Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No: 43957-ER

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED GRANT

IN THE AMOUNT OF SDR 7.4 MILLION (US$12 MILLION EQUIVALENT)

TO THE

STATE OF ERITREA

FOR AN

INTEGRATED EARLY CHILDHOOD DEVELOPMENT PROJECT I1

May 30,2008

Human Development 1 Country Department Eastern Africa 2 Africa Region

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUNALENTS

May 28,2008

ARI BCC C-GMP CAS CCG CDD CFR CHW CNSP CPPR CRC DGA DP ECD ECEC ECEC EDHS EENT EPDF EPI ESP FM IFR GOE GH GMP HAMSET HDNED HFA

CurrencyUnit = ERN ERN15 = US$1

US$1.6298 = SDR 1

FISCAL YEAR January 1 - December31

ABBREVIATIONS AND ACRONYMS

Acute Respiratory Infection Behavior Change Communication Community-Growth Monitoring Program Country Assistance Strategy Community Caregiver Community Driven Development Case Fatality Rate Community Health Worker Children in Need o f Special Protection Country Portfolio Performance Review Convention on the Right o f the Child Development Grant Agreement Development Partner Early Childhood Development Early Childhood Education Early Childhood Education & Care Eritrea Demographic and Health Survey Eye, Ear, Nose and Throat Education Program Development Fund Expanded Program on Immunization Education Sector Investment Program Financial Management Interim Financial Report Government o f Eritrea Group Home Growth Monitoring and Promotion HN/AIDS; Malaria; Sexually Transmitted Diseases; Tuberculosis Human Development Network- Education Cluster Health Facility Assessment

.. 11

FOR OFFICIAL USE ONLY

HIV/AIDS HH HWC- IMCI IBRD ICR IDA IEC IECDP IEG I M C I IMF IMR I S N ISR K A B P KG M&E MF MOA M o E M o H M o L G M o L H W MDG MMR MTR N C D N R S NSS NUEW NUEYS ovc PDO PHC P I M P M T PSC RRC SBD S I L SRS SSA TSC UNICEF USAID

Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome Household Household and Community Integrated Management o f Childhood I l lness International Bank for Reconstruction and Development Implementation Completion Report International Development Association Information, Education, Communication Integrated Early Childhood Development Project Internal Evaluation Group Integrated Management o f Childhood Illnesses International Monetary Fund Infant Mortality Rate Interim Strategy Note Implementation Status Report Knowledge, Attitude, Bel iefs and Practices Kindergarten Monitoring and Evaluation Ministry o f Fisheries Ministry o f Agriculture Ministry o f Education Ministry o f Health Ministry o f Local Government Ministry o f Labor and Human Welfare Millennium Development Goal Maternal Mortality Rate Mid-Term Review Non-communicable Diseases Northern Red Sea zoba (Region) Nutrition Surveillance System National Union o f Eritrean Women National Union o f Eritrean Youth and Students Orphan and Vulnerable Children Project Development Objective Primary Health Care Project Implementation Manual Project Management Team Policy Steering Committee Regional Resource Center Standard Bidding Document Sector Investment Loan Southern Red Sea zoba Sub Saharan Africa Technical Steering Committee United Nations Children’s Fund United States Agency for International Development

This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not be otherwise disclosed without Wor ld Bank authorization.

VHC VWG WFP WHO WB

Village Health Counselors Village Working Group World Food Program World Health Organization World Bank

Vice President: Obiageli K. Ezekwesili Country Director: Colin Bruce Country Manager J. Christopher Lovelace Sector Manager: Christopher Thomas

Task Team Leader: Carla Bertoncino

i v

ERITREA Integrated Early Childhood Development Project I1

CONTENTS

Page

I . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 A . B . C .

I1 . A . B . C . D . E .

I11 . A . B . C . D . E . F .

I V . A . B . C . D . E . F . G .

Country and Sector Issues ................................................................................................... 1 Rationale for Bank Involvement ......................................................................................... 7

Higher Level Objectives to which the Project Contributes ................................................ 8

Lending Instrument ............................................................................................................. 9 Project Development Objective and K e y Indicators., ......................................................... 9 Project Components .......................................................................................................... 10

Alternatives considered and reasons for rejection ............................................................ 15

Partnership Arrangements.. ............................................................................................... 15

Institutional and Implementation Arrangements .............................................................. 15

Monitoring and Evaluation o f outcomes/results ............................................................... 17

Critical Risks and possible controversial aspects ............................................................. 20

Loadcredit conditions and covenants ............................................................................... 22

PROJECT DESCRIPTION ............................................................................................. 9

Lessons Learned and Reflected in the Project Design ...................................................... 13

IMPLEMENTATION .................................................................................................... 15

. . . Sustainability ..................................................................................................................... 18

APPRAISAL SUMMARY ............................................................................................. 23 Economic and Financial Analyses .................................................................................... 23

Technical.. ......................................................................................................................... 24

Fiduciary ........................................................................................................................... 24

Social ................................................................................................................................. 26 Environment ...................................................................................................................... 27 Safeguard policies.. ........................................................................................................... 27

Policy Exceptions and Readiness ...................................................................................... 27

V

Annex 1: Country and Sector or Program Background ......................................................... 28

Annex 2: Major Related Projects Financed by the Bank andor other Agencies ................. 33

Annex 3: Results Framework and Monitoring ........................................................................ 35

Annex 4: Detailed Project Description ...................................................................................... 40

Annex 5: Project Costs ............................................................................................................... 45

Annex 6: Implementation Arrangements ................................................................................. 46

Annex 7: Financial Management and Disbursement Arrangements ..................................... 50

Annex 8: Procurement Arrangements ...................................................................................... 66

Annex 9: Economic and Financial Analysis ............................................................................. 71

Annex 10: Safeguard Policy Issues ............................................................................................ 76

Annex 11: Project Preparation and Supervision ..................................................................... 77

Annex 12: Documents in the Project File ................................................................................. 78

Annex 13: Statement of Loans and Credits .............................................................................. 79

Annex 14: Country at a Glance ................................................................................................. 80

Annex 15: Map ............................................................................................................................ 83

vi

ERITREA

Source Local

INTEGRATED EARLY CHILDHOOD DEVELOPMENT I1 PROJECT

Foreign Total

PROJECT APPRAISAL DOCUMENT

~ ~~

BORRO WERRECIPIENT

AFRICA

0.7 0.00 0.7

AFTH1

Date: May 30, 2008 Country Director: Colin Bruce Sector ManagerDirector: Christopher J. Thomas Development (1 0%)

Team Leader: Carla Bertoncino Sectors: Health (40%); Pre-primary education (35%); Social Protection (1 5%); Social

Themes: Nutrition and food security (P); Child health (P); Education for all (S); Social Risk Management (S); Participation and Civic Engagement (S) Environmental screening category: Not Required

Project ID: P107254

Lending Instrument: Specific Investment Loan

~~

[ ]Loan [ 3 Credit [XI Grant [ ]Guarantee [ ]Other:

For Loans/Credits/Others: Total Bank financing (US$m.): 12.00 Pronosed terms:

I 7.9 I 4.1 I 12.00

Recipient: State o f Eritrea Eritrea

Responsible Agency: Ministry o f Education P.O. Box 1099 Eritrea Tel: 291 1 151614 mekonnen@edel. org. er

Fax: 291 1 159566

Expected effectiveness date: August 18,2008 Expected closing date: August 17,2012 Does the project depart from the I S N in content or other significant respects? Re$ PAD I.C. Does the project require any exceptions from Bank policies? Re$ PAD IKG.

