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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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• The emphasis in the evaluations of operations within the World Bank is shifting from projects to sectors. Within five years the Bank will conduct evaluations to determine if a country assistance strategy, that is, the entire portfolio of projects in a given country, has been successful. Evaluations are likely to become bottom up: looking at the country and region and then returning to the evaluation instruments used, rather than attempting to measure the specific impact of each instrument. Evaluations will ask questions such as: Did the Bank’s approach to structural adjustment, to economic development, or to poverty alleviation work in a given country? What were the instruments used? Were they used correctly? Was a social fund an appropriate answer to compensate for a structural poverty problem?

Three basic audiences were identified for evaluations: communities and project beneficiaries, executing agencies, and financing agencies or donors. Given the overlaps in the requirements of these audiences, there was consensus on: (a) the importance of coordinating evaluations for the sake of efficiency; (b) promoting beneficiary participation 94 A Close Look at the Key Issues

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Session expectations This session focused on the options available to social funds with long-term development objectives for achieving the sustainability of subprojects. In addition to applying sound selection procedures and ensuring ownership of subprojects by target groups, should social funds take on the responsibility for operations and maintenance? What are the risks of this approach, both for social funds as well as for the sector institutions in the country? Alternatively, what provisions should social funds take to ensure the operation and maintenance by beneficiaries or by permanent line institutions? Desired outcomes of this session were specific recommendations for ensuring the long-term sustainability of subprojects.

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Discussion The concept of sustainability was seen as extremely complex and varied across countries and regions. The discussion defined the differences between projects financed by the first generation and the second generation of social funds, with the latter positioning themselves as permanent development institutions. Three aspects of sustainability beyond that of subprojects were also discussed: financial, institutional, and community sustainability. The sustainability of a community was seen as linked to the macroeconomic environment, to productive activities, to microcredit, and to long-term community development. Some of these are beyond the scope of the accomplishments of a social fund.

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Session expectations In examining the environmental assessment of social funds subprojects, this session focused on the following questions: (1) How are environmental concerns addressed during the promotion, design, selection, and implementation phases? (2) How does a social fund evaluate the magnitude of the environmental impact of its subprojects? (3) How does it arrive at cost-effective measures for mitigation of negative impacts? A desired outcome of this session was a set of recommendations for improving the environmental impact assessment procedures of social funds.

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that projects must have been submitted, reviewed, and positively screened by the regional bureaus of the National Resources and Environmental Protection Agency.

Environmental Monitoring during implementation is carried out to ensure that the review during recommended mitigation measures are in place and all agreed proceimplementation and dures are being followed. Once implementation is over, monitoring is thereafter continued to verify that the subprojects financed are operational, that they are being used as planned, and that no environmental standards are being violated.

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Session expectations In examining the pros and cons of an information, education, and communication (IEC) strategy, this session focused on the design process that leads to the identification of an IEC for a social fund as well as on the challenges to the implementation and management of an IEC. How does a social fund balance political interests with a demand-driven approach? What is the role of social communication in eliciting demand and participation? How much does an IEC cost? A desired outcome of the session was a set of recommendations for designing and implementing information outreach and communication systems in social funds.

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Partner Institutions AFRICATIP, African Development Bank, World Bank Africa Region Organizers Lamine Ben Barka (AFRICATIP); Cesaltina Abreu (Angola Social Funds); Alberto Harth and Laura Frigenti (WB)

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Partner Institutions La Red Social, Organization of American States, World Bank Latin America and Caribbean Region, Inter-American Development Bank Organizers Eduardo Diaz Uribe (Red Social); Samuel Morley (Inter-American Development Bank); Benno Sander, Roy Thomasson (Organization of American States); Allan Colliou, Willem Struben (World Bank)

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2. Capacity building—Before social funds start building capacity, they need to recognize how much unutilized capacity exists. The tendency is to think that because it does not belong to my organization, I am not going to use it. That is a thought that occurs repeatedly. There are organizations and institutions already that are deprived of financing, but new institutions are built to create new capacity. Please try to use existing institutions and ask whether you want to build a new institution, a new organization to do the work for social funds. I heard a lot about capacity building, but I did not hear the words “capacity utilization.” I know—I have worked in Africa—there are capable Africans outside the government, outside social funds, but they are not being utilized. And expensive consultants are brought from North America and from Europe because they are being funded by donors. Let us use local capacity.

