Document of

The World Bank

Report No: 20428

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 3.8 MILLIONUS$ 5.0 MILLION EQUIVALENT

TO THE

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FOR THE WOMEN DEVELOPMENT INITIATIVES PROJECT

WID

JULY 27, 2000

Human Resources Development Group IVAFCO6Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective 1999)

Currency Unit = Ethiopian Birr8Birr = US$ 1.0

US$ 1.0 = 8.0 Birr

FISCAL YEARJuly 8 July 7

ABBREVIATIONS AND ACRONYMS

ACORD Agency for Cooperation and Research in NGO Nongovenmental OrganizationsDevelopment

CAS Country Assistance Strategy NCB National Competitive BiddingCCU Central Coordinating Unit NSC National Streering CommitteeCERTWID Center for Education, Research and Training PAD Project Appraisal Document

of Women in DevelopmentCRDA Christian Relief and Development PHRD Japan Policy and Human Resource Development Fund

AssociationDCA Development Credit Agreement PIM Project Implementation ManualEA Environmental Assessment PIU Project Implementation UnitESRDF Ethiopian Social & Rehabilitation PMR Project Management Report

Development FundFDRE Federal Democratic Republic of Ethiopia PRAs Participatory Rural AppraisalsGF Grassroots Fund PY Program YearGIF Grassroots Initiatives Fund RCU Regional Coordinating UnitsGOE Government of Ethiopia RCU/ZCU/ Regional Coordinating Units/Zonal Coordinating

WCU Units/Wereda Coordinating UnitsGMT Grassroots Management Training RSU Regional Streeing CommitteesGMTP Grassroots Management Training Project R/Z/WCU Regional/Zonal/Wereda Coordinating UnitsHSDP Health Sector Development Program SA Special AccountsIAPSO United Nations Interagency Procurement SOEs Statement of Expenditures

Services OfficeICB International Competitive Bidding TA Technical AssistanceIDA International Development Association TOR Terms of ReferenceIDF Institutaitonal Development Fund TSE Technical Support ExpertsIEC Information, Education and Communication WAO Women's Affairs OfficeLACI Loan Administration Change Initiative WB World BankLIL Learning and Innovation Loan WID Women In DevelopmentM&E Component Monitoring & Evaluation Component WDIP Women's Development Initiatives ProjectMIS Management Information System WG Women's GroupMTR Mid-Term Review WGs Women's Groups

Vice President: Callisto E. MadavoCountry Manager/Director: Oey Astra Meesook

Sector Manager/Director: Arvil Van AdamsTask Team Leader/Task Manager: Christine Pena

ETHIOPIAWID

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 5:2. Main sector issues and Government strategy 53. Learning and development issues to be addressed by the project 84. Learning and innovation expectations 11

C. Project Description Summary

1. Project components 122. Institutional and implementation arrangements 153. Monitoring and evaluation arrangements 17

D. Project Rationale(This section is not to be completed in a LIL PAD)

E. Summary Project Analysis

1. Economic 182. Financial 203. Technical 214. Institutional 225. Environmental 236. Social 247. Safeguard Policies 25

F. Sustainability and Risks

1. Sustainability 262. Critical risks 263. Possible controversial aspects 27

G. Main Loan Conditions

1. Effectiveness Condition 272. Other 27

H. Readiness for Implementation 28

I. Compliance with Bank Policies 28

Annexes

Annex 1: Project Design Summary 29Annex 2: Project Description 34Annex 3: Estimated Project Costs 41Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 42Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 49Annex 6: Procurement and Disbursement Arrangements 50Annex 7: Project Processing Schedule 58Annex 8: Documents in the Project File 59Annex 9: Statement of Loans and Credits 60Annex 10: Country at a Glance 62

MAP(S)

ETHIOPIA

WID

Project Appraisal Document

Africa Regional OfficeAFTH4

Date: June L 5, 2000 Team Leader: Christine Lao PenaCountry Manager/Director: Oey Astra Meesook Sector Manager/Director: Arvil Van AdamsProject ID: P050342 Sector(s): SS - Social Sector AdjustmentLending Instrument: Learning and Innovation Loan (LIL) Theme(s):

Poverty Targeted Intervention: N

Project Financing DataEl Loan 1 Credit O Grant O Guarantee [ Other (Specify)

For Loans/Credits/Others:Amount (US$m): 5.0 M equivalent (SDR 3.8 M)

Proposed Terms: Standard CreditGrace period (years): 10 Years to maturity: 40Commitment fee: 0.5 Service charge: 0,75%F14anclnPtan: so r"o oi -- -n TotalGOVERNMENT 0.00 0.70 0.70IDA 0.10 4.90 5.00GOVERNMENT OF ITALY 0.00 1.80 1.80MULTIPLE DONORS 0.50 0.00 0.50

Total: 0.60 7.40 8.00Borrower: FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIAResponsible agency: ACTIVITIES WILL BE IMPLEMENTED BY SELECTED INTERMEDIARIES

Address: EthiopiaContact Person: H.E Tadelech Haile-Michael, Minister in Charge of Women's Affairs, Addis Ababa, EthiopiaTel: 251-1-557794 or 552044 Fax: 251-1-552030 Email:

Address: Women's Affairs Office, Prime Minister's Office, Addis Ababa, EthiopiaContact Person: Christine PenaTel: 202 4723-5421 Fax: 202 473-8107 Email: cpena@worldbank.orgAddress: AFTH4, World Bank, 1818 H Street, NW Washington, DC 20433Estimated disbursements ( Bank FYWUS$M):

FY 2001 202 2003 2004 200Annual 0.4 0.7 1.2 1.4 1.2

Cumulative 0.4 1.1 2.3 3.7 4.9

Project implementation period: 2001-2005Expected effectiveness date: 08/15/2000 Expected closing date: 08/30/2005

OCS PAD Fc.r R.v M.h, ZXOO

A. Project Development Objective

1. Project development objective: (see Annex 1)

Within Ethiopia's overall developmental strategy, the proposed Women's Development InitiativesProject (WDIP), a Learning and Innovation credit, aims to test methodologies to enhance the social andeconomic welfare of households in selected poor districts by improving and increasing women'sopportunities through increased skills, productivity, and income.

2. Key performance indicators: (see Annex 1)

For the purpose of annual joint reviews and supervision missions between the Bank and GOE, the

following key indicators have been selected:

(1) Input indicators

(a) number of applications and % accepted(b) % of funds disbursed(c) average beneficiaries' contribution as percentage of total cost

(2) Process indicators

(a) Project processing time compared to the standard schedule of submission to financing,financing to implementation and implementation to completion

(b) administrative costs as percentage of project costs(c) % of progress/supervision reports submitted on time

(3) Output indicators

(a) number of women groups established(b) number and % of female and male beneficiaries reached by IEC messages/campaigns in

each of the six thematic areas as specified in the project implementation manual (PIM)(c) number and % targeted beneficiaries who have received Grassroots Management Training

and skills training(d) number and % of projects completed(e) % of funds repaid by individual beneficiaries to their group(f) Level of satisfaction of beneficiaries with group-level and community-level outcomes(g) Number of networking/coordinating meetings held at Woreda, Zonal, Regional, and

National levels

For more detailed project monitoring, the following proposed indicators have been selected andcategorized into four main groups: input (to track what resources were used), process (to track efficiency ofresource utilization), output (to track outcome of resource usage), and sustainability (to trackorganizational, economic, institutional and behavioral sustainability). Initially sustainability will beassessed in terms of "Yes/No" indicators. It is envisioned that as the project develops and capacity forMIS and monitoring and evaluation is strengthened, that more refined ratings scales will be developed.

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A. Summary efficiency and performance indicators

These indicators will be used to provide an overall assessment of the efficiency with which theproject was implemented and its effectiveness in achieving its intended impacts. The following sectionspresent specific indicators for assessing each major component of the project. Where appropriate,indicators will be compared to the final targets for the project and the projected progress for a particulartime period.