I s approval for any pol icy exception sought from the Board? Does the project include any critical r isks rated “substantial” or “high”? Re$ PAD III.E. Does the project meet the Regional criteria for readiness for implementation? Re$ PAD IKG. Project development objective Re$ PAD II. C., Technical Annex 3

[

[ ]Yes [XINO

[ ]Yes [XINO

[XIYes [ ] N o

[X ]Yes [ ] N o

No

Have these been approved by Bank management? [ ]Yes [ IN0

To improve the health, nutrition, and access to pre-school education o f Eritrean children aged 6 and under in the project villages.

Project description [one-sentence summary of each component] Re$ PAD II.D., Technical Annex 4 The project will consolidate and strengthen the existing IECD interventions to address young children’s needs in the areas o f Maternal and Chi ld Health and Nutrition, and Early Childhood Education and Care (ECEC).

Project Components:

1) Maternal & Child Health and Nutrition: This component wil l strengthen the community based health system in order to expand and sustain the household and community Integrated Management o f Childhood Illnesses (HWC-IMCI), as well as Growth Monitoring and Promotion in villages already covered in Phase I.

2) Early Childhood Care and Education: This component wil l aim at consolidating quality provision o f ECCE services already established in Phase I, expanding cost effective ECCE services to cover al l children in the target villages, and ensuring sustainability o f interventions in target communities after the completion o f Phase 11.

3) Project Management, Monitoring, Evaluation, Advocacy and Strategic Communication: This component wil l provide overall coordination and manage cross cutting issues o f M&E and Advocacy & Strategic Communications.

Which safeguard policies are triggered, if any? Re$ PAD I K F., Technical Annex 10 None as the project is rated ‘Cy (see approved ISDS)

Significant, non-standard conditions, if any, for: Re$ PAD III.F. Board presentation: None.

Grant effectiveness:

0 A Project Implementation Manual acceptable to IDA is finalized.

0 Financial Management related conditions:

o An updated Financial Management Procedures Manual acceptable to IDA i s finalized. o An updated and complete Community Grant Manual acceptable to IDA i s finalized. o An updated OVC Grants Manual acceptable to IDA i s finalized. o Deploy 6 Zoba Finance Officers.

Covenants applicable to project implementation:

0 Long term financing strategy for sustainability o f the ECD interventions at the community level for Eritrea prepared and endorsed by the Government by the end o f the third year o f implementation. Inputs into the strategy would include an independent evaluation o f the community grant scheme subcomponent and a Participatory Beneficiary Assessment in the project villages.

0 An evaluation o f the O V C grants subcomponent would be completed by the end o f the third year following the TORS that were used for the evaluation under IECD.

0 Semi-annual interim internal control reviews.

I. STRATEGIC CONTEXT AND RATIONALE

A. Country and Sector Issues

1. Sudan. Eritrea’s longest border i s shared with Ethiopia to the south. Since the resumption of conflict with Ethiopia in 1998, there has been an impasse in the transition to a market-based economy. Client commitment to the necessary reforms has been uneven over the course o f the I S N period (ISN 2005-07, Report No. 31665-ER) as the border dispute with Ethiopia remained unresolved. Under the recent I S N that was submitted to the Board o n M a y 20,2008 (ISN 2009- 10, Report no. 42930), the Bank shifted focus to maximize improved service delivery through the existing portfolio and planned analytical work. The strategy rests on two pillars: (a) support human development and (b) support basic infrastructure development. The proposed operation i s consistent with the strategy outlined in the I S N which supports one new project to sustain gains made in early childhood development.

Eritrea i s located along the Red Sea, north o f the Horn o f Africa, between Djibouti and

2. Economic conditions remain challenging as a result o f the external environment, macroeconomic situation and limited physical and human capital. Although there has been significant fiscal consolidation since the end o f the border war, the fiscal deficit is s t i l l high at 10 percent o f GDP, and the resulting macroeconomic imbalances continue to be managed through regulations and price controls. Annual per capita growth has been negative since the border war, reversing the gains made between 1993 and 1997, and returning real per capita incomes to pre- independence levels, making Eritrea one o f the poorest countries in the worlda2 Inflation remains in the double digits, but has decelerated from 18.5 percent at end- 2005 to an estimated 12.3 percent at end- 2007. The risk o f macroeconomic instability, the use o f price controls, regulations and rationing, particularly o f foreign exchange, create an unfavorable business environment. There was an economic contraction in 2006 as manufacturing and construction sector activities slowed in response to shortages o f foreign exchange. Renewed mining sector activity and a rebound in construction and service sector activities resulted in a positive growth rate o f 1.3 percent in 2007. In addition to continuing to correct fiscal imbalances, GoE indicated during the International Monetary Fund’s Article IV mission that i t would consider steps to correct external imbalances in 2008. Despite the weak overall economic performance, the Government support for the social sectors has remained strong and World Bank assistance has achieved positive results in the health and early childhood and education sectors. However, rising world food and o i l prices could reverse the marginal 2007 economic improvement.

3. Poverty data needs updating. The last household survey and Participatory Poverty Assessment (PPA) undertaken in 2003 estimated around two thirds o f the population were living below the poverty line. Although the reliability o f the estimate i s questionable (e.g. data showed favorable agriculture production following a bad drought year in 2003), i t i s fair to assume that poverty rates are very high. Despite relatively good harvests in the last two years, the prices o f essential food items and cereals have been increasing, possibly as a result o f higher global food prices. Undernutrition prevalence i s high, with over 50 percent o f under-five children stunted

’ The economic assessment draws upon the IMF Article IV Staff Report and Selected Issues paper, January 2008. Even leaving aside the years directly affected by the conflict, median per capita growth was -3.3 percent for the period 2001 to 2006, compared to 7.4 percent in the period 1993 to 1997.

1

and 13 percent underweight for their age. Women remain among the most disadvantaged. Forty-seven percent o f households are headed by women, hal f o f these are widows as a result of Eritrea’s turbulent history, and they are overwhelmingly poor - as high as 85 percent according to the PPA. There has been limited progress toward achieving the Mil lennium Development Goals (MDGs), but gains have been made in indicators o f health and to some extent education outcomes where development partners have continued to provide support.

Sector Issues - Health, Nutr i t ion and Food Security. Education and Early Childhood Development

Health

4. resources, especially the healthy development o f i t s young children. Since independence, Eritrea has made admirable progress in improving the health o f i t s people, especially in malaria, HIV/AIDS and child survival. Malaria morbidity and mortality have been reduced more than 80 percent since 1999 given good control efforts, making Eritrea one o f few Sub-Saharan Afr ica (SSA) countries to have met the Abuja Ro l l Back Malaria targets. HIV prevalence in Eritrea i s relatively l ow at 2.4 percent o f the adult population, compared to the SSA average o f 7 percent. According to the Demographic and Health surveys (DHS), between 1995 and 2002, infant mortality f e l l dramatically from 72 to 48 deaths per 1,000 live births, and under-five mortality fel l from 136 to 93 deaths per 1,000 l ive births. Around 76 percent o f children aged 12-23 months are fully immunized. The upcoming 2008 DHS wil l confirm whether these improvements have continued.

The Health Sector plays the most fundamental role in strengthening a country’s human

5. Despite such achievements, several health challenges remain. Child health improvement is s t i l l an unfinished agenda. W h i l e there have been dramatic reductions in infant and under-five mortality as discussed above, the neonatal mortality rate remains around 25 per 1,000 l ive births for the last decade. Poor access to safe water and sanitation contributes to diarrhea, which i s the leading cause o f illness in children. Maternal health is another challenge. There are different estimates for maternal mortality ratio (MMR), a more recent estimate i s 450 per 100,000, which i s high. Disparity in reproductive health outcomes i s large, with maternal mortality ratio many times higher in remote areas such as the Southern Red Sea region than in the capital ci ty o f Asmara. While 40 percent o f pregnant women have the fourth antenatal visit, only 30 percent deliver in a health facility. The majority o f deliveries (70 percent) are conducted at home by non- medical personnel. The rate o f health facility deliveries is much higher in urban areas (62 percent) than in rural areas (8.6 percent). The GoE has a strategy under implementation to address these issues, supported in large part by HIV/AIDS, Malaria, STD, Tuberculosis Control and Reproductive Health (HAMSET) I and 11.

