Document of The World Bank FOR OFFICIAL USE ONLY Report No. P7505-ET REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ONA PROPOSED SUPPLEMENTAL CREDIT OF SDR 21.5 MILLION TO THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT November 22, 2002 Human Resources Development Group III AFC06 Africa Region This document has restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate as of March 2002) Currency Unit = Ethiopian Birr US$ 1.00 ETB 8.55 SDR 1.00 = US$ 1.240 FISCAL YEAR July 8 - July 7 ABBREVIATIONS AND ACRONYMS CDD Community-Driven Development ERP Emergency Reconstruction Program ERRP Emergency Recovery and Reconstruction Program ESRDF Ethiopian Social Rehabilitation and Development Fund GOE Government of Ethiopia IG Income Generating IMR Infant Mortality Rate MEI Micro-Finance Institutions NDP National Development Program PRSP Poverty Reduction Strategy Paper RWSS Rural Water Supply and Szaitation SCA Saving and Credit Associations SDR Special Drawing Rights SSI Small-Scale Irrigation WDF Woreda Development Fund Regional Vice President: Callisto E. Madavo Country Director: Ishac Diwan Sector Manager: Laura Frigenti Task Team Leader: Nadine Poupart FOR OFFICIAL USE ONLY THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA SUPPLEMENTAL CREDIT FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT Table of Contents Country Background ...................................1 Implementation Experience of the Original Project ....................................2 Rationale for a Supplemental Credit ...................................3 Project Objectives and Description ....................................4 Beneficiaries ...................................5 Project Cost and Financing ....................................6 Project Implementation, Financial Management and Procurement Arrangements ...................................6 Effectiveness Conditions ...................................7 Participatory Approach ...................................7 Environmental Aspects ...................................7 Project Benefits ...................................8 Project Sustainability ....................................8 Project Risks and Mitigating Measures ...................................9 Recommendation ...................................9 Attachments Ethiopia Country at a glance Map IBRD No. 31158 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. FOR OFFICIAL USE ONLY THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA SUPPLEMENTAL CREDIT FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT CREDIT AND PROJECT SUMMARY Borrower: Federal Democratic Republic of Ethiopia Implementing Agency: Ethiopian Social Rehabilitation and Development Fund (ESRDF) Beneficiaries: Poor communities, mainly in rural areas throughout Ethiopia Credit Amount: SDR 21.5 million (US$28.3 million equivalent) Terms: Standard IDA terms with 40 years maturity Financing Plan: IDA 28.3 million (in US$ million) Netherlands 4.0 million Government of Ethiopia 5.0 million Community Contribution 2.5 million Total : 39.8 million Economic Rate of Return: Not applicable Poverty Category: Poverty Reduction Project ID Number: PE-5P077457 Map: EIlVRD-No. 3-1158 REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED SUPPLEMENTAL CREDIT OF SDR21.5 MILLION TO THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT 1. I submit for your approval the following report and recommendation on a Supplemental Credit to the Federal Democratic Republic of Ethiopia for SDR 21.5 million (US$28.3 million equivalent). The proposed Supplemental Credit would be on standard International Development Association (IDA) terms with a maturity of 40 years. The credit would supplement the on-going Social Rehabilitation and Development Fund Project (Credit 2841-ET), and would mainly finance the completion of multi-sectoral projects requested by poor and remote communities of Ethiopia. Country Background 2. Ethiopia, with 65 million people, is one of the poorest countries in the world. The per capita income is US$100 and life expectancy is 52 years. Infant mortality rate (IMR) is 97 per 1000 live births and one out of six children dies before the age of five. Maternal mortality ratio is 500-700 per 100,000 live births. Safe water is accessible to less than 26% of the population and proper sanitation facilities are available in only 10% of households. Literacy level is very low; on average only 40% of men and fewer than 20% of women can read and write. Forty-four percent of the population is below the poverty line (45% in rural areas and 37% in urban areas); food poverty is 42%, indicating that most of the poor have insufficient income to even meet the minimum nutritional requirements. 3. The Government's commitment to poverty reduction has been reaffirmed repeatedly since the Transitional Government of Ethiopia replaced the socialist Derg regime in 1991. Poverty reduction was one of the primary objectives of the first National Development Program (NDP) for 1995-99 and of the second NDP for 2000-05. In August 2002, the Government finalized its Poverty Reduction Strategy Paper (PRSP) following a broad and inclusive participatory process. The strategy is built on four core elements: (a) agriculture-development-led-industrialization; (b) justice system and civil service reforms; (c) decentralization and empowerment; and (d) capacity building in public and private sectors. Many recent actions of the GOE are supportive of the thrust areas identified in the PRSP. To deepen decentralization, GOE has initiated direct fiscal transfers to Woredas (local governments) and is strengthening the administrative and technical capacity of the Woreda administration. It is piloting a five-year National Capacity Building Program that aims at building national capacity across the public, private, and civil society sectors. Several sector programs, notably in health, education, and transport, and multi-sector programs such as the HIV/AIDS program and the - 1- Ethiopia Social Rehabilitation and Development Fund (ESRDF), are also under implementation. 