedfor the remainder of their lifetime and their cognitive capabilities, their strength and stamina are permanently and incontrovertibly compromised. Nutrition programs, therefore, must adopt foremost aprevention strategy. Third, childhood nutritionis an important inputaffecting the quality of life and a critical determinant of human capital formation andeconomic development. Adequate nutrition is a necessary, but not sufficient, condition for human development: poorly nourished children suffer malaise, are less social, have concentration problems, achieve less cognitive learning, have low school attendancerates and highdrop-out and highrepetitionrates. As aresult, they are relatively poor students (other things equal), and are less likely to developjob-related skills or adequatesocial skills, and are more likely to have a lower income-earning potential and lower qualityjobs. Malnutrition, therefore, i s an important factor affecting the intergenerational transmission of poverty. However, malnutrition not only affects individual development and income, and the intergenerational transmission of poverty, it also affects society more generally. It requires additional expenditures inhealth to combat it directly, and reduces the efficiency of other expenditures inhealth (because it interacts synergistically with other infectious diseases to undermine health status), and it also effectively throttles human capital formation and economic development. Nutrition programs and nutritionpolicy should not be equated with food distribution. Simply distributing food will not addressthe root causes of the problem, and thus must be regarded as simply a palliative measure. Nutritional status i s the outcome of a complex web of causality. It stems from deficiencies inknowledge, attitude and practices about hygiene, nutrition, health and child development andchild-rearing practices (World Bank 2004a, 2004b). The AIN-C programaddresses all three of these considerations. The FirstEmplovment program i s an intervention model for youth-at-social-risk following the main principles of several training/employment programs for youth inLatin America, including, among others, Chile Joven, Colombia's Jo'venes en Accio'n, Argentina' s Proyecto Joven, and Uruguay's Projoven. These and other interventions have beenrigorously evaluated and they show encouraging results interms of mitigating the mainrisk poor youth are exposedto, includingearly school drop out, insufficient knowledge and skills, and unemployment. Recent evaluations inChile, Uruguay, and Colombia show that a direct impact of these interventions i s higher employability for the trainees. The design of the Honduras First Employment programfollows the maincharacteristics of these successful international best practices. Specifically, the following three aspects are important: (i) The First Employment program will be effective intargeting the most 28 vulnerable groups of youth inthe country: those with incomplete formal secondary education and the unemployed. Most of these youth have dropped out of school and lack enough experience and skills to compete inthe formal labor market. (ii) The FirstEmployment program seeks to correct the mismatch between demand and supply of labor by providing training adapted to reflect the productive sector's requirements. Thus, the trainingand experience provided by the program will respond to market needs. (iii) The First Employmentprogram addresses the challenge of coupling vocational training with provision of initial work experiences, thus dealing with the two main risks poor youth face: lack of work experience and lack of knowledge and skills. Inaddition, the FirstEmployment program has beenadjusted to the Honduran needsand context, but it i s grounded on the basic principles mentioned above. Perhapsthe most important feature of the program i s that it is a preventive intervention designedto reducethe likelihood of inactivity andits direct relationship with drugs, violence and gangs. Interms of project design, the main adjustmentsinclude: (i) involving alternative formal education interventions to target poor youth and the requirement that beneficiaries continue insuch programs to create a culture of continuing education for employment; and (ii) connecting graduates to active labor market services, thus improving the likelihoodthat beneficiaries will be fully inserted. 3. Fiduciary As mentioned above, the project will have three implementing agencies. Component 1will be implemented by the Office of the Vice Minister of the Presidency, in its role as the coordinator of social policy. Component 2 will be implemented by the Secretariat of Health as the normative agency for the country's nutritionpolicy and programs, and as the supervisor and agency incharge of the monitoring and evaluation of AIN-C. Component 3 will be implemented by the Secretariatof Labor and Social Security (SLSS), in accordance with the government's decision to approach the topic of social protection for youth through labor market insertion, and over which the SLSS holds the mandate. The project responds to a set of prioritiesincluded in the social protectionpillar of the PRSP, under the coordination of the Secretariat of the Presidency. Therefore, the SOP will be ultimatelyresponsible for the proper coordination and supervision of overall project implementation and will coordinate its implementation with the other two ministries. The institutional project implementation arrangements have been designedwithin each agency. Procurement(Annex 8): The Procurement Assessment reviewedthe organizational structure for implementing the project and the interaction between the implementing agencies. The mainfinding indicates that the proposed implementingagencies have varying levels of institutional capacity and experience working with the donor-financed projects. Furthermore, the assessment identifies an opportunity to harmonize the implementing arrangements with the IDB. The IDB i s launching two projects with the SOH and SLSS as implementing agencies. The content and objectives will be consistent with the content and objectives of this IDA-financed project. Thus, the two institutions can leverage their existing capacity and experience. The overall Procurement RiskAssessment: Average. The project implementation arrangementswithin the SOH and SLSS will be sharedwith the IDB-financedprojects. To addressthe staff capacity limitations, a financial managementand 29 disbursement workshop will be delivered by the World Bank's staff once all financial management and procurement specialists are hired. Financial Management(Annex 7). The implementing agencies have varying levels of institutional capacity and experience working with donor-financed projects. Inall cases, the existing administrative, budget andfinancial managementstructure will be usedto the maximum extent possible. Project implementation arrangements within the Ministries of Labor and Health will be sharedwith existing IDB-financedprojects. Accounting and managementinformationsystems will be acquired and installed by each implementing agency by project effectiveness. As mentioned above, a workshop will be delivered by World Bank staff once all financial managementand procurement specialists are inplace. Duringthe project, eachimplementing agency will complete the following activities: (i)Manage its own USD Special Account opened inthe Central Bank of Honduras and be individually responsible to submit its respective disbursement applications to the World Bank. The funds transfers will be basedon the financial needs identified and the expenditures incurred. The GOH counterpart funds will be transferred to the operational accounts opened inlocal currency inthe Central Bank of Honduras as part of the budget allocations to the respective implementing ministries. (ii) responsibilitytopreparethequarterly(FMRs)andannualfinancialreportsfortheir Take respective components and submit such reports to the Secretariat of the Presidency for further consolidation. (iii) responsibilitytomonitorcompliancewiththerequirementsandprocedures Take established inthe Credit Agreement and the Project Operational Manual. Each Secretariat will also be responsible to monitor the achievement of the project development objective and performance indicators. Annual financial statements of the project will be audited inaccordance with the International Standards on Auditing, by an independent firm and in accordancewith terms of reference (TORS)acceptable to IDA. Inaddition to the audit opinions on project annual financial statements, the FMRs, the Special Account reconciliationand the SOEs, separate reports will be required on the state of the InternalControls ineach of the implementing agencies and the project's compliance with the Credit Agreement and Operational Manual requirements. To improvethe existing arrangements, an Action Plan has been agreedupon betweenthe Government of Honduras and the Bank (see Annex 7). 4. Social A social assessmentwas carried out inMarch2005 as ajoint effort of the Ministries of Healthand Labor and the World Bank. The social assessmentincludedtwo parts: (a) a desk review, and (b) two Participatory Assessments (urban and rural). The results of the assessment and an Indigenous Peoples Development Plan (IPDP) were agreedwith the government, incorporated inthe project design and will be included inthe Operational Manual. Two teams were deployed to implement informed consultations with key 30 stakeholders of both components. For the AIN-C component, a multidisciplinary team visited 12communities presently benefiting from the program inthe Departments of L a Paz, Intibuca, Lempira and Copan, andfour villages not participating, as a control group. They carried out a Rapid Participatory Rural Appraisal (RPRA), which included focus groups with beneficiaries and non-beneficiaries (parents) of AIN-C and monitores. They interviewed local and traditional authorities, Patronatos, community leaders, HealthUnitsand other providers (including NGOs).For the First Employment component, 343 survey/interviews took place inthe two metropolitan areas of TegucigalpdComayaguela and SanPedro Sula. Focus groups were carried out with training providers in nine Training Centers (Including EDUCATODOS). Moreover, government meetings with the Indigenous and Afro-Honduran Federations were held to identify targeting mechanismsfor both components. Proposedstrategy for both components: (a) Include the variables of ethnicity, gender and age inboth baselines, in all databases and monitoring systems inorder to monitor progress and behavior changes of participating ethnic children and youth. (b) Provide an intercultural health and social protection approach to reinforce the intercultural identityof the country. For the AIN-C component, the IPDP contemplates the training providedby the Indigenous Health Unit (SOH) to health workers inside the SOH, departmental staff, teams of facilitators, NGOs, etc. (c) Promotional campaigns should have an intercultural and gender strategy to target both men and women. The radio is consideredthe most effective form of media. Recommendations for the AIN-C component: (a) Include an "Intercultural health module" which includes the practices of western medicine and local traditions. The module should cover both safe and unsafe practices, and be targeted to: (a) staff involved inhealth care service delivery at the Central, departmental municipal, and local levels; and (b) facilitators, NGOs and monitors for AIN-C. (b) Strengthenthe existing "community-based health networks" (Monitors, midwives, healers, guardians) which operate traditionally and permanently inthe communities to provide traditional preventive and curative care. Since they enjoy respect and credibility in the community, AIN-C would benefit from including them inthe strategy, and their involvement would convey greater credibility and sustainability to the program. (c) To improve the nutritionpart of AIN-C, coordinate with other agenciesto provide the community the opportunity to access agricultural programs, seed distribution, etc. Also, liaise with institutions/NGOs working on medicinalplants cultivationprograms. Recommendationsfor the First Employment Component: (a) The targeting study for the program should consider the broader "Metropolitan" areas, that is, MDC (Tegucigalpa and Comayaguela); SanPedro Sula and L a Ceiba and satellite municipalities where people commute to the city for work. (b) Socialize/promote the program inside the SLSS inMDCas well as SanPedro Sula andL a Ceiba. Socialize/promote thee program outside the SLSS through informed consultations with stakeholders (employers, unions, trainingproviders, indigenous federations, youth groups and civil society). 31 (c) Strengthen the central and regional directorates of the SLSS to collaborate with the project. Participatory Indigenous and Afro Honduran Peoples, and Gender Plan. Since the Departments of AIN-C are a multi-cultural area (40 percent Lenca and Chorti, 40 percent peasants of Lencatradition, and 20 percentmestizos), the social strategy i s intended to include all residents under a culturally-appropriate strategy that benefits the entire region. The IPDPalso ensures the inclusion of isolated ethnic communities identifiedby the Lenca and Chorti federations. It recommendsbringingthe AIN-C program closer to the communities (to the CESAR), and training the traditional community-based health networks inprimary health carewithin the AIN-C strategy. The IPDPsuggestsoffering qualified indigenous NGOs the opportunity to participate as providers. Finally, it includes the training of main actors on "Intercultural Health" strategies. Training will be providedby the Indigenous HealthUnitof the Secretariatof Health. Inthe case of the FirstEmployment component, the IPDPproposesa strategy to alert ethnic youths 15-19years of age about the opportunity to register inthe EDUCATODOS, PRALEBAH, etc. training programs in order to becomeeligible beneficiaries. The indigenous and Afro-descendant federations have agreedto assist inthe identificationand promotion of the program among youth living in the targeted cities through their networks. Annex 10provides a full description of the IPDPagreed with the Secretariatsof Healthand Labor. 5. Environment The project does not finance any construction activity and there are no environmental safeguardissues. 6. Safeguard policies Safeguard PoliciesTriggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.01) E l [XI Natural Habitats (OP/BP 4.04) [XI Pest Management (OP 4.09) EE[I ll Ex1 Cultural Property -3, beingrevised as OP 4.11) Ex1 InvoluntaryResettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OD4.20, beingrevised as OP4.10) Ex1 [I Forests (OP/BP 4.36) E1 [XI Safety of Dams (OP/BP 4.37) [XI Projects inDisputed Areas (OP/BP/GP 7.60) EE[I ll Ex1 Projects on International Waterways (OP/BP/GP 7.50) Ex1 7. Policy Exceptions andReadiness The proposed project does not require any exceptions from Bank policies or procedures. The project meets all regional criteria for readiness for implementation. 32 Annex 1: Country and Sector Background Country Issues The Governmentof Honduras needs to focus its efforts to reduce poverty and vulnerability sustainably. The GOHfaces the challenge of designing and adopting a strategy and interventions to break the intergenerational transmission of poverty and create the conditions to sustain that strategy. The Honduras Poverty Reduction Strategy proposesto meet this challenge by acceleratinghuman capital accumulation through an integrated set of structural social policies (education, health, nutrition, labor) with complementary interventions targeted to support the most vulnerable groups and those that have traditionally been left behind. Programsfor poor population groups under 20 years of age are particularly important. These groups representa disproportionate majority of the poor population in Honduras and offer the greatest leveragefor human capital investments, making them the primary target groups for sustainablepoverty reduction efforts. Inrecent years, the governmenthasdemonstrateda strong commitment to reduce vulnerability among the mostunderservedpopulationgroups through specific social protection programs that aimto reduce poverty and inequality. These programs complement the government's broader efforts to enhance the opportunities andbenefits provided by economic growth and to improve social service delivery to the entire population. The government must meet the challengesof sustaining-and insomecases, scaling-up- these social protection programs by consolidating their institutionalarrangements, (including the administrative and legal frameworks) and ensuring the qualitative and quantitative adequacy of their technical andhuman resource inputs. For many Hondurans, economic and human development opportunities remainbeyond reach. Honduras continues to be one of the poorest countries inthe hemisphere, with a 2002 per capita GNIof US$920. Nearly two thirds of the populationi s poor and more than half i s extremely poor, with a per capita income that i s less than the cost of a food basketdesigned to meet basic nutritionalrequirements. Inrural areas, almost 70percent of the population i s considered extremely poor. Despite modest gains inpoverty reduction inthe 1990s,social indicators have largely stagnatedsince 1998,and the prevalence of vulnerability remains high. Progressinpoverty reductionhas slowed, due to low GDPgrowth, increasing inequality, and continued highpopulation growth rates. Even though the prevalence of poverty declined from 74.8 percent in 1991to 64.2 percent of households in2004, not all groups have benefited from economic growth (INE 2004). Inparticular, inequality between urban and rural areas has increased, exacerbating sharp differences inliving standards. While important gains have been made inexpanding the coverage andquality of health and education services, indicators still lag well behindthose of almost all of the other counties in Central America, and there are important inequities inquality and access. Poor young children andyouth are particularly exposed to risks that may cause irreversible losses of human capital. The most vulnerable Hondurans are primarily young children and youth. Individualsinthese groups are the least able to take advantageof opportunities to reduce their poverty, while at the same time they are exposedto additional risks that increasethe probability of beingpoor. The most important additional risks confronted by these groups vary and contribute to long-term social problems by undermining human capital formation and economic growth. For children less than 6 years of age, the 33 critical additional risk factor i s chronic malnutrition. For youth, 15-19years of age-and especially a subset of them, school dropouts-the critical, additional risk factor i s their inadequate level of skills due to their incomplete andpoor quality education. Despite government efforts to address these specific problems, these two groups remain especially vulnerable and unprotected. These critical gaps inthe social safety net have allowed breaks inthe chain of humandevelopment. Inthe case of chronic malnutrition, the impact of this break i s irreversible. The potential level of physical and mental development of children less than two years of age who suffer malnutrition, i s compromised forever, thereby throttling potential human capital formation, underminingthe potential effectiveness and efficiency of broader social policies and slowing the potential paceof economic development. Inthe case of youth, inadequate skills development limits potential social and economic opportunities, which undermines hopes and aspirations, while sowing seeds of pessimism and cynicism that are manifested by the growth indisaffected youth, social anomie and gangs (murus) (see Table 1below). Table 1:Honduras:MainVulnerabilitiesbyAge Group /Age Rate % of total population Infants (0-6 years old 13 (0-4) Chronic Malnutrition (12-59 months) (%)( 1) 33 Poor populationnot benefitingfrom ECD programs (%)(2) 99 Not in school(5-6 years) (%) 64 Children (7-15 years old) 28 (7-14) Not inschool - 7-12years old (%) 11 - 13-15years old (%) 62 Youths (15-19 years old) 10(15-18) Illiteracy (15- 18) 8 Not inschool (16-18) 79 Inactivity rate (neither working nor studying) - 14-15years old 20 - 16-17years old 26 - 18 years old 27 Only studying - 14-15years old 7 - 16-17years old 9 - 18 years old 10 Openunemployment 9 Adults (24-59) Unemployment 6 42 (19-60) Seniors (60+) w/o pension (2) 95 7 (60+) Source: INE2004. except (1) ENDESA 2003. (2) Marques. 2003. 34 Sector Issues Social Protection. To reduce the exclusionof vulnerable groups, Honduras' broad economicgrowthand social strategiesmust be complementedby effective interventions targeted to the most vulnerable groups. Honduras's numeroussocial protection programs have been designed, implemented or funded by a myriad of uncoordinated agencies from central and local government, NGOs, and civil society to international agencies. These programs are frequently duplicative and overlapping. Yet some groups are not assisted. A recent assessment of the Honduran social safety net indicates that the needs of the most vulnerable groups-in particular, infants, preschool children, and youth-remain inadequately addressed. Other weaknesses include the relative neglect of prevention and mitigationinterventions and amore systematic approach to program monitoring and evaluation. These factors limit the effectiveness and efficiency of social protection policy. In order to promote Honduras' broadeconomic growth and social strategies andeffectively address these high-risk groups, there is a needto change the focus of public efforts from palliative measures (that are reactions to already-existing risks or shocks to prevention) to specific targetedinterventions that aim to prevent malnutrition (young children) and to prevent the process of exclusion (youth). A major probleminestablishinga social protection strategy hasbeenchronic institutionalweakness. As inother countries of Latin America, Honduran social protection interventions have been developed inan ad hoc way. The social protection structure consists of presidential programs andprojects that lack a proper institutional background and a structured, comprehensive, and mid-term strategy. As a result, social protection programs are highly exposedto political interference, undermining their sustainability since they are closely attachedto the givenpresidential priorities. Inthis regard, resource allocation and beneficiary selection usually depends on decisions from central and political authorities. The government has improvedinstitutional conditions for implementingitssocial protection strategy, but there is a needfor more coordinationand direction. The government createdthe Social Cabinet, a ministerial level committee, for directing, coordinating, and monitoring social policy, including social protection strategies. Likewise, a Poverty Reduction Strategy Paper offers a comprehensive plan for reducing poverty, and the development of a targeting mechanism has allowed for government's efforts to focus on the poorest areas of the country. However, the agencies responsible for social protection programs are fairly independent of each other, coordination mechanisms are nonexistent, and direction from the Social Cabinet i s mostly nominal. Institutional coordination also fails to articulate central government policies andprograms with interventions funded or implemented by NGOs.This i s particularly important since poverty and income levels in Honduras have led a significant number of NGOs and other donors to finance and develop social protection interventions covering a wide range of services. Publicprograms andgovernment interventions targeting two of the populationgroups most exposed to shocks and risks-children younger than 6 years of age and youth 15- 19years of age-have suffered most of the institutionalweakness of the social protection sector inHonduras. There have been some innovative pilot interventions that aim to serve the priority groups of small children and youth, butthe development of a 35 coherent strategy to institutionalize and expand them i s constrained by two factors: (i) inadequate coordination, which has ledto bothprogram duplication and exclusion; and (ii) weak institutional arrangements, which impede program coordination, expansion and sustainability. As a result, programcoverage remains limited. Infants andpreschool children. Overview of the Health Sector Honduras' health sector is dominated by the Secretariat of Health. The SOH i s by far the largest provider of health care inHonduras, accounting for 59 percent of total ambulatory care and 71percent of hospitalizations. The Secretariat's extensive and still growing infrastructure consists of 28 hospitals (4,000 beds), nearly 1,000 health posts and more than 275 health centers." Since 1994, the Secretariat's infrastructure has increasedby 50percent, as the government has sought to improve access to care. As of January 2004, the SOH had one or more facilities in294 of Honduras' 298 counties (municipios),providing a relatively highdegree of access to carethroughout most of the country. Another element of the government's continuing efforts to extend coverage has consisted of the SOHpurchasing NGO services to provide a Basic Packageof Health Services (BPHS) in isolated, rural areas.I2Implementation of the BPHS started in2000 and as of February 2005, itcovered approximately 250,000 individuals, 3.6 percent of the national population. This system was designedby, and has been implemented with the technical and financial support of an externally funded project which ended inDecember 2004. The SOH'Sinstitutional capacity to administer and supervise this new function, however, was never adequately developed. Inparticular, the Secretariat has yet to develop a system to monitor and evaluate the NGOs' performance, and thus does not yet have the capability to assess the fulfillment of contractual obligation^.'