Nutrition and Food Security

6. Malnutrition i s a major concern in Eritrea. Data collected at the end o f 2006 for the final evaluation for the previous Integrated Early Childhood Development (IECD) project estimated that 42 percent o f children < 3 years old were malnourished, o f which 13 percent were severely (<3 standard deviations) underweight.

2

7. Causes o f malnutrition in young children include both its ‘immediate’ determinants such as child health and nutrition practices as wel l as the broader context o f food security/food availability. The (IECD) Project implemented in Eritrea showed that food security problems can dampen the overall impact o f health and nutrition interventions; and that any reversal would require both additional efforts at the local level through programs such as Growth Monitoring and Promotion (GMP) and the need to address food security issues.

8. Some 40 percent o f the Eritrean population is estimated to be chronically food insecure due to the cumulative effects o f repeated droughts, deforestation, and soil erosion and degradation. Despite relatively good harvests in the last two years, the prices o f essential food items and cereals have been increasing - possibly the impact o f higher global food prices. Global food prices have risen by 26 percent in the last three years, and along with other resource-poor, small SSA countries, Eritrea has suffered a significant terms o f trade shock as a result o f commodity price changes (the size o f the shock i s estimated to be 10 percent o f GDP). Eritrea’s food security strategy attempts to mitigate the impact on household consumption through centrally managed food supplies and rationed availability o f basic commodities at fixed prices. Wheat, sorghum, and barley can be sold only to the GoE, and are therefore subject to price controls. Fair price shops sell sorghum, sugar, beans, oil, tea, and pasta, which are rationed for eligible residents based on family size. I t i s important to emphasize that there i s no independent assessment o f the success o f this strategy. The GoE and European Commission (EC) have recently agreed to a new program o f support focused on food security/rural development, road infrastructure and regional connections, and capacity building. Overall, food security remains a major risk in Eritrea, and is a specific concern for this proposed follow-on operation.

9. strategy to deal with malnutrition issues:

In l ine with international best practice, the Government has adopted a two-pronged

(a) The Government has a strong program, with the support o f the World Health Organization (WHO) and the United Nation’s Children Fund (UNICEF), to help address issues o f community nutrition, including GMP. The program i s aimed at engaging families and communities to help prevent severe malnutrition (for children who are moderately malnourished) through educational programshehavioral change and help refer severely malnourished children to health units for community-based therapeutic and supplemental feeding.

(b) In addition, food security i s a government priority. The Food Security Strategy, 2003, aims to make “food o f sufficient quantity and acceptable quality readily accessible to al l at an affordable price at any time and place within the country.” To lower aid- dependence, a cash-for-work pol icy was introduced in 2006 to replace free distribution o f food aid. Since the cash-for-work programs were introduced, food aid has effectively ceased. A Grain Board and a Crop Early Warning system have been established to manage food supplies. The Board has intervened in the market for food in times o f scarcity, to stem price increases and i s expected to hold sufficient stocks so that in times o f drought, food can be supplied immediately from domestic

GMP is, a community-based approach that helps prevent and treat malnutrit ion in young children through both educatiodtraining and therapeutic feeding interventions.

3

sources. A Food Security Fund was also set up to ensure that the government could purchase an additional three months worth of food on the world market to supplement the stocks kept by the Grain Board.

Education

10. independence, but currently only 50 percent o f children complete primary school, compared to a SSA average o f 57 percent. O n the supply side there are insufficient numbers o f primary schools, textbooks, and trained teachers to ensure that quality education can be provided. On the demand side, a large nomadic population poses particular challenges facing the authorities for getting al l children into school. The GoE recognizes that the development o f human capital will be critical for future economic prospects. The IECD program wil l help address both supply and demand side challenges by promoting young children’s healthy growth, better development o f language abilities and social skills thus improving their school readiness.

In the Education Sector, primary school attendance increased rapidly following

Early Childhood Education and Development

1 1. Enrolment in preschools (four and five year olds) i s limited but has increased substantially - by about six times over the period 2000-06 - and net enrolment rose from about 4.5 percent to 19 percent, owing largely to a strong community-based approach. In addition, owing in some part to the government program, there was a substantial decrease in repetition and dropout rates in Grade 1. In spite o f this achievement, there i s a vast majority o f rural children who s t i l l do not have access to pre-school and early childcare. Some development partners such as UNICEF have continued to provide assistance to the Government in the area o f ECE policy, including support on capacity building for ECE pol icy making and program development.

12. As part o f i t s broad-based growth strategy, the GoE regards IECD, and the psychosocial protection o f vulnerable children as a fundamental condition to achieving its long-term development goals. There i s a keen awareness o f the importance o f investing in young children and the long-term economic and social returns i t can generate. In line with this principle, the GoE ratified the convention on the Rights o f the Chi ld (CRC) in 1994. The government formulated pol icy guidelines for Early Childhood Education and Care (ECEC) in 1995 and for Primary Health care, Food security and HIV/AIDS in 1998. Several articles in the 1997 National Constitution also affirm the E C D imperative. These sectoral policies culminated in the finalization o f the draft Integrated E C D Policy in 2005. With funding from the Education Program Development Fund (EPDF) the Bank provided the GoE technical assistance to cost the implementation o f the program endorsed by the Policy. This preliminary costing exercise provides the development partners (DPs) with information o f financing gap. The Bank task team is engaged in a dialogue with the GoE to explore further fiscal space issues and financing options.

13. institution, communities, families and International and National Development Partners for investing in and implementing integrated E C D programs that contribute towards realizing the well-being o f young children.

The IECD policy also provides a framework o f Government, Regional, Administration,

4

14. ECD:

Different ministries are implementing sector-specific policies and programs related to

(a) The Ministry o f Education (MoE) implements the ECEC policy, supporting equal access to and improved quality o f ECEC interventions, and the promotion o f cost- effective community-based interventions that promote and strengthen community responsibility with the intent to achieve sustainability o f interventions.

(b) The Ministry o f Health (MOH) has prepared pol icy guidelines on food security and nutrition that focus on children and mothers because o f their observed vulnerability to malnutrition.

(c) The Ministry o f Labor and Human Welfare (MOLHW) has programs in place to strengthen the traditional safety nets with a focus on supporting children in need o f special protection, especially orphans.

(d) On the civ i l society side, the National Union o f Eritrean Women (NUEW) and the National Union o f Eritrean Youth (NUEY) are actively engaged in advocacy efforts that promote the r ights and well-being o f women and children.

15. they are integrated at the community level with support from al l administrative levels in the government. In this regard, the National Decentralization Policy (Proclamation No. 86/96 for the Establishment o f Regional Administration) and i t s framework play a critical role in enhancing effective E C D implementation. This pol icy aims to devolve program management responsibility to regions (zobas), sub-regions (sub-zobas), and communities as a means o f improving performance, financial transparency and accountability, effectiveness and sustainability.