4. The November 2000 Interim Support Strategy for Bank assistance to Ethiopia, addresses the country's immediate recovery needs following the 1998-2000 border conflict. A Country Assistance Strategy is under preparation. Implementation Experience of the Original Project 5. The Ethiopia Social Rehabilitation Fund (ESRF) was established in 1991 as a pilot to test the effectiveness of a social-fund approach in providing poor households and communities with greater control over their economic and social development. Based on the pilot's success, ESRF was expanded in 1996 into a nationwide program and became the Ethiopia Social Rehabilitation and Development Fund (ESRDF). 6. The ESRDF Credit was approved in April 1996 and became effective in August 1996. The total project cost was estimated at US$242.0 million, of which SDR 80.8 million (US$120 million equivalent) was financed by IDA, US$61.8 million by other donors, and the remaining balance by the Government and communities. The objectives of the ESRDF Project are to: (a) help alleviate poverty and support community development through the provision of financial and technical resources to implement community-initiated projects; and (b) strengthen the Borrower's capacity for welfare analysis and monitoring. 7. ESRDF is currently the unique nation-wide institution capable of working effectively and efficiently at the community level in Ethiopia and benefiting the poorest and most remote communities. As of today, ESRDF has completed 2,900 community- initiated projects, with an additional 840 under implementation. These projects (covering mainly rural water supply, education, health and sanitation, small scale irrigation and environment) are expected to benefit more than 20 million people, although this figure may involve some double-counting as the same community may have benefited from more than one project. In addition, 502 training and capacity building projects have benefited over 323,000 individuals, of whom almost 50% are women. The ESRDF Project is also implementing two pilots, albeit on a limited basis due to shortage of funds. These pilots are testing : (i) the introduction of income generating projects; and (ii) a system of block grants to woredas - called the "Woreda Development Fund" - that is expected to strengthen the decentralization process and promote sustainable delivery of services. 8. The ESRDF Project has also played an instrumental role in establishing a functional Welfare Monitoring System to inform and guide the process of formulating poverty reduction policies and programs. The Central Statistical Authority has conducted two Household Income Consumption Expenditure surveys in 1995/96 and 1999/00 and four Welfare Monitoring surveys in 1995/96, 1996/97, 1997/98, and 1999/00. The Welfare Monitoring Unit produced a first poverty profile based on the 1995/96 survey data sets and is currently finalizing a second report based on the 1999/00 survey data sets. These surveys and studies have been key inputs to the PRSP. - 2 - Rationale for a Supplemental Credit 9. The proposed Supplemental Credit would finance the completion of ongoing community projects, all of them initiated under the ESRDF Credit and nearing. completion stage. It will also support capacity building efforts of communities and collaborating agencies, and completion of the ongoing welfare monitoring activities. 10. The proposed supplemental credit meets the following requirements and conditions of OP/BP 13.20: (i) The cost overrun is due to exceptional circumstances beyond the Borrower 's control. During the implementation phase, the ESRDF Project suffered substantial exchange rate losses, totaling US$13.4 million, due to the depreciation of the SDR to the USD. Given the highly decentralized nature of ESRDF, and the time lags inherent in implementing community-driven development interventions, the ESRDF Central Office was unable to adjust new commitments to the reduced Credit amount in USD terms. In addition, emergency needs for communities living in the war-affected areas of Tigray and Afar were identified under the Emergency Recovery Project (ERP), following the 1998-2000 border conflict. A total of US$17.5 million from the ESRDF Credit were earmarked to finance these needs, and ESRDF was given the responsibility to implement most of them. This decision was justified at the time by the relatively slow disbursements of the Project, with only 56% of the IDA Credit disbursed. 11. Of the US$17.5 million earmarked for ERP-related activities, US$4.1 million have now been disbursed, and about US$12 million have been committed (at the stage of signed Financial Agreements, bidding or contract award). Construction in the destroyed border city of Zalambessa alone accounts for USD8.5 million of the committed amount and is expected to be completed by December 2003. Disbursements have lagged initially because of delays in completing the assessment of damages of community infrastructure in Tigray and Afar regions and the identification of eligible beneficiaries for household rehabilitation component (Afar). This was due to the presence of land mines in most areas and the lack of necessary technical staff to carry out the work. At present, 42 community projects have been completed, and 33 other projects are under construction in Tigray. In Afar, work is underway to support 5,000 households, preliminary work has been initiated to rehabilitate 51 community infrastructures. The importance of the activities being undertaken under the ERP to helping ensure peace and stability to the war-affected areas of Tigray and Afar precludes from using some of these resources to further ESRDF activities in other parts of the country. 