Embed Size (px)
Citation preview
Document ofThe World Bank
Report No: 24304-PH
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
IN THE AMOUNT OF US$33.60 MILLION
TO THE
REPUBLIC OF THE PHILIPPINES
FOR AN
ARMM SOCIAL FUND PROJECT
November 6, 2002
Rural Development and Natural Resources Sector UnitEast Asia and Pacific Region
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of November 1, 2002)
Currency Unit = Peso (PHP)I PHP = US$0.0191
US$1.00 = 53.13
FISCAL YEARJanuary 1 -- December 31
ABBREVIATIONS AND ACRONYMSAFMO Area Fund Management OfficeAFMP Agriculture & Fisheries Modemization PlansARMM Autonomous Region in Muslim MindanaoASFP ARMM Social Fund ProjectBA Barangay AssemblyBOD Board of DirectorsCF Community FacilitatorsCFMO Central Fund Management OfficeCIDA Canadian International Development AgencyCIDSS Comprehensive and Integrated Delivery of Social ServicesDBM Department of Budget ManagementDSW Department of Social WelfareEA Environmental AssessmentGOP Government of the PhilippinesIDP Intemally Displaced PersonsIEC Information, Education and CommunicationIPs Indigenous PeoplesJSDF Japan Social Development FundLGSP Local Government Support ProgramLGU Local Government UnitMDC Municipal Development CouncilMED Monitoring and Evaluation DepartmentMF Municipal FacilitatorsMILF Moro Islamic Liberation FrontMNLF Moro National Liberation FrontMOA Memorandum of AgreementMRDP Mindanao Rural Development ProjectMSM Municipal Stakeholders' MeetingNGO Non Governmental OrganizationO&M Operation and MaintenancePCIA Peace and Conflict Impact AssessmentPOs Peoples' OrganizationsRPDO Regional Planning Development OfficeSAFDZ Strategic Agriculture and Fishery Development ZoneSPAC Subproject Approval CommitteesSPDA Southern Philippines Development AuthoritySZOPAD Special Zone of Peace and Development
Vice President: Jemal-ud-din Kassum, EAPVPCountry Manager/Director: Robert V. Pulley, EACPF
Sector Manager/Director: Mark D. Wilson, EASRDCo -Task Team Leaders: Richard Anson/Mary P. Judd
PHILIPPINESARMM SOCIAL FUND PROJECT
CONTENTS
A. Project Development Objective Page
1. Project development objective 32. Key performance indicators 3
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 42. Main sector issues and Government strategy 43. Sector issues to be addressed by the project and strategic choices 6
C. Project Description Summary
1. Project components 82. Key policy and institutional reforms supported by the project 103. Benefits and target population 104. Institutional and implementation arrangements 13
D. Project Rationale
1. Project alternatives considered and reasons for rejection 192. Major related projects financed by the Bank and other development agencies 213. Lessons learned and reflected in the project design 224. Indications of borrower commitment and ownership 235. Value added of Bank support in this project 23
E. Summary Project Analysis
1. Economic 232. Financial 243. Technical 244. Institutional 255. Environmental 276. Social 297. Safeguard Policies 31
F. Sustainability and Risks
1. Sustainability 322. Critical risks 32
3. Possible controversial aspects 35
G. Main Conditions
1. Effectiveness Condition 352. Other 35
H. Readiness for Implementation 36
I. Compliance with Bank Policies 37
Annexes
Annex 1: Project Design Summary 38Annex 2: Detailed Project Description 42Annex 3: Estimated Project Costs 56Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 57Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 62Annex 6: (A) Procurement Arrangements 63
(B) Financial Management and Disbursement Arrangements 71Annex 7: Project Processing Schedule 77Annex 8: Documents in the Project File 78Annex 9: Statement of Loans and Credits 79Annex 10: Country at a Glance 82
MAP(S)IBRD 32115
PHILIPPINESARMM Social Fund Project
Project Appraisal DocumentEast Asia and Pacific Region
EASRD
Date: November 6, 2002 Team Leader: Mary P. Judd
Sector Manager/Director: Mark D. Wilson Sector(s): Other social services (100%)
Country Director: Robert V. Pulley Theme(s): Conflict prevention and post-conflictProject ID: P073488 reconstruction (P), Rural services and infrastructure (P),Lending Instrument: Specific Investment Loan (SIL) Civic engagement, participation and community driven
development (S)
- ' D a _ --!. D -
[X] Loan 1 Credit l1 Grant [ I Guarantee l Other:
For Loans/Credits/Others:Amount (US$m): 33.6
Borrower Rationale for Choice of Loan Terms Available on File: l Yes
Proposed Terms (IBRD): Fixed-Spread Loan (FSL)Grace period (years): 8 Years to maturity: 20Commitment fee: 0.85/0.75% Front end fee (FEF) on Bank loan: 1.00%
Payment for FEF: Capitalize from Loan Proceeds
Initial choice of Interest-rate basis: Auto. Rate Fixing by period 6 months
Type of repayment schedule:pXq Fixed at Commitment, with the following repayment method (choose one): level[ 1' Linked to Disbursement
Conversion options: [X]Currency [X]Interest Rate [X]Caps/Collars: Capitalize from Loan Proceeds,
BORROWER 7.00 0.00 7.00
IBRD 29.89 3.71 33.60
Total: 36.89 3.71 40.60
Borrower: GOVERNMENT OF PHILIPPINESResponsible agency: ARMM SOCIAL FUND (OFFICE OF THE PRESIDENT)Address: ASF FUND MANAGEMENT OFFICE, Zamnboanga CityContact Person: Executive Director Nazrullah ManzurTel: (63-62) 991-9386 Fax: (63-62) 991-9410
Email:
Other Agency(ies):ARMM REGIONAL GOVERNMENT
Address: Cotabato CityContact Person: Governor Parouk Hussin; Executive Secretary Nabil TanTel: (63-2) 814-0612; 814-0061 Fax: (63-2) 814-0613; (63-64) 421-5189
Email:
OFFICE OF THE PRESIDENTAddress: Malacanang, ManilaContact Person: Executive Secretary Alberto Romulo; Undersecretary Manuel GaiteTel: (63-2) 735-6020, 735-6023, 735-6039 Fax: (63-2) 735-6173
Email:
Estimated Disbursements ( Bank FYiUS$m):# >-2.00?;+ ' f;.O.4~ ' . ,. 2:SQ5. - - -2006 , 2b07 2008
Annual 1.50 6.70 10.50 8.40 5.00 1.50Cumulative 1.50 8.20 18.70 27.10 32.10 33.60
Project implementation period: 5 yearsExpected effectiveness date: 01/15/2003 Expected closing date: 06/30/2008
-2 -
A. Project Development Objective
1. Project development objective: (see Annex 1)
The development goals of the five-year ARMM Social Fund for Peace and Development Project, hereinafter known as the ARMM Social Fund Project (ASFP), are to foster sustainable development in the
Autonomous Region in Muslim Mindanao (ARMM) through reducing poverty and supportingmechanisms for the promotion of a peaceful and safe environment in the conflict-affected areas therein.Specific project objectives are to: (a) provide and/or improve sustained access to social and economicinfrastructure and services by the poor and conflict-affected poor communities; (b) provide capacitybuilding for women, youth and other community groups for improving food security, employmentopportunities and household incomes; (c) strengthen social cohesion and partnerships between and within
communities in the ARMM region; and (d) improve local governance and institutional capacities forimplementation in the ARMM Region, with a focus on improved transparency and accountability in the
allocation and management of public resources by the participating communities, local government units
(LGU) and ARMM Regional Government.
The project is designed according to the following principles:
> Part of a broader and longer-term program and operational framework of peace and development inthe ARMM; this program will be supported by other donor-supported projects (e.g., Canada/CIDA,Japan/JBIC, possibly others) which plan to use the same and/or related strategies, managementarrangements, and implementation mechanisms;
> Community-driven development (CDD), through: (i) effective partnerships between the ARMMGovernment, LGUs, Community Groups, NGOs, and the private sector; and (ii) responsiveimplementation mechanisms (such as the social fund) to expedite funding and resources to meetsustainable development objectives;
> Strengthening of social capital within and among participating communities and other stakeholders;> Transparent management of criteria and priorities for community and stakeholder participation;> Adaptation of relevant lessons from international and national experiences;> Complementarities with other projects; and> Management and coordination through a semi-autonomous project management system, focusing on
sustainable mechanisms and arrangements.
2. Key performance indicators: (see Annex 1)
Progress in achieving development objectives will be assessed periodically by key performanceindicators measuring project inputs, outputs, and outcomes. Such indicators, which are detailed in
Annex 1, include the following types of indicators:
* proportion of households in participating communities with improved access to basic infrastructureand social services;
* number of completed strategic regional infrastructure subprojects that are well operated and
maintained;.* proportion of women, indigenous women and youth groups with improved financial management and
entrepreneurial skills and access to livelihood activities;* proportion of ARMM Regional Government and participating LGUs have adopted participatory
approaches, improved planning, budgeting, and financial management systems; and* improved social cohesion and partnership indicators within and between target communities.
- 3 -
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: R2002-0083 [IFC/R2002-0076] Date of latest CAS discussion: June 4, 2002
The project supports the Bank's new Country Assistance Strategy (CAS) for the Philippines. The CASobjective over the next three years is to assist the Government of the Philippines (GOP) in "winning thewar against poverty". Specific objectives include improving governance, building capacity to managesustainable development, addressing long-term risk factors (e.g., creating a stable internal and externalenvironment), and enhancing systems to implement effective development policies at the sub-nationallevel. The new CAS also prioritizes assistance to the conflict-affected areas of Mindanao, especially theARMM and neighboring areas, to support the Government's parallel peace and development strategy.
2. Main sector issues and Government strategy:
The proposed ASF Project supports the Government of the Philippines' (GOP) "peace and development"strategy to overcome continuing armed conflict in Mindanao between Government forces and Muslimseparatist groups, namely, the Moro National Liberation Front (MNLF) and the Moro Islamic LiberationFront (MILF). The Government's strategy focuses on the following three elements: (a) effectiveimplementation of the Government's 1996 Peace Agreement with the MNLF; (b) rapid conclusion ofpeace negotiations with the Moro Islamic Liberation Front (MILF) leadership; and (c) strategic, targeteddevelopment in Mindanao's conflict-affected communities (focusing on the ARMM region).
The Government requires institutional arrangements that are "Mindanaon-driven." Under-the newarrangements, the Government is expanding the new ARMM administration's role to indicate itscommitment to support autonomy in that region and is restructuring the Southem PhilippinesDevelopment Authority (SPDA) so as to coordinate development activities with Mindanao's non-ARMMareas. The ARMM has its own Regional Government, which in many ways mirrors the nationalgovernment structure and functions. The future role and effectiveness of the ARMM RegionalGovernment will be influenced by a number of key factors, including: the degree of autonomy accordedby the National Government, the ability of the new ARMM leadership to restore credibility in theARMM Government's commitment and capacity to deliver improved services, significant progresstoward improved governance of the ARMM government bodies, the ability of the Regional Governmentto integrate the views of the ARMM provincial and municipal government units, the future revenuesources of ARMM, and significantly improved peace and order.
In 2000, escalated armed conflict between the GOP and the MILF displaced over 400,000 people in thecentral parts of Mindanao and an additional 100,000 in the island provinces of Basilan and Sulu.Subsequently, the number of displaced decreased to approximately 100,000; yet, many are still unwillingto return to their communities because the prospects for lasting peace remain tenuous.
Some 18 of Mindanao's 24 Provinces are seriously affected by the conflict. Many have the lowest levelsof public services, particularly in ARMM and in Regions 9 and 12. The Bank's recent Filipino ReportCard Report (issued in June, 2001) also reported the highest levels of dissatisfaction with Governmentservices in Mindanao, especially in conflict-affected areas. Disparities between Mindanao and the rest ofthe country are also deepening (see Table below):
-4 -
Table 1. Poverty Indicators: A Geographical Comparison
Indicators Philippines Mindanao ARMPoverty Incidence 39.9 56.26 72.4(% of population), 2000
GRDP Growth Rate (%), 1995-96 15.3 10.84 10.18
Reliance on IRA, 1996 (%) 59.89 73.20 88.89
Social IndicatorsHuman Development Index, 1994 0.660 0.477 0.390
Life Expectancy, 1995 70.08 (female) 65.9 (female) 56.82 (female)64.83 (male) 60.61 (male) 52.99 (male)
Literacy rate %, 1995 93 -- 72
BHS to Population Ratio, 1996 1:4207 1:4521 1:4356
Maternal Mortality Rate per 100,000 180 218.4 320Births, 1995Hospital Beds per 10,000 Population, 11.8 9.39 3.771997 _ _ _ _ _ _ _
Primary Level Drop-out Rate, 1997 8.83 -- 19.61
Source: Poverty Incidence, 2000 from Balisacan, "Update of Poverty Profile in 2000", 6 March 2002.Other source: Garilao and Associates, "Peace & Development Initiatives in Mindanao", 2002.
At the request of the Government, the Bank assessed the economic costs of the Mindanao conflict interms of foregone investment and stable growth at three levels: the national level, Mindanao, and theARMM region. The assessment demonstrated that the destruction and damage inflicted by the war andits recent escalation (in 2000) not only depressed socio-economic growth and development of directly
affected communities in the battle zones, but also affected all of Mindanao. The study estimated thecumulative economic costs of conflict in Mindanao to be about Ph P 70 Billion over the past 25 years,while the projected economic cost over the next few years, in the event the current conflict continuessporadically, to be about 5-10% of the expected output per capita in SW Mindanao. A key conclusionof the study is that it will be more cost effective for the Government to address current Moro demandsthrough poverty reduction and peace building (within GOP's existing Constitutional framework) than to
persist in trying to maintain previous gains through armed conflict and expenditures. It is recognizedthat there is a need for an appropriate balance in Government's response.
To rehabilitate communities and encourage economic recovery, the Government developed an integrateddevelopment framework for Mindanao under the updated Medium Term Philippines Development Plan
for 2001-2004. A critical component of this framework is rehabilitating communities damaged by theconflict and returning displaced populations home. The framework includes: (a) demobilizingevacuation centers; (b) repairing damaged houses and facilities; (c) supporting psychosocial healingamongst children, youth and women and other vulnerable groups; and (d) demobilizing combatants andensuring their reintegration into the country's economic and social life. Establishing a Mindanaoninstitutional structure and effective coordination are critical to developing the required consensus tosupport the investment program proposed under this framework.
The Government further plans to build the capacity of local government units (LGUs), localnongovernmental organizations (NGOs), and affected communities in ARMM, who provide emergencyand rehabilitation services. The Government has already provided substantial assistance, but is
-5 -
constrained by limited resources. Through the new Kalahi-CIDSS program (another Bank-financedproject), the Government is undertaking a parallel socioeconomic program to provide basic socialservices and infrastructure to promote economic development throughout Mindanao. Kalahi will coverthe non-ARMM conflict-affected areas while the ASF Project will cover the conflict-affected areas inARMM. To ensure appropriate coverage, the Kalahi-CIDSS program and ASF Project will be closelycoordinated.
3. Sector issues to be addressed by the project and strategic choices:
The proposed ASFP Bank-supported project will address critical cross-sectoral, strategic issues outlinedbelow. Relevant lessons and experience from the SZOPAD Social Fund Project, Mindanao RuralDevelopment Project, and Kecamatan Development Project in Indonesia - are reflected in the projectdesign.
(a) Transition from Humanitarian Relief to Development. The project will address the immediate needsof affected communities while preparing them to resolve the long-term problems of poverty andeconomic dislocation in their region. The ASF Project will evolve from employing quick delivery andemergency relief and rehabilitation mechanisms to long-term, development-oriented and integratedprograms. The project targets marginalized groups; strengthens participatory and empowermentmechanisms and processes; and supports a broad range of sub-project interventions to respond toimmediate rehabilitative as well as long-term development needs of marginalized groups.
The SZOPAD Social Fund Project experience demonstrated the need to ensure adequate operation andmaintenance (O&M) of completed subprojects. Thus, explicit O&M agreements (specifying cleararrangements for allocating and managing funds) with beneficiary communities and relevant LGUs willbe established prior to subproject approval (e.g., a Memorandum of Agreement (MOA) together withsocial preparation and monitoring are used to ensure effective compliance).
(b) Targeting Beneficiary Barangays and Community Group(s). Given limited resources and expectedexcess demand, the project will employ a transparent, simple methodology to ensure that the selection ofbeneficiary communities amongst the 2,378 barangays in the ARMM fits with its key objectives. Fiveprinciples guide the criteria for targeting the Project's beneficiary barangays/community group(s):
* Inclusive - as many communities as possible should be able to participate in the project;* Immediate - activities on the ground should begin as soon as possible;* Demand-driven - the communities themselves should determine the types and timing of project
interventions;* Simple - the criteria should be easy to apply consistently across all sites;* Self-selecting - given likely excess demand for limited project funds, the criteria should support
a self-selection process.
Although these criteria will be flexible, any criteria poses risks to the objective of promoting socialcohesion since some groups are inevitably excluded. Thus, a simple and transparent selection process iscritical for building consensus, understanding, and ownership. To address any ensuing disparities indevelopmental assistance, the Bank will assist GOP to secure additional donor support to coverbarangays not selected by the proposed project and will actively support improved coordination withcomplementary activities of other on-going and proposed initiatives and programs implemented inARMM.
(c) Institutional 'Base'. A critical issue to be determined is the project's institutional base within theGovernment's evolving institutional arrangements for Mindanao. Until September 2001, INTERACT
- 6 -
MINDANAO, a Cabinet-level inter-agency coordinating body appointed by the President, oversaw the
relief and rehabilitation program. This high-level body was abolished in early 2002 and is being
replaced with enhanced institutional arrangements for coordinating Mindanao's peace and development
agenda. In the case of the ARMM region, the new arrangements enhance the role of the ARMM
Regional Government as part of the Government's broader policy of supporting the expanded autonomy
of the new ARMM Government.
Project success and sustainability require a Mindanao-driven Board of Directors to oversee
implementation. The Executive Order 124 (September 12, 2002) has ensured that this body will have
clear connections to high-level decision makers (at both national and Mindanao levels) and to the new
ARMM government. However, the ARMM Government already faces capacity constraints and there is
significant concern about its previous poor financial and leadership accountability and track record in
providing improved services. These transitional issues highlight the important role of the Board of
Directors in overseeing the proposed project and supporting the enhanced capacity and governance of the
ARMM Government.
The role of LGUs as "reinforcing social bodies" in partnership with local communities and the new
ARMM, should be further defined and rationalized within the framework of an expanded ARMM. Major
efforts must be undertaken to build the capacities of the ARMM Government and LGUs to govern and
ensure accountability, by establishing open and transparent procedures in government policies, financial
management, and procurement.
The project structure, systems, and personnel will be close and responsive to the target communities.
The FMO will therefore establish two area-based FMOs to manage and implement the subprojects. They
will be established in the ARMM region, to cover Maguindanao, Lanao del Sur, Basilan, Sulu,
Tawi-Tawi provinces, and Marawi City. Project management will be structured as a semi-autonomous
entity as established by an Executive Order (EO 124, September 12, 2002), staffed by highly
professional, motivated staff in order to coordinate interventions involving a range of agencies and
stakeholders. The SZOPAD Social Fund Project experience confirms the merits of a semi-autonomous
structure, yet also underscores the need to strengthen partnerships with the ARMM Regional
Government and LGUs in order to ensure sustainability.
(d) Building Social Capital and Social Cohesion. The Project, through its activities, hopes to improve
confidence and trust among local community stakeholders and promote an environment of stability. This
will also facilitate project implementation and general development of the area. A key strategy will be to
promote community management of basic services and restoration and strengthening of social
infrastructure (e.g., school management committees, health center advisory committees, and sanitation
and water management associations). Through its development efforts, the Project hopes to improve
social capital among the various diversities of age, ethnicity, religion, and gender within a given
community and between communities. Simple partnership mechanisms (O&M cost sharing, technical
assistance) with LGUs will also promote sustainability.
Paralleling these activities will be concerted reforms to address transparency, accountability, and open
govemance, which promote social cohesion and confidence building. The project will improve local
governance through various mechanisms, including barangay and municipal-level development councils,
peoples'organizations, and farmer associations, and advance various mechanisms for filing complaints in
the event of possible fraud and/or corruption. Such mechanisms serve as "positive social reinforcers" of
peace and development in post-conflict and conflict-affected areas, and facilitate delivery of vital
infrastructure and social services. In this regard, CIDA plans to provide parallel financing to the ARMM
Social Fund Program to support these activities which would contribute toward enhanced ARMM
-7 -
institutional strengthening and governance of the ARMM and LGUs. These activities will be closelycoordinated with the Bank-financed Project.
(e) Project Menu. The results of the Social Assessment conducted during project preparation indicatedthat the needs of most communities focused around a few core areas. These are: peace and order, watersupply, livelihood, health services and medicine, school buildings, power supply, roads, and housing forinternally displaced persons. Accordingly, a decision was made to follow a "limited" menu approach forthe Community Development Assistance Component. This would also address the need to ensureadequate technical and implementation standards in the subprojects financed. In the event there is astrongly justified subproject community-driven proposal which is not included in the menu (provided it isnot in the negative list), the project review and approval processes (through the Subproject ApprovalCommittee) will consider the proposal, in accordance with the viability criteria outlined in the OperationsManual.
Two complementary approaches were considered for project implementation of the CommunityDevelopment Assistance Component. First, subprojects could be implemented through ARMM or LGUsand/or second, they could be implemented and managed directly by participating communities. Thelatter approach was selected. It builds on the successful experience of the CIDSS and other projects inthe Philippines. The main features of the funding modalities will be further refined based on experiencewith the pilots prior to project effectiveness in early 2003.
(f) Complementary Support for Other Donors. JBIC and CIDA plan to provide parallel finance tosupport the ARMM Social Fund through providing specific activities. The complementary assistancefrom CIDA will help to empower communities, government agencies and CSOs/NGOs to engage inpeace advocacy/1EC, reconciliation, and conflict management. The activities will support themainstreaming through the incorporation of reconciliation and conflict prevention into all projectactivities and training as well as support for leadership and organizational capacity building of LGUs.JBIC will provide assistance for expanding the components of Community Development Assistance andStrategic Regional Infrastructure.
C. Project Description Summary
1. Project components (see Amnex 2 for a detailed description and Annex 3 for a detailed costbreakdown):
Component 1: Community Development Assistance (CDA): This component will empower targetcommunities and create opportunities for increased community participation in reducing poverty andpromoting a durable peace. Communities will be able to implement sub-projects which will improve theirprioritized basic services and development needs for their own communities. Community-drivendevelopment (CDD) mechanisms will be adapted to ARMM conditions. Peoples' organizations (POs)from qualified barangays will receive on demand technical and financial assistance so they mayefficiently implement and manage subprojects addressing their priority socio-economic needs. Thesubprojects will be selected by the participating communities from a menu derived from theimplementation experiences of on-going projects and from a completed social assessment of communityneeds in Mindanao; the community groups will select the subprojects based on a framework of abarangay/sitio development plan and a list of priority subprojects and an allocation ceiling to be phasedin tranches, if appropriate. Among the things included in this menu are: water supply and sanitationsystems; small-scale irrigation systems; community health stations; community-based schools andlearning centers; post-harvest facilities; farm-to-market roads; timber ports and bridges;community-oriented training; provision of short-term relief and rehabilitation of damaged houses for
-8 -
internally displaced people; capacity building for women groups, indigenous women groups and
out-of-school youth groups in improving food security and household incomes through technical and
financial assistance; assistance for training of indigenous people; and mapping assistance in ancestral
domain claims. The proposed approach involves community cost sharing, capacity building, contracting
and various accountability mechanisms to ensure efficient, transparent and sustainable use of funds to
empower and benefit vulnerable target groups.
Pilot activities - Prior to formal project launching in early 2003, pilot activities will be field-tested in
selected barangays/municipalities to refine the design and implementation for the CDA component.
These activities will take place in one municipality in each province, with two-three target barangays in
each municipality (for about 15-20 barangays). These initial activities will be used to meet project
"readiness filter" requirements and reduce implementation risks and delays to facilitating a strong
pipeline of subprojects/communities.
Component 2: Strategic Regional Infrastructure: This component will rehabilitate criticalinfrastructure damaged during the conflict in 2000 to improve access and provision of services. The main
types of subprojects (about 13) have been prioritized in line with ARMM's development plan, andinclude improved facilities for health, education, manpower development, social services, and port
facilities. This component also includes technical assistance and training to enhance the capacity of the
Regional Government line agencies to participate more effectively in procuring, managing, andmonitoring such investments.