The GoE recognizes that ECD interventions yield strong and sustainable results when

IECD’s Achievements and proposed IECD I1

16. Early Childhood Development (IECD) with support from the World Bank and the Italian Cooperation. The development objectives o f IECD were to: (i) promote healthy growth and development o f children under six years o f age; (ii) expand access to, and improve the quality of services that address the basic needs o f young children; (iii) support orphans and children facing especially difficult circumstances; and (iv) improve health and nutrition o f children in primary schools. To achieve the above objectives, the first phase o f the IECD program targeted pregnant women and children aged six and under, focusing on Maternal and Chi ld Health and Nutri t ion services (including selected food security interventions), early stimulation for cognitive development, Early Childhood Education and Care (ECEC). I t also provided support for orphans re-integration and services for vulnerable children in need o f special protection up to age 18 years.

Between 2000-2007 the GoE implemented the f i rst phase o f its program o f Integrated

17. objectives (see Table 1 for details).

The f i rst project, which ended in March 2007, was successful in achieving most o f i t s

5

Table 1. IECD Project Development Objective (PDO) Achievement

ComDonent Indicator Tarpet Result

Child Health Combined Case 20% reduction 53.4% reduction Fatality Rates (CFR)

Child and maternal Prevalence o f 20% reduction 6.4% increase nutrition underweight children

less than 3 years o f age

Early Childhood care Repetition and 20% reduction 36% reduction in and education Dropout rates between dropout rates and

30% reduction in repetition rates.

Support for Children Reunification o f 32,000 orphans 3 1,556 orphans in need o f special orphans with close reunified protection measures relatives

grades 1 and 2

18. Table 1 shows the achievement o f three out o f four outcome targets. In addition, i t i s worthy to note that IECD also helped increase enrolment in preschools by about six times over the base year and net enrolment went from about 4.5 percent to 19 percent, owing largely to a strong community-based implementation approach. However, the prevalence o f underweight children less than three years o f age increased over the IECD project period due to broader food security issues caused by a prolonged drought that lasted four years (2002-2005). It started while the Project was being prepared and did not end until 2006.

19. produce radically different results. Through the IECD Project the M o H implemented household and household and community based Integrated Management o f Childhood Illnesses (HWC- I M C I on a pi lot basis - combined with GMP activities - and was able to demonstrate the effect o f this combined approach in reducing malnutrition by 28 percent in the pi lot area (see Table 2 below). With support from UNICEF, a community based therapeutic feeding program was also implemented in limited scale.

However, the f i rst project also demonstrated that innovations program design could

Source: Final Project Evaluation, 2006

A pilot with joint GMP and HWC-IMCI interventions only for 17 villages in zoba Debub.

6

20. implementing integrated E C D effectively. In particular, i t illustrated the need for integrated services delivered at community level and the empowerment o f families and communities for the long-term sustainability o f the ECD program. This experience provided lessons and insights for the development o f the GoE’s National IECD Policy.

IECD also served as a pi lot to fine-tune and hrther develop the mechanisms for

21. After the project closed, the GoE has continued to provide support to the existing interventions, although integration at the community level has not been scaled up. Government has retained the implementation arrangements (which are largely mainstreamed). Financial support to ECEC centers has continued through the ongoing Bank support o f the Education Sector Investment Project (ESP). In addition, UNICEF continued to provide technical assistance and support in the area o f parenting education training and other children related activities during this period.

22. The focus wil l be to consolidate and strengthen the integration o f E C D services at the community level. In particular, the proposed second phase will: (i) limit the focus o f the interventions to children aged six and under; (ii) further consolidate the health and nutrition, and social protection interventions in the project villages; (iii) strengthen ongoing nutrition interventions, including GMP promotion and an agreement to use the unallocated amount to purchase additional therapeutic feeding to mitigate the effects o f food security crisis if it were to affect the project areas; and (iv) contribute to the sustainability o f the IECD program in the target communities through a grant scheme program.

The proposed follow-up operation builds on the strengths o f the previous IECD program.

B. Rationale for Bank Involvement

23. The international evidence on the link between nutrition and pre-schooling and school readiness i s strong: weight-for-age (underweight) at age 2 i s a strong predictor o f stunting; malnutrition in early years is linked to 0.7 grades loss o f schooling and seven month delay in starting school. Malnourished children are more l ikely to drop out and/or repeat grades, iodine- deficiency robs children o f 13 IQ points on average, and anemia reduces performance on cognitive tests (IQ) by 8 points. For these reasons, early childhood development continues to be a priority within Government’s social sector policies for humanitarian as wel l as economic development.

24. The IECD, launched in September 2000, with support from the World Bank, the Italian Cooperation and counterpart funding from the Government o f Eritrea was closed o n March 3 1 , 2007. The implementation was satisfactory and project objectives were largely achieved. Of the three self-standing ECD operations o f this kind in Sub-Saharan Afr ica recently, Eritrea IECD stands out for the commitment shown by the Government and other development partners in achieving satisfactory results. Moreover, the Implementation Completion Report (ICR) confirmed the current relevance o f IECD’s PDO - an assessment shared by the Internal Evaluation Group (IEG) and crucial in the decision to process the proposed operation as a repeater. The proposed operation would help consolidate the achievements made in IECD through a targeted, integrated program o f support that mitigates the r isks identified in the prior

7

operation and builds on i t s successes. It would ‘ride on’ on the implementation arrangements that are already in place and operational in the project areas.

25, IMCI, and UNICEF for GMP and HWC-IMCI. The Bank’s involvement in the proposed repeater project provides an opportunity to build on the lessons from I E C D and support the Government in enhancing the quality and deepening the integration o f relevant ECD interventions in targeted areas. The Bank’s comparative advantage in reviewing public sector financing and sustainability issues i s expected to help the Government to scale up successfidly effective ECD interventions, without losing sight o f fiscal constraints. IECD I1 wil l also provide a learning ground for fbture E C D options elsewhere in the region, as wel l as an opportunity to present the achievements o f integrated ECD to other international partners.

IECD also remains an area o f focus for the Development Partners - mainly WHO for

26. ISN:

The proposed operation meets the criteria for Bank’s new financing in Eritrea listed in the

(a) The Bank has a comparative advantage and a history o f positive engagement and results (which I E C D demonstrated).

(b) There is an appropriate sector pol icy framework in place, agreement with the GoE on the remaining pol icy issues, and a plan for their implementation (including a strong IECD Policy).

(c) There i s demonstrated willingness by the GoE to take on board Bank technical and pol icy advice in the sector (the GoE has requested such support).

(d) The results are estimated to be sustainable under realistic macroeconomic projections (but are somewhat mitigated by the planned experiment with the community grant scheme program embedded in the project design and a plan for longer term Bank-government engagement on financing strategies).

(e) The project-level risks are considered moderate following mitigation measures (confirmed for the current project).

(f) The development impact i s expected to be considerable in terms o f either direct improvements in well-being or in terms o f galvanizing economic growth (confirmed for the proposed project, per the positive experience with similar interventions in the previous Eritrea IECD project and generally accepted research on the benefits o f ECD).

C. Higher Level Objectives to which the Project Contributes

27. The design and implementation o f the second phase o f the I E C D program is consistent with and supports the Government’s IECD Policy and the Bank’s I S N focus on human development. Through the longer term impact IECD activities are expected to have on health and education, IECD I1 will contribute to a number o f M D G s relating to maternal and chi ld health, nutrition, and primary education as wel l as poverty reduction. The impact o f this project

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i s especially high because i t focuses on the well-being o f young children, especially those who are disadvantaged by poverty and post-conflict conditions.

28. scaling up o f E C D throughout Eritrea. By consolidating the integrated program in targeted villages and helping to ensure their sustainability through optimal Governmental funding and community participation, the project will pave the way for a large scale replication and scaling up o f the programs across the country in the next seven to ten years. This operation, therefore, provides the extra technical assistance and financial ‘push’ so as to ensure that the achievements o f the previous operation are sustained and given momentum for the longer term.