^ Since current SOH plans call for expanding NGOs' provisionof the BPHS over the next decade to 1.5 million persons, 15 percent of the national population, addressing this institutional weakness i s imperative. External financing and technical cooperation has hada long and important role inHonduras' public health sector. As the graph below shows, the level of external financing i s considerable and fluctuates significantly from year to year. The Secretariat's long-term reliance on externally-provided technical cooperation has created some more difficult to measure impacts anddependencies. The worrisome financial and institutional sustainability implications were important considerations inthe design of the proposedproject, as will be further discussedbelow. ~~ ~ I'Healthposts are usually staffed by a nurse auxiliary who has one year of training. Health centers are generally staffed by one or two physicians, one or more graduate nurses and severalnurse auxiliaries. l2 Underthe BPHS scheme, the SOHpays NGOsa capitation fee to provide25 specific services. ParticipatingNGOs are required to developitinerant health teams and visit their assignedcommunities at leastonce every two months. The content of the BPHS are primarily matemal and child health services, with an emphasis on preventivecare. l3 Even though the Secretariat has not developed adequate capability to manage, monitor or analyze the implementation or results of the BPHS, there have beensubstantial changes inthe BPHS since it was first introduced. Most notably, the SOH has bowedto NGOpressureto both reduce the package's costs (primarily by eliminating the requirementthat each provider team include a physician) and increaseits capitation payment. 36 I Sources of SOH Financing, Honduras2001-2004 100% 80% 60% 40% 20% 0% 1999 2001 2002 2003 2004 (Budgeted) (Budgeted) t I There i s an abundance of social capital inHonduran society, as i s evident inthe long, rich history of private individuals volunteering their time and resources to contribute to the betterment of their communities. The health sector inparticular has benefited substantially from Honduras' highlevel of social capital. The Secretariat of Health's efforts are aided by a cadre of community volunteers, including: health volunteers (guardians), community drug fund advisers (consejeras), pneumonia volunteers, malaria voluntary collaborators, AIN-C's nutrition monitors (monitores)and community health committee members. These volunteers are recognized and valued by the SOH, as is demonstratedby the fact that Secretariat proceduresrequire all the SOH health centers and health posts (CESAMOs and CESARs) to hold regular monthly meetings to obtain input from the volunteers, to coordinate activities with them and to provide them with community recognition and appreciation (the most important factors motivating the volunteers). Malnutritionand Childcare inHonduras Malnutrition is a key riskjeopardizing the survival and impeding the long-term development of children in Honduras. Children who are mildly underweight have a two- fold higher risk of death, and those who are moderately to severely malnourished have a 5- to 8-fold higher risk of death, than those who are better nourished (The Bellagio Group, 2003). More than half of the deaths of children under five inHonduras are attributable to malnutrition-either directly, or in combination with acute respiratory illnesses or diarrhea. Honduras' highrate of malnutrition may prevent it from achieving its nutrition Millennium Development Goal (MDG)and also its MDGgoals of reducing infant and child mortality. Malnutrition is also one of the most importantfactors affecting the intergenerational transmissionof poverty. Poorly nourished children have concentration problems, reduced cognitive skills, and have low school attendance, highdropout and highrepetitionrates. As a result, they are relatively poor students, and are less likely to develop job-related skills or social skills, and are more likely to be limited to lower quality jobs and a lower income- earning potential. Student malnutrition undermines the effectiveness and efficiency of the education sector and adds to the burden on the health care system. Chronic malnutritionand stunteddevelopment, therefore, not only perpetuate individualand intergenerational chronic poverty; they also slow the potential rate of economic development. 37 I Trendsin Chronic Malnutritionin Honduras,1987-2001 I 1087 1991 1996 2001 The programresponseto childmalnutritioninHondurasis inadequate. Since 1987, Honduras has reducedthe proportionof its children that are chronically malnourished (height-for-age) by 25 percent (see Graph above). Despite this considerable progress, the prevalence of chronic malnutrition among children remains unacceptably highat 32 percent (12-59 months of age). Honduras' rate i s more than twice the Latin American average, and, inCentral America, it is secondonly to Guatemala-which has one of the highest rates in world. Muchmore needsto be done to combat child malnutrition in Honduras and the pace of progress mustbe accelerated. Traditionally, public food and nutrition programs inHonduras have been carried out by a variety of institutions, and dominatedby international agencies, most notably the World Food Program (W), USAIDandmorerecently the IDB. Nutritionandchildcare programs for children under six years of age are fragmented and coverage i s limited. Program targetingi s inadequate, and criteria are not systematizedacrossprograms. Programs are poorly coordinated, with the result that different programs with different approachesand supported by different institutions target the same age group and risk. With the notable exception of AIN-C, no rigorous evaluations have been developed to measureimpact, while cost- efficiency is, on average, poor. Duplication, overlapping, and exclusion are common features of these programs (see Table 2). Program Institution Type of Intervention Target Group Programof IntegratedCare SOWSAD Motherdchildren under for Infants(AIN-C) Supply five HouseholdManagedBasic C A W Supply Pregnantwomen, and HealthcareProgram SOWUSAID childrenundertwo (HOGASA) Communityhouseholdsfor IHNFA/NGOs Supply childcare Voucher for mother and PRAF/GOH Demand Families infants Nutrition, healthand PRAFRDB Demand Pregnantwomen, 38 Community centersfor child IHNFAI ISupply 6 care I1I Childrenbetween children months and 6 years old Most food and nutritionprograms have not addressedthe most important causal factors of malnutritioninHonduras. Since the early 1950s, the primary programmatic responseto malnutritioninHonduras has beenthe distribution of food. For instance, the most important nutrition program in terms numbers of beneficiaries and level of financing has beenthe Student Snack Program (Program de Merienda Escolar, PME). In2004, it had a budget of US$10.5 million and distributed food to 640,000 children. The primary objective of the PMEis to provide public school students with a minimal nutritious meal, so as to encourage school attendanceand to reduce Honduras' highrates of repetition and desertion (PRAFpresentation, March 2004). While food distribution is important, it does nothing to prevent malnutritionfrom occurring inthe longer term. It i s a short term response. A more effective, longer-term strategy must seek to prevent malnutrition. To do so, requires an understanding of its causes. Honduras i s vulnerable to food and nutrition insecurity due to a combination of its macroeconomic and social characteristics, most importantly: low averageincome, widespreadpoverty, the slow rate of economic growth, inequality inthe distribution of income, low salaries, the highproportion of informal sector employment and widespread underemployment (GOH y PMA, 2003). The relative contributions of the three principal indicators of nutritionalvulnerability are shown inTable 3 below. The most important factor i s biologicalavailability, which includes considerations such as health status, health behaviors and other factors that influence health status, and access to and use of health services. These are the primaryfocus of the AIN-C program. The AIN-C i s an appropriate strategy given the highprevalence of chronic malnutrition and the nature of food and nutrition vulnerability inHonduras. Relative Weights of ComponentIndicators PhysicalAvailability Source GdH y PMA. 2003 The needfor a community-based program to prevent malnutrition was first recognized by the SOH officials inthe early 1990s,when they began working inearnest on the implementation of an effective growth monitoring and promotionprogram. It quickly became apparentto the SOHproviders that they could not wait untilmalnourished children came to the health ``Vulnerability is definedas the probability that an acute reductioninaccess to food will drive consumptionlevels belowcritical minimallevels (1,900 Kcal) creatinga situationof hunger. 39 facility. By then, the damage was already done and could not be reversed. Moreover, it becameclear from the findings of national, population-based, health surveys that the most severely malnourished were never even arriving at Secretariat facilities. The Secretariat realized that it neededto develop a community-based program to monitor the growth of young children and to intervene proactively when it was detected that children were growing inadequately. This was the birthof the AIN-C program (Giffiths&McGuire, 2005). The AIN-C is a preventive health andnutrition program that relies primarily on volunteers to pro-actively engage both the families and the communities to monitor and maintain the adequategrowth of children under two years of age. The AIN-C also treats andrefers sick children under age five to health services. For the under two year olds, the program employs inadequatemonthly growth as a triggering device for applying a diagnostic decision-tree analysis to identify the causes of inadequateweight gain, and combines it with formative research-based, protocols that address the causes of the problem, rather than simply treating its short-term symptoms. The volunteers use a simple, uniform, highly structured counseling approach with families. The HonduranNational Nutrition Plan (2003) identifies the AIN-C and, more generally behavioral change, as among the country's most important strategiesfor reducing malnutrition, andcalls for the expansion of its coverage. Youth-at-socialrisk (15-19years of age). Honduranyouth are at high risk. InHonduras, access to secondary education i s limited and its quality and relevance for poor families i s low, leavingpoor youth at riskof inadequate acquisition of knowledge and skills to compete inthe labor market. More than 400,000 adolescentsaged 15-19 live inextreme poverty. By the time they turn 19 years old, impoverished youth have two years less schooling than the national average (5.4 years vs. 7.4 years), and 55 percent of girls have at least one child. Their underemployment and unemployment rates are twice the national average. Inactivity leaves youth increasingly likely to turn to alternatives such as gangs, drugs, adolescent pregnancy, and crime. Between 15,000-20,000 youth belong to gangs, two-thirds of whom are male. Few programs address low education attendance rates and attainment among youth over age 15. Secondaryeducation is available to less than 35 percent of all youth, yet there are no significant training programs to improve the skills and employability of youth. The returns to education inHonduras are the lowest inCentral America, reflectinglow quality, which has depressedthe demand for education. As a result, youth are poorly preparedfor the labor market. About 25 percent of youth between 15-19 years of age neither attend school nor work (the highest rate inCentral America). Those who do find ajob inthe labor market are poorly prepared, and are trapped inlow productivity, bad quality jobs that generatelow incomes. Inthe long term, only improving human capital formation throughout all stages of life will sustainably reduce the vulnerability of poor Honduran youth. Yet, there i s a need to address this problemin the short term to prevent additional irreversible losses of human capital. Inadequateand insufficient investment in youth directly threatens (i) their opportunities to close their skills gap; (ii) poverty reduction efforts; and (iii) ability to their transfer benefits to the next generation. The Government Agenda The GOH's commitment to reduce the vulnerability of particularly underserved groups of the population is expressedinits Poverty Reduction Strategy. The fifthpillar of the 40 PRSP(the social protection strategy) emphasizesthe importance of improving the welfare of disadvantaged groups of the population by addressingrisk factors among specific groups of greatest vulnerability, including children and youth, to overcome obstacles to their social integration and development. Government's strategy to tackle poverty follows the approach by which human development duringchildhood and adolescencerequires specific interventions throughout the life-cycle, and achieving the maximum benefits inone age group will depend on adequate interventions at other ages. Inthis regard, the GOH recognizes that a focus on these groups significantly improves the poverty reduction impact of program resourcesbecausechildren and youth are central to the human capital formation chain. Investments in children and youth are the required complements to government efforts to improve the effectiveness of basic social services, inparticular basic education. A key priority of the Government's social protectionstrategy is diminishing the gaps in the chainof human capital development of children and youth. The first joint IDA/IMF staff assessmentof the PRSPimplementation progress concludes that if Honduras i s to meet the PRSPgoals and the MDGs, the country must do more to ensure that growth translates into poverty reduction via strengthenedsector strategies and improved implementation efficiency-including strengthening and rationalizingthe social protection strategy. The government has made significant progressinthe identificationof vulnerable groups (see Figure 1). Inthis framework, investments in young children and youth will help to close human development gaps by enabling poor groups to take advantageof opportunities offered by economic growth andimproved social programs. As outlined in the PRSPand inIDA'S PRSC, which supports its implementation, the GOH aims to improve the welfare of poor and vulnerable groups, especially children and youth via, inter alia, support for child nutrition and development, and youth education and employment opportunities. 41 0 Child NutritionandDevelopment: As noted above, programs in this sector lack a comprehensive guidingstrategy, are highly fragmented, and use widely varying criteria and approaches with little or no coordination. The government i s committed to streamlining its efforts by focusing on priority programs, of proven effectiveness, includinginparticular, the community-based health and nutrition (AIN-C) program for children aged 0-5 years. This innovative program, developed inHonduras, i s recognized worldwide as an effective, yet inexpensive preventive health and nutritionprogram. The government has targeted the expansionof AIN-C to the 80 poorest municipalities inthe poorest departments of the country, all of which have chronic child malnutritionrates in excess of 52 percent, well above the national average." A key constraint to addressin the expansion of this program is the needfor sound institutional arrangementsinthe Secretariat o f Health. The lack of such support inthe past has prevented the institutionalization of the program and limited its expansion and sustainability. 0 Youth education and employment: The efforts to prevent chronic malnutritionand strengthen the educational systemas outlined inthe PRSP, offer long-termresponsesto human development challenges. But for those young people who have already left the educational system or will do so over the next few years, a more immediate approach- providing basic life and vocational skills training, coupled with a first labor market experience and insertion assistance-is needed. The GOH's PRSPdefines support for youth labor market insertion as the primary social protectionstrategyresponsefor this group. To do so, the GOHis creating a "first employment" program for disadvantaged youth. The program draws from international experience, adaptedto domestic conditions. It will be implemented via an alliance between the Secretariat of Labor and Social Security, and governmental and non-governmental training organizations, in collaboration with the private sector, and alternative formal education programs. At the policy level, Honduras needs to develop a coherent social protection strategy that contributes to breaking the intergenerationaltransmission of poverty. A focus on the risks and vulnerabilities of infants, preschool children, and youth not only supports the GOH's strategy to reduce poverty sustainably, it i s also a major step toward improving the overall social safety net. The GOH considers this focus on social protection for children and youth as the entry point to strengthening its social protection strategy. Addressing the needs of young children and adolescentsat risk coherently will require that social protection interventions are closely coordinated with other government strategies, inparticular for health, education, and labor. Coordination and direction of policies and programs at the highest level is improving under the leadership of the Secretariat of the Presidency, but much work remains to develop the strategies andprepare line institutions to implement them. l5ForthePRSP,theGOHdevelopedanHDIrankingofthe18departmentsandprioritized80municipalitiesin6 departments. For AIN-C, the SOH has prioritized four of those departments with the highest ratesof chronic malnutrition-Lempira, Intibucfi,CopanandLa Paz. These departmentshave 67 municipalitieswith anestimated 40,000 childrenundertwo years, (10 percentof the nationaltotal) and 117,000 childrenbetween 1-4years. Nine municipalitiesare beingserved by an IDB-financedproject; the proposed projectwould expandAIN-C coverageto communities inthe remaining58 municipalities. 43 Annex 2: Major Related Projects Financedby the Bank and/or other Agencies HONDURAS: Nutrition and SocialProtectionProject 1. The Honduras Nutrition and Social Protection Project is one of several initiatives supportedby the Bank to reduce vulnerability and improverisk prevention mechanisms through fostering human capital investment among poor families inHonduras, as well as to support the Government's strategy to reduce poverty. The project represents the initial phase of a concerted effort to improve Honduras' social safety net. Other Bank-financed projects addresscomplementary areas, such as landmanagementand administration, health reform, roadconstruction and improvement, sustainabletourism, community-based education, etc. The Honduras Nutrition and Social Protection Project i s part of an agendathat also includes projects such as: Related Projects sup, wted bv the World Bank are: ProjectName Amount Financier - DOAP Ratings Sector Issue Community-based US$41.5 M IDA DO-S [mprove quality of preschool and basic education Education Project IP-s inrural areas. Includes Intercultural Bilingual (34970-HO) Educationcomponent. Continued collaboration of FHIS and PRONEEAAH-EIB at the Secretariat of Education. FifthSocial US$60.0 M IDA DO-S Increase access to small-scale social and Investment Fund IP-s economic infrastructure. (34430-HO) MunicipaldecentralizatiodCDD. Health System DO-S Reform o f Health System. Component 2 provides ReformProject IP-s opportunity to submit healthproposals. (36400-HO) Land Administration DO-S Decentralized land administration system to Program IP-s provide users with accurate information on (PO55991) parcels and land administration services. Mesoamerican US$12.22 M GEF DO-S Enhance protection o f marine ecosystems. Barrier Reef System IP-s (Mult-27739) Regional US$12.0M IDA DO-S Sustainable tourism development based on the Development of IP-s cultural and natural patrimony of the Copin Copan Valley Valley and surrounding areas through the (37640-HO) Honduras Institute of Tourism. Road Reconstruction US$66.5M IDA DO-S Restore roads damaged by Hurricane Mitch. and Improvement IP-s (34320-HO) Rural Land US$34 M IDA DO-S Demarcation, cadastre, census of territories. Management Project IP-s Benefited indigenous territories belonging to 23 - P U R Tolupan tribes. Training on land rights done for (02940-HO) Pech in Colon and Olancho. US$5.0 M IDA ~~Sustainable Coastal DO-S Develop and manage sustainable coastal tourism Tourism Project IP-s along North Coast mainland and offshore Bay (3558 1-HO) islands through learning/participatory process. Trade Facilitation and DO-S Increase productivity of Honduranprivate sector Productivity IP-s comDetitiveness. 44 Nuestras Raices US$lO.lM IDA DO-S Improve the socio-economicdevelopmentof IP-S indigenousand Afro-Honduran communities. Poverty Reduction USS8.0 M IDA DO-S Improve Government's institutional capacity in SupportTechnical IP-S the areas of planning, participatory monitoring, Assistance Project public expendituremanagement, accountability, public administration and public servicedelivery. Relatedprojects by other international agencies include: 2. The Inter-American Development Bank (IDB).Inthe past two years, the IDB funded interventions that are complementary to Nutrition and Social Protection, as part of the Poverty Reduction Strategy. Project Name Amount Approval ~ Number Date Sector Issue Poverty Reduction 02111/04 Make progresstowards attaining specific SupportProgram HO social-sectortargets within the poverty reduction targets containedinHonduras' PRS. Specifically, the program seeks to link strategic and financial decisionsmade at the highest level of governmentwith a commitment to reachspecific targets in education and health. Secondary Education USS30.6M 1552lSF- 06/09/04 Improvethe coverageand quality of the and Job Training HO third and fourth cycles of secondary educationand the employability of youths and adults. Comprehensive USS20.0 M 1568lSF- 01/28/04 Enhancethe humancapital of the country's Social SafetyNet HO poorestfamilies through a comprehensive Program social protection strategy. Improvementof USS16.6M 1619/SF- 03116/05 Improve a series of indicators (i.e. maternal HealthConditions in HO andchild mortality and morbidity Honduras indicators) to expandhealth coverageand enhance the quality of maternaland child 45 I * C il) Lo 98 8 > 'p > as 'gm e, 0 2e, 0 e, m Lo 2 e, x N &8x 0 m m m v'i a n > m 0 3 CQ w-l ? N 3 Annex 4: Detailed Project Description The project developmentobjective is to improveHonduras' socialsafety net for children and youth. This would be achieved by (i) improving nutritionalandbasic health status of young children through and expanding the successfulAIN-C program, and (ii) increasing employability of disadvantagedyouth through piloting a FirstEmployment program. The coordinated implementation of these interventions constitutes the first step towards consolidating the government's institutional and technical capacity to formulate, coordinate, and monitor a comprehensive social safety net. This objective supports government's strategy of fostering human capital investment among poor families inthe poorest municipalities of the country to reduce poverty. The project will strengthengovernment's capacity to protect and improve the human capital of children and youth populations, as a first phase of a long-term process to consolidate a comprehensive social safety net structure. The project will support two sets of interventions. The first intervention will support government's efforts to (i)improve the nutritional and basic health status of children aged0-5 within the broader framework of an integrated early childhood development program inthe rural areas of the four poorest departments with the highest incidence of chronic malnutrition; and (ii) improve the skills and employability of poor youth-at-social-risk inurban areas. These interventions will complement the government's strategy to increase access and quality of health and education, and strengthen the chain of human capital formation from the early stages of life untillate adolescence. Second, the coordinated implementation of these young children and youth programs constitutes a first step towards consolidating the government's institutionaland technical capacity to formulate, coordinate, and monitor a comprehensive social safety net. This annex provides details on each of the three components: (a) InstitutionalStrengthening of the social protection framework for children and youth; (b) Consolidation and Expansion of the AIN-C program; and (c) FirstEmployment Program for Youth-at-Risk. Component 1: Institutional Strengthening of the social protection framework for children and youth (US$l.O million). This componentseeksto improvegovernment capacity to protect and improvethe humancapitalofpoor infants, children, andyouth inHonduras,as the first stage ofa process to consolidate a comprehensive social safety net. The project will support long- term efforts to create a coherent institutional structure to make policy decisions, coordinate implementation and budget allocations, and monitor social protection interventions, starting with the children and youth programs. B y helping create adequateinstitutional, administrative and technical conditions, the project will enable the government to gradually define and implement additional social protectionprograms. The Honduran Law of Public Administration delegates to the Secretariat of the Presidency (SOP) the responsibility to coordinate social policy formulation and monitoring, including social protection, as an integral part of the PRSP. This component will support the SOP as it consolidates the institutionaland operational framework for social protection inHonduras, starting with children and youth. This component includes four subcomponentswith activities targeting vulnerable young children and youth. 