Component 3: Institutional Strengthening and Governance: This component supports project
management, institutional strengthening and capacity building, and enhanced governance of ARMM,
LGUs and other partner institutions. In addition to supporting a smooth implementation of the social
fund itself, this component in the Bank-financed Project will initiate specific processes to improve
performance, delivery, transparency and accountability of the ARMM and local government units to their
respective constituencies, especially conflict-affected communities. Similarly, the component will
support the cross-cutting theme of good governance in all sub-project components (primarily via the
FMO staff and the Project's participatory and capacity-enhancing mechanisms in all components). The
component will be further enhanced by the proposed institutional strengthening and governance
component to be supported by CIDA (as a parallel and coordinated Project).
As part of "Institutional Strengthening", assistance will be provided to mainstream the informal
community-based education system (including the existing religious group education system) into the
national educational system. Curriculum highlighting peace and social cohesion concepts and valuesthrough the community-based education system will be developed, pilot tested and expanded in
identified, integrated community-based schools in each province. Teacher training will also be supported
to help facilitate accreditation of relevant informal community-based education system, and thereby
enhance the employment prospects of graduates. Project activities will also support the accreditation of
these community-based education system to help ensure the employability of school graduates.
-9-
- ffn~ivida ive Bank- %of2 r -, i Component ; i; ficin. B:
1) Community Development Assistance 25.99 64.0 22.82 67.9
2) Strategic Regional Infrastructure 5.47 13.5 4.65 13.8
3) Institutional Strengthening and Governance 8.80 21.7 5.79 17.2Total Project Costs 40.26 99.2 33.26 99.0
Front-end fee 0.34 0.8 0.34 1.0Total Financing Required 40.60 100.0 33.60 100.0
2. Key policy and institutional reforms supported by the project:
Several key policy and institutional reforms to promote Mindanaon peace and development, andconsequently to improve the effectiveness of the Bank's program, were addressed during projectpreparation. Key aspects of these reforms will also be supported by the proposed program and thiscomponent project, specifically:
* Supporting a Government policy on the Mindanao peace and development strategy, prioritizinginvestments in close collaboration with local stakeholders and establishing a transparentinstitutional framework to improve governance and accountability to facilitate this process;
* Further updating and supporting effective implementation of the ARMM Development Plan andinvestment priorities by the new ARMM leadership, rationalizing roles and functions of variousspecial bodies/agencies, including the ARMM and SPDA;
* Supporting a policy and strategic framework to promote a favorable private investment climate inMindanao. The Project will support this initiative through strengthening ARMM's policyplanning, implementation and donor coordination capacities;
* Expanding ARMM Government revenue generation and management, to ensure adequatefunding for O&M of rehabilitated infrastructure;
* Providing institutional assessments and an action plan of ARMM's strengths and capacities forregional governance and accountability.
3. Benefits and target population:
a. Project Scope and Coverage
The ASF Project covers only the ARMM, which is at the center of armed conflict in Mindanao. Thisregion has the highest poverty incidence and the lowest level of development measured in terms ofHuman Development Index (HDI) in the Philippines.
Focusing ASFP in ARMM will: (1) demonstrate the seriousness of the Government in reducing povertyand promoting peace and development in the poorest, most troubled region of Mindanao; (2) promotetrust and confidence in the national government in that region; and (3) continue the developmentmomentum of SZOPAD Social Fund and maximize project impact.
With a total population of 2.8 million, ARMM consists of five provinces, one city, 94 municipalities andaround 2,378 barangays. Given resource and time constraints, the project will target about 20% of thetotal barangays, which will be prioritized, selected, and phased according to explicit selection andreadiness criteria. All municipalities in the ARMM will be eligible to participate, in accordance with the
-10-
project's barangay selection criteria. Within the five-year implementation period, around 500 barangays
are expected to receive ASFP financial and technical support to implement their priority development
program package. The five ARMM provinces will be divided into two project management areas: Area 1
(mainland provinces) - Lanao del Sur, Maguindanao and Marawi City, and Area 2 (island provinces) -
Basilan, Sulu and Tawi-Tawi.
b. Community Targeting and Prioritization Criteria
Five principles are followed in formulating criteria for targeting the Project's beneficiary
barangays/community group(s):
Inclusive: - All municipalities (94) in the ARMM are eligible to participate in theProject, and as many barangays/communities as possible should beincluded. Funding constraints alone limit the proportion of barangayswhich participate in the initial phase. Within communities, there arevarious mechanisms to ensure broad-based participation, especially ofvulnerable subgroups.
Immediate: - The project should meet priority needs as soon as possible.
Demand-driven: - Priority interventions and their timing should be determined by the
community.Simple: - The criteria should be easy to apply and consistent across all sites.
Self-selecting: - Given excess demand for limited project funds, the criteria will encourage
self-selection of participating barangays/community groups.
Based on these principles, the selection criteria should take into account the efforts to be required from
municipalities, barangays and the municipal facilitator in applying the criteria. The following steps to
target beneficiary barangays/community groups were agreed upon (See Annex 2, Attachment I for
further details):
(i) Phasing of municipalities. Given 94 municipalities in the ARMM region, they will be phased
according whether they: i) are able to make the most efficient use of the limited resources; ii)
demonstrate levels of intervention such as social preparation and capacity building assistance so as to
access ASFP program according to the resources available; and iii) are willing to convene a
Municipal Stakeholders Meeting through the Municipal Development Council.
(ii) Eligibility of barangays. Of the 2,378 barangays in the ARMM, alnost all are poor and
conflict-affected. Given a lack of reliable data for credible targeting, all barangays in the city and
municipalities will be eligible to participate.
(iii) Short-listing of barangays. Area Fund Management Offices (AFMO), in consultation with
Municipal Stakeholders Meetings, will short-list barangays. Prioritization of barangays will be based
on the four criteria (supported by explicit indicators, and relative weights for each category): poverty,
conflict-affected, complementarities (not receiving assistance from other programs) and commitment.
Barangays requiring institutional strengthening will also be identified so they can access the project
at a later stage. After the short-listing of the barangays, the proponent community groups within each
barangay will be identified and prioritized according to project criteria at the Barangay Assembly.
Prioritization of community groups will enable phasing of implementation by explicit "readiness"
criteria. The AFMO will be responsible for exercising the necessary flexibility in applying the above
criteria, while ensuring transparency and adherence to stated principles.
Targeting of Families
The ASF-supported communities will identify the poorest families and socially disadvantaged withinbarangays and sitios. "Very poor" and "poor" are categorized using a set of qualitative indicators.'Through discussions held in the Barangay Assembly, the communities identify the poor, marginalized,and conflict affected by name, in a manner which is sensitive to the local culture.
Readiness Criteria for Subproject Start-up
The following readiness criteria will be applied to determine eligibility:
a) Community organization is formally organized and legally registered by a GOP accreditationbody;
b) Community organization has opened a bank account exclusively for the ASF funds; andc) Subproject proposals meet the appraisal requirements.
c. Priority Concern for Disadvantaged and Vulnerable Groups
The project prioritizes those most affected by deprivation and displacement caused by armed conflict.These groups include the poorest community members; farm workers without assets, the elderly,widowed women, IDPs, IPs, children and out-of-school youth. Youth are especially vulnerable torecruitment by MNLF/MILF rebel forces and even to those operating outside the law, such as NewPeoples' Army (NPA) or Abu Sayyaf.
Following the CDD strategy, the poorest sector of the community will participate side-by-side with othermembers, and benefit not only financially but also in terms of social capital formation. Women, youthand indigenous groups will be specially targeted to benefit from the community development assistance.
d. Project Phasing
The project period is five years, beginning in January 2003.
The ASFP will reduce poverty and help sustain peace for approximately 2,378 barangays of ARMM (andsome three million inhabitants, at least indirectly). Based on available financial resources in theimmediate phase, approximately, 500-600 barangays (equivalent to 20-25% of the population, or about750,000 persons) will be directly provided with a grant to implement their community plans andsubprojects. Other barangays will be encouraged to seek funding from complementary projects andalternative funding sources, and from the social fund program, to the extent it mobilizes additionalresources.
Prior to Year One, an initial 15-20 barangays will pilot the project's CDA activities and processes. Thisearly on-the-ground experiences will provide feedback for continuous adjustment of project operation.The five-year implementation period will then be divided into four overlapping two-year phases. Targets'for each phase are, as follows:
Phase 1 (Year 1 - Year 2) 10 municipalitiesPhase 2 (Year 2 - Year 3) 30 municipalitiesPhase 3 (Year 3 - Year 4) 35 municipalitiesPhase 4 (Year 4 - Year 5) 14 municipalities
During Year 3, a mid-term review will evaluate project performance in terms of the relevance,effectiveness and efficiency of funding mechanisms, targeting, and conflict resolution. This mid-termreview will also evaluate the effectiveness of institutional arrangements, progress in meeting the phase-in
- 12 -
action plan/milestones of transferning the Fund Management Office responsibilities to the ARMM
Regional Government, and identify any emerging issues. The mid-term review will result in
recommendations for improving implementation mechanisms and performance indicators.
In Phase 3, the recommendations of the mid-term review will be implemented. Changes in target areas,
implementing schemes and relationships with partners may be undertaken in this phase. In Phase 4, a
phase-out plan will be established and the project will focus on documenting experiences, outcomes,, and
benefits, and promoting new investments.
e. Expected Benefits and Impact
Expected project benefits, broken down by each of the three components and by major activities, were
assessed. Benefits were further subdivided into those that are social in nature (e.g., access to potable
water or improved quality of health services); and the purely economic, such as reduced cost of
transporting passengers and cargo resulting from the rehabilitation of access infrastructure. Project
benefits were classified by expected timelines, in accordance with the implementation schedule outlined
above (See Annex 4):
(i) Immediate benefits are realized soon after the subprojects are completed (e.g., immediate
employment in infrastructure rehabilitation).
(ii) Additional, long-term impact is also expected, taking take into account the "gestation period" not
only for infrastructure subprojects, but also for subprojects such as capacity-building. Classic
examples of such impact are increases in income, labor productivity, long-termemployment-generation, generation of backward and forward economic linkages (such as more
vibrant transport and marketing activities due to a rice or corn mill), and private sector
investments. Improvement in social capital and cohesion is a benefit which often takes the
longest time to be realized, but sustains peace and development.
A project benefit analysis outlines quantitative and qualitative benefits. Quantifiable economic benefits
are derived mainly from: Community Development Assistance (especially access infrastructure, potable
water supply and post-harvest facilities); and Strategic Rural Infrastructure. Imnportant qualitative benefit
is expected from capacity-building of the above two components and from Institutional Strengthening
and Governance.
Finally, project benefits accrue directly to the community level or initially to intermediate and higher
levels. All benefits, such as increased incomes and employment and greater labor and natural (local)
resource productivity, should eventually accrue directly to communities. However, immediate benefits
often accrue to "intermediary institutions" particularly LGUs and NGOs - to enable these institutions to
provide socio-economic benefits to the communities. Examples of benefits accruing to intermediary
institutions are enhanced governance capabilities of LGUs and the ARMM government and improved
implementation capacities of government agencies and NGOs.
4. Institutional and implementation arrangements:
Project Organization and Management Overview
Following global practices on social funds, ASFP will support a semi-autonomous project management,
while also being a part of the ARMM Plan/Strategy and the Government's autonomy and
decentralization strategies. The Social Fund will be a vehicle to achieve efficiency, transparency and
accountability, and effective, accelerated delivery of basic socio-economic services and infrastructure to
-13 -
project beneficiaries. A simple, streamlined organizational structure will allow "nearer to the ground"decision-naking and rapid flow of funds subject to accountability procedures and mechanisms applied toimplementing organizations and target communities. While the organizational structure builds on theSZOPAD Social Fund experience, it also reflects the enhanced scope and delivery mechanisms requiredin ASF Project. ARMM supports the proposed structure which also reinforces both ARMM and GOPefforts to decentralize the management of Mindanao's programs. The overall institutional arrangementsare illustrated in the chart and sections outlined below, and involves 3 key levels: the project's overallgovernance arrangements through a Board of Directors; the project's day-to-day management andcoordination through the Fund Management office (comprised of a central FMO and two field-levelFMOs, actively support by municipal and community facilitators, to ensure client responsiveness andclose monitoring); and other key partners to support effective implementation, including the ARMMRegional Government line agencies and participating LGUs. All of these activities support the activeimplementation role of the participating communities, support by various accountability mechanismsoutlined below and detailed in the Project's Operations Manual.
-14 -
ARMM Social Fund Project Institutional Arrangements
Board of Directors ............................ Commision on Audit
ARMM-chaired & OP-co-chaired (Extemal Auditor)(9 members: 5 Govt & 4 Civil Society)
Executive Director (ex-officio)
Fund Management Office
Central FMO
Executive Director
Intemal Audit Legal MIS/IA&E
Finance/Admin DeDutv ED Szopad SF
(Operations)
Inst. Dev/Cap Bldg Unit Technical Unit
Subproject Area FMO (min. 2 units) Subproject
Approval Approval
Committee Area Manager Committee
BOD-chaired BOD-chaired(9 members: 5 Finance Operations Community M&E (9 members: 5
Govt & 4 Civil I Govt & 4 Civil
Society) Society)AFMO Mgr (ex- Inst. Dev/Cap Bldg Technical AFMO Mgr (ex-
officio) officio)
- Municipal Facilitators - LGUs - NGOs - Private SectorService Providers
Community GroupsBarangays
-15 -
(a) The overall governance and management structure of ASFP Project comprises (seeorganizational chart):
i) A Board of Directors (BOD), which will formulate policies and guidelines, approve andsupervise financial plan and budget, strategic regional infrastructure sub-projects, all majordecisions, changes in the Operations Manual, and has over-all responsibility and accountabilityfor the Project (including ensuring audits are carried out);
ii) The Fund Management Office (FMO) consisting of a Central Fund Management Office(CFMO) and two Area Fund Management Offices (AFMOs), will handle day-to-dayimplementation, in accordance with policies and Operation Manual procedures approved by theBOD. The FMOs' administrative base is under the Office of the President, and is accountable tothe Board of Directors; and
iii) Two Subproject Approval Committees (SPACs), which approve prioritization of barangaysand approval of subprojects under the CDA component in their area ofjurisdiction, inaccordance with agreed selection and appraisal criteria outlined in the Operations Manual. Theactual subprojects will be planned and implemented by community organizations in coordinationwith LGUs, NGOs, religious, business and other public service agencies/providers.
(b) The Board of Directors (BOD) is the goveming body for the Project. The members areappointed by and report directly to the President of the Philippines. The BOD has nine (9) votingmembers, as follows:
(l) The ARMM Govemor as Chairman;(2) A Senior Representative of the Office of the President, as co-chair;(3) The Secretary of Social Welfare and Development;(4) Presidential Adviser on the Peace Process;(5) A representative on behalf of the provincial govemors of ARMM;(6) Representative of the Business Community from ARMM;(7) Representative of former combatants from ARMM; and(8) Two (2) representatives of civil society from ARMM.
The Executive Director of the FMO will be an ex-officio non-voting member of the BOD, and willact as the BOD Secretary.
The BOD will: (a) formulate and approve financial policies and implementation guidelines(including changes in the Operations Manual); (b) review annual project policies and strategies; (c)review and approve the annual work plan, financial plan, and budget allocations; (d) approvesub-projects under the SRI component; (e) review progress and FMO's performance in terms ofmanagement and service delivery; (f) arrange for annual independent audits for management,procurement, technical and social aspects of the Project; (g) resolve disputes; (h) submit periodicreports to the President of the Philippines; and (i) perform other tasks as assigned by the President topromote Fund objectives. The Board of Directors will meet bi-annually, or more often, asdetermined by the Chair or Co-Chair.
(c) The Fund Management Office (FMO) consists of a Central Fund Management Office(CFMO), and two Area Fund Management Offices (AFMOs). The location of the CFMO and the
- 16 -
AFMOs will be decided by the BOD. One AFMO will serve Central Mindanao (i.e., the provinces of
Maguindanao, Lanao del Sur and Marawi City) and the other AFMO will serve the three islandprovinces (provinces of Basilan, Sulu and Tawi-Tawi). If an AFMO is situated in the same place as
the CFMO, it will have a smaller staff in the finance, administrative and M&E units. The workload
of these units will be placed under the corresponding CFMO heads. While closely coordinating with
relevant agencies, the FMO will be semi-autonomous from the ARMM Government agencies.
Central Fund Management Office (CFMO) coordinates overall project implementation, including
supervision of AFMO to ensure effective management of activities and smooth, timely disbursements
of funds. CFMO will provide institutional strengthening support to ensure that the AFMOs
effectively apply the operations' manual procedures. The CFMO also coordinates production and
dissemination of consistent project information. The CFMO further reviews and endorses subproject
appraisals before they are submitted to the BOD. Finally, the CFMO is the command center for the
audit, monitoring and evaluation and management information systems.
An Executive Director will be appointed by the President to head the CFMO. Under his/her
supervision are five operating units:
a) Operations Department, which directly supervises the CFMO operation, conducts appraisals
and contracting, and oversees day-to-day effectiveness of the two AFMOs. The Operations'
Director also serves as the Deputy Executive Director;
b) Finance and Administrative Department, which is responsible for financial management,budgeting, human resource development, procurement and property management;
c) Monitoring and Evaluation Department, which coordinates Project overall monitoring and
evaluation of the ASFP and manages the management information system of the FMO;
d) Internal Audit Unit, which supports strong accountability mechanisms for financialmanagement audits; and
e) Legal Unit, attached to the Office of the Executive Director.
Area Fund Management Offices (AFMOs). The two AFMOs will oversee beneficiary
barangays/community groups' activities. The AFMOs will initiate the social preparation; conductappraisals of subprojects; develop contracts with beneficiary communities; supervise subproject
implementation and turnover, and report regularly to the CFMO on progress of implementation
activities.
An AFMO Area Manager will head the AFMO. She/he will supervise three operating units:
a) Finance and Administration Unit, which prepares and manages the budget of the AFMO and
conduct periodic internal audits of subproject funds;
b) Operations Unit, which facilitates the provision of technical assistance and other support to
beneficiary communities; and
c) Community Monitoring and Evaluation Unit, which monitors and evaluates subprojectimplementation of subprojects maintains an management information system and prepares
periodic reports to the CFMO.
- 17 -
Staffing and Compensation: Given the Project's unique nature as well as global practices governingsocial fund projects, all FMO managerial and technical staff will be contracted through competitiveand transparent selection procedures to ensure selection of the most suitably qualified staff. Allpersonnel appointments are for periods from six months to one year, and renewable subject tosatisfactory performance and to the project's institutional phase-in of ARMM.
A compensation scheme for FMO staff was based on recommendations worked out by anindependent consultant firm, which carried out a compensation survey of comparableorganizations/projects, in accordance with an agreed TOR. The compensation recommendationswere reviewed by a Government Compensation Study steering subcommittee, comprised of seniorGovernment officials. It was agreed that the compensation rates for the FMO contractual staff andthe Executive Director will be consistent with the rates allowable under Memorandum Order No. 20(dated 6/25/01), i.e., [(Basic Salary + Benefits) x 2].
In order to help scale-up and sustain the Project activities, it was also agreed that the Project would"interface" the FMO Management and staffing with the ARMM Regional staff in a coordinated anddeliberate manner so that the latter will be ably managing the Project in the later half of the projectlife. An action plan has been prepared to hand-over the staffing and management responsibilities--toadequately qualified staff from the ARMM Regional Government-in a phased manner (3 phases,based on agreed triggers and milestones). The Project will support actions which will help preparethe ARMM Government staff for these expanded responsibilities. The Project's mid-term reviewalso will assess the readiness of this phased hand-over to the ARMM Regional Government. It isanticipated that the hand-over to ARMM organic staff will require appropriate compensation levels,which will also consider the ARMM Regional Government compensation structure and therequirements of this Project.
An independent firm has screened and short-listed the most qualified candidates for the FMO(including area offices), based on agreed TOR and selection criteria. This transparent selectionprocess was given due attention to well perforning staff from SZOPAD Social Fund Project, andhelp "depoliticize" the staffing of the FMO. A selection panel from OP, ARMM and the independentfirm will finalize the selection of the key management staff.
(d) Subproject Approval Committees (SPACs): The President of the Philippines will appointmembers of the two Subproject Approval Committees (SPACs). They will approve prioritybarangays and review/approve sub-projects appraised and submitted by the AFMO for the CDAcomponent. A critical function will be to ensure that the appraisal criteria and assessments arecorrectly done. The subprojects below a certain threshold (to be decided by the BOD) can beapproved by the SPAC. All other sub-projects including Strategic Regional Infrastructuresub-projects will be approved by the Board.
SPAC members consist of a representative of the Board of Directors as chair; a representative fromthe ARMM Provincial Govemor(s); a representative from the ARMM Regional Planning andDevelopment Office (RPDO); a technical representative each from the ARMM DSWD and ARMMDPWH; two (2) civil society representatives from the area, including a representative for theIndigenous People; a representative from the business community from the area; and a representativeof former combatants from the area. The Area Manager of the AFMO Manager will be an ex-officionon-voting member, and will serve as the secretariat of the SPAC.
-18 -
SPAC would meet at least once a month, or more often as necessary, to review and approve requests
for fumding community subprojects. The SPACs will validate that the participation processes were
transparent and the design/implementation aspects outlined in the Operations Manual are
satisfactorily covered, according to ASFP objectives. SPACs will also monitor the complaints filed
by stakeholders and ensure that the FMO is taking appropriate steps to address legitimate complaints.
(e) Role of ARMM in Project Implementation: Relevant ARMM agencies that will participate in
coordination and implementation in the various components and phases include: RPDO, DPWH,
DSWD, DOH, DOTC, TESDA, DepEd, TMS-ORG and other regional line agencies and institutions.
They will conduct: (i) feasibility studies; (ii) detailed engineering assessments; (iii) supervision; (iv)
support services; (v) monitoring and evaluation; and (vi) eventually take over the management and
staffmg of the FMO (in 3 phases), by the end of the Project period (see discussion above). The
ARMM-RPDO will coordinate the conduct of feasibility studies on priority regional infrastructure
projects and serve as the counterpart of the FMO in monitoring and evaluation of ASFP.
(f) Other Supporting Partners and FMO Transition Arrangements: Annex 2 provides more
information on roles and arrangements of other key implementation partners, including: municipal
stakeholders' meetings, barangay assemblies, community organizations, service providers, LGUs;
and the FMO transition strategy and framework of the action plan. The FMO transition action plan
outlines two stages in the FMO's transition: first, the current transition of ensuring a smooth
integration of the current SZOPAD Social Fund FMO into the "transformed" FMO, while ensuring
the on-going SZOPAD Project is completed; and the "handover" of the FMO responsibilities and role
to the ARMM Regional Government, in accordance with fulfilling an identified number of readiness
criteria.
D. Project Rationale
1. Project alternatives considered and reasons for rejection:
Three altemative project designs were considered, but were rejected because they did not address
adequately Mindanao/ARMM strategic needs. The first design option was to have a broad geographic
scope to include the ARMM Provinces as well as conflict-affected communities in Regions 9 and 12.
There was a concern that excluding the adjoining communities to the ARMM Region might accentuate
community differences. However, the GOP included the conflict-affected communities in non-ARMM
provinces in the Bank-financed Kalahi-CIDSS Project (approved by the Board on September 17, 2002),
which will scale-up the interventions in these areas adjoining ARMM. There are other donor-funded
Projects (notably from UNDP and USAID) which are sensitive to the need to ensure adequate attention to
the adjoining non-ARMM communities which have been affected by conflict.
A second design option was to restrict the project components to community subprojects and
institutional reforms. However, the complex nature of the roots of conflict in ARMM warranted a
comprehensive approach. The assessment of the SZOPAD Social Fund Project, the social assessment
findings, and consultations with stakeholders revealed a strong preferences for activities that would
generate employment and livelihood opportunities, including micro-enterprise development, and
strategic infrastructure and services. These particular subcomponents may also encourage further funding
by other donors once the operational issues are resolved. Their design features and scope are deliberately
simple so as to allow for future scaling-up, based on performance and implementation experiences.
Accordingly, this Project follows a "program approach" to promoting coordinated development in
Mindanao, to be supported by complementary Projects to be financed in parallel by other donors
- 19 -
(initially, CIDA and Japan/JBIC).