Building on the success o f IECD, this project sets the ground work for a long term

11. PROJECT DESCRIPTION

A. Lending Instrument

29. This project i s a follow-on operation, processed as a Specific Investment Loan (SIL), and financed through an International Development Association (IDA) Grant. The proposed duration o f the project is four years.

B. Project Development Objective and Key Indicators

30. the IECD’s PD05. The PDO is to improve the health, nutrition, and access to pre-school education o f Eritrean children aged six and under in the project villages. A particular effort wil l be made across components/activities to ensure that al l Orphans and Vulnerable Children (OVC) in the target villages are benefiting equally from the project.

As a repeater and more focused operation, the PDO for IECD I1 i s a simplified version o f

3 1. A crucial lesson was learnt from the previous project in terms o f the indicators for nutrition and early education. Reducing malnutrition i s a higher level outcome and, as such, one that the Country Strategy itself i s responsible for - as opposed to an operation or even a subset o f Human Development (HD) interventions. In light o f this i t is suggested that the PDO achievement o f IECD I1 be measured by simpler, more reliable, and more easily measurable indicators than used in the first project. Similarly, ECEC can impact repetition and dropout rates in lower primary school only after 5-7 years o f uninterrupted implementation and, therefore, will not be monitored in this project. A set o f intermediate outcomes and indicators have been agreed upon and they are discussed in Section 111. C as wel l as in Annex 3.

32. These are the proposed PDO indicators:

(i) Combined Case Fatality Rate from the five main childhood illnesses in the project villages; and

IECD Objectives were: (i) to promote healthy growth and development o f children under six years o f age; (ii) to expand access to, and improve the quality of, services that address the basic needs o f young children; (iii) to support orphans and children facing especially difficult circumstances up to the age o f 18 years; and (iv) to improve health and nutrition o f children in primary schools.

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(ii) percent o f children enrolled at the correct age (four and five year olds) in Kindergartens (KGs) and Community Care Givers (CCGs) in the project villages.

33. malnutrition rates in the project villages, while the M o H wil l continue monitoring i t nationwide through i t s Nutrition Sentinel System (NSS). Likewise, the M o E wil l keep monitoring the primary education indicators, including repetition and dropout rates. In terms o f the longer term impact that ECD has on children’s health, growth, education outcomes and quality o f adult life, an evaluation i s being planned in the context o f the Human Development Impact Evaluation Program o f the Afr ica Region in the World Bank.

Although not as part o f i t s Results Framework, IECD I1 wil l continue tracking

34. implementing line ministries was developed significantly. At the village level, capacity needs strengthening in order to mainstream the use o f the M&E feedback loop. IECD I1 wil l address this need by implementing the village level M&E feedback loop in the target villages at the onset o f the project through proper training and support for the Village Administrators.

During the previous project the capacity to collect and integrate information from the

C. Project Components

35. address young children’s needs in the areas o f Maternal and Child Health and Nutrition, and ECEC through three main components, namely: (i) maternal and chi ld health and nutrition; (ii) ECEC; and (iii) Project Management, Monitoring and Evaluation, Advocacy and Strategic Communication.

The proposed IECD I1 will consolidate and strengthen the existing IECD interventions to

36. health care, nutrition, cognitive stimulation, and early education. The project wil l continue equipping parents, mothers, caregivers and the community with knowledge and services to support child growth and development, targeted at various stages o f the young child’s development. Mothers and caregivers wil l be provided with knowledge on how to deal with childhood illnesses, improve existing nutrition behaviors, and the value o f cognitive stimulation in the early years. Health clinics and communities wil l be equipped to address the major childhood illnesses. Access to early childhood education through preschool centers wil l also be improved.

The project will provide services and support for maternal and young children’s needs:

37. over the l i fe o f the project. O f these, 185 villages are in ‘ready to implement’ status given that most o f them already have implementation structures, and also have C C G K G centers and ongoing GMP interventions. The remainder 165 villages are those with ongoing C C G K G centers, and wil l become fully integrated within the f i rst two years o f the proposed operation, as health and nutrition interventions are rolled in. Among other inputs, the proposed operation wil l

Interventions will target 3506 villages, where the project wil l finance integrated services

Villages in rural areas in Eritrea are uniformly disadvantaged in access to basic social services. The targeted 350 villages for IECD I1 were chosen on the basis of: (i) prior IECD coverage; and (ii) readiness to implement an integrated package o f ECD services based on availabil ity o f pre-school centers, and planned health and nutr i t ion activities (per MoH’s program).

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support the recurrent costs o f the interventions while the communities prepare and implement an experimental grant program, the objective o f which i s to generate a stream o f income to help defray recurrent costs o f running CCGsKGs, HWC-IMCI, and GMP interventions over the long term.

38. place at al l administrative levels, including at the Central, zoba, and sub-zoba levels. At the central level, the model o f a Project Management Team (PMT) with the responsibility of coordinating al l project activities - with guidance from the Policy Steering Committee (PSC) and the Technical Support Committee (TSC) - wil l be continued as in IECD. This team and committees are currently operational. At the village level, the proposed operation wil l utilize existing Village Administrators, mainstreaming the task o f coordinating the integrated interventions at the community/village level.

The proposed operation will utilize the implementation arrangements that are already in

Maternal & Child Health and Nutrition (US$4.3 million)

39. components - strengthening the health system, improving the health workers’ skills, and H W C - IMCI . The M o H used a large portion o f IECD funds and other donors’ support to strengthen and mainstream the first two components o f I M C I during the past eight years. W h i l e the current work program o f the Ministry continues to consolidate the gains, the focus has now shifted to the H W C - I M C I piloted during the previous project - expanded to include coverage o f the newly born.

The main program M o H uses to address child health is IMCI, which has three

40. community health workers (CHW) through training in prevention and treatment o f childhood illnesses with the highest morbidity and mortality, and prevention o f malnutrition in children under five years o f age; (ii) improve the nutritional status o f children 2 years and under, and pregnant and nursing mothers through improving health and nutrition practices in communities, with particular emphasis on exclusive breastfeeding during the first six months from birth; improving household and community response to .childhood illnesses, nutrition issues, and quality o f care provided to pregnant mothers and young children at home; and (iii) empower communities and caregivers to improve familykhild health care practices through promoting a supportive and enabling environment at the household and community level for children’s survival, growth and development; improving appropriate and timely health care seeking behavior when children need assistance outside home; and increasing compliance to recommended treatment and advice from health professionals. The unallocated amount o f US$1 mi l l ion would be used to meet any unforeseen needs, e.g. to procure therapeutic feeding should an episode o f food insecurity arise in the project areas during implementation. The GoE (Policy Steering Committee), in consultation with the Bank, wil l determine on how to use this amount as the project gets implemented, according to demand and effectiveness o f interventions.

The component will a im to: (i) improve case management and skills o f health workers,

41. effective: (i) provision o f essential I M C I drugs7 as close to the communities as possible with

This component will also address two essential requisites for H W C - I M C I and GMP to be

’ These are basic drugs, e.g. paracetamol, co-trimoxasol, Oral Rehydration Salts

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appropriate training o f persons responsible for dispensing them; and (ii) implementing protocols for treatment and management o f severe and moderate malnutrition, including provision o f therapeutic feeding. For these two interventions, the Government i s expected to work closely with other partners providing support to GoE, especially UNICEF which has expertise in the area o f H W C - I M C I and GMP implementation. The project would finance: relevant training for Health Workers, CHWs and GMP promoters; HH/C-IMCI medicine kits, including drugs to equip CHWs; eventual therapeutic feeding to prevent and cure severe malnutrition cases.

