Document of The World Bank FOR OFFICIAL USE ONLY Report No: 75411-YE PROJECT PAPER ON A PROPOSED ADDITIONAL FINANCING GRANT IN THE AMOUNT OF SDR 16.3 MILLION (US$25 MILLION EQUIVALENT) TO THE REPUBLIC OF YEMEN FOR THE SOCIAL FUND FOR DEVELOPMENT PHASE IV PROJECT MARCH 6,2013 Human Development Department Egypt, Yemen, Djibouti Country Management Unit Middle East and North Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2013) Currency Unit = Yemeni Riyal US$1 = YR 215.15 SDR 1 = US$1.54 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing CBO Community-based Organization CHM Complaints Handling Mechanism CHVs Community Health Volunteers CLD Community and Local Development CSO Civil Society Organization DA Designated Account EMP Environmental Management Plan FM Financial Management HHs Households IDA International Development Association IFR Interim Financial Reports IMF International Monetary Fund ISN Interim Strategy Note IYCF Infant and Young Child Feeding LIW Labor-intense Works MAM Moderately Acute Malnourished MNA Middle East and North Africa MOE Ministry of Education MOPHP Ministry of Public Health and Population MOPIC Ministry of Planning and International Cooperation MUAC Mid-upper Arm Circumference NGO Non-governmental Organization OM Operational Manual ORAF Operational Risk Assessment Framework OTP Outpatient Therapeutic Program SC Stabilization Center SFD Social Fund for Development SFP Supplementary Feeding Program UNICEF United Nations Children's Fund WA Withdrawal Application WHO World Health Organization WFP World Food Programme Vice President: Inger Andersen Country Director: Hartwig Schafer Country Manager Wael Zakout Sector Manager: Yasser El-Gammal Task Team Leader: Mira Hong REPUBLIC OF YEMEN SOCIAL FUND FOR DEVELOPMENT PHASE IV PROJECT CONTENTS Project Paper Data Sheet Project Paper I. Introduction .................................................... 1 II. Background and Rationale for Additional Financing ......... ...............1 III. Proposed Changes .................................................. 4 IV. Appraisal Summary .................................................. 8 Annex 1: Results Framework and Monitoring Indicators..................... 15 Annex 2. Operational Risk Assessment Framework (ORAF) ....................... 28 Annex 3 Detailed Description of Modified or New Project Activities ................ 31 REPUBLIC OF YEMEN SOCIAL FUND FOR DEVELOPMENT PHASE IV PROJECT ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Country Director: Hartwig Schafer Sectors: Other social services (100%) Sector Manager/Director: Yasser El- Themes: Nutrition and food security Gammal/Steen Jorgensen (30%), Social safety nets (50%); Team Leader: Mira Hong Global food crisis response (10%), Project ID:P133699 Social inclusion (10%) Expected Effectiveness Date: May 15, 2013 Environmental category: Partial Lending Instrument: SIL assessment Additional Financing Type: Scale Up Expected Closing Date: December 31, Restructuring 2016 Joint IFC: No Joint Level: N/A Basic Information - Original Project Project ID: P117949 Environmental category: B Project Name: SOCIAL FUND FOR Expected Closing Date: December 31, DEVELOPMENT IV 2015 Lending Instrument: SIL Joint IFC: No Joint Level: N/A AF Project Financing Data [ ] Loan [ ] Credit [x] Grant [ ] Guarantee[ ] Other: Proposed terms: AF Financing Plan (US $m) Source Total Amount (US $m) Total Project Cost: 25 Cofinancing: Borrower: Total Bank Financing: IBRD IDA 25 New Recommitted Client Information Recipient: Republic of Yemen Responsible Agency: Social Fund for Development Fij Attan, PO Box 15485 Yemen, Republic of Tel: (967-1) 449-671 aaldailami(&sfd-yemen.org AF Estimated Disbursements (Bank FY/US$m) FY 13 14 15 16 17 Annual 2 6 6 7 4 Cumulative 2 8 14 21 25 Project Development Objective and Description Original project development objective: To: (i) improve access to basic services; (ii) enhance economic opportunities; and (iii) reduce the vulnerability of the poor. These objectives will remain the same for the additional financing. Revised project development objective: N/A. Project description: The additional financing will scale up Component 4 Labor-Intensive Works (LIW) Program and introduce two new subcomponents to: (i) support LIW targeted to unemployed youth; and (ii) introduce cash-for-work opportunities for youth and women in the delivery of social services. It will provide financing of: (i) labor-intensive works that provide income opportunities and work experience to young people and at the same time improve the communities' access to public infrastructure, and (ii) social services to be provided by young people and women at the community level that provide income opportunities and work experience to young people and women and at the same time improve the communities' access to basic social services. Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [X]Yes []No Natural Habitats (OP/BP 4.04) [ ]Yes [X] No Forests (OP/BP 4.36) [ ]Yes [X] No Pest Management (OP 4.09) [ ]Yes [X] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [X] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [X] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [X] No Safety of Dams (OP/BP 4.37) [ ]Yes [X] No Projects on International Waterways (OP/BP 7.50) [ ]Yes [X] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X] No Does the project require any waivers of Bank policies? [ ]Yes [X] No Have these been endorsed or approved by Bank management? [ ]Yes [ ] No Conditions and Legal Covenants: Financing Agreement Description of Date Due Reference Condition/Covenant Amendment Letter to Financing Agreement, The Subsidiary Agreement By effectiveness paragraph 13. has been revised according to the provisions of the Amendment Letter. I. INTRODUCTION 1. This Project Paper seeks the approval of the Executive Directors to provide an additional financing grant (Grant No. H8330-RY) in theamount of US$25 million equivalent to the Republic of Yemen Social Fund for Development Phase IV Project (P 117949) (SFD IV, Grant No. H5480-RY). 2. The proposed Additional Financing (AF) grant would finance the costs associated with scaling up this well-performing project and maximizing its impact in reducing the vulnerabilities of unemployed youth and women. It would be used to scale up the project's Labor-Intensive Works (LIW) component which aims to reduce the vulnerability of poor people to food security risks through targeted short-term income generation. This program has become a critical safety net to help poor and vulnerable households smooth their income and consumption, while supporting the construction of priority basic social infrastructure. 3. Through the AF, the LIW Program would target additional cash-for-work opportunities specifically to youth and womenand extend the program to include cash-for-work in the delivery of social services. The additional financing would be used to support: (i) LIW providing income relief and work experience to unemployed young people (ages 18-30); and (ii) cash-for-work opportunities for youth and women in the delivery of education and nutrition services, while targeting the works and services to poor communities. 4. The project will be restructured to include: the addition of two subcomponents; revision of the results framework to incorporate additional indicators; and one year extension of the closing date to December 31, 2016. II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING 5. The purpose of the AF, in the amount of US$25 million equivalent, is to scale up activities under the LIWcomponent of the current project, which became effective on October 7, 2010 and is expected to close on December 31, 2015. The proposed AF would close one year later, on December 31, 2016. 6. The Project Development Objectives (PDO) of the SFD IV are to: (i) improve access to basic services; (ii) enhance economic opportunities; and (iii) reduce the vulnerability of the poor. The PDO will be the same for the AF.The activities to be supported are fully consistent with the original project development objectives, which remain highly relevant, and they are consistent with the World Bank Group's Yemen Interim Strategy Note (ISN) (FY13-14) (Report #70943), discussed by the Board of Executive Directors on November 13, 2012, and support the pillar on "Achieving Quick Wins and Protecting the Poor". The proposed focus of the AF on the inclusion of youth and women supports a guiding principle of the ISN to intensify participation and inclusion, with a special focus on gender and youth. 7. The social and economic impact of the country crisis in 2011 has increased the pressure on Yemen's multi-tier social safety net system, which includessuccessful community-driven programs (notably under the SFD and the Public Works Projects), and the cash transfer program 1 to the poorest (through the Social Welfare Fund). The SFD Phase IV Project's LIW program is now a well-tested instrument which is contributing substantially to this system, delivering cash- for-work to poor households. 8. The additional activities to be financed by the AF focus on two high priorities in the current country context: youth employment and child nutrition. Unemployment is highest among youth-estimated at 53 percent for the 15-24 year old age group, including many with tertiaryeducation-and is contributing to undermining political stability and security in the country. According to the World Food Program (WFP), food insecurity affected approximately 45 percent of the population in March 2012, with almost half of the children under five in the country-two million children-chronically malnourished and one million acutely malnourished.Through the AF, SFD's LIW Program will target unemployed young people, including those with high education levels, and women through cash-for-work opportunities in the provision of community-level education and nutrition services as well as community infrastructure. The program will be supporting the National Integrated Nutrition Intervention Program at the community level through female community health volunteers who will provide community-based nutrition intervention services. 