50 Subcomponent 1. Social protection policy formulation and coordination: This subcomponent will finance technical assistanceto consolidate an institutionalstructure that can support the mandate of the SOP to formulate, implement and monitor social protection policies and programs, beginning with children and youth. Activities will support a coherent process to identifypriorities, make decisions, coordinate budgetary appropriations and program implementation, andconsistent monitoring and evaluation. The activities include: (i)Definingan institutional structure for policy formulation and decision-making, coordination of implementing agencies, andmonitoring and supervision. The project will strengthenthe Secretariatof the Presidencyin its role as technical secretary o f the Social Cabinet. (ii) Defining the institutions and clarifying their roles in social protection strategies and programs. This activity includes three different levels: policy formulation and decision making, involving the Social Cabinet and the Secretariatof the Presidency; budgetary allocation and implementation at the central level, includingthe implementation agencies and the Secretariat of Finance; and sustainability, involving local governments and communities. (iii) Designing and adapting instruments and norms to improve institutional coordination. Subcomponent 2. Instruments to improve the effectiveness of social protection expenditures. Activities included inthis subcomponent support capacity buildingwithin the social protection institutions through the design and implementation of instruments to improvethe effectiveness of public expenditures on social protection. The institutional arrangements supported by the previous subcomponent will be complemented by a set of instruments to improve targeting and beneficiary selection of social protectioninterventions, monitoring and supervision, and impact evaluation of selectedinterventions. The project will support the SOP inthe following actions, which when appropriate, will initially focus on children and youth: (i) Reviewing the targeting system and definingand adopting improvements to expand social protection programs beyond the 80 currently targeted municipalities. (ii) Designing and adopting aM&Esystemfor social protection interventions. Initially, the M&Esystem will be developed to be consistent with the M&Eschemes adopted inthe Ministries of Health and Labor for the other two components of this project. (iii) Technical assistance, training, and equipment to support the M&Einstruments and their implementation. Subcomponent 3. Support to the Secretariatof the Presidency as coordinator of Social ProtectionPolicy. and coordinator of this proiect. This subcomponent will provide technical assistance, training and equipment for the Secretariat of Presidency and the UNAT as needed to support the abovementioned policy development and project coordination tasks. The main activities to be supported by this subcomponent include: (i) supporting the SOP to define a policy framework for social protection starting with children and youth, developed and approved by the Social Cabinet; (ii) reviewing and adjusting the normative and legal framework of the SOP to support its role as coordinator o f social protection; (iii) training and technical assistanceto the SOPKJNAT to consolidate its role as the technical office for sectoral coordination in social protection; and (iv) the SOP will also be responsible for project implementation and oversight, ensuring proper reporting and coordination among the implementing agencies, providingpolicy guidance and guaranteeing the feedback of operational lessons into the policy development process. Subcomponent4. Social Audit of Social Protection programs. This subcomponent will help the Presidency gather feedback information on programdesign and impactby providing technical assistanceto identify community counterparts and to design and implement 51 participatory instruments to monitor social protection interventions for children and youth at the local level. The activities of this sub-component will support: (i) consultations with Civil Society to prioritize the programs to be audited; (ii) design and validation of data collection instruments, based on experiencesof other countries; (iii) data collection; (iv) dissemination of results and feedback via workshops with the participation of relevant public institutions and program beneficiaries. Component2: Consolidationand Expansionof the AIN-C program (US$15.00 million inproject costs; US$12millionincredit financing). The objective o f this component i s to prevent chronic early childhood malnutritionby strengthening the institutional base and expanding coverage of a community-based program of growth promotion and basic health activities. The AIN-C program was createdby the Secretariat of Healthinthe early 1990s,mainly with support from USAID,and i s basedon community volunteers (monitores)who monitor growth of children under two years old, advise mothers on caring for their babies and toddlers, and provide curative primary health care services to children under age five. The model will consist of three principal components: i)a preventive component that includes growth monitoring and early stimulation; ii)a component on neonatalcare; and iii)a curative component that includes managementof prevalent childhood diseases, such as respiratory and diarrheic diseases. Also, as part of the AIN-C, the project will support the adoption of regular workshops for mothers regarding childcare, home hygiene, water usage, etc., and the full involvement of communities and local governmentsin the program to guarantee future sustainability. Ifthe project i s able to incorporate additional AIN-C modules, or conversely, encounters training bottlenecks for inclusion of the neonatal component, then the GOH can propose a revised operating planconsistent with its operating manual that i s satisfactory to IDA. The AIN-C i s now being implemented inmore than 1,900 communities by a variety of Honduran institutions, including the SOH, PRAFand NGOs, with support from USAID and the IDB.Preliminary evaluation results are very encouraging, showing that participating mothers are better informed about good nutrition practices and demonstrateimprovedearly childhood health care and general childbearing practices. However, results also show that the full benefits ofAIN-C were not attained, due to inadequate institutionalsupport, follow up and supervision. The SOH now intends to expand the programto all communities infour of the six poorest departmentsprioritized inthe PRSP. The first step, with the support of this project, will incorporate at least additional 1,000 communities with more than ten children, to reach about 35,000 children under age two and a total of about 87,000 children under age five. Ifthe project can incorporate more than 1,000 communities, the GOHcan propose an operating planthat i s consistent with its operating manual and satisfactory to IDA.The project will also address the shortfalls identified inthe evaluation, by supporting the broader institutionalization of the program, so that further program expansion can be supported and sustained. The GOHhas set a goal of covering 10,000 communities by 2015, or approximately 40 percent of all Honduran communities. This expansion of AIN-C i s a key element of the development of the country's social protectionpolicy that will be supported under the first component of this project. 52 This component has three subcomponents: (i)coverage expansion of the AIN-C model; (ii) institutional strengthening of the Secretariatof Health; and (iii)implementation of a strategy for information, education and communication. Subcomponent 1: Coverage expansion of the AIN-C model (US$12.0 million). This subcomponent aims to improve and expand coverage of AIN-C activities for children under two years of age to no less than 1,000 communities inthe poorest departments of Honduras. The expansion of AIN-C to new communities includes the following activities: (i) the identificationo f participating communities; (ii) specific community needs survey; (iii) program validation with the community and local/municipal authorities to reinforce their collective responsibility to sponsor the program and to review and enhancethe AIN-C package; (iv) selection of community volunteers (monitores);(v) a broadenedprogram of local level training and workshops in AIN-C activities to improvepersonnel quality (primarily monitores), (vi) incentives for monitores, (vii) AW-C materials; and (viii) a communications program (intended to complement a program under implementation with USAIDfunding)that is designedto accompany the expansion of AIN-C with information about how AIN-C works, including the role of the monitores, and how families can participate. The SOH is currently implementing sector reforms. The most important adjustments undertaken by the Secretariatinclude: (i) strengthening services via new models of service delivery; (ii) separatingthe functions of service delivery from those of finance; and (iii) developing stable and sustainable finance mechanisms to stimulate and increase community participation. The project will operate via several modalities for coverage expansion: (i) contracts with private providers, primarily NGOs and other civil society organizations, (ii) municipal execution of the program, and (iii) strengthening the SOH to deliver the services itself. It i s expectedthat most of the coverage expansion will be implemented via NGOs. In all cases, aprevious processof certification will guarantee the suitability of the chosen providers. The SOH will work with the departmental and local levels to choose the most appropriate service provisionmodality. The implementation capacity of the municipalities will be assessedby the central level o f the SOH incollaboration with the Honduran Association of Municipalities (AMHON)and the Secretariat of Presidency. The Secretariat of Government i s implementing a decentralization program with IDBfinancing, and i s strengthening local managementcapacities. Ithas developed an index of municipal capacities, which will help the departmental delegations identify those municipalitiesthat could be able to implement the AIN-C program. Municipalities will also be consulted to identify their interest inparticipating. To ensure a sound institutional basis to support AIN-C expansion, no new communities will be incorporated duringthe project's first year becauseefforts will be devoted to the preparation of administrative systems, including the monitoring, supervision and evaluation designs, the incentive system for the monitores, design of the private contracting mechanisms and the selection of municipalities that will directly implement the program. The program will expandto 500 new communities in2006,250 more in 2007, and another 250 communities in2008 for a total of 1,000 over the life of the project. Subcomponent2: Institutionalstrengthening of the SOHat the central and local levels (US$ 3.0 million). This subcomponent will help the SOH to consolidate its capacity to implement the AIN-C program successfully. Inparticular, the project will strengthen the capacity to 53 plan, implement, superviseand evaluateAIN-C activities at all levels of the Secretariat. These activities will not only create the capacity for the SOH to manage the proposedproject, the institutional strengtheningprovided by this project will also benefit the AIN-C processes already underway inother communities. Inaddition, this subcomponent will consolidate the institutional basis for the further expansionof AIN-C to other areas of the country, as contemplated inthe PRSP. There are two main activities to be financed as described below. a. Strengthening the central level of the SOH, including activities to strengthenthe planning, implementation, and supervision and evaluation processesin the SOH, for a successful expansion of AIN-C. The Unidad de Extensio'n de Cobertura y Financiamiento de Sewicios de Salud - UDECOFISS (under the office of the Minister of the SOH) i s the administrative unit through which the SOHwill coordinate, implement, evaluate and administer all resources designated for the expansion of maternal and child health programs. Strengthening this unit i s key for project implementation. The SOH will finance the neededpersonnel, along with logistical and administrative support, while the project will finance those instruments neededfor planning, supervising and evaluating AIN-C activities, human resources, computer equipment for the UDECOFISS training, technical assistanceand workshops. Inaddition, since managementplanning will need to be strengthenedat the central and department (and/or municipal) levels, the project will finance the definition of: (i)targeting identificationand selection criteria for communities to be covered by AIN-C, mechanismsto verify which communities already have AIN-C financing from other sources (e.g., PRAF), and validation of the communities selectedby the departmental and central levels of the SOH; (ii) selection and accreditation of service providers: revision of selection criteria, selection standards, andthe creation of a databasethat maps service providers along with their accreditation information; (iii) criteria for grouping communities inlots to be adjudicated to service providers; definition of unit costs; (iv) mechanisms to verify service provider regulation prior to contract preparation and formalization; (v) definition of the roles and responsibilities of each level of the system (central, departmental, local); (vi) a system to supervise and monitor AIN-C progress, including service provider performance; (vi) payment mechanisms for service providers and for the verification of contract compliance; (vii) design of impactevaluation and collection of baseline data; (viii) technical assistance, training and support to the SOH for implementation, including procurement and financial management. The project will also strengthen the Direccidn General de Promocidn de la Salud, which i s in charge of providingtechnical and normative guidance for AIN-C, including the operational structure and guidelines for the program. It will be responsible for coordination with other relevant offices inthe SOH (General Departments of Systems and HealthServices, Sanitary Regulation, Integral Healthto the Family, Health Vigilance, and RegionalDepartments) and it will beresponsible for the following operational aspectsof AIN-C: (i)Training departmental facilitators. The project will provide support to the central level team to train departmental facilitators inplanning and preparingtraining workshops and events, including materials and logistics, and in the execution o f those events. (ii)Monitoringand supervision o f the departmental level by the central level. The project will provide temporary financing for personnel (under an agreement for financing declining recurrent costs), technical assistanceand logistical support. 54 (iii)Information system for AIN-C. The SOH i s now designing this information system, including data to collect andthe instruments to collect it, analytical methodology and reports to be produced. The program will finance computer equipment and materials, and other neededequipment and training in the use of the information system. (iv) Referrakounter-referral system for AIN-C. The project will strengthenthis system to better connect services at different levels of the SOH. b. Strengthening the deuartmentallevel of the SOHfor AIN-C coverage expansion. The project will develop a process to strengthenall of the SOHdepartmental delegations to implement AIN-C, inorder to ensure uniform implementation of the model across the country and to lay the basis for further program expansion beyond the 1,000 communities contemplated in this project. This process will include improvedservice provider training and supervision, and coordination mechanismswith other community groups to ensure AIN-C expansion i s as inclusive as possible. To enhancethe GOH's institutional capacity to increase AIN-C coverage, the project will finance personnel, technical assistance, training, instruments and methodologies for supervising and monitoring, transport, materials, and equipment, and it will finance quarterly supervision meetings with service providers to determine results andperformance. It will also define the process by which the GOHwill gradually assume the recurrent costs of this model. Specifically, the project will support the following actions: (i) training-the project will support the departmental teams in preparation, planning and development of training procedures and financing the logistics and support materials. It will also improve procedures for the selection of monitores, and it will update the training and continuing education plan for monitores in line with the current vision for AIN-C;I6 (ii) departmental supervision-the project will support departmental supervision and monitoring of AIN-C progress, including the aggregation of monthly reports from each community participating inAIN-C, to identify communities at risk, measureservice provider performance, and define actions that may need to be taken. The project will support development of an information system so that the SOH has evidence of AIN-C progressand results; (iii) municipal supervision-selected municipalities will be responsible to support AIN-C implementation or to contract private service providers. Municipalities will play a facilitator role with service providers, will support the socialization of the AIN-C program, and will provide oversight of service delivery and incentives to monitores. For service provisioncontracts, the municipalities will be responsible to identify service providers, contract them and supervise contract compliance. The departmental delegations will coordinate with the municipalities to ensure that selected providers are certified, and to record programprogress and provider performance. The departmental level will provide a standard contract format to the municipalities. Municipalitiesmust inform departmental authorities on the number of contracts inforce with private providers. Component 3: First Employment Programfor Youth-at-Risk (US$7.3 million in Project costs; US$7.0 million inproject financing). This component aims to promote the labor market insertionof approximately 6,000 poor urban youth who have abandonedthe conventional education system, and who do not work l6The SOH will use enhanced training to broaden the scope of AIN-C services provided, including greater emphasis on family planning, prenatal care, early stimulation, nutrition education, hygiene and foodpreparation. 55 or who work in very low returninformal activities. The pilot program is part of a larger effort of the GOH, and specifically the Secretariatof Labor and Social Security, to construct and a system for training andprofessional development for youth to improve their possibilities for labor market insertion. The SLSS i s mandatedwith this task through its creating law. However, to date, these efforts have been scarce and scattered. With support from the IDB, the SLSS hasjust recently started an on-the-job training program (Program for Employment Promotion -ProempEeo) for young adults. Inaddition, several bilateral donor have engagedin youth training activities (AECI, GTZ, EO, etc.), however, without much coordination and weak leadership from the SLSS so far. The pilot program would provide its graduates access to these programs, thus linkingthem in a systemic way. The pilot program would form part of this larger system by focusing on the employability of disadvantagedyouth via an integrated approachthat would provide (i) orientation for life and work skills, (ii) specific job training, (iii) internship directly linked to that training, and an (iv) support for job search after the traininghnternship. This approach builds on Honduran and international experience with youth-at-risk labor market insertion programs, which show that besidestraining, emphasis needsto be given to improving social and life skills of beneficiaries, and providing longer-term connectednessfor the participatingyouth. It would be mandatory for participants to continue their alternative formal education duringprogram participation. Of utmost importance inthe implementation of the programi s the close coordination of the government, representedby the SLSS, public and private training institutions, and private sector enterprises to offer opportunities for youth at risk, a novum in Honduras. The pilot would include four subcomponents: Subcomponent 1.Targeting. and selection of beneficiaries: Youth ages 15-19that live in selectedmarginalized urban areas of Tegucigalpa, San Pedro Sula and L a Ceiba (and possibly others that may be decided by the GOH), and that are enrolled ina program of alternative formal education would be eligible for enrolling in the program.17These targeting criteria ensure that the program benefits disadvantagedyouth while at the same time, they contribute to the sustainability of the intended outcomes of the program. Eligible persons can apply to participate inthe programeither through a potential training provider or through the Secretariat of Labor's "job orientation services," offered by the SLSS's Department of Employment, which would be strengthened under the project. It would (i) inform potential beneficiaries about the requirements and benefits of different programs (and serve to filter out those who are not prepared to meet the requirements), (ii) deliver a preliminary orientation on the functioning of the labor market andhelp match those with individual vocational aptitudes, and (iii) prepare the potential beneficiaries to make a decision on course selection that will govern their stay inthe program. The selection of eligible personswould be donejointly by the training provider and the private enterprise, based on the training and internship requirements. SubcomDonent2. Training. services and preparation for the world of work: Training will be offered by private and public training centers, competitively selected and pre-qualifiedfor this purposeby the SLSS. Training institutionswill beresponsible for defining the specific Education(e.g. EDUCATODOS, PRALEBAH - ProgramadeAlfabetizacih y Educacidn Ba`sicade Adultos en "AlterativeformaleducationprogramsaredefinedasthosepromotedandaccreditedbytheHonduranSecretariatof Honduras).This criterionprovidesthe addedincentivefor youths to returnto the education system. 56 areas of training they offer, basedon the internship opportunities they have previously identified with employers. A priority would be given to those areas identifiedby the GOHas having particular highpotential for economic development ("clusters"), such as tourism, maquiladora, etc. The three to four months training will be designed so that it will prepare the participant for the internship in anenterprise (three to four months). This mechanism ensures (i) provision of a first time opportunity for a program beneficiary to get hands on and structured work experience, thus increasing hisher chances of obtaining employment upon completion of the program, (ii) pertinence of the training by engaging the private sector in definingtraining needs, thus breaking the traditional cycle of center-basedtraining that has little relevance to private sector labor market demand, and finally (iii) this arrangement would strengthen private sector links with the training institutions, broadentheir market and create a training culture within the enterprise sector. a. Selection of training institutions. Pre-qualified training institutions would be periodically invitedthrough a "call for proposals" to participate in a competitive biddingprocess to offer training to eligible beneficiaries. Training includes two phases: classroom training inthe training institution, and practical traininglinternship ina structured enterprise." Training contracts will be evaluated basedon technical and financial criteria. b. Supervision and Performance evaluation of training services. Throughout the training, the program will ensure proper supervision of training center performance, and record results in a databasewhich will serve for tracking program graduates, evaluating training center performance and compliance with contracts. Inaddition to the final "performance" payment of each contract, the evaluated performance of a training center will be reflected inpoint scores adjudicated during subsequent biddingprocessesfor training contracts. c. Life skills training. Beneficiaries will be trained ina skill to a level that will permit them to work as assistants in their field, and with an emphasis on competencies that can be transferred to other related skill areas, to facilitate labor mobility. The cumculum will also include a basic component of "training for life" which seeks to develop non-cognitive skills that are valued in the market place and civil society. This "training for life," along with the condition to continue with alternative formal education throughout the training phase will support the process of social inclusionfor participatingyouth. d. Stipendsfor beneficiaries. Program participants will receive a stipend duringthe training and internship to cover the costs of transportation and food for each day o f attendance. The training centers are responsible for disbursingstipends to the beneficiaries ina timely fashion, basedon attendance records supervised by the program. Subcomponent 3: Promotion, dissemination and su~portfor labor market insertion. Informationabout this new program will needto be disseminated to three target groups: potential beneficiaries, traininginstitutions and employers. Promotion efforts will be ledby the SLSS with support from the Secretariat of the Presidency (SOP). Messagestargetedto '*Theterm "structured enterprise" refers to an enterprisewith at least one year of activity, with at least three employees inaddition to the owner or manager, with different job responsibilities within the structure and which, preferably but not necessarily, i s part of the formal sector. The enterprise could be private or public and the practical training intemships must be inactivities already establishedwithin the enterprise and for which the enterprisealready employs at least one permanentworker. The formal sector requirement i s used inother countries where similar programs are implemented, but i s not a requirement for this project, given low levels of formal sector employment in Hondurasandbecause the programaims to reach very poor beneficiaries who may have insufficient skill levels and who may face barriers to access formal sector enterprises. 