Early Childhood Education and Care (US$6.6 million)

42. 2000, at the f i rst opportunity for large scale public investment in young children, the M o E expanded the ECEC program, while updating the curriculum and launching a non formal approach that has proven to be cost effective to reach the rural population. Expansion led to increased enrollment, which has been noted before. A large number o f education officers and supervisors at various administrative levels have received training, which made it possible to mainstream supervision and monitoring o f pre-school centers.

The Ministry on Education initiated i t s ECEC program in the mid-1990s. In the year

43. villages through refresher training o f current service care providers, provision o f enhanced learning materials and teaching aids for the KGs and CCGs, professional capacity building for al l new ECEC service providers, parenting enrichment training (through training 2,500 adult education facilitators), and introduction o f pre-school based delivery o f preventive health services; (ii) enhance inclusion o f OVCs (mainly orphans) through the community based program that aims to integrate orphans into families. It i s estimated that 4,400 orphans wil l be re-united with families through provision o f OVC grants to support income generating schemes for the benefit o f the families; and (iii) pilot grant scheme program o f ECD services at the community level through establishing a mechanism o f providing small community grants that the communities can use to acquire and build assets. The O V C grants are a well-established program the government started in the 1990s to meet the challenge o f the large number o f war orphans. Under the program orphans are reunified with their closest relatives, and the host family receives a small grant to use for income generating activities to meet the incremental costs (food, healthcare, school fees and materials, clothing). Evaluation studies conducted in the second hal f o f the 1990s showed that the orphan reunification program was significantly more cost-effective than the traditional orphanages. More importantly, the psychosocial condition o f the children benefiting from the O V C grants program was found to be much better than that o f the institutionalized children. The community grants scheme i s an innovation and therefore i t will need to start with a pilot. Approximately 50 to 100 villages will be selected to implement the pi lot o f the community grants scheme. The approach wil l be scaled up in al l project villages based on evidence o f success* and wil l take into account the lessons learned from the pi lot villages. There will be a process established o f continuous assessment and feedback o f experiences in the implementation o f community grants. In order to maximize learning from the pilot, villages wil l be selected to represent the microclimatic/agricultural variety in the country (e.g. lowlands vs. highlands), as wel l as l ow and high capacity levels. A detailed implementation plan wil l guide the roll-out o f the pi lot community grants scheme as well as the subsequent

This component wil l aim to: (i) consolidate quality in ECEC services in the 350 target

* Bases o n the capacity o f the p i l o t community to contribute to the recurrent costs o f the ECD program.

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scaling-up. If successful, such an approach would both empower communities and help improve the quality and sustainability o f ECE programs. An independent evaluation o f the approach is planned by the third year o f the project.

44. W h e r strengthened and supported to become centers o f excellence for E C D in each zoba, including ensuring i t s use in training programs and illustrating model teaching, monitoring and evaluation. UNICEF wil l provide support to the M o E in assessing the needs and requirements of these RRCs and in helping to strengthen their services. The Project would finance: relevant technical assistance and training for ECEC supervisors and adult education facilitators; in- service training for KG teachers, CCGs, as wel l as sensitization o f lower primary school teachers and directors on ECD issues; learning materials and teaching aids for KGs and CCGs; O V C grants, and community grants to develop community level sustainability o f E C D interventions.

Furthermore, the ongoing Regional Resource Centers (RRC) built in Phase I will be

Project Management, Monitoring, Evaluation, Advocacy and Strategic Communication (US$1.8 million)

45. an efficient system o f coordinating project activities across the Ministries o f Health and Education and at various administrative levels; timely monitoring, supervision and evaluation, including collecting relevant data and information, analyses, and reporting on results; and ensuring reliable and timely procurement h c t i o n s and financial management and reporting; and (ii) implement effective Advocacy and Strategic Communications, through various communication mechanisms and exchanges o f informationhowledge for increasing awareness o f parents and caregivers with regard to their children’s health, nutrition, education and psychosocial development. The Project would finance: operating costs; consultancies (including auditing costs); training; printing o f advocacy and communication materials.

This component aims to: (i) strengthen project management and implementation through

D. Lessons Learned and Reflected in the Project Design

46. been reflected in the project design.

The following lessons learned, most o f them described in detail in the I C R o f IECD, have

(a) Integration of Nutrition and HH/C-IMCI, and contingency plans. IECD demonstrated that nutrition interventions are successfbl when integrated with health interventions. Furthermore, in environments that can experience food insecurity episodes, i t i s essential to have a contingency plan that can be activated fast if needed, which the proposed project includes in i t s design.

(b) National ownership and buy-in i s important in achieving development outcomes. Clearly, the achievements realized in IECD result from the GoE not viewing i t s role as purely that o f a beneficiary or facilitator. The commitment and responsiveness shown by the GoE was that o f a majority shareholder whose development interests were the paramount considerations in al l deliberations made and decisions taken. Such support and interest has been forthcoming during the preparation o f this repeater operation.

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(c) Role of Project Units. Different from the traditional Project Implementation Units which carry out implementation for and report to the line ministries, the Project Management Team (PMT) in IECD coordinated the line ministries’ implementation o f decentralized, multi-sectoral operations. It also facilitated the communication across levels o f administration, and performed the financial management (FM) and procurement functions on behalf o f the l ine ministries, with their technical inputs. This model worked well, with the P M T reporting to the Policy Steering Committee, chaired by the Ministry o f Education, and receiving guidance from the Technical Support Committee, chaired by the Director General o f General Education. The same structure would continue in IECD 11, with a greater focus on mainstreaming the program at the village level (at the zoba and subzoba levels, the IECD program i s already almost fully mainstreamed).

(d) Monitoring and Evaluation. It is very common to underestimate the risk o f insufficient M&E capacity, especially in multi-sectoral, decentralized operations as these require both horizontal and vertical links, in turn calling for a complexhntegrated M&E framework. A thorough assessment o f the capacity to operationalize such a framework, including the relative readiness o f the participating l ine ministries, and a corresponding risk mitigation strategy should be clarified in projects o f this type. The preparation o f IECD I1 has taken this lesson into account by simplifying the M&E framework and clearly defining the roles and responsibilities for M&E, including M&E at the village level.

(e) Component Design and Relevant Policies. Considering the intent o f delivering an integrated package o f services, i t would be advisable to design project components around the level o f implementation (e.g. community, regional, national) as opposed to the lines o f the interventions, as was the case init ial ly under IECD. This project i s designed to fully integrate i t s services at the village level.

f) Development Partners Engagement and Coordination. Of the three self-standing ECD projects in SSA implemented recently (Kenya, Uganda and Eritrea), IECD was the only one that largely achieved i t s objectives. A major lesson to be learnt from the evaluation o f the three operations i s that a formal, wel l coordinated partnership among al l the involved development partners, local and international, i s necessary for a successful outcome. This was not the case in any o f these projects. In Eritrea, an informal partnership worked because of: (i) the project almost exclusively built on existing interventions supported by the GoE and other development agencies; (ii) the small number o f development partners; and (iii) the GoE’s unwavering commitment and consistent guidance. IECD I1 builds on these experiences by continuing to work closely with WHO and UNICEF

(g) Limited community ownership and capacity, One strong lesson from the relative low impact area o f IECD i s that communities need time to understand the benefits o f interventions, and need to be supported to develop their own plans for sustainability. IECD I1 proposes to set right this aspect through the grant scheme program embedded in i t s design, continuous technical support, and intensive sensitization campaigns.