The third option involved implementation by existing national and/or Mindanao-based agencies, such asthe Department of Social Welfare and Development (DSWD), the Department of Interior and LocalGovernment (DILG), and ARMM. While these agencies have the requisite capacity, the experiencesfrom projects implemented by the SZOPAD Project argued for a flexible and responsive implementingunit that would not be hobbled by a large bureaucratic structure and weaknesses in governance (e.g.,ARMM Regional Government), while recognizing the positive progress being made. The success ofSZOPAD, as well as of other social funds in conflict-affected areas of the developing world,demonstrated the need to establish a high-level authority and a semi-autonomous agency (i.e., asestablished by a Presidential Executive Order) to assure targeted communities and beneficiaries about theProject's credibility and responsiveness to address their needs and concerns. The current project designhas still established appropriate implementation and collaboration linkages with these agencies,especially ARMM and the LGUs, to help ensure scaling-up and sustainability.
Major related projects financed by the Bank and/or other development agencies (completed, on-goingand planned).
Currently 17 multilateral and bilateral donor-assisted projects are contributing to peace and developmentin Mindanao. At the same time, some $ 1.5 billion in donor money for projects in Mindanao remainsunused primarily because of implementation difficulties, including over-design, unduly compleximplementation standards (e.g., POs expected to prepare narratives/feasibility studies), poor projectmanagement and administration, low absorptive capacity, and unstable peace and civil order.
The Bank currently supports the Mindanao Rural Development Project (MRDP), which initially had agood start, later experienced implementation problems, and is now re-emerging with improvedimplementation. The proposed ARMM Social Fund Project incorporates relevant lessons from theMRDP Project, including the role of pilots to help ensure project readiness, and effective managementand monitoring systems to ensure that adequate and timely actions are taken when needed. GOP has alsorequested the Bank to fund a national anti-poverty alleviation project under the Kalahi-CIDSS program,to be implemented by the Philippine's DSWD (but this program will not operate in ARMM). Otherdonor- supported projects for Mindanao's conflict-affected areas include UNDP's Multi-donor Program(Phase 3), and CIDA (LGSP), AusAid (poverty reduction), and USAID (e.g., GEM and proposed GEMII, and an Ecogovernance Project) projects. Most of these projects focus on building the institutionalcapacities of local government units and local people's organizations, encouraging peace andeducation, and developing small enterprise and livelihood support projects (especially for ex-combatants). During Project preparation and appraisal, the Bank and ARMM have informed otherdonors of the proposed program/project. In turn, donor agencies expressed strong support for the ASFprogram and the proposed Project, and there is a strong desire for close donor complementarities andcollaboration in conflict-affected communities, especially on the ground. Senior GOP officials expresssimilar desires and have suggested an inventory and geographical mapping of donor-funded projects andcorresponding undisbursed funds. Recently, the ARMM Regional Government established a donorcoordination unit to strengthen its coordination capacities and effectiveness. It is anticipated that thiscoordination unit will enhance the implementation of the proposed Project.
-20 -
2. Major related projects financed by the Bank and/or other development agencies (completed,
ongoing and planned).
1 . SNt,, $,'j' '' t ' ' ' ' t Latest Sipervisio'Sector Issue : 'Project ' i- (PSR) Ratings
: I _____,_,_,;_,__,_i_,_-_,_|. (Bank,-financed pr,ojects;only),Implementation Development
Bank-financed Progress (IP) Objective (DO)
Participatory and community SZOPAD Social Fund Project S S
subprojects (participatory mechanisms Community Based Resourcevary by project) Management Project
(S rating for IP and DO)Agrarian Reform CommunitiesDevt. Project
(S rating for IP and DO)Mindanao Rural Development U SProject
S S
Microfinance/Livelihood ACCESS (JSDF) S SSZOPAD SF Project (JSDF)Third Elementary Education S SProject (TEEP)
Single Sector Projects Water Supply Project S S
Multi-sectoral SEMP I (sectoral loan) S S
Other development agenciesGovernance UNDP Multi-Donor and CIDA
(Local Govt. Support)Numerous NGOs
Econ. Devt/Livelihood USAID (GEM/LEAP/MABS)
Rural Infrastructure(e.g., roads) Japan and ADBRelief Assistance (for internally Numerous NGOs and bilateraldisplaced persons) donors
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
-21 -
3. Lessons learned and reflected in the project design:
An independent impact assessment of the SZOPAD Social Fund Project highlighted the followinglessons: (a) there is a high demand by communities in the ARMM Region for a demand-driven menu ofsubprojects which address their priority socio-economic needs, and participating communities havedemonstrated their commitment and capacity to participate in accordance with the project's policies andprocedures; (b) an emergency, quick- response mechanism for post conflict areas is necessary, but isinsufficient to promote lasting peace and development; and (c) the sustainability of subprojects isdependent on a number of factors, including the responsiveness of the subprojects to communitydemands, adequate community "social capital" (or capacity to take a meaningful role in the context ofpromoting "peace-building through development" at the community level), the active participation ofLGUs, national government agencies, NGOs, and other groups, linkage with other livelihood, financing,and technical assistance projects, and a workable O&M plan fully owned by the communities, andbacked by the LGUs.
These lessons and the experiences of other Social Funds and community-driven projects have beenintegrated into the over-all ASFP design. These lessons are operationalized in both site and beneficiarytargeting criteria as well as in the development of participatory approaches and mechanisms to planningand to implementation. Some of the relevant lessons learned from other Social Fund projects (drawingfrom the Bank/OED recent comprehensive review of Social Fund Projects (2001), and a further updatingof lessons prepared for OED's Social Fund Conference held in June, 2002) include:
* Project design must be kept simple and flexible, supported by effective M&E systems;* Community-driven projects require skilled facilitation in both social and technical dimensions;
adequate time needs to be allowed to ensure that subprojects reflect community priorities andinclude vulnerable groups;
* A rational demand-management strategy, focused beneficiary targeting, and a participative,consensus-building approach to community development are essential;
* Expanded role of LGUs and ARMM and building local partnership between LGUs and localcommunities and informal structures of leaderships (i.e. ulama, tribal councils, staterevolutionary commands) also will play an important role;
* It is important to devote adequate attention to creating local sustainability mechanisms and socialcohesion; The use of community-based contracting of services, with appropriate capacitybuilding and accountability safeguards, can be effective;
* Social preparation is necessary to assure community readiness for project implementation andsustainability, and the additional time and effort needs to be taken for this groundwork;
* Lack of community access to relevant information about development programs lies at the root ofmany quality and corruption problems (especially when it is difficult to prove collusion); and
* Semi-autonomous nature of project management structure to maintain technical and projectintegrity and implementation effectiveness. This is complemented by effective M&E systemsand a pro-active Board of Directors, to help ensure that timely actions are taken in a complexenviromnent.
-22 -
4. Indications of borrower commitment and ownership:
Government officials at all levels have expressed a strong commitment to the proposed ARMM SocialFund (ASF) Program, and the Bank-financed Project, which is part of a longer-term program beingsupported by other donors. The President of the Philippines has issued strong statements asserting thehigh priority to be given to Mindanao's development as a key strategy of the country's national economicrecovery and poverty alleviation program, and project preparation is being coordinated by the Office ofthe Presidential, under the overall direction of the Executive Secretary. Several departments of thenational government proclaimed strong support and are coordinating efforts to achieve the project'sobjectives as reflected through active collaboration during preparation. The newly elected leadership ofARMM also is taking an active role in project preparation and presentation to the ICC. The ARMMGovernor has assumed active chairmanship of the IASG. The Department of Budget and Managementhas included the SZOPAD in Mindanao as a priority ODA project that will be included in theGovernment's budget for FY03 (and onwards).
5. Value added of Bank support in this project:
The SZOPAD Social Fund Project was implemented to support the 1996 Peace Agreement. The impactand results of this project generated a surfeit of subproject requests from local communities in theconflict-affected areas of Mindanao. Bank involvement is contributing the following elements, whichotherwise would not be present: (a) placing the project design within a strategic development frameworkfor Mindanao and ARMM, whereby the Bank also is providing this TA in a manner which is highlycomplementary; (b) drawing on the Bank's comparative experiences with community-driven programs inother parts of the world; (c) developing innovative mechanisms that are being adapted to Mindanao'sneeds; (d) the Bank's support for the ASF could also help catalyze additional donor funds for the vastdevelopment needs of the conflict-affected areas of Mindanao, especially as the ARMM establishes itscredibility and capacity to absorb additional funds for regional development interventions.
E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)
1. Economic (see Annex 4):* Cost benefit NPV=US$ million; ERR = 12 to 16 % (see Annex 4)
O Cost effectivenesso Other (specify)
The ARMM Social Fund Project is similar to the SZOPAD Social Fund Project in that "The actualactivities that will be financed and, hence, the benefits cannot be accurately quantified as the project willbe demand driven. NPV and ERR are not relevant for Social fund projects" (Report No. 17228-PH PADof the SZOPAD Social Fund Project, February 26, 1998 page 10, Section E.1). The economic analysiscan therefore only be illustrative and indicative of the sort of outcome to be expected and in the absenceof any firm data or precise plans has to rely heavily on assumptions and estimates. These have beenchosen as carefully as possible and generally with a bias towards a conservative approach.
Given the multisectoral and especially social nature of the Project, its economic analysis is limited to theCommunity Development Assistance (CDA) component, together with including the ProjectManagement expenditures. The Strategic Regional Infrastructure subprojects would be subjected toeconomic analysis once their detailed underlying estimated benefits are estimated in order to ensure theyare designed in a manner which they are economically and financially viable. Based on "prototype"subproject analysis and an assumed subproject scaling-up/demand pattern (reflecting the socialassessment findings), the estimated economic internal rates of return (EIRR) for major projectcomponents exhibit the range from 12% to 16%. Sensitivity analysis shows that the project remains an
- 23 -
attractive investment even if benefits decline by 20% or costs increase by 20%, and economically viableeven if there is a simultaneous 20% decrease in benefits and 20% increase in costs.
In addition to the directly measurable benefits, the project would also have major non-quantifiablebenefits through the support it would provide'to conflict resolution and reduction of poverty in theARMM region. The Project's contribution to enhanced equity, quality of life, and productivity is likelyto be translated into incremental incomes, savings and expanded economic activities. See Annex 4 for amore detailed presentation of the analysis and discussion of the benefits according to component andquantitative and qualitative benefits.
2. Financial (see Annex 4 and Annex 5):NPV=US$ million; FRR = % (see Annex 4)
Separate financial analyses have been made for the Potable Water Supply, Post Harvest Facilities andProvincial Hospital sub-components. The analyses assumed that beneficiaries would only be in a positionto pay rather modestly for the three services. Consequently all three show financial intemal rates ofreturn (FIRR) of between 10 and 14%, although the level of payments would be fully adequate to meetoperation and maintenance costs.
Fiscal Inpact:
Implementation of the project would not impose a heavy net direct budgetary cost on ARMM. DirectGOP/ARMM investment is estimated at about US$0.5 million over the five year implementation period.Even assuming 40% of this total amount had to be raised in one year this would still be well within 10%of the ARMM annual revenues. ARMM and the LGUs can therefore be expected to be able to meet therelatively small share of investment costs as well as the incremental recurrent costs associated with theproject. For some of the lower income LGUs, the annual O&M expenditures arising from the additionalsubprojects may require sc.ne reprogramming of their meager annual revenue allotments and otherrevenues to ensure adequate funding of these additional assets (especially as other donor-funded projectsexpand their assets). The Project's participatory approach is securing an active ownership role by theARMM and participating LGUs, which will help ensure their commitment and priority to providing therequired O&M funds on a sustained basis.
3. Technical:
There are no major technical issues except those related to processes and capacity for generating localparticipation in community development assistance (CDA) planning processes. There is also a need toensure that the technical designs of subprojects are consistent with those used by sectoral agencies, whileASF plays a catalytic role in enhancing the responsiveness of subproject designs to the specific culturalneeds of the stakeholders. Accordingly, a piloting of the CDA processes already has been initiated totest the design and implementation arrangements for the CDA component. The slow start-up in projectimplementation throughout the Philippines (and other countries) strongly reconfirms the merits of such apilot prior to formal launching, especially as there are innovative approaches to communityempowerment in promoting peace and development. Five (5) pilot sites (one for each province), plus 2pilots for intemally displaced persons, have been identified to participate in this pilot. These pilot LGUs,and their specific barangay, were validated during the appraisal mission. Two (2) pilots with IDPscommunities have been included. The piloting would test the Project's Operations Manual with the FMOassuming the overall coordination and supervision role, with implementation assistance from theconsultant team, during this pilot period. The piloting activities will continue even after project launch,and will play an important role in facilitating smooth implementation in the other participatingcommunities.
-24 -
The CDA piloting is being funded from a Japanese program grant being managed by the DOF, and$300,000 has been made available to the Project. These pilot activities would help ensure timelyimplementation of the pilots and also help ensure fulfillment of project readiness filter criteria.
Given the indigenous peoples profile of poverty, criteria for targeting priority barangays andmunicipalities will include the participation of indigenous communities. The menu for sub-projects willinclude priority concems of indigenous peoples like mapping assistance for their ancestral domainclaims.
The technical designs of the strategic regional infrastructure will be based on current designs beingimplemented by the national and ARMM agencies, with the FMO introducing appropriate enhancements.Major attention will be accorded to establishing clear commitment for effective operation andmaintenance of these subprojects. Project implementation arrangements will ensure the closecollaboration of the relevant technical agencies in the design and implementation phases.
4. Institutional:
4.1 Executing agencies:
The FMO will coordinate and implement the ARMM Social Fund Project in partnership with differentagencies and groups within ARMM, e.g., participating communities will implement the CDA component,with the support from the LGUs and selected service providers; FMO, together with the ARMM lineagencies, will implement the SRI component; the FMO, with the active support of qualified serviceproviders, will implement/coordinate the institutional strengthening and governance component. Thesupporting roles of other agencies and bodies are outlined in the above section.
4.2 Project management:
The FMO will be responsible for managing ASFP, under the overall direction of the Executive Director.Overall accountability for the Project will be the responsibility of an ASF Board of Directors, appointedby the President of the Philippines, within the framework of an Executive Order (EO 124, September 12,2002). During implementation, the Project will interface the FMO management/staff with the ARMMRegional Staff in a phased manner based on clear triggers and milestones for eventual turnover of theProject to ARMM.
Sub-project approval process within the CDA component will be conducted by the Subproject ApprovalCommittee, whose members are also appointed by the President of the Philippines. The SPAC supportsdecentralized decision-making in the ARMM and will need strong guidance in ensuring compliance ofthe approval criteria and implementing guidelines outlined under the ASFP Operations Manual.
Commitment to the Project by its target beneficiaries will be determined by the skill and capability of theMunicipal Facilitators (MFs), working in close collaboration with the commnunity facilitators (CFs), toensure participation from communities and other key stakeholders. The MFs serve multiple roles ofresearcher, LGU liaison, diplomat, negotiator, conflict manager, project troubleshooter, and trainer. Thefinal selection of the MFs will be done by the FMO under very strict and explicit recruitment procedures.Careful attention will be placed in the selection process to ensure adequate independence of the MFs andCFs, as well as adequate training to ensure they are responsive to the Project requirements.
4.3 Procurement issues:
The main procurement issue is the importance of institutionalizing open and transparent procurementpolicies at the community and ARMM levels, based on accepted WB and GOP procurement procedures.
- 25 -
Many LGUs and local communities have limited experience with such procurement processes. Suchprocedures are essential elements for building transparency, confidence and trust in local governmentinstitutions in conflict-affected areas, The Project has worked out appropriate procurement methods andarrangements to ensure economy and efficiency.
An important area for Project intervention in terms of capacity building and monitoring will be to buildthe capacity of local communities to manage the contracting of local services, given their limitedexperience in doing so. Annex 6(A) provides further details on the procurement arrangements.
4.4 Financial management issues:
The financial management arrangements for the ASFP loan meet the Bank's requirements as outlined inOP-BP 10.02. The existing Fund Management Office (FMO) of the SZOPAD Social Fund is currentlybeing "transformed" into the new FMO of the ASFP, to handle the on-going SZOPAD Social FundProject as well as to take on expanded responsibilities under the ASF Project. This assessment is basedon the assumptions that the FMO will be successfully transformed, and that most of the key positionsshall be filled by the existing FMO staff, who are being selected on a competitive basis. Two units willhave major financial management responsibility in the project: (i) the Finance and AdministrationDepartment (FAD) in the CFMO which will-handle most of the financial management (FM) work,including disbursements via the Special Account, FM reporting, accounting, planning and budgeting: and(ii) the Finance and Administration Unit in the AFMOs, which will coordinate the financial activities inthe field especially in the implementation of the sub-projects. The Community Groups/Organizationswho will implement the Community Development Assistance (CDA) component shall likewise havefinancial management responsibility in their respective sub-projects. The disbursement mechanisms forthe flow of Project funds will be an important feature of this Project. The detailed cash-flowmechanisms, including the flow of Bank fimds through the Special Account(s), have been worked out ina manner that they are consistent with Bank guidelines. Annex 6 (Part B) outlines further details on theproposed financial management arrangements, including flow of funds and a financial managementaction plan (e.g., WB loan funds will be channeled to the Project's special account, and based on agreedannual work and financial plans and contracts for works, goods, and services, these funds will bechanneled to the various components, in accordance with procedures outlined in the Operations Manual).
The risk that the funds will not be efficiently and effectively used for the attainment of project objectivesis moderate. The major inherent risk in the project, based on its design, is the possible fund leakage inthe communities as part of the CDA component. This risk is mitigated by: (i) the creation of an InternalAudit Unit which is mandated to audit the sub-projects either by itself or through outsourcing from localfirms; (ii) the establishment of basic internal controls in the community organizations at the communitylevel; (iii)strong community participation in monitoring and evaluation, including a complaintsmechanism to enhance accountability in fund utilization; (iv) the control functions of the MunicipalFacilitators, CFMO, AFMOs and SPAC; and (v) the use of external auditors to carry outmanagement/physical audit of the Fund (and reporting directly to the BOD).
Other inherent risks in the project consist of the slow release of funds to the FMO, given the severe fiscalpressures on Government and its cash-flow. This could be addressed by the FMO preparing realistic andperiodic updated work and cash-flow plans and keeping Department of Budget and Management fullyinformed. The control risks on the project's financial management are the accuracy of the accounting bycomponents in the CDA, in reporting of financial statements due to the transition to the NGAS, and theuse of the accounts in the old GAAM in the 2003 budget preparation. Measures are being put in place tomitigate these risks.
- 26 -
Compliance to financial covenants of SZOPAD Social Fund is timely. Further details on the FMassessment and arrangements for this Project, including an agreed financial management action plan, areoutlined in Annex 6 (Part B).
5. Environmental: Environmental Category: B (Partial Assessment)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 Operations Manual has developed satisfactory environmental screening criteria and processes forassessing each of the subprojects as part of the appraisal and approval process. The project, as reflectedin the screening criteria, has a negative list of subprojects which will not be approved. Subprojects withpotentially adverse environmental impacts will be carefully reviewed and, to the extent that adverseeffects are unavoidable, subproject planning will aim to devise effective mitigation measures as part ofthe Environmental Management Plan.
Overall, there are no perceived adverse long-term environmental impacts of other rural and regionalinfrastructure subprojects. Mitigation measures will be implemented for possible increased generation ofmedical wastes resulting from the rehabilitation and/or expansion of provincial and district hospitals.Environmental issues identified from these subprojects are covered by existing environmental impactassessment procedures, and steps will be taken to ensure that subprojects meet World Bank's and GOP'senvironmental safeguard policies and guidelines. Applicable environmental assessment (EA) study(ENFORM 1, Initial Environmental Examination/lEE Checklist, IEE Report or EIA) will be carried outfor each infrastructure subproject for the acquisition of Certificate of Non Coverage (CNC) orEnvironmental Compliance Certificate (ECC] from the DENR-ARMM. Subprojects not covered underthe Philippine EIS will apply for a CNC, while the rest will apply for an ECC in accordance with theprovisions of DENR Adniin Order 96-37 and subsequent Memorandum Circular releases. CNCs andECCs will be secured prior to all construction works.
To ensure that environmental safeguards are being complied with by subprojects before and duringconstruction and implementation, FMO will have an in-house competent Safeguard Specialist. TheSafeguard Specialist will ensure that applicable and acceptable EA is prepared for each subproject andthat EMP and CNC or ECC conditions are implemented, monitored, documented and reported toDENR-ARMM and FMO. He will prepare list of possible intermediaries (i.e., LGU, ARMM Agencies,Service Providers, Consultancy Firms) who will prepare the EA of subprojects for the acquisition ofCNC or ECC from the DENR-ARMM. He will also coordinate with the DENR-ARMM, WB and otherdonor agencies on environmental and social concerns. The intermediaries will be oriented on the WBenvironmental safeguards and GOP environmental policies prior to deployment in the field.
For the rural infrastructure within the CDA component, target communities will take into considerationenvironmental protection in selecting interventions in their respective areas. The EA will be donesimultaneously with the project proposal and their respective outputs simultaneously submitted to theprovincial appraisal group for review and approval by the SPAC. A member of the appraisal group willbe in charge of the environmental safeguards and will see to it that the subproject complies with theenviromnental requirements. The EA will also be reviewed by the FMO Safeguard Specialist. Once theproject proposal is approved, the attached EA is submitted by the proponent/intermediary to EMB,DENR-ARMM for review and issuance of CNC or ECC. Subproject proponents will have the mainresponsibility of ensuring that EMP and conditions in the CNC or ECC are implemented, monitored,documented and reported to DENR-ARMM and FMO.
For the Strategic Regional Infrastructure component, intermediaries will prepare the applicable EA
-27 -
(either ENFORM 1, LEE Checklist, IEE Report or EIA) for each subproject. Coordination shall be madeby the feasibility study team and the EIA team to ensure that information generated by each of the teamare properly taken into account in their respective works. The Safeguards Specialist of the FMO willensure that the EA of subproject complies with the Bank's and GOP's environmental safeguard policies.Once the project proposal is approved, the attached EA duly reviewed and approved by the FMOSafeguard Specialist will be submitted by the proponentlintermediary to the EMB, DENR-ARMM forreview and issuance of CNC or ECC. Subproject proponents will have the main responsibility ofensuring that EMP and conditions in the CNC or ECC are implemented, monitored, documented andreported to DENR-ARMM and FMO.
The Project will arrange for capacity building of the DENR-ARMM to enable it to fulfill its functionsefficiently.
5.2 What are the main features of the EMP and are they adequate?
The project preparation report includes an environmental management plan for the ASF Project. Furtheroperational details are outlined in the Project Operations Manual, which have been further refinedfollowing the appraisal mission.
5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: July 15, 2002
5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the enviromnental impacts and proposed environment management plan? Describemechanisms of consultation that were used and which groups were consulted?
Consultations were held with NGOs and communities groups during project preparation. Among theissues discussed were those on negative social and environmental impacts. No issues regarding negativeenvironmental impacts were raised by the groups. Systematic consultations on environmental awarenessand safeguard are planned for project implementation.
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?
The Project will ensure that the EMP and conditions in the CNC or ECC for each subproject areincorporated in the bid documents and contract agreement with the contractor to ensure complianceduring construction and implementation. Subproject proponents will be responsible for monitoringcompliance of contractors on a regular basis. For subprojects issued with CNC, the environmentalsafeguards compliance checklist attached in the environmental section of the Operations Manual will beused by subproject proponents, with assistance from MFs, to record compliance. The completed checklistwill be submitted to FMO and DENR-ARMM on a quarterly basis. FMO Safeguard Specialist and theDENR-ARMM, through its Community Environment and Natural Resource Officer (CENRO), willvalidate information contained in the compliance checklist.
For subprojects issued with ECC, again the EMP and the conditions in the ECC will be incorporated inthe bid documents and contract agreement. Proponent Line Agency will assign a competent technicalstaff to monitor compliance using the measures in the EMP and the conditions in the ECC asbenchmarks. The monitoring report will be submitted to the FMO and DENR-ARMM on a quarterlybasis. FMO Safeguard Specialist and the DENR-ARMM, through its Community Environment andNatural Resource Officer (CENRO), will validate information contained in the monitoring report.
The safeguard (environment and social) monitoring will be mainstreamed in the Project's M & E System.
-28-
6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.