12. The Government of Ethiopia requested a Supplemental Credit of US$30.9 million to cover the cost overrun resulting from the exchange rate fluctuation and the reprogramming for emergency activities. However, a Supplemental Credit of only US$28.3 million is proposed to reflect ESRDF's past disbursement perfornance, particularly the lower absorptive capacities of some regions. (ii) The credit is being implemented in compliance with covenants. ESRDF has 22 legal covenants, all of which have been complied with or are not yet due. - 3 - (iii) It is impossible to reduce the scope of the project to fit the available resources without significantly impairing the project's economic viability or capacity to achieve its objectives. Reducing the scope of the project to fit the remaining available resources would definitely impair the project's ability to fully achieve its key objectives, given that the activities to be financed by the supplemental credit have already started and are in various stages of implementation (signed financial agreement, bidding, awarded contract, etc). In addition, the project would not be able to fully meet its objectives in terms of beneficiary satisfaction if ESRDF fails to fulfill financial agreements with the communities. The satisfactory maintenance for Rural Water Supply and Sanitation (RWSS), and Small Scale Irrigation (SSI) sub- projects would also be affected. Last year, ESRDF initiated important efforts to address this issue (e.g. financing of model projects in RWSS and catchment treatment projects in SSI) and they are starting to yield positive results. The timely completion of these activities will not be possible without the Supplemental Credit. (iv) The Government is unable to finance the additional costs and to obtain additionalfundsfrom other lenders on reasonable terms or reasonable time. The Government has submitted requests for supplemental funding to other donors. The Government of the Netherlands has agreed to provide a Grant of about US$4 million, but other donors were unable to provide additional resources outside of their program cycles. (v) The time available is too short to process a further freestanding Bank loan. The Bank received a request for a follow-up ESRDF II Project and indicated its willingness to support it (Country Director's letter of November 15, 2001). Simultaneously, the Government undertook major decentralization reforms to strengthen Woredas and improve service delivery at the local level. In this policy context, the preparation of a freestanding loan would have required substantial new analysis and, therefore, more time than available to render the credit effective by the closing date of the ESRDF Project (December 31, 2002). (vi) The borrower is committed to the project, and the implementing agencies have demonstrated competence in carrying it out. The Government of Ethiopia has consistently provided its counterpart contribution to the project in the form of ESRDF staff salaries and operating costs. ESRDF has consistently performed satisfactorily on both its Development Objectives and Implementation Progress. Project Objectives and Description 13. The proposed three project components are consistent with the original project objectives and components. Component 1: Construction and Rehabilitation of Social and Economic Infrastructure and Improvement of Related Services (US$26.50 million equivalent): The Supplemental Credit would finance about 840 ongoing community projects, all of them initiated under the ESRDF Credit and nearing completion stage (both physical and financial completion), and retention fees for about 860 completed projects. The projects cover the following sectors : primary health, primary education, rural water supply and -4 - sanitation, small-scale irrigation (e.g. diversion weirs, water catchment treatment), and agriculture (e.g. veterinary clinics). In addition, the Supplemental Credit would finance income generating (IG) projects as part of the ongoing pilot. ESRDF is piloting IG projects with a view to (i) raise the income-generating potential of beneficiary communities; (ii) enable them to recover the cost of grant-funded (group-owned or group-managed) assets and recycle the income generated through their own savings and credit associations (SCAs); and (iii) link them to Micro Finance Institutions (MFIs) and banks that may serve their future financing needs. The pilot is designed to operate in areas where existing MFIs are not yet active and to facilitate savings mobilization and management at the community level as a basis for future linkage with more formal MFIs, and to avoid getting ESRDF directly involved in credit operations. The Supplemental Credit would also continue to test in selected regions the institutional and financing mechanisms for transferring resources to communities through woredas. Under this mechanism, pilot woredas submit to the ESRDF Regional Office (RO) annual work plan and budgets of eligible projects, all identified in a participatory manner. ESRDF RO then transfers funds to the Woreda-Council from which funds are disbursed to communities. As for other ESRDF-financed projects, the beneficiary communities manage the procurement process. Component 2: Welfare Monitoring System (US$0.80 million equivalent): The Supplemental Credit would further strengthen the Borrower's capacity for welfare