9. The Government of Yemenis fully committed to the project and supports the AF. It has been financing over 10 percent of the SFD's budget since 2004. The SFD's Board is chaired by the Prime Minister with members representing line ministries, the private sector, labor unions and NGOs. The Ministry of Public Health and Population (MOPHP) and the Ministry of Education (MOE) have been closely involved in preparation of the proposed additional activities in their sectors and are committed to ongoing coordination and support through implementation. 10. Since its inception, the SFD Phase IV Project has performed satisfactorily and has been ahead of schedule in implementation, disbursement and achievement of its development objectives. The IDA grant of US$60 million equivalent to SFD IV is 53 percent disbursed, less than halfway through implementation of the project. As of October 2012, 7.2 million employment days had been created, with 2.5 million direct beneficiaries (of which 1.5 million werefemale) and 1.5 million indirect beneficiaries (of which 0.8 million werefemale). The Project showed resilience and maintained excellent performance throughout the country crisis of 2011 and ramifications in 2012 which left many in the country unemployed and food insecure. The SFD adapted to the new environment with innovative approaches to meet implementation challenges and played an important role in responding to urgent needs in the population. In response to the consumption gap during the crisis period, SFD scaled up its LIW program to provide immediate income relief by creating more than two million employment days. The SFD IV Project management has earned a highly satisfactory rating throughout implementation so far. The only covenant under the SFD IV is that "On or about April 15, 2013, the Recipient shall carry out jointly with the Association and the SFD, a midterm review of the progress made in carrying out the project". This review is planned for June 2013. 11. The SFD IV Project has four components: (a) the Community and Local Development (CLD) program; (b) the Small- and Micro-Enterprise Development program; (c) the Capacity Buildingprogram; (d) and the LIW program. All four components are making progress toward achievement of development objectives. The LIW program, in particular, has been proposed for 2 scaling up because of the opportunity it presents for immediate impact on the incomes and livelihoods of vulnerable groups. The program has been providing a targeted cash-for-work safety net to bridge the household consumption gap during shocks and seasonal shortfalls, and has directly benefited around 140,000 people through the multi-year workfare assistance. Notably, the direct contracting mechanism used for the LIW program has performed far better than commercial contracting, especially during the crisis period: only 3 percent of this program was stopped, compared to 23 percent of overall SFD program. Labor-intensity has been high, with 60-70 percent of subproject costs being paid as wages, in line with the safety net function of the program. The participating communities have been very much engaged in implementing subprojects as these offered sources of income for communities that had been quickly running out of other options. The program also has built productive assets of communities, through rehabilitation of agricultural land, terraces, watershed management schemes, and feeder roads, helping to improve livelihoods of the rural population. 12. AF offers the best mechanism for supporting the expansion of the SFD's LIW program. The LIW program has established effective and efficient operational procedures with highly satisfactory management and is readily adaptable to focus on youth employment in service delivery as well as small infrastructure works. The use of a repeater or new project would incur unnecessary costs on the part of the Bank and the Recipient and would delay realization of the benefits, given that the on-going project is disbursing ahead of schedule. 13. The SFD has adequate capacity to expand the scale and scope of LIW activities. Funding for LIW amounted to US$45 million' for 2009-2011. The agreed plans for the SFD for 2012- 2015 would scale up the program to US$121 million, about half of which has so far been mobilized. The program has been successfully decentralized to implement through nine branch offices. Since 2009, staff capacity has been built up steadily and the management information system (MIS) and operational manual have been developed. For the community-based education services, the SFD will draw on the successful experience of its Girls Education Program and will use effective procedures and training content already developed and tested. 14. In addition, the LIW team participated in study visits to Ethiopia and India for a south- south learning event on public works (sponsored by the World Bank). These learning experiences provided opportunities to strengthen various aspects of program design, including targeting, payment mechanisms, MIS, and monitoring and evaluation, and to develop ways to make the program more inclusive (bringing in youth and women) and coordinated with other SFD programs (nutrition and education). 15. No changes are anticipated in the project's fiduciary or safeguards arrangements, including the environmental category. Some small adjustments would be made in the results framework, adding some indicators to match the expanded menu of the LIW. The scaled up activities are expected to be completedby December 31, 2016, one year after the current closing dateof the SFD Phase IV Project. This includes financing from other donors. 3 16. Overall, considering the SFD's success in implementing projects over the past 15 years, as well as the fact that, more recently in the current country context, the SFD Phase IV Project has remained on track to meet its development objectives, the option of additional funding to the ongoing project provides the most cost-effective way for both the Bank and the Government to extend activities and maximize the development impact of the project. III. PROPOSED CHANGES 17. The AF will scale up the Labor-Intensive Works (LIW) program (Component 4) with two new subcomponents to: (i) support LIW targeted to unemployed youth; and (ii) introduce cash- for-work opportunities for youth and women in the delivery of social services. The existing LIW component is being implemented successfully and will continue with its original allocation of US$25 million to finance labor-intensive community infrastructure subprojects, providing cash- for-work to participating members of poor households. The two new subcomponents are detailed below: 1) LIW for Youth (US$5 million): The main objective of this subcomponent is to reduce the vulnerability of unemployed youth through youth-targeted labor-intensive works. The subcomponent will finance subprojects that provide income opportunities and work experience to participating youth, while at the same time improving public infrastructure. The program will create approximately 420,000 person-days of employment for unemployed youth in the 18-30 year old age bracket in urban and semi-urban areas. The level of compensation will be set lowto ensure that the program attracts unemployed youth from poor households. Some 7,000 youth are expected to participate with up to 60 days employment each. Subprojectswill be selected on the basis of high labor-intensity and potential impact, primarily targeting semi-urban poverty pockets in towns with high unemployment.In addition to the LIW program's regular menu, subprojects more suitable for youth and urban and semi-urban areas will be added, such as planting trees, paving cobblestone streets, cleaning shorelines, and especially rebuilding damaged public spaces. Management and coordination arrangements for subproject implementation will follow the procedures already tested and used for the LIW program, with implementation through SFD Branch Offices in close coordination with local authorities. Subcomponent 1 LIW for Youth will finance: * subproject costs in the targeted communities for carrying out labor-intensive public works; * the development of annual operational plans; * capacity building of the selected local authorities and communities in participatory planning and management of development activities; * the provision of goods, training, consultancy services and operating costs for management, monitoring and evaluation activities. 4 2) Cash-for-Work for Social Services (US$20 million): The objectives of this subcomponent are: (i) to reduce the vulnerability of unemployed youth and women through providing employment opportunities, and (ii) to improve access to basic social services in poor communities. In coordination with relevant national programs, this subcomponent will finance education and nutrition services at the community level, with a particular focus on promoting demand for these services. (i) Education, literacy and numeracy Approximately 750,000 person days of employment in teaching will be created for up to 3,000 unemployed young women and men who have completed at least secondary education. Successful applicants will receive training and regular supervision in delivering the following services: teachers to fill teacher gaps in regular schools (pupils 6-14 years old); non-formal accelerated programs for children who have not enrolled or have dropped out of school, to help them re-integrate into the formal system; and adult literacy classes,including life skills. The beneficiary communities for these education services will be approximately 30 percent in urban areas and 70 percent in rural areas, selected on the basis of poverty and education indicators. The program expects to provide education and literacy benefits for approximately 26,000 children and 9,000 adults (70 percent women) in targeted communities. In implementing the subprojects, the SFD will use thetested procedures, guidelines, manuals and training content developed since 2004 for its Girls Education Program, taking an integrated community-based approach to addressing key constraints in the targeted communities, and will coordinate closely with the MOE and local government formal, community and adult education systems. (ii)Nutrition Approximately 460,000 person days of employment will be created for women Community Health Volunteers (CHVs) who will be trained and will receive monthly incentives in delivering a package of community-based nutrition services2for children under 5 years old (U5) and pregnant and lactating women. This package includes: (a) enrolment and initial malnutrition screening; (b) quarterly or bi-annual malnutrition screening where MOPHP outreach services are not available; (c) facilitating transport to health facilities for treatment; (d) monthly nutrition education to mothers of U5 children; (e) nutrition education for pregnant women; (f) breastfeeding promotion; and (g) community level nutrition and health education. The services are targeted to Hodeida Governorate, based on its high malnutrition rate and its readiness to provide nutrition interventions through the public health facilities. The program will take a phased approach to covering the whole governorate, and expects to directly benefit approximately 75,000 acutely malnourished children, representing 15 2 See attachment A of the Annex 3 for details. 