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E. Alternatives considered and reasons for rejection

47. Given the general interest o f the Government in E C D related interventions, the Government and the Bank team considered several options and rejected the following:

(a) the option o f developing a large new operation in collaboration with many other development partners with interventions to cover the whole country. This option was rejected given the capacity and the fiscal constraints for such a large expansion. Instead, IECD I1 builds on the previous experiences and aims to deepen the consolidation o f integrated programs while expanding in a phased manner.

(b) the option o f implementing only a few vertical interventions in health and early childhood care and education in target villages. This option was rejected, as there i s evidence from inside and outside o f Eritrea that the ‘integrated’ programs are more effective in improving the health and development o f young children. This i s especially important for those who come from disadvantaged backgrounds. IECD I1 aims to provide integrated services, even though the services may originate in different Government ministries and departments.

111. IMPLEMENTATION

A. Partnership Arrangements

48. The project will continue to be supported by development partners working in the Human Development sector, especially UNICEF. UNICEF i s engaged in supporting the Government in health and nutrition policies and programs as wel l as in the education sector, including early childhood, through capacity building. UNICEF wil l continue to provide such support in the crucial areas o f implementing H W C - I M C I and GMP throughout the implementation period of the proposed project. UNICEF wil l also help assess the capacity needs o f the RRCs and provide inputs for improvements. The E C will be engaged in the area o f food security during their next phase o f support starting in 2008, although the exact nature o f that support i s s t i l l being discussed between the E C and the Government.

B. Institutional and Implementation Arrangements

49. The institutional and implementation arrangements remain the same as those established under IECD and would be guided by the Government’s pol icy o f devolving responsibility to the decentralized levels and o f partnership with the communities in the implementation o f national development programs, as prescribed by the National Decentralization Policy (1 996). Furthermore, these arrangements follow a multi-sectoral organizational structure and working principles that emphasize participation and feedback, ensuring the delivery o f E C D interventions in an integrated manner and o f quality in the project villages.

50. At the National level, the Policy Steering Committee (PSC), a multi-sectoral committee composed o f the Ministers o f Education, Health, Labor and Human Welfare, and chaired by the Minister o f Education sets ECD policies and provides overall guidance in project

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implementation. I t convenes at least twice a year and when the need arises. The Technical Support Committee (TSC), also a multi-sectoral committee comprised o f the Director Generals (DG) o f the ministries o f education, health, and labor and human welfare and chaired by the DG o f education provides technical guidance, ensuring technical quality o f the interventions. I t meets at least four times a year and when the need arises. The PMT, established under the umbrella o f the Ministry o f Education during IECD, i s responsible for the day-to-day project coordination and progress monitoring. In addition, i t supervises the flows and utilization o f hnds and provides guidance on matters related to procurement, planning and budgeting, financial management and accounting. I t is also responsible for al l project reporting as required by the Bank. The Project Manager i s assisted by a Procurement Officer, a Financial Management Officer, an M&E Officer and a Communications Officer as well as by a team of support staff (accountant, procurement assistant, cashier, administrative assistant). Having managed IECD in a satisfactory manner, the key staff o f the PMT (Manager, Procurement and Financial Officers) is already in their positions and wil l bring solid experience in the implementation o f ECD interventions in a h l ly integrated fashion. In addition over the years, the PMT knowledge o f Bank’s procedures and implementation compliance has been significantly strengthened.

5 1. administrations, with the same multi-sectoral structure as at the national level. E C D activities fall under the mandate o f the Social Services Department o f the region. Under the leadership o f the Governor, the Director General o f the Social Service Department, who plays a key role in al l social development activities at the regional level, wil l manage the implementation o f the project in collaboration with the directors o f the departments o f education, health, labor and human development. In addition to this multi-sectoral collaboration, fostering the hnctional linkages and the jo int planning o f interventions, there will be increasing advocacy and partnership with the National Union o f Eritrean Women (NUEW) and National Union o f Eritrean Youth and Students (NUEYS) to benefit from their well-established l i n k s with the communities. The day- to-day project coordination and progress monitoring wil l also be ensured at the zoba level through a small-sized structure, comprising a project coordinator and a finance officer as key staff. Functions related to M&E and communications wil l be performed using the zoba’s administrative structure with support from the PMT at the national level. At the Sub-zoba level, there will be a staff in the Administrative office playing the intermediary role o f coordinating the activities o f village working groups in the sub-zoba and o f information channeling between the villages and the zobas.

At the zoba level, implementation will be carried out through the regional

52. At the Village level, working groups are established and will be the “direct” entity responsible for the implementation o f E C D in an integrated manner, including the follow-up o f program interventions. The working group i s constituted by members o f the village; i t s composition can vary to include groups representing women and youth but wil l have a core group with kindergarten teacher, and/or care giver, and/or growth promoter, and/or community health worker. The village working group wil l receive technical support from the Village Administrator and other service providers. I t is headed by a Village Administrator, knowledgeable o f E C D implementation in an integrated approach, having been member o f working groups under the IECD project. The Village Administrator will monitor, supervise and report on the activities o f the working groups.

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53. structure are defined in the Project Implementation Manual.

Roles and responsibilities o f the staff working at each level o f the implementation

54. The integration approach in the delivery o f ECD interventions has been strengthened progressively over the years due to several factors, notably: (i) a strong Government commitment; (ii) communities having increasing knowledge about the benefits o f integrated E C D services; (iii) awareness o f decision makers that the village i s the center for integration; (iv) experiences acquired throughout the implementation o f the IECD project. In order to sustain the knowledge and experiences in the integration approach and to ensure the delivery o f quality interventions, the project wil l adopt a number o f implementation strategies and principles that would foster strong partnership across line ministries, between the national and the regional levels, and a participatory approach in the communities. A number o f these strategies consist o f (i) establishing a two-way reporting communication from the national to the regional to the village levels and vice-versa; (ii) deploying the implementation o f the E C D integrated package model; and (iii) using findings o f multi-sectoral joint site visits to provide feedback to the decision makers and the communities on ways to improve the integrated delivery o f ECD. (see Annex 6 for details).

C. Monitoring and Evaluation of outcomes/results

55, operations in general - i s that the risk o f 'insufficient M&E capacity i s often underestimated. This i s especially t rue for multi-sectoral, decentralized operations as these require both horizontal and vertical l inks, in turn calling for a complexhtegrated M&E framework. The preparation team has taken four measures to mitigate this risk: (i) the IECD Results Framework and the arrangements for results monitoring were simplified; (ii) M&E roles and responsibilities within the implementation arrangements were clarified; (iii) a thorough assessment o f the capacity to operationalize such a framework was conducted during appraisal, including the relative readiness o f the implementing l ine ministries; and (iv) explicitly included village level M&E in the framework. However, mainstreaming o f the use o f the M&E feedback loop at the village level - instrumental for assessing and achieving rapid results on the ground -was not developed fully during the previous project given that: (i) integration at the village level took place towards the end o f the implementation period (there was no time for the implementers to internalize the concept); and (ii) USAID was the only source o f specialized training and they left the country in 2005. IECD I1 will start applying the concept in the integrated villages from effectiveness, with technical assistance and relevant training.

An important lesson learnt from the previous project - and from human development

56. The assessment concluded that the capacity o f the participant l ine ministries responsible for collecting data on the outcome and intermediate outcome indicators in their respective sectors improved during the implementation o f the previous project, both through learning by doing and technical assistance from UNICEF and WHO. At the PMT level- responsible for collecting and integrating information from the implementing l ine ministries - the assessment recommended that an M&E officer be rehired and be in place by effectiveness.