monitoring and analysis through the completion of ongoing activities, including: (i) production of a national poverty map; (ii) setting up a survey data storage system; and (iii) national and regional workshops to disseminate existing information on poverty. Component 3: Capacity Building, Training and Research (US$I.0 million equivalent): Under this component, ESRDF would continue to strengthen the capacity of (i) local communities to implement small-scale projects to improve their living conditions; and (ii) collaborating agencies such as the regional bureaus, local government and NGOs to assist communities. The Study Fund previously established would be maintained to refine operational and technical aspects of ESRDF interventions, and capture lessons learned during implementation. The Supplemental Credit will also finance a resettlement audit and a dam safety audit, as well as implementation of potential remedial measures. Beneficiaries 14. The Supplemental Credit is expected to benefit about 2.65 million people living in the poorest areas of the country. There is significant evidence that targeting ESRDF resources to poor communities has been effective. Two studies pointed out that the average sampled ESRDF sub-project is at least 50 kms away from an all weather road. ESRDF follows a four-pronged targeting strategy. First, only projects that meet the basic needs of the poor are eligible. Second, screening criteria are used during sub-project - 5 - appraisal, including a mandatory field appraisal and social assessment of beneficiaries, to ensure that poor communities and beneficiaries will be served. Third, supervisors and facilitators have been trained to help increase access to ESRDF resources by difficult-to- reach and poorer areas. Fourth, sub-regional offices have been opened and woreda officials trained to facilitate access by poor communities. Some regions like Tigray and Amhara have developed their own poverty maps and utilize these for targeting the poor. In other regions like Gambella, Somali, and Afar, projects were closer to the regional capital during the first two years of the program. However, later projects are much further away. Project Cost and Financing 15. The total project cost, net of taxes and duties, is estimated at US$39.8 million, with the following breakdown: US$28.5 million - IDA; US$4.0 million - Dutch Government; US$5.0 million - Government of Ethiopia, and US$ 2.5 million - Community contribution. The breakdown of estimated costs is shown in Schedule A. Schedule B lays out the project's financing plan and disbursement schedule. A summary of procurement arrangements is given in Schedule C. The timetable of key project processing events and the status of Bank Operations in Ethiopia are given in Schedule D and Schedule E, respectively. Project Implementation, Financial Management and Procurement Arrangements 16. The Supplemental Credit would be implemented over a period of 18 months, starting January 2003. ESRDF was established through Proclamation No. 19/1996 as an autonomous government entity having its own juridical personality. Implementation mechanisms of the on-going ESRDF Project would continue to be applied. ESRDF would continue to operate on a decentralized basis through 11 regional offices following the current operational manual and technical handbooks. 17. ESRDF has established an acceptable accounting and reporting system for the project, including arrangements for audits, which will continue for the Supplemental Credit. Independent auditors acceptable to IDA will audit the use of all funds available under the Supplemental Credit, including the Special Account and the statements of expenditures. Audit reports will be submitted to IDA no later than six months after the end of the fiscal year. The format and the frequency of periodic reporting will be maintained as defined in the project implementation manual. An Implementation Completion Report (ICR) will be prepared within six months after Credit closing. 18. The Special Account for the ongoing project would be used and the Special Account ceiling would be maintained at US$9,000,000. Statements of Expenditures (SOEs) would be used for all expenditures under contracts below the Association's prior review limits. 19. Procurement of goods and services will be carried out as stated in the Development Credit Agreement of May 15, 1996 (as amended) and ESRDF's Operational Manual and will be in accordance to World Bank Guidelines for procurement - 6- of goods and works under IDA Credits (as revised on January 1999) and World Bank Guidelines for Selection and Employment of Consultants by World Bank Borrowers (as revised on January 1999). The same procurement methods used under the ongoing project will be applied to the Supplemental Credit, namely: intemational competitive bidding, national competitive bidding, national shopping, procurement of small works and community participation. 