5 percent of the estimated 493,644 children in the governorate, as well as providing nutrition education to 20,000 pregnant and lactating women. SFD will be responsible for managing and implementing the demand side community- level interventions, in close coordination with MOPHP which is responsible for the operation and equipment of health facilities and outreach teams. For implementation of the nutrition intervention, MOPHP will be supported by the Bank's Health and Population Project (P094755), which will supply nutrition kits, and the on-going treatment and supplementary feeding programs of UNICEF and WFP. Subcomponent 2 Cash-for-Work for Social Services will finance: * subproject costs in the targeted communities to carry out of cash-for-work for social services; * information, public awareness and recruitment campaigns; * testing of applicants and training of the youth and women recruited; * equipment and materials (textbooks and learning materials, supplies); * education and health supervisors (consultants); * the development of annual operational plans; * capacity building of select local authorities and communities in participatory planning and management of development activities; * management and monitoring and evaluation activities through the provision of goods, training, consultancy services and operating costs. 18. SFD Phase IV's institutional and implementation arrangements and safeguard and fiduciary procedures will apply for the proposed scale up activities. 19. Table 1 below summarizes the proposed changes to the project financing as a result of the AF. Table 1: Project Cost Summary by Component (US$ million) Activities Original Project SFD IV Additional Financing Local Foreign Total Local Foreign Total Component 1: Community and Local 25 0 25 Development Component 2: Small and Micro 4 1 5 Enterprises Development Component 3: Capacity Building 3 2 5 Component 4: Labor-Intensive 25 0 25 Works AF subcomponent 1. Labor-Intensive 5 5 Works for Youth AF subcomponent 2 Cash-for-Work 19.7 0.3 20 for Social Services Total Cost 3 57 3 60 24.7 0.3 25 3 Project costs include all taxes. 6 20. Project Outcome indicators for AF. Intermediate results indicators will be added for the AF under the LIW Program to report on the core objectives of the two new subcomponents: providing employment opportunities for youth and women and improving access of the poor to basic social services. No additional PDO indicators will be added. The outcomes of the impact of education, literacy and nutrition services provided through the Cash-for-Work for Social Services subcomponent will be evaluated from the sectoral perspective through SFD's overall program impact evaluation or sector program evaluation. However, the results of these evaluations may not be available by the time of project closing. 21. The AF will be monitored with a view to learn from these new interventions to make SFD's program more effective and guide improvement of ongoing programs and future interventions, as has been the case for the LIW since 2009. Table 2: Additional Financing New Indicators CURRENT Indicators REVISION introduced through AF Component Four: Labor-Intensive Works Program *Number of people/households directly benefiting from No change multi-year workfare assistance (target: 300,000) *Number of working days employment created under No change workfare assistance program (target: 24,000,000) *Indirect beneficiaries: Number of people benefiting from *Increase target by 10,000 community livelihood assets *Land: Total area of agricultural rehabilitated land and No change terraces *% of resources transferred to beneficiary households on a No change timely basis (target: 80%) *Average length of payment delay (Number of No change days)(target: 2-3 days) *Add: number of person days of employment (disaggregated by gender) created through: (i) LIW for youth (ii) Cash-for-Work for education and literacy (iii) Cash-for-Work for nutrition *Add: number of beneficiaries of education and literacy training services. *Add: number of children receiving nutrition services. *Add: number of pregnant and lactating women receiving nutrition services. 7 IV. APPRAISAL SUMMARY 22. Technical Appraisal. Technical standards and specifications for different types of subprojects have been developed under previous phases of SFD implementation and utilized under SFD IV. The AF subprojects are consistent with sectoral norms where such norms exist.For the on-going LIW program, the procedures and standards that have been developed are found to be effective and will be used for the LIW for Youth subcomponent. The Cash-for-Work for Services - combining workfare, training and services, or "public works plus" - is more innovative but also builds on SFD's established norms and procedures. Relevant lessons that have been incorporated in the design of the Cash-for-Work for Social Services subcomponent are as follows: (i) ensure that the necessary technical capacity is in place to implement the schemes; (ii) have strong coordination and integration with sector programs; (iii) include financial and logistical resources for the provision of training (depending on line ministries only for the curriculum when relevant); and (iv) incorporate life skills in the training. 23. The nutrition services to be delivered under the Cash-for-Work for Social Services follow a standard package of community-based nutrition interventions agreed with MOPHP, including screening, counseling and referral services, following MOPHP protocols and guidelines. These services are designed to meet the community-level demand side of the Integrated Nutrition Intervention (INI). Selection of Community Health Volunteers will follow MOPHP criteria. Training of the volunteers will be managed by SFD using MOPHP modules. The supply side of nutrition services will be the responsibility of the MOPHP through its district health facilities, in coordination with the on-going programs of UNICEF and WFP. The INI has been designed in consultation with all the agencies concerned and will also be supported directly through two other Bank-financed/administered projects: the on-going Health and Population Project (P094755) (H6400) supporting the role of the MOPHP; and the Emergency Targeted Nutrition Intervention (financed by the Japan Social Development Fund) through which SFD will pilot the community-based nutrition intervention with the addition of a conditional cash transfer mechanism. Targeting of the INI pilot as a whole has been based on recent data from the SMART4 survey. The impact of the INI, with and without conditional cash transfers, will be evaluated to inform decisions on subsequent scaling up of the model to other governorates. The respective roles and responsibilities of SFD and the MOPHP in implementing the INI have been clarified and agreed and will be confirmed in a Memorandum of Understanding. 24. The community-level education interventions under the Cash-for-Work for Social Services have been designed in close coordination with the MOE. They will draw on SFD's own experience in the sector, in particular its successful Rural Girls' Education program, taking an integrated approach at the community level to identify and address the most pressing constraints to school enrolment and literacy in the community concerned. SFD will hire and train teachers and facilitators to provide the following interventions in poor communities with weak education indicators: filling teacher gaps in formal schools where needed; accelerated programs in multi- grade community classes for out-of-school children; adult literacy classes; community awareness campaigns; education of influential community leaders; training of teachers and other school 4UNICEF's Standardized Monitoring and Assessment of Relief and Transitions Survey 8 staff; strengthening and training of parents' and mothers' councils. Some life skills training will be included in the community classes. Appropriate procedures, methods, manuals, guidelines and training content are already in place, having been developed and refined over SFD's several years of experience in the sector. Coordination arrangements at central and local levels between the SFD activities and the Ministry of Education have been defined and agreed and will be confirmed in a Memorandum of Understanding. 25. Institutional and Implementation Arrangements. All arrangements agreed upon for SFD Phase IV remain unchanged for the AF. The project will be implemented by the SFD. The SFD is an autonomous organization under the Prime Minister's Office. Its Board of Directors has government representation, NGO representation, private sector representation, and financial sector representation. The Board reviews policy issues and approves important documents, including annual plans, budgets, and amendments to the Operational Manual. The executive body of the SFD is headed by a Managing Director who has full authority to manage the operations, including all personnel and operational matters. Besides the SFD's office in Sana'a, there are nine regional branch offices country-wide. 26. Over the last 15 years, capacity has been built substantially to identify, prepare, and supervise the implementation of development projects. The SFD now has the capacity to commit subprojects valued at around US$20 million every month and the capacity to disburse approximately the same amount. Main functions have been gradually decentralized, and the regional offices are now making a large number of the operational decisions. The final approval of subprojects continues to be done at Sana'a level by a subproject committee to ensure quality of the interventions and compliance with policies and standards, and to avoid the political pressures on regional offices. 