Summary Input indicators:

1. % of funds disbursed (by each component)2. Number of grassroots management training courses given3. Number of skills development training courses given4. Average group investment as % of total cost5. Number of Intermediaries, Facilitators, and Technical Support Experts used6. Number of IEC campaigns launched in total and by thematic areas

Summarv Process indicators:

I. Compliance with targeting criteria (absence of micro-finance institutions, access to economicinfrastructure, availability of intermediaries)

2. Number of requests received3. Number of requests approved (in total and by sector) and volume of grants compared to targets4. Processing time compared to established standards5. Proportion of the target population who received training (grassroots management and skills

development).6. Total number of women who have been reached by at least one project component7. Administrative cost as proportion of total cost8. Number of projects completed9. Proportion of projects completed within acceptable cost and time limits

10. % of Progress reports submitted on time

Summarv Output/Impact Indicators:

I. Number of women who have acquired new skills2. Number of women who have improved their existing skills3. Number of women who actively take part in micro-credit projects after training4. Number of groups created or strengthened compared to target5. Level of satisfaction of beneficiaries with group-level and community-level outcomes6. % of microenterprises managed by women7. % of funds repaid by individual beneficiaries to their group8. % of profits generated compared to grants for raw materials and inputs9. % increase in assets two years after project intervention (excluding direct assistance)

Summary Sustainabilitv indicators

1. Number of women's groups which continue to operate after project closing

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2. Number of economic initiatives (group and individual) which continue to operate after project closing3. Number of outside support groups (intermediary agencies, etc.) which continue to maintain contact

with the communities after the close of the project.4. Number of IEC initiatives which continue to influence group/community behavior after project closing

B. Progress in the creation and sustainability of groups

I . Number of groups created2. Number of groups which have received grassroots management training3. Number of groups which have submitted action plans4. Number of action plans approved5. Number of groups to whom funds have been disbursed (tranche 1, 2, 3 if given in tranches)6. Group projects started7. Individual projects approved by groups8. % of funds repaid by individual beneficiaries to their group9. Number of projects completed10. Number of exit reports prepared11. Number of groups still operating 6, 12 and 24 months after project closing

C. Effectiveness of the IEC component

Within each thematic areao Gender and developmento Legal literacy* Nutrition* Harmful traditional practices* Family planning* Environment* AIDS

A maximum of five key messages will be identified, and the effectiveness of the program incommunicating these messages will be assessed in terms of:

1. The number of people in the community who have received the message (attended the theatergroups, attended meetings, etc.)

2. % of male and female beneficiaries reached3. Level of understanding of the project and its objectives4. The number of people who have understood the message5. The number of people who have changed their attitudes as a result of the message

- indicators 3 to 5 will be measured using participatory/impact assessments

D. Capacity Building

1. Indicators for assessing capacity building at the grass-roots level

a. Number of grass-roots management courses given

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b. Number of groups who received courses (more than one group might participate in the samecourse)

c. Number of individuals who received coursesd. Proportion of target groups who receive skills development traininge. End of course assessments covering:

(i) The effectiveness of the training methods(ii) What was leamed(iii) The confidence of the group to carry out its tasks

f. Number of women who have acquired new skillsg. Number of women who have improved their existing skillsh Number of women who actively take part in micro-project development after taking training

2. Effectiveness of the technical assistance provided to the communities

a. Number of groups/individuals who have received support from intermediary agenciesb. Number of groups/individuals who have received support from technical specialistsc. Number of individuals who have received skills trainingd. Number of groups which have facilitatorse. Number of studies undertaken to assist in the selection and design of micro-projects

3. Management of the grass-roots fund

a. Number of groups to whom grants have been disbursedb. Total volume of grants disbursedc. Total group contribution as % of grant/loansd. Maintenance of initial assetsf. Increase in volume of working capital

B. Strategic Context1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: 1 7009-ET Date of latest CAS discussion: 09/09/97

The Ethiopia CAS supports economic growth and employment creation as the primary means ofreducing poverty. It also supports the use of targeted programs and safety nets to assist the mostvulnerable groups in society. One of its key strategies is to improve the status of women through botheconomic and social means. It strongly supports investments in human capital as one of the mostsustainable ways to achieve economic growth through a more productive population. The CAS includesthis project as part of its assistance strategy for gender-balanced poverty alleviation in Ethiopia. It will beimportant to ensure that WDIP is implemented as a coherent part of the overall program of Govemment,Bank, and other donor-financed activities aimed at poverty reduction with a focus on women's activities

2. Main sector issues and Government strategy:

Despite their contribution to the country's economy, mainly in the agricultural and the informalsectors, and given the importance of their social role, women in Ethiopia do not have equitable access toeconomic resources. The gender dimension of poverty in Ethiopia and the low levels of women's access toeducation and health services, employment opportunities, and participation in the political/legal activities inthe country, are reflected in the welfare indicators provided in Table 1. These indicators are also validatedby the participatory rural appraisals (PRAs) that have been conducted in most regions in Ethiopia.

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Different Socio-economic Roles of Men and Women Women disproportionately bear the burden ofpoverty in Ethiopia. Women are responsible for all household chores, in addition to support they provide inagriculture and livestock production. This is mainly a result of the gender-based division of labor,characteristic of many traditional societies, and exacerbated by the poor state of the environment and thelack of appropriate technology. Only 18 percent of the population have access to clean water. Fuelwoodand cow dung remain the main sources of domestic energy for 95 percent of the Ethiopian population.Women, therefore, spend a large part of their day collecting water and searching for fuelwood. The lack ofappropriate technology also results in the daily pounding and grinding of grain, a laborious task identifiedby women as consuming a large part of their day. Together with other activities, this results in ruralwomen typically working 15-18 hours a day. Women have little or no opportunities and time to accesstraining/technical assistance and credit, thus they are often unable to increase their income to overcomesubsistence-level livelihoods. To assist them in their arduous activities, women keep their children, inparticular girls, from school, perpetuating the vicious cycle of poverty for women. Because of thesedifferentiated roles, the impact of development interventions is also different and, in most cases,gender-neutral development interventions fail to benefit women effectively, and in some cases evenadversely affect women's access to economic resources.

National Policy for Women. The Federal Democratic Republic of Ethiopia (FDRE) has demonstrated itscommitment to addressing these issues and to the equitable socioeconomic development of women with theestablishment of the National Policy for Women in 1993 and the promulgation of the new Constitution in1994. The National Policy for Women aims to institutionalize the political and socioeconomic rights ofwomen by creating appropriate structures in government institutions so that public policies andinterventions are gender-sensitive and geared towards ensuring equitable development for all Ethiopians.

Table 1. The Gender Dimension of Poverty in Ethiopia

Indicators Males FemalesGross primary enrollment rate, 1997 (percent) 48 27Gross secondary enrollment rate, 1997 (percent) 13 1 0Adult illiteracy rate (percent) 59 71Malnutrition (stunting, under 6 years) (percent) 65.2 63.8Malnutrition (wasting, under 6 years) (percent) 10.5 11.1Life expectancy (years) 49 52Maternal mortality (per 100,000 births) NA 500-700 (450-500*)% of Attended Births NA 10 (34*)% of candidates during 1995 election 87 12.1

Note: *SSA average; NA = not applicableSources: WB Genderstats, Social Sector Report (1998); WB HSDP document (1998)

Implementing the National Policy for Women: As discussed in the 1998 Government/WB Report onImplementing the Ethiopian National Policy for Women: Institutional and Regulatory Constraints, theactual implementation of the Women's Policy faces immense challenges. The devolution of administrativepowers to the regional authorities creates both opportunities and difficulties for the implementation of theNational Policy. Opportunities arise in that interventions can now be geared to address region-specificconcerns; yet difficulties remain because of the capacity constraints in administrative and service deliveryat the regional and lower administrative levels. Considerable inter-regional variations further increase thecomplexity of designing and delivering services in a gender-sensitive fashion, as does the fact that regional

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development plans are largely gender-neutral. Interventions that do target women tend to be ad hoc andself-standing projects with fairly standard processes of delivery through formal institutions such ascooperatives and kebeles -- institutions that women, especially those in rural areas, tend not to activelyparticipate in. The 1998 Government/WB report grouped the constraints to successful WID policyimplementation into three main categories:

(i) Relatively lower participation of women in development interventions: Women are unableto benefit equitably from existing opportunities because of a number of social, economic, andtechnical reasons. While a number of these constraints stem from social and cultural norms, manyof them are also generated by project design and delivery mechanisms that are insensitive togender-based constraints. Also, women are usually not part of formal groups such as cooperativesand associations. If at all, they tend to be part of informal and traditional groups; these groups arerarely involved in development activities.