20. As part of this request for a Supplemental Credit, a concomitant extension of the closing date of December 31, 2002, to December 31, 2004, is proposed. Without such an extension, the project would close in December 31, 2002, which would make it impossible to implement the activities to be financed by the Supplemental Credit. Effectiveness Conditions 21. No additional actions are required except for the submission of a satisfactory legal opinion on the Agreement Amending the Development Credit Agreement, as a condition of effectiveness. Participatory Approach 22. In keeping with the principles and modus operandi of ERSDF, the proposed Supplemental Credit would be implemented with maximum community involvement in all phases of the project cycle, including maintenance of infrastructure investments. After ESRDF has carried out promotional activities to create awareness on the aims, objectives, working mechanisms, and procedures of ESRDF, communities will elect Community Project Committees (CPCs) comprised of five members - at least three of whom are women. These CPCs take the leadership in the implementation of the community-initiated projects, including ensuring that the 10% community contribution is secured. ESRDF assists the CPCs by providing training and necessary technical assistance throughout the project cycle. Environmental Aspects 23. ESRDF's Operational Manual provides criteria for environmnental screening of each project during its appraisal, in order to identify potentially negative environmental and social impacts at an early stage. However, in order to address possibie areas of concern, mainly related to small-scale irrigation projects, and to bring ESRDF into compliance with current World Bank Safeguard Policy requirements, ESRDF produced an Environmental and Social Management Plan and a Resettlement Policy Framework in June 2002. The first document details mitigation, monitoring, and institutional measures to be considered during project implementation to avoid or mitigate potential adverse environmental and social impacts. The Resettlement Policy Framework clarifies the principles for social impact mitigation, via compensation for loss of properties and livelihood, and relocation or resettlement, for completion of ongoing projects. Finally, the Supplemental Credit would finance two audits: (a) a resettlement audit to assess whether any of the subprojects financed under ESRDF have outstanding displacement or compensation issues, and to recommend remedial measures to address these; and (b) an -7- audit of dam safety for those built under Credit 28410-ET that will recommend a set of mitigation measures to address any potential issues. It is anticipated that the audit will take approximately 4 months to carry out, with an anticipated 14 months set aside for remedial measures to be implemented during the Supplemental Credit. An estimated US$0.4 million has been allocated for remedial measures. Projects involving water abstraction from the Wabi-Shebele-Geneale (Juba) rivers, which are international waterways, shall not be eligible for financing under the Supplemental Credit, as was the case under the ESRDF Credit. Project Benefits 24. Completion of ongoing community projects under the Supplemental Credit would provide poor communities with basic social and economic services. Direct benefits include the following: * increased education and health coverage and standards, as a result of the social infrastructure, rural water supply and sanitation sub-projects; * increased income and food security, as a result of small scale irrigation schemes; * enhanced potential for long term development through environmental rehabilitation, and * improved capacity of communities to undertake actions to improve their living conditions. Communities will become aware of their own reality and the possibilities to change it, and have the capability to identify solutions to address their needs on a sustainable basis. Project Sustainability 25. Under the proposed Supplemental Credit, ESRDF will continue to deepen its focus on sustainability. The sustainability of ESRDF's projects is achieved by ensuring maximum community involvement in all phases of the project cycle (e.g., identification, preparation, appraisal, implementation, and post-completion). In addition, ESRDF ensures that beneficiary communities actually contribute in cash, in-kind, through labor, or a combination thereof, which further ensures ownership and sustainability of projects. Responsibility for both maintenance and operation - by the government or the community or a combination of both, are clearly recorded in the financing agreement during the project appraisal. In addition, ESRDF will systematically use post-completion visits to heighten awareness of the importance of operations and maintenance among beneficiaries. 26. The Government considers ESRDF an integral part of Ethiopia's Poverty Reduction Strategy. Beyond the direct benefit to poor and remote communities, ESRDF has served as an institutional model for community empowerment in a decentralized setting. The government is currently incorporating the empowerment and capacity building innovations tried out by ESRDF into its new decentralization program. ESRDF is a perfect example of a quality institution, created to perform the functions of a weak - 8 - state, contributing to the improvement in the way the state functions. The Government is discussing the possible new roles ESRDF would play after project completion. Project Risks and Mitigating Measures 27. ESRDF fund allocation follows the Federal Government formula, which legally eliminates the possibility of reallocating funds across regions. Given the variances in the absorptive capacity across all regions, one possible risk would be that not all regions complete planned and ongoing activities by project closing. This risk has been minimized by aligning the level of budget resource allocations with each region's demonstrated capacity for implementation. This factor has been fully taken into account to determine the budget envelope for the Supplemental Credit. Concurrently, the Credit would also continue to rigorously implement capacity building interventions to further strengthen each region's capacity for program implementation. Recommendation 28. I am satisfied that the proposed Supplemental Credit will comply with the Articles of Agreement of the International Development Association, and recommend that the Executive Directors approve it. James