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«Social Funds and Reaching Proceedings from an international workshop organized by the Poor The World Bank and Experiences and AFRICATIP La Red Social de ...»

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Social Protection Board World Wide Web Page on Social Funds Before the international workshop, an initial version of the social funds World Wide Web page was developed jointly by the Social Protection Board of the Human Development Network and hosted in EDI’s website. The web page offered online access to the workshop’s program and to key documents prepared for the event. During the workshop, it provided a mechanism for participants to express their views on the sessions and to indicate their personal areas of interest for follow-up work. Since then, the social funds web page has further evolved and

acquired a new and permanent Internet address, where relevant and constantly updated information is posted:

http://www.worldbank.org/sp/html/social_funds.html Part II Updating the Conventional Wisdom The World Bank’s View on Social Funds

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Keynote Speaker: Joe Stiglitz, Senior Vice President and Chief Economist The determinants of development have extended in recent years beUnderstanding the yond the usual prescriptions of macroeconomic stability, avoiding determinants of price distortions, and liberalization of trade and investment to the development effective role played by institutions, including the government. We now better understand the complementary nature of the relationship between governments and markets. We understand the limitations of markets, the limitations of government, and how they can work together. In practice, the quality of these institutions is highly 24 Updating the Conventional Wisdom

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Eduardo Diaz Uribe, Chairman, La Red Social de America Latina y el Caribe La Red Social de America Latina y el Caribe is the regional network of social funds and of other poverty reduction programs and institutions; its members are over 25 agencies of both Spanish-speaking and English-speaking countries. Its mandate is to foster horizontal exchanges among its members and to promote the importance and the quality of poverty-reduction programs at the national and international levels. Created in 1991 in Mexico, it is managed by a coordinating committee of six (two per subregion), and by a chairperson that is elected for two years on a rotating basis. The Organization of American States, through its Department for Social Policies, provides the technical secretariat of La Red Social.

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Magatte Wade, former President, AFRICATIP AFRICATIP is a network of African agencies that were set up to carry out labor-intensive public works. Created in Burkina Faso in 1993, its permanent secretariat is in Senegal; it has a current membership of 14 francophone and anglophone countries, mainly in West Africa. The network facilitates cross-country fertilization among the institutions engaged in the fight against poverty. Given that AGETIPs have increased the absorptive capacity of international loans in African countries, the network can become a catalyst for mobilizing other resources in countries where AGETIP agencies operate. By strengthening its ties with social funds and international development agencies, AFRICATIP can better promote economic growth and poverty reduction.

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Manuel Chiriboga, Co-Chair, NGO-World Bank Committee The NGO-World Bank Committee was created as a forum for policy dialogue between the World Bank and the NGO world. It includes the representatives of NGOs from all developing regions as well as of NGOs of the Organization for Economic Cooperation and Development (OECD) countries. The committee is under the joint chairmanship of an NGO representative and a manager from the World Bank.

It meets twice a year, once in Washington, D.C., and once in a developing region, to discuss strategies for facilitating participation of civil society organizations in the development projects financed by the World Bank through changes in policies and operational procedures. It also carries out studies and evaluations of its own through its NGO working group. Within the World Bank, the NGO Unit acts as permanent technical secretariat to the committee.

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Session expectations This session examined the problems faced by social funds in their transition from institutions with short-term, emergency response objectives to ones with longer term, developmental objectives. Can such a transition be accomplished with minor organizational modifications within a short time? What lessons can be drawn for the design of a social fund, given the likelihood of an extension of its life? A desired outcome of this session was a set of design recommendations to ease the transition of a social fund when its life is extended.

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into a development-oriented institution. These changes cannot be brought about in the short term, just as they cannot be realized without the simultaneous transition by other government institutions to a more participatory direction to development.

Discussion Participants debated whether infrastructure projects executed by ministries and line agencies have less cause to suffer from technical problems that reduce their useful life as compared to those executed by funds.

When projects are executed by technically weak entities, be they communities or municipalities or contractors that are not technically adept, poor design can impact their useful life. Inadequate arrangements for project O&M have been another important factor in the reduction of usefulness. Focusing on the links between sustainability and project quality, the discussion reviewed experiences, attempting to strike a balance between community involvement and the sustainability of projects.

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Session expectations In examining the problems faced by a social fund when its mandate is widened and its life extended, this session focused on three major concerns: (1) the “dependency syndrome” that can jeopardize basic structural adjustment measures; (2) raising beneficiary expectations in a financially unpredictable environment; and (3) shifting donor priorities. How can these concerns be addressed in the design of a social fund? A desired outcome of this session was a set of design recommendations for the optimal financial structure of a social fund and for the financial sustainability of its operations by raising resources in the national context.

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Sustainability refers to subprojects financed by the SDF and to the SDF as an institution. The SDF has managed to achieve a reasonable degree of sustainability of subprojects by requiring a certain amount of financing from sponsoring agencies before the implementation of public works projects. Sustainability of the institution, however, is a more complex issue. Mobilizing donor resources requires confidence-building in the effectiveness of the program as well as in the use of resources. This takes time. At any point during this process, donor priorities or goals may change, and funds, like the SDF, need to be sensitive, proactive, and responsive to such situations.

Discussion The discussion focused on the difficult issues of governance and public sector management deficiencies that contribute to the need for a social fund and on the relationship between a fund and the government’s machinery. The discussion addressed the immediate concerns of managing a social fund and its appropriate institutional roles when a social fund’s life is extend ed. The following issues were raised during the


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Session expectations In examining the institutional autonomy of social funds, the demand-driven nature of project proposals, and broad stakeholder participation, this session assessed the level of interaction between social funds and nongovernmental organizations. Its outcomes were recommendations for (1) a greater role for civil society in identifying social funds as antipoverty instruments; (2) the use of social funds as vehicles for strengthening community organizations; and (3) the creation of a stronger role for social funds in the definition and implementation of a national social policy.