(ii) Gender disparity in legal literacy. Though some provisions in the 1960 Civil Code ofEthiopia are discriminatory and violate the provisions of the 1994 Ethiopian Constitution, there area number of legal provisions that benefit women in significant ways. However, legal literacy isvery low and most women are unaware of the positive provisions. This is a key reason for thenon-enforcement of laws in personal disputes. Access to dispute resolution is also limited by anumber of factors.

(iii) Institutional issues: Inadequate definition of responsibilities and roles of women's offices, lackof institutional capacity, and insufficient budget contribute to the ineffective and inefficient use ofresources, as well as to lack of adequate attention to mainstreaming gender issues.

Strategy to address the above constraints. While the institutional issues will be discussedfurther and addressed in a holistic manner through the ongoing sector work onRegionalization/Decentralization, this pilot project will primarily tackle issues related to women'sparticipation in development interventions at the grassroots levels, and increasing investment inhuman capital. The project is benefiting from the participatory/consultative workshops organizedby WAO to discuss the proposed project with key stakeholders such as the regions and NGOs, aswell as ongoing project preparation activities being undertaken through the Policy and HumanResource Development (PHRD) Grant. The Government-requested PHRD Grant has beeninstrumental in the development and pre-testing of the project manuals [organizationalmanagement, IEC (GIF promotion, health including HIV/AIDS and harmful traditional practices,nutrition, legal literacy, and environment), financial management, MIS, and monitoring andevaluation]. It has also supported the Ministry of Justice's activities related to a review of theFamily Law and improving legal literacy. In addition, WDIP is also benefiting from theInstitutional Development Fund (IDF), which has been useful in providing technical assistance oncapacity building assessments, technical studies to assist WAO in preparing economic profiles ofthe most viable economic activities of women in pilot regions as background information for theGIF, and subsequent institutional strengthening activities such as workshops on communitymobilization and gender-sensitization and skills development training programs; as well as studytours to China and India to learn how these countries have promoted women's income generatingactivities, particularly those related to handicrafts. Linkages between the activities undertakenthrough the PHRD Grant and IDF have been maintained through frequent consultations betweenWAO, PHRD and IDF staff. Moreover, for a number of months, the IDF technical consultant hasworked with the Ethiopia Resident Mission on gender issues and acted as the liaison between theIDF and WDIP teams to ensure effective coordination of strategies and activities.

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3. Learning and Development issues to be addressed by the project:

Lessons Learned from Other Projects

* Based on ESRDF's experience, components with community participation require more time andresources to implement because of the need for capacity building. The project, therefore, has estimatedthe number of microprojects conservatively, and estimates about nine to twelve months of promotionand capacity building activities after credit effectiveness. Simplicity in arrangements will be a criticalfactor to effective implementation. To the extent possible, the structure and arrangements have beenkept simple in this project. Furthermore, a clear project implementation manual (PIM) will help toclarify roles and responsibilities to ensure institutional coherence.

* Increased commitment and sustainability through community participation and contribution. Toreceive assistance, women's groups will be asked to provide upfront savings (at least 10% of totalassistance being sought, 5% of which can be in kind).

* In the Gambia Women in Development (WID) Project, an important lesson learned was the need forintegrating traditional and modem communication methods of IEC (for example, via theatre and radio).WDIP will combine both traditional and modem communication channels in order to be most effective.In addition, IEC and promotion measures are being undertaken to provide information to men andwomen of poor households in poor districts so that women's increased participation may, to the extentpossible, be a joint decision of the household rather than being seen as one addressing solely women'sconcerns.

* The regional background studies for the 1998 WID report indicate the need for increased capacity atthe center and regional government levels, especially the Women's Affairs Bureaus, to effectivelysupervise the implementation of the project, as well as other activities. Both IDF and PHRD Grantsare being used to strengthen supervision and implementation capacity. For example, experts oncapacity building, monitoring and evaluation, community mobilization are being hired to providetechnical assistance in project preparation.

- WID projects in the Gambia and Cote d'Ivoire experienced mixed results because of inadequatemonitoring and evaluation systems and a lack of baseline data. Thus, it is important to have a goodmonitoring system that will help to fine-tune project implementation mechanisms, as well as baselinedata for the benefiting group before assistance is provided in order to be able to measure the impact ofeach intervention. A reporting format for each WDIP micro-project will be ready and functional forthis purpose before assistance is provided to women's groups. An MIS and monitoring and evaluationmanual and system have also been prepared and will be pre-tested and finalized before projecteffectiveness.

* Pilot activities will benefit from local knowledge. The Gambia WID project noted that the privatesector often has a comparative advantage over Government with regard to piloting innovative activitiesand tailoring activities to different groups. Community based organizations, indigenous NGOs, churchgroups, etc., as intermediaries, will be well-placed to solicit the different needs of women's groups andprovide locality-specific technical assistance.

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Development Issues to be Addressed:

F'ocus on cross-sectoral linkages. If the position of women is to be addressed as articulated in theEthiopian National Policy for Women, it will have to be done in a holistic manner. Linkages within andacross sectors is a critical aspect that will contribute to the achievement of stated objectives, gender being across-cutting issue. Specifically, the proposed project would assist targeted women's groups in selectedpoor districts (based on poverty information from regional governments) to improve their social andeconomic status through an inter-sectoral program of assistance as well as provide them with informationto increase their awareness about social and economic matters. Thus, the success of this project will lie inthe ability to tap other resources available to ensure that the ultimate package of assistance provided towomen's groups addresses a variety of critical constraints that hinder their participation in developmentactivities, (for example, lack of time, control over resources, skills, and access to credit).

Three steps will be taken to increase the chances that a package of assistance will be provided:

* regional steering committees will be charged with the responsibility to ensure that the package ofassistance provided to women's groups is a holistic and well designed program of interventions. Forexample, the ESRDF Regional Manager will also be a member of this committee, in order tocoordinate the provision of labor saving devices, wherever possible, to ensure that women's time isireed up from tedious and burdensome daily chores for other more productive activities;

* the project will finance the capacity building of a variety of regional stakeholders and staff of sectoralbureaus to integrate gender concerns into the work of their line ministries, thereby increasingopportunities for women to receive benefits from other ongoing activities; and

* the project will be implemented through intermediaries who will be able to operate and coordinateoutside individual sectors and bring in an inter-sectoral perspective.

Strong and supportive information, education and communication program It is also criticalthat the package of assistance be provided in the context of a persuasive and effective IEC program.Therefore, WDIP would also finance some new and innovative Information, Education and Communication(IEC) programs to increase community awareness of important health and education issues, as well as mainconcerns/issues identified in the PRAs. For example, nutrition, hygiene, harmful traditional practices,HIV/AIDS, legal awareness, and environmental conservation practices will be emphasized. In addition,the IEC program would also include strong legal messages that communicate the rights of both men andwomen under the existing Constitution and the Civil Code. A PHRD grant is currently supporting theMinistry of Justice's activities which include the study and revision of the Family Law, legal awarenessworkshops to inform and engage regional policy-makers and other stakeholders, and the formulation of keylegal messages to be delivered to women's groups through WDIP's IEC component. WDIP will also selectand fund female role models who have made noteworthy achievements in different fields (for example, inagriculture and business) who will serve as promotional and inspirational spokeswomen as part of the IECcomponent. The IEC component will be developed in collaboration with the IEC experts involved in theHealth and Education Sector Development Programs.

Linkages with the private sector. The national and regional steering committees will also aim toestablish pilot linkages between the more successful women's groups with some private sector entities.This may initially be possible, for example, if a private sector entrepreneur, in the business ofmanufacturing honey or exporting flowers, could be linked up with the women's groups. The project couldsupport the majority of expenses necessary for training, purchase of equipment, and a first set of inputs to

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facilitate the production either jointly or collectively of either honey or flowers which would then be boughtby the entrepreneur at an agreed price, provided required quality is maintained. The private investor wouldbe expected to contribute at least 25% of the total start-up costs for these types ofjoint ventures.