3. Decentralization—How should live linkages be established between social funds and local governments? Latin America is way ahead of everybody else as far as decentralization is concerned.

We should try to learn lessons from Latin America, because local governments and social funds should not conflict. They are all serving the same people, the same community. How to establish natural linkages, working relationships, the division of labor between local governments and the social funds, that is the third challenge.

4. Targeting the poorest—How should we reach the poorest of the poor? We are reaching some poor, but there are extremely poor people living in remote areas, in marginalized areas, who are not being served by social funds. There has been progress in targeting the poor, but the next-generation challenge is how to reach the poorest of the poor.

To me, the new generation of social funds will have to meet these four challenges if they are to have any effect on poverty reduction.

Part IV Original Workshop Papers The Social Investment Fund in the Context of National Development by Marco Camacho, Director, Social Investment Fund, Bolivia 1980–85: A Period of Crisis A reversal in economic growth began to affect Bolivia toward the end of the 1970s, resulting in a economic crisis of staggering proportions by the end of the first half of the 1980s. Output declined, and a growing share of production shifted to the informal sector because of high tariffs and quantitative controls, an overvalued exchange rate, price controls, and strong regulations. Production and export levels dropped, prices soared, and hyperinflation reached a dramatic 24,000 percent in 1985. All this, coupled with controls on interest rates and other financial restrictions, led to a flight from the peso and a sharp drop in private investment. Economic disruption fomented intense labor disputes as social groups competed just to maintain their share of a rapidly shrinking pie. Politically, Bolivia was becoming difficult to govern, and the country was witnessing extensive social conflicts.

Structural Adjustment In August 1985 a new government administration headed by Dr. Víctor Paz Estensoro initiated the New Economic Policy (NEP), a structural adjustment program that focused initially on stabilizing the economy, halting inflation, and restoring the balance in the external debt account. Longer term structural adjustment measures were aimed at dismantling most price controls, reforming the trade regime, restructuring ailing public enterprises, and overhauling the tax system.

Pursuing its economic program with remarkable tenacity, the government managed to reduce inflation to 20 percent within a year of launching the program. There was little leeway, however, for addressing social issues. Even before the structural adjustment program was launched, social conditions in Bolivia were the worst in the southern hemisphere. The government concluded that effective action to address social issues was critical for the success of the economic program.

Emergency Social Fund: A Compensatory Mechanism for Adjustment Measures The Emergency Social Fund (ESF), a response to the extreme social deterioration in the country, provided emergency relief and implemented a program to generate employment for the groups most severely affected by adjustment measures. Created in February 1986, it had the

following objectives:

150 Original Workshop Papers

• To identify and promote efficiently the implementation of projects and programs with high social returns

• To contribute to the alleviation of the social conditions in regions most affected by social crisis and unemployment

• To provide grants, education, and technical training programs to develop a better-trained, more efficient work force.

The ESF supported labor-intensive social infrastructure projects, such as the construction and repair of schools, health centers, basic self-help housing, and sewage and water systems, as well as cultural heritage projects. Economic infrastructure projects supported by the ESF included urban infrastructure, construction, maintenance, and improvements in access roads, irrigation and drainage works, erosion control, land recovery, and reforestation. Welfare projects to improve living standards of families were supported in the food, nutrition, and health sectors.

Outcomes of the Emergency Social Fund Demonstrating the Bolivian government’s will and initiative to combat poverty, the ESF helped the state to regain the trust of civil society. It had a favorable impact on Bolivia’s economic indicators, because it generated a positive capital flow of over US$210 million, which contributed to a reduction in the current account deficit. Private sector confidence was bolstered, and its participation in the economy grew. Bolivia was beginning to enjoy remarkable price stability.