D. Wolfensohn President By Shengman Zhang Washington, D.C. November 22, 2002 Attachments 9- SCHEDULE A Page 1 or 1 FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA SUPPLEMENTAL CREDIT FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT ESTIMATED PROJECT COSTS (in US$ million equivalent) Category Local Foreign Total Sub-projects 21.95 6.67 28.62 Welfare Monitoring System 0.45 0.31 0.76 Operating Costs 4.70 - 4.70 Total Baseline Cost 27.10 6.98 34.08 Physical Contingencies 3.54 2.18 5.72 Total Project Costs 30.64 9.16 39.80 SOURCE OF FINANCING (in US$ million equivalent) Local Foreign Total Percentage of Foreign Expenditures IDA 17.40 10.90 28.30 100% Netherlands 4.00 - 4.00 - Government 5.00 5.00 Communities/Beneficiaries 2.50 = 2.50 - Total 28.90 10.90 39.80 100% -10- SCHEDULE B Page 1 of 2 FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA SUPPLEMENTAL CREDIT FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT FINANCING PLAN (by Project Component) (in US$ million equivalent) COMPONENT IDA Netherlands Government Community Total 1. Construction/Rehabilitation of 26.50 4.00 4.50 2.40 37.40 Social and Economic Infrastructure and Improvement of Related Services 2. Welfare Monitoring 0.80 0.30 - 1.10 3. Capacity Building, Training and 1.00 0.20 0.10 1.30 Outreach Total 28.30 4.00 5.00 2.50 39.80 DISBURSEMENT SCHEDULE (in US$ million equivalent) IDA FY 2003 2004 2005 Annual 12.00 16.00 0.30 Cumulative 12.00 28.00 28.30 SCHEDULE B Page 2 of 2 ALLOCATIONAND DISBURSEMENT OF SUPPLEMENTAL IDA CREDIT (in USS million) Category Initial ESRDF Credit Supplemental % of expenditures Amount Credit to be financed for Supplemental Amount Credit Amount 1. Goods and Works for Projects under Part A of the Project (a) Projects under Part A.l (a) 72.27 (a) 22.00 (a) 100% of foreign expenditures and 90% of local expenditures; (b) Projects under Part A.2(A) (b) 14.90 (b) - (b) 100% of foreign expenditures (c) Projects under Part and 90% of local expenditures; A.2(B) (c) 2.25 (c) - (c) 100% 2. Consultants' services, 85% Technical Assistance and Training (a) under Parts A and B of (a) 2.40 (a) 2.50 the Project (b) under Part C. I of the (b) 0.44 (b) 0.50 Project (c) under Part C.2 of the (c) 0.25 (c) 0.20 Project 3. Equipment, Vehicles, 100% of foreign expenditures and Furniture and Materials 90% of local expenditures (a) under Part B.3 of the (a) 0.00 (a) - Project (b) under Parts A.1, B.1 (b) 1.50 (b) - and B.2 of the Project (c) under Part C. I of the Project (c) 0.10 (c)- (d) under Part C.2 of the Project (d) 0.11 (d) 0.10 4. Refinding of Project 0.00 - Amounts due pursuant to Section Preparation Advance 2.02(c) of DCA 5. Unallocated 0.28 3.00 TOTAL 94.501 28.30 _ lIncludes cancellation of US$11.48 million (SDR 8.61 million) on March 13, 1998. - 12- SCHEDULE C Page 1 of 1 FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA SUPPLEMENTAL CREDIT FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT PROCUREMENT ARRANGEMENTS (in US$ million equivalent) Category Procurement Method International National Other N.I.F. Total Competitive Competitive Methods2 Bidding Bidding Projects 1. Civil Works 14.00 6.18 20.18 (12.71) (4.60) (17.31) 2. Construction 2.59 2.56 5.00 10.15 Materials/Equipment (2.59) (2.32) (3.62) (8.53) 3. Services 2.56 2.56 (0.56) (0.56) Services 4. Training/TA/Studies 1.00 1.00 (1.00) (1.00) 5. Welfare Monitoring 0.80 0.80 (0.80) (0.80) Miscellaneous 6. Office Equipment/Vehicle 0.11 0.11 (0.10) (0.10) 7. Operational Costs 5.00 5.00 ______ ~~~~~~~~~~~~~ i l L~~~~~~ TOTAL: 2.59 16.67 15.54 5.00 39.80 Of which IDA (2.59) (15.13) (10.58) ( (28.30) N.I.F. = Not IDA-financed. Figures in parenthesis are the amounts to be financed by the IDA Supplemental Credit. Slight differences may result from rounding of figures. 2 Other methods include use of consultants by ESRDF according to Bank guidelines and national shopping for goods procured by ESRDF. It also includes the procurement of works and goods, and the employment of consultants for the sub-projects financed by ESRDF, which will be done in accordance with the ESRDF's Operational Manual, as may be amended from time to time with the prior approval of the Bank. - 13 - SCHEDULE D Page 1 of I FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA SUPPLEMENTAL CREDIT FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT TIMETABLE OF KEY PROJECT PROCESSING EVENTS Time taken to prepare: 9 months Prepared by: Government with assistance of World Bank Staff Appraisal: May 2002 Negotiations: November 2002 Planned Board Presentation: December 2002 Planned Date of Effectiveness: January 2003 Project Completion: June 2004 Credit Closing: December 2004 This report is based on the findings of two supervision missions (October/November 2001 and May 2002) of the ongoing operation. Names of staff who worked on the project: Nadine T. Poupart: Task Team Leader and Sr. Economist, AFTH3 Getahun Gebru: Sr. Operations Officer, AFTH3 Marylou R. Bradley: Operations Officer, AFTH1 Eshetu Yimer: Financial Management Specialist, AFTFM Samuel Haile Selassie: Procurement Specialist, AFTPC Timothy J. Marchant: Lead Statistician, AFTKL Helen Giorghis Taddese: Program Assistant, AFTHI Southsavy Vilay Nakhavanit: Program Assistant, AFTH3 - 14 - SCHEDULE E Page 1 of 1 FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA SUPPLEMENTAL CREDll FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND Operations Portfolio (IBRD/IDA and Grants) As of Date 11/20/2002 Closed Projects 65 IBRD/IDA* Total Disbursed (Active) 840.41 Of which has been repaid) 0.00 Total Disbursed (Closed) 1.992.63 Of which has been repaid 351.97 Total Disbursed (Active + Closed) 2,833.04 Of which has been repaid 351.97 Total Undisbursed (Active) 