PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: 46674

Project Name / KH-Rural Investment & Local Gov. - II
Region / EAST ASIA AND PACIFIC
Sector / Roads and highways (40%);Water supply (20%);Irrigation and drainage (20%);Sub-national government administration (20%)
Project ID / P096505
Borrower(s) / KINGDOM OF CAMBODIA
The Kingdom of Cambodia
Cambodia
Implementing Agency
National Committee for Management of Decentralization and Deconcentration Reform (NCDD)
Ministry of Interior
275 Norodom Blvd (301),
Sangkat Tonle Bassac, Khan Chamkar Mon.
Phnom Penh
Cambodia
Tel: 855 12 898 440 Fax: 855 23 726 092
Environment Category / [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared / May 14, 2008
Estimated Date of Appraisal Authorization / November 3, 2009
Estimated Date of Board Approval / March 25, 2010

1.  Key development issues and rationale for Bank involvement

In 2001, the Royal Government of Cambodia (RGC) initiated decentralization with the enactment of the Law on Commune/Sangkat (C/S) Administration and Management and the Law on Commune/Sangkat Elections. Since then, two direct elections of C/S Councils–the first in February 2002 and the second in April 2007—have been held successfully in Cambodia's 1,621 Communes and Sangkats. In 2002, the C/S Fund was established as the intergovernmental fiscal transfer to finance both administrative and development expenditures of the C/S Councils, and the allocation to the C/S Fund from recurrent revenues has increased each year, and will reach 2.80 percent (or an estimated $15,000 per commune) by 2010. The C/S Councils have used the C/S Fund to provide basic infrastructure and services identified as priorities by their residents through a participatory planning process. The World Bank has, since 2003, supported about 50 percent of C/S Fund development expenditures through the Rural Investment and Local Governance (RILGP) and RILGP-Additional Financing (AF).

The decentralization to the C/S has laid the foundation for further decentralization to other sub-national levels. In June 2005, the RGC adopted the Strategic Framework for Decentralization and Deconcentration Reforms (Strategic Framework). The Strategic Framework envisaged reforms encompassing the indirect election of councils at district and province levels and creation of downwardly accountable and unified administrations to support these councils, and called for development of Organic Laws to codify the envisaged reforms. In February 2008, the Council of Ministers approved two Organic Laws[1] which were promulgated by the National Assembly in April 2008. The Organic Laws provide the legal framework for indirect election of sub-national councils at the province and district levels, and establishment of unified administrations to these councils. Indirect election of the sub-national councils must take place within one year of promulgation of the Organic Law. While the Organic Law does not directly assign functions and allocate personnel and resources, it indicates a process that would be followed to do so. A new national committee for democratic development at the sub-national level (NCDD), an inter-ministerial body, will be established to oversee implementation of the Organic Law which will be phased over a decade or longer.

With funding from RILGP-AF, RGC is formulating its National Program for Sub-National Democratic Development (National Program) for 2009-2018. The National Program is intended as an operational strategy and implementation program for the Strategic Framework and the Organic Laws, and will establish a government-led program to align donors support.

The proposed RILGP-II will be prepared in parallel and aligned to the National Program and harmonized with other donor initiatives supporting the National Program. RILGP-II would extend the focus of the Bank’s support “upward” from the communes to the districts and compliment the Bank’s ongoing support through RILGP and RILGP-AF under the CAS Objective 4: “support decentralization and promote citizens’ participation for better governance”.

2.  Proposed objective(s)

The development objectives of the proposed project are to assist the RGC in its efforts to implement the National Program for Sub-National Democratic Development, through supporting establishment and strengthening of decentralized local governance and development institutions and processes, and the related fiscal decentralization and public financial management systems, at the district level, and provision of funding for delivery of rural infrastructure and services.