27. The SFD has a dynamic group of staff in Sana'a as well as in the regional offices. It has developed its organizational structure and subprojects cycle very professionally during the first threephases. It has a state-of-the-art MIS system that was designed in-house and that captures all aspects of the subproject cycle from the submission of the request to closure and evaluation of the subproject. 28. Based on the experience of the first threephases, as well as the ongoing fourth phase, the contracting arrangement will be as follows: IDA signs a Financing Agreement with the Republic of Yemen and a Project Agreement with the SFD. The Republic of Yemen, represented by the Ministry of Planning and International Cooperation (MOPIC), signs a Subsidiary Grant Agreement with the SFD. A designated account is opened in a commercial bank in the name of the SFD. The MOPIC designates the Managing Director of the SFD as the authorized signatory for the grant funds. The SFD gets an authorized allocation in the designated account on a quarterly basis (based on interim unaudited financial reports (IFRs). 29. Economic Analysis. There is strong economic rationale for investing in the proposed AF, as poverty and vulnerability continue to be the main challenges facing Yemen and its people. The AF aims to support some of the most vulnerable segments of the Yemeni population, such as unemployed youth and women, not only to help meet their basic needs, but also to contribute towards stability in the country. The cash transfers, through cash-for-work initiatives, the 9 community assets that would be built, and the experience the direct beneficiaries and the communities will gain in the process, are expected to enhance the living conditions of the poor and vulnerable. The proposed grant would contribute towards meeting the consumption needs of the beneficiaries and help reduce current poverty. The cash-for-work program would also benefit targeted poor communities through (i) improved social and economic infrastructure; (ii) improvements in school attendance and adult literacy; and (iii) increased efficacy of nutrition interventions. Moreover, the proposed AF contributes to Yemen's broader poverty reduction efforts by ensuring close interaction with and working alongside health, education, and other social services aimed at reducing poverty and managing risk. Therefore, there are several economic rationales for the AF, including (i) redistribution of income to the poorest and most vulnerable, with an immediate impact on poverty and inequality; (ii) enabling households to make better investments in the human capital of their children and in the livelihoods of the earners; and (iii) helping households facing hard times to manage risk and avoid irreversible losses, allowing them to nourish and school their children. 30. There is ample international evidence showing that cash-for-work programs increase food, health, education and investment spending by households. In Bangladesh, a cash-for-work program found that children in beneficiary households had 0.12 mm and 0.17kg increases in height and weight respectively when compared to families not receiving the cash transfer payments (Mascie-Taylor, CGN. Et al., 2010). Multiple evaluations of India's public works and cash transfer program show that most money is spent to improve nutrition among food insecure households (S.Ravi 2012) and there has been a positive impact on child nutritional outcomes. In a meta-level analysis, the World Bank's Independent Evaluation Group found that 17 out of 20 independent evaluations conducted of in-kind or cash transfer safety net programs showed either a rise in food quantity or improvements in quality towards larger consumption of dairy, meat, fruits and vegetables and significant decrease in consumption of unhealthy substances such as tobacco (World Bank, 2011).5 Similarly, cash-for-work programs are found to increase education spending, leading to improved enrollment and attendance. An evaluation of the Philippines' CCT Pantawid Pamilya Barangays shows a 38 percent increase in education spending per capita among beneficiaries, signaling a significant shift in spending pattern as a result of the program. Brazil's Bolsa Familia increased school attendance of 6-17 year-olds by 4 percent; rates of grade progression by 6.0 percentage points; and has large effects on keeping children in school after age 14. 31. SFD's existing implementation arrangements support cost effective outreach to the poorest and most deserving households and communities to maximize the poverty impact. The poverty targeting performance of SFD has been strong, using a combination of geographic targeting based on national data, qualitative assessment tools and participative approaches to target communities within the broad geographical allocation framework, and programmatic targeting for the allocation of additional resources to address problems affecting specific communities and groups. Earlier evaluations have shown that the efficiency and cost Types of interventions in the IEG study are diverse and include 6 CCT programs, 3 school-feeding, 2 workfare, 2 food aid, 2 pensions and 2 UCT programs. There are several hypotheses for decline in tobacco and alcohol use cash transfer programs, one hypothesis attributes this to women's improved bargaining power in the household as they are the prime beneficiaries of payments. 10 effectiveness of the SFD's LIW programs have been high. Its operational costs have been kept low, at 4.7 percent including staff salaries, while the cost of inputs has also been minimized, enabling the LIW program to transfer more than 70 percent of allocated funds to beneficiaries as wages. 32. Financial Management. The existing financial management (FM) systems and disbursement procedures used under the ongoing SFD operation are satisfactory and will be followed under the AF. The SFD continues to maintain satisfactory FM arrangements using their automated accounting system implemented by qualified staff in the FM department with oversight provided by the internal audit department. The SFD implements adequate internal control procedures following their operations and FM manuals. To date, Interim Financial Reports (IFRs) that have been submitted by SFD to the World Bank have beenfound acceptable. In addition, acceptable audit reports have been submitted on time with unqualified audit opinions and there are no overdue audit reports. 33. Complaints Handling Mechanism (CHM). The SFD has developed a CHM through which SFD manages, monitors, and responds to complaints within its activities as part of an ongoing process to improve its accountability. Complaints are received by branch managers/unit heads, unit heads, project officers, and consultants, directly, by fax and mail, or through complaint boxes in some SFD programs. SFD gives the priority to investigate complaints of a financial nature and classify them as sensitive complaints. Complaints which are not resolved in the branch offices or become a dispute are usually dealt with at the headquarters (HQ) level with the full support of the Technical Unit and the SFD's attorney. Depending on the subject of the complaint, an investigation takes place at the office level and field verification as needed. Response is made accordingly and complainants get informed. Complaints related to procurement and contractual issues are dealt with as per the standard bid documents. Finally, SFD staff exchange experience related to complaints and disputes handling through their meetings and workshops, and through direct contact with the technical unit which is in charge of dealing with complaints and disputes. 34. Disbursement and Flow of Funds.The AF funds will be channeled through the SFD and deposited into a separate segregated USD Designated Account (DA) in a commercial bank acceptable to the World Bank, to be opened and maintained by the SFD and under conditions acceptable to the World Bank. Advances based disbursement will be the main disbursement method, along with Reimbursement, Direct Payment and Special Commitments. Requests for payments from the AF funds will be initiated through the use of the Bank's Withdrawal Applications (WAs) supported by IFRs and Form of payments against contracts subject to the World Bank's prior review, for two quarters as provided in the IFRs. Disbursement to the beneficiaries from the SFD's segregated DA will follow the SFD's OM and the World Bank Guidelines. 11 Table 3: Original and Revised Grant Allocations Amount of the Original Amount of the Grant Allocated Additional Grant Percentage of (expressed in SDR) Allocated (expressed Expenditures to be Category in SDR) Financed (inclusive of Taxes) Goods, works, non-consulting 38,700,000 16,300,000 100% services, consultants' services, Sub-Grants, wages of social services providers under Part D.4 of the Project, Training and Incremental Operating Costs for the Project SUBTOTAL AMOUNT 38,700,000 16,300,000 TOTAL AMOUNT 55,000,000 35. Procurement. Procurement for the proposed additional financing grant will be carried out in accordance with the World Bank's "Guidelines: Procurement of Goods, Works and Non- consulting Services under IBRD Loans and IDA Creditsand Grants by World Bank Borrowers" dated January 2011; and "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. The SFD's procurement management capacity has benefited from the leadership provided by management to ensure that procurement procedures set out in the OM of the SFD are complied with satisfactorily. The OM provides detailed responsibilities of the Procurement Unit in the center and its oversight of the activities of Procurement Specialists posted to Branch Offices at the Governorate level. Under SFD IV, there has been an increased focus on strengthening the capacity of Branch Offices to administer procurement activities in a more effective and transparent way as part of the effort to enhance decentralized governance and project management. 