Linkages with the social sector. In order to address constraints facing women in a holisticmanner, in addition to IEC messages, the Regional Steering Committees will facilitate and ensure thatregional bureaus or other organizations design and target social and economic services to these groups ofwomen. These will include messages on nutrition, home economics, health issues including harmfultraditional practices and HIV/AIDS, assistance on agricultural inputs, literacy and numeracy courses, andother such activities.

Linkages with environmental activities. Women's groups will be encouraged to undertakeenvironmental activities in line with the National Environmental Policy. Any Women's Group that maywish to undertake environmental activities (for example, soil conservation, social forestry such as care andcultivation of trees, establishment of nurseries) may include them in their action plan. As an additionalincentive, funds may be allocated for this over and above the ceiling for individual groups.

Project Issues to be Tested before Expansion

Administration The project's budget for overhead takes into account the rather slow and difficult processof reaching and training diverse constituencies in communities that are generally located in remote areas.Based on experiences of The World Bank Institute, it should be expected that project administrative costswill remain high for at least the first two years. The experience of NGOs and the Ethiopian RehabilitationDevelopment Fund also suggest that a ceiling of 20 percent for overhead costs might be more realistic thanthe current 10 percent ceiling for administrative costs specified in the ESRDF project's operational manual.The administrative costs will need to be closely monitored.

Women's Groups and Intermediaries

o Size of women's roups. The size of the women's groups must be kept at an optimum level to ensurecohesiveness and support for each other. At the same time, cost effectiveness is increased if the groupsare larger. A balance has to be struck. This LIL will be able to test how groups of different sizesranging from 1O to 30 members perform.

* Capacity of women to participate in development activities will be another key issue. While this will beaddressed through a planned and systematic capacity building program appropriately sequenced tomaximize the impact of project funding, the costs and corresponding benefits will need to be closelymonitored.

* The majority of rural Ethiopian women lead a life that appears more difficult than their counterparts inSub-Saharan African countries like Uganda, Kenya and Tanzania. Cultural and traditional restraintsare exacerbated by the state of the environment in Ethiopia, leaving women in most parts struggling forsurvival. Within this context, how can development assistance be provided in a meaningful manner?Will men be supportive of such means of enhancing household welfare? In addition, existing formalorganizations do not have significant female membership; this particularly constrains women's accessto development opportunities since assistance is normally delivered through these organizations. Canthe project provide incentives to such organizations. in the form of technical assistance and trainingsupport, to increase the percentage of women members and agree to activities that would also benefitwomen?

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* Is there an adequate number of intermediaries to implement such a program? What are their trainingand capacity building needs?

Sustainability

* Sustainability. What are the issues related to sustainability of these grassroots activities (for example,do the women's projects continue to operate even after the project closes and what are the factors thatdetermine the ability of women's groups to continue operating and to initiate new activities; howsustainable are the links established with local and regional organizations and how many of these linkscontinue to exist once the initial project ends?). If the program is to be expanded, what are the -potential benefits and risks involved?

4. Learning and innovation expectations:

Cl Economic 1 Technical D2 Social X Participation1 Financial X Institutional [] Environmental El Other

The project will begin as a pilot by promoting the Fund among poor communities that havereceived little sustained outside support for their own developmental initiatives. Its pilot characteristic alsomeans that the project will be able to actively pursue experimental approaches to women's management andparticipation in small self-help activities. In addition, implementation arrangements (mainly throughfinancing windows) will be kept relatively simple to the extent possible and will be adapted to each region'ssituation and needs.

While allowing for flexibility and experimentation in project processes and procedures, the projectwill also incorporate a number of design and implementation mechanisms to ensure that the activitiesfinanced by the project are likely to be sustainable. Critical factors for sustainability include ability tomotivate women from poor households who have very little time for development activities, nature andcapacity of women's groups, identification of suitable intermediaries to provide adequate technicalassistance to women's groups, ability to appoint and retain qualified staff, particularly at the regionallevels, and ensuring ownership by key stakeholders. Thus, in order to mitigate the potential risks thatproject activities are unsustainable a number of mechanisms will be in place. For example, the first nine totwelve months after credit effectiveness will be limited to IEC, fund promotion, and capacity buildingactivities. To the extent possible, appropriate intermediaries with roots in the locality will be selected inorder to increase the likelihood that they provide the necessary mentoring to the group.

On the other hand, while targeting criteria will ensure that productive activities have a good chanceof success, the Project may not reach the poorest communities. Thus, in order to assess whether the WDIPcan be adapted to reach even poorer communities, it is proposed that about 10% of total number of projectsbe organized in areas which do not have access to the minimum level of basic economic infrastructure.Special methodologies will be developed and tested including the use of non-banking institutions to holdassets :for these women in such areas. These pilot experiences will be evaluated and recommendations willbe made regarding whether and how a project of this kind can reach the poorest groups.

Given that this is a leaming and innovation project, intended to provide lessons and guidelines forthe development and implementation of future development interventions, it will also be essential to put inplace a simple and effective monitoring and evaluation and MIS system. Participatory assessments will beundertaken periodically to elicit stakeholder feedback and monitor project perfornance. The challenge is to

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design and implement a system that can supply fairly rapid feedback to improve project implementationwhile, at the same time, provide a careful assessment of the WDIP as a whole, and its components.

If successful, this project could create an important, sustainable, and relatively inexpensivedevelopment mechanism consistent with FDRE's poverty reduction strategy to build the capacity of womento participate in development activities.

C. Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

The WDIP aims to enhance women's participation in development interventions by mobilizingwomen at the grassroots level and capitalizing on their potential to support the development process. It willfacilitate the formation of self-help women's groups, and the strengthening of existing grassroots groups,and will build women's capacity to act collectively to increase the social and economic welfare of theirhouseholds. Women's groups will constitute the backbone of the project's activities, and the organizationalstructure is intended to provide support to these groups and to give community women increased voice inthe decisions affecting their lives.

There are two main project components: (a) the Grassroots Initiative Fund for Women and (b)Institutional Strengthening Program comprised of three sub-components: (i) Capacity Building, (ii)Information, Education, and Communication, and (iii) Monitoring and Evaluation.

Grassroots Initiative Fund for Women.

The Grassroots Initiatives Fund (GIF) does not identify or implement projects, but supports theefforts of intermediaries and women's groups in sub-project implementation and management by providingfinancial and supervisory support and by enhancing their managerial and technical capacities. The GIF isprimarily a financing window and will be demand-driven. It will provide support to women's groups toorganize themselves around productive activities, the nature of which will be determined by thebeneficiaries themselves, and in which they are themselves willing to invest ( on average, about 10% inup-front savings from women's groups will be required in order for them to qualify for project grants; atleast 5% in cash and the other 5% could be in kind). Given the nature of the Fund's mandate, all activitieswill be relatively small, technically simple, and cost effective. Annex II provides a table which outlines theproposed criteria on which activities will be assessed, for example: proposed activity should be one that isin line with the Fund's objectives, it must be socially acceptable, should not result in an illegal activity norin unfair competition, and it must have no adverse environmental impact. The cost of the proposedsub-project must be within the limits of the Fund's support and its complexity level must be in line with thecapacity of beneficiaries. For income generating activities, the proposal must also indicate a satisfactoryassessment of the marketability of the proposed product/service, local availability of raw materials is alsoan important criterion, as well as the availability of facility for production/service, where necessary. Forlabor-saving devices, the appropriateness of the proposed technology will also be assessed and whether ornot it could be funded by other agencies and/or by the ESRDF. Sustainability will be a driving principlebehind all activities and the GIF will not be involved in any way in relief or rehabilitation activities.Examples of possible activities are: handicraft production; rearing of small animals or poultry; productionof food items; labor-saving devices (e.g., enset production equipment for grinding and scraping);organization of a day-care center with a nutrition training component or other such activities determined bythe women's groups.

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In consultation with the women's groups, the local coordinating offices will select and hireappropriate intermediaries to provide the requisite technical assistance to women's groups in thecoordination, design, implementation, monitoring, supervision and operation of their selected activity.Group facilitators, hired by intermediaries in consultation with women's groups/communities, will workwith women's groups for a certain period of time to assist them in preparing their action plans for GIFfunding, attendance records, minutes registers, cashbooks and ledgers. They might also assist -intermediaries in facilitating group formation and in delivering IEC messages. A technical panel of expertswill also be available to provide technical assistance to women's groups on an as needed basis.

