Integrated Safeguards Datasheet s8

INTEGRATED SAFEGUARDS DATASHEET

APPRAISAL STAGE

I. Basic Information

2. Project Objectives

The project development objective (PDO) of the Local Governance Support Project (LGSP) is to develop effective and accountable Local Governments (LGs) providing services that meet community priorities, supported by a predictable and transparent fiscal transfer system. Achievement of the PDO will be measured in terms of maintaining a significantly scaled-up level of basic service provision at the UP levels during FY2008-2011 as compared with previous years.

3. Project Description

Component 1 - Fiscal transfers: This component will support the ongoing clarification of intergovernmental roles and relationships through strengthening transparent, rules-based fiscal transfers for basic local service delivery while providing incentives for good governance and service delivery performance. Significant incremental increases in the size of the block grant to eligible UPs are an essential, practical and simple step towards increasing local accountability – without sufficient resources at the local level, there is little incentive for anyone to hold UPs accountable. These additional resources will provide momentum to efforts to clarify the functions of UPs relative to other tiers. The block grant will be allocated in the medium term budget framework, through a simple, population-based formula with a minimum allocation to protect small UPs. It will be partially financed by the IDA credit, and disbursed in a predictable manner directly to the bank accounts of eligible UPs via a national commercial bank. Eligibility will be earned / maintained through meeting a set of basic requirements on financial (e.g. having a bank account, receiving timely unqualified financial, procurement and social “audits”) and community accountability (e.g. open planning and budgeting, public reporting.) Resources will help fund a portion of the costs of services, based on an open menu of allowable expenditures, with a short negative list, within the functional domain of UPs. Project approvals will be decentralized to UPs. The risks of elite capture and the misuse or inappropriate use of resources will be addressed through effective, transparent and participatory local planning, budgeting, approval, auditing and environmental and social management processes, complemented by oversight from higher tiers of government. The project will provide support to build adequate fiduciary safeguards in the preparation of accounts and financial statements of expenditures and auditing of records relating to implementation of this component. A separate performance grant will be provided to those UPs that demonstrate improvements in participatory governance, measured through year-on-year improvements in own revenue generation. This will build on recent measures to strengthen UP revenue administration, and offset disincentives to revenue mobilization arising from an expanded block grant and a perceived disinclination of UPs to raise taxes from their local electorates. Own revenue mobilization entrenches community accountability for UP spending, which reinforces a key objective of the block grant. Over time good performance may be accompanied by expanded functional competence and revenue authority.

Component 2 - Institutionalizing local accountability: The program seeks to institutionalize accountability into existing systems based on a set of incentives associated with the expanded Block Grant, and complemented by mandatory disclosure by UPs to both communities and to higher tiers of government. Regular open meetings and access to information will be at the core of the local participatory process and will be conditions of block grant release. Thus the project places the onus of accountability on the Union Parishad. The project requires: 1) Mandatory quarterly reporting to government (through reports) and communities (through open meetings) as a prerequisite for further grant installments. 2) Mandatory annual financial, procurement and social assurance process undertaken for each UP to become or remain eligible for the expanded block grant. The project will provide technical and financial support to upper tier monitoring agencies and capacity building at all levels to ensure adequate tracking of project inputs and outputs, and to introduce these simple but comprehensive social and financial assurance procedures. Supervision will verify these processes on a sample basis. The project will be supported by a proposed competitive grant facility that will assist civil society in undertaking activities that support the inclusion of marginalized communities in UP decision-making.

Component 3 - Supporting core LG capacity development: LGs require support to undertake participatory strategic planning, design and manage project implementation, and monitor and evaluate project outcomes. The project will provide information and support to the various actors involved in block grant implementation, including procurement, as well as local Public Expenditure Management (PEM) and the Environmental and Social Management Framework (ESMF). The project will assist GoB in developing a capacity building framework that meets emerging nationwide local government capacity development needs. It will directly strengthen the capacity of GoB institutions – such as the Ministry of Local Government and Rural Development (MLGRD), the National Institute of Local Government (NILG), the Comptroller and Auditor General (CAG) and Upazila Nirbhai Officers (UNOs) and Upazila level staff – to implement the reform process, through enhancing and repositioning their roles as appropriate. This component will consist of four subcomponents: (i) Information, Education & Communication concerning the LGSP block grant condition and cycle (eligibility, use and performance); (ii) Training and capacity building activities of UPs around the local PEM cycle; (iii) Developing peer learning mechanisms for participating UPs and local officials; and (iv) Providing institutional support for the overall decentralization process and for policy development.

Component 4 – Support to ongoing policy evaluation and development capacity: GoB will be assisted to conduct regular, outcomes-based evaluations of the project in order to contribute to the evolution of the local governance system. The measurement of the projects impacts will help to establish the link between project inputs and outputs and whether some of the main goals of the project were achieved. In this way, evaluation of the project links closely with ensuring accountability and inclusiveness in the project. Formal evaluations of policies are also intended to assist in making mid-course corrections to the design of the program and to lay the empirical groundwork for its possible future expansion. Activities will include: (i) formal evaluation of the block grant; (ii) evaluation of other decentralization efforts, including the learning and innovation components of the program, namely the UNDP-supported 6 district pilot and the social protection pilot (Component 5); (iii) strengthening the capacity of MLGRD for policy analysis; (iv) conducting a consultative forum and dissemination of the results of the various studies on decentralization issues; and (v) development of models for the survey instruments and sampling techniques. UPs will be selected on a random basis for impact evaluation purposes in order to set up a rigorous mechanism at entry to assess and track impacts.