36. Procurement activities for the LIW Program are carried out jointly by the Sana'a based Procurement Unit of the SFD and the newly established LIW Program whose clear mandate is to enable the SFD Branches at the Governorate level to design, appraise and implement "Workfare" programs. 37. Social. Poverty targeting. An impact evaluation conducted in 2009 showed SFD targeting was strongly pro-poor: 30 percent of SFD resources go to the extreme poor, 54 percent to both extreme and moderate poor, and 79 percent to all poor households. In keeping with the SFD's existing LIW program, the AF will be targeted to the poor. Compensation levels will be set low in the AF cash-for-work activities to ensure that these opportunities attract youth and women from poor households. The benefits of the cash-for-work activities - of improved community infrastructure, and education and nutrition services - will be targeted to poor communities, and to out-of-school children and malnourished children within these communities. 38. Youth inclusion. High levels of youth unemployment in Yemen have been a source of hardship and social instability in the country as well as an economic loss. The problem has 12 grown as a result of the recent crisis which has further reduced the economic opportunities for young people, including those with high levels of education. By targeting cash-for-work to unemployed youth, the AF will provide young people with income, work experience, and the opportunity to contribute to development of their communities, thus supporting social stability as well as the welfare of the participants. 39. Gender. In the on-going LIW program, the decision as to which member of the household will participate in the cash-for-work is made by the household and this has resulted in approximately 14 percent female participants. Considering the high priority of addressing the gender gap in Yemen (which has come in last in the2011 Global Gender Gap Index for the past six consecutive years), the AF is specifically designed to expand LIW opportunities for women. It is expected that a substantial share of qualified women will be attracted to the cash-for-work for education services, while the role of Community Health Volunteer is open only to women. Community-based non-formal education services will be geared in particular to the needs of girls and women. 40. At-risk children. The education and nutrition services to be provided through the extended cash-for-work program are specifically targeted to the most deprived children: those of primary school age who are not enrolled in school, and U5 children who are acutely malnourished. Through participatory approaches at the community level, the program will seek to promote the demand of poor households for schooling and nutrition services. 41. Environmental Safeguards. The AF includes scaling up of theLlWprogram of the SFD Phase IV Project, and will thus finance types of subprojects similar to those in the original project. The LIW includes the rehabilitation of community assets relating to terrace rehabilitation and soil protection, maintenance and improvement of local feeder roads, street paving and other types of small civil works/labor-intensive works, based on the demand and priority needs of each community. In addition, subprojects that are more suitable for youth and urban and semi-urban areas will be included, such as planting trees, paving streets, cleaning shorelines, and rebuilding damaged public spaces. 42. The project will remain classified as environmental category B according to the World Bank's Operation Policy on Environmental Assessment (OP 4.01). The Environmental Management Plan (EMP) dated February 2010 that was updated by SFD during the preparation of SFD IV is still applicable. Furthermore, SFD periodically updates the EMP as needed to reflect additions and/or changes in its overall program design with IDA and other donors. Since no new type of works will be introduced as part of this AF, the current EMP is still applicable to the AF. 43. SFD has developed thorough procedures for screening of subprojects that it has successfully used during the previous phases. As a result of screening, any category A type subprojects (including cultural heritage) will be excluded from IDA funding. Furthermore, subprojects that could potentially involve acquisition of land or resettlement will be excluded from all SFD (IDA and non-IDA) financing. 13 44. SFD has successfully implemented previous projects and has the proven capacity to implement and comply with the EMP and Bank safeguard policies. SFD will continue to prepare annual environmental audits of its program, including audits of subprojects funded by IDA and will also include updates on compliance with the EMP in its periodic progress reports that are submitted to the Bank. 45. Risks and Mitigation Measures.The overall risk rating for project implementation is "Moderate". The main risks for the project pertain to the weak social accountability and governance environment in Yemen and the implementing agency's lack of adequate capacity to manage the Additional Financing. The participatory techniques and the governance mechanisms incorporated in the SFD's operational manual will ensure transparency of processes and reduce opportunities for elite capture. A complaint handling mechanism and a communication strategy are in place and transparent participatory and social accountability arrangements will be utilized.In addition, SFD has demonstrated solid performance in the past, especially during the political and economic crisis, in adapting to the new environment. Staff capacity has been built up steadily, and solid financial management and M&E systems supported by a state-of-the-art MIS are in place. 14 ANNEX 1: RESULTS FRAMEWORK AND MONITORING INDICATORS Revisions to the Results Framework Comments/ SRationale for Change Project Development Objective Curn'zt (PAD) Proposed ________ To improve access to basic services, enhance economic No change. opportunities and reduce the vulnerability of the poor Project Outcome Indicators Currcia (PAD) Proposed change* * Participation: 70% of households which agree with the No change. selection of the community demand driven project as a priority of the community *Poverty Targeting:50% of CLD resources go to the No change. lowest three income deciles of households *Education usage: net enrolment rate in basic education No change. in rural CLD beneficiary communities 60% for girls and 75% for boys *Water usage: : Percentage of households in rural CLD No change. areas where time to collect water is 30 minutes or less *Rural roads: time taken to reach nearest market / town No change. 90 minutes *Microfinance access: 100,000 active clients accessing No change. microfinance services supported by SFD directly or indirectly (sex disaggregated) (60% women) *Reduced vulnerability: at least 70% of LIW direct No change. beneficiary households are able to meet their basic cereals consumption. Intermediate Results Indicators Currnt (P,AD) Proed cange* *Total number of direct beneficiaries of SFD funded No change. projects (sex disaggregated) *Total number of indirect beneficiaries of SFD funded No change. projects (sex disaggregated) No change. *Total number of person-days employment created Component 1. Community and Local Development No change. Program *Education access: Number of classrooms constructed or rehabilitated 15 Revisions to the Results Framework Comments/ Rationale for Change *Education usage: Number of pupils enrolled in SFD supported basic schools, disaggregated by: - Boys - Girls - children with special needs *Education quality: Number of teachers trained (sex disaggregated) *Number of educational professionals trained (sex disaggregated) *Health access: Number of health personnel trained (sex disaggregated) *Number of health facilities constructed/renovated and/or equipped * Water access: Number of households using improved water sources *Volume of improved drinking water stored (in3) *Volume of unimproved drinking water stored (in3) *Sanitation access: Number of households using improved sanitation facilities *Number of Open Defecation Free project communities *Rural roads access: Total length of roads improved / built *Cultural heritage: Number of sites and monuments documented / saved or conserved # of Master builders trained \gained skills # of professionals trained & gained skills (Architects\ Archaeologist\ Engineers) #of master builders trained and gains skills through conservation Component Two: Small and Micro Enterprises No change. Development Program Outreach: * Number of active borrowers - Percentage active female borrowers - Percentage active rural borrowers Loan Portfolio Quality: *Portfolio at risk PAR > 30 days (of total Loan Portfolio outstanding) Financial sustainability: * Percentage of active borrowers served by microfinance providers that are financially sustainable [i.e. number of MFIs that are financially sustainable] Enabling Environment: * Number of good practice Greenfield initiatives that have entered the market * Legislation/regulation submitted to the government regarding credit bureau and code of conduct developed 16 Revisions to the Results Framework Comments/ Rationale for Change regarding consumer protection *Business Development Services: Number of small enterprise sub-sectors that have diversified product/market and enhanced value added Component Three: Capacity Building Program No change. * Number of district authorities which are certified and implementing development projects funded by SFD *% of village councils in pilot areas which are functioning effectively: - meeting regularly - participation (sex disaggregated) - initiate self-help initiatives * Number of people trained in M&E, participatory methods, planning or other strategic information management disaggregated by - young volunteers (sex disaggregated) - government organizations - NGOs and cooperatives - beneficiary communities - local authorities - private sector / individuals Component Four: Labor-IntensiveWorks Program *Number of people/households directly benefiting from No change multi-year workfare assistance *Number of working days employment created under *Increase target. To monitor whether the AF workfare assistance program inputs result in providing employment opportunities to *Indirect beneficiaries: Number of people benefiting from *Increase target by unemployed youth and community livelihood assets 10,000. women. *Land: Total area of agricultural rehabilitated landand No change terraces *% of resources transferred to beneficiary households on No change a timely basis *Average length of payment delay (Number of days) No change (target: 2-3 days) *Add: number of To monitor the participation of person days of youth and women, and employment whether the objectives of the (disaggregated by AF are being achieved. gender) created through: (i) LIW for youth (ii) Cash-for-Work for education and 17 Revisions to the Results Framework Comments/ Rationale for Change literacy (iii) Cash-for-Work for nutrition *Add: number of To monitor subcomponent beneficiaries of objectives. education and literacy training services. *Add: number of To monitor subcomponent children receiving objectives. nutrition services. *Add: number of To monitor subcomponent pregnant and objectives. lactating women receiving nutrition services. 