The main social development objectives of the Project are: (i) ensuring that vulnerable target groups(e.g., women beneficiaries, indigenous peoples, internally displaced persons) receive priority indecision-making positions in local community organizations; (ii) addressing social cohesion and publictrust in conflict-affected communities; (iii) assuring the transition from displacement to reintegration ofconflict-affected families; and (iv) expanding coverage and ensuring the participation of indigenouspeoples/lumads in Project interventions. The results of the Social Assessments have been used to ensurethese social concerns are adequately addressed. The ASFP will ensure the participation of the mostvulnerable groups such as IDPs, IPs and women-headed households by the following ways: (i) the socialpreparation phase will imply a proactive approach by the MF to reach the most vulnerable groups, suchas IP to ensure their participation in the barangay assembly and IDPs; ii) sharpening the selection criteriaby including specific indicators to target these groups at the barangay level; iii) the pilots will includeIDP communities; and iv) the ASF pilots will make efforts to include at least one barangay that has asignificant number of IPs.
6.2 Participatory Approach: How are key stakeholders participating in the project?
While participation will be an essential principle and operational element in the project, determining themost suitable processes and mechanisms to generate participation will be an on-going challenge, giventhe high level of mutual distrust throughout Mindanao. Another issue is the integration of formal andinformal structures of leadership (e.g., ulama/tribal councils/state councils) into communitydecision-making processes.
The Philippines has substantial experience in testing and applying participatory approaches todevelopment planning and project preparation that could be used as reference by the ASFP. Modelsinclude those developed under the USAID-financed Governance and Local Democracy (GOLD) Projectand CIDA-funded Local Government Support Program (LGSP); and those used by Department ofAgriculture for preparing and updating "Agriculture and Fisheries Modernization Plans" (AFMPs) at theLGU, regional and national levels and the "Strategic Agriculture and Fishery Development Zone"(SAFDZ) plans for prime agricultural areas.
In the proposed design, the Municipal Stakeholders' Meeting (MSM) is the venue by which activeparticipation from the different sectors of the municipality is facilitated. The MSM allows stakeholdersto discuss among themselves which barangay will be prioritized and to articulate issues related tocommunity group subprojects, thereby hopefully fostering social stability and cohesion. However, thisbody may come up against existing, functioning local bodies such as the Municipal Development Council(MDC) and the Barangay Assembly (BA). Efforts will be made to integrate and complement their roles.Also, the Project will provide modest arrangements to enable broad-based participation of stakeholders inthe MSMs (e.g., providing travel costs and per diems to selected participants).
Utilizing the MDC to convene the MSM and convening and/or reactivating the BA as itscommunity-based counterpart is important in order to ensure that development interventions areconsistent to local development plans and that there is greater involvement of the local government units.The Municipal Stakeholders' Meetings (MSM) will be a venue for interaction between communitymembers and local officials. These meetings will be attended by community representatives and localofficials and will mainly be convened to discuss project related concerns particularly the prioritization ofbarangays and the formation of community groups and local officials, and will mainly be convened todiscuss project-related concerns, particularly the prioritization of barangays and the strengthening and/or
-29 -
formation of community groups as well as linkages between local government and communities. In orderto ensure a broad participation of stakeholders both at the BA and MSM and to minimize the possibilityof 'elite capture' of goods and services, it was agreed that the participation of 80% of barangays at theMSM and 80% of stakeholders and community groups at the BA will be followed.
6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?
Existing NGOs in Mindanao generally have limited organizational and technical capacities. NGOs withthe relevant experience do not exist at all in some of the more conflict-affected communities. Thisobviously will hinder fill utilization of NGO service providers as conduits for technical assistance andcapacity building as well as venues for advocacy and leveraging of resources with other organizedsectors. Detailed preparation has endeavored to assess the adequacy of service providers/NGOs. Also,efforts will be made to work with and through several NGO-umbrella type organizations in Mindanaowhich have a solid track record (e.g., Philippine Business for Social Progress (PBSP) and TabangMindanaw ("Help for Mindanao").
Key partners in the CDA component are the NGOs and other potential service providers (academe, LGU,etc.). It was expressed during the consultations that there is preference for local service providers orthose that have a sense of understanding and sensitivity of the culture and experience of communities. Atthe start of implementation, the AFMO and MFs will undertake an intensive assessment of NGOs andother service providers in their specific areas which may include consultations and cross checks withrelevant agencies and communities.
6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?
A major element of the Project's operational strategy is based on local partnership and collaboration,especially among the ARMM, LGUs, service providers and local communities. Service providers willwork closely with LGUs to assist community groups in their design, implementation, and monitoring ofcommunity sub-projects. Institutional linkages with other sectors, such as academic/serviceorganizations, NGOs and civil society groups will also be needed. Ties with academic/researchinstitutions and NGOs are to be established, where possible. The Project's partnership with CIDA'sLocal Government Support Program will strengthen the institutional capacity and arrangements to ensurethat the Project will achieve its objectives.
Gender Considerations: The Project has deliberately put in place certain mechanisms to promote theactive participation of women and to ensure that they benefit from it. Among the various ways to includewomen are some of the following key ones:
* project staff will reflect gender balance;* municipal and community facilitators, and service providers will be monitored for gender balance;* livelihood and employment program will be targeted for women and indigenous women (the program
also includes out-of-school youths); and* consultations, trainings and other community gatherings will have special sessions for women.
6.5 How will the project monitor performance in terms of social development outcomes?
High priority is given to designing effective monitoring and evaluation (M&E) systems, with a focus onthe key performance indicators outlined in Annex 1. Many of these indicators support the socialoutcomes. Project monitoring and evaluation are critical as the project tests innovative and decentralizedimplementation arrangements that give a wide degree of latitude to LGUs and NGOs/POs, e.g., CDA
- 30 -
grants. The ASF Project builds on the M&E system that evolved during the SZOPAD Social FundProject. The existing M&E system will be used to clarify fund packages and implementation modalitiesto be piloted prior to start-up of the new Project.
7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?
~ ~ ~ :~P..~i-y. - - ; ' -Pii t X ,
Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) * _ Yes U NoNatural Habitats (OP 4.04, BP 4.04, GP 4.04) U Yes * NoForestry (OP 4.36, GP 4.36) U Yes * NoPest Management (OP 4.09) U Yes * NoCultural Property (OPN 11.03) (U) Yes * NoIndigenous Peoples (OD 4.20) * Yes (9 No
Involuntary Resettlement (OP/BP 4.12) * Yes (9 No
Safety of Dams (OP 4.37, BP 4.37) (9 Yes * No
Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) ( Yes * No
Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* (9 Yes * No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.
As a Category "B", the project has developed policy frameworks and procedural guidance to address thepotential negative impact related to resettlement, Indigenous Peoples (IPs) and environment. Theissuance of such policies ensure that potential negative impacts resulting from sub-projects are mitigated,and that project affected persons must be treated and valued the same way as the Project values itsProject beneficiaries. The safeguard framework and strategies will be particularly useful in guiding theProject's components on: (i) community development assistance where small-scale community-basedinfrastructure subprojects are expected; and (ii) priority regional strategic infrastructure where small tomedium-scale infrastructure activities may be funded.
For such Project components, contacts with Indigenous Peoples and their communities are inevitable.Based on the Social Assessment conducted, about 0.5 million IPs can be found within ARMM.Specifically, the prominent groups are the Tedurays in Maguindanao (North and South Upi); and theBadjaos, Yakans and Samnas in Sulu and Basilan. Tedurays and Badjaos are considered the mostvulnerable and least influential groups, among the poorest groups. The Project's Framework onIndigenous Peoples Development will ensure that IPs are deliberately included in the communityplanning process as priority target groups, that concerns affecting use of resources within their ancestraldomains (e.g. springs, timber, coral reefs) are addressed in compliance with OD 4.20, and that theyreceive culturally appropriate benefits from the Project.
The project does not envision any involuntary resettlement due to the nature of project interventions,with the possible exception of a limited number of persons who may -be affected due to the right of wayprovisions to enable the implementation and/or rehabilitation of certain infrastructure (e.g., rural roads,irrigation and water supply/sanitation) if ever, in the future. In any case, subproject criteria place greaterpriority on rehabilitation of infrastructure which will have limited negative impact and the Project Officewill ensure that the safeguard procedures are complied with. A policy framework for land acquisitionand involuntary resettlement has been prepared for the Project. The ARMM Government has endorsed
- 31 -
and disseminated this and other safeguard policies and guidelines in all its provinces. The Project willtranslate, produce and distribute the documents in dialects understood by the beneficiaries and projectaffected persons. Presentation and discussions on the various safeguards will be implemented by theFMO/AFMOs through the support of the Municipal and Community Facilitators.
There will be an in-house Safeguard Specialist at the Project Fund Management Office who will beresponsible to provide guidance, training and monitoring in all safeguard matters, includingenvironmental and social. The training modules for the LGUs, service providers and MFs also willinclude familiarization of these IP and Resettlement guidelines. All the safeguard documents andscreening mechanisms are included in the ASF Operations Manual.
F. Sustainability and Risks1. Sustainability:
Several sustainability issues were identified, including: (a) the uncertainty of sustained commitment topeace and development in Mindanao by key national policymakers (including Congress); (b) delayedcongressional endorsement of GOP's final revised Medium Term Philippines Development Plan forMindanao and/or poor implementation of the Plan; (c) budgetary limitations or restrictions in theLGUs/ARMM providing the required O&M funds for completed subprojects, which may be aggravatedby slow economic recovery in the next two to three years as a result of global recession and the effectsfrom global and regional security concems; (d) the possibility that ARMM and local LGUs may find itdifficult to become active and responsible partners in local development initiatives in conflict-affectedcommunities because of technical, financial, and/or administrative constraints which may exceed theircapacities, compounded by delays in capacity building measures, and further exacerbated by peace andorder problems which may constrain the required supervision of field activities; and (e) ARMM RegionalGovernment (at various levels) may not be willing to improve governance, transparency andaccountability mechanisms as part of the project design and implementation requirements;
The various assets financed by the project should be seen as the property of the local communities. Suchconcems strongly affect the sub-component design. For example, potable water supply systems providedmust be considered by the beneficiaries as 'their' systems. This also argues for keeping the systemssimple and the sort of asset which a rural community can operate and maintain. Otherwise, they willregard the system as LGU or a line agency's property and ask for help if any maintenance or repair isrequired. Simplicity also ensures that the interventions are more self-targeted towards the poorer sectionsof the population.
2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):
;: :g., Risk. Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveBreakdown in Mindanao peace process, S Target project interventions to communitiesescalation of conflicts, and resulting with "manageable" peace and order conditions;constraints in carrying out required field under extreme conditions where fieldsupervision of Project activities supervision of contracts cannot be carried out,(especially contracts) project activities in specified subareas may
need to be suspended temporarily; the basis forsuch suspension will be clearly reflected in theProject Operations Manual.
Macroeconomic instability and fiscal M Community Development Assistancecrisis, which may limit component and their component subprojects
- 32 -
availability/release of required have small counterpart requirements helpingcounterpart funds (from GOP, ARMM ensure realistic absorptive capacity; measure ofand.LGUs) commitment is to secure upfront counterpart
contribution (in cash or kind)
From Components to OutputsWeak capacity of participating M Project will provide communities socialcommunities to directly implement the preparation and capacity building, clearsubprojects and to provide the required participatory and transparency processes,O&M as envisioned funds, and TA (municipal and community
facilitators and qualified service providers) toassist the communities at all key stages ofcommunity plans/subprojects; and asrequirement for proposal approval, upfront theProject will require the communities to providea clear subproject O&M plan, supported byperiodic participatory monitoring to ensuretimely actions
Inadequate supply of qualified service M Project will draw on service providers, firstproviders/intermediaries to provide from Mindanao, and if inadequate supply, theneffective assistance to participating from other parts of Philippines, given the largecommunities number of NGOs in the Philippines; FMO team
will provide service providers effectiveorientation to project needs and periodicin-service training
Lack of adequate commitment and S Project design includes processes to securecapacities by LGUs and ARMM LGU and ARMM upfront "ownership" andGovernment to provide the required provision of key counterpart staff andcounterpart technical staff and funds to subproject funds at all.stages of communityhelp ensure timely subproject block grant processes/cycle. FMO will seekimplementation and sustainability Memo of Understanding with partner agencies,(including the transition hand-over stage) backed by the BOD. There is also an agreed
transition hand-over action plan to help ensurethe ARMM Regional Government meets keytriggers prior to taking over the FMO functions.The Project action plan includescapacity-building activities. GOP has alsomade an exception for ASFP which reducesARMM LGUs cost share from the mandated50% to 15% (see Minutes of Negotiations,October 25, 2002). This will assist inimproving the affordability of subprojects forLGUs.
Lack of ARMM commitment towards S The semi-autonomous FMO will begood governance would lead to poor and "transformed" to take over with a clearnon-transparent implementation mandate to coordinate project activities,
participatory and transparent processes tosecure inter-agency/community partnership in
- 33 -
implementation, close monitoring, andsustainability. Most of project funds will bechanneled directly to the participatingcommunities (ref. the CDA component).Readiness criteria will require upfrontimproved and transparent budgetary, financialmanagement and procurement systems of theARMM for funds being managed by theARMM.
Efforts to successfully "transform" the M There will be transparent processes andexisting FMO to meet the ASF Project consensus building, updated organizationalrequirements may be constrained by structure, staffing levels and mix (and theirvarious factors transparent recruitment) to "transform" the
existing FMO to meet the ASF Projectrequirements. Clear steps in three phases havebeen designed for this transformation.
Overall Risk Rating S
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
The "substantial" risk rating of the project is primarily due to the unstable peace and order situation inseveral parts of Mindanao, especially the ARMM Region, the militarization activities in the ARMMregion, the need for the new ARMM leadership to restore its credibility and enhanced governance inmanaging development and resources in the ARMM, and the transitional challenges involved in a newway of promoting community driven development in the ARMM Region. (see Annex 1 for furtherdetails). In the event the on-going peace process in Mindanao unravels, the risk rating could bedowngraded to "High".
External Risks are: (a) any shift in official GOP policy away from "parallel peace and development"and/or resurgence of a "hawkish" policy which could accentuate the militarization trends; (b) poorimplementation, or even unraveling of the 1996 Peace Agreement between the Government and theMNLF (which may be adversely affected by the breakaway MNLF splinter groups); (c) discontinuationof the on-going peace dialogue between the GOP and the MILF, thereby resuming hostilities between theGOP and the MILF; (d) factionalism and fanaticism among combating forces, with a breakaway group ofthe MNLF and/or MILF capitalizing on the fragile/tense situation; (e) inability of law enforcementagencies to address escalation of criminality by separate terrorist groups, i.e. Abu Sayyaf, Pentagon, andothers; and (e) increased macroeconomic instability. An institutional risk is the difficulty for low-incomeLGUs and community groups to putting up the required counterpart funds (which is only 15% in cashand/or kind, hence reducing the effects of this risk). Under the on-going SZOPAD Social Fund Project,there was no counterpart requirement for subprojects, and hence, there will need to be a clearcommunication strategy to secure support for this cost-sharing approach. The limited amount ofavailable funds will also prioritize communities which provide the modest counterpart funds.
Internal, Project-related Risks include: (a) weak community capacity to manage subprojects,compounded by an inadequate supply of competent service providers and facilitators; (b) limitedcapacity by participating LGUs and ARMM to provide counterpart technical staff and funds to ensuretimely subproject implementation and sustainability; and (c) delays in establishing adequate governancereforms and accountability mechanisms (at various levels). Given the CDD approach being followed bythe Project, the readiness criteria is adapted. to this type of Project, namely: ensuring the completion offeasibility and detailed engineering designs and associated preparation of the procurement processes of
- 34 -
strategic regional infrastructure subprojects, the identification of an adequate pipeline of communitygroups and subprojects in accordance with the first year implementation plan, and beginning thefield-testing of the CDA processes in a limited number of participating barangays.
The Project has designed appropriate measures to mitigate each of these potential risks, although theextemal risks require implementation flexibility, primarily by re-directing activities where it is feasibleto operate. The Project also has a comprehensive Operations Manual, prepared in the light of relevantimplementation experiences, which together with a highly competent FMO team will help reduceimplementation delays and risks.
3. Possible Controversial Aspects:
At the moment, there are many donors interested in providing more assistance to Mindanao, especiallyfor ARMM. The Project will ensure coordination with other donor-funded projects in the region so as toavoid duplication of efforts and establishment of contradictory systems and approaches.
G. Main Loan Conditions
1. Effectiveness Condition
(a) The Government has established Sub-project Approval Committees (SPACs) with membershipacceptable to the Bank [LA, Article 6.01 (d) and Schedule 5, section 2 (b) (iii)];
(b) The ASF Board has approved the Operations Manual, including the Policies and Guidelines,satisfactory to the Bank [LA, Article 6.01 (c) and Schedule 5, section 2 (c) and (d)];
(c) The Fund Agreement has been entered into between the Borrower and the Fund under the termsand conditions acceptable to the Bank [LA, Article 3.02 (b) and 6.01 (a)];
(d) The Fund has entered into a memoranda of agreement with the ARMM Regional Government[LA, Article 6.01 (b) and Schedule 5, section 1 (a)]; and
(e) The Fund has entered into a Sub-project Memoranda of Agreement with at least ten beneficiarygroups under Part A (CDA Component) of the Project [LA, Article 6.01 (e) and Schedule 5,section 2 (1)].
2. Other [classify according to covenant types used in the Legal Agreements.]
(a) The FMO would, by October 01 of each year starting October 01, 2003, submit to the ASF BOD andBank for its review and comments, an annual work plan, annual training plan and annual budget, andimplement it, taking into consideration the comments from the Bank and the BOD [LA, Schedule 5,section 2 (o)];
(b) The Borrower/ARMM Regional Govemment would ensure adequate and timely provision of annualbudgetary allocations (to cover both the loan proceeds and counterpart funds) and fund releases toimplement the Project's implementation plan in accordance with its updated annual work plans [LA,Article m, Section 3.01 (a) and Schedule 5, section 2 (p)];
(c) As part of implementation monitoring, the FMO would compile semi-annual and annual progressreports, and submit to the ASF BOD and the Bank by January 31 and July 31 of each year (startingJuly 31 of 2003). They will be used as a basis to conduct with the World Bank and otherco-financiers six monthly reviews of project performance [LA, Schedule 5, section 2 (s)];
- 35 -
(d) The FMO would, by July 31, 2005, prepare and submit to the Bank a progress report integrating theresults of monitoring and evaluation of project implementation for the first half of the project periodending June 30, 2005; and conduct with the Bank, by August 2005, a mid-term review of the projectbased on the report, and thereafter implement the recommendations of the report to ensure efficientcompletion of the project and achievement of project objectives [LA, Schedule 5, section 2 (t)];
(e) The project would maintain an adequate financial management system with appropriate books ofaccounts and in accordance with generally accepted accounting principles [LA, Article IV, Section4.01 (a)];
(f) The FMO would submit to the Bank Financial Management Reports on a quarterly timely basis (nolater than 45 days after the quarter), starting with the quarter ending in March, 2003 using formats tobe agreed during negotiations [LA, Article IV, Section 4.02 (b)];
(g) The Board of Directors would submit to the Bank annual audited financial statements for the project,comprised of Sources and Uses of Funds (one of the FMRs), a statement of Special Accounts, andthe Statement of Expenditures, would be submitted to the Bank within six months after the end ofeach of the project's fiscal year (June 30), starting June 31, 2003 [LA, Article IV, Section 4.01 (b)(ii)];
(h) The Board of Directors would arrange for independent annual audits for the following-FMOmanagement, procurement, technical aspects, and social aspects--to ensure that the Project is beingimplemented satisfactorily according to the agreed Operations Manual, and provide the Bank a copyof the findings and recommendations, not later than end-January of each year, beginning withend-January, 2004 [LA, Schedule 5, section 2 (q);
(i) The FMO would, within six months after project completion, prepare and submit to the Bank theGovernment contribution to the Implementation Completion Report evaluating the project'sperformance and a plan for the continued achievement of the purposes of the Project [LA, Article III,Section 3.03 (a)].
H. Readiness for Implementation
g 1. a) The engineering design documents for the first year's activities are complete and ready for thestart of project implementation.
L] 1. b) Not applicable.
2 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.
3 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.
D 4. The following items are lacking and are discussed under loan conditions (Section G):
- 36 -
1. Compliance with Bank Policies
El 1. This project complies with all applicable Bank policies.2. The following exceptions to Bank policies are recommended for approval. The project complies
with all other applicable Bank policies.
Mary P. Judd ngp Robert V. PulleyTeam Leader 81 ner/1 rector Country Director
^37 -
Annex 1: Project Design SummaryPHILIPPINES: ARMM Social Fund Project
-. - 7:: ~~~~~~~~~~~~~~~~~~~~~~~~~~faVk. S ,L
Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)
To foster sustainable By the end of the project: Barangay baseline and MIS Parallel peace anddevelopment in the data. development policy continuesAutonomous Region in 1. Reduction in poverty to be adopted by theMuslim Mindanao (ARMM) incidence in participating Independent impact Government.through reducing poverty and communities assessments includingsupporting mechanisms for a perception surveys. Law enforcement situation inpeaceful environment in 2. Reduction in levels of . target areas improves.conflict-affected areas therein. violence in previously conflict Participatory Monitoring,
affected areas Evaluation and Reporting Overall macro-economic(PME&R) System. situation remains stable.
3. Enhanced communitycohesion (inclusiveness) Peace and Conflict Impactacross cultural, ethnic, gender Assessment (PCIA).and political lines
4. Increased communityperception of improvements intheir quality of life
Project Development Outcome I Impact Project reports: (from Objective to Goal)Objective: Indicators:
1. To provide and/or improve Improved participation of LGU governance capability The GOP, MNLF and MILFsustained access to social and communities with improved assessment. continue dialogue and to workeconomic services by the poor access to socio-economic for peace in Mindanao.as well as conflict-affected services, such as a proportion Joint WB-GOP Supervisioncommunities. of the following: Missions.
*Enrollment rates*Literacy rates PCIA.*Infant mortality*Malnutrition*Water supply*Market access
2. To provide capacity Women, indigenous women Independent impactbuilding for women, and out-of-school youth have assessments includingindigenous women and improved skills in improving perception surveys.out-of-school youth for household food security,improving food security, employment and incomeemployment opportunities and through technical and financialhousehold income. assistance:
*% of small-scale enterprisesand their labor requirements*% of community projects andstrategic regionalinfrastructure and their labor
I requirements
- 38 -
*% of target households withfood security for more than 9months per year
% of households withimproved income
3. To strengthen social Improved participation of Baseline data (to be gatheredcohesion and partnerships communities in about 600 before and during socialbetween and within ARMM barangays with preparation).communities in the ARMM community organizationsregion. implementing development PME&R System including
activities and improved access process documentation.to key infrastructure and/orservices: MOAs*% of community contractsand MOA between Fund andcommunities*% of community sub-projectsimplemented at technicalstandards and within budget*% of traditional and otherconflict resolutionmechanisms practiced
4. To improve local Capacity building andgovemance and institutional implementation supportcapacities for implementation provided:in the ARMM Region. *% of LGUs accept signed
MOAs and assist participatorymanagement of sub-projectsby barangays*% sub-projects selected andimplemented with complianceto project transparencyrequirements
Output from each Output Indicators: Project reports: (from Outputs to Objective)
Component:
A. Community DevelopmentAssistance (CDA)
* Social preparation 1. Participatory mechanisms 1. PME&R System, including 1. Sufficient number of
(community group formation for barangay selection and community joumals. qualified intermediaries
and training) project implementation (e.g., available for social preparation
MSM, BA installed in 2. NGO/service provider work.* Community planning (with municipalities reports.multi-sectoral participation in 2. Households at purok level 2. Risk of resentment (from
decision-making processes) are reached by IEC 3. FMO monitoring and barangays/communities that
3. Commnunity groups are accomplishment reports. cannot be covered under the
* Community subprojects formed/tasks identified project) can be managed.