Women's groups will constitute the backbone of the project's activities. Where there are existingwomen's groups in selected districts, these groups will be utilized. However, in many cases, there may beno existing groups, and it would be necessary for the Fund to identify and encourage the formation ofwomen's groups.

Capacity building and training to strengthen women's group is included under this component,while capacity building at all other levels will come under the capacity building component. The capacityof women's groups to undertake and manage their activities will be strengthened through the GrassrootsManagement Training Program (GMTP) which could have the following core contents: human resourcemanagement (for example, group formation, dynamics); financial management (for example, bookkeeping,savings and credit schemes), management (for example, identification of business and skills requirement ofthe group, preparation of sub-project); and production and marketing. GMTP can be adapted to the needsof semi-illiterate or illiterate women in a variety of sectors and a range of different socio-cultural contexts.Simple skills training would also be provided to women's groups. The need for such training will beidentified by the women's groups themselves, and determined in consultation with their intermediary. Theintermediary will then place the request before the Regional Coordinating Unit who would then decide howand wlhere to give such training, after compiling such requests from the different intermediaries in theregion.

Institutional Strengthening Component

(a) Capacity building

A preliminary assessment has been carried out which focuses on the capacity and intent ofstakeholders likely to be involved in project implementation. Clearly, the capacity of many stakeholders isweak, and therefore capacity building will be an integral and important part of project design. In fact, it ispossible that the first nine months of the project may consist entirely of capacity-building activities.

(i) Capacity Building for Internediaries and Facilitators. The intermediaries that would help toimplement the project will constitute a critical group in this project. In general, capacity buildingefforts will focus on improving intermediary skills regarding group organization, facilitation, trainingof grassroots beneficiaries, project design, appraisal, monitoring, and evaluation reporting. Efforts willalso focus on strengthening of indigenous and community-based organizations within poor districts. Tosome extent the nature of the capacity building program will also depend on the roles and thecharacteristics of the selected intermediaries and, therefore, more specific activities would be developedimmediately after selection of intermediaries in the different regions. Group facilitators will also begiven training that would help them work effectively with women's groups.

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(ii) Project Officers and Other Partners. Given the nature of the project, all project officers, staff andother project stakeholders at different administrative levels will be targeted to ensure that they arefamiliar with the project approach and objectives and armed with technical skills related to projectplanning, implementation, and management. Training aimed at increasing the appreciation andunderstanding of issues related to gender, environment, and developing community mobilization andparticipation skills will also be supported.

(b) Information, education and communication

(i) Objectives and Activities. The IEC component aims to increase awareness of men andwomen in a number of areas like health, including HIV/AIDS and harmful traditional practices, nutrition,family planning, environmental sanitation, and legal rights and obligations. Activities would be designedbased on the findings of the Participatory Rural Appraisals and would aim to strengthen the positiveaspects of customary laws and practices, while at the same time sensitizing the public to the adverseaspects. Key legal messages will be based on a study being financed by the PHRD grant which examinesthe inconsistencies between the 1995 Constitution and the 1960 Civil Code to identify Family Lawrevisions that would be needed to ensure the Constitutional mandate of gender equality. Thissub-component will also involve the promotion of some female role models, whose services will be utilizedto increase awareness of the potential opportunities for women and to convince both men and women thatthe household will benefit on the whole if women are also able to develop and avail themselves of suchopportunities.

(ii) Implementation. Private sector intermediaries would be used to design and implementdifferent types of innovative campaigns to reach women at the grassroots level. Different media will beused to reach poor households in a social context where the majority of men and women are illiterate andwhere conventional forms of IEC tools like radios and television are not widely used. Separate draftguidelines have been prepared for the IEC component, which are currently being pre-tested under thePHRD grant and will be finalized in August, 2000.

(c) Monitoring and evaluation

Monitoring and Evaluation will be based on indicators identified in the project proposal of women'sgroups, financing agreement, and the list contained in the Development Credit Agreement. Regular andsystematic collection of information and relevant data to monitor progress/performance of deliverymechanisms as well as the impact of the activities financed under the project will be undertaken. This isessential not only to be able to adjust the project mechanisms as necessary for effective projectimplementation but also for designing the expanded phase, if such a decision is made. At the beginning ofthe project, a simple, computerized national MIS will be established at the central level while regions willenter data manually. Eighteen months after credit effectiveness, the system would be jointly reviewed bythe Govemment and the Bank, and a decision made on expansion of the computerized system to theregions; regions can then adapt it based on their needs and capacity.

As part of the loan conditions, a Mid-Term Review will also be conducted and relevant progressreports and beneficiary assessments will be prepared in time for discussion during the MTR.

The M&E Component will also finance other participatory assessments and independentevaluations periodically.

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Indiatfive E_ 4- % OfComponent Sector Costs % of financing Bank-

____________ (US$11) Total MML financing1. Grassroots Initiatives for Women Institution 4.47 55.8 2.70 54.0Component building

2. Institutional Strengthening Program BI - Institutional 0.0 0.0Component Development

BI - Institutional 0.63 7.9 0.55 11.0a. Capacity Building Sub-component Development

b. Information, Education, and BI - Institutional 0.72 9.0 0.50 10.0Communication Sub-Component Development

c. Monitoring and Evaluation BI - Institutional 0.46 5.7 0.45 9.0Sub-Component Development

3. Administrative/Management 1.73 21.6 0.80 16.0Cornponent*

0.00 0.0 0.00 0.0

Total Project Costs 8.01 100.0 5.00 100.0Total Financing Required 8.01 100.0 5.00 100.0

All taxes for vehicles and equipment will be financed by the Government.: Managementladministrative costs listed as separate for purposes of transparency and monitoring. Administrative component includes investmentcosts fbr vehicles and fax machines and recurrent costs which include salaries and operating costs in all regions.

2. Institutional and implementation arrangements:

The project period will cover five years.

Management of Project Activities

Cenitral Level. Project activities would be managed at the regional levels, supported by a smallcoordinating and monitoring unit at the central level. The central financing window will be kept small with3-4 staff at the most to coordinate/monitor the project and report to WAO, as well as help them tomainstream and strengthen their coordination and monitoring responsibilities (their mandate under theNational Women's Policy). The central office would include a Project Coordinator,Financial/Procurement/MIS Officer, a Capacity Building Officer, and a Promotion/IEC Officer. There willbe a National Steering Committee that will reflect a wider range of expertise and will oversee and guide onpolicy and other issues (NGOs, such as CRDA and CERTWID will be included). This SteeringCommittee will be chaired by the Minister of Women's Affairs.

Regional Levels. Regional Steering Committees will oversee activities in the different regions chaired bythe head of the Regional Women's Affairs Bureau. A small financing window would be managed under thesupervision of the Women's Affairs Bureaus. The unit would have a Regional Coordinator for project

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activities who will report to the Steering Committee. The Unit would also include a capacity-buildingofficer, promotion/lEC expert, financial and procurement officer, and MIS officer. At the regional level, itwould be helpful if the offices were small but staff requirements kept flexible depending on regional needs.It was also suggested that capacity building, promotion/lEC, and MIS officers could be shared by regions,with these experts being rotated from one regional office to another as each region begins itsimplementation phase. Depending on the capacity within the region, such coordinating unit may even bemaintained at the zonal or wereda level. This would mean that a staff of the Regional Unit could bedelegated to the zonal or wereda level until necessary capacity is built.

Implementation Arrangements

The project would strengthen existing local structures and linkages with grassroots entities likekebeles and development associations. There would not be a single, uniform implementation structure forall regions, given their varying capacity and different socio-economic conditions. The goal would be toavoid creating any additional institutional structures for coordination at the regional levels, and to utilizelocal structures to manage project activities. As a LIL, the project can be open to testing out differentmodels to see which one works best.