18 Arrangements for Results Monitoring UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start PDO Indicators * Participation: % 70% (to 70% (to Every 3-4 IE SFD (All) of households who 80%) 80%) years agree with the across across through selection of the different different IE community sector sectors demand driven project as a priority of the community *Poverty 40% 50%6 Targeting: % of CLD resources go to the lowest three income deciles of households *Education usage: 45% for 60% for net enrolment rate girls girls and in basic education 70% for 75% for in rural CLD boys boys beneficiary communities *Water usage: % 15% 58% of households in rural CLD areas where time to collect water is 30 1 1 _1 __1_11_1__1_11_1_ 6This target value reflects a conservative estimate by SFD given changes in methodology used to collect data and measure the achievement of this target. 19 UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start minutes or less *Rural roads: time 120 90 taken to reach minutes minutes nearest market / or more town *Microfinance 32,000 76,890 100,000 Every 6 access: active (64% (60% months clients accessing women) women) through microfinance progress services supported report by SFD directly or indirectly (sex disaggregated) *Reduced 40%' 70% Every 3-4 vulnerability: % years of LIW direct through beneficiary IE households are able to meet their basic cereals consumption Results Indicators for All Components *Total number of [] No. 0 Im 0.6 1.6 2.8 4.2 6.0 Every 6 MIS (ALL) SFD (ALL) direct beneficiaries months 7Baseline values in LIW areas are not directly available for this indicator. The baseline value provided here is based on SFD's M&E and Programming Units' estimates for communities covered by the Rainfed Agriculture and Livestock Project, adjusted downwards to reflect the focus of the LIW on the poorest communities. 20 UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start of SFD funded (ALL) projects (sex El 1.5m 0.7 1.9 3.3 5 7 disaggregated) *Total number of E No. 0 0.7m 0.22 0.52 0.92 1.52 2.2 indirect beneficiaries 0.8m 0.3 0.7 1.3 2.1 3.2 of SFD funded projects (sex disaggregated) *Total number of El No. 0 7.2m 6 12 18 24 30 person-days employment created Component 1: Community and Local Development Program * Number of district E No. 0 0 0 0 5 20 40 Every 6 MIS (ALL) SFD (ALL) authorities which are months certified and (ALL) implementing development projects funded by SFD *Education access: E No. 0 2566 200 2,400 4,600 6,800 9,000 Number of classrooms constructed or rehabilitated *Education usage: E No. 0 134038 Number of pupils 4,480 53,760 103,040 152,320 201,600 enrolled in SFD Boys: 77,401 3,520 42,240 80,960 119,680 158,400 supported basic Girls: 500 1,625 2,750 3,875 5,000 schools, 55,476 disaggregated by: Children - Boys with special - Girls needs: - children with special needs 1161 *Education access: 0 No. 0 135 (Male) 20 40 60 80 100 Number of teachers trained (sex 562(Female) 20 40 60 80 100 21 UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start disaggregated) *Number of El No. 0 751 156 312 468 624 782 educational 120 240 360 480 600 professionals trained Males: 438 (sex disaggregated) Females: 313 *Health access: No. 0 1716 200 550 900 1250 1450 Number of health 200 550 900 1250 1450 personnel trained Males: 564 (sex disaggregated) Females: 1152 *Number of health No. 0 71 200 400 600 750 800 facilities constructed renovated and/or equipped * Water access: E] No. 0 30,263 9,600 19,200 28,800 38,400 48,000 Number of households provided with improved drinking water sources volume of improved E] M3 0 769,464 220,000 440,000 660,000 880,000 1,100,000 drinking water stored (m 3) volume of E M3 0 1,068,879 52,000 104,000 156,000 208,000 260,000 unimproved water stored (m 3) *Sanitation access: E No. 0 5,360 5,200 10,400 15,600 20,800 26,000 Number of households using improved sanitation facilities *Number of Open E No. 0 50 0 50 110 170 240 Defecation Free project communities 22 UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start *Rural roads access: 0 KM 0 303 365 730 1,095 1,460 1,825 Total length of roads improved / built * Cultural Heritage: E No 116 Master builders 0 70 170 270 390 510 trained \gained skills Professionals trained E No. 55 & gained skills (Architects\ 0 30 65 105 145 190 Archaeologist\ Engineers) # of sites and 2 No. 21 monuments 0 10 20 30 40 50 documented saved /conserved Component 2: Small & Microenterprise Development Program Outreach: E No. Every 6 MIS (ALL) SFD (ALL) Number of active months borrowers 42,000 76,890 57,000 67,000 78,000 88,000 100,000 (ALL) - Percentage active E % female borrowers 77% 64% 60% 60% 60% 60% 60% - Percentage active El % 15% 15% 15% 20% 20% 20% rural borrowers 7% Av. Outstanding I % balance/GDP per capita 20% <100 < 100% < 100% < 125 % < 125 % < 150% Loan Portfolio Quality: *Loan portfolio % <5% quality: percentage portfolio at risk (PAR) over 30 days (of total portfolio 2% <5% <5% <5% <5% <5% 8Abyan program was excluded as it was badly affected during 2011 political crisis, and the program is likely to be merged with another program. 23 UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start outstanding) Financial sustainability: *Financial El % sustainability: percentage of active borrowers served by microfinance providers that are financially sustainable 11% 14% 25% 35% 50% 60% 70% Enabling Environment: *Enabling 0 Text environment: credit bureau legislation/regulation submitted to the government No 1st Draft Final draft legislation prepared submitted E Text 1tdraft sent to all MFIs+ YMN provide consumer *Code of Conduct protection regarding consumer guidelines to protection adopted MFIs. A by Yemen workshop Microfinance No code was 1st Draft Final draft Network of conduct conducted prepared agreed E] Text a full proposal document for establishment 1 1 *Number of good of a new additional additional practice Greenfield One green field MFIs MFIs initiatives that have Greenfield bank in estab- estab- entered the market (Al Amal) Yemen lished lished 24 UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start completed *Business El No. 6 3 7 12 17 21 Development Services: Number of subsectors that have diversified and enhanced added value *% SMEPS E % 100 100 90 80 70 60 60 operating cost covered by SFD Component 3: Capacity Building Program # of village councils E No. 0 1294 0 500 900 1,200 1,500 Every 6 MIS (ALL) SFD (ALL) in pilot areas which months are functioning (ALL) effectively: - meeting regularly - participation (sex disaggregated) - initiate self-help initiatives * Number of people E No. trained in M&E, participatory methods, planning or other strategic information management disaggregated by - young volunteers E No. 600 500 1,000 1,500 2,000 2,500 Male 350 334 300 600 900 1,200 1,500 Female 299 - government E No. 20 5 15 25 35 40 organizations - NGOs and E No. 120 38 10 30 50 70 90 cooperatives - Beneficiaries [ No. 3000 933 500 1000 1500 2000 2500 committees 25 UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start - local authorities E No. 40 10 18 36 54 72 90 - private sector/ El No. 700 2,077 200 400 600 800 1000 individuals Component 4: Labor-Intensive Works Program9 *Number of people E No. 84,000 138,709 100,000 200,000 300,000 300,000 300,000 Every 6 SFD (ALL) directly benefiting months MIS (ALL) from multi-year (ALL) workfare assistance *Number of working D No. 750,000 2,039,286 2,000,000 6,000,000 12,000,000 18,000,000 24,000,000 days employment created under workfare assistance program *Indirect 166,450 250,000 260,000 beneficiaries: Number of people benefiting from community livelihood assets *Land: Total area of E M2 17 hectares 708 415 1,245 2490 3735 4980 agricultural rehabilitated land and terraces *% of resources E % 70% 75% 70% 75% 75% 80% 80% transferred to beneficiary households on a timely bases *average length of E % 12 days 6-8 7-10 5-7 5-3 2-3 2-3 payment delay (Number of days) *Add: number of No. 0 person days of 9 The baseline values for LIW are drawn from the current emergency version of the program and therefore are not directly comparable. In particular, the new SFD-IV LIW will provide multi-annual assistance and an integrated planning approach including community-based watershed management where appropriate. 26 UOM Baseline Progress to YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Q Original Date 2011 2012 2013 2014 2015 2016 and Methodology for Data Project Reports Collection Start employment created through (disaggregated by gender): (i) LIW for youth 50,000 200,000 300,000 420,000 (ii) Cash-for-Work 100,000 350,000 500,000 750,000 for education and literacy (iii) Cash-for-Work 50,000 200,000 350,000 460,000 for nutrition *Add: number of No. 0 10,000 20,000 30,000 35,000 beneficiaries of education and literacy training services. *Add: number of No. 0 20,000 40,000 50,000 75,000 children receiving nutrition services. *Add: number of No. 0 5,000 10,000 15,000 20,000 pregnant and lactating women receiving nutrition services. 