(infra and services) 4. Community mobilization 4. Technical assistanceprioritization and plans are prepared reports. 3. LGUs committed to support
- 39 -
implementation based on 5. Community development community subprojects.community plans. commnittees trained, mobilized 5. Joint WB-GOP
on community planning, Supervision Missions.financial mgt. and M&E.6. Conmmunity development 6. Peace Watch Reportsplans formulated with (monitoring for early warningparticipation of conmmunity of violence/conflict).groups including women,youth and IPs.7. Community groups withcapability to manage and beresponsible for project funds.8. Infra and non-infrasubprojects are successfullyimplemented (i.e., completedper design, operated andmaintained by communitygroups with LGUs).9. Women, IP women andyouth groups formed andparticipating in capacitybuilding for livelihood andincome generating activities.10. Capacity building andfinancial assistance providedto groups as follows:- Non IP women groups 30%- IP women groups 30%- Out-of-school yth grps 30%- Other community grps 10%
B. Strategic RegionalInfrastructure (SRI)
* Completion/rehabilitation 1. FS/Detailed Engineering 1. ARMM RPDO/RLA GOP and ARMM commitmentof "strategic gaps" in regional design and POWs for SRI Reports. to project coordination,infrastructure, especially completed. governance, andwar-damaged or unfinished 2. Contractors' reports. implementation arrangementsirrigation facilities, training 2. O&M plans for SRIs consistent and strong.centers, municipal or island submitted. 3. FMO monitoring andfeeder ports, and regional supervision reports.hospitals. 3. SRI projects completed
according to specifications and 4. Joint WB-GOPsafeguards requirements. Supervision Missions.
5. Regional stakeholdersconsultation reports.
6. PCIA for each SRI project.C. InstitutionalStrengthening &Governance
1. Effectively-functioning 1. Capability-building needs ARMM and LGUs continuingProject management FMO being provided with assessment (as baseline). commitment to provide
assistance support ARMM oversight. supporting role and O&M2. Pre- and post-training funds/assistance to
-40 -
* Capacity-building for 2. Consortium of resource reports. participating communities.ARMM and LGUs partners formed with effective
multi-sectoral and women 3. FMO monitoring and
* Enhancement and representation. accomplishment reports.strengthening of informalcommunity-based education 3. Strengthened awareness 4. PME&R reports.systems and commitment by LGUs,
ARMM and local stakeholders 5. TA Reports.to ASF objectives, processes.
(Proposed CIDA activities 6. Joint WB-GOPunder this component will 5. Broadened participation of Supervision Missions.have addititional outputs and LGUs in project developmentindicators) cycle/community processes,
expressed support, allocationof counterparts forcommunity identifiedsubprojects.
6. Plans for accrediting andmainstreaming informalcommunity education systemsinto formal education systems.
Project Components I Inputs: (budget for each Project reports: (from Components to
Sub-components: component) Outputs)IBRD GOE ARMM Community
(USD Million) Manual of Operations Timely release by GOP and
Community Development World Bank of funds and
Assistance ($25.99M) 25.6 1.30 0.0 1.86 Project Implementation Plan other required inputs toproject implementers.
Financial and audit reports
Strategic Regional 4.65 0.27 0.55 0.0 dittoInfrastructure ($5.47M)
Institutional Strengthening and 5.78 2.92 0.0 0.10 dittoGovernance ($8.80M)
-41 -
Annex 2: Detailed Project DescriptionPHILIPPINES: ARMM Social Fund Project
By Component:
Project Component I - US$25.99 millionCommunity Development Assistance (CDA)
1. The CDA component empowers vulnerable and marginalized communities in the AutonomousRegion in Muslim Mindanao (ARMM) Region by creating opportunities for participation andaccountability in community development, which will help reduce poverty and promote a durable peace.The component employs community-driven development (CDD) mechanisms, highly participatoryapproaches, and capability building strategies adapted to ARMM conditions. Targeted communitygroups and peoples' organizations (POs) from qualified barangays will be provided, on a demand basis,technical and financial assistance to implement and manage subprojects that address their prioritysocio-economic and development needs.
2. Social Preparation: This phase involves i) intensive information, education, and communication(EEC) activities early on in the project cycle through an information campaign aimed at the barangays andcommunity groups; and ii) site visits and dissemination of the ASF through informal communityleadership structures.
3. Selection/Phasing of Municipalities: The early project stages will utilize a careful and balancedapproach in targeting municipalities and barangays. The final selection and phasing target municipalitieswill take into account those municipalities that will make the most efficient use of the limited resourcesand those that require additional levels of social preparation and capacity building to access ASF at alater stage, and their willingness to convene the Municipal Stakeholders Meetings through MunicipalDevelopment Councils.
4. CDA process: The CDA process was refined to ensure broad participation and inclusivity of allstakeholders in the identification of the most vulnerable community groups in the barangays (seeAttachment 2 on CDA), through a transparent and simple methodology. One of the most relevantenhancements relates to defining community ties, government programs and LGUs in the ASF processes,such as involving local authorities as well as reconciling local developments plans (both at the municipaland barangay levels) with community group subprojects.
a) The Municipal Stakeholders Meeting (MSM): The MSM will be established in all municipalitiesthrough the Municipal Development Council (MDC). The MSM will be formed by at least 80%of barangays, representatives from different civil society organizations, and local formal andinformal leaders. The MSM will be decentralized/subdivided into sub-municipal MSMSaccording to the number of barangays in a municipality and/or to geographical conditions;
b) Barangay Assembly (BA): To guarantee a transparent selection process and to supportconsensus-building and social cohesion, existing barangay assemblies will be convened andre-activated in all short-listed barangays to discuss and refine the selection and readiness criteria;identify the most vulnerable community groups; initiate field community assessments; agree onthe Community Facilitator and service providers, and monitor the implementation process. TheASF and LGU will ensure a broad participation of at least 80% of stakeholders and communitygroups;
-42 -
c) Role of local programs in the CDA project cycle: In order to ensure sustainability, the ASF will
coordinate with other development programs in ARMM to complement (not duplicate) activities.With programs such as CIDSS, ARC, UNDP, CIDA and CFSI coordination include: (i)providing their listing of poverty and conflict-affected barangays that have not been assisted so
as to include these in the initial lists to be prioritize by the ASF; ii) supporting the projectpreparation phase by providing their survey lists of NGOs' representatives and civil societygroups; and (iii) giving technical assistance if requested by the community groups.
5. Memorandum ofAgreement (MOA): It was agreed that a MOA will be signed between the Barangay
Assembly (e.g., as represented by the barangay captain) and the Project's AFMO Manager, to ensure: i)endorsement of the community project by the barangay Assembly (chair); ii) clear roles andresponsibilities in different stages of the project of all stakeholders involved; iii) barangay LGU and
community commitment to the project expressed in at least 15% contribution in cash and/or kind for
implementation and O&M as well as respecting the procedures and principles of the project; iv)commitment to security, operations and maintenance (O&M) arrangements; and v) institutionalmechanisms for Monitoring and Evaluation (M&E).
6. Targeting the Most Vulnerable Groups: The participation of the most vulnerable and marginalizedgroups-indigenous people, internally displaced persons (IDP), women head of households, and out-ofschool youths-were raised during the CDA process. The targeting mechanisms for these vulnerablegroups will: (a) include specific indicators in the selection criteria to identify them at the barangay level;(b) make efforts in the social preparation phase to reach these groups and informed them on the ASF
objectives and process; and (c) include specific menu options.
7. Gender Balance: The ASF will promote the inclusion of women in all phases and levels of the
project. Consultations with stakeholders suggested that 50% of the composition of the MSMs should bewomen; that the ASF will make efforts to identify qualified women to work in all stages of Fundimplementation; and that assistance for sub-projects will be provided to targeted groups in a
gender-balanced manner. The "affirmative action" approaches will be closely monitored to ensure theyachieve development objectives.
Implementation Arrangements
8. Selection of the Municipal Facilitator (MF): The selection of the MF will be done in a transparent
and open process according to agreed terms of reference. Municipal and barangay officials will be
requested to suggest qualified candidates. The MF will undergo training including conflict resolution,mediation skills, and social cohesion building.
9. Subproject Approval Committee (SPAC): The SPAC will validate the transparency of the
participation process and will approve the short-listing of the barangays and community. group
subprojects (see section on governance, below).
10. Criteria for Selection and Prioritization of Barangays and Community Groups: Four sets of criteria
are used to select and prioritize barangays: (i) poverty, (ii) degree of conflict, (iii) complementarity withother projects, and (iv) evidence of commitment. Each criterion was assigned weights and a few
objectively verifiable indicators (see Attachment 1 for Criteria for Selection and Prioritization ofBarangays).
11. Allocation of Project Resources across Barangays: Considering the variable sizes of the barangay
populations, extent of physical area, and population density of the approximately 2,378 barangays within
-43 -
ARMM, a flexible approach is required. The threshold population size should range from 750-1,500.
12. Allocation per beneficiary: Based on the CDA target of reaching up to 25% of the total ARMMpopulation, the project should cover about 700,000 beneficiaries. With a total project budget of Pesos1.25 billion, this will mean a budget of Pesos 1,740 - Pesos 2,175 per capita. With an average barangaypopulation of 1,146 the budget per barangay will range from PhP 2.0 M to PhP 2.5 M. In turn, the totalnumber of barangays that can be covered under the project will range from 500 to 625 barangays.
13. Flow offunds to community groups: A key design feature of the CDA is the direct disbursement ofthe funds via direct deposit of approved subproject funds to beneficiary community groups. The fundsunder this CDA component will be channeled through the proponent community group. The role of theLGU, especially on subproject monitoring and turnover, needs to be managed properly, so as not toundermine community empowerment processes. It is agreed that the manner by which effective andproper partnerships are ensured may be 'operationalized' through an MOA which the community groupsand LGUs may enter. The MOA will specify how LGUs will relate to communities in matters where thesubproject will be turned over and maintenance commitments under the principle ofco-ownership/co-management between community groups and barangays/municipalities.
14. Subproject Menu: See Attachment 2 for the subproject menu. Some flexibility will be introduced inthe subproject menu to address specific needs of key stakeholder groups, including:
a) Women, IP women, out of school youth and other eligible community groups can receive capacitybuilding and get technical and financial assistance in group strengthening, skills training andfinancial assistance for livelihood activities and revolving fund activities (for the last activity nointermediaries will be involved, the group manages own funds and revolve them to expandcoverage to more members).
b) Internally displaced persons aDPs)from the armed conflict will require emergency responseactions both at the evacuation centers and resettlement areas. Thus menu options may include: i)shelters (construction or rehabilitation of damage housing); ii) provision of food while longerterm productive activities are set in place; iii) specific health needs to address malnutrition inIDP children; and iv) psychosocial and war trauma therapy.
c) Indigenous People-Lumads will require options to address specific cultural needs such as i)strengthening of IP community organizations; ii) literacy programs; iii) mapping assistance forancestral domain claims; and iv) promotion of indigenous medicine.
d) Water supply subprojects: The main menu of subprojects may include levels 1 and 2 watersupply services, and under very special conditions/preconditions, Level 3 as well.
15. CDA Pilots: Prior to project launching in early 2003, a pilot CDA activity will be started to test thedesign and implementation arrangements for this component. The slow start-up in projectimplementation throughout the Philippines (and other countries) strongly confirms the merits of pilot andinnovative approaches to community empowerment in promoting peace and development. Five (5) pilotsites (one for each province) will participate in this CDA pilot. The pilot would test the ProjectOperations Manual with assistance from consultant team during this transition period. The further designof the pilot, including cost estimates, has been completed, and will be carried out over the next fewmonths prior to project launching. There would also be two pilots involving IDPs (one for IDPs whorecently returned to their community of origin, and the second for an IDP group who would beencouraged to return to their community of origin).
- 44 -
Project Component 2 - US$5.47 millionStrategic Regional Infrastructure (SRI)
1. The SRI Component supports the rehabilitation and enhancement of facilities for health, manpower
development, social services, port operation and strengthening of ARMM regional government physicalinfrastructure. Specifically, the objectives of this component are to: (a) improve access and provide
services through the rehabilitation of critical infrastructure directly or indirectly affected by war, to spur
economic development; (b) construct facilities in support of education, manpower development andenhanced peace efforts; and (c) utilize regional infrastructure sub-projects as a means to strengthenARMM's capability in procuring, managing and monitoring infrastructure investments.
2. Selection Criteria: To ensure optimum resource utilization for this component, the followingeligibility criteria will be prioritized:
> War-affected projects - incomplete or existing infrastructure with small damages requiring smallinvestments for rehabilitation but with large socio-economic impact at the municipal and
provincial levels;> Projects that are clearly linked with potential production, peace efforts, and value-adding
investments;> Projects that will enhance the provision of services to address the needs of out-of-school youth
(OSY) and conflict affected women and widows; and> Projects that are consistent with the ARMM regional plan, especially those that will complement
existing or approved key infrastructure and service support.
3. Priority will be given to: (a) proposed sub-projects with project preparation activities which can be
completed within Years 1 and 2 of ASF; (b) regional infrastructure which are under the direct operational
mandate and responsibility of ARMM regional line agencies, such as DPWH, DOH, DOTC, etc.; and (c)
those that will have clear and defined arrangements for operation and maintenance followingpre-implementation training and technical assistance provided in part by the Project.
4. The proposed adjustrnents are to ensure the-readiness of a strong pipeline of subprojects andinstitutional reforms in place for implementation during the Project's first two years. There is agreement
on a list of thirteen (13) sub-projects and one additional one sub-project under consideration for a totalestimated base cost of PhP210 million or US $4.2 million (PhP250 mnillion or US $5million if including
contingencies). Of this total, PhP95 million shall be allocated for regional facilities located in
Maguindanao, and the balance of PhPI 15 million to be distributed among provincial facilities in Sulu(PhP3O million), Tawi-Tawi (PhP20 million), Basilan (PhP 10 million), Maguindanao (PhP3O million),and Marawi/Lanao del Sur (PhP25 million). Among the ARMM agencies, distribution of proposed SRI
sub-projects shall be as follows: DOTC/RPA (PhP55 million), TESDA (PhP5O million), DOH (PhP35million), RPDO (PhP25 million), DepEd (PhP2O million), DSWD (PhP2O million) and RRUC/Peace
Center (PhP5 million).
5. The Central FMO will take the lead in the implementation of SRI sub-projects during the
procurement and contracting process, with close support from the participating ARMM line agencies.The CFMO will chair the PBAC, to be co-chaired by RPDO, and with membership from the participating
agencies. The Procurement Officer at CFMO shall head a technical working group to assist the PBAC in
evaluating submitted bids and in conducting post-qualification activities. During the period leading tothe awarding of contracts and subsequent implementation, CFMO through a consultant team shall
-45 -
conduct a series of training seminars and workshops on procurement and safeguard (following the bank'spolicies and guidelines), contract administration, and construction supervision and management.
6. ARMM RLAs submitted a list ("List of Sub-Projects in the Pipeline") of additional proposed SRIsub-projects in anticipation of further assistance that may come from an expanded funding source frompotential contributors to the Fund. Among the sub-projects in the pipeline, the following were identifiedas priority SRI sub-projects: (a) Rehabilitation of ARMM Regional Assembly Building, (b)Multi-purpose Assembly Halls in a number of municipalities, (c) Rehabilitation and/or concreting of anumber of strategic provincial roads, and (d) Manpower Training Centers in Sulu and Tawi-Tawi.Sub-projects funded by other donors will follow all the agreed guidelines and procedures, includingsafeguard compliance, for the Project.
Project Component 3 - USS 8.80 millionInstitutional Strengthening and Governance
1. Component Objectives and Description: The institutional strengthening and governance componentof the ASF aims to initiate processes towards improving performance delivery, transparency andaccountability of the ARMM and local governments to their respective constituency, especially inconflict-affected communities. Similarly the component will support the cross-cutting theme ofimproving good governance and participatory decision-making at both regional and local levels in all ofthe key sub-project components. It will be complemented by a CIDA-financed project being provided ona parallel basis, and which will give special attention to enhancing the developmental and governancecapacities of the ARMM Regional Government, and the LGUs in the ARMM Region, building on andexpanding the on-going Local Government and Support Project.
2. The "Institutional Development and Governance" component comprises four (4) sub-components:
> EEC/social marketing to support institutional strengthening and governance;
> Transition assistance to ARMM, LGUs and FMO including improvements in transparency andaccountability in financial management and procurement procedures;
> Enhancement and reform of the informal community-based education system in the ARMM,including the enhancement of basic skills/maths/sciences in the madrasah school curriculum andother community schools seeking assistance, and accreditation of community-based schools tohelp ensure their graduates are employable; and
> Project management assistance, in a manner which will contribute to enhanced capacity of theARMM Regional Government and its participating agencies and LGUs (mainly through"learning by doing" and in-service training).
3. As part of a parallel project supporting the ASF, CIDA intends to provide additional funds to enableCIDA-LGSP to build capacity of the ARMM regional government and provide technical assistance tolocal governance/LGU capacity building. These two sub-components shall be managed by CIDA-LGSPthrough the implementation mechanisms and guidelines applied by CIDA-LGSP in their existing capacitydevelopment program for ARMM.
4. The sub-component on capacity building for ARMM regional government, based on the identifiedpriority areas for capacity building in the ASF proposal, CIDA-LGSP, shall devise the appropriateimplementing mechanisms and processes for the application of the TA support consistent with the
-46 -
objectives and principles of the ASF Project. Likewise, this component will also facilitate collaborationwith the Asian Development Bank's (ADB's) TA to ARMM. The WB/ASF will serve as beneficiary of
the CIDA-LGSP implementation of this sub-component on TA for effective local govemance/LGUcapacity building technical assistance.
5. On the TA for effective local governance at the LGU level, existing implementing guidelines and
readiness processes currently applied by CIDA-LGSP to the 23 ARMM LGUs will also be applied to an
expanded number of LGUs in ARMM. Prioritization or additional weight will be given by CIDA-LGSP
for inclusion as an LGU to receive capacity building assistance, to those ASF LGUs who will beidentified as areas where ASF community project beneficiaries/Community Development Assistance
(CDA) infrastructure shall be applied. Similarly it is LGSP-assisted LGUs which would be given priority
to receive ASF CDA assistance. The CDA process will remain applicable in the selection of thecommunity infrastructures for potential communities as proposed under the ASF selection process.
Further opportunities for collaboration (in the course of implementation) maybe seen with the USAIDTransparency, Accountability and Govemance (TAG II) Project on this sub-component.
6. Sub-Component (i): IEC/social marketing to support institutional strengthening and governance.
This component is aimed at generating general understanding and project readiness of projectbeneficiaries and institutional commitment on project implementation and participation. Activities that
would be conducted under this sub-component are: (a) assessment of infornation requirements and gaps
including a review of the proposed ARMM decentralization framework and of the use of public lands;
(b) ASF public awareness and social marketing campaign; and (c) transition TA and orientation of key
project implementers in the ARMM, LGUs and CFMO.
7. Activities in this sub-component are intended to be part of the social preparation activities that would
be conducted in all potential project communities/barangays during the transition period orpre-implementation phase of the Project.
8. Implementation arrangements: This subcomponent will be an integral part of the activities in the
CDA component as well as in the other social preparation activities with LGUs, community and ARMM
during the pre-implementation and implementation stages of ASF. The development of the materials and
other inputs in this activity could be sub-contracted to a private firm or group to facilitate production andquality.of the materials.
9. Sub-Component (ii): Transition assistance to ARMM, LGUs and FMO. This sub-component is the
institutional readiness activities to support the capacity building of the ARMM, LGUs and FMO in the
transition period. This include support to team building efforts of the incoming ASF CFMO/AFMOs on
the ASF Project, Operations Manual, CDA process and development of specific operational andadministrative guidelines of the Project. In addition, in partnership with CIDA technical assistance will
be provided to ARMM to improve its administrative functions as well as its transparency andaccountability in financial management system and procurement procedures.
10. Implementation arrangements: Pre-implementation activities before project effectiveness will befocused on team-building activities that shall be facilitated with the selection of the ASF ED and key
technical staff. Detailed briefings and orientation between the ARMM government and the ASF staff
shall be focused on the operations manual and developing of detailed guidelines based on the policy
decisions made by the BOD. The early selection and convening of the BOD shall be critical in the
smooth and effective transition and jump starting of the ASF project.
-47 -
11. Sub-Component (iii): Enhancement of Informal Community-Based Educational System. Thissub-component will initiate efforts to enhance the existing informal community-based education systemfor mainstreaming into the formal educational system and gaining accreditation in the national educationsystem to enable the graduates to be more employability. Support for this activities are focused on thepreparation, formulation, development and 'piloting' of a development-oriented madrasah system andother infornal schools, curricula, instructional materials and teaching,methodology, including:
- assessment of extent of mainstreaming and other related requirements in the ARMM region;- curriculum and instructional materials development;- selective piloting of community-based and enhanced 'madrasah' curricula and instruction
materials;- other aspects, as other informal community-based education systems seek project assistance.
12. Implementation arrangements: This sub-component could follow through on the initial work done bythe ASF project preparation team and work with the ARMM-Department of Edcucation and thePresidential Adviser on Higher Education on the 'mainstreaming' of this sub-component. RA 9054 or thenew ARMM law has clearly stipulated the integration of the 'madrasah' system into the formal educationsystem. The sub-component may support the piloting and development of key instructional materials,methodology and curricula as well as further consultation activities with representatives from the ulamaand religious leaders in ARMM. The ASF FMO can also facilitate discussions between the ARMM-Department of Edcucation and other donor agencies (i.e. ADB) on supporting the implementation of a'development madrasah' system in the ARMM. To the extent other community-based informal educationsystems seek similar project assistance, such schools would need to meet the eligibility criteria, such thatthis component will take an inclusive approach to assistance.
13. Sub-Component (iv): Project Management Support. The sub-component covers the support towardsthe establishment and operation of a technically-competent, effective and streamlined projectmanagement structure that would support the successful implementation and achievement of the Projectobjectives. There is also a phase-in plan such that the responsibilities carried out by the FMO would betransferred to the ARMM Regional Government during the course of the Project's implementationperiod, in accordance with various "readiness" triggers/milestones. The project will devote efforts toassisting the ARMM meet these milestones. The framework will be updated and guided by the Board ofDirectors during the Project's first two years of implementation.
-48 -
Attachment 1
ARMM Social Fund ProjectRefinement and Application of Criteria for Selection and Prioritization of Barangays
* Criteria should be as simple as possible, taking into account the amount of effort to be required from
barangays and Municipal Facilitator (MF) in applying the criteria.* Criteria are applicable to entire barangays rather than to individual households.
* Two or more data sources should be cross-checked.* Obtaining data directly from barangay is consistent with "self-selection" approach, but subject to
"audit" to ensure reliability.
Scoring will be disaggregated using a "points system". For example, the distance of the barrage from the provincialcapitol (see Criteria la) can be scored using a five-point scale: 5 points (max.) if the barrage is located more than 40km from the capitol; 4 points if 31-40 km from capitol; 3 points if 21-30 km from capitol; 2 points if 11-20 km fromcapitol; I point if 1-10 kmn from capitol; and 0 point if it is less than I km from the capitol.
Criteria and Indicators Scoring Source of Data(see above)
1. Poverty (30%)a. Distance of barangay from the The farther the distance from a * Barangayprovincial capitol (or alternatively from "central location", the higher the * Provincial engineer's or planningmunicipal school or Municipal Health score officeCenter) * MF key infornant interviews
b. Percent of barangay households with The lower the percentage of * Barangayaccess to Levels I-III household water households with access to water, * Local water associationsystems the higher the score * Local health center
* MF key informant interviews
c. Distance of barangay from nearest The farther the distance from the * Barangaymajor highway major access road, the higher the * Provincial or municipal planning or
score engineer's office* DPWH
d. Percent of barangay population The higher the percentage, the * Barangayclassified as Indigenous People higher the score * NCIP
* DENR* MF key informant interviews
e. Percent of barangay households The higher the percentage, the * Barangayheaded by women higher the score * MF key informant interviews
2. Conflict-Affected/Conflict-Influenced (40%)a. Percent of barangay households The greater the percentage, the * Barangaywhich evacuated from barangay within higher the score * DSWDthe last five years; or which were * MF key informant interviewsevacuees to the barangay over the sameperiodb. Number of infrastructure damaged The higher the number, the higher * Barangayover the last five years the score * Provincial or municipal engineer's* Roads office* Bridges * MF key informant interviews* Schools* Water systems
-49 -
c. Number of violent incidents over the The higher the number, the higher * Barangaypast year within the barangay the score * Peace and order council
m MF key informant interviews3. Complementarity (20%)a. Number of other projects (existing The lesser the projects, the higher * ARMM RPDO inventoryor approved) within the barangay the score * ASF design document annex* locally-funded * Barangay* foreign-assisted * Provincial or municipal planning
office* MF key informant interviews
b. Amount committed to above projects The smaller the amount committed, * Barangay(to confirm actual implementation) the higher the score * Provincial or municipal planning
office* MF key informant interviews
4. Evidence of Commitment (10%)a. Barangay Development Council * Fixed score for required * Barangayresolution: minimum counterpart* to provide a counterpart * Extra points for higher* to take on O&M responsibilities counterpart* to abide by ASF policies and
procedures
Refinement of the Principles, Criteria and Indicators for Selection and Prioritization of Barangays
The Project Appraisal Document discusses five principles (inclusivity, immediacy, demand-driven,simplicity, and self-selection), and four major criteria (poverty, conflict, complementarity, andcommitment), for targeting beneficiary barangays. In turn, each criterion was to be applied using a set ofverifiable indicators. The Appraisal Mission focused on (a) seeking from the pilot LGUs, NGOs fromthe pilot municipalities, and interested international organizations (JBIC and CIDA) further feedback onthe principles, criteria and indicators; and (b) the procedure for applying the criteria for the selection offive barangays in each of the five pilot municipalities, as well as during the post-pilot stage of projectimplementation.