3.  Preliminary description

The proposed project would help establish and support initial implementation and capacity development of the local governance and service-delivery system at the district level in Cambodia within the new decentralized institutional framework established under the Organic Law. The RILGP-II would provide support at the national and district levels over four years (2010 – 2013) through the following three components:

Component 1: Policy Development, Program Management, and Operational Support (US$ 5 million)

This component would provide support for policy development and systems design to be conducted by the national level as part of the National Program, including the development of detailed policy and design of structures, systems and procedures in areas such as: (a) intergovernmental fiscal arrangements, (b) sub-national administration and management, including assignment of functions and allocation personnel and resources; and (c) public financial management. This component would also provide support for program management and operations, including consulting services for long-term technical assistance, contributions to the sub-national MBPI, workshops and incremental operating costs.

Component 2: Equipping and Building Capacity of Councils and Unified Administrations at District Level (US$ 5 million)

Support under this component would include works, goods, consulting services and training for district councils and/or their administrations in selected districts for: (a) rehabilitating and constructing office buildings; (b) equipping with office equipment, furniture and motor vehicles; (c) building capacity for budget planning and execution, technical service delivery, financial management and social and environmental safeguards; and (d) strengthening bottom-up accountability relationships.

Component 3: District Investments (US$ 10 million)

This component would focus on supporting the service-delivery capabilities of the district by contributing to initial funding of the “District Fund”, the intergovernmental fiscal transfer system to the district level. It is envisaged that the District Fund would provide a basic infrastructure and services grant to the 185 districts for related investments within their jurisdictions. It is envisaged that district councils would have significant discretion over the use of the funds within the parameters of their assigned functional responsibilities and local priorities established through the district planning process. It is envisaged that this component would start in year two of the project (calendar year 2011) and would provide investment funding at the notional level of $50,000/district/year for approximately 75 districts over the final three years of the project.

4.  Safeguard policies that might apply

Safeguard Policies Triggered by the Project / Yes / No / TBD
Environmental Assessment (OP/BP 4.01) / [X] / [ ] / [ ]
Natural Habitats (OP/BP 4.04) / [ ] / [ ] / [X]
Pest Management (OP 4.09) / [ ] / [ ] / [X]
Physical Cultural Resources (OP/BP 4.11) / [ ] / [ ] / [X]
Involuntary Resettlement (OP/BP 4.12) / [X] / [ ] / [ ]
Indigenous Peoples (OP/BP 4.10) / [X] / [ ] / [ ]
Forests (OP/BP 4.36) / [ ] / [ ] / [X]
Safety of Dams (OP/BP 4.37) / [ ] / [X] / [ ]
Projects in Disputed Areas (OP/BP 7.60)[*] / [ ] / [X] / [ ]
Projects on International Waterways (OP/BP 7.50) / [ ] / [X] / [ ]

Safeguards context: Under RILGP (and AF) safeguards frameworks were established and adopted to apply as country systems at the commune level–they apply to all C/S Fund investments throughout Cambodia, not just those financed by RILGP. Commune-level investments are small, however, with most generating very little, if any, adverse environmental or social impact.

District-level investments (average of $50,000/district/year) will be about three to four times the size of the commune investments under RILGP, so it is likely that environmental or social impacts may be larger and more complex, although still relative small overall. Also, the yet-to-be-established district planning process may be less directly connected to community preferences. Therefore, safeguards provisions for the district investment process would need to be further strengthened and different guidelines would need to be developed. In keeping with the governance focus of the project, preparation of program guidelines and support for capacity-building activities is intended to ensure that effective safeguards systems are applied throughout the country, and not only in subprojects for which the Bank provides financial support.

5.  Tentative financing

Source: / ($m.)
BORROWER/RECIPIENT / 20
International Development Association (IDA) / 20
Total / 40

6.  Contact point

Contact: Louise F. Scura

Title: Lead Natural Resource Economist

Tel: 5781+3097 / 62-21-5299-3097

Fax: 62-21-5299-3111

Email:

Location: Jakarta, Indonesia (IBRD)

[1] Law on Administrative Management of Capital, Provinces, Municipalities Districts and Khans; and Law on Elections of Phnom Penh Captial Council, Provincial Council, Municipal Council, District Council, Khan Council

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