27 ANNEX 2. OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) 1. Project Stakeholder Risks Rating Moderate Description : Risk Management: SFD will continue to use its established mechanism to ensure targeting the poor SFD is unable to reach the target direct and indirect and vulnerable. beneficiaries, i.e., unemployed youth and women (cash-for- work), and malnourished children and pregnant and lactating Stage: Preparation Due Date: Ongoing Status:Ongoing women (nutrition intervention). and Implementation 2. Implementing Agency Risks (including fiduciary) 2.1 Capacity Rating: Low Description: The implementing agency may not have adequate Risk Management: SFD has been implementing projects since 1997 and has sufficient staff to capacity to manage the AF, including fiduciary. implement AF activities including procurement and FM issues. The LIW program has been successfully decentralized to implement through nine branch offices. Since 2009, staff capacity has been built up steadily and the MIS and manual have been developed. In addition, the LIW team participated in study visits to Ethiopia and India and south-south learning events on safety nets and public works (sponsored by the World Bank). Resp: SFD Stage: Preparation Due Date: Status:Completed 2.2 Governance Rating: Substantial Description : Some communities and households may get Risk Management: Household Budget Survey is under preparation which will provide data for double benefits through SFD and other SSN programs while updating poverty mapping. SFD, SWF and PWP have arrangements for data exchanges. SWF has needy communities and households are excluded. developed a database of 1.62 million HHs providinga good database of the poor, which is being utilized by SFD. Resp: SSN programs Stage: Implementation Due Date: Ongoing Status: Ongoing Description: Weak social accountability and Risk Management: The participatory techniques and the governance mechanisms incorporated in the governanceenvironment in Yemen may lead to elite capture and SFD's OM will ensure transparency of processes and reduce opportunities for elite capture. Complaint affect service quality. handling mechanism and communication strategy are in place and transparent participatory and social accountability arrangements will be utilized. In addition, SFD has been partnering with local communities and local authorities to empower them in the past through its nine branch offices. The program empowers the local authorities to prepare self- 28 initiated development plans with community participation in line with the available local resources and based on the priorities of local communities. As of September 2012, 1,294 village councils had been formed with equal numbers of male and female members being trained. And 38 NGOs and 933 CBOs have been supported through ongoing phase to strengthen their capacity. Resp: SFD SaePrpato [Due Date :Ongoing Status: Ongoing --Tand Implementation 3. Project Risks 3.0. Design Rating: Low Description : Risk Management: SFD will not be able to identify the needs of the communities SFD will utilize its network of branch offices, well-established relations with local civil society for social services. organizations and local authorities to ensure that financed social services address local needs. SFD's education or health interventions are negatively impacted For education, the necessary coordination mechanisms with MOE are already in place and functioning by failure of coordinated actions by line ministries. under the SFD Rural Girls Education Program. For the nutrition intervention, MOPHP will be supported by the new Bank-financed health project and on-going programs of UNICEF and WFP. In both cases, the respective roles and responsibilities have been defined and agreed and will be confirmed in an MOU signed by SFD and the responsible ministry. Resp: SFD Stage: Implementation Due Date: Ongoing Status:Ongoing 3.1. Social & Environmental Rating: Moderate Description: Subprojects cause adverse environmental and Risk Management: An EMP has been prepared that will guide implementation of subprojects. social impacts. The project is rated as environmental Category B for rehabilitating small community assets, and the safeguard policy on Environmental Assessment, OP 4.01 will be triggered. No other safeguard policies are envisaged to be triggered. This is also consistent with the ongoing SFD IV project. Additionally, the community subprojects will focus on rehabilitating existing community assets and therefore no land acquisition/resettlement will be required. Stage: Preparation Resp: SFD ad Impeation Due Date : Ongoing Status:Ongoing and Implementation 3.2. Program & Donor Rating: Low Description: SFD's program impacted by weak donor Risk Management: Donor coordination is good at present and maintained through regular coordination communication, joint missions, and harmonized monitoring and reporting requirements. Stage: Preparation Resp: WB ad Impeation Due Date :Ongoing Status: Ongoing Sand Implementation 3.3. Delivery Monitoring & Sustainability Rating: Moderate Description: Inadequate information on results. Risk Management: A solid monitoring system is in place and the project's impact will be evaluated at the end of the project. 29 Sustainability of education or health benefits jeopardized by Strong communication and coordination exists and will be maintained between SFD and the relevant inadequate sector policies and/or inability to maintain adequate ministries. Coordination mechanisms have been defined and will be confirmed in signed MOUs. The staffing and other inputs to facilities. Bank has on-going technical dialogue and is financing new projects in both sectors. Stage: Preparation Resp: SFD ad Ppeation Due Date :Ongoing Status: Ongoing and Implementation 3.4. Other Rating: Substantial Description: Substitution effects between food and Qat Risk Management: The Project AF will continue to monitor substitution effects through the household consumption will occur under workfare program. surveys. The Government has embarked on a public information campaign to raise public awareness about this issue. Participation of women is expected as they are more likely to use the money on food for the family. Resp: SFD Stage: Implementation Due Date: Ongoing Status:Ongoing 4. Overall Implementation Risk Rating: Moderate 30 ANNEX 3 DETAILED DESCRIPTION OF MODIFIED OR NEW PROJECT 1. The proposed scaling up fully supports the SFD IV's development objectives which are to: (i) improve access to basic services; (ii) enhance economic opportunities; and (iii) reduce the vulnerability of the poor. These objectives therefore remain the same. The AF will scale up the Component 4 Labor-Intensive Works (LIW) program with two new subcomponents to: (i) support LIW targeted to unemployed youth; and (ii) introduce cash for work opportunities for youth and women in the delivery of social services. The existing LIW component is being implemented successfully and will continue with its original allocation of US$25 million to finance labor-intensive community infrastructure subprojects, providing cash for work to participating members of poor households. The two new subcomponents are detailed below: 1) LIW for Youth (US$5 million): The main objective of this subcomponent is to reduce the vulnerability of unemployed youth through youth-targeted labor-intensive works. The subcomponent will finance labor-intensive subprojects that provide income opportunities and work experience to participating youth, while at the same time improving public infrastructure. The program will create approximately 420,000 person-days of employment for unemployed youth in the 18-30 year old age bracket in urban and semi-urban areas. The level of compensation will be set low, below the market rate, to ensure that the program attracts unemployed youth from poor households. Some 7,000 youth are expected to participate with a maximum of 60 days employment each. Subprojectswill be selected on the basis of high labor-intensity and potential impact, primarily targeting semi-urban poverty pockets in towns with high unemployment.In addition to the LIW program's regular menu of subprojects (including irrigation, water harvesting schemes, agricultural terraces rehabilitation, agricultural land improvement, maintenance and improvement of village access roads, the improvement of drinking water sources, and watershed management), subprojects more suitable for youth and urban and semi-urban areas will be added, such as planting trees, paving of cobblestone streets, cleaning shorelines, and especially rebuilding damaged public spaces. Management and coordination arrangements for subproject implementation will follow the procedures already tested and used for the LIW program, with implementation through SFD Branch Offices in close coordination with local authorities. This subcomponent will finance: * subproject costs in the targeted communities for carrying out labor-intensive public works; * the development of annual operational plans; * capacity building of the selected local authorities and communities in participatory planning and management of development activities; * the provision of goods, training, consultancy services and operating costs for management, monitoring and evaluation activities. 