Feedbackfrom stakeholders. Generally, there is consensus that the existing principles, criteria andindicators are sound, and ready for application during the pilot stage - after which these could be furtherrefined based on actual results and experiences. Suggestions for further refinement include:
Addition of the following as criteria for selection and prioritization of barangays: (a) barangay(multi-year) development plan; (b) barangay annual investment program; (c) statement ofbarangay income and expenses; and (d) convening of the barangay assembly: Adding thesecriteria will ensure that the barangays (i) will be ready to implement the ASF, based onfamiliarity with participatory development exercises; (ii) have received a share in the IntemalRevenue Allotment (IRA) to support its own development activities including the requiredcounterpart for ASF; and (iii) are complying with provisions of the Local Govermment Code of1991. On the other hand, adding these four criteria could work against the poorer, less developedbarangays that do not have the means, especially to prepare the development plan, and the annualinvestment program. Thus, the four criteria could be used as "readiness criteria" rather thatprioritization criteria. This way, the project could assist the poorer, less developed barangays tomeet said criteria.
-50 -
* Addition of resource availability criteria: Resource availability (e.g., hectares of productiveagricultural land, or forest resources) would be a good addition at a later stage when the requireddata from barangay resource inventories/assessments would have been made available.
* Definition of "damaged infrastructure": As one of the indicators of the "degree of conflict"criterion, damaged infrastructure would be the roads, bridges, schools, water systems, etc., thatcannot be optimally used by the community as a result of damage from armed conflict over thelast five years. For example, only one-half of a two-lane bridge being passable, because the otherhalf was damaged by bombing. This definition would be used during the pilot stage.
* Weight assigned to commitment criterion: The 10% weight appears to be low because thecommitment of the barangay is the main determinant of the success of the project. However,since the verifiable indicator during the selection stage is an official barangay resolution, allbarangays are expected to be able to easily meet this criterion and thus, the 10% weight would beappropriate.
* Addition of "pressing needs/problems" (in barangay checklist): During the stakeholderconsultations, a "barangay checklist" was presented. The checklist will serve as data gatheringinstrument for the barangay selection criteria and indicators. By adding pressing needs/problemsto the checklist, the barangay itself would be able to identify priority areas for intervention basedon its own perception. However, it was explained that the social preparation stage of the projectcycle will ensure that priority needs/problems will be identified by the barangay/community,rather than by project managers/outsiders.
The criteria and indicators will be reviewed and fine-tuned based on the results of the selection andprioritization of barangays within the pilot municipalities. One area of concem is the reliability ofdata on conflict indicators (e.g., evacuees; violent incidents).
Application of Final Criteria and Indicators for Barangay Selection and Prioritizafion
For the pilot stage where five municipalities have already been identified, the procedure for applying the
criteria and indicators for barangay selection will be as follows:
- 51 -
1. The "barangay checklist" will be finalized by the consultants, and explained to the MunicipalFacilitator (MF), who will be sent out to the field to gather data supporting each of the criteria andindicators for barangay selection. Data will be gathered from key informants in each barangay, withenough time for consolidation, processing, and packaging before the Municipal Stakeholders Meeting(MSM).
2. With assistance from the consultants, the data gathered will be consolidated, processed and packagedby the MF for presentation during the MSM. The materials to be presented will be very simple (e.g., onManila paper, the rank-order of all barangays within the municipality in terms of distance to a "centrallocation" such as the municipal or provincial capitol). Materials should be in the local language/dialect.
3. Along with basic EEC materials about the project, the processed and packaged data from the barangaychecklist will serve as one "objective basis" for the MSM participants to self-select the five prioritybarangays. The data will be presented by the MF during meeting. It is recognized that si,pplemental"local knowledge" will be provided by MSM participants in self-selecting the priority barangays.
For the post-pilot stage of the project, the procedure for the application of the criteria and indicators forbarangay selection, along with the criteria and indicators themselves, will be reviewed for possiblerefinement. The barangay checklist, for example, could be included in EEC materials to be widelydisseminated throughout ARMM, filled-out by candidate-barangays, and included in the "Expression ofInterest" to be sent to the FMO by the barangays.
-52 -
Attachment 2ARMM Social Fund Project
Community Development Assistance Component(Menu of Subproject Mix)
Sub-Component Infrastructure Non-Infrastructure
Water and 1. Level I artesian well (for areas > Formation of household beneficiariesSanitation with no spring potentials) > Training on health and sanitation
> Training on community contracting> Training on community monitoring and
evaluation> Training on operation and maintenance
2. Level H (spring development) with > Strengthening of BAWASA and training oflaundry area members
> Set-up mechanisms for sustainability such ascommunity water fund managed by association
.> Training on health and sanitation> Training on community contracting.> Training on community monitoring and
evaluation> Training on operation and maintenance
Community and 3. Barangay Health Station (BHS) > Training of community health workersSocial Services repair/construction and expansion > Organization of mothers' class
with medical equipment > Mechanism for seed fund for Botika sa& Barangay (BSB) and "fee for services" schemesRainwater tank > Training on community contracting
> Training on community monitoring andevaluation
> Training on operation and maintenance> Strengthening of Local Health Board
4. School building > Training on community contractingrepair/construction and expansion > Training on community monitoring andwith basic furniture evaluation& > Training on operation and maintenanceCommunal toilet > Organization of parent-teachers associationsRainwater tank > Strengthening of Local School Board
5. . > Conduct of basic functional literacy,leaming centers (including tribal post-literacy, equivalency/accreditation and
halls, peace centers and day care vocational trainingcenters) with basic furniture > Capacity building for enhancement of project
management skills in non-formal educationimplementation
> Conduct of literacy mapping to identify learners) Training/re-training of madrasah teachers in
- 53 -
basic teaching skills (using reconciledcurriculum), research and extension knowledgeand skills
> Upgrade the management and supervisory skillsof Madrasah administrators
> Training on community contracting> Training on community monitoring and
evaluation> Training on operation and maintenance> Provision of toys and learning materials for day
care children
Post-Harvest 6. Solar Dryers and Storage > Training on community contractingFacilities > Training on community monitoring and
- Concrete solar driers for land-based evaluationcrops > Training on operation and maintenance
> Training on microenterprise development and- Solar driers on stilts for seaweed management (including market linkages)
> Strengthening of cooperatives- Warehouse building construction
Access 7. Barangay and farm-to-market road > Training on community contractingInfrastructure rehabilitation > Training on community monitoring and
evaluation> Training on operation and maintenance
8. Timber port construction and - ditto -rehabilitation
9. Pedestrian bridge construction and - ditto -rehabilitation
10. Hanging bridge construction and - ditto -rehabilitation
11. Rock causeway/bailey bridge - ditto -construction and rehabilitation
Gender and In addition to the above >. Conduct of gender awareness and genderDevelopment sensitivity traiings
> Organization and training of women in conflictresolution activities
Non IP Women Groups > Conduct of group and organizational(30%), Indigenous strengthening activities and trainingsWomen Groups (30%), > Capacity building in financial management andOut-of-School Youth business skillsGroups (30%) and > Financial assistance for group to use as revolvingOther Eligible funds for members and expand coverage to newCommunity Groups members (no financial intermediaries will be(10%) used; small loans will be provided to beneficiary
-54 -
groups which will be repaid to group itself)Sk Promote the concept of food security and expand
skills in livelihood activities
Internally Displaced In addition to the above > Construction or rehabilitation of damagedPersons shelters
> Provision of food while longer term activitiesare set in place
> Health needs to address malnutrition in IDPchildren
> Psychosocial and war trauma therapy
Indigenous People In addition to the above > Strengthening of IPs community organization> Mapping assistance for ancestral domain claims> Promotion of indigenous health medicine
Nezative List
> Purchase of weapons, chainsaws and, explosives> Financing of sawmills> Purchase of pesticides, insecticides, herbicides, asbestos, and other potentially dangerous materials and
equipments> Purchase of fishing boats and other related equipment> Road construction into protected areas> Use of funds for purchase or compensation for land> Financing activities that have an altemative prior source of committed funding> Financing of recurrent govenmment expenditures (e.g. salaries for government and LGU staff)> Construction or repair and buying for equipment of govermment offices and places of religious worship> Financing of political and religious activities, rallies and materials> Salaried activities that employ children under 16 years> Financing activities that unfairly exploit women or men at any age> Financing intemational travel> Use of coral reef as building material> Use of mangrove as building material> Financing livestock (poultry is acceptable)> Purchase or repair of vehicles
-55 -
Annex 3: Estimated Project CostsPHILIPPINES: ARMM Social Fund Project
- - '~~~Lb~~dI:- . iFo-11i -19- EMP.t5IRE.-~,1,Project C'ost ByCornponnht:iJ -. h' *S-$m1ion; 7Wil F S$rnj9 .a
1. Community Development Assistance 23.69 0.00 23.69a. Community-Based Infrastructureb. Non-Infra and Support Social Services
2. Strategic Regional Infrastructure 3.52 1.08 4.603. Institutional Development and Governance 6.21 1.94 8.15Total Baseline Cost 33.42 3.02 36.44
Physical Contingencies 0.67 0.13 0.80Price Contingencies 2.80 0.22 - 3.02
Total Project Costs 36.89 3.37 40.26
Front-end fee 0.34 0.34
Total Financing Required 36.89 3.71 40.60
- -. , IocaL~~~~~~~~~~~~~~~ ~~~F~oreign Q-. !NipraW2
- -Project CostBy Category=> . _ - '_i_lion _. m____________ WS$rnIlIIoflK _J$m lirn~ I
Works (SRI) 4.19 1.28 5.47
Goods (Vehicles and Equipment) 0.30 0.00 0.30
Grants (CDA) 21.09 0.00 21.09
Consultant Services & Training 8.64 2.09 10.73
Incremental Operating Costs 2.67 0.00 2.67
Total Project Costs 36.89 3.37 40.26Front-end fee 0.34 0.34
Total Financing Required 36.89 3.71 40.60
Identifiable taxes and duties are 0 (US$m) and the total project cost, net of taxes, is 40.6 (US$m). Therefore, the project cost sharing ratio is 82.76%
of total project cost net of taxes.
- 56 -
Annex 4: Cost Benefit Analysis SummaryPHILIPPINES: ARMM Social Fund Project
Summary of Benefits and Costs:
1. The project's sector related CAS goal is to reduce poverty and help promote a peaceful and safeenvironment in the Autonomous Region of Muslim Mindanao (ARMM). Based on an ARMM populationof around 2.8 million and assuming a 10% depression in annual output per capita - or about US$100 -the cost of the conflict would be around US$280 million annually. A study at present in draft indicatesthat the present value of the cost of the conflict would be likely to exceed US$ 1 billion (refer "TheEconomic Cost of the Mindanao Conflict" by Edgardo Barandiaran, draft March 9, 2002). A major partof the expected benefits is therefore encouraging a return to peace, which would be hard both to quantifyand to partially attribute to this project among the many current initiatives with a similar goal. Theanalysis is therefore based on those components for which adequate data is available and whose benefitsdirectly flow from the project investments. Even in this respect there are difficulties since the project willadopt a demand-driven approach and it will therefore be up to the local communities to decide whatparticular investments they require. Indeed the PAD of the earlier SZOPAD Social Fund Project stated:"The actual activities that will be financed and, hence, the benefits cannot be accurately quantified as theproject will be demand driven. NPV and ERR are not relevant for Social Fund projects" (Report No.17228-PH PAD of the SZOPAD Social Fund Project, February 26, 1998 page 10, Section E.1).
2. The economic analysis can therefore only be illustrative and indicative of the sort of outcome tobe expected and in the absence of any firm data or precise plans has to rely heavily on assumptions andestimates. These have been chosen as carefully as possible and generally with a bias towards aconservative approach.
3. In order to estimate project costs and provide some estimate of benefits it has been assumed thatcommunity infrastructure would include items such as provision of access roads, drinking water anddrying floors. In addition the project will also finance strategic regional infrastructure, in particularhospitals and port facilities; livelihood and financial assistance, with a particular focus on women,indigenous women and youth to provide employment and improve incomes in rural areas; providetraining and capacity building; and fund investments for Institutional Strengthening and Govemance -which would include support to ARMM for project implementation.
4. Total project costs including physical and price contingencies are estimated at around P 2.1billion (US$ 40.27 million). For the economic analysis foreign exchange costs have been adjusted by theforeign exchange premium estimated at 1.2. For all the components and sub-components included in theanalysis it is assumed that benefits commence in the year following the project expenditures.
Analysis of the Project Components:
A. Community Infrastructure
5. Access Infrastructure. The economic benefits of the access roads are savings in vehicleoperating costs, driver and passenger time savings and benefits in goods transport due to improved roadconditions as a result of the project. Estimation of benefits has been made based on traffic count surveysundertaken for the Mindanao Rural Development Project (Report NO. 19639-PH PAD of the MRDP,November 8, 1999) in the provinces of North Cotabato and Sultan Kudarat supplemented by a
- 57 -
community survey undertaken for project preparation and detailed vehicle operating cost data taken froman ADB financed road project in the Philippines. Traffic intensities are low to very low in the projectareas - motorised vehicle counts are around 30 per day. Savings in vehicle operating costs are thereforesmall and estimated at around P42 (US$0.84) per km per day. Savings in driver and passenger time havebeen calculated on the basis of an average of four occupants per vehicle, a time saving of 10 minutes perkm and an economic opportunity value of labour of P120 per day. based on the local survey informationcommodity transport benefits have been derived assuming three 50kg sacks per vehicle at a benefit of P5per sack. Maintenance costs have been included in the analysis at the rate of 5% of investment costs fromthe year following construction onwards. Based on these estimates and assumptions the value of benefitsat full project development from Year 6 onwards is estimated at around P116 million(US$2.3million)annually.
6. Potable Water Supply. The barangay water supply association (BAWASA) will be generatingincome from the project installed water system by charging user's fees at the estimated rate ofP20-P30/household/month. This assumes a household with 5-6 members would consume 400 liters ofwater/day or 12 cu.m. of water/month, cost at P2.50/cu.m. The BAWASA will not have a profitobjective in maintaining the water system, hence the amount paid by the members will be tantamount totheir contribution to the maintenance and operation of the system. As for the access infrastructure annualmaintenance costs have been assumed at 5% of construction costs. Benefits would include time savingsof households in fetching water, which is equivalent to cost of time devoted to productive labour, which
would otherwise be used in fetching water.
7. Some adequate potable water sources are already available in the project area. For the purpose of
the analysis it is therefore assumed that about half the total project beneficiary population, or some350,000 people would benefit from the sub-component. There are two (2) types of economic benefitsunder the potable water supply system. These are (i) the avoided costs of water-borne diseases and (ii)time savings in fetching drinking water. The first is associated with the decrease of incidence ofwater-borne diseases. This decrease in number of incidences multiplied by the average cost perincidence (medical, hospitalization and patient's/carer's time) is equivalent to the cost savings throughavoiding the disease. The second benefit occurs through developing convenient sources of potable watersupply. It makes potable water more accessible. For the purposes of the analysis a time saving per 6member family of 15 minutes per day has been conservatively adopted as an average over the whole350,000 beneficiary population, although indications from the surveys undertaken during projectpreparation indicated that time savings per family could easily be twice that amount. The value of
benefits at full project development, realizable from Year 6 onwards is P47 million (US$0.94 million)annually.
8. Post Harvest Facility. Post harvest facilities are expected to generate income from user's fees.In the case of solar driers, the fee will be paid by private individuals/farmers, to the organizationmanaging the facility. The facility may generate profit if total collection exceeds the requirement foroperating the facility and in maintenance and repair of equipment if applicable. Most rice mills,warehouses and solar driers owned by community organizations/private entrepreneurs generally earnsatisfactory incomes. The cost stream for the analysis includes maintenance costs estimated at 2.5% ofconstruction costs.
9. For the economy, the benefits from this sub-component will be in the form of savings inpost-harvest losses. The component is expected to reduce post harvest losses by around 7.5% from theestimated prevailing rate of 12.5% to about 5%. Assuming that the present land use pattern in the projectarea continues, the estimated value of the post harvest loss prevention will amount to P18.8 million
- 58 -
(US$0.38 million)from Year 6 onwards for agricultural products. The project will also improve thequality of dried seaweed by an estimated P5.00 per kilogram of dried product. This has an estimatedvalue of around P875,000 (US$17,500) at full development from Year 6 onwards. Total annual benefitfrom the component at full development from Year 6 onwards is therefore estimated at P19.6 million(US$0.39 million).
B. Strategic Regional Infrastructure
10. Development of the component is at present limited to agreement on the priority items forinvestment, and construction cost estimates for each of the 13 to 14 subcomponents selected. Detailedfeasibility studies have been completed for each sub-component and includes a financial and economicanalysis where appropriate (i.e. for port and hospital subcomponents, but not for components such as theSocial Welfare and Development Centre, the benefits of which are social empowerment and cohesionand would be problematic to measure). With the present lack of any estimates of likely benefits noeconomic analysis has been attempted for the Strategic Rural Infrastructure component.
11. Port rehabilitation and Expansion (Polloc, Jolo, Bongao). The financial benefits from portdevelopment are expected to stem from revenues from port operation such as passenger accommodationand assistance fees, arrastre services/cargo handling fees and rental of other facilities such as bondedwarehousing. Future benefits as a result of the rehabilitation and expansion will be identified andestimated as part of the detailed feasibility study.
12. Economic benefits would be derived from increased volume of cargo handled and savings in timeand cost of berthing and other docking fees. However, at present the detailed extent of the rehabilitationand improvement is not known, neither is there reliable data available on cargo and passenger trafficthrough these ports. It is not, therefore possible to make any worthwhile economic analysis.
13. Regional and Provincial Manpower Training Centre. This service facility assumes thatregistration fees will be collected from the beneficiaries, which should be enough to operate and maintainthe facility at costs of training that would be less than if the participants go to service providers outsidethe area. Thus the economic benefits of the centre would be the cost savings from not using thesealternative venues. Comparison of costs includes cost of training itself, cost of accommodation, traveland other incidental costs. It is presumed that since the new facility will be located in ARMM, cost oftravel will be minimal.
14. Rehabilitation of Provincial and District Hospital. Revenues of the hospital will be generatedby admission fees. This will be minimal since the hospital is a public service facility that generally catersto the poor sector of society. Economic benefits are expected in the form of the value of costs savedthrough avoidance of a range of major causes of morbidity, except water-borne diseases (alreadyconsidered as a benefit of the potable water supply subcomponent). Of the quantified benefits, only 65%was attributed directly to the rehabilitation/expansion of the district and (Sulu) provincial hospitals. Atfull development benefits are calculated at more than P6 million (US$120,000) from Year 6 onwards.
D. Financial Analysis Results
15. Individual financial analyses have been carried out for three components, namely: (a)rehabilitation/expansion of provincial hospitals, (b) water system project (level II), and (c) post harvestfacilities. The financial evaluation of the selected components/subprojects shows varying financialviability. The FIRR of the base case of these components/subprojects are as follows:
- 59 -
16. Component/subproject FIRR (%)
Potable Water Supply (Level II) 11.0 at P 1 6/cu.m
<0.0 at P 9/cu.m.
Post Harvest Facilities 14.0Provincial Hospital 10.0
E. Economic Analysis Results.
17. As already mentioned in para. 2 the economic analysis can at best be only indicative for a socialfund project of this nature. Also it can only be limited to those components for which data are availableand for which the benefits are fairly readily measurable. For these reasons several of the components andsub-components have been excluded from the analysis. These include: (i) the Strategic RuralInfrastructure component, for which data are currently lacking during the writing of this report, and (ii)Institutional Strengthening and Govemance component, except for those investment and recurrentexpenditures related to project management - all the other component expenditures are aimed atgenerating institutional and social development benefits; and (iv) the Non Infrastructure and SupportSocial Services sub-component of the Community Development Assistance (CDA) component, sincethese expenditures are largely for training, empowerment and institution building and haveunquantifiable benefits.
18. The economic analysis is accordingly limited to the CDA component.
Community Development Assistance (CDA) Component
19. Access Infrastructure. The limited information derived from surveys in North Cotabato and
Sultan Kudarat provinces indicate very low motorised traffic volumes - typically about 30 motorisedvehicles of the smaller size categories per day. Savings in vehicle operating costs are therefore quitesmall - less than US$1 per km/day. The outcome of the analysis therefore depends heavily on theassumptions regarding driver and passenger time savings and goods transport benefits, in particular theassumptions on the average number of passengers and bags per vehicle. Based on the assumptionsdescribed earlier the analysis shows a an economic rate of return for the sub-component of 22% and anNPV (at 15% discount) of P 101 million (US$2 million).
20. Potable Water Supply. More than 80% of benefits of the sub-component are derived from timesavings in water collection. Even assuming that diarrhoea cases are 505 higher than the national average,the frequency is still below 1.8% of the population. On the basis of the assumptions and estimatesadopted the subcomponent has an ERR of 30% and an NPV of P 76 million (US$1.5 million). Doublingthe daily time savings per family from 15 minutes to 30 minutes per day would also result in a doubling
of the ERR to 60%.
21. Post Harvest Facilities. Based on the assumptions described the ERR of the sub-component iscalculated at 13% with a negative NPV of minus P5.6. The analysis may understate the benefits, sincelike all grain storage and handling facilities the financial and economic performance depends heavily onthroughput and there may be additional uses and benefits for the drying floors that have not been
captured in the calculations.
- 60 -
CDA and Project Management Costs
This part of the analysis is a close as it is possible, with the data at present available, to approach to awhole project result. Assuming that half the project management investment and recurrent cost areattributable to implementation of the CDA component the ERR is calculated at 16% with an NPV of P34million (US$0.7 million). Including the whole amount of project management investment and recurrentcosts the overall ERR would fall to 12% with negative NPV of minus P103 million (minus US$2.1million).
Non-Quantifiable Economic Benefits
22. As mentioned in para. 1 the project is likely to have major non-quantifiable benefits through thesupport it will give to the strengthening of social capital and conflict resolution. These can only bedescribed in qualitative terms but are nonetheless clearly economic in nature. The Project's contributionto quality of life and human productivity is likely to be translated into unquantifiable increments inincome, savings and other economic goods. These qualitative economic benefits can be identified forspecific infrastructure and social services components of the CDA as well as the InstitutionalStrengthening and Govemance.
F. Fiscal Considerations
23. Sustainability of the subprojects implemented requires that the municipal, provincial andregional governments bear a large part of the annual operation and maintenance cost of these facilitiesafter they are completed and became operational. In addition, the regional provincial, and municipalgovernments are required to produce counterpart funding for some of the subprojects of the ASF. Thiscounterpart funding, however, is expected not to create a problem since it can either be in cash or in kind.For most of the local government units however, the annual operation and maintenance requirements ofschools, roads, training centers and hospitals may need reprogramming of their annual revenue allotmentsand other income so as to accommodate these additional obligations.
24. Available data revealed that the Local Government Units (LGUs) could easily accommodate theannual operation and maintenance requirements of the new facilities. This is fully supported by theARMM statement of receipts and expenditures, the trend for which over the period 1996 to 1998. Thisshows that the ARMM municipal and provincial governments as a whole had a surplus of P116.12million in 1996 which by 1998 had increased to P569.43 million.