Implementation by Intermediaries. Intermediaries will act as implementing agencies, providing support insocial mobilization, training, capacity building, and guidance in identifying the group's action plan. Theywill also monitor and provide implementation support to women's groups. Intermediaries can provide arange of functions based on their qualifications and on the established need of women's groups (forexample, wherever possible women's groups will maintain their own finances, but in some cases theintermediary may need to oversee the funds). The intermediaries will be chosen based on specificpre-identified criteria to be defined in the project implementation manual (for example, track record,location or proximity to women's groups, language, training experience). If they are from the private sectoror NGOs, they will be hired as consultants. If they are extension agents or other govemnment agents, theywill be paid only expenses for travel and per diems for such services. The financial arrangements at thegrassroots level will be flexible to reflect the capacity of the groups and the intermediaries. Where women'sgroups lack capacity and need to be strengthened, intermediaries may be held accountable for the women'sgroups' use of the funds. Extent of accountability of intermediaries would need to be very clear in theagreements. In particular. the responsibilities between women's groups and intermediaries would need to beclearly defined in agreements. The project implementation manual will have annexes containing sampleagreements between women's groups and intermediaries. Differences between the rural and urban regionswill need to be taken into account (for example, in terms of availability of banks and literacy rates).

Capacity Building. The capacity building components will consist of two types of activities: First, thosethat can be designed in advance based on needs already identified across various groups (such as trainingwomen's groups and intermediaries in managing the cycle). Second, those which have to be tailor-madeto meet the special needs of a group of beneficiaries, or facilitators depending on the nature of selectedsub-projects.

While project staff will actively identify capacity building requirements, given staffing constraints,training will be sub-contracted through a wide range of training institutions, NGOs, and consultingspecialists. In the case of the Grassroots Management Component, a training-of-trainers approach in orderto develop a network of skilled facilitators and specialists will be utilized. As the goal will be to create asmuch self-reliance at the level of the women's groups as possible, special attention will be given to thesetraining of trainer programs. In order to assist in moving project preparation efforts forward, the firsttrainer of trainers workshop funded by ESRDF was held in August 17-27. Participants from IDF, PHRD,

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NGOs, the Government, and private sector took part in the training. Evaluations results showed that thetraining was both relevant and timely. A draft GMT manual adapted to the Ethiopian context will be oneof the outputs of the training. The manual will be further refined at the field level.

Techrnical Support Experts. A panel of service providers (technical support experts) would be establishedcentrally, which regional units could contract for technical expertise on an as-needed basis. Where possibleregional panels may be established, depending on the capacity available in the region. (See Annex 2 forfurther details).

Implementation Rules and Guidelines. Implementation arrangements and responsibilities will be clearlyarticulated in manuals, which are listed below. The Project Implementation Manual (PIM) has alreadybeen provided to the Bank and will be finalized after negotiation. Any changes to the PIM can be made inconsultation with the Bank. A simple set of guidelines for women's groups is being tested with small groupsof women and will be finalized after negotiations. In addition, drafts have been received of the followingguidelines, all of which will be retained as drafts in order to ensure flexibility for revisions as warranted bycircurnstances:

* An IEC manual would provide guidelines for the legal literacy campaign, other IEC messages, andhow the role model fund would be implemented.

e A capacity building manual will be developed at the regional level. Regional offices will be incharge of capacity building and implementation is expected through intermediaries such as CRDA.This manual is being developed through a series of workshops; two GMT workshops have alreadytaken place this year, the introductory/sensitization workshop in April and the training of mastertrainers workshop in August.

3 A detailed financial/administrative operations manual has also been finalized.

Phased Manner of Implementation. Regional implementation will occur in a phased manner, with fourregions starting during the first year, four regions during the second year and the remaining regions duringthe third year. Addis Ababa, Amhara, Afar, and Dire Dawa have been selected for project year (PY) I so asto provide learning in urban and rural situations, as well as in regions that are in different stages ofdevelopment.

3. Monitoring and evaluation arrangements:

Monitoring of project implementation and the evaluation of the impact of the project on thesocioeconomic status of beneficiaries will be conducted in a participatory manner. At the outset of theproject, baseline information based on data sheets prepared by each participating grassroots women groupwill be collected. Most of this information will be collected by the facilitator with the assistance of localresource persons where necessary, under the supervision of the intermediary. The implementing agency,beneficiaries, the RCU and other stakeholders will jointly and continually monitor and evaluate the progressand the impact of sub-projects. Stakeholders who are close to the sub-projects such as wereda, kebele andother village-level organizations, will also play a strong role in the monitoring and evaluation of projects.In addition, the project will finance independent evaluations periodically to understand the outcome andimpact of these activities. These will involve qualitative assessments that will take into consideration theviews of beneficiaries.

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Regular monitoring tools will be monthly sub-project progress report submitted by the intermediaryto the RCU and project visit reports of the Capacity Building Officer. The monthly progress report of theintermediary will include the implementation status of project activities, financial status, i.e., funds receivedand used/unused; and problems encountered and measures taken to solve them.

The coordination of the follow-up and evaluation of completed sub-projects will be theresponsibility of the RCU. The RCU will make arrangements, involving all major stakeholders, to ensurecompleted sub-projects are visited and their impact on the beneficiaries assessed. The reports of suchevaluations should be used as feedback information for planning purposes.

Guidelines with clear monitoring and evaluation indicators will be ready by credit effectiveness.Monitoring and evaluation will be conducted against indicators identified in the project proposal andaccording to the monitoring and evaluation schedule indicated in the Financing Agreement. A simplecomputerized MIS svstem is being developed and will be available at the central level. Data entry will beundertaken manually at the regional levels.

Assuming computers are already available, the possibility of selecting one or more regions topilot the computerized monitoring and evaluations systems would be considered. Eighteen monthsafter credit effectiveness, the system would be jointly reviewed by the Government and the Bank, anda decision made on expansion of the computerized system to the regions.

Bank Supervision Plan. While the project will be closely monitored, with the support of ResidentMission staff, a mid-term review will take place after 30 months of project implementation to identifyproject successes and problems to be addressed, and modifications that may be needed in projectprocedures for the second half of the Project. The Mid-Term Review will be preceded by independentconsultant studies of a sample of sub-projects by region and sector, utilizing beneficiary participatoryassessment methods.

Project Evaluation & Expansion Scope. Eighteen months before the completion of the Project, anindependent evaluation will be carried out to detennine (i) whether the Project has accomplished itsobjectives both in project terms and as part of the broader poverty reduction program; (ii) the effectivenessof project management, the institutional structure, and the operational procedures; and (iii) the value ofscaling up project activities.

D. Project Rationale

[This section is not to be completed in a LIL PAD. Rationale should be implicit in paragraph B: 3.]

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):[For LIL, to the extent applicable]O Cost benefit NPV=US$ million; ERR = % (see Annex 4)O Cost effectiveness* Other (specify)

The WDIP seeks to operationalize the Ethiopia Country Assistance Strategy's objective of povertyalleviation, in general, and to improve the status of women by economic and legal means, in particular. Bytargeting women in poor districts and encouraging them to form and remain in groups organized to

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undertake productive activities funded by grants through the project, it directly addresses the financingneeds of poor women. These needs have been underscored by existing sector work such as the EthiopiaSocial Sector Report, participatory appraisals, and the WBGOE publication on Implementing the NationalPolicy onI Women. Through its IEC component, WDIP also aims to improve awareness among women andcommunities regarding legal, health, nutrition, harmful traditional practices, and environmentalconservation issues. It also seeks to build institutional capacity (for intermediaries, facilitators, andrelevant government institutions) for project services delivery and oversight through its capacity-buildingcomponent.

There are two main reasons for government involvement: imperfect credit markets and povertyalleviation. This project targets women's groups which would not have access to funds from other financialinstitutions under normal circumstances. Based on the PRAs, these poor women tend to borrow moneyfrom relatives and friends, as well as moneylenders who charge high interest rates (sometimes as much as240 percent per annum). However, financing alone would not satisfactorily address the diverse needs ofwomen especially if they want to improve the productivity of the activities they engage in and, ultimately,the welfare of their households. Thus the strategy adopted in this project emphasizes the holistic approachof provicling training, IEC, and financing to women's groups in order to have a broader impact on women'slives and household welfare.

The counterfactual would have been to rely on the private sector and NGOs whose involvement isusually l-imited to more accessible, developed regions. In general, the private sector tends to be motivatedby profits; providing training and financing to poor women can be risky and is more likely to yield greatersocial returns than financial returns. While some NGOs in Ethiopia provide grants and training, theiractivities are substantially smaller in scale and scope than what this project proposes to do. WDIP willcover selected districts in zones that have high numbers of people below the poverty line in all regions. Inaddition, while it proposes to target mainly women's groups that are poor but not the poorest of the poor, itaims to organize about 10 percent of the total number of projects in areas which do not have access to theminimumn level of economic infrastructure such as banking services. Special methodologies for servicedelivery will be tested and evaluated to see how WDIP can work effectively in these areas.