31 2) Cash for Work for Social Services (US$20 million): The objectives of this subcomponent are (i) to reduce the vulnerability of unemployed youth and women through providing employment opportunities and (ii) to improve access to basic social services in poor communities. In coordination with relevant national programs, this subcomponent will finance education and nutrition services at the community level, with a particular focus on promoting demand for these services. (i) Education, literacy and numeracy Approximately 750,000 person days of employment in teaching will be created for unemployed young women and men who have graduated from university, high school or teacher training institutes. Contracts will be for nine months with the possibility of renewal. Depending on the length of actual service, 2,000 to 3,000 youth will benefit from the work experience. Wages, depending on qualification level, will be similar to those of teachers in the formal education system for recruits from outside the target area, and about four fifths of that level for teachers from the same area. Successful applicants will receive an average of 15 days training relevant to their qualifications and specific tasks and 27 days of educational supervisors' visits over each nine-month period. Priority will be given to applicants in the project location, to education graduates, and to applicants with previous experience in the education field. Conditions for eligibility are: Yemeni nationality; aged 18-30; successful completion of university or secondary education; passing the entry test; physical and mental fitness; and ability to move and work in rural areas. The services to be provided by the recruits will includeteachers to fill teacher gaps in regular schools (pupils 6-14 years old); non-formal accelerated programs for children who have not enrolled or have dropped out of school to help them re-integrate into the formal system; and adult literacy classesincluding life skills. This activity will build on the successful experience accumulated under the Rural Girls Education Program (GEP) and will use the procedures and training content developed under the GEP. The beneficiary communities will be approximately 30 percent in urban areas and 70 percent in rural areas. Selection criteria will be based on evidence of need: poverty index; population density; enrollment gaps; illiteracy rate; and low university or secondary education outcomes in the region.The program expects to provide education and literacy benefits for approximately 26,000 children and 9,000 adults (70 percent women) in targeted communities and to stimulate the demand for education among households that have not traditionally considered education important. SFD will be responsible for management and implementation of the subprojects. Following the tested procedures developed since 2004 for its GEP Program, the SFD will take an integrated community-based approach to identifying key constraints in the targeted community, incorporating community awareness activities and education of influential community leaders. SFD will coordinate closely with formal, community and adult education systems and a Memorandum of Understanding will be signed by the SFD, 32 the Ministry of Education and the local government authorities, clarifying their respective roles and responsibilities. (ii) Nutrition Approximately 460,000 person days of employment will be created for women Community Health Volunteers (CHVs) who will be trained and will receive monthly incentives. Training for qualification to carry out defined activities will follow MOPHP's training modules. In the selection of participants, priority will be given to midwives in the community when available. Selection will be based on MOPHP criteria: women, with preference given to mothers; education level (at least able to read and write); community acceptance; awareness of volunteer work; family acceptance; and flexibility of moving. CHVs will deliver a package of community-based nutrition services for children under 5 (U5) and pregnant and lactating women, including enrolment and initial malnutrition screening; quarterly or bi-annual malnutrition screening where MOPHP outreach services are not available; facilitating transport to health facilities for treatment; monthly nutrition education to mothers of U5 children; nutrition education for pregnant women; breastfeeding promotion; and community level nutrition and health education. The services are targeted to Hodeida Governorate, based on its high malnutrition rate and its readiness to provide nutrition interventions through the public health facilities. The program will take a phased approach to covering the whole governorate, and expects to directly benefit approximately 75,000 acutely malnourished children, representing 15 percent of the total 493,644 U5 children in the governorate, as well as providing nutrition education to at least 20,000 pregnant and lactating women. SFD will be responsible for managing and implementing the demand side community- level interventions to empower communities through better understanding of health and nutrition needs. The supply side of services is the responsibility of the MOPHP through operation and equipment of its health facilities and its outreach teams, with the support of the Bank's Health and Population Project, which will supply nutrition kits, and the on- going treatment and supplementary feeding programs of UNICEF and WFP. The SFD will coordinate closely with the MOPHP and local health officials and the respective roles and responsibilities will be formalized in a Memorandum of Understanding signed by the SFD and the MOPHP. Subcomponent 2 Cash for Work for Social Services will finance: * Subproject costs in the targeted communities for the carrying out of cash-for-work for social services; * information, public awareness and recruitment campaigns; * testing of applicants and training of the youth and women recruited; * equipment and materials (textbooks and learning materials, supplies); 33 * education and health supervisors (consultants); * the development of annual operational plans; * capacity building of select local authorities and communities in participatory planning and management of development activities; * management and monitoring and evaluation activities through the provision of goods, training, consultants' services and operating costs. 34 Attachment A. Proposed Community-based Health and Nutrition Intervention 1. Malnutrition screening. Malnutrition screening for U5 children and pregnant and lactating women will be carried out. After initial malnutrition screening (for acute cases), quarterly or bi-annual malnutrition screening when MOPHP quarterly outreach services are not available will be carried out by the CHVs. Referral services for malnutrition will be provided at: (i) outpatient therapeutic programs (OTP) for severe acute malnutrition (SAM) without complications;(ii) supplemental feeding practices (SFP) for moderate acute malnutrition (MAM) without complications; and (iii) stabilization centers (SC) for SAM with complications. The SFD will provide transportation to these facilities for treatment. 2. Nutrition education (to be provided by CHVs) will also be provided every month to: (i) mothers of children under two years old on infant and young child feeding (IYCF) practices and mothers with children over two years old on nutrition; and (ii) nutrition education for pregnant women. There would be four target groups for nutrition education, which can be accommodated in two separate education sessions per month: (a) Children: 0 - 6 months old: exclusive breastfeeding up to 6 months (b) 6 months - 2 years old: breastfeeding with complementary feeding Topics: IYCF promotion will include exclusive breastfeeding until 6 months, breastfeeding combined with supplementary food (introduced at 6 months old) until the age of 2 years, importance of frequent, balanced meals, iodized salt, proper hygiene and sanitation, as well as clean drinking water, and the home-based treatment of diarrhea. For lactating mothers: healthy practices (including no qat, no smoking, and proper hygiene) and diet will be covered. Frequency: once every month (c) Children: > 2 years old Topics: healthy family meals, higher meal frequency than adults, proper hygiene and sanitation, clean drinking water, food safety, home-based treatment of diarrhea, and promotion of iodized salt Frequency: once every month (d) Lactating mothers will automatically be part of group (a). This can also include pregnant women as the immediate and exclusive breastfeeding is important to them and guidance for lactating and pregnant women largely overlaps. 3. Behavioral change communication which will focus on healthy practices (including no qat, no smoking, proper hygiene and sanitation, and clean drinking water) and diet during pregnancy and lactation. It will also promote relevant elements from IYCF (e.g., immediate exclusive breastfeeding after delivery, no pre-lactal feeds, use of colostrums) and education on the importance of using iodized salt and micronutrient supplementation. For antenatal care, mothers will be referred to the nearest health center. Frequency: once every month 35 Since pregnant/lactating women and mothers of young children are key target groups for the family planning, a session on this will be added at each education session. Each session should be complete in providing the main nutrition messages, but variation can be created by going more in-depth into some of the topics, or by addressing seasonality of foods and needs. 4. Breastfeeding promotion (to be provided by the community volunteers). Most important in the IYCF is the immediate (within one hour) establishment of exclusive breastfeeding. In most cases, this is a natural and easy step, but in Yemen there is a culture of feeding the child other liquids first. It is important to encourage breastfeeding during antenatal care, during the community education sessions, and directly after the delivery through the midwife or the hospital ward staff. In case there is any difficulty, the mother should be able to receive adequate counseling on breastfeeding (which is an important part of the training manual for counseling on IYCF). 5. Nutrition education sessions are likely to be provided at the community level and will be open to all community members. A communication strategy will be prepared within two months of the Grant signing to effectively reach out to beneficiaries and stakeholders. Interventions will follow MOPHP/WHO guidelines and collaboration will be established with the immunization, nutrition and health education programs already in place within the MOPHP. This subcomponent will be implemented through SFD which will recruit and train additional CHVs if required in coordination with the MOPHP. 36