978.60 Total Undisbursed (Closed) 3.59 Total Undisbursed (Active and Closed) 982.18 Active Projects Difference Between Last PSR Orienal Amt in US$ Million Expected and Actual Supervision Rating Disbursement A Project ID Project Name Develonment ImDlementation Fiscal IBRD IDA GRANT Cancel Undisb. Orig. Frm Obiectives On Proaress Year Rev'd P000733 AG. RESEARCH & TRNG. S S 1998 60 32.9046 25.2 P035147 CONSERV & SUSTAIN. S S 2001 1.887 1.76006 0.1 P052315 CONSERVATION OF MED S S 2001 2.597 2.40386 -0.2 P057770 CULTURAL HERITAGE S S 2002 5 5.43385 0.2 P050938 Capacity Bldg for Dec. S S 2003 26.2 27.3753 0.8 P073196 Demob.and Reintegr. HS S 2001 170.6 48.2186 15 P000732 Education Sector Investmen S S 1998 100 28.2645 30.4 P067084 Emergency Recovery & Reh. S S 2001 230 142.871 120.6 P049395 EnergyAccessProject 2003 132.7 138.117 P000736 ET Energy 11 S S 1998 200 72.1497 58.5 P0069886 Ethiopia Multisectoral HIV/ S S 2001 59.7 45.23 11.7 P074585 ET Structural Adjustment Cr 2002 120 126.7 P050383 Food Security Project 2002 85 89.7619 P069083 Global Distance Leaming S S 2001 4.9 4.81386 2.2 P000756 Health Sector S S 1999 100 47.6576 46.4 P000734 Road Rehabilitation S S 1993 96 14.4281 20.1 2.198464 P000755 Road Sec. Dev; Program S S 1998 309.2 128.517 139.3 65.77739 P000771 Social Rehab (ESRDFI) S S 1996 120 11.4806601 13.4009 37.8 20.5236 P000764 Water Supply Dev. & Reh.. S S 1996 35.73 5.81232 9.9 P050342 Women's Development nit. S S 2001 5 4.53941 1.1 0.296285 Overall result Result 1862.627 1.887 11.4806601 980.359 519.2 88.79574 "Intended disbursements to date minus actual disbursements to date as projected at appraisal -15 - SCHEDULE F Page 1 of 3 FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA SUPPLEMENTAL CREDIT FOR THE SOCIAL REHABILITATION AND DEVELOPMENT FUND PROJECT PERFORMANCE INDICATORS ESRDF Project Supplemental Total By Project Performance Indicators (actual to April 2002)| Credit (Planned) Closing (Planned) _L NPUT INDICATORS 1. Project Disbursement o % of total project funds disbursed 77.97 100 100 o Annual Disbursement target (Birr - 384,514,000 project) 2. No. of requests received by type ofproject o Rural Water Supply 3,101 50 3,151 o Education 2,590 30 2,620 o Health and Sanitation 1,787 25 1,812 o Small Scale Irrigation 487 10 497 o Capacity Building & Training 591 - 591 o Other 832 25 857 IL PROCESS INDICATORS- 1. % ofprojects with a 10% cost overrun over contract cost (by type ofproject) o Rural Water Supply 3.71 3.70 4.0 o Education 3.54 3.50 3.5 o Health and Sanitation 3.58 3.50 3.5 o Small Scale Irigation 7.79 6.0 6.0 o Capacity Building & Training Not Applicable Not Applicable Not Applicable o Others 6.80 6.0 6.0 2. Average total community investment as percentage ofproject costs. 6.50 6.0 6.70 3. Project processing time by type ofproject (a) % ofprojects with 10% time overrun over standard schedule o Rural Water Supply o Education 68.36 N/A 60.00 o Health and Sanitation 81.63 N/A 75.00 o Small Scale Irrigation 81.08 N/A 75.00 e Capacity Building & Training 69.44 N/A 75.00 o Others 73.11 N/A 70.00 -16- SCHEDULE F Page 2 of 3 ESRDF Project Supplemental Credit Total By Project Performance Indicators (actual to April 2002) (Planned). Closing (Planned) (b) % of sub projects with 10% time overrun over planned schedule (implementation to completion) * Rural Water Supply 78 75 77 * Education 93 85 90 * Health and Sanitation 50 45 50 * Small Scale Irrigation 15 10 14 * Capacity Building & Training Not Applicable Not Applicable Not Applicable * Others 8 5 7 (c) Overhead costs as percentage ofproject costs (for ESRDF as a whole andfor each RO) * ESRDF 11.05 9.6 10.0 * Addis Ababa 7.80 7.0 7.5 * Afar 14.40 11.0 13.0 * Amhara 6.20 6.0 6.0 . Benishangul Gumuz 16.00 12.0 14.0 * Dire Dawa 15.40 12.0 14.0 * Gambella 14.30 - 14.30 * Harari 19.00 20.0 18.0 * Oromiya 4.90 5.0 5.0 * Somali 13.30 11.0 11.0 * SNNPR 8.40 10.0 10.0 * Tigray 7.50 - 7.50 - I ~ i * .a. A. .'U 2 - t ; * f f. .n , 1. No. ofprojects completed * Rural Water Supply 1,402 311 1,713 * Education 674 235 909 * Health and Sanitation 523 179 702 * Small Scale Irrigation 75 55 114 * Capacity Building & Training 208 47 275 * Others 185 27 212 2. No. of beneficiaries reached * Rural Water Supply 3,625,366 299,960 3,924,726 * Education 2,037,111 196,458 2,233,569 * Health and Sanitation 12,150,328 132,422 13,474,552 * Small Scale Irrigation 178,866 52,476 231,342 * Capacity Building & Training 1,810,050 200,150 2,010,200 * Others 2,595,735 574,607 3,167,342 -17- SCHEDULE F Page 3 of 3 ESRDF Project Supplemental Credit Total By Project Performance Indicators (actual to April 2002) (Planned) Closing (Planned) 3. Ratio of Female Trained to Male 7rained Beneficiaries (by type ofproject) * Rural Water Supply 0.54:1 0.9:1 0.6:1 * Education 0.96:1 1:1 1:1 * Health and Sanitation 0.56:1 0.9:1 0.7:1 * Small Scale Irrigation 0.32:1 0.5:1 0.4:1 * Capacity Building & Training Not Applicable Not Applicable Not Applicable * Others 0.67:1 0.9:1 0.8:1 4. No. of beneficiaries trained * Rural Water Supply 4,455 * Education 124,332 * Health and Sanitation 6,040 * Small Scale Irrigation 5,884 * Capacity Building & Training Not Applicable * Others 48,778 5. Ratio of Female to Male Beneficiaries * Rural Water Supply 1.04:1 1:1 1:1 * Education 0.92:1 1:1 1:1 * Health and Sanitation 1:1 1:1 1:1 * Small Scale Irrigation 0.85:1 1:1 0.9:1 * Capacity Building & Training 0.85:1 1:1 0.9:1 * Others 08: : .: [yI. OtTPUT INDICATORS_t 1. % of women among beneficiaries reached * Rural Water Supply 54.25 60 55 * Education 42.11 60 50 * Health and Sanitation 48.49 60 50 * Small Scale Irrigation 46.17 30 10 * Capacity Building & Training 41.14 - 41.14 . Others 46.26 30 10 2. Women as a % of total committee members * Rural Water Supply 27.50 30 30 * Education 20.95 30 30 * Health and Sanitation 29.94 30 30 * Small Scale Irrigation N/A * Capacity Building & Training Not Applicable Not Applicable Not Applicable * Others N/A 30 30 - 18 - Ethiopia PRICES and GOVERNMENT FINANCE 1981 1991 2000 2001 Inflato (%) (% chnge) 15I Consumer prices 6.1 20.9 4.2 -7.2 10 ImpllcltGDPdeflator .. 