][n order not to impose additional burdens on the existing limited implementation capacity of thegovernment and to minimize the transactions costs for poor women, nongovernmental entities will also becontracted to deliver services to poor women. Community involvement will also be actively sought by theproject.

By the end of the project, it is expected that about 800 women's groups would have been formed;approxinmately 16,000 women would have been recipients of training, productive and/or labor-savingtechnology, and small grants to purchase inputs for income-generating activities. It is also estimated thatover 250 facilitators and a number of intermediaries would have been trained and mobilized in all regions.It is also expected that the capacity to plan, undertake, and manage development interventions will bestrengthened across different administrative levels, ranging from the community level to the central level.

Training, technical assistance, and technology/input funds received are likely to result in increasedproductivity and incomes, as well as improved management, technical and project implementation skills. Itis also envisioned that over the long term, a number of women's groups will benefit from their involvementin WDIP-supported activities because of increased savings through the mobilization of savings groups. Itis also expected that a number of them would be able to gain access to mainstream financial intermediationmechanisms. Women are also expected to benefit from increased self-reliance, self-confidence, and theirenhanced social status in the family and community.

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Benefits of increased awareness of legal rights, health, and nutrition, harmful traditional practices,and environmental conservation issues due to WDIP's IEC activities are also expected, although thesewould be difficult to quantify. Improved community awareness of gender issues is also an importantbenefit of this project.

The project, however, also faces a number of risks (Annex 4 discusses them and outlines some riskmitigating measures which the project implementation plan will also address):

* groups might be difficult to form, especially in more remote and more traditional areas* mistargeting of beneficiaries* possibility of default and dropping out* grant funds might be used to finance consumption rather than production as specified in the group's

business plan* implementation capacity constraints

Of these risks, default and dropping out and the use of grant funds for consumption rather thanproductive items seem to be the more difficult ones to control but risk minimization measures, includingsupervision and monitoring, will be clearly stipulated in the project implementation manual.

2. Financial (see Annex 5):NPV=US$ million; FRR = % (see Annex 4)[For LIL, to the extent applicable]

Fiscal Impact:

The total cost of the five-year program is US$8.01 million, with IDA's contribution at US$5.0million; Italy's contribution is approximately US$1.8 million; other donors's contribution is estimated to bearound US$ 500,000; the Government's contribution is US$600,000; and women's groups' contributionsare estimated at around US$160,000. The project as it is designed is affordable and is expected to haveonly minimal fiscal impact. In addition, implementation arrangements have been kept simple with a lightgovernment structure that relies on existing local institutions as intennediaries and locally based individualsas group facilitators. Project activities will be phased to keep pace with capacity-building activities.Economies of scope will be achieved by combining services delivered to target beneficiaries, for example,grants and training together with information that increases community and women's awareness on legal,health and nutrition, environmental conservation issues. Various cost minimizing alternatives in terms ofsharing of regional office units, capacity building, MIS, and promotion officers; having a simple MISsystem; delivery of services to groups that are clustered geographically to facilitate ease of supervision andmonitoring have also been presented and discussed with the Government. The Government has agreed toalmost all of the cost minimizing suggestions and will also explore the possibility of sharing some regionaloffice units.

However, since WDIP has been designed as a grant, there is no direct cost recovery mechanisminvolved although mechanisms for women's groups to become sustainable by having a group revolving fundwill be established (with each member expected to pay back to their group a percentage of administrativecosts and, if agreed upon in the group by-laws, some interest together with their share of input costs to helpsustain future group activities). It is also envisioned that some of these groups, particularly those in urbanareas, would even be able to obtain loans from formal microfinance institutions as a result of their

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increased capacity to manage their business activities and their savings which could be used ascollateral/deposit. Nonetheless, should the government decide to continue with the grant mechanism oncethe project ends, then it would need to make sure that this is adequately budgeted for. In addition, shouldthe project be scaled up then the additional financial and administrative requirements of increased outreachactivities, taking into account different funding sources, would need to be examined.

The average direct cost per beneficiary, considering only skills and grassroots fund management,training, equipment, technical assistance and seed money is estimated at US$281. When other supportcosts such as institutional capacity building and MIS/monitoring and evaluation are included then cost perbeneficiary increases to US$501. This estimate allows for sufficient funds for training, capacity buildingand other needed support (for example, administrative and monitoring) costs necessary to effectively reacha mix of poor women's groups, some of which may have illiterate and/or less skilled members who mayneed more training and follow-up and supervision, as well as a number who may be located in remoteareas.

A wide range of activities have been envisaged to be undertaken by poor women's groupsdepending upon the resource base in the project areas. The groups themselves will select the activitiesappropriate to their need and circumstances. A review of studies on small-scale income-generatingactivities by the WDIP team indicates that women are predominantly engaged in petty trading andprocessing and selling of food and beverages; followed by pottery making; textile and rug weaving; andjewelry and household crafts making. A number of them were also interested in animal husbandry. Basedon the few available estimates, the average financial rate of return for these activities is about 20 to 25percent; most of these are urban-based and a lower financial rate of return is more likely to be expected inrural and remote areas.

3. Technical:[For LIL, enter data if applicable or 'Not Applicable']The technical issues that need to be considered during project design and implementation are the following:

* Providing Technical Support to Women's groups. Ensuring that women's groups are guidedproperly in technical matters to ensure that they adopt activities in a sustainable manner so that withina specified period they can continue to operate independently without relying on intermediaries.

* Targeting Women from Poor Households - Criteria for targeting women's groups would need to bedetermined carefully. Based on a number of surveys: having a majority of female heads of householdsas group members may be a criterion; involvement in particular types of income-generating activitiesmay be another criterion; women from landless households, women above 18 who are not married inpoor rural households may be another selection criterion.

Effective Delivery of IEC. Ways of delivering IEC that would effectively reach illiterate women and men,as well as a way of packaging different IEC messages that could deal with various relevant issues such aslegal literacy, nutrition, health, hygiene, harmful traditional practices, and environmental conservation.

* Provision of Grants. Targeting women from poor households who do not have the capacity to obtaincredit from financial intermediaries is important. The appraisal of women's groups project proposalswill have to ensure that the proposed arrangements address a number of issues related to size,recipients, and usefulness of such grants.

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* The establishment of a satisfactory MIS system would be essential including the establishment of:

(a) Criteria for expansion - scaling up indicators and modalities for, and sequence of expansion;and

(b) The need to include more outcome/impact indicators. This underscores the need to collectbaseline data about the women's groups, and therefore it will be necessary to think through theseissues.

4. Institutional:

4.1 Executing agencies:

The Women's Affairs Office at the Federal Level will be the main executing agency. A small centralfinancing window will be established within WAO, which will be responsible for coordinating andmonitoring the project activities. Only a few staff are expected to be appointed: a grassroots fundcoordinator, an administrative and accounting specialist, a capacity building expert, and an MIS officer.Technical guidance will be provided through a National Steering Committee comprised of sectoral,nongovernmental and private sector representatives to guide at the policy level. These arrangements arelikely to be replicated at the regional levels. It is also possible, if sufficient capacity exists, for thecoordinating unit to be located in a wereda. Different options will be tested.

4.2 Project management:

Project management. The project is expected to be coordinated by the Central Ministry but project staff atthe central level will be kept minimal. The project will be managed fairly independently at the regionallevels. The draft implementation manual which will be circulated along with the PAD will containimplementation suggestions that will be reviewed within the Bank.

Capacity of Regional Bureaus and other stakeholders to provide the required support under this project iscritical and preliminary review indicates that this will need to be strengthened considerably. Based on theneeds assessment undertaken as part of PHRD, a capacity-building sub-component will be designed. APanel of Technical Support Experts will be established who will be contracted to provide technicalguidance on a consultancy basis.

Linkages with all partners. Activities that may be financed by the project are likely to be intersectoral andthe project would need to ensure that, in both design and implementation, there are adequate linkages inplace with all relevant sectoral stakeholders.