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Session expectations In examining decentralization and the functional links between municipalities and social funds, this session focused on three major themes: (1) the strengths, weaknesses, and comparative advantages of social funds and municipalities in the 1980s; (2) the changes that have taken place within municipalities with the advent of decentralization in the 1990s; and (3) the impediments to decentralization posed by the current structure of social funds. A desired outcome of this session was a set of recommendations for reorienting social funds to support decentralization and the role of municipalities in social development.

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vary in accordance with the classification of municipalities on a poverty scale. The fund could provide resources for operations and maintenance to line ministries, where decentralization has not already taken place. It could be financed from transfers of municipal current savings accounts, central government transfers, other resources received by the municipality and community, and neighborhood-generated revenues.

Discussion Since Latin America has experienced a proliferation of funds at both national and municipal levels, the discussion focused on lessons related to resource allocation and implementation. Issues and problems of targeting, differences in the perception of local development priorities between different tiers of government, comparative advantages of different institutions in delivering different products and services, and the importance of project software and hardware framed much of the discussion.

Participants agreed that decentralization needed to be an integrated effort and to cover society as a whole, not remain confined to government functions. What were the experiences with decentralization in Latin America? How long does it take to enhance the role of municipalities in the social sector?

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Substantial discussion followed on the capacity of municipalities to undertake such tasks under decentralized systems, but the participants remained divided on whether there was a certain order or pace that should be followed when implementing decentralization. It was defined more as a wave that had to be ridden when it appeared, rather than as a planned event.

74 A Close Look at the Key Issues

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Session expectations This session, highlighting the success of AGETIPs in the areas of private sector development and employment creation through delegated contract management and the promotion of labor-intensive techniques, was expected to address the following questions: (1) How to ensure a sustained volume of work in the future to keep newly created enterprises in business? (2) How can these enterprises transform themselves to be able to compete for contracts requiring a higher level of technology? A desired outcome of this session was a set of recommendations for sustaining the gains made by the private sector through the investments made by AGETIPs.

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Session expectations In examining the pros and cons of a program approach that defines subprojects that cannot be financed under the social fund as compared to an approach that defines subprojects that will be financed, this session focused on the way the approach itself can facilitate or hinder the access of different target groups to social funds’ benefits. What should social funds finance? How should this decision be made and by whom? A desired outcome of this session was a series of recommendations for identifying approaches to the development of subproject menus that facilitate a broader access of marginalized groups to support for social funds.

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in family counseling. Economic infrastructure activities to be financed include feeder roads and small agroprocessing facilities. Subprojects that benefit a large number of beneficiaries will be preferred. The determinant factor in the selection of targeted sectors will be the level of need: the sector must be seen as a priority and the subproject financed by the fund should significantly impact poverty. The fund aims to maintain flexibility in selecting projects for funding and intends to conduct periodic reviews and adjust its subproject menu if needed. In this way, the fund will maintain a balance between the targets indicated by the government’s poverty alleviation strategy and the actual demand for subprojects.

Discussion The intention of Jamaica’s fund to build social capital by creating social infrastructure was well received by the participants, given that urban violence is a problem in the country. Questions, however, were raised about how the fund would reconcile program definition by sectoral line ministries with its intent to define programs by community demands.

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Participants felt that if the objectives of a fund were short term, it would be reasonable to work through existing intermediaries. However, if a fund had long-term development objectives, then it needed to have a process focus as opposed to a project focus. Funds could adopt a programmatic approach that would enable them to start by directly delivering subprojects in their initial years and gradually transition to enabling other actors to take over.

Taking note of the emphasis on institution building as a subproject category in Jamaica, the discussion focused on the exchange of experiences from other countries in trying to reach communities directly, avoiding the risk that intermediary agencies’ priorities would supersede community priorities in the articulation of project proposals.

86 A Close Look at the Key Issues

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Session expectations This session examined the efficiency, adequacy, and cost-effectiveness of monitoring and evaluation as distinct elements. Are the monitoring levels currently employed optimal? Do external reporting requirements impact negatively on the internal management of information? Since disbursements for poverty alleviation without long-term sustainability of investments cannot affect structural poverty, are current evaluation approaches adequate for measuring sustainability and impacts of subprojects?

Desired outcomes of this session were recommendations for goal-oriented and effective monitoring and evaluation of social funds operations.

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• Mexico, over the last eight years, has executed social funds financed in part by the World Bank. Initially the funds responded to information requests by the Bank using methodologies, indicators, and measuring systems recommended by the Bank; these evaluations were considered efficient. In the last few years, new indicators have been added by the Bank. Evaluations done against these additional indicators by the Ministry of Social Development highlighted the need to enhance the technical and administrative capacity of municipalities and community organizations. The Bank, nevertheless, conducted its own evaluation, only to arrive at the same findings. When the Mexicans did their own impact evaluations against the data of their 1990 census, they found that social infrastructure had a positive impact on the quality of life in participating communities, even though measurements against indicators for mortality, productivity, health, and education did not demonstrate that poverty had been significantly reduced.

Participants agreed that the definition of poverty by economic criteria alone was inadequate and that social and cultural criteria as well as national contexts were important factors to consider. Qualitative assessments of poverty could often be more important than quantitative assessments. Evaluations of poverty impacts of a social fund can be misleading when viewed in isolation. There was agreement that evaluations need to be simple to provide useful answers. They need to focus on activities supported rather than on the funds themselves, because the ultimate objective is to deliver services that improve the quality of life of participating communities.

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