57 potential programbeneficiaries will be disseminated through local and community networks, and through the alternative formal education programs working inthe selectedurban areas. It i s expected that the alliance betweeneducation and training programs will generatepositive effects on education program enrollment and attendance. Promotionefforts directed to training institutions andemployers will aim to create alliances between the two groups, inorder to meet the goals and requirements of the program. This will be carried out through inter-institutional bodies like the Economic and Social Council, chaired by the SLSS, and COHEP (Consejo Hondurelio de Empresa Privada). Furthermore, seminars will be offered to the potential training institutions to strengthentheir capacity to develop highquality proposalsfor the program. Graduates will be automatically registered inthe Bolsa de Empleo,managedby the Directorate of Employment of the SLSS, and they are eligible to receive counseling services, employment referrals and follow up. The proposedproject will finance the strengthening of these services. Graduateswill also be referred to other relatedprograms, such as Proempleo, and the GTZ-financed program for youth labor market insertion and the Bolsa de Empleo of the COHEP. Similarly, graduates will be linked to post-program qualifying opportunities via the programs of formal alternative formal education of the Secretariat of Education with financing from USAIDand the Organization o f American States (OAS). Finally, the program will also include activities designed to promote non-risky behaviors of youth inurban areas, andfor employers, to emphasize their corporate social responsibility. This would be done through mass media, seminars, website information, and other means. Subcomponent 4. ProgramManagement and Evaluation: The project will finance the development of a monitoring and evaluation system in the SLSS, to inform and support the development of a youth training and labor market insertion system as part of a wider youth development strategy. The SLSS' s Management InformationSystem (MIS)would be strengthenedto include key performance indicators of this and other programs to generate timely and relevant informationon their progress. The MIS will be complemented by an impact evaluation, which will encompass the FirstEmployment and the Proempleo programs and will include the collection of baseline data and the implementation of a comparative impact evaluation (as far as the programs are comparable). This subcomponentwill also finance the program's incremental start-up costs for the SLSS, including training activities, technical assistance, equipment and materials for the institutional strengthening of the SLSS, and some operating costs to implement the pilot. IDA will finance: i)part of the staff of the coordinatingthe project inthe SLSS; ii)training courses contracted to training centers and the services of a management agency in administering the training contracts; iii)additional staff for the SLSS' Department of Employment to offer appropriate pre-orientation of candidates and support for labor market insertion. The project will also finance modest investments inoffice equipment and office remodeling for the program. The SLSS will finance part of the project coordinating staff, personnel inthe SLSS departmentsinvolved inprogram implementation, and the resources for the promotion and dissemination of the program. 58 Annex 5: Project Costs Honduras Nutrition andSocialProtectionProject ComponentsProjectCost Summary (US$ Million) Prqject Cost by Componentand/or Activity Local Foreign Total A. 1. InstitutionalStrengtheningof the social protectionframeworkfor childrenandyouth 0.60 0.40 1.00 B. 2. Consolidationand Expansionof the AIN-C Progam 2.1 Coverageexpansionof the AIN-C Model 8.99 2.60 11.59 2.2 InstitutionalStrengtheningof the SOH centraland locallevels* 2.69 0.27 2.96 Subtotal2. Consolidationand Expansionof the AIN-C Program 11.68 2.87 14.55 C. 3.0 First EmploymentProgramfor Youth at Risk 6.61 0.54 7.15 Total BASELINE COSTS 18.89 3.81 22.70 PhysicalContingencies 0.22 0.04 0.26 PriceContingencies 0.24 0.10 0.34 Total PROJECT COSTS 1935 3.95 2330 Honduras Nutritionand SocialProtectionProject ProjectComponentsby Year-Totals Including Contingencies Totals Including Contingencies (US$ Million) ----- 05/06 06/07 07/08 08/09 Total A. 1. InstitutionalStrengtheningof the social protectionframework for childrenandyouth 0.30 0.31 0.22 0.17 1 .oo B. 2. ConsolidationandExpansionof the AIN-C Program 2.2 Coverage Expansionof the AIN-C Model 2.50 3.46 3.54 2.50 12.00 2.1 Institutionalstrengtheningof the SOHcentralandlocal levels 1.02 0.69 0.67 0.62 3.00 Subtotal2. Consolidationand Expansionof the AIN-C Program 3.52 4.15 4.21 3.12 15.00 C. 3.0 First EmploymentProgramfor Youth at Risk 2.06 1.80 1.71 1.75 7.30 ~ ~ ~ ~ Total PROJECT COSTS 5.88 6.26 6.14 5.04 2330 *Numbers may not addup due to rounding. 59 IHonduras IThe Government IInternationalDevelopment Nutrition and Social ProtectionProject Agency (IDA) Total ~1 Componentsby Financiers (US$Million) Amount % Amount % Amount A. 1. Institutionalstrengtheningof the social 1.o 100.0 protectionframework for children andyouth B. 2. Consolidationand Expansion AIN-C - Program 2.1 Coverageexpansionof the AIN-C Model 2.5 21.0 9.5 79.0 2.2 InstitutionalStrengtheningof the SOH 0.5 17.0 2.5 83.0 central and locallevels Subtotal 2. Consolidation and Expansionof 3.0 20.0 12.0 80.0 the AIN-C C. 3.0 First Employment Programfor Youth at .30 4.0 7.0 96.0 Risk Total PROJECT COSTS 3.3 14.0 20.0 86.0 23.3 100.0 60 Annex 6: InstitutionalandImplementationArrangements This project respondsto the social protection priorities of the PRSP, under the coordination of the Secretariat of Presidency.The Secretariat of the Presidency will hold overall responsibility for project coordination and implementation incollaboration with the other two Ministries. Within the Secretariat of Presidency, the project will strengthenUNAT's capacity to coordinate ongoing project administration with the Secretariatsof Healthand Labor. Component 1: SOP is the implementing agency for this component, which will support the institutional strengthening of the SOP to fulfill its role to coordinate social policy overall, including social protection. The SOP will benefit from TA to help develop the instruments and mechanisms for the design, coordination, finance and evaluation of social protection actions. The SOP will also be responsible to coordinate the implementation of this project with the two line agencies, SOH and SLSS, and to consolidate M&E and other progress reports for proper oversight and supervision of project implementation. Component 2: SOH i s the implementingagency. The UPEGinclude the following functions: (i) analysis and design of policies, programs and projects; (ii) planning coverage expansion; (ii) resourceallocation, usingcriteria to guaranteeequity in access to health services. Toward developing a Sector Wide Approach inhealth, and to better harmonize the use of donor resources, the SOHi s inthe process of institutionalizing various project execution units. For this purpose, inJanuary2005, the SOHcreated the UDECOFISS. The table at the end of this annex summarizesthe functions of the UPEG,the UDECOFISS and the Departmental Health Regions for the implementation o f AIN-C. Inaddition, the administrative organization diagram at the end of this annex presentsthe institutional structure for the implementation of AIN-C. The functions of the UDECOFISS incl~de'~: coordinate, implement and evaluate the (i) coverage expansion process, via innovative management and finance models, including financial, political and legal feasibility analyses of contracting service providers; (ii) administer resourcesallocated for the processof coverage expansion and for programs assignedto the department; (iii) contract health service provision that guarantees access to quality health services; (iv) harmonize donor resourcesunder a Sector Wide Approach; (v) design norms, procedures and instruments for contracting health services, defining payment mechanisms and resource transfer mechanisms to health service providers; and (vi) strengthen the departmental health offices inthe development of health service provision contracting processesvia new managementmodels of decentralized financing, and inthe monitoring and evaluation of the objectives, goals and indicators agreedinthe management instruments. More specifically, the UDECOFISS will have to: (i) prepare annual operating plans, coordinate program activities with other central and regional SOHentities, with both line and support functions; (ii) supervise compliance with the work programs and prepareperiodic progressreports; (iii) define the communities that will participate in AIN-C; (iv) define and Acuerdo No 043, January 7,2005. 61 group communities in lots to be bidout to service providers; (v) prepareterms of reference for the service providers; (vi) regulation of providers for the preparationand signature of contracts; (vii) define the system of service provider performance supervision; (viii) define baseline criteria for the program's impact evaluation; and (ix) assure the proper functioning of the AIN-C information system to ensure supervision and evaluation. The DECOFIS will be composedof: one general coordinator, a technical section, a section for administration andfinance, with a legal area, an area for M&Eand an area for information technology. A brief summary of these areas and their principal functions i s listed at the end of this annex. To ensure adequatemaintenanceof AIN-C financial accounts, the UDECOFIS will be supported by the Directorate of Finance and Administration of the SOH. The SOH already has some financial and administrative experience with contracting for private service provision becausethe PRESS has contracted NGOs. Component 3: The First Employment pilot program will be implemented by the Secretariat of Labor and Social Security. The general coordination of the pilot program as well as its financial administration will be carried out by the Secretariat's Special Project Unit (SPU) which i s also responsible for implementing parts of the IDB financed Proempleo project and others. While the SPU will be responsible for general management of the subcomponents 1,2 and4, the Department of Employment will be responsible for assisting the SPU technically, and for offering the expandedjob market orientation and placement services. This arrangementoffers three advantages. First,from the beginning, the pilot program works through the Secretariat's units that are incharge of the public policy for training and labor market insertion. Second, the arrangements coincide and reinforce two large reforms that are currently taking place: the modernization of the SLSS which intends, inter alia, to strengthen the Secretariat's active role inlabor market orientation and regulation (supported underthe Bank financed Competitiveness Project), and the creation of the National System for Labor Market Trainingwhich seeks to bring government, the private sector and private and public training institutions closer together. Finally, the additional burden of setting up a pilot program would be sharedby the SPU, which i s composed of long term consultants to manage the start-upphase, and the DOE, staffed bypermanent employees and strengthenedover time to run the programs once it is consolidated. The training services under subcomponent 2 will be contracted through a competitive bidding process whose administration (request for proposals, evaluation of proposals and recommendations about their eligibility, contracting, supervision of contracts, reporting, etc.) will be delegatedto a managementagency. Finally, the SLSS will establish agreements with relevant programs for alternative formal education, including EDUCATODOS and PRALEBAH,supported by USAID and the Organization of American States respectively, to (i) reach out to their beneficiaries with the program's information and promotion campaign, and (ii) allow for exchange of data sets on potential and actual participants. Basisfor Selection of Institutional Arrangements: Although these agencies are institutionally weak, they have shown recent improvement inimplementation capacities, and 62 the Project will emphasizeinstitutional strengthening. More importantly, these are the correct institutions-they have the legal mandatesintheir respective areas, and the political support to carry project initiatives forward. The Secretariatof the Presidency has taken the lead inpreparing,monitoring, and coordinating implementation of the Poverty Reduction Strategy, inkeeping with its mandate to serve as the coordinator and technical secretariat of the social cabinet. *'In this latter capacity, the SOP collaborates with a Consultative Group (Consejo Consultivo) that meets periodically and whose members include Civil Society representatives. Finally, the SOP managesimplementation of the PRSP's fifthpillar (Social Protection strategy), starting with a process to identify vulnerable groups and their mainrisks (Annex 1). To fulfill these mandates, the SOP's UNAT (Unidad deApoyo Te`cnico)i s being strengthened, and will be further strengthenedunder the project. These arrangementsensure a highlevel of Government commitment to leadpolicy formulationand appropriate institutional coordination mechanismsto achieve successfulimplementation. Working with implementing agencies, the SOPi s defining appropriate interventions to close the gaps between the needs of these groups and available program responses. The two main components of this project -Children and Youth- play a major role infulfilling these objectives. Despite this progress, further efforts are also neededto develop a comprehensive social protection approach, including better coordination mechanisms for program design, budget allocations, andimplementation. The UNATwill also support the SOP'Srole as the primary counterpart agency for this project and will ensure adequate communication and coordination with the Ministries of Health and Labor, responsibleto implementthe other two componentsof the project. The project will support the UNAT and the Secretariat through technical assistanceand instruments to accomplish their responsibilities. Consolidating this process with the strategies for young children and adolescents will be the first step towards the coordination of broader social protection actions. The Secretariat of Health (SOH) plays a key role within the PRSP and the Social Protection strategy. The SOHprepared the NationalPlan to Reduceinfant, child, and maternal mortality, which prioritizes tackling chronic malnutrition by expanding and improvingAIN-C program quality, and is consistent with the PRSP's SP priorities. To support AIN-C expansion, this Project will help the SOH develop a process to institutionalize AIN-C within the Secretariat. SOHhas worked closely with the main AIN-C service provider, and has received further support for this process duringproject preparation. With PHRDproject preparationfunds and a PPFadvance, the SOHhas identified and is implementing key interventions to improve institutional capacity. The SOH i s expected to be ready to implement the AIN-C component and start the processof institutionalizationby project effectiveness. The recently createdUDECOFIS at the SOH will be incharge of administering all maternal and child healthprograms, including AIN-C. Through this unit, the Secretariat will greatly increaseits capacity to (i) administer, supervise and regulate maternal and child health programs finance with international cooperation; (ii) improve donor coordination inthese areas, includingfinancial management and procurement arrangements; and (iii) improve interactions with service providers outside the Secretariat (NGOs, municipalities) and with 2o DecretoEjecutivo No.PCM-011-99andLey del Fondopara la Reduccibn de la Pobreza(Decreto LegislativoNo. 70-2002). 63 local authorities and communities. At the sub-national level, component implementation will work through the departmental andmunicipal health units,though service provisionwill be contracted to specialized agents. The project will orient substantial efforts, particularly over the first year, to improve andconsolidate these new institutional arrangementsto guarantee sustainability. The selection o f the SLSS to implementthe youth employment component reflects the GOH's desire to focus this element of the strategy on buildingthe employability and employment o f youth, since the SLSS holds the legal mandate to implementpolicies and programs in the areas of training andemployment. This decision supports two reforms underway inthe public sector: i)the modernization o f the SLSS, one element of which i s to play a more active role inthe orientation and regulation of labor markets. To this end, the SLSS will retain responsibility to guide the component, but will partner with a management agency that will be responsible to organize the competitive contracting process for training providers and to maintain the registry of accredited providers; and ii)the creation of the National Labor Training System, which aims to increase the participation of employers and training service providers to complement public sector resourcesinthis area. Inaddition to extending program support to project beneficiaries, the project will also contribute to (i) consolidate social protection as a key policy sector within government social policy; (ii)institutionalize Children and Youth policies as key components of social protection; and (iii) strengthenthose institutions with the clear mandateinthe areas of social protection policy formulation and implementation, rather than creating parallel institutions as a means of overcoming weaknesses inthe line institutions. Capacity Constraintsto be addressed: Inthe policv component, the project will strengthen the capacity of the Secretariatof the Presidency to systematically collect and analyze program data and to use the results to inform policy priorities for the social protection of children and youth. The project will also support the Secretariat to design and adopt instrumentsto consolidate its role as "technical secretariat" of the social cabinet, enhancing its capability to prepare policy documents to be approved by such instance, basedon technical reports and rigorous monitoringand evaluation processes. The childhood nutrition and development component will help the SOH mainstream what i s now a marginal nutrition topic into the broader health agenda, since they have defined AIN-C as their priority program. To do so, the SOHmust obtain commitment to AIN-C at all levels of the health system, and make all actors aware of their roles and responsibilities to enroll children early inthe program, and to constantly monitor their progress. Specifically, to improve AIN-C quality and expand coverage, the SOH needs to strengthen the DECOFIS. Sincepart of the service delivery expansion will be implemented by NGOs, the SOH needsto buildthe capacity to contract and supervisethose outside service providers. Inaddition, the capacity of local health facilities would need to be strengthened to monitor andevaluate program implementation. Underthe FirstEmployment component, the project will support significant institutional strengthening for the SLSS, which has not implemented a World Bank project of this size before. Capacity building will include MIS and M&Esystems, as well as support for the technical implementation of the component. This challenge i s deemed feasible, becauseit 64 will be done slowly over course of the project and with a small component. The project will also work with other actors inthe sector to create consensus on how to do this. AIN-C implementation arrangements Extension of Coverage and Health Services Financing Department Description General Managesthe Unit coordination Responsible for coordinating areas that include the department and its technical and administrative team (reports directly to the Ministry of the SOH) Technical section Responsible for the technical analysis for implementation of management models financed by international cooperation Preparesthe technical components o f contracts and agreements Coordinates and exchanges information and communication with the remaining sections o f the Department Administrative- Carries out the administrative-financial work of the Department financial section Responsible for managing the resources assigned to the Department Carry out acquisition o f goods and consulting services processes and contracting of health services providers Analyze, evaluate, and maintain good relationships with providers and the remaining sections of the Department Provide support and collaboration to the Technical Area for the design of contracts and agreements Legal area Provides support in the revision of laws, national regulations, and regulations for external cooperation organizations to define bidding conditions, request for proposals, selection processes, and features of the contracts Supports the administrative-financial area during the acquisition process Evaluate and validate contracts and agreements I Maintains constant exchange o f information and communication mainly with the technical and administrative-financial area Monitoring and Responsible for monitoring and evaluating the technical, legal and administrative evaluation area compliance of the administration's contracts and agreements with health services providers Responsible for monitoring and evaluation o f processes and projects, managemenl models, and administrative and financial issues. Coordinate and maintain constant communication with the technical, legal and administrative-financial area Information Responsible for implementing the technical, administrative and legal informatior technology system Responsible for monitoring and evaluation in order to provide truthful and appropriate information for decision-making Provide computer support to different areas o f the Department and providers ir order to guarantee their proper performance Coordinate and maintain constant communication with the technical, legal anc administrative-financial area 65 Summary ofMainFunctionsofUPEG,UDECOFISandDepartmentalRegionsfor implementation of AIN-C Department Mainfunctions for implementationofAIN-Cprogram Planning and Management Analyze and design policies, programs and projects Evaluation Unit (UPEG) Plan extension of coverage Assign resources using criteria to guarantee equity in access to health services Evaluation of AIN-C program Extension of Coverage and e Coordinate, implement and evaluate extension of coverage process Health Services Financing e Carry out financial, political and legal feasibility analysis of providers for contracting of Unit (UDECOFIS) services e Manage resources assigned to extension of coverage process and programs to be assigned e Harmonize financial resourcesfrom external sources within the Sectorial Approach frame e Design regulations and procedures for contracting of services e Define community identification outline e Define payment and resource transfer mechanisms for health services e Select and ensure accreditation of providers e Ensure regulation o f providers for preparation and signature o f contracts e Contract health services e Define providers' performance supervision outline e Ensure smooth operation of the program's information system to guarantee monitoring and evaluation e Strengthen departmental management in the development of health services contracting processes e Strengthen departmental management in monitoring and evaluation of objectives, goals anc indicators negotiated inthe management instruments e Departmental Region"' e Formulate regional or departmental policy Establish health needs at a local level Define extension of coverage needs Define and group lots to be put out for bid 4 Strategic planning of AIN-C delivery in the region-department Sociability of treatment standards and regulations Epidemiological supervision of the region or department 4 Champion health before other branches Jointly with the central level, define indicators to be included incontracts 0 Impact evaluation of AIN-C strategy Stocktaking at the central level e Select communities, establish supervision systems, confirm results, and ensure monitoring in coordination with local governments e Support process o f identification and selection of providers at a local level 21DECOFIS Organization and Functions Handbook, January 2005. 