Main Assumptions:
Sensitivity analysis / Switching values of critical items:
- 61 -
Annes 5: Financia2 Sumnamary
PHUPPINES: ARMv SocuaD Fund Projee
Years Ending
IMPLEMENTATION PERIOD
Year I Year 2 Year 3 Yearr I I Yew 5 I Year 5 Year 7
Total Financing RequiredProject Costs
Investment Costs 2.3 11.0 10.3 7.4 3.4 0.0 0.0
Recurrent Costs 0.7 1.0 1.7 1.9 0.6 0.0 0.0
Total Project Costs 3.0 12.0 12.0 9.3 4.0 0.0 0.0
Front-end fee 0.3 0.0 0.0 0.0 0.0 0.0 0.0
,Total Financing 3.3 12.0 12.0 9.3 4.0 0.0 0.0
FinancingIBRD/IDA 2.7 11.0 10.0 6.4 3.5 0.0 0.0
Govemment 0.5 0.8 1.2 2.3 0.3 0.0 0.0
Central 0.4 0.7 1.1 2.1 0.2 0.0 0.0
Provincial 0.1 0.1 0.1 0.1 0.1 0.0 0.0
Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0
User FeeslBeneficiaries 0.1 0.2 0.8 0.6 0.2 0.0 0.0
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Project Financing 3.3 12.0 12.0 9.3 4.0 0.0 0.0
Main assumptions:
- 62 -
Annex 6(A): Procurement ArrangementsPHILIPPINES: ARMM Social Fund Project
Procurement
Guidelines. Procurement of all works and goods under the project, funded wholly or partly by BankLoan, will follow the Guidelines-Procurement under IBRD Loans and IDA Credits published by theWorld Bank in January 1995, and revised January and August 1996, September 1997, and January 1999.Selection of consultants and service providers under the project, funded wholly or partly by Bank Loan,will follow the Guidelines-Selection and Employment of Consultants by World Bank Borrowerspublished by the World Bank in January 1997 and revised September 1997, January 1999 and May 2002.
Conflicts between the Procurement Procedures of the Republic of the Philippines and ProceduresAcceptable to the World Bank. There are several conflicts between the procurement procedures of theRepublic of the Philippines and those which are acceptable to the Bank. A procurement supplementalletter will be issued by the Borrower, on the same date as the signing of the Loan Agreement, detailingprocedures under existing national laws that are not acceptable to the Bank. The supplemental letter willhave among others, the following provisions:
* NCB opportunities shall be advertised in national newspapers of general circulation, withsufficient time for bidders to prepare offers, which shall not be less than 30 days;
* Price negotiation shall not be allowed, however, in case of budget limitation, adjustment inquantities of goods or scope of works may be agreed upon, subject to the concurrence of theBank;
* Bid and performance securities shall be specified in the bidding documents which at the bidder'soption, may be in the form of a certified check, a letter of credit, an irrevocable letter of credit, ora bank guarantee from a reputable bank, but excluding any form of surety bonds;
* Extension of consultancy services shall be allowed for as long as the extension is a continuationof current contract; and
* Prior registration of contractors shall only be undertaken prior to contract award, but not forpurposes of participating in the bidding.
Project Procurement Responsibilities. The responsibilities for each step in the procurement processare described in detail in the Operations Manual. In a summary, the different units that will be involvedin the project implementation, and their roles, are as follows:
a. A Board of Directors (BOD), will formulate, approve and supervise, policy, strategy, annualwork and financial plan and budget, all major decisions, implementing guidelines, and hasover-all responsibility and accountability for the Project (including ensuring that audits of theoverall project are carried out by COA, and audits of subprojects are done by independentauditors). The BOD is the governing body for the Project, and it reports directly to the Office ofthe President.
b. The Fund Management Office (FMO), consisting of a Central Fund Management Office (CFMO)and two Area Fund Management Offices (AFMOs), will handle day-to-day projectimplementation, in accordance with policies and the Operation Manual procedures approved bythe BOD. They will be responsible for: i) all procurement under the Strategic RegionalInfrastructure component; ii) the selection of consultants and service providers for theInstitutional Strengthening and Governance component; iii) the necessary guidance and
-63 -
assistance to communities and service providers under the Community Development Assistancecomponent; iv) procurement orientation and training of community members; v) assisting thecommunity in organizing its procurement structure, and in the preparation of their procurementplan; vi) supervise the procurement process at the community level; and vi) monitoring andreporting the progress of procurement to the BOD on regular basis.
c. Two Subproject Approval Committees (SPACs), will approve prioritization of barangays andapproval of subprojects in their area ofjurisdiction, in accordance with agreed selection andappraisal criteria outlined in the Operations Manual. The actual subprojects will be planned andimplemented by community organizations in coordination with LGUs, NGOs, religious, businessand other public service agencies.
d. Relevant ARMM agencies will participate in coordination and implementation of the variouscomponents, and will serve as the FMO counterpart in monitoring and evaluation of the Project.
e. Community members will be responsible for completing the subprojects funded by thecommunity grant category.
Summary of Procurement Capacity Assessment. The assessment of the procurement capacity of theFMO was carried out in accordance with the Office Memorandum from the Manager of the Bank'sOCSPR, dated August 11, 1998. The assessment involved review of the procurement policies andprocedures adopted and implemented in the Office, and how it actually implemented procurement for theSZOPAD Social Fund. The Bank's Country Procurement Assessment Report (CPAR) for the Philippines'was completed in June 2002, and the general findings of the assessment of the FMO conform to those ofthe CPAR's.
In general, the FMO has proven its procurement capacity through effective implementation of theon-going SZOPAD Social Fund Project. With the proposed Project, the FMO will take the lead incoordinating procurement arrangements, which will vary according to component. The majorcomponent, CDA, will involve community contracting, where communities have limited experience inprocurement; while the SRI component will have all sub-projects procured through national competitivebidding (NCB) procedures which is not used in the on-going SZOPAD Social Fund. In order to addressthese situations, it was agreed that a procurement specialist will be hired by the FMO for the Project toprovide the necessary all-around expertise on Bank procurement policies and procedures.
Other major shortcomings identified in the capacity assessment include: i) the need to revise theOperations Manual currently in use in the SZOPAD Project to include detailed procedures on allprocurement methods applicable to the project, as well as ensuring that adequate safeguards are includedfor transparency, accountability, and responsibility, and to avoid any conflicts of interest; and ii) the needfor capacity building of the communities, as well as the FMO, in the implementation of Bank-fundedproject.
The assessment also considered the lessons learned from the on-going SZOPAD Project based on anindependent impact assessment made. It is concluded that the FMO can deliver on their procurementobligations for the Project, but will require more procurement expertise as the Project covers a lot morediverse components than the on-going SZOPAD Project.
It is not possible to assess the capacity of each of the community that will be implementing the CDAsub-projects. Moreover, not all of these communities would have been identified prior to project
- 64 -
effectiveness. Hence, the assessment was based on the general understanding of how the communities inthe project area are organized and how they carry out their procurement works. The procurementcapacity of the communities are expected to be low. To ensure that the communities will be able to carryout satisfactory procurement, the Project's Operations Manual shall define the procedures and minimumrequirements that a beneficiary community should fulfill before they can handle procurement. Theprocedures include: (a) procurement supervision by the Area Fund Management Office (AFMO) andmunicipal and/or community facilitators; (b) proposals for funding submitted by communities willinclude items to be procured and the method of procurement; (c) all procurement will be handled by acommittee in the beneficiary group; (d) intensive training on sub-project procurement during socialpreparation phase; (e) use of sample/standard procurement forms; (f) defined accountability in theapproval process; (g) permanent bulletin boards displayed in the communities showing grant utilization,and updated regularly; (h) preparation of quarterly procurement report and post-review thereof conductedby the AFMO, and annual reporting; and (i) annual procurement audit by an independent entity.Satisfactory draft Project's Operations Manual, including a chapter on Procurement, should be preparedprior to loan negotiations.
Procurement methods (Table A)
1. Works and Goods: Civil works, including contingencies, include access infrastructure, potablewater supply and sanitation, post harvest facilities, and social infrastructure as part of the CommunityDevelopment Assistance (CDA) Component(Community-Based Infrastructure Sub-Component); andimprovement and upgrading of the physical facilities of the ARMM, particularly the Regional Planningand Development Office (RPDO) in support of the Strategic Regional Infrastructure (SRI) Component.International Competitive Bidding (ICB) would be used only for contracts estimated to cost $700,000equivalent or more per contract; however, no ICB contract is expected under the project due to the smallsize and dispersed nature of contracts. Eligibility of contractors will be determined through postqualification procedures acceptable to the Bank.
Goods, about US$0.30 million, including contingencies, to be procured under the project's institutionalstrengthening component include vehicles, motorcycles, computers, furniture and office equipment; thoseunder the community infrastructure component include basic equipment for health clinics, schools andother facilities, and advocacy/EEC materials; and those under the peace and reconciliation componentinclude equipment/reference materials for peace centers. No ICB and NCB are expected due to the smallsize and nature of the goods planned to be provided under the Project.
Project Procurement at FMO Level:
a. National Competitive Bidding. Works contracts, under the SRI component, estimated to costbetween US$50,000 and $700,000 equivalent per contract, up to an aggregate amount ofUS$5.47 million, will be procured under National Competitive Bidding (NCB) proceduresacceptable to the Bank. NCB procedures will be the method of procurement to be followed as allworks involved are either new construction or rehabilitation of basic infrastructure needs in theregion, and costs are relatively high ranging from US$100,000 to US$700,000. The NCBbidding documents approved for use by the Bank under the ARCDP I will be adopted for thisProject.
b. National Shopping: Goods contracts, under the institutional strengthening component, estimatedto cost US$50,000 equivalent per contract, or less, for an aggregated amount of US$0.3 millionwill be procured under national shopping procedures acceptable to the Bank.
- 65 -
2. Community Participation: For the CDA component, community participation in procurement,under para 3. 15 of the Procurement Guidelines, will be the method of procurement to be followed.Community participation in procurement is justified in the interest of project sustainability and toachieve the social objectives of the project. It is desirable to call for the participation of localcommunities and/or NGOs to increase the utilization of local know-how and materials, and employlabor-intensive and other appropriate local technologies. Detailed procurement procedures are found inthe Operations Manual but the following two procedures are highlighted:
a. Small Works Contracts. Works contracts estimated to cost less that US$50,000 equivalent, up toan aggregate amount to exceed US$3.80 million, will be procured through simplifiedprocurement procedures similar to national shopping (small works). Contracts will be awardedon the basis of quotations from at least three qualified contractors, and as a general rule, theaward shall be made to the contractor who offers the lowest price quotation and is evaluated tohave the technical capacity for the required work. Participation of non-governmentalorganizations (NGOs) or people's organizations (POs) would be acceptable, if found qualifiedand have the capacity to undertake the work, based on good track record as confirmed by theFMO.
b. Shopping for Goods. Goods contracts estimated to cost less than $50,000 equivalent, up to anaggregate amount not to exceed US$.50 million, will be awarded by obtaining and comparingprice quotations from at least three qualified suppliers on the basis of simplified documentsfollowing the forms provided in the Operations Manual. Requests for quotations shall be madein writing and shall indicate the description and quantity of the goods as well as the desireddelivery time and place. Quotations received shall be opened at the same time and to the extentpossible in the presence of community members.
3. Consultants Services and Training: about US$10.73 million including contingencies. Thisincludes the provision of technical assistance, training and conduct of workshops under the project, andhiring of individual consultants to fill up the specialist positions for the FMO.
a. The selection of firms based on quality- and cost-based selection (QCBS) procedures would befor contracts above $100,000 per contract. This includes technical assistance forcapability/capacity building, technical assistance on governance, services for policy reforms,development and packaging of peace materials/documentation/researches, technical auditservices, impact evaluation and other studies.
b. Consultancy services and/or service providers for training/workshops, with contracts estimated tocost less than US$100,000 equivalent, up to an aggregate amount not to exceed US$1.20 million,may be procured through selection based on consultant's qualifications in accordance with theprovisions of par. 3.8 of the Consultant's Guidelines.
c. Consultancy services estimated to cost less than US$100,000 equivalent, up to an aggregateamount not to exceed US$0.50 million may, with the Bank's prior agreement, be procuredthrough single-source selection in accordance with the provisions of par. 3.8 through 3.11 of theConsultant Guidelines.
d. Individual consultants, up to an aggregate amount not to exceed US$4.29 million, meeting therequirements set forth in par. 5.1 of the Consultant Guidelines will be procured under contractsawarded in accordance with the provisions of par. 5.1 through 5.3 of the Consultant Guidelines.
- 66 -
Given the Project's unique nature as well as global practices governing social fund projects, allFMO managerial and technical staff will be contracted through competitive and transparentselection procedures, based on TORs acceptable to the Bank, to ensure selection of the mostsuitably qualified staff.
4. Operating Costs: about US$2.67 million, including contingencies. Support for projectmanagement, operations, monitoring and supervision activities (including travel, subsistence allowances,provisions of consumable supplies and materials) transportation, training, repairs and maintenance willbe provided in accordance with existing Government prescribed limits and procedures acceptable to theBank. The Bank will not finance salaries of Government staff which will come from counterpart fund.
-67 -
Table A: Project Costs by Procurement Arrangements(US$ million equivalent)
Procurement MethodExpenditure Category ICB . NCB Other - N.B.F. Total Cost
1. Works 0.00 5.47 0.00 0.00 5.47
SRI (0.00) (4.65) (0.00) (0.00) (4.65)
2. Goods 0.00 0.00 0.30 0.00 0.30
(0.00) (0.00) (0.26) (0.00) (0.26)
3. Services 0.00 0.00 0.00 0.00 0.00
(0.00) (0.00) (0.00) (0.00) (0.00)
4. Consultant's Services and 0.00 0.00 10.73 0.00 10.73Training(Consultant's Services $4.59M; (0.00) (0.00) (8.45) (0.00) (8.45)Training $3.86M) _
5. Front-end fee 0.00 0.00 0.33 0.00 0.33
(0.00) (0.00) (0.33) (0.00) (0.33)6. Grant Funds (CDA) 0.00 0.00 21.10 0.00 21.10
(0.00) (0.00) (18.44) (0.00) (18.44)
7. Operating Costs 0.00 0.00 2.67 0.00 2.67(0.00) (0.00) (1.47) (0.00) (1.47)
Total 0.00 5.47 35.13 0.00 40.60
(0.00) (4.65) (28.95) (0.00) (33.60)
"Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.
2 1Includes civil works and goods to be procured through national shopping, consulting services, services of contractedstaff of the project management office, training, technical assistance services, and incremental operating costs relatedto managing the project
-68 -
Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)
.I F - Selection MethodConsultant Services - - Sc M
Expenditure Category QCBS QBS SFB - LCS CQ Other N.B.F. Total Cost'-A. Firms 4.74 0.00 0.00 0.50 1.20 0.00 0.00 6.44
(3.69) (0.00) (0.00) (0.40) (0.94) (0.00) (0.00) (5.03)B. Individuals 0.00 0.00 0.00 0.00 0.00 4.29 0.00 4.29
(0.00) (0.00) (0.00) (0.00) (0.00) (3.42) (0.00) (3.42)
Total 4.74 0.00 0.00 0.50 1.20 4.29 0.00 10.73(3.69) (0.00) (0.00) (0.40) (0.94) (3.42) (0.00) (8.45)
Including contingencies
Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants Guidelines), CommercialPractices, etc.
LSC should read SSS - Single Source Selection
N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Loan.
- 69 -
Prior review thresholds (Table B)
1. The procedures set forth in par. 2 of Appendix 1 to the Guidelines shall apply to:
a. The first three contracts for works each year procured through NCB procedures, regardless ofcost; and all contracts estimated to cost the equivalent of US$200,000 or greater.
b. The first three contracts for works and goods each year procured through methods other thanNCB procedures, regardless of cost.
c. Contracts for consultant's services in excess of US$ 100,000 equivalent for firms and $50,000equivalent for individuals.
d. Terms of references for all consultant's services that are in excess of the prior review threshold.
2. With respect to all contracts not governed by prior review, the procedures set forth in par. 4 ofAppendix 1 to the Guidelines shall apply. Ratio shall be 1:5.
Table B: Thresholds for Procurement Methods and Prior Review'
Contract Value ': , - . i Contracts Subject toThreshold - r - Procurement' PriorReview
Expenrditure Category: (US$thousands) , . - Method - (US$ millions)
1. WorksFMO Between US$50,000 and National Competitive First three contracts, and
US$700,000 Bidding all those equal to or greaterthan US$200,000
Community Grants Less than US$50,000 Community Participation (US$5.47 million)Less tan US50,00 Commuity Prticiation First three contracts each
year regardless of cost
2. GoodsFMO Less than US$50,000 National Shopping First three contracts each
year regardless of cost
Community Grants Less than US$50,000 Community Participation (US$0.30 million)3. Services
4. Consultant's Services above US$100,00 for firms QCBS All contractsand Training (US$4.74 million)
above US$50,000 forindividuals IC None
5. Miscellaneous6. Miscellaneous
Total value of contracts subject to prior review: $10.51MOverall Procurement Risk Assessment: High
Frequency of procurement supervision missions proposed: One every 3 months(includes special procurement supervisionfor post-review/audits)
Thresholds generally differ by country and project. Consult "Assessment of Agency's Capacity to ImplementProcurement" and contact the Regional Procurement Adviser for guidance.
-70 -
Annex 6(B) Financial Management and Disbursement ArrangementsPHILIPPINES: ARMM Social Fund Project
Financial Manaeement
1. Summary of the Financial Management Assessment
A financial management assessment was carried out by a Bank financial management specialistfollowing the Guidelines for Assessment of Financial Management Arrangements of Projects Financedby the World Bank issued by the FM Board in June 2001. The financial management arrangements forthe ASF loan meet the Bank's requirements under OP-BP 10.02. The design envisions the existing FundManagement Office (FMO) of SZOPAD to be transformed into the new FMO of the ASF. It hasassumed that there will be a transformation of the SZOPAD Social Fund FMO, and that most of the keypositions shall be filled by the existing FMO staff. The assessment has to be updated after the actualhiring and appointment of the key FM Staff. Two units will have major Financial Managementresponsibility in the project: (i) the Finance and Administration Department (FAD) in the CFMO whichwill handle most of the FM work, including disbursements via the Special Account, FM reporting,accounting, planning and budgeting: and (ii) the Finance and Administration Unit in the AFMO whichwill coordinate the financial activities in the field especially in the implementation of the sub-projects.The Community Groups/Organizations who will implement the Community Development Assistance(CDA) component.
1.1 Summary of Financial Management Risks
The risk that the funds will not be efficiently and effectively used for the attainment of project objectivesis moderate. The major inherent risk in the project, based on its design, is the lack of financialmanagement capacity of the project participating community based organizations and consequent fundleakage in the communities in the CDA component. This risk is mitigated by: (i) the creation of anIntemal Audit Unit which is mandated to audit the sub-projects either by itself or through outsourcingfrom local firms; (ii) the establishment of basic intemal controls in the community organizations at thecommunity level; and (iii)strong community participation in monitoring and evaluation, (iv) the controlfunctions of the Municipal facilitators, CFMO, AFMO and SPAC. The other inherent risks in the projectconsist of the slow release of funds to implementing agencies and projects under the present budgetaryfunds flow system of the government. This could be addressed by providing for the delay in the Project'sfund management. The control risks on the project FM are the accuracy of the accounting by the CDAcomponent and in reporting of financial statements due to the transition to the new govemmentaccounting system. The financial management arrangements discussed below propose measures tominimize the above risks.
1.2 Strengths and Weaknesses
The strengths of the Project's FM System are:
1. The present key FMO staff, if retained, is a strong team capable of delivering results.2. The established systems and procedures of the SZOPAD Social Fund FMO on which to build the
new ASF-FMO lays a strong foundation for the project.3. The semi-autonomous arrangement for the FMO somehow insulates the project from political
pressures particularly from the municipal and provincial LGUs.4. Multi-sectoral representation in the prioritization, screening and approval process of barangays
and community sub-projects provides for the participation of a broad base of society and
- 71 -
addresses the collective interests of the community.5. The representation of the Office of the President in the Board of Directors gives a very strong
signal of support from the national government.
Significant Weaknesses Solution1. The weak ARMM Regional Government as 1. The training and mentoring of localwell as the provincial and municipal LGUs executives and officials is part of thewho will be partners in the implementation of Institutional Strengthening component.the project.
2. Many barangay heads find little distinction 2. Training in the institutional strengtheningbetween community needs and their personal component, monitoring by the community, and
needs when it comes to allocating government guidance from the Municipal and Community
resources. Facilitators.
3. Geographically dispersed location of the 3. Establishment of Area Offices (AFMOs),
ARMM areas makes project management a bit which will coordinate project activities in the
more complex. field.
4. Diverse sub-cultures in the various 4. Hiring of highly skilled and qualified
communities of ARMM, which requires Municipal and Community Facilitators who areadaptation/modification of procedures where familiar with the nuances of the community
such procedures have a bearing on community sub-culture.practices and traditions.
5. Lack of capacity to manage funds by the 5. Training of community based officials in
beneficiary communities. basic financial management procedures.Oversight by municipality facilitators andAFMO staff and internal auditors.
1.3 Organization and Staffing
Financial Management shall be the main responsibility of the CFMO's Finance and Administration
Department (FAD), which will be headed by a Director. Under the FAD Director in the CFMO is the
following key staff: an Administration Officer, a Procurement Officer, a Cashier and a Chief
Accountant. The Chief Accountant shall have Accountant staff who shall handle disbursements
processing, bookkeeping and recording, financial reporting, planning and budgeting. The Cashier shall
similarly have his/her staff to assist in the cashiering function, such as check preparation and releases,
fund transfers to communities' bank accounts, payroll, cash receipts and deposits, bank relations, etc.
The number of Accountant staff and Cashier staff to be hired shall be based on the workload and
requirements of the project as the implementation progresses. The Executive Order 124 provides for the
continuance of the appointment of the present FMO staff until the approval of the organizational
structure and staffing pattern of the ASF.
In addition to the CFMO financial management staff, small Finance and Administrative units will be
established in each of the AFMOs. The AFMO financial management staff will be responsible for
reviewing the work and financial plans submitted by the community organizations, providing support and
- 72 -
advise to community officers responsible for maintaining banking and accounting records andauthorizing fund releases.
1.4 Fund Flow
The ASF Project is a community-driven development project, which has a Community DevelopmentAssistance component accounting for about 65% of the total project cost. The funds flow process willinvolve two major stages, the funds flow from the World Bank to the FMO Special Account, and thefunds flow from the FMO Special Account to the project components/beneficiary communities.
Funds Flow to the FMO
Funds from the World Bank to the Project shall flow via the regular government funds flow procedures.The FMO shall maintain an imprest Special Account from which disbursements shall be made for thedifferent project components in accordance with procedures approved by the Bank and consistent withgovernment budget requirements. These are described below. An initial deposit to the SA will be made inaccordance with the Loan Agreement and following government procedures. Replenishments of theSpecial Account shall be remitted by World Bank based on replenishment requests submitted by FMO inaccordance with Loan Agreement and government procedures.
Funds Flow to the Communities
As indicated above, about 65% of the project disbursements will be as grants to communities fordevelopment sub-projects. The operational procedures for approval and supervision of sub-projects,responsibilities of communities for project implementation, accounting and reporting are given in theOperations Manual. Once sub-projects are approved in accordance with agreed procedures, the grantdisbursement will follow the following principles. Detailed financial procedures will be included theFinancial Management Manual.
For Community Development Assistance sub-projects, on approval of the Grant, the participatingPeoples Organization (PO) will open a Bank account with a commercial Bank acceptable to FMO for thepurpose of depositing grant funds. The bank account should exclusively be used for the financialtransactions of the approved sub-project. FMO will deposit an initial amount in accordance with theGrant Agreement and the Work and Financial Plan. Subsequent fund releases to the sub-project will bebased on certification of work completed issued in accordance with procedures in the OperationsManual. All withdrawals from the bank account shall be via checks duly authorized in accordance withagreed procedures. The PO officer responsible for accounting will'ensure that all supportingdocumentation against each check issued is maintained and available for inspection by FMO staff. Abank reconciliation shall be made at the end of each month and at the end of sub-project completion. Asimplified procurement, accounting, reporting and internal control procedures will be incorporated in theOperations Manual and each participating PO will be required to follow these procedures in themanagement of grant funds. The transfers to the beneficiary communities' bank accounts based on theiragreed work plan and budget and certification of work completed shall be treated as expenditures forpurpose of SOE preparation and replenishment of the SA.
Funds Flow for Other Components
For the remaining components (35% of the Project costs), Strategic Regional Infrastructure, andInstitutional Strengthening and Governance, the funds flow will be directly from the FMO to respectiveproviders of goods and services, in accordance with detailed arrangements outlined in the Operations
- 73 -
Manual and agreed with the Bank.