The ESF’s investments caused a gross domestic product (GDP) growth rate in 1990 of 2.6 percent compared with 1.5 percent before the investments. During the four years of its life, the ESF generated nearly 60,000 direct and 45,000 indirect jobs. In 1990 the number of jobs created equaled

1.8 percent of the economically active population and nearly one-third of unemployed workers.

Fight Against Poverty, the Social Investment Fund Although the immediate crisis had been overcome, much remained to be done. In response to a more considered response to Bolivia’s development needs, the ESF gave way to the Social Investment Fund (SIF), a more permanent institution that focused exclusively on health and education. The SIF was structured to coordinate and integrate its programming with the sector strategies and development plans of the respective ministries. An important implication of working within a framework of established norms, as opposed to outside them, as had been the case with the ESF, was that the SIF was not able to respond quickly. While projects were rapidly and efficiently processed and delivered during the emergency stages because of expedited procedures, SIF projects had to go through more bureaucratic steps for approval.

Bolivia developed a model to facilitate the prioritization of investments in rural and urban areas. Based on an analysis of the health and education indicators of cantons, geographical units lower than a municipality, priority areas were identified to enable the phasing of investments.

For urban areas, priority areas were identified based on an analysis of the availability of basic services. Unfortunately the data used for this analysis was the outdated census data of 1976, which resulted in considerable mismatches between what was requested by the population and the conclusions derived from the data analysis. However, because this marked the first attempt in the country to focus its investments, development of the model was a significant event.

Social Investment Fund, Phase I (1991–93) The objectives of the SIF were to improve the coverage and quality of health and education services by changing priorities guiding investments in primary and preventive health care and primary education; developing mechanisms to sharpen the focus of social programs targeted to The Social Investment Fund in the Context of National Development 151 the poor; and introducing procedures to facilitate easier coordination between the social actors.

To meet its objectives, the SIF adapted intervention methodologies for the necessary coordination and integration. It also used strict criteria to focus its interventions and facilitate community participation, including the participation of women. In the education sector, the SIF supported infrastructure and equipment for primary schools and adult training centers. In the health sector, the SIF supported day care centers with nutrition components, training programs in nutrition, basic health and primary care projects, immunization campaigns, and potable water and basic sanitation projects. The SIF also supported institutional strengthening programs through the construction of infrastructure, in addition to contributing to the equipment and operating costs for 18 months for those agencies in charge of executing SIF projects.

SIF Investments between 1991 and 1993

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Problems Faced and Actions Taken by the SIF At the time the SIF was created, its organizational structure complied with the requirements of the ESF, which had a fragmented sectoral focus. Interventions were isolated, geographically dispersed, and demand-driven albeit with little community participation in the project processes. This lack of comprehensiveness hindered the realization of the full potential of the investments.

The SIF came into existence when a set of norms and laws were enacted at the national level to guarantee economic stability and lay the groundwork for promoting private investment and growth. These laws redefined the role of the state and established a basis for privatization within a framework to enhance Bolivia’s participation in a globalized economy. However, fast economic growth does not guarantee closure of the investment gap in social sectors. It was up to the SIF to generate external resources to provide for projects in the areas with the greatest need.

Institutional Reforms A number of laws were enacted within the Bolivian government to support the stability of the economy and to promote private economic growth. They include reforms in the Bolivian constitution that address the country’s ministries, decentralization, citizen participation, the economy, and the social system.

Constitutional Reforms These reforms defined the functions and the roles of the government, the legislature, and the judiciary to enable a strong and efficient democratic system. With the enactment of the Law of Reforms to the political constitution of the state in 1994, for the first time the multiethnic and multicultural character of the Bolivian people was recognized, and indigenous organizations were acknowledged to ensure their participation in decisions that affect their lives. The enacted

reforms secured the following:

• Extension of the constitutional term for the president, vice president, and congressmen from four to five years 152 Original Workshop Papers

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