66 I0 Support contract design and preparation process for purchase of services Support negotiation processwith various providers Support health services contracting process (through a branch in charge of monitoring and evaluation of contracts) 0 Negotiate and reach consensus with communities and mayorships on the various models and participation of providers 0 Analyze reports submitted by private providers Revise local organization of basic supplies to be delivered to private providers (iron, vitamin A, etc.) 0 Provide technical support to local levels to implement AIN-C 0 Monitor and evaluate program fulfillment, inother words, fulfillment of contracts (objectives, goals, and indicators negotiated) Decision-making for problem-solving 67 I - r v1 v3 I ud u 02 u L I I I I I r1 3 I I I I 2 d 8 + I II 1 InstitutionalSchemefor First EmploymentImplementation [ HONDURANGOVERNMENT 1 SECRETARIAT OF LABOR AND SOCIAL SECURITY ProjectCoordinationUnit (PCU) I ( GeneralCoordinator I 1 I I I Subcoordinator ' Subcoordinator' ` ' Subcoordinator Proeempleo Proeempleo(SIL FirstEmployment L (EPEM) J \ - M A T ) / \ B.M. F J AdministrativeFinancial Procurement Secretary Specialist 70 Annex 7: FinancialManagementandDisbursementArrangements Summary of FinancialManagementImplementationArrangements The project will have three implementingagencies. Component 1will be implemented by the Secretariat of the Presidency, supportedby the UNAT as the coordinator of social policy. Component 2 will be implemented by the Secretariatof Health(SOH). The SOH is the normative agency for the nutrition policy and programs, and also supervises andmonitors AIN-C. In accordancewith the Government's decision to approach the topic of social protection for youths through labor market insertion, the implementingagency for Component 3 i s the Secretariatof Labor and Social Security (SLSS). The project responds to a set of priorities included inthe social protection strategy of the PRSP's fifthpillar, under the coordination of the Secretariat of Presidency.Therefore, the Secretariat of Presidency will be responsible for coordination and supervision of project implementation with the other two Ministries. The three implementing ministries have inplace some elements of administrative and financial management(budget management, accounting, reporting and auditing), and the project will attempt to utilize existing implementation arrangements (existing PIUs). However, where necessarythe project will also support improving and buildingthe administrative and financial managementcapacity of the participatingministries. The flow of funds will result intransfers to three separateSpecial Accounts (each agency will manageits dedicated Special Account). Funds will be used to finance expenditures, according to the activities of each component and each agency will be responsible for managing and submittingits disbursement request to the Bank. While each implementing agency will manage its own Special Account and prepare annual and quarterly statementsfor their respective components, the Secretariatof Presidency will compile consolidated quarterly and annual financial statements, and submitthem to the Bank. Inaddition, the Secretariatof the Presidency will be responsible for the coordination of the external audit processfollowing the year end. RiskAssessment Summary Inherent risk. Inherent risk i s the susceptibility of project funds not being used as intended, if we assume that there were no internal controls. Inpart becauseof the poor ratingof Honduras in2003 and 2004 Transparency International's Corruption indices, and despite recent measurableimprovements in the country's public financial management systems, inherent riski s still considered to be substantial. Control risk.As was observed duringthe preparation of the project, while certain financial managemendinternal control arrangementsdesigned to provide a reasonable assurancethat misuse of funds would be prevented or detectedand corrected on a timely basis are inplace, there is still a significant need for improvement and capacity-building, especially in the first- time implementing agency (SLSS). Therefore, the control risk i s considered to be high. The riskis the highest inthe areas of the projectFMstaffing, as inall three implementing agencies accounting staff i s either new and has very limited experience, or has not been hired yet (the Secretariat of Health and the Secretariat of the Presidency). Moreover, none of the 71 agencies has yet to implement its accounting/managementinformation systems. Measures required to mitigate identified risks have beenincluded under the Action Plan section of this Annex. Detectionrisk. Given the combination of inherent and control risks, acceptable level o f detection risk needs to be lower, so as to reduce the overall risk level. Inorder to directly mitigate this risk, it will be necessary therefore, to carryout more frequent and regular financial management supervision o f the project. ImplementingEntities Secretariat of Health: The Secretariat of Health (SOH) has the most extensive experience with project implementation and managementof donor-financed projects - it has worked most recently with Bank and IADBfinanced projects. Within the Secretariat's administrative structure, a number PCUs (project coordination units)have beenestablishedand are directly responsible to implement manage donor-financed projects. Inthe nextfew months the IADB will launch a similar Social Protection andNutrition project. This presents an important opportunity to harmonize the implementing arrangements for the two projects, leveraging on the existingcapacity and experience. Specifically, the harmonization efforts would translate into the following: 0 A single operational unit within the administrative structure of the SOH to coordinate all interventions related to child and maternal care. The project financial managedaccountant will be hired to serve both the WB and the IADBprojects. The salary for the first four years will be paidfrom the IADB project funds, and then subsequently will be financed by the Government. A single informationsystem will be utilizedto meet accounting and reporting requirements for bothprojects. This system will needto be acquired prior to project effectiveness. Bothprojects will try to align with each other, to the maximum extent, the report formats and the Chart of Accounts. The system should also be able to managebudget and expenditure management ina manner consistent with the Government's classification in SIAFI(the government's integrated financial managementsystem). Secretariatof Labor: The Secretariatof Labor (SLSS) i s the least experienced of all three implementing agencies and this project representsthe Secretariat's first programimplementation partnership with the Bank. The program implementation will managed by the Secretariat's Unit for the External Cooperation. To the extent possible, the project will leverage on the capacity of existing Unit, while also offering administrative and financial managementcapacity development where needshave beenidentified. The project financial manager has recently been hiredby the Secretariat, and whose responsibilities will also include working on the other donor- financed projects implemented by the SLSS. The FinancialManagement capacity of the 72 newly created unit i s insufficient comparing to the potential volume of operations. To address this weakness, the hiringof an additional official incharge of accounting should behired. Currently, the External Cooperation unit does not have accounting and information system in place. Reports for the other donors are preparedinExcel spreadsheets.Acquisition of the managementinformation and accounting systemis one of the conditions of effectiveness. Secretariat of the Presidencv: The Secretariat of the Presidency will be responsible for the implementation of the smallest component of the project; however, inaddition, this Secretariat will be responsible for overall coordination of financial management with the other two implementingMinistries. The Secretariat of the Presidencyhas previous experience inmanaging donor-financed projects, including World Bank financed projects and has en established administrative structure, including personnel. However, the implementing unit of this secretariat does not have an accounting/management information system inplace. Acquisition and installation of the system i s one of the conditions. Planning,budgetand financial reporting,FMRs Plans and budgets. The Credit Agreement and project cost tables will be the main inputsfor the project budgets and counterpart (GOH) fundingestimates. The implementing agencies will follow prescribedIDA disbursement category and governmental budgetary heads, each implementing agency will prepare at least: An annual work plan classified by work lines ,with goals/objectives, physical and financial programs; Budget proposals specifying the sources of funds, the summarized and detailed expenditures by major areas, accounts and specific objects; A budget execution program broken down monthly, and the quarterly document of budgetary commitment authorization; Monthly reports on budgetary execution to be issued within the 15 days after the end of each month; and Quarterly reports on evaluation of budgetary execution to be issued within 15 days after the end of the quarter. Annual Reports: Followingthe close of each fiscal year (January-December), all three project implementing agencies will prepare the annual financial statementsfor their respective components (these annual financial statements will use the cash basis of accounting). The Secretariatof the Presidency will be responsible to collect the annual statementsfrom the SOH and SLSS and will submit them for review under the external audit. FMRs (Financial Management Reports). EachImplementingagency will be responsiblefor the preparation of the quarterly FMRs for their respective components. These reports will thenbe submitted to the Secretariat of the Presidency for the final report consolidation and submission to the Bank's review -the consolidated project FMRs should be submitted to the Bank no later than forty-five (45) days after the end of each quarter. As each implementing agency will have its own Special Account, each agency will be responsible to complete 73 reconciliationfor its SpecialAccount. Along with the project financial statements, the FMR will include physical progress andprocurement reports. Flow of funds Operation of the Bank Accounts: Disbursementswill be transaction-based. Inorder to minimize delays inthe flow of funds to the implementing agencies, each agency will operate its Special Account (USD), which will be openedand maintained at the Central Bank of Honduras. The authorized allocation per implementing agency special account will correspond to the 4-month average disbursementestimate. Proceduresfor flow of funds from the credit and the required counterpart contribution will be implemented with due regard to safeguarding project's resourcesandensuring timely execution of payments. The GOH will allocate its counterpart funding as part of the regular budgeting allocation to the implementing ministries, by maintaining two accountsinLempiras to finance its contribution to the Project, one each for SOH and SLSS respectively inthe Treasury books of the Ministry of Finance, according to the previously submitted budget estimates. Statements of Expenditures (SOE): The Bank may require withdrawals from the DCA account to be made on the basis of SOEs under contracts not subject to prior review by the IDA. Eachimplementing agency will be responsible for the periodical preparationof its respective SOEs. Before payments for acquisition of goods and services can be processed, a purchaseorder or contract mustexist. The implementing agencies will reconcile (monthly) the project bank accounts and include this reconciliation, along with the other required documentation to the withdrawal application (Statementof Expenditure) submitted to the Bank. Accountingsystem Chart of accounts. Due to the nature of this project, there will not a be a single chart of accounts utilizedby the three implementing Ministries -each Secretariat will prepare its chart of accounts considering not only the components it manages, but also considering the harmonization of other projects under its management. The chart of accountswill comply with Bank requirements as to allow for the classification of expenditures by disbursement category, project component and source of funds. It will also provide for reporting budgetary execution interms of governmental requirements. Accounting records. Transactions will be recorded as incurred, and all primary supporting documentation will be maintained to facilitate ex-post reviews and the external annual audits. Such documents should be maintained for a minimumperiod of five years inaccordance with local norms. 74 1. Accounting software. At the time of appraisal none of the implementing agencies had a functioning accounting system that would support the financial managementand information needs of the project. The acquisition and installation of the accounting software i s one of the project's conditions of effectiveness. Two of the most important considerations of the accounting system, to be acquired, include (i) compatibility with the budget and program classification managedinSIAFI (the government's integratedfinancial management system) and (ii) the ability to simultaneously support multipleprojects. Other major requirements include: (i) multi-currency capability; (ii) of the various reporting support requirements; (iii) procurement module. Internal Controls A single Operational manual will be developed andusedby all three components of the projects. Followingthe principles of the harmonization agenda the manual should be as closely aligned as possible with the IADB manual that will usedby the same implementing agencies. It should also be preparedin such manner, as to be easily adaptableto the needs of the Secretariat. The Secretariatof Health has already prepared a draft of the Financial Management section of the manual, which will be reviewed and approved by the other two implementing agencies. The Operational Manualwill provide for and elaborate on all proceduresrelevant to the project - including financial managementand procurement. Once finalized and approved, the manual will be presentedand distributed to all project staff. Lastly, while the manual may be updatedperiodically, its observance inpractice will be monitoredregularly (e.g., external audits of the project would include selective reviews of compliance with the proceduresestablished in the manual). ExternalAudits External Audit: The annual financial statements of the project will be audited inaccordance with the International Standardson Auditing, by an independent firm and in accordance with terms of reference (TORS)both acceptableto IDA. Inaddition to the single audit opinion covering the project annual financial statements, the SA reconciliationand the SOEs, a separatereport will be required on the state of the Internal Controls ineach of the implementing agenciesand the project's compliance with the credit agreement and Operational manual requirements. Project management agreedto appoint the auditors by three months after Credit effectiveness. The audit would cover the period from January 1st through December 31st of each year, with the audit report due no later than 4 months after the end of the fiscal year. The Secretariatof the Presidency will act as the main coordinator to facilitate the work of the auditors. Action ResponsibleEntity Completion Date 1.Finalize Financial Implementing agencies, Before effectiveness Management Section of the jointly Operational Manual 2. Appoint the external Implementing agencies, 3 months after effectiveness 75 auditor jointly 3. Have accounting, and Eachimplementing agency Before effectiveness management information systems available for the project use 4. Each Implementing Each implementing agency Before effectiveness Agency hire the permanent project accountant 5. Submit first FMRsand Secretariatof the Presidency 45 days after the end of the consolidated FMR quarter inwhich effectiveness takes dace 76 Annex 8: Procurement Procurement for the project would be carried out inaccordancewith the World Bank's "Guidelines: Procurement under IBRDLoans and IDA Credits" datedMay 2004; "Guidelines: Selection andEmployment of Consultants by World Bank Borrowers" dated May 2004; and the provisions stipulated in the Legal Agreement. The general description of various items under different expenditure categoriesi s describedbelow. For each contract to be financed by the credit, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time frames are agreedbetweenthe Borrower and the Bank project team inthe Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity. The project inputs, estimated costs, andprocurement methods and arrangementsunder the project are summarized inTables A and B. I. CapacityAssessmentoftheAgenciestoImplementProcurement An assessmentof the capacity of SOH, SLSS and SOPto deliver procurement services and supervision for the project was carried out by the Bank inFebruary 2005. The assessment findingsand recommendations arecontainedinthe Aide Memoireresultingfrom the pre- appraisal mission. The assessment reviewed the organizational structure for implementing the project and the interaction betweenthe PCU and the implementing agencies. The mainfindingindicates that the proposed implementing agencies have varying levels of institutional capacity and experience working with donor-financed projects. Furthermore, the assessment identifies an opportunity to harmonize the implementing arrangementswith the IDB. The IDBi s launching two projects with SOH and SLSS as implementingagencies. The content and objectives will, to a very significant extent, be consistent with the content and objectives of the IDA project. Hence the two institutions can leverage on the existing capacity and experience. The Secretariat of Presidency will be the head and ultimate responsible for proper coordination and supervision of the overall project implementation and will coordinate its implementation with the other two Ministries. However, three implementing agencies will have responsibility for overall procurement management, and will ensure that procurement procedures, criteria and documentation agreed with the Bank are satisfactorily complied with. The institutionalized project implementation arrangementshave been designedwithin each agency as follows: 0 Component 1:Institutional Strengtheningof the social protectionframework for childrenand youth (US$ 1million) will be implemented by the Secretariat of the Presidency, inparticular the office of the Vice Minister, inits role as the coordinator of social policy. 0 Component2: Consolidationand Expansionof the AIN-C program(US$12 million) will be implemented by the Secretariat of Healthas the normative agency for the country's nutritionpolicy and programs, and as the supervising agency in charge of the monitoring andevaluation of AIN-C. 77 Component3: FirstEmploymentProgramfor Youthat Risk(US$7.0 million)will be implemented by the Secretariat of Labor and Social Security in accordancewith the Government's decision to improve the prospectsof labor market insertion for youth at risk. Secretariat of Health (SOH): Of all three agencies SOH has the most extensive experiencewith project implementation of donor funded programs. Inthe past SOHhas worked with IDA-financedprojects, as well as with the IDB and other donor-financed projects. Under its umbrella, SOH has a few PCUs, working with established administrative andoperational skills directed at implementation and managementof the donor-financed projects. The team working on the implementation of this project will be part of the UDECOFISS Unit of the Secretariatand i s developing procurement capabilities for providing support to the projects financed by the various donors. Secretariat of Labor (SLSS): SLSS i s the least experienced of the three implementing agencies. Infact, this is its first experience working with IDA-financed projects. The project implementation will be done under the Unitfor the External Cooperation umbrella, and will, to the extent possible, leverage on the existing arrangement, while simultaneously focusing on the capacity development within and beyond the project's scope. The project implementation coordinator i s an existing employee of the Secretariat. Currently, the External Cooperation unit does not have a full-time procurement expert with experienceunder Bank rules, methods and carrying out of post-reviews. Secretariat of the Presidency (SOP): SOP will be responsible for the smallest component of the project. However, in addition, it will be responsible for the coordination amongst all three components inthe area of procurement management. SOP has previous experience inmanaging the donor-financed projects, including IDA financed projects, and while setting the implementation arrangements, the structures already inplace are going to be fully leveraged. The project implementation staff i s existing Secretariat employees, and their salaries will be financed by the Government budget. It was agreed that for the purposesof project procurement, the systemdeveloped by the Modemizucidn del Estudo Unit, and already utilized for the accounting of two other Bank Financed projects, i s going to be used. Currently, this system i s undergoing modernization, and a new version will be available intwo to three months. IDBCoordination The project implementation arrangementswithin SOH and SLSS will be shared with the IDB projects. Inall three implementingagencies the project will either utilize existing accounting and managementinformation systems, or will be pegged to a system developed to encompass broader institutional needs. To address the staff capacity limitations, a financial management and disbursement workshop will be delivered by the Bank's staff once all financial managementandprocurement specialists are hired. 78 11. Procurement Arrangements Procurement Plan A draft Procurement Planhasbeenpreparedfor the project andwill form the basisfor procurement. The Plan will be updatedevery six months to reflect changes inprocurement process, which could significantly affect the timely and successful implementation of the project. The procedures usedfor eachtype of procurement would be consistent with those described inthe Credit Agreement andin the PADas well as with the stipulations of the Operational Manual. The revisionshpdates inthe Procurement plan would be agreedwith the Bank prior to its implementation. Goods Goods procured for the PCUsandproject operations will be financed by the Bank.These items consist o f office equipment, computers, communication equipment, copy andfax machines, and printers, off-the-shelf data software, and miscellaneous suppliesfor the operation of the project. Printingservices, vehicles, motorcycles and small office remodeling works are also to be procured under the project. Such procurement will be undertaken as follows: (a) Shopping for packagesestimated at lessthan US$50,000 basedon comparing quotations solicited from at least three qualified suppliers; and (b) for contracts above US$50,000 and below US$ 150,000 National Competitive Biddingprocedureswill be used. Consulting Services and Other Services Consulting Services contracts will consist of, but are not limited to, technical assistance,ex- post evaluation of programs, auditing services, implementation of strategies, media dissemination, and design and execution of training and workshop activities, including training courses contracted to training centers and the services of a managementagency in administering the training contracts. Firms. Quality and Cost BasedSelection (QCBS) may be usedfor the larger contracts. Least Cost Selection (LCS) would be usedfor the auditing services. Consultants Qualifications (CQ) may be usedfor the smaller contracts where there i s enough competition. Sole Source (SS) will be used for strategic reasonsor for activities that becauseof its remotenessdo not merit competition. Individuals. Specialized advisory services such as small short-term contracts for training and workshops, provided by individual consultants will be selectedon the basis of their qualifications for the assignment comparing CVs inresponse to an advertisement, and according to the provisions of the paragraphs5.1 through 5.4 of the Consultant's Guidelines. 