Component 5 - Social Protection Pilot. This component promotes the objective of the overall program by testing the use of conditional fiscal transfers for national functions that can be administratively devolved, in addition to block grants. This will be done by piloting activities in a sector where technical ministries currently play a lead role but some administrative activities may be naturally moved to UP control, and which could form part of a second generation of decentralization reforms. For these activities, conditional fiscal grants can be used as they are an instrument to transfer funds to UPs for pre-specified purposes, and would form part of any future intergovernmental fiscal framework. Future grants may be linked to attaining certain pre-agreed performance criteria. The project will include a pilot program of conditional fiscal grants for safety nets to be implemented in a limited number of UPs. Funds for the program will be released in a predictable and timely fashion to scheme providers (the UPs) through a conditional fiscal transfer, based on the annual budget cycle and coordinated with other transfers envisaged in the program. The same transparency and disclosure requirements will apply to this component as elsewhere in the program. The UP’s will implement the program according to its pre-specified design parameters.The first year grant will be given on a flat rate basis. A performance incentive will kick in the following year with the performance based proportion rising annually. Initially, programs will be introduced in fifteen UPs where funds will be conditional upon being spent on agreed schemes with a pre-determined targeting formula. The operation of this component will be ring-fenced and carefully evaluated at the projects mid-term.

4. Project Location and salient physical characteristics relevant to the safeguard analysis

The rural local governments (union parishads - UP) that meet the minimum conditions will receive the block grants. However, all UPs will receive assistance from other components e.g. capacity building, monitoring and evaluation.

5. Environmental and Social Safeguards Specialists

Ms Nilufar Ahmad (SASES)

Mr Dr. M. Khaliquzzaman (SASHD)

II. Key Safeguard Policy Issues and Their Management

A. Summary of Key Safeguard Issues

1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts:

In this project local governments will use block grants for the provision and rehabilitation of small-scale community infrastructure works (CIWs), costing between $500 to 1000. Environmental assessment indicated that these will not lead to environmental impacts of any significance. However, to avoid potentially adverse environmental impacts and improve existing environmental conditions, World Bank Operational Policy on Environmental Assessment (OP 4.01) is triggered an Environment and Social Management Framework (ESMF), and an Operational Manual for UPs will be in place.

2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area:

None

3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts.

N/A

4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described.

The Ministry of Local Government and Rural Development (MLGRD) already has an Environment and Social Management Framework (ESMF) and Operational Manual (OM) for community infrastructure. For assessing triggering of World Bank operational policies and revision of existing ESMF, an environment and social assessment was carried out in different union parishads (UP), especially, Sirajganj Local Government Pilot project, Social Investment Project and tribal areas of Chittagong Hill Tracts (CHT). The assessment indicate that UPs are using part of the block grants for the provision and rehabilitation of small-scale rural community infrastructure works (CIW), e.g. rehabilitation of rural roads, rehabilitation and construction of culverts/footbridges, rehabilitation drainage systems, construction of water and sanitation facilities, rain or spring water harvesting, social forestry, solid waste management etc. These will not lead to environmental impacts of any significance. However, to avoid potentially adverse environmental impacts and improve existing environmental conditions, World Bank Operational Policy on Environmental Assessment (OP 4.01) is triggered for this project and all community infrastructures will be subject to environmental screening exercise. The study also found that these sub-projects are built on public lands, and there was no land acquisition or involuntary displacement. Assessment in tribal areas indicates that they are the major beneficiary of block grant schemes. Therefore, no other operational policies are triggered. Based on the assessment, MLGRD updated the ESMF and drafted an Operational Manual (OM), to identify, mitigate and monitor environmental impacts of sub-projects. The draft ESMF and OM and Bangla translation of executive summary will be finalized in an open meeting and disclosed by April 13, 2006.

MLGRD already has an Environment and Social Management Framework (ESMF), which was developed earlier to establish a set of steps and procedures for compliance with the World Bank’s safeguard policies. In addition, MLGRDC has been implementing many World Bank financed projects, including the ongoing Municipal Services Development, Arsenic Mitigation, Water Supply, Rural Roads and Markets projects. Through these projects, MLGRDC has demonstrated adequate capacity to ensure compliance with safeguard policies.

UPs did not receive grant directly for implementing community infrastructure before, so their capacity for implementing environment and social guidelines need to be enhanced. An ESMF training manual will be prepared by National Institute of Local Government (NILG), and all UPs, their secretaries and local level extension officials (agriculture, livestock, health) will be trained for the implementation of ESMF. Furthermore, upazila level MLGRD officials (LGED, DPHE, cooperatives) will also be trained to provide oversight support.

5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people.

IDA has been working closely with the key stakeholders e.g. MLGRD NILG, UPs; and Development Partners through the local consultative group of donors (LCG), and UNDP/UNCDF and EU will be co-financiers of the project. The team has been working closely with civil society, NGOs and local government leaders which will continue during implementation phase. An Implementation Monitoring Group (IMG) consisting of eminent members of civil society will be constituted to play an oversight and advisory role in project implementation. At the local level, Upazila Block Grant Committee (UBGC), together with UPs, sub-project implementation committee (PIC) and sub-project support and monitoring committee (PSMC)will organize consultation and disclose ESMF and assist mitigating any adverse impacts.