Availability, capacity, and acceptability of intermediaries. The WID Report on "Implementing theEthiopian National Policy for Women" indicates that reaching women is going to be a difficult challenge.In the remote and distant areas, where the need for assistance is greatest, there are very few formal NGOsor institutions working with women. Other existing institutions like wereda and kebele developmentassociations will also be utilized. Finding intermediaries who are acceptable to communities will also be animportant consideration in the selection process.

Women's Groups. Women need to be encouraged to form groups through which services may be delivered,and where members of the group may help themselves, as well as each other, in enhancing their income and

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skills. Measures to promote this approach, as well as to provide adequate incentives, will need to beexamined and translated into project design.

All of the above issues have already been examined through region-specific background studies and PRAs,and during the Bank appraisal but these will be examined further through work under the PHRD grant.

4.3 Procurement issues:

Procurement, mostly consisting of contracts of very small monetary value, will be mainly carriedout at the grassroot level, following simple and transparent procurement procedures stated in theproject implementation manual. This manual has already been reviewed by Bank procurementspecialists. It will also conform with national regulations.

No major procurement issues are identified although training on procurement procedures andrecord keeping is important at all levels. The Project Launch Workshop would include a module onprocurement for the project and project staff will be provided with intensive training with the assistance ofthe Procurement Analyst/Specialist in the Addis Ababa Resident Mission. The training prepared forintermediaries will also include a module for sensitizing the intermediaries to Bank requirements oftransparency and faimess. Women's Groups will also be provided adequate, simple procurement andrecord-keeping training related to their proposed activities under the component "Grassroots ManagementTraining" through the use of experienced intermediaries.

4.4 Financial management issues:

Prior to credit effectiveness, a Bank-approved financial management specialist will evaluate theproject's financial management and reporting system (staffing levels and skills of accounting andfinancing personnel, the adequacy of the manuals, the completeness of the accounting system, and theprocess for appointment of auditors). The establishment of a sound financial management andreporting system will be a critical condition for credit effectiveness.

5. Environmental: Environmental Category: C (Not Required)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

The project involves no major construction. Where construction is needed, such as for a day carecenter, it is expected to be a small tukul or such indigenous structure, not involving any environmentaldamage. The proposed action plans will contain a section on possible impacts of the proposed activity (ies)on the environment and community. At the same time, the project will encourage activities that will protectand conserve the environment. Activities will include group nurseries, group wood lots, and soil erosionprevention. Activities may also involve discouraging women from depending on fuelwood sale for theirlivelihood and channeling them into other productive activities that do not adversely affect the environment.The project would also promote actions that could help protect the environment such as hygienic (e.g.sanitatiion and waste disposal) practices that households and communities can adopt. Monitoring andevaluation, MIS will also try to have some indicators that would measure the environmental effects of theproject.

5.2 What are the main features of the EMP and are they adequate?

Not Applicable

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5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: Not Applicable

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanisms

of consultation that were used and which groups were consulted?

Not Applicable

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

Not Applicable

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

defined (indicate how issues will be identified) []None

Participatory Rural Appraisals which were conducted in all but two regions sought information oncustomary laws and practices affecting the economic lives of men and women. In addition, two PRAs wereconducted in Addis Ababa to understand the constraints facing female entrepreneurs and obtain infornationon divorced women's access to social and financial assistance. PRA findings constitute the basis for thedesign of this project. In addition, a large number of beneficiaries at the grassroots level were consulted tounderstand the priorities and needs of grassroots women.

In particular, these investigations have led to a much clearer understanding of gender-based rolesof men and women, which will help in the fine-tuning of project design and implementation mechanisms toreach women more effectively. They have also enhanced understanding of the types of social and economicgroups/networks that exist in many of these communities that may be used to deliver servicesfor women. The PRAs have also been useful in identifying key areas where IEC messages are needed.Moreover, a recent survey conducted to understand the access of women from poor households to differenttypes of media will assist in better designing the IEC component.

The PRAs have also helped in identifying the risks inherent to this project because of conservativesocial attitudes regarding the role of women, but at the same time indicate that perhaps, at one level,poverty does emancipate women from a number of traditional constraints. For example, the PRAs indicatethat women from very poor households were all engaged in some income-generating activity in order tosupplement household income, and are likely to have the support of the husbands to engage in such activity.

Also, most men questioned seemed to support women being assisted to increase their income.

Another very clear message that comes across is that women work very long hours. In somelocalities, women work as long as 18 hours on a daily basis. It is evident that if these women are to benefitfrom development interventions, it will be important to free up their time or to focus on increasing theproductivity of activities that they are already involved in.

6.2 Participatory Approach: How are key stakeholders participating in the project?

This project is a direct response to the findings of the WID Sector Report, which was prepared and

finalized for Ethiopia. The Report had been prepared in a highly participatory manner, jointly with the

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Federal Government, and in close consultation with, and under the guidance of Regional Governments, aswell as nongovernmental stakeholders.

Participatory Rural Appraisals, were conducted in all but two regions, to bring in the voices of thegrassroots beneficiaries. Participatory appraisals were also completed in three urban areas, though in two,the information generated was relatively weak. Selected consultants, including a National Coordinator,received training from international consultants for this purpose. Further workshops and consultativemeetings were held to share information on project design and implementation mechanisms with regionalstakeholders.

NGOs and Intermediaries: All of the following NGOs have been advised of the proposed project; andthere has been an exchange of information on a number of project-related issues: ACORD, Action Aid,African Village Academy, CARE International, Food for the Hungry International, Oxfam UK, Propride,Redd Bama, Relief Society of Tigray, Save the Children UK, Sustainable Financial and PromotionalInstitutions, and World Vision. The information provided by these groups will be used to estimate the costeffectiveness of this project. Further workshops will be held as the preparation of the project progressesand they will be advised of the project concept and their comments sought on its design and implementationmechanisms.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

Not Applicable

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

Not Applicable

6.5 How will the project monitor performance in terms of social development outcomes?

Not Applicable

7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?

= lky A.PUc ' I;.tyl Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) E Yes N No

El Natural habitats (OP 4.04, BP 4.04, GP 4.04) EL Yes N NoE Forestry (OP 4.36, GP 4.36) L Yes N NoE Pest Management (OP 4.09) LI Yes LI NoEI Cultural Property (OPN 11.03) [ Yes N NoE Indigenous Peoples (OD 4.20) ElI Yes El NoC Involuntary Resettlement (OD 4.30) El Yes N NoEl Safety of Dams (OP 4.37, BP 4.37) El Yes N NoEl Projects in International Waters (OP 7.50. BP 7.50. GP 7.50) El Yes N NoC Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) C Yes N No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

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F. Sustainability and Risks

1. Sustainability:

This section is not to be completed in LIL PAD.

2. Critical Risks (reflecting assumptions in the fourth column of Annex 1):

Risk Risk Rating Risk Minimization MeasureFrom Outputs to ObjectiveAbility to find appropriate and sustainable H Women will be encouraged to organize based onactivities for women's groups activities that they are already invoIved in so

that the focus will be on enhancing productivity.A menu of possible options will be prepared.PRAs, already conducted at the regional levels,will help to identify such activities. Incentivesfor continued group collaboration will also beexplored.

Capacity of women's groups to produce M Grassroots Management training will berequired savings required before a women's group will receive

any other assistance. Savings would also be aprerequisite for acquiring additional funds forthe women's groups

From Components to OutputsAvailability of adequate intermediaries to S There will be a wide range of activities toimplement project activities promote project's objectives, and a variety of

existing entities will be strengthened throughprovision of training and technical assistance.

Willingness of communities to permit N An IEC program is being prepared that will aimwomen to participate in project activities to convince communities that supporting women

to get involved in economic activities willultimately benefit all. Further, interventions willbe packaged in such a way that women's groupswill be organized around an income-generatingactivity and at the same time learn more aboutbetter health and nutrition practices and otherhousehold/community welfare enhancementpractices. These could serve as incentives forpoor communities to participate.

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Poor households will have the time for M Labor-saving devices will be financed under thisproject activities project. Also, women will be encouraged to

group around activities that they are involved in,and the incremental increase in terms of time isexpected to be minimal.

Ability to attract adequately trained staff S Remuneration and benefit packages will bein the regions discu