79 Training Includes expenditures for cost of travel, accommodationsandper diem incurred by trainees and other participants inconnection with the training/workshops as well as fees chargedby academic or other institutions. Ouerational Costs Salaries for the PCUpersonnel and operational costs would be government financed and procured through regular GOHprocedures. Custom Duties andTaxes All goods specifically imported for the project will be subject to the payments of custom duties and local value addedtaxes. Consulting firms and individual consultants are also liable for the applicable taxes. 111. Project Costs by Procurement Arrangements Table A. ProcurementArrangements US$ Million Note: Figures inparenthesisare the respective amounts financed by The Govemment Note: QCBS = Quality- and Cost-Based Selection LCS =Least-Cost Selection CQ =Selection Basedon Consultants' Qualifications SS =Sole Source Selection Other = Selection of individual consultants (per Section V o f Consultants Guidelines), Commercial Practices, etc. 80 Table B. Thresholds for Procurement Methods and Prior Review 1.Goods >150 ICB All contracts >30<150 NCB Firsttwo contracts <30 Shopping Firsttwo procedures 2. Consultants Firms >IO0 QCBS (use of short list of All local consultants only) 50 See Section V of All (TOR, contract, CV) ~ Guidelines 4 0 See Section V of Review of TOR only I 1 Guidelines Overall Procurement Risk Assessment: Average Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review) reviewing a sample of 1in 5 contracts signed. 81 Annex 9: Economic and Financial Analysis I.CONSOLIDATIONANDEXPANSIONOFTHEAIN-CPROGRAM A. Methodologyand Assumptionsof the Analysis The discussion begins with a series of assumptions about the strategies, interventions and goals o f the Nutritionand Social Protection Project. The most important assumptionsare described below: 1. Populationcovered: The proposedinterventions will focus on two distinct segments of the most highly vulnerable Honduran population: (a) Children less than 5 years of age who live in the four departments of the most vulnerable, high-risk 80 municipalities that the Government of Honduras has prioritizedinits poverty reduction strategy.'* 2. Temporal horizon: While the project will a 4-year intervention, the impact of the project's activities will be for considerably longer. So as to be consistent with the economic analysis o f similar projects the time horizon of the analysis will be 10years. 3. Discount rate: A discount rate of 12% i s usedto discount the total benefits generatedby the project. Two alternative scenarios are considered with 10and 8% rates. (A 10%rate is normally usedinWorld Bank-evaluatedprojects, which representsthe investment opportunity cost ofproject resources. Lower discount rates of course meanthat the income flows from future earnings will be greater.) Inaccordancewith the World Health Organization-established standard(Murray andLbpez, 1994), a 3% discount rate will be usedto discount the future income streams received by people whose premature deathhas been averted due to the project (Le., inthe valuation of lives savedby the project). 4. Direct benefits: The AIN-C component of the project will generate cost savings as a result of the mothers and caretakers of children under five substitutingAIN-C monitoru care for Secretariat of Healthpreventive and curative care provision. USAIDevaluations of the AIN-C Program found that mothers who participated inthe AIN-C Programsubstitutedtheir local monitores' care and consultation for visits to the SOH. The study found the following effects: (a) a 29.6% reduction inthe number of SOH outpatient consultations for respiratory illness and (b) a 49% reduction inthe number of SOHoutpatient consultations for diarrheal disease. The expectedreduction inthe number of SOHoutpatient consultations per child was estimated by applying (multiplying) these proportions to the estimated number of children participating inAIN-C as a result of the project's extension of coverageto the age-, disease- and facility type-specific SOH utilization rates inthe targeted departmentsin2004. The cost of an SOHoutpatient visit at hospitals was calculated as the average of the estimated cost of a pediatric outpatient visit which was available for 2 of the 4 hospitals inthe 4 departments 22 There are approximately 110,000children under five in these 80 municipalities. 82 for 2002. 23 This figure was inflatedto June 2005 usingan adjustedCentral Bank consumer price index. The cost of an SOH outpatient visit at a CESAR and CESAMO was estimated as simply the total SOHexpenditures inthese health regions dividedby the number of consultations they providedin 2004. Inaddition, it was assumedthat the introduction ofthe AIN-C Program would result ina 95% reduction in the proportion of growth monitoringvisits providedby the SOH, and a 50% decreaseinthe 2004 hospitalization rates of children under five for respiratory illnesses or diarrhea in the SOH hospitals located inthese four departments. The cost of apediatric admission to the SOHhospitals was assumedto be equal to the average of the two hospitals inthe target areafor which such data were available. 5. Indirect benefits: For the AIN-C component of the project, two types of indirect benefits are estimated: (a) enhancedphysical strength and stamina, (b) enhancedcognitive capability and (c) children lives savedfrom reduced vitamin A deficiency. Young children who suffer chronic malnutrition andare stunted (two or more standard deviations below the median of an international comparison group) earn significantly lower incomes throughout their economically active lives. Given its irreversibility, the prevention of chronic malnutritionincreasesan individual's potential income earning capacity relative to what it would have been had he/she suffered malnutrition. The benefit of reducing chronic malnutritioni s measuredby the increasedincome-earning capacity of the persons whose nutrition status i s better than it would have been without the project. This benefit can be estimated as the of future income flow, valued on the basis of the minimumsalary projected throughout the individual's work life and translated inpresent value. The effect on adult earnings and productivity i s estimated at 10per cent for stuntingand 4 per cent for childhood anemia (Hoddinott; Quisumbing; Gillespie & Haddad2003; Alderman, Hoddinott & Kinsey 2002; Ross& Horton 2003). Thirty-four percent of Honduran children less than five are anemic and 15% are vitamin A deficient. UNICEF estimatesthat vitamin A deficiency results inthe death of approximately 350 Honduran children annually. The AIN-C monitores will distribute a 100,000 IUvitamin A capsuleonce every six months to all children less than five intheir communities. The consumption of a single high-dose capsule once every 6 months prevents vitamin A deficiency. The monitores will also distribute iron capsules to children under five. The value of the reduction inthe number of deaths of children under 5 employs the human capital methodology. An economic assessmentof the future income flow received by the proportionof these children whose lives are saved that i s expected to eventually becomepart of the economically active population, i s presented. 6. The expected trajectory inthe program's effectiveness: Based on the evaluations of the AIN-C Program it appearsas though the coverage and some of the most important elements of the program may be slipping.24It i s assumedthat without the Project that the ~ 23The hospital cost data are produced by the WINSIG management information system that the IDB PRIESSProject has assistedthe SOHin implementing in 12hospitals. 24The careful wording "appears to be slipping" is deliberate, and intended to recognize that-while there is no definitive data of the magnitude of this impact-the marked variations in the way in which the program 83 coverage of AIN-C would deteriorate at an annual rate of 10%. With the Project andits institutional strengthening activities it is assumedthat the coverage of the current program will be maintained. This higher coveragerate i s the source of additional benefits of the Project. Another expectation basedon the AIN-C evaluations i s that within any community inwhich it i s introduced, that the program will becomeeffective among the less than two year olds very quickly, but that among the 2-4 year olds its take-up will be slower. It i s assumedthat inits first year inoperation the programwill reduceboth stuntingandanemiaby 15%andin the second year and thereafter by 20%. 7. Project investmentsand recurrentcosts: The total financing of the Nutrition and Social Protection Project will be disbursedover aperiodof 5 years. It i s assumedthat recurrent costs will be absorbed by the SOH once project investments are completed in 2009. 8. Establishment of "without project" and "withproject" scenarios: Two scenarios are analyzed in estimating direct and indirect benefits: without project and with project. In the "without project" scenariothe performance variables of interest are analyzed assuming rates (and rates of improvement) that exist in2004. Inthe "with project" scenario estimates of changes are basedon rates of changeincoverage that the Project anticipates making. The difference betweenthese rates may be interpreted as the savings generatedby the project. 9. Thisis a conservative,low-endestimateof benefits: Dueto the difficultiesin quantifying some of the expectedbenefits, this analysis produces what should be regardedas minimumbenefit estimatesdoes not take into accountall possible benefits. Inparticular, it excludes any benefit attributable to: (1) more general impacts on child mortality other than those attributable to vitamin A deficiency (2) improvedefficiency of the education system, owing to better nourished children starting school earlier, learning more and lower frequency of grade repetition (Hoddinott & Quisumbing, Behrman et al., 2003), (3) reduced travel time and expensesof caretakers (to take children to SOH and other care providers), (4) caretakers' lost days of work, (5) reducedduration and severity of respiratory and diarrheal illnesses due to heightened access to care. These unquantified benefits, together with the conservative assumptionsmade incalculating those benefits that arehere estimated, meanthat the project i s considerably more desirable than indicated by the conservative, low-end estimates presentedinthis economic analysis. C. Results The project's interventions will generatea cumulative net economic benefit of US$26.1 million, inpresentvalue terms, over the course of the 10-year evaluative horizon. 16% of total benefits represent the valuation of the direct benefits of reduced SOHrecurrent cost was found to be implemented inthe 1998and 2000 surveys, strongly suggeststhat there has been a decline. While it is recognized that there are a number of potentially confounding variables that threaten the validity of this conclusion, in lightof the magnitude of the differences inthe two evaluations' findings and the fact that the technical assistancethat has been provided by the USAID BASICS Project local team for the past 10years is ending this year, it was decided to make risk-averse assumption: viz., that coverage of the currently functioning AIN-C program sites' will decline by 10% a year. The differences in the coverage estimates of the two evaluations' was 8%. 84 5,671,625 9,t94,400 PIC @ 8% $2.48 order to investigate the sensitivity of the rate of return to changes in some of the Project's critical assumptions. D.Fiscalimpactandsustainability Inaccordance with establishedandestimateddisbursementflows, the fiscal impact ofthis project would be quitemodest. Recurrent project costs to be assumedby SOH after the Nutrition and Social Protection Project disbursements are completed representapproximately 3% of projected Secretariatexpenditures. Annual estimated costs represent less than 1.5% of the SOHbudget and less than 2% of the current expenditures. As aproportionof GDP, project costs represent a relatively small amount that does not exceed 0.2% of GDP, which, together with cost flow analyses, benefitsand profitability, make the Projectnot only viable, but an attractiveeconomic option. 11.FIRSTEMPLOYMENTPILOTPROGRAM A. Background. More than 400,000 adolescentsaged 15-19 live inextreme poverty in Honduras, and underemployment and unemployment rates for youth aged 15-24 i s twice the national average. The economic rationale for investing inyouth at-risk inHonduras i s based on two specific considerations: (I) Improvements of the employability and productivity of the beneficiaries generate both private and social returns on investments, and (11) The labor marketinsertion of youth who neither work nor study will diminishthe probability of them engaging in anti-social andrisky behaviors, which inturn will decrease future expenses for rehabilitation and treatment related to these behaviors. Basedon the rough, initial estimate, the costs of the training and internship to the Honduran government (includingthe basic training, technical training, stipend, advising duringthe labour marketinsertion, administration, evaluation and equipment costs) are between $800 and $850 per graduate. The costs are going to be validated by consultations on the offering of training. B.DirectBenefits: The benefits of this project component will generateprimarily from the improvements of employability and productivity of the participating youth at risk. Direct benefits of youth training and internship programs inArgentina, Chile, Colombia, Costa Rica, Peru, Mexico and Uruguay, which are similar to the "First Employment" pilot supportedunder this project, have beenmeasuredthrough impact evaluations insome of the countries. As shown inthe table below, the outcomes of these programs differ, but ingeneral they show a positive impact inemployment and/or earnings of the program beneficiaries. It should be notedthat not all the studies usedmatching techniques and could have bias problems that were not analyzed indetail. 86 __ Country Program impacts on employment I wage ~~ _ _ ~ ~ ~ ~ Argentina - An increasein wages of around US$20 per month, representing almost 10percent of the - average wage. The effect on finding employment not as significant even though a simple regression analysis indicatedthat the program has positive effect on the probability of obtaining - employment. Most surveys available indicate that about 30% of the graduates are employed immediately after the internship. More than 20% return to school. There is limited evidence that close to 70% of the trainees are employed 22 months after beginning the course. (Aedo, Nunez 2004; de Moura Castro 1999) - One year after graduation, project beneficiaries have substantially improved their labour situation. Compared with the control group, the impact was positive, as most participants (70%) had effectively improved their possibility to obtain higher quality, better paidjob. (International Labor Organization) Chile - Significant, 25.2% effect on the labor insertion, but the impact on the wages appearedto be negative, -8.8%. - The percentageof employment among the beneficiaries prior to the program was 57.8%, as opposed to 38.3% in the control group. Reckoning social inclusion to be the sumtotal of the employed and the students, the beneficiary group reached 60.7% inclusion, and the control group 42.9%. (Nopo, Robles, Saavedra2002) - Probability o f employment increased by 8-13 percent. 50% of trained youth foundjobs after the project. (Fawcett 2001) Colombia - The employment rate of the graduates after the completion of the latest program reached the average employment rate of all youth (18-25) in the same occupational stream (40%) - and significantly exceededthat of the control population's (22%). The proportion of disadvantaged youth in the formal sector increased significantly, from 18 to 38 percent. - 61% of the members of the beneficiary groups were employed when they were surveyed - about a year after the program. 50% of the trainees inthe sample had improved their situation from the viewpoint of wages and employment (International Labor Organization) Peru - Firstbatch: Share of beneficiaries inpaidemployment grew from 35.8% at the beginning of the program to 61.5% and 62.9% six and twelve months after graduation. The same rate for the control group went from 50.2% to 56.2% and 58.4% for the same period. (International Labor Organization) - Employment rate of the beneficiaries was 6% higher than that of the control group's; (ii) the program beneficiaries' incomes were 18% higher than the control group's; (iii) the program's participants worked 5.5% more hours than the members of the control group resulting to US$130 000 yearly gain; (iv) the program participants had better jobs (measured interms of incorporation inthe formal sector and social security and benefit coverage); and (v) the program generated a statistically significant reduction in gender - segregation. The program led to an increase in youth employment in medium-sized and large - companies, together with a consequent reduction in employment in micro enterprises. More than 18 months after the hands-on phase's completion the program's effects were still substantial. (fiopo Hugo, Robles Miguel, Saavedra Jaime, 2002; Nopo, Saavedra, 2003 as quoted in Inter-American Development Bank). 87 Uruguay - Probability o f employment increased by 60 percent. Reduction of searchtime by 8.5 - months. Quality of new employment is higher. Increasein salary 18-23% depending on type of training (withlwithout stipend, technical - training withlwithout stipend) Marginal and insignificant effect on returning to school. (Fawcett 2001) Chile, - Ingeneral, the programs leadto increaseinearnings or employment, but not both Costa-Rica together. The outcomes differ across countries, but in most of the programs the and Mexico outcomes on earningwere below 10percent of wages. (Elias, Nunez, Cossa, Bravo 2004) Net PresentValue of Youth Employment programs. There i s no sufficient data available at this point to calculate the benefits of the Honduranprogram. However, impact evaluation of the Argentina and Peruprograms indicate the net present value (NPV)of this type of programs. An evaluation of the Programa Joven inArgentina in2004--using the matching estimators--showed that the meanearnings effect for all beneficiary groups was US$17.87 per month and US$24.67 for young males and adult females, with only the latter being statistically significant. The estimateswere basedon the data on fifth generation of training courses, costs per student that graduated at least from the technical knowledge phase: direct cost of US$1342 (incl. training services of about 200 hours per beneficiary, insurance, fellowships & subsidies to program beneficiaries with children); indirect costs of US$483.83 (incl. personnel, infrastructure, other expenses of the ministerial department, biddingcosts, promotion, supervision etc.), and zero opportunity costs. Usinga 5% discount rate, young males and adult females, require 9 years of program benefits to achieve apositive NPV, and all beneficiaries on average 12 years. (Aedo, Nunez 2004, Betcherman, Olivas, Dar 2004) In the cost-benefit analysis of the sixth round of the Peru ProJoven program, the total costs were estimated to be US$2.4 million, of which the direct costs of the program were estimated to be 77%, and the remaining 23%, opportunity costs of the beneficiaries. The pessimistic, conservative, and optimistic benefit scenarios usedin the evaluation yielded internal rates of returnof 13%, 20%, and 36%, respectively. Usinga discount rate of 5%--same as used in the Argentina model-- each of these scenarios would require less than sevenyears to acquire a positive net presentvalue. (Nopo, Robles, Saavedra2002) C. Indirect Benefits: The above mentionedcost-benefit analyses of the youth training and employment programs only consider the direct benefits of the program, and the impact evaluations can therefore be regarded as conservative. Inparticular, reducing youth violence i s expectedto bringconsiderable savings to the youth, their families, society, and Honduran economy. The cost of crime committed by youth cannot be accurately estimated because many of the crimes include immeasurable losses, such as those resulting from murder, sexual offenses, and drug trafficking. Furthermore, criminal activity at a young age has long-term implications for a person's future criminal activity and his or her integration into society. At a minimum, the financial and economic costs ofjuvenile crime and violence include criminal justice costs, victim costs, forgone earnings, security costs, and lost of social capital (World Bank 2003, Knowles, Behrman 2003). The Cost of Crime and Violence. According to a study by Inter-AmericanDevelopment Bank on costs of violence in six Central American countries--El Salvador, Colombia, Venezuela, Brazil, Peruand Mexico-- violence against goods andpeople accumulatesto a destruction and transfer of resourcesof US$168 million, approximately 14.2 percent of their 88 GDP. The materiallossesare composedof government security andjustice expenses representing 1.6 percent of the GDP; security costs assumedby householdsand businesses, with a percentage of GDP nearly as highas the public expenditures; and low level of economic activities (work, consumption, investments), and welfare. It i s estimated that the loss of human capital--calculated in years lost by premature deathor disability--represents 1.9% of GDP. (Gaviria, Guerrero, Londoiio, as quoted inJaramillo 2001) Inthe case of the Caribbeancountries, the social financial cost from youth crimes (including cost the arrest, court appearances, incarceration, victim compensation of medical care, public programs for victims, and lost earnings) has beenestimatedto be approximately US$39 million inJamaica and US$46 million inSt. Lucia. Usingdata from Trinidad and Topago, expenditures by citizens to protect themselves from being victims of the crimes i s estimated to be US$3,696 per household per lifetime infixed costs and an additional annual expenditure of US$1,200 to US$30,000. The total social economic cost of youth crime have beenestimated to be equivalent to 0.04 percent of gross domestic product (GDP) inJamaica and 0.45 percent inSt. Lucia; andthe total private economic costs to citizens equivalent to 11 percent of GDP inJamaicaand 0.92 percent inSt Lucia. (World Bank 2003). Youth criminalitv and violence inHonduras has become one of the most serious problems facing the country. Between 15,000 and 20,000 young people are members of gangs, and minor offences, mainly robberies, by gang members younger than 18 years have increased from 17,333 cases in 1998to 55,388 in2003. A very small proportionof serious crimes including murders are attributable to minors, but reports show that almost 2,520 children and youth under 23 years (59% of whom are under 18 year) have beenmurdered between 1998 and 2004 as a result of their supposedintegration to gangs, causing considerable losses through forgone earnings etc. (Coiproden. 2005, Caldera, Jimenez 2004). Moreover, statistics show that Honduran firms are frequently victimized by crime, which increasesthe cost of doing business and reduces their productivity. One inthree firms in2002 suffered a criminal attack (theft, robbery, vandalism or arson), and Honduran firms on averageloose 0.9 percent of their sales due to crime. Inaddition, the firms spent an additional 3.6 percent of sales on security measures.Total losses add up to 4.5 percent of sales. According to the Honduranfirms, youth gangs are responsible for about 25 percent of these crimes, and thus, the losses. (World Bank 2004) Since the government in2003 amendeda penal code to make mere membership of gangs a criminal offence, more than 1,000 young people have beenjailed adding considerably to the criminaljustice costs resulting from youth crimes. The maximumcapacity of 435 of the four special internment centers for minor offenders under the age of 18 has been surpassedby more than 200% and there are a large number of youth gang members inadult penitentiaries. (Caldera, Jimenez 2004, Romero 2004) 89 Annex 10: Safeguards 1.Environmental The Project i s classified under Category C as it presentsno potential adverse impacts. 