16.1 1.7 -7.0 5 Govemrnent finlrmce 001 (M of GOP, includes cuarent gants) -6 5 g0 Current rvenue 16.4 13.7 18.3 19.6 -10 Current budget balance -0.2 -4.7 -8.2 -0.4 -GDP delator 0 CPI Oveall surplus/deffcit -4.9 -10.9 -14.8 -10.0 TRADE (US$ tnilonsJ 1981 1901 2000 2001 Export and Import leveb (US$ mill.) Total exports (fob) 411 276 486 441 2O,O Coffee 130 262 175 Leather and bather products 45 35 38 1, ** Manufactures Total Imports (Cff) 744 1,029 1,611 1,558 1 ** Food 152 116 241 * *0*JJJJ Fuel and energy 102 213 265 Capital goods 466 755 569 0 Export price Index (1995-100) 82 77 64 59 e so gr s 99 oo o Import prae Index (1995=100) 112 99 116 117 a Exports * Imports Terms of trade (1995=100) 73 78 55 50 BALANCE of PAYMENTS (US$ rnflfidns 981 t991 2000 2001 Current account balance to GOP (%) Exports of goods and services 554 543 984 957 2 Imports of goods and services 845 1,228 1,960 1,945 Resource balance -291 -83 -976 -987 . Net Income -7 -73 40 -59 Net cufrent tnansfrs 50 229 701 774 4* Current account balance -249 -528 -335 -272 -4 FIancing Items (net) ISO 681 110 259 -6* Changes In net resrs 59 -153 225 13 -10 Memo: Reserves Including gold (US$ rnilions) 370 106 Conversion ate (DEC, locaWSSJ 2.1 2.1 8.2 8.3 EXTERNAL DEBT and RESOURCE FLOWS 1981 1991 2000 2001 (US$ nV/lions) ComposItion of 200 debt (USS mill.) Total debt outstanding and disbursed 1,842 9,119 5,483 5,697 IBRD 52 20 0 0 G: so IDA 276 883 1,779 2,151 F: 100 Total dabt service 58 138 138 183 IBRD 7 9 0 08:2151 IDA 2 11 34 36 ComposIton ot net resource flows Offcil grants 135 781 Offacil creditors 894 145 122 435 PrtVatecredHfors 63 212 -8 -10 Foreign dIrct Investment 0 8 50 0 DO Poritilo equty 0 0 0 0 0:949 World Bank program Comltmnents 78 0 465 202 A - IBsD E - Blatersi DIsbursements 28 59 137 455 B -IDA D-OOthermultlaters F-PPdvate Principal repayments 4 12 21 22 C - W G - Short-trm Net fbws 23 46 118 433 Intrestpayments 5 8 13 14 Net lansfers 18 38 103 419 Development Economics 9/24102 - 20 - Ethiopia at a glance 9t24t02 Sub- POVERTY and SOCAL Saharmn Low- Ethipla Aica Income DOtvdpftSdlamond` 2001 Population, mid-year (mrnlns) 65.8 674 2.511 We expectancy GNI per capita (AUas mehod. USE) 100 470 430 GNI (Atas mehodt, USS bos) 6.7 317 1,069 Average annual gmwth, 19K-Cl Population (%) 2.5 2.5 1.9 / G Labor force (%J 2.2 2.6 2.3 GNI Gross per . prlmary Most rcent eatimat (latt year availkbbe, 19S5-Cl) capita enrolnent Poverty (% of pwulaton below national poverty kw.e) Urban population (% of total PWoultIon) 16 32 31 UWe expectancy at birth (years) 42 47 59 Infant mortatty (per 1,000 lIve birts) 98 91 76 Child malnutrfflon (% of dcid, under 5) 47 .. .. Access to improved water source Access to an improved water source (% of Kpuabtff) 24 55 76 IlIteracy (% of population age 154J 60 37 37 Gross primary enrdolment (% of sdcooW population) 71 78 96 Ethia Maio 85 85 103 Low-income grow Female 57 72 88 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1961 1991 2000 2001 Economic rt GDP (US$ blDbns) 5.2 9.5 6.4 6.2 Gross domestic Investment/GDP 13.3 9.9 15.3 18.0 Tmde Exports of goods and services/GDP 10.7 5.7 15.5 15.4 Gross domestic savings/GDP 7.3 2.7 -0.1 2.2 Gross national savingstGDP 8.1 4.4 10.0 13.7 Current account balance/GDP -4.8 -5.5 -5.3 4,4 Domesdc Interest paymentstGDP 0.3 0.4 0.8 1.0 savings _nvesiment Total debttGDP 35.6 95.9 86.2 91.4 Total debt service/exports 10.3 25.2 138 18.9 Present value of deWGDP .. .. 51.3 Present value of detexports .. .. 326.5 Indebtedness 181-91 1991-11 2000 2001 2014-0 (average annual grwth) GDP 1.0 5.3 5.4 7.7 6.3 Ethuil GDP per capIta -2.1 2.9 2.9 52 3.5 Low-ixome gW Exports of goods and services 0.8 11.9 23.6 -1.6 6.7 STRUCTURE of the ECONOMY 1961 1991 2000 2001 Growth of Inveatmwnt and GOP (%) (% of GDP) w Agricuiture 56.1 59.1 52.3 52.3 Industry 12.3 10.1 11.1 11.1 20 Manufacuing 7.9 5.4 7.0 7.0 10 Services 31.6 30.8 36.5 36.5 Private consumption 79.0 81.8 76.8 80.3 .10 I 00 01 General government consumpton 13.7 15.5 23.2 17.5 -- - GDP Imports of goods and servilces 16.7 12.9 30.8 31.2 19819 1991-C 2000 2001 Growth of expons and Imports(%) (average annual growth Agriculture 0.7 2.3 2.2 11.5 40 Industry -1.0 6.4 1.8 5.8 20 Manufacturing -2.5 7.6 2.1 21.7 Services 2.5 82 9.5 46 Private consumption 0.8 2.7 -1,9 11.4 U.r w 00 0 General government consumptlon 3.0 13.0 29.3 -18.5 -2D Gross domestic Investment 0.2 10.9 -1.2 27.4 - iexpolpsre Imports of goods and services 1.2 7.1 6.3 -1.8 Note: 2001 data are preominary esimates. * The dlamonds show tour key IndIcators In the country (In bold) compared with its Income-group average. If data are missing, the diamond wit be Incomplete. - 19 - $ ,~~~~~~~~~~0 ~~~~~~~ Red ff*' - ~~~~~~~~~~~~~~~~~~~~~~~~IBRD 31 158 REPUBLIC / ERITR Ao K.ft..REP. OF YEMEN SU D A N S H~,na \mdoSo Mo)orno - Ab Ret,,,,. ~~~~~~~~~~~~~~~~~~~~~~~ BE dE5NUL g ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~6nA~ AA.~ SOMALA R-i- G B~~~~~~~~~~~~~~~~~~~~~~~- E 'I Bohi, L. A .. tTe,d,dh, JIo U50MALI e~~~~~~J OROMIYA~ OAI/ bi AyK~~~~~~~~~~~~~~~~~APHL,ALWETE OD CUGANDA~~~~~~NRRAINA ONDRE 5'~ ~ ~ ~ ~ ~ ~~G1 Fm,, S,I-d --------' o 20 0 UGANDA~~~~~~~,. y --- ETHIOPI 35~~~~~~ K E N Y A /~~~~~~~~~Y GRAVEL,on ALL-WEATHERdROADS 9 RURAL AND/ OR DRY-WEATHER ROADS~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~NVMBR20. Report No.: P 7505 ET Type: MOP