1.6 Accounting and Reporting
The ASF is a fund created by an Executive Order (EO 124, September 12, 2002) issued by the Presidentof the Philippines. The fund is subject to pertinent government policies and procedures on accounting,auditing and financial management. The New Government Accounting System (NGAS) promulgated bythe Commission on Audit on January 2002 is applicable to all government agencies for the fiscal yearsending December 2002 and beyond. NGAS is based on generally accepted international accountingprinciples for public sector accounting. The accounting system of the FMO will be based on NGAS.Detailed procedures for authorizing, recording and reporting of expenditure will be included in aFinancial Management Manual to be prepared and submitted for Bank approval as a condition ofnegotiation.
The CFMO shall be required to submit Financial Monitoring Reports (FMRs) on a quarterly basisfollowing the Bank guidelines issued by Operations Policy and Country Services (OPCS) datedNovember 30, 2001. This will allow regular monitoring of the components under the Bank-financedprograms. The Financial Monitoring Reports shall include (a) Statement of Sources and Uses of Funds;(b) Statement of Uses of Funds by Project Activity; (c) Physical Progress Report; and (d) ProcurementReport. The formats of the Reports shall be agreed with the CFMO before Loan negotiation. The reports(a to c) will be prepared quarterly and submitted to the Bank within 45 days after the end of the quarter.The Procurement Report will be submitted semi-annually.
The CFMO shall ensure that a simplified book-keeping and a reporting system is installed at each of thePOs receiving grants for community development and micro-enterprise development. These recordingand reporting will be consistent with the Bank's minimum requirements of the Fiduciary Management forCommunity-Driven Projects - A Reference Guide issued by the FM Board in June 2002.
2. Audit Arrangements
CFMO shall establish an Internal Audit Unit (IAU) under the Office of the Executive Director. IAUshall perform financial, operations and compliance audit of the activities of the project, in particular theoperations of the POs participating in community development and micro-enterprise developmentassistance. The scope of the Internal Audit will focus on compliance with systems and procedures andfinancial audit of sub-projects, including disbursements from and reconciliation of Bank Accounts. TheInternal Audit Unit shall be tasked to conduct management audit of all aspects of project implementationto ascertain compliance with policies and procedures in the OM and FMM as well as financial audit ofcommunities implementing the sub-projects.
In accordance with Government requirements, COA shall be the independent external auditor for theProject. COA has carried out audits of the on-going SZOPAD Social Fund Project and the past auditreports have not reported any significant accountability findings. The CFMO shall be responsible forpreparing the annual financial statements for the audit. COA shall express an opinion on (a) thepresentation and fairness of the financial statements and adequacy of underlying internal control systemsof the Project; (b) the eligibility of expenditures claimed on the basis of Statements of Expenditures; and(c) the operation of the Special Account.
- 74 -
3. Disbursement Arrangements
The following financial management action plan is agreed:
ASF Project: Financial Management Action Plan
Action Responsibility Target Date1. Hire/appoint the Director of the Finance and
Administration Department Executive Director Before negotiations
2. Prepare draft Financial Management Manual (as Proj. Prep. Cons. Team) Before negotiationspart of the Operations Manual), which will includefinancial management policies and procedures Director - FADincluding simplified forms, procedures and basicinternal control mechanisms for administrationand management of grants
3. Draft Financial Monitoring Reports (as part of the Proj. Prep. Cons. Team Before negotiationsOperations Manual)
4. Appoint the Chief Internal Auditor and staff Executive Director By end-June 20035. Appoint the FM staff for CFMO and AFMO Director FAD As effectiveness condition6. Establish the system for FM reporting under the Director - FAD By end-January 2003
NGAS with emphasis on dovetailing the system Director - MISwith the preparation of the Financial MonitoringReports (FMRs)
7. Update the staff capacity assessment of the WB By end-January, 2003CFMO and the AFMO after the actual hiring andappointment of the key FM staff
Use Of Statement of Expenditures
Disbursement for the project shall be under the traditional SOE-based method. The WithdrawalApplications will be supported by SOEs for:
- Civil Works below $200,000 equivalent per contract;- Goods below $200,000 equivalent per contract;- Consulting firms' contracts below $100,000 equivalent per contract except those awarded on a
single source basis;- Contracts for individual consultants below $50,000 per contract;- all subloans and grants
All other Withdrawal Applications shall be supported by full documentation and signed contracts.
Special Account
CFMO shall establish a Special Account for the deposit of Bank funds. The limit of the SpecialAccount will be US$2.3 million with an initial deposit of US $1,000,000. The SA shall only be used forpayment of the Bank portion of the eligible expenditures.
- 75 -
Allocation of loan proceeds (Table C)
Table C: Allocation of Loan Proceeds
Expenditure Category - Amount in US$million Financing Percentage
Grants (for CDA sub-projects) 17.51 100%
Grants (for SRI sub-project works) 4.42 100%
Goods (vehicles & equipment) 0.26 70/100%
Consultant Services 4.33 82% for individual87% for firms
Training 3.64 80%
Incremental Operating Expenses 1.45 85%
Unallocated 1.65
Total Project Costs 33.26Front-end fee 0.34
Total 33.60
Use of statements of expenditures (SOEs):
Yes. See discussion above.
Special account:Yes. See discussion above.
- 76 -
Annex 7: Project Processirg Schedule
PHILIPPINES: ARMM Social Fund Project
Project Schedule Planned Actual
Time taken to prepare the project (months)First Bank mission (identification) 09/01/2001 09/01/2001
Appraisal mission departure 06/05/2002 06/24/2002
Negotiations 07/22/2002 10/24/2002
Planned Date of Effectiveness 01/15/2003 01/15/2003
Prepared by:Office of the President (assisted by consultants) under the guidance of Undersecretary M. Gaite and theARMM Regional Govermnent under the leadership of Governor P. Hussin
Preparation assistance:PHRD-funded consultants (split execution by GOP and WB) and WB Task Team
Bank staff who worked on the project included:$ H .Name :,, 7 q ' . Speciality
Mary Judd/Richard Anson Co-Task Team Leaders
Miriam Pahm Mindanao SpecialistAsmeen Khan NRM/Community Devt. Specialist
Marie Theresa Quinones Community Participation Specialist
Ernie Guiang Agriculturalist/NRM Specialist
Maya Villaluz/Josefo Tuyor Environmental Specialists
TJ Ho/May Olalia/Ronnie Oblepias Human Development Specialists
W.Wickrema/J. Reyes/M.Castillo Financial Mgt. Specialists
John Weatherhogg Project Financial Analyst/EconomistRene Manuel Procurement SpecialistPiet Goovaerts Social Fund/Implementation Specialist
Elmer Mercado Institutional SpecialistCesar Umali M&E SpecialistPatricia Cleves Anthropologist/Post-Conflict/CDD Specialist
Sal Jiaio Civil Engineer/Rural Infrastructure Specialist
M.Bekhechi/K.Nordlander Lawyers/Counsels
Hung Kim Phung Senior Finance OfficerYasmin Lao Community Devt. /NGO Specialist
Muhamad Abu-Nimer Peace and Conflict Management Specialist
Nat Colletta Post-Conflict Specialist
Eric Casino/Manuel Villahuesa Social-Anthropologist/Political Scientist(Mindanao Researchers)
Edward Jimenez Micro-enterprise/Microfinance Specialist
Ines Bagadion RD and Safeguard Specialist
B.Phillips/P.Morente/M.Khorami Program Assistants
-77 -
Annex 8: Documents in the Project File*PHILIPPINES: ARMM Social Fund Project
A. Project Implementation Plan
ARMM SF Project Preparation Report, revised, May, 2002
Draft Implementation Operations Manual for the Project (September 2002)(includes Framework for Resettlement and Indigenous Peoples, which are also self-standing reports)
B. Bank Staff Assessments
Note: Reports Available Upon Request
1) Economic Cost of the Mindanao Conflict: Discussion Paper (draft, March 2002)
2) ARMM Framework Development Plan (2002 - 2007) and Investment Plan (financed by WB, forARMM Governor/Cabinet)
3) Social Assessment for Basilan and Sulu (input for Project Preparation): (draft-April 2002;final-September2002)
4) Social Assessment for Ccntral Mindanao (funded by WB Post-Conflict Unit, and input forproject preparation) (draft-May 2002; final-October 2002)
5) ARMM SF Project Financial Management Assessment (draft, June, 2002)
6) Economic Analysis of the ARMM Social Fund Project (draft, June 2002; revised October 2002)
C. Other
*Including electronic files
- 78 -
Annex 9: Statement of Loans and Credits
PHILIPPINES: ARMM Social Fund Project02-Oct-2002
Difference between expectedand actual
Original Amount in USS Millions disbursements
Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd
P077012 2003 KALAHI-CIOSS PROJECT 100.00 0.00 0.00 0.00 100.00 0.00 0.00
P069491 2002 PH-LGU URSAN WATER & SAN APL2 30.00 0.00 0.00 0.00 30.73 2.46 0.00
P069916 2002 PH-2nd Socdal Expenditure Management 100.00 0.00 0.00 0.00 100.00 0.00 0.00
P066509 2001 MMURTRIP-Bicyde Nwk 0.00 0.00 1.30 0.00 1.32 0.18 0.00
P066069 2001 LAND ADMIN & MANAGEMENT 4.79 0.00 0.00 0.00 3.63 1.34 0.00
P057731 2001 Metro ManUa Urban Transport 60.00 0.00 0.00 0.00 57.33 1.09 0.00
P065113 2000 PH-SOCIAL EXPENDITURE MGMT 100.00 0.00 0.00 0.00 44.29 44.29 0.00
P039019 2000 PH-FlrstNatl Rds Improve. 150.00 0.00 0.00 0.00 117.36 51.88 0.00
P059933 2000 COASTAL MARINE 0.00 0.00 1.25 0.00 1.16 1.60 0.00
P058842 2000 MINDANAO RURAL DEV 27.50 0.00 0.00 0.00 22.25 13.75 0.00
P039022 1999 PHIL-LGU URBAN WATER & SANITATION 23.30 0.00 0.00 0.00 17.73 17.73 0.00
P048588 1999 PHIL-LGU FINANCE & DEVELOPMENT 100.00 0.00 0.00 40.00 55.57 29.72 0.00
P057598 1999 RURAL FINANCE III 150.00 0.00 0.00 0.00 100.54 85.54 0.00
P004595 1998 COMMUNITY BASED RESO 50.00 0.00 0.00 12.00 27.04 28.89 10.73
P004576 1998 PH-WATER DISTRICTS DEVELOPMENT PROJE 56.80 0.00 0.00 0.00 30.08 47.03 21.68
P004566 1998 PH-EARLY CHILD DEV. 19.00 0.00 0.00 0.00 12.93 10.93 0.00
P051386 1998 SZOPAD SOCIAL FUND 10.00 0.00 0.00 0.00 0.17 0.17 0.00
P004602 1997 PH-THIRD ELEMENTARY EDUCATION 113.40 0.00 0.00 20.10 62.91 73.37 31.37
P037079 1997 AGRARIAN REFORM COMM 50.00 0.00 0.00 0.00 4.16 -3.04 0.00
P040981 1997 PH-SECOND SUBIC BAY 60.00 0.00 0.00 23.85 16.14 39.98 0.00
P004613 1997 WATER RESOURCES DEVE 58.00 0.00 0.00 16.27 15.11 30.38 6.73
P004571 1996 TRANS GRID REINFORCE 250.00 0.00 0.00 45.52 72.31 103.21 70.03
P004611 1996 PHIL-MANILA SEWERAGE II 57.00 0.00 0.00 9.00 40.21 49.21 34.32
Total: 1569.79 0.00 2.55 166.73 932.97 629.69 174.86
- 79 -
PHILIPPINESSTATEMENT OF IFC's
Held and Disbursed PortfolioJun 30 - 2002
In Millions US Dollars
Commifted DisbursedIFC IFC
FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1980/82/89/90/94/95 AACT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.002001/02 APW Trade 0.63 0.00 0.00 0.00 0.63 0.00 0.00 0.001996 All Asia Growth 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.001996 All Asia Manager 0.00 0.04 0.00 0.00 0.00 0.04 0.00 0.001996 AllAsiaVen Mgmt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.002000 Asian Hospital 7.00 0.00 0.00 0.00 5.00 0.00 0.00 0.002002 Banco de Oro 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001997 BataanP/E 29.82 0.00 10.00 116.55 29.82 0.00 10.00 116.551998 Drysdale Food 13.46 0.00 0.00 10.00 11.66 0.00 0.00 8.802002 Eastwood 25.00 0.00 0.00 0.00 0.00 0.00 0.00 0.002001 Filinvest 22.00 0.00 0.00 0.00 16.00 0.00 0.00 0.001979/90 General Milling 0.00 0.65 0.00 0.00 0.00 0.65 0.00 0.001998 H&Q PV m 0.00 5.76 0.00 0.00 0.00 5.76 0.00 0.001989 H&QPV-I 0.00 0.61 0.00 0.00 0.00 0.61 0.00 0.001993 H&QPV-II 0.00 1.16 0.00 0.00 0.00 1.16 0.00 0.002000 WI MEP 0.00 0.12 0.00 0.00 0.00 0.12 0.00 0.002001 MNTC 46.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001970/72/00 Mariwasa 10.50 0.00 3.00 0.00 10.50 0.00 3.00 0.001993/94 Mindanao Power 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.002001 PIATCO 50.00 0.00 0.00 50.00 0.00 0.00 0.00 0.002002 PSMT Philippines 12.50 0.00 0.00 0.00 0.00 0.00 0.00 0.001993 Pagbilao 30.00 10.00 0.00 3.00 30.00 10.00 0.00 3.001992 Pilipinas Shell 0.00 1.56 0.00 0.00 0.00 1.56 0.00 0.002000 PlantersBank 13.50 0.00 8.71 0.00 13.50 0.00 8.71 0.001998 Pryce Gases 13.00 0.00 0.00 5.00 13.00 0.00 0.00 5.002000 SME.com 0.00 0.21 0.00 0.00 0.00 0.12 0.00 0.002000 STRADCOM 12.00 0.00 8.00 0.00 0.10 0.00 8.00 0.001995 Sual Power 27.19 17.50 0.00 140.05 27.19 17.50 0.00 140.051999 UPPC 20.00 0.00 10.00 0.00 20.00 0.00 10.00 0.001992 Union Cement 0.00 5.63 0.00 0.00 0.00 5.63 0.00 0.001994 Walden Mgmt 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.001994 Walden Ventures 0.00 1.27 0.00 0.00 0.00 1.27 0.00 0.00
Total Portfolio: 352.60 48.57 39.71 324.60 177.40 48.48 39.71 273.40
- 80 -
Approvals Pending Commnitmnent
FY Approval Company Loan Equity Quasi Partic2001 AEI 1.00 0.00 0.00 0.002002 Eastwood 0.00 0.00 3.00 0.002002 PTF-HSBC 10.00 0.00 0.00 0.001994 MINDANAO RISK MG 0.46 0.00 0.00 0.002000 Asian Hospital 0.00 0.00 0.00 5.002000 LTO Project 4.00 0.00 0.00 20.002001 PEDF 1.50 0.00 0.00 0.002002 All Asia Life 0.00 0.00 0.11 0.002002 LSPP 0.00 0.00 0.19 0.002002 BDO-RSF 20.00 0.00 0.00 0.002002 Planters -MS- 15.00 0.00 0.00 0.00
Total Pending Commitment: 51.96 0.00 3.30 25.00
-81 -
Annex 10: Country at a Glance
PHILIPPINES: ARMM Social Fund ProjectEast Lower-
POVERTY and SOCIAL Asia & middle-Philippines PacHic Income Development diamond'
2001Population, mid-year (millions) 77.0 1.826 2,164 Life expectancy
GNI per capita (Alas method, US$) 1,050 900 1,240GNI (Atlas nethod, US$ billions) 80.8 1,649 2,677
Average annual growth, 1995-01
Popuiation ((%) 2.0 1.1 1.0 GN
Labor force (%) 2.6 1.3 1.2 rIa Gross
Most recent eRtimate (latest year available, 1995-01) capita enrollment
Poverty (% ofpopulation belcw national poverty line) 11 26Urban population (% of total population) 59 37 46Life expectancy at birth (years) 69 69 69
Infant mortality (per 1,000 lIhe births) 31 36 33Child malnutrition (% of children under 5) 32 12 11 Access to Improved water source
Access to an Improved water source (% of population) 87 74 8o
literacy (96 of population age 15+) 5 14 15Grossprimaryenrollment (96ofschool-agepopulation) 117 107 107 Philippnes
Male .. 106 107 Lower-middle-income group
Female .. 108 107
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1981 1991 2000 2001Economic ratios
GDP (US$ biliions) 35.6 45.4 74.7 71.4
Gross domestic Investment/GDP 27.5 20.2 17.6 18.0Exports of goods and services/GDP 23.8 29.6 56.3 49.3 Trade
Gross domestic savings/GDP 24.1 17.2 24.0 19A
Gross national savings/GDP .. 19.6 30.3 26.0
Current account balance/GDP -5.8 -1.9 11.3 6.3 DonmesicInterest payments/GDP 2.3 3.2 3.2 3.5 sa. vn Investment
Total debVGDP 58.3 71.5 67.4 73.3
Total debt service/exports 33.6 23.0 13.7 18.7
Present value of debt/GDP .. .. 67.9Present value of debt/exports .. .. 103.0
Indebtedness1981-91 199141 2000 2001 200145
(average annual growth)GDP 1.3 3.5 4.0 3.4 4.6 Philippins
GDP per capita -1.1 1.4 2.1 1.5 2.6 Lower-middle-income group
Exports of goods and services 4.4 7.0 17.7 -3.2 5.3
STRUCTURE ot the ECONOMY1981 1991 2000 2001 Growth of Investment and GDP (%)
(S6 of GDP)Agriculture 24.9 21.0 15.9 15.2Industry 39.2 34.0 31.1 31.2 1 _
Manufacturing 25.5 25.3 22.6 22.4 o
Services 35.9 45.0 52.9 53.6 -10 go 07\ 00 o
Private consumption 67.1 72.9 63.2 68.4 -20 .1
General govemment consumption 8.8 9.9 12.8 12.2 - GDI - e GDP
Imports of goods and services 27.2 32.6 50.2 47.4
1981-91 199141 2000 2001 Growth of exports and Imports (%)
(averege annua/ growth)GrwhoexrtanIm rs(#Agriculture 1.2 1.8 3.3 3.9 20
Industry -0.5 3.5 3.9 1.9 10
Manufacturing 0.8 3.3 5.6 2.2 oServices 3.1 4.4 4.4 4.3 96 7 s
Private consumption 2.5 3.9 1.2 2.1 20
General government consumpbon 1.4 3.3 -1.1 -0.9 0
Gross domestic Investment -1.1 3.3 2.3 4.3 1 -Exports e mprts
Imports of goods and services 5.1 6.8 4.0 0.5
Note: 2001 data are preliminary estimates.The diamrinds show four key Indicators in the country (in bold) coronared vith its inorne-group average. If data are rr issing. the diamond WIll be Incomplete.
- 82 -
Philippines
PRICES and GOVERNMENT FINANCE1981 1991 2000 2001 Inflation (%)
Domestic prices(% change) 15
Consumer prices .. 18.7 4.3 6.1 'O
Impilcit GDP deflator 11.7 16.5 6.7 6.7
Govemnment finance(% of GDP, includes current grants) oCurrent revenue .. 17.7 15.6 15.5 90 97 9s aw 0 o
Current budget balance .. 1.9 -0.7 -0.8 GOP deflator ePiOverall surplus/deficit .. .. -4.1 -4.0
TRADE
(USS mil/ions) 1981 1991 2000 2001 Export and Import levels (USS mill.)
Total exports (fob) .. 8,839 37,295 31,243 40,000
Electronics/Telecom .. .. 22,178 16,800Garments .. .. 2,563 2,400 30,000
Manufactures 2/ .. 6,432 33,989 29,301Total imports (fob) .. 12,051 31.386 29,546 20.000
Food .. 493 1,400 1,369 1oo
Fuel and energy .. 1784 3.877 3,542Capitalgoods .. 2952 12,161 11,665 o
905 9a 97 99 99 oo 01
Export price Index (1995=100) .. go .. ..Import price index (1995=100) . .. .. WExpots * Imports
Terms of trade (1995=100) ..
BALANCE of PAYMENTS
(U.S$ millions) 1981 1991 2000 2001 Current account balance to GOP (%)
Exports of goods and services 7,513 12,367 41,267 34,394 15
Imports of goods and services 9,554 13,855 36,484 33,586Resource balance -2,041 -1,488 4,783 808 10
Net Income -527 -208 3,212 3,268 9 -
Net current transfers 507 827 437 423
Current account balance -2.061 -869 8,432 4,499
Financing items (net) 1,496 2,972 48,852 -4.588Changes In net reserves 565 -2,103 420 89 .10
Memo:Reserves Including gold (US$ rn/lions) .. 4.470 14,911 15,549Conversion rate (DEC. locallUS$) 7.9 27.5 44.2 51.0
EXTERNAL DEBT and RESOURCE FLOWS1981 1991 2000 2001
(US$ millions) Composliton of 2001 debt (USS mill.)
Total debt outstanding and disbursed 20.786 32,451 50.382 52,356IBRD 1.330 4.073 3,627 3,250 A: 3,250
IDA 41 135 207 204 G: 6,049 B:204-
Total debt service 2,971 3,398 6,758 7,776IBRD 126 622 573 491 D32IDA 0 2 5 6
Compositon of net resource flows .Official grants 70 293 157 .. \ E: 11031
Official creditors 777 797 28 -239 .;Private creditors 726 -146 245 -99Foreign direct Investment 172 544 2,029 F: 26.6s0Portfolio equity 0 0 290 ..
World Bank programCommitments 0 566 255 90 A - IBRD E -Bilatera
Disbursements 448 386 162 120 B -IDA 0 -Other multilateral F -PrIvate
Principal repayments 38 310 352 312 C-IMF G -Short-tern
Net flows 410 76 -190 -192Interest payments 89 314 225 185Net transfers 322 -239 -415 -377
uevelopmenr tconomrcs W i
2/ Manufactures Includes electronics/telecom and garments.
- 83 -
MAP SECTION
IRRD 321151 20' 122 1254- Ilig-n City
Toogab'
8° 7-C<§t j t * 8 PROJECT COMPONENTS:i1". - ~~~~~~~~~~~~~~~COMMUNITY DEVELOPMENTPHILIPPINES S ac PogodionOty rCi AO * ASS STAINCE
Apil R. M, M EL S O C I A L F URN D _ .STRATEGIC REGIONALARMM SOCIAL FUND INFRASTRUCTUREo
PROJECT b/ / a how * GOVEARNANCE
4-~ ~ ~ ~ ~ ~~~~~~~~~Clbt Ctt * Midas, op- __-_______
Cotabat. i d p ooconPAN-PHILIPPINE HIGNWAY
Dot P, cotoboi° b - !OTHER MAIN ROADS- iaN,,boong >5oJ v _. ~ \ fMAGUIN,DN4>,-' $, MAJORPORTS
Z~oong ~ @ ,~-, ~MAJOR AIEPORTS
Isobello 0.~. -- ~ RVR01,100' t~~~~~~~~~~~~~~~~~~~~~~~oo~~~~~~~ ~~0 SELECTED TOWNS
N ** K,r edo!\ /, I * PROVINCE CAPITALS
~~~~0o ~~~~~~~~BA51LAN REGIOPN CAPITALS
S N <>fi1 in ~ s et B A S I L A N \\ - \,> tm \ ____. ARMM PRO VINNCE BOUNDARIES
e.- -_ _. ARMM REGION BOUNDARY
6°;~ K ~to" N 0~__ ' INTERNATIONAL BOUNDARY
_-\C:S U L U 120' , 25 -\ \\ LSP ""* . . -2~~~~~~~~~0 m
TAWI- TAWI Cbh-
Ve dna ; D & \ % /.- r, .-] i! S -- {@ $ 5 a rrg . plilippieLiZN Sea
VI~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'
00o,
/+/ SP<25n9Bslidnz~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~bi9 ° 6- dd.~, -l-, d.-i-ti- .d -. h, i -i - - - - -
/~~~~ ,2Jdg mene on~~~~~~~~~~~~*9- fhe Ifgolheobs of -y "f rS foy, .r -ny -4- -=en r , 120L214 ' 50 1?' 150
// ITILOMETERS I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~__T%rBR
TMAG2NG
Report No.: 24304 PHType: PAD