2. SocialAssessment and IndigenousPeoplesDevelopment Plan (IPDP) The project targets two highly vulnerable groups of the Honduran population identifiedby the PRSP: children 0-5 years old with the highest levels of malnutrition and some of the lowest indicators of primary health care inthe poorest departments (Copan, Intibuci, La Paz and Lempira); and youths at risk (15-19 years old) facing limited access to education andthe work force along with the challengesof urban life inTegucigalpa, San Pedro Sula and La Ceiba. A social assessmentwas carried out inMarch 2005 to assess some current practicesunder AIN-C and consult direct beneficiaries and stakeholders on the relevance, efficiency of processes, efficacy of existing programs, perceptions on how they can be improved, and expectations of the servicesto be delivered by the components. The assessment hadtwo parts:(a) adesk review assessingexisting demographic composition, andthe institutional and legalframework of the proposedproject; and (b) a Rapid Participatory RuralAppraisal (RPRA) for the AIN-C component, and aRapid Participatory UrbanAppraisal (RPUA)for the FirstEmployment component. The assessmentswere carried out by two teams of local consultants accompanied by the project teams of both Secretariats (Education and Labor), supported by the Indigenous and Afro-descendants federations, and with technical assistance from the Bank. The goals of the assessment were to: (a) explore mechanismshtrategies to improve the delivery of services to the most vulnerable groups; (b) agree on anIndigenous PeoplesDevelopment Plan that would ensure the inclusion of highly vulnerable Indigenous and Afro-descendant children and youths inthe project; and (c) includerecommendations to improve the project design. Legal Framework The HonduranConstitution and The Childhood and Adolescents' Code (Decree No. 73-9), protect the right of the child to health and provides guidelines for employment of children under 18 years of age. The Code establishes that: (a) Art. No. I,"for legal purposes, all individuals below the age of 18 are considered children"; (b) Art. 120, "minimum working age i s 14years old", and "Under no circumstances shall a child younger than 14years work". This is ratifiedby the ILOAgreement 138. Inspite of the above legislation, the Census records as economically active all the children 10years old and older who work; (c) Section No. 3 on the Apprenticeship Contract, Art 129 signals some employment options for the population servedby the project. It specifies that "A child working for an employer shall be paid an agreed salary providedthat employer grants the child the required technical training to learn a skill, form of art or manufacturing technique". The L O Convention 169 on the Rightso f Indigenous Peoples (ratified by Honduras in 1994) recognizes the rights o f Indigenous children and youth to health, education and social protection. Moreover, the WorldBank O.D. 4.20 mandates informed consultations 90 to be carried out with Indigenous Peoples living inthe project area, andan Indigenous Peoples Development Plan (IPDP) to be agreed with said peoples to ensure services are rendered in a culturally-adequate manner. The following Indigenous andAfro-descendant organizations are legally constituted to represent the nine ethnic groups in Honduras: The Consejo Consultive Lenca (CCL) which includes four federations ONILH, MIL, CGL and FONDIL; COPINH (Lenca); CONIMCCH (Chorti); FITH(Tawakha); FETRIPH (Pech); FETRIXY(TolupBn); MASTA (Miskito); NABIPLA(EnglishSpeakingBlack); andOFRANEH (Garifuna). The Government commitment to fight poverty among indigenous and afro-descendants The ethnic communities are among the poorest inthe country, with much higher than average rates of malnutrition, illiteracy and unsatisfied basic needs. Due to geographic and cultural isolation, participation of these groups inGovernment programs i s limited. A more active participation inhealth and nutrition programs on one hand, and youth-at-risk on the other, is key to povertyreduction among ethnic groups. In2001, the Government ofHonduras (GOH) presentedits Poverty Reduction Strategy Paper (PRSP), which seeks to reducepoverty by 24 percent during2001-2005 through a comprehensive set of measuresor pillars, including: (1) accelerating equitable and sustainableeconomic growth; (2) reducing poverty inrural areas; (3) reducing urban poverty; (4) investing inhuman capital; (5) strengthening social protectionfor specific groups; and (6) guaranteeing the sustainability of the strategy. The objective of "Social Protection for Specific Groups" (pillar 5) i s to improve the living conditions of people inextreme poverty, particularly children, adolescents, senior citizens, women, persons with disabilities and ethnic groups, in order to enabletheir social integration and development through equitable access to opportunities. The PRSPalso calls for programs and projects that support (a) socio-economic development of ethnic communities, and (b) ethnic and ecological tourism. Indigenous Peoples and Poverty Honduras i s one of the poorest countries inLatin America and i s characterized by a high degree of income disparity. With a per capita GNIof US$920 in 2002, the country i s the third poorest inLatin America. Given its highincome inequality (the national Ginicoefficient i s 0.6), poverty is widespread. Nearly two-thirds of the population is poor and nearly halfis extremely poor25These vulnerable groups, particularly those living inisolated regions, are in the two poorest population quintiles. Over 50 percent of rural householdsare considered chronically poor. Human development indicators for ethnic groups, such as malnutrition, illiteracy and unsatisfied basic needsare higher for indigenous than for non-indigenous. Limited or inadequate access to basic services i s common. The deficit of education inrural areas i s 25The "extremely poor" are those living below the extreme poverty line, which is the cost o f a food basket designed to meet basic nutritional needs. According to the Honduras CAS (pg. 4), "All Poor" in2002 represented 63.3 percent of Honduras households and "extremely poor" 45.2 percent o f households. 91 above 40 percent for ethnic communities, and illiteracy is equally high(46 percent for Tolupan and Miskito) due, inpart, to their geographic isolation. Shortagesof potable water andelectricity among ethnic peoples are noteworthy. Over 70 percent of indigenous households inrural areas dependon candles for light and 40 percent dependon rivers and wells for water. Over 50 percent of the ethnic population lack basic sanitation including latrines. The deficit inhealth and sanitation services i s equally substantive. HIV/AIDS and other contagious diseasesare significant health threats to the 54 Garifuna communities along the Atlantic Coast. Proiect Targeting The project targeting for the AIN-C component responds to the need expressedby the PRSP to improveprimary health care indicators inthe Western departmentsof Copin, Intibuca, Lempira and L a Paz, particularly for neonatal and health care of children 0-5 years of age. This component will focus on 1,000 new rural villages of selectedmunicipalities inthe poorest departments. The FirstEmployment component targets the two largest metropolitan areas of Tegucigalpa and San Pedro Sula; and the Coastal urban centerof La Ceiba. Analysis of Demographic and Socio-EconomicFactors affecting the Interventions of AIN-C and First Employment Demographics According to the 2001 Census, 440,323 people self-identified as indigenous or afro- descendant(7.2 percent of Honduranpopulation), although, according to the indigenous federations the ethnic population i s approximately 900,000inhabitants or 14%of the population. O f those, the largest group i s the Lenca accounting for 62 percent, followed by the Miskito 11%,the Garifuna lo%, the Chorti 8%, the English-Speaking Black263%, the Tolupan 2%, the Pech 1%and the Tawahka less than 1%. The Nahoas have not been officially recognized as a federation, but they account for 3%. Indigenous peoples belong to sevenethnic groups of diverse origin. The Lenca, and Chorti are of Mesoamerican descent; the Tolupin, Pech, Tawahka, and Miskito are believed to be of Chibcha descent; the Garifuna and English-Speaking Blackof African descent. Table 1:UrbadRural Demographic Distribution inthe Four Departments Targeted by the Source: Self-elaboration basedon Census 2001 26This group prefers to be called "Negros de Habla Inglesa or English-Speaking Black" 92 With regard to the ethnic composition of the population under the AIN-C component, 32 percent of the population inrural areas targetedby the project i s autochthonous.Inthe Department of Copin, 6 percent of the population i s autochthonous (mostly Chorti) and 98 percent of them live inrural areas, which is the area of influence of the project. Inthe other three departments Intibuci, La Paz and Lempira, 40 percent of the population i s autochthonous (mostly Lenca) and93.2 percent of them live inrural areas. Consequently, AIN-C may potentially affect autochthonouspeoplesdirectly. According to that Census, poor urbanpopulation accounts for 61.3 percent at the national level. Table 2: Indigenous and Afro-descendant population 15-19 years of age inHonduras I I Rural 367,850 327,262 2,307 514 949 353 4,528 28,077 180 3,680 40,588 Male 194,753 173,716 1,117 267 525 156 2,178 14,749 91 1,954 21,037 Fem 173,097 153,546 1,190 247 424 197 2,350 13,328 89 1,726 19,551 Table 3: Indigenous and Afro-descendant population 15-19 years of age inMetropolitan Areas of MDC, San Pedro Sula and La Ceiba Source: Self-elaborationfromCensus 2001. Tables 2 and 3 indicate that there are approximately 50,000 Indigenous and Afro-descendant youths 15-19 years old inthe country, of whom approximately 9,500 were inurban areas in 2001, and approximately 3,500 in the metropolitan areas of the MetropolitanDistrict (MDC), SanPedro Sula and L aCeiba. There are more indigenous females than males inthese areas. It is not clear how many of them are studying and/or employed. 93 The Socio-economic andHealth Situation of Indigenous Peoples inthe Project Area HealthCare Supply. Studies carried out by the ETZTANIResearchInstitute (2001) stress the deficit of health care supply and limited access to services inthose departmentsingeneral, particularly among indigenous groups inisolated rural areas. For the general population, the study estimates that there i s one CESAR (with one nurse) for every 6,825 people and one CESAMO (with one doctor) for every 30,000 people. Dwelling overcrowding and `chagas' epidemic. According to the census, 93 percent of ethnic peoples suffer from overcrowding. The Social Investment Fund(FHIS), through the Nuestrus Rakes Program with support of SOH, has rehabilitated 500 dwellings andplans to rebuild 4,000 more infested housesto fight the epidemic. Water and sanitation facilities. This i s one of the biggest problems affecting the entire country with dramatic consequencesfor health and nutrition. Whereas 73 percent of households at the national level have access to a household or public connection, access is limitedto 30percent of the population inrural areas. Well water is less common andlimited to 6 percent of the householdsnationwide, although it i s more popular among the Garifuna (17 percent) and the Chorti (11percent) inrural areas. 12percent of Hondurans still depend on river or lake water for drinkingand cooking, but the number is higher for the indigenous. 24 percent of rural Lencas, and 16percent of Chorti consume only river water. Withregard to sanitation, 42 percent of Lenca, 50 percent of Chortiand 18percent of Garifuna householdshave no installed sanitation facilities, compared to 22 percent at the national level. Also, 23 percent of Lenca, 20 percent of Chorti and 10percent of Garifuna use simple latrines as opposedto 25 percent at the national level. Interms of connections to a seward system, only 7 percent of Lenca and Chorti and 22 percent of Garifuna are connected, as compared to 28 percent at the national level. Electricitv. Out of 601,273 rural households existing inHonduras, only 29 percent have public or private electricity, aprivateplant or solar energy. The other 71percent use wax or gas candles, torches or candle lamps. Education. For the population ingeneral, the census indicates that illiteracy i s 6.4 percent for the Department of Francisco Morazin (Tegucigalpa), and an averageof 9.3 years of schooling;l3 percent of illiteracy and an average of 7.7 years of schooling for Cort6s (San Pedro Sula); and 7 percent illiteracy and an average of 8.3 years of schooling for Atlintida (La Ceiba). The low education levels contribute to deficient health indicators. For people 15 years of age and older, literacy i s calculated at 80 percent at the national level, and 90 percent inurban areas. However, inthe Metropolitan areas, close to 40 percent of youths with access to primary education did not finishit; 95 percent of youths who started secondary education did not complete it. About 10percent attend a vocational school. About 30 percent are economically active. The average schooling of working youths i s of grade. Urbanliteracy for the Garifuna i s higher than the national urban level, at 94 percent (14,212 Garifunas); as compared to 87 percent for the Lenca and 88 percent for the urban Chorti. The latter are important factors to bear inmindfor the FirstEmployment component. The rural scenarioi s worse, as 31percent of rural populations at the national level, and 38 percent for the Chorti and Lenca are illiterate, of relevance for the AIN-C component. 94 The economically-active population. InHonduran terms, the economically active population i s 10years old and older. The main occupation of Hondurans i s agriculture, forestry and fishing(40percent), followed by trade (15 percent) manufacturing (13 percent) and community-based activities (11percent). For the urban Garifuna, the most common occupation is tourism services (26 percent) followed by community-based services (22 percent), while for the rural Garifuna, agriculture and fishing are the most common (48 percent). For the urban Lencas, the most common activities are community-based (23 percent), while agriculture, fishing, hunting occupies 83 percent of Lenca and 82 percent of Chorti inrural areas. The majority of working Lencas and Chorti 10+ years old and up are self-employed (60 percent on average), around 20 percent are privateemployees, and4 percent work inthe public sector. An important source of income for the target population of both components is the remittances from relatives overseas. The Needfor Intercultural Strategies for Health and Social Protection. Understanding the cultural context of the components i s key to the attainment of the objectives. Although language i s an important indicator of cultural differences, the latter may be historically preserveddespite the absence of the native language itself. ~ALTHOUGHTHE LENCALANGUAGEIS DEAD,THE CULTUREANDTRADITIONSARE ALIVE The Lenca group is the largest inHonduras, accounting for 62 percent of ethnic population or 279,507 people (2001 census) inhabiting mostly west Honduras. The AIN-C program will focus on the departments of Intibuck, Lempira and L a Paz, where the ethnic population accounts for 220,290 of which 98.5 percent are Lenca. Although the Lenca language (of the family of Mayan languages) disappeared in Honduras at the beginning of the 20th century, the behaviors and preferences of peasants of Lenca ancestry and Lenca peoples indicate their culture and traditions are vivid. This is significant for the framing of "intercultural health". The RapidParticipatory RuralandUrbanAppraisals(RPRAand RPUA) Two Rapid Appraisals were carried out: a rural appraisal (RPRA)for the AIN-C component, and an urban appraisal (RPUA) for the "My FirstEmployment" component. The RPRA was carried out by a local multi-disciplinary team with the purpose of consulting with 12 communities presently participatinginthe AIN-C program, as well as with four non- beneficiary communities inthe four departmentsof the project. Informedconsultations were gearedto assess: (a) the level of satisfaction andexpectations of direct beneficiaries; (b) the level of commitment of local governments and SOH units; and (c) the level of participation of the local health network (Health Committee, midwives, traditional healers, SOH health and sanitation workers (TSA), NGOs) as well as their perceptions and expectations. For the FirstEmployment component, the urban assessment was implemented by a local team, accompaniedby the SLSS. Informed consultations were carried out with students, training centers, employers and indigenous federations. The goal o f the consultations was to assess the mechanismsto be used on the pilot project. A series of workshops with employers/firms remains to be carried out as part of the social assessment. Itwas difficult to analyze results of AIN-C on ethnic groups, as existing studies and evaluations do not disaggregate data with the variables "ethnicity and gender". The incorporationof variables on ethnicity, gender and age i s an important recommendation for both components. 95 Main highlightsof the Rapid Participatory Rural Appraisal AIN-C 1. The existing AIN-C strategy inthe 16communities visited covers children 0-2 years old. The central activity of the strategy i s to monitor children's weight, andrefer children to the HealthUnit. AIN-C only monitors weight, but other NGOs, Le., Plan International (Plan Honduras) monitors children's heightand weight. 2. Since the CESAMOs (larger health centers) have only one medical doctor, a nurse and auxiliary nurse to serve an average of 30,000 people, basing the AIN-C strategy on the CESAMO would appear to be a burdenfor the center. The CESAR (village level) i s closer to the community physically and culturally, and more likely to embrace the program, even though it is only staffed with a nurse and auxiliary nurse. InterculturalHealth 3. As agreed with SOH, an Intercultural Approach i s neededfor the AIN-C Component in the autochthonous communities. Inthose communities, approachesto health care are governed byparticular traditional behaviors. 4. A module on "Intercultural health; safe and unsafepractices" may be added to the training program taught to health workers. There i s a needfor systematic training in `intercultural health' to health care workers of the SOH as well as the communities as suggestedby the Department of Indigenous Health at the SOH during consultations. This training should include safe traditional practices (i.e. the staple sacate tea) as well as unsafe traditional practices (i.e. tobacco leaves chewed by a first-time pregnant woman, wrapped ina rag, and given to the colicky baby as a pacifier to suck on; or using leftover antibiotics from previous illnesses; rubbing (sobudus),use of hen oil or other potions, etc. for bronchial illnesses). 5. Trainingto community-based networks should include, among other things, prevention against the `chagas' disease, which may be affecting hundreds of children inthe project area, and which will manifest itself later as heart problems. The Community-based health networks 6. The community-based health networks (health committees, midwives, health monitordguardians, traditional healers) are the only permanent health care providers in the community. The RPRA indicates that inrural settings, most people seek amember of the community-based network (monitor, midwife, healer) for advice and treatment of all diseases. People go to a health unit only when the self-medication, pharmacy or local healers have not been able to solve the problem, or in emergencies. 7. The consultations found that self-medication i s the first step to solve a health problem. This is donemostly with fitotherapy (plants), sometimes combined with medication bought in the food store (pulpeviu) or pharmacy, including antibiotics. People are reluctant to approach health unitsthat have no medication (which was the case of 50% of CESAMOs and CESARs) visited. 96 Stakeholder participation and social auditing 8. The inclusionof traditional authorities i s key to project sustainability. For example, the Auxiliary Mayor i s the highest traditional authority inthe rural aldeas and caserios and should be includedinthe strategy. Inurban areas, the Auxiliary Mayor i s the representative of the Mayor inthe neighborhood; therefore, his inclusion can be a key factor of success. Inaddition, the health committees, Patronatos, community leaders, water committees, etc. are important representativesof civil society. They should be informedabout AIN-C, particularly as sources of support (logistic). They are presently not included. 9. The assessment found that the level of interest and involvement of the Municipalities visited inAIN-C goes from minimal (ex.: a one time-contribution of Lps 100for transportation of monitors) to non-existent. 10. The MDsat the CESAMO are on a one-yearpractical trainingprogram, and do not get involved inprograms such as AIN-C. Incontrast, the nurse i s the permanent staff responsible for implementing the program inthe community, leading the PHC efforts, and chairing the monthly AIN-C meetings with the monitors. 11. The SOHfacilities (CESAMO and CESAR) only respondto health care demandsof patients who visit the units.They also provide vaccination, and primary or family health care through brigades inthe villages. 12. The Monitors (community volunteers) are the pillarsof AIN-C due to their daily commitment. They are the heart of the community-based network. Monitors also provide preventive andcurative care on demand. 13. Although the SOH Manual indicates Monitors should be selectedby the community, most Monitors are chosen, at the moment, by the HeadNurse of the CESAMO. Gender 14. The AIN-C strategyis targeted to women. Meninterviewed requestedthat men be educatedto share the responsibility of parenthood andthe health care of their children. Training 15. Most Monitors received the first training module (5 days) during the first year and the second module (3 days) duringthe third or fourth year of volunteerism. Most of the time, there was no training inthe interim. 16. Training provided inthe health facility is attended only by few monitors, leavingout the majority of community volunteers who practice traditional medicine. 17. Communities requestthat someoneinthe community be trained in giving injections, particularly for elders, the handicapped and very small children who do not usually reach the CESAMO becauseof distances. The Chagas Epidemic 18. Many school children, particularly in the area of Copin were found to be carriers of the chagasepidemic. According to PAHO, there are presently approximately 10,000 householdsinfested with chagas particularly inthe Northwestern regions (AIN-C area). 97 Mainhighlightsof the RapidParticipatorv UrbanAppraisal for FirstEmployment 1. The results of the social assessment show that the opportunities of youths to study are as limited as thejob opportunities. Students interviewed from the EDUCATODOS list (average age 16.5 years old) have only finishedsixth or seventh grade, and are over-age to sit inregular school classrooms. These students need alternative formal education opportunities. 2. Low schooling and low quality ofjob opportunities correspond to low income inthe formal and informal sectors. 3. There was great enthusiasm among the 338 youths interviewedto get trained and access their firstjob opportunity. The majority expressedpreference for training close to home to save time and avoid traveling, becausemany of them study, and 63 percent work. 4. The most popularjobs among youths are: auto mechanics, trade, restaurant cooking/waiting, welding, masonry, and working inhotels. The most popular among young women are: house/office/hotel cleaning, sewing, washinghroning, chambermaids, and childcare. 5. The indigenous federations have shown great interest in coordinating with the program. They have offered to use their social networks to infondguide eligible youth at risk to register inEDUCATODOS or other participating programs, inorder to be eligible for the FirstEmploymentprogram. 6. Twenty-six firms were interviewed inSan Pedro andLa Ceiba as part of the assessment. Firmsconfirmedtheir interest inparticipating inthe program. Some54.8 percentof those interviewed indicated their interest infinancing in-house training for eligible youths. Sixty-six of interviewedfirms do not employ youths at the moment. Recommendations for proiect design of Component 2: AIN-C 1. Include an "Intercultural health module" which includes the practices of western medicine andlocal traditions. The module should cover both safe and unsafe practices, and be targeted to: (a) staff involved inhealth care service delivery at the Central, departmental municipal, and local levels; and (b) facilitators, NGOs and monitors for AIN-C. 2. Change the name `monitoras' to "Monitores" to include men. 3. Strengthenthe existing "community-based health networks" (Monitors, midwives, healers, guardians) which operate traditionally and permanently inthe communities to provide traditional preventive and curative care. Since they enjoy respect and credibility in the community, AIN-C would benefit from including them inthe strategy, and their involvement would convey greater credibility and sustainability to the program. 4. Organize the training ofMonitores inthe communities themselves (CESAR), to allow for higher participation of the entire health network, instead of havingmonitors travel to the CESAMO. The CESAR i s more accessible to rural communities. Training can also be provided inschools. 98 5. To improve the nutritionpart of AIN-C, coordinate with other agencies to provide the community the opportunity to access agricultural programs, seed distribution, etc. Also, liaise with institutions/NGOs working on medicinal plants cultivation programs. Recommendations for proiect design of Component 3: FirstEmployment 1. Includethe variables of "ethnicity, gender and age" inthe baselineandM&Esystems. 2. Seek to avoid exclusion of youths basedon ethnicity, gender, or social strata. 3. The targeting study for the program could consider the broader "Metropolitan" areas, that is, MDC (Tegucigalpa andComayaguela); San Pedro Sula and LaCeiba and satellite municipalities whose inhabitants commute to the city for work and study. 4. Socialize/promote the programinside the SLSS inMDC as well as SanPedro Sula and La Ceiba. Socialize/promote the program outside the SLSS through informed consultations with stakeholders (employers, unions, trainingproviders, indigenous federations, youth groups and civil society). 5. Strengthen the Central and Regional Directorates of the SLSS to collaborate with the project. 3. ParticipatoryIndigenous, Afro-descendant Peoplesand GenderPlan(IPDP) The presenceof indigenous peoples inthe project areas triggers compliance with the Bank's O.D. 4.20, which requires that the needsof these populations be taken into account inthe design of the project, to enable them to benefit in a culturally appropriate way. Given that the Departments of AIN-C are in a multi-cultural area (over 30 percent Lenca and Chorti, and almost 50 percent peasantsof Lenca tradition), the IPDPi s intended to include all of the above under a culturally-appropriate strategy that benefits the entire region. Inthe case of the FirstEmployment component, the IPDPrecommends coordination with the indigenous and Afro-descendant organizations and their social networks to identify youth at risk inthe project areaand invite them to participate. Both the Health andLabor Secretariatshave agreedto includethe variables "ethnicity, gender and age" intheir baseline data, and in all databases to be usedfor monitoringand measuring the impact of the two components. Both components of the project will coordinate important actions with the Indigenous and Afro-descendant Federations to activate the social networks inrural and urban communities as needed. Both Secretariatswill inform the organizations about project opportunities, to allow their groups to participate inthe programs as beneficiaries, or as service providers, having met eligibility and selection criteria. Training and supervision of the `intercultural health' module are the responsibility o f the Indigenous HealthUnitat the SOH. 99 Component 2: Consolidation and Expansion of the A N - C Proeram (a) Elaboration of the module on "Intercultural Approach to health care delivery for children 0 to 5 years old" by the IndigenousHealthUnitat the SOH.This module will be taught along with the AIN-C training modules. Training will be provided to health staff at the Central and Departmental levels, and to facilitators. US$17,000 (b) Contract with a localfirmfor training of module on "Intercultural Health" US$47,000 (c) Supervision of NGOs in the field to ensurequality of intercultural approach to health us$lo,ooo (d) Workshop with the Indigenous Federationsto agreeon their participation in(i) identifyingremote indigenous communities lacking health services, where AIN-C may be introduced; and (ii) promotion of the program among local NGOs eligible for delivery of AIN-C package US$5,000 (e) Equippingof Monitors inremote communities with workbags containing first aid materials, scales, umbrella, rain poncho, basic medicines. Budgeted under project. Component 3: FirstEmployment Program for Youth at Risk (a) Socialization andpromotionof the project with personnel from the Regional Offices of Tegucigalpa, San Pedro Sula and La Ceiba, and other important stakeholderssuch as employers, youth organizations trainingproviders, ethnic organizations and beneficiaries, and other civil society groups, 3 @ 3,500 US$10,500 (b) A one-day workshop to inform the Indigenous andAfro-descendant organizations and 14 federations about the objectives of the project and its content. US$8,000 (c) Program promotion on radio stations most popular among youths. Posters and brochures to attract indigenous and Afro-descendant urban youth us$10,000 100 Annex 11:Project Preparation and Supervision HONDURAS: Nutrition and Social Protection Project Planned Actual PCNreview 06114/04 06114/04 Initial PID to PIC 07/06/04 07/26/04 Initial ISDS to PIC 07116/04 07/26/04 Appraisal 04111/05 Negotiations 3101105 05/02/05 BoardRVP approval 4/05/05 07/05/05 Planneddate of effectiveness 1013112005 Planneddate of mid-termreview 0612007 Plannedclosingdate 06/30/2009 Key institutions responsible for preparation of the project: Secretariatof Labor and Social Security, Secretariat of the Presidency, and Secretariatof Health. Bankstaff andconsultantswho worked on the project included: Name Title Unit Manuel Salazar Task Manager LCSHD Andrea Vermehren Sr. SP Specialist LCSHD RebeccaP. Santos Operations Officer LCSHS Jack Fiedler Sr. Health Economist LCSHD Patricia Orna LanguageProgramAssistant LCSHD SvetlanaKlimenko FMSpecialist LCOAA Aracelly Woodall Project Costing Specialist LCSHD LuisTineo Sr. Procurement Specialist LCOPR Minna Matter0 Jr. Professional Officer HDNCY MoragVan Praag Sr. Finance Officer LOAGl Ximena Traa-Valarezo Social Evaluation Specialist LCSHD Pilar Gonzalez Legal Counsel LEGLA SolangeAlliali Sr. Counsel LEGLA Jaime Rm'rez Consultant LCSHD Nancy Gillespie Consultant LCSHD Bank funds expendedto date on project preparation: 1. Bank resources: US$192,435.00 2. Trust funds: US$60,000.00. 3. Total: US$252,435.00. EstimatedApproval and Supervision costs: 1. Remaining costs to approval: US$O.OO 2. Estimatedannual supervision cost: US$86,400.00. 101 Annex 12: Documentsinthe Project File HONDURAS: NutritionandSocial ProtectionProject Country Documents producedcommissioned bv the World Bank: 1. Honduras -Country Assistance Strategy, May 29, 2003. 2. Honduras -InterimPoverty Reduction StrategyPaper (PRSP) -Volume 1, April 18,2000. 3. Honduras -Poverty Reduction Strategy Credit (PRSC), May 26, 2004. 4. Honduras -Development Policy Review (DPR), August 1I,2004. 5. Elaboracio'n del documentode Proyecto de Nutricio'n: Consolidacidny Expansidn del ProgramaAZN-C,March 6 2005,Matilde Neret (unpublished). 6. Youth at RiskComponent, March 6, 2005,Jaime Ramirez (unpublished). 7. The Joint Staff Assessment of progress in PRSPimplementation, February 2, 2002. a. Central America SSNA Cross Country Review of Findings, August 6,2003,JosC Marquez. Country Documentsproducedby the Government 1. Focalizacio'n de la Politica Social, Secretariat of Presidency,2003. 2. Bases Conceptualesy Operativas de la Atencio'nIntegral a la Niiiez en la Comunidad (AIN-C ), Secretariat of Health, 2004. 3. Propuesta Metodoldgica: Operacionalizacidn de la Estrategia deAtencio'n Integral a la Niiiez en el Ambito Comunitario (AIN-C), Tegucigalpa, November 2004,Glenda HernBndez. 4. Politica de la SaludZntegral de la Niiiez de Honduras (AIN-C),draft, October- November 2004,Lic. Gertalina Cerrato Gattorno. 5. Alcanzando las Metas de la Estrategia para la Reduccidn de la Pobreza, Plan de Implementacidn 2004-2006. 6. Revisidn y Readecuacidn del Modelo de Operacio'ny Metodologia de la Estrategia de Atencio'n Zntegral a la Niiiez (AIN-C), October 2004, Secretariatof Health. 7. Revisidn de las Bases Conceptualesy Elaboracio'n de Politicas, Secretariat of Health and Secretariatof the Presidency, 2005. a. Identificacio'n de Programas Complementarios Potenciales a la Zmplementacio'nde la Estrategia de Atencidn Integral a la Niiiez (AIN-C), first draft, November 2004, Victoria Vivas de Alvarado. 9. Resultado de la Consultoria Nacional para Asistencia en Sistematizacio'nde Focalizacio'n del Proceso de Implementacio'n de la Atencio'n Integral a la Niiiez en la Comunidad (AZN-C), en 10s Departamentos de SantaBarbara, Copdn, Ocotepeque, Lempira, Zntibucay la Paz, January 2005, Irene Orellana. 10. Esquema del Documento: Consultoria Nacional para la Revisio'ny Readecuacio'ndel Modelo de Operacio'ny Metodologia de la Estrategia de Atencio'n Integral a la Niiiez (AIN-C), October 2004, Judith Galindo and Glenda Hernindez. Others: 1. World Bank. 1996. "Promoting the Growth of Children: What Works. Rationale and Guidance for Programs." Washington DC. 102 2. World Bank. 2004. Honduras InvestmentClimateAssessment (two volumes). Finance, PrivateSector and Infrastructure, LCR, WashingtonDC. 3. World Bank. 2004. "To Nourisha Nation:InvestinginNutritionwith World Bank Assistance." WashingtonDC. 4. World Bank. 2004. "Nuts andBoltsof Nutrition." Volume 2 of the World Bank NutritionToolkit Series. WashingtonDC. 5. World Bank. "Children and Youth Approach." 6. Honduras, Secretariat of LaborandSocial Security (SLSS) a. Proyecto de L.ey Marc0 del Sistema Nacional de Formacidn y Capacitacidn. Documentode Trabajos$ b. Plan de Modemizacidn de la Secretaria. Documento de Trabajo s$ C. Decreto de Creacidn y Reglamento Intemo del Consejo Econdmico y Social de Honduras.S$ d. Estudio Diagndstico del Mercado Laboral y del Sistema de Empleo y Capacitacidnde Honduras, September 2003. 7. Honduras, Secretariat of Education. a. Programa de Alfabetizacidn y Educacidn Bcisica de Jdvenes y Adultos en Honduras- PRALEVAH, February 2004. b. Programa EDUCATODOS -2004. 8. Honduras,Programa deAsignacidn Familiar,PRAF. a. Sistematizacidnde logros y obsta'culos con vistas a mejorar el impacto social del bonojuvenil del PRAFpara jdvenes en riesgo social de San Pedro Sula. II Informe (Preliminar), April 2004 b. Sistematizacidnde logros y obstbculos con vistas a mejorar el impacto social del bonojuvenil para Jdvenes en riesgo social de Tegucigalpa,April 2004 103 Annex 13: Statement of Loans and Credits HONDURAS: Nutrition and Social Protection Project Honduras Statement of IFC's HeldandDisbursedPortfolio As of 01/31/2005 (InUS Dollars Millions) Held Disbursed FYApproval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1998 Camino Real Plaz 5.14 0 0 0 5.14 0 0 0 1999 GranjasMarinas 2.94 0 0 0 2.94 0 0 0 Total Portfolio: 8.08 0 0 0 8.08 0 0 0 Approvals Pending Commitment Loan Equity Quasi Partic 104 Annex 14: Country at a Glance HONDURAS: NutritionandSocial Protection Project Honduras at a glance 9/15/04 POVERTYand SOCIAL Honduras &Carib. income Developmentdiamond' 2003 Population,midyear (millions) 534 2,655 II GNI per capita (Atlasmethod, US$) Lifeexpectancy 3,260 1,460 GNI (Atlas method, US$billions) 1,741 3,934 T 997-03 1 5 0 9 2 1 1 2 GNI per Most recantestimate(latest year available, 1997-03) capita enrollment Poverty (% ofpopulationbelownationalpovewline) Urbanpopulatlon(% of totalpowlation) 50 Lifeexpectancyat birth(years) 69 Infant mortalitq(per 1,000livebirths) 32 ChildmalnutritionI%ofchildren under5) 11 Access to improvedwater source Access toan improvedwater source (% ofpopulation) 81 I Illiteracy(% ofpopulationage E+) 10 Gross primaryenrollment (% of school-aqepopulaf!on) 112 -Honduras Male 113 -Lower-middle-incomegroup Female 111 KEY ECONOMIC RATlOSand LONGTERM TRENDS 2003 7.0 29 2 P 36.5 Trade Grossdomestic savtnqsJGDP 119 Gross nationalsavingsIGDP 21.3 -75 Domestic 1 4 savings Investment Total debtlGDP 69.1 1252 81 8 80 2 I Total debt servicelexport 244 29.0 121 9 0 Presentvalue of debffGDP 468 I Presentvalue of debtlexports .. 944 Indebtedness 1983-93 1993-03 2002 2003 2003-07 (averageannualgro GDP 3 7 0 3.0 -Honduras GDP per c 0 6 6 5 Lower-middle-incomegroup Exportsof 21 1 5 STRUCTURE of the ECONOMY 1983 1993 2002 2003 1 Growth of p/,ofGDP) investmentandGDP (%) 1 Agriculture 21.2 20.6 13.4 13.5 10 Industry 25.3 30.1 30.6 30.7 5 Manufacturing 15.1 17.7 20.3 20.2 0 Services 53.5 49.3 56.0 55.6 I 5 Privateconsumption 77.0 67.8 74.1 74.4 -10 1 Generalgovernmentconsumption 13.1 10.6 13.8 13.7 Importsof goods and services 29.2 43.1 52.8 53.8 -GDI -GDP 1983-93 1993-03 2002 2003 (average annualgrowth) [Growth of exportsand imports(%) 1 Agriculture 3.8 2.2 4.6 9.0 10 Industry 3.9 3.2 0.7 4.4 5 Manufacturing 4.0 4.1 2.8 3.8 0 Services 3.4 3.6 2.9 -0.6 5 Privateconsumption 3.1 3.2 1.7 2.5 -10 Generalgovernmentconsumption 1.4 6.6 0.5 1.4 Grossdomestic investment 10.2 1.8 3.3 8.4 Importsof goods and services 4.0 3.2 2.1 1.3 Note: 2003data are preliminaryestimates. This table was producedfrom the DevelopmentEconomicscentraldatabase. * Thediamondsshowfour keyindicatorsinthe country (in bold)compared with its income-groupaverage. If dataare missing,the diamond will be incomplete. 105 Honduras ~ PRICESand GOVERNMENT FINANCE 1983 1993 2002 2003 I Domesticprices Inflation(Oh) I (77change) 25 Consumer prices 10.7 7.7 8.4 ImplicitGDPdeflator 7.0 13.6 7.3 8.6 Governmentfinance ~ (77ofGDP,includescunentgrants) Current revenue 13.0 16.6 18.3 19.9 Current budget balance -3.1 -1.1 -0.6 1.4 Overallsurpluddeficit -10.1 -9.6 -5.5 -4.1 deflator &CPI ~ -GDP TRADE 1983 1993 2002 2003 (US$mi//ions) Exponand import levels(US$ mill.) I Total exports(fob) 699 856 1,371 1,396 Bananas 203 225 171 /4,Oo0T I Coffee 151 125 175 Manufactures Total imports(ci9 823 1,320 2,920 2,994 Food 123 166 546 Fueland energy 164 183 408 Capitalgoods 126 292 809 892 Exportprice index (1995=100) 80 89 97 98 99 w 01 02 Import priceindex(1995=100) 88 109 KdExports Imports Termsof trade (1995=100) 91 82 BALANCEof PAYMENTS 1983 1993 2002 2003 (US$mi//ions) 1 Current account balanceto GDP (%) i Exportsof goods andservices 801 1,084 2,437 2,550 Importsof goods and services 912 1,498 3,456 3,758 Resourcebalance -111 -415 .1,019 -1,208 Net income -152 -75 -177 -165 Net currenttransfers 18 68 748 849 Current account balance -246 -421 -448 -524 Financingitems(net) 202 327 577 524 Changes in netreserves 43 94 -129 0 Memo: Reservesincludinggold (US$ mi//ions) 134 1,493 1,492 Conversionrate (DEC,/ocal/US$) 2.0 6.5 16.4 17.4 EXTERNALDEBTandRESOURCEFLOWS 1983 1993 2002 2003 (US$millions) Compositionof 2003debt (US$ mill.) Total debt outstandingand disbursed 2,127 4,360 5,395 5,598 IBRD 268 479 105 85 IDA 81 236 1,014 1,143 466 85 Total debt service 203 374 397 311 IBRD 26 85 20 28 IDA 1 3 13 17 Compositionof net resourceflows Officialgrants 62 93 130 Officialcreditors 165 218 82 92 Privatecreditors 5 150 -43 -54 Foreigndirect investment 21 27 143 i Portfolioequity 0 0 0 World Bank program Commitments 45 183 27 22 Disbursements 60 A IBRD E. Bilateral 81 51 45 B IDA -- D Othermultilateral - F Private - Principalrepayments 8 47 16 29 C. IMF G -Short-term Netflows 52 34 36 15 Interestpayments 18 40 17 15 Net transfers 34 -6 19 0 Note:Thistable was producedfromthe DevelopmentEconomicscentraldatabase. 9115/04 106 Annex 15: PreliminaryResultsof Evaluationof AIN-C Implementation and Impact 2000-2002 Performanceand cost evaluationsof AIN-C An experimental-design basedevaluationof the AIN-C Programhasdemonstratedthat it has a significant impact on the nutrition status of children less than two. The evaluations demonstrate that the program has had important impacts on the mothers' child rearing knowledge, attitude andpractices, and, most importantly, on the health and nutrition status of their children. The evaluations have also elucidated some of the shortcomings of the program and provided some insights into areas where the program might be improved and its impact enhance. This annex discussesingreater detail the two evaluations that have been done of the AIN-C program and the results of a study of its costs, which have informed the design of this project. a. The TwoImpactEvaluations ofAIN-C The USAID BASICS Project conducted household surveys of AIN-C and control communities in2000 and again in2002, and usedthe data to undertake relatively rigorous program evaluations (Van Roekel, et al., 2002; Plowmanet al., 2004). The first evaluation was exclusively aprocess evaluation. Its principal conclusion of the evaluation was that AIN- C was successful in improving the knowledge, attitudes andpractices (KAF') of mothers of children less than two years of age related to child feeding, nutritionand health status, health care utilization and, more generally inimprovingchildrearing and child development. The evaluation found that mothers who participated inAIN-C had a greater propensity to know that a child who does not eat well and does not grow well runsthe risk of malnutrition. Mothers participating in AIN-C had statistically greater probabilities of: Having more contact with health personnel en the previous three months Having a growth chart for their children and knowing how to interpret it Havingchildren who had a complete set of immunizations Exclusive breastfeeding duringthe first six months Not havingusedbottle feeding Offering frequent feedings to children over 12 months andunder 12months Receivingiron supplementsfor children over or under 4 months of age Knowing the danger signs of dehydration and acuterespiratory infection Knowing how to stimulate the appetite of a child to ensure adequate nourishment Havingusedoral rehydration therapy, and Havingoffered liquids to children and having continued to feed themduringepisodes of diarrheal disease. The evaluation also found that community participationwas a key factor in achieving expectedproject results, as well as for the sustainability of AIN-C activities over time. The 2002 survey and evaluation focused primarilyon the program's outcomes and impacts. Usingmultivariate analysis to control for mothers' characteristics and socio-economic characteristics, the study found that the nutrition status o f children participating ina growth 107 monitoring and promotionprogram (either AIN-C or the traditional SOH program) was better than that of children who did not participate (using weight-for-age and weight-for-height (though at marginal levels of statistical significance, p=.056 andp=.067, respectively). It then analyzed separately the impact of participation inAIN-C and the impact of participation inthe traditional SOHgrowth monitoringandpromotion program. Itfound that the nutrition status of childrenparticipating inAIN-C was (statistically) significantly better (using height- for-age, weight-for-age and weight-for-height children, p=.034, p=.003 and p=.036, respectively). Incontrast, analysis of the traditional SOH program did not find any nutrition status impact; Le., programparticipation did not have any effect on any of the three nutrition indicators. Results of the 2002 evaluation show that AIN-C's strength-its greatestimpact-has beenin changing the K A P s relatedto the care of, and the nutrition status of the youngest children in the program-those less than 6 months of age (BASICS 2004). For instance, children enrolled inAIN-C 6 to 11months of age were highly likely (81%j and more likely than control group subjects to be appropriately fed (a composite index of severalpractices). Although AIN-C program participants aged 12to 23 months were significantly morelikely than members of the control group to be appropriately fed, fewer than one ineight (12%j of the children participating in AIN-C were appropriately fed. Both of these measures show that while the AIN-C program i s positively impactingthe behaviors of children aged 12-23 months and their mothers, that there remains substantial room for improvement. For example, the 2002 evaluation found, that only 16% of children 12-23 months old participating inthe program were reported to receive complementary foods five or more times per day, despite the fact that this i s one of the key messages of the AIN-C Program. Bi-variate analysis of AIN-C participants and controls provides additional evidence of the program's relative weakness inchanging the nutrition status of the older children in the program, as well. Disaggregating the analysis of height-for-age into 3 month age splines (0-2 months, 3-5 months, etc.) shows that the only significant differences inthe height-for-age indicator between AIN-C participants and control children, occur at the two extreme ages- 0-2 and 21-23-and inboth casesthe AIN-C childrenare statistically significantly smaller. Thus, when they are very young andhavejust enteredthe AIN-C program, the AIN-C children have lower nutritional status than the control group subjects. Interpreting these cross-sectional differences as a reflection of programperformance dynamics, it may be inferred that a substantial number of children enter the AIN-C program with low nutritional status-lower on averagethan the control group children. Once inAIN-C, the under- nourished children overcome their relative nutritional deficit quickly, such that there are no differences between the AIN-C and control group children among the 3-5 month old. Moreover, the AIN-C children maintaintheir relatively improvednutritional status for the next 13 to 17 months. But, then, intheir final months of participation inthe program, the nutritional status of the AIN-C participants again becomes, on average, lower relative to the control group children. Why this occurs i s not understood. The 2002 evaluation did not addressthis important issue. It was primarily an outcome evaluation, and providedlittle insight into what factors may have contributed to the program's differential impact by age. Having an evaluation that investigates bothprocess and outcome i s essential to understanding how and how well the program functions and constituting an effective feedback mechanism to improve its performance. The project has set aside adequateresources to undertake a rigorous evaluation. 108 Itis unlikely that one candirectly comparethe findings of the two evaluations of AIN-C that have beenconducted. They are cross-sections of different households with populations that may vary systematically. The programs may have varied systematically before being exposedto the program. Most importantly, the householdssurveyed inthe two evaluations may vary by those characteristics that are directly related to their health and nutrition status, and the experimental group household (i.e., those that participated inAIN-C) may have been exposedto significantly different versions of AIN-C.27 While, bearing this caveat inminda comparison was made of the averageAIN-C households' knowledge, attitudes and practices inwhat the program regardsas critical areas. The magnitude of the differences that were found insome of the measureswere so striking that they were used to informprogram design and implementation (e.g., encouraging trainers to emphasizeparticular topical areas, or setting ofprogram priorities), while beingregarded as simply indicativeof possible trends, rather than definitive evidence of trends. The average level of some of the measureswas higher in 2002 compared with 2000. 0 69% of children were included inAIN-C by the time they were three months of age 0 Exclusive breastfeeding increasedfrom 39% to 57% 0 The utilization of vitamin A increasedfrom 80% to 94% The use of iron supplements increasedinchildren aged4-23 months from 47% to 66% 0 The shareof mothers who recognized the program materials (Za`minas)increasedfrom 67% to 73%. Other indicators, however, were lower and in some cases markedly lower than the program's design would suggest are acceptable. The most important of these were: The averagerates of community participation inthe program (the proportionof all children less than 24 months of age who were registered and participated at leastonce inthe program) were lower; 92% in2000 compared with 83% in2002 The number of children who had beenweighed three times inthe prior three months was less; 61% in2000 compared with 70% in 2002. The number of children being weighed in2002 was 84% incontrast with 100%in 2000. In2002 only 31% ofmothers were told the weight of their child as compared with 93% in2000. Only 25% of mothers were told if their child's weight was adequateor not in2002, as compared with 85% in2000 Only 38% of mothers received counseling about feeding methods in2002, compared to 80% in2000. 2'That is, the validity of this analysis is threatenedby "history," which may havebeen due to different pre- programcharacteristics,exposure to substantially different programactivities and/or different rates of programexposure, among others. 109 b. The AIN-C Cost Study In2003, a cost study of AIN-C inHonduras was preparedinorder to provide the SOHwith a tool to plan and budget for AIN-C, and to investigate how changes inprogram structure affected program costs (Fiedler 2003). The study-which analyzed only the program as implemented by the SOH, and not the NGO-implemented program--estimated that the long- term, annual, recurrent cost to attendto one child was US$6.82, and approximately 11%of the cost of the SOH attending one child inits traditional, facility-based, growth monitoring program. Notingthat a substantialproportion of the SOH costs of the program are comprised of fixed personnel costs, the study also estimatedthat the SOH'S long-term, annual incremental budget requirements to attendone child was US$4.00. The study concluded that AIN-C can be classified as a low cost intervention. 110 Annex 16: IBRD Map 33418 111 89°W 88°W 87°W 86°W 85°W 17°N 17°N BELIZE Caribbean Sea HONDURAS Roatán LA BAHIA Gulf of Honduras 16°N ISLAS DE 16°N Trujillo Iriona Puerto Cortés Tela La Ceiba Balfate GUATEMALA C O L Ó N speranza Corocito Barra Patuca M o C O R T E S A T L Á N T I D A Sonaguera E s La q u Lago de San Pedro Aguan i to Izabal Olanchito Sula El Progreso Quimistan La Vega o El Carbón Carbón C Morazán Morazán Sierc ra Paulaya Si G R A C I A S o a Puerto s Lempira Nuevo Sirsirtara Arcadia S A N T AUlúa Higuerito Y O R O A D I O S t San Esteban Yoro Dulce Nombre 15°N B Á R B A R A Sulaco de Culmí Culmí 15°N C O P Á N Santa O L A N C H O Coón del Patutuca ca Bárbara Bárbara Lago de Catacamas Copán Copán Salamá Salamá Santa Rosa Yojoa San Luis de de Copán Copán Humuya Pa Auasbila To Jaitique Guayape To Chiquimula Gracias Puerto d e M o n t a ñ a s Juticalpa Cabezas O C O T E - Cedros Montañas Cerro Guaimaca Las Minas C o m a y a g u a Montañas Nueva P E Q U E (2,870 m) La O Ocotepeque Esperanza UCÁComayagua La Paz COMAYAGUA L E M P I R A Jalán Guyaambre To San Salvador Marcala CISCZANTECUCIGALP RA A EL PARAÍSO PARAÍSO Coco Mapulaca I NTIBL A P A Z N Danlí Danlí 14°N Camasca FRAM O 14°N Sabana Yuscarán uscarán HONDURAS EL SALVADOR To Las Manos San Miguel Grande VALLE NICARAGUA SELECTED CITIES AND TOWNS To To Nacaome Estelí San Marcos DEPARTMENT CAPITALS San Salvador San Lorenzo de Colón Colón NATIONAL CAPITAL Choluteca 0 20 40 60 80 100 Kilometers RIVERS de Fonseca CHOLUTECA MAIN ROADS SEPTEMBER 13°N Golfo El Triunfo 0 20 40 60 Miles 13°N RAILROADS This map was produced by the Map Design Unit of The World Bank. IBRD PACIFIC OCEAN To Managua The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank DEPARTMENT BOUNDARIES Group, any judgment on the legal status of any territory, or any 33418 2004 endorsement or acceptance of such boundaries. INTERNATIONAL BOUNDARIES 89°W 88°W 87°W 86°W 85°W