57. ministerial channels as many interventions (e.g. HWC-IMCI) are now mainstreamed in the

Data collection and use at subzoba, zoba and national levels will take place through the

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activities o f the ministries. At the village level, the Village Multisectoral Working Group, led by the Village Administrator, wil l be responsible for reviewing implementation progress on a monthly basis. They wil l receive training on a simplified set o f indicators, and reporting tools they can use at the village level to monitor progress, and bring issues beyond their control to the attention o f the next administrative level.

5 8 . chi ld health and nutrition component wil l be measured by a pre-intervention survey during the first year o f implementation. The survey would collect data on CFR, knowledge, attitude and practice o f communities and families in the care o f children. To collect the required data, the survey wil l rely on chi ld caregivers, health providers, health officers, community leaders and influential community groups - both through individual interviews and focal group discussions. Although not part o f the Results Framework, the malnutrition rate (weight for age in the <3 years olds, and height for age in the <six years olds) wil l also be recorded during the pre-intervention survey. The PDO indicator for the early education component i s ‘percent o f children enrolled at the correct age (four and five year olds) in KGs and CCGs in the project villages’ and wil l be tracked by the EMIS. A baseline survey wil l be conducted after effectiveness -at the beginning o f the school year in September, The intermediate indicator (communities covered for parenting enrichment training) will be measured as part o f the training program activities. The intermediate indicator for sustainability - percent o f recurrent costs o f the E C D program paid by communities receiving grants - will be measured as part o f the grants implementation activities.

Concerning baselines, the PDO and intermediate outcome indicators for the maternal and

59. will be measured by a rigorous impact evaluation o f integrated E C D - an achievement considering that i t would be the first time this kind o f knowledge i s generated in Sub-Saharan Africa. The evaluation, part o f the Human Development Impact Evaluation Program o f the Africa Region funded through an IDF grant, wil l also be the basis for measuring the longer term benefits o f IECD as described in h e x 9.

The outcome o f the proposed operation on school readiness and cognitive development

D. Sustainability

60. investment in young children are high in the long run. Scaling up the successful IECD program and sustaining i t s positive outcomes at the individual and social levels requires sustained financing. The Government does not yet have a clear financing strategy to scale up and sustain IECD over the next seven to ten years. However, consistent with the National IECD Policy that emphasizes a partnership model among the Government, development partners, and communities, the Government has proposed a two pronged model to help generate adequate resources for expanding E C D interventions and maintaining their quality.

The Government i s keen to scale up the IECD program as it recognizes that the returns to

61. organizations (CBOs) to establish income generating activities, which would generate community resources for ECD. Such resources would be used for defraying recurrent costs, such as salary incentives to caregivers, or other small operations and maintenance costs incurred in ECD centers.

First, the Government wi l l pi lot a grant provision scheme to Community based-

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62. provision scheme in Eritrea:

There are three favorable factors that are l ikely to lead to the success o f this grant

(a) Eritrea has a strong locally-based community-participation structures, which includes, at the village level, a general ‘Community Development and Reconstruction Committee’ (CDRC) and other thematic committees that report to the CDRC. The proposed scheme would also operate as a thematic committee and would report to and be guided by the CDRC.

(b) Eritrea has implemented a national scheme that i s similar to the proposed scheme through the successful and ongoing Savings and Micro Credit Program (SMCP). The grant provision scheme will build on the experience o f SMCP and receive initial technical support from SMCP in the areas o f administering the f low o f funds, reporting requirements, etc.

(c) More generally, Eritrea has a long tradition o f community participation dating back many years and any community-based programs such as the proposed scheme would be received positively by communities.

63. particular, while the program such as SMCP ‘rides on’ the personal motivation o f individuals interested in generating income, this program would have to depend on the motivation o f individuals who wish to invest their effort in this scheme with a ‘social’ cause. As a result, the chances o f success are unknown. The Government is developing a detailed manual for grant implementation and has proposed to pi lot this approach in 50- 100 villages and evaluate i t s success before a larger scale up i s implemented. In order to maximize learning from the pilot, villages wil l be selected to represent the microclimatic/agricultural variety in the country (e.g. lowlands vs. highlands), as well as l ow and high capacity levels. The proposed scheme i s described in Annex 6 and further details are provided in the Community Grants Manual.

The Government i s cognizant o f the risk involved in implementing this scheme. In

64. and the Bank are expected to review fiscal space issues in the HD sectors with a focus on education (including ECE level), as a way to define a detailed financing strategy for sustainable financing for IECD in the next 7-10 years. Such an exercise wil l provide accurate information o n the financing gaps, and options that could be explored, including reallocation within and across public resources, donor financing, as wel l as community contributions. Regarding the sustainability o f the O V C grants program, the evaluation conducted under the IECD, in 2004, showed clearly that i t i s a sustainable program, with a success rate o f over 90 percent o f the income-generating activities it financed. More importantly, the evaluation found that the reunified orphans were enjoying good physical, as wel l as psychosocial health and were al l enrolled in school.

Second, building on a prior work on costing o f the ECD Policy 2005, the Government

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E. Critical Risks and possible controversial aspects

Risk factors Risk rating Mitigation measures Description of risk

Rating of

residual I risk

I. Country-Level R i s k s

Sector Governance, In the case o f the Human L e Government commitment in the HD sectors in general and early childhood sector in particular i s expected to remain strong.

Policies and Institutions Development sectors (Education, Health and Social Protection), the GoE’s commitment i s very high, especially towards the healthy development o f young children. The GoE’ policies and institutions, as we l l as the demonstrated results, clearly reflect this high level o f commitment.

Capacity constraints

L

Fiduciary Risks

11. Sector-Level Risks

At the central level, there i s no gap. The implementation structure under the previous project that closed a year ago

Gap in Implementation

Weak capacity to manage projects could lead to waste and reduce the effectiveness o f available resources.

L e The zoba level PMT staff wil l be reassigned to the implementation team before effectiveness.

Analytic work o n public financial management (PFM) in Eritrea is not available. L imi ted available information indicates P F M weaknesses (e.g., weak budget-policy link, l o w level o f fiscal transparency, non-availability o f budget p lan o r budget execution information outside o f government). Findings o f a W o r l d Bank review in 2002, which are s t i l l valid, include: i) the country does not have a sound procurement system in place; ii) the procurement practices are less than fully transparent; iii) institutional capacity i s weak, and vi) open competitive bidding is infrequently used, etc.

e Improve counterpart capacity through the design o f Bank projects.

e Coordinate closely with partners who are also providing assistance to build government capacity (EC and UN agencies).

e Maintain offer o f support for design o r fmancing o f capacity building for public fmancial management and procurement to upgrade practices. Ensure satisfactory fiduciary practices (procurement and financial management) in Bank-financed projects through project-specific measures.

Moni tor assessments o f corruption f rom other development partners for s igns o f problems.

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M&E

Sustainability

Food Security

Financial management

remains and participated in the preparation o f the proposed project. However, at the zoba level P M T staff were reassigned to other tasks.

At the village level, capacity needs strengthening in order to mainstream the use o f the M&E feedback loop.

One objective the previous operation did not achieve was the sustainability o f the ECD interventions at the community level.

Food insecurity may occur during the l i fe o f the project and negatively affect the nutrit ional status o f the < 3 yrs. olds. Lack o f familiarity with the establishment o f In ter im Financial Reporting.

Absence o f audit committee and lack o f internal audit function.

M

H

S

S

The vil lage level M&E feedback loop in the target villages wil l be implemented at the onset o f the project through training and support for the Vil lage Administrators.

First, the Government and the Bank are expected to review public expenditure and fiscal space issues in the overall education sector with a focus o n the lower levels. Second, the Government wil l p i lo t a grant scheme program to communities so they can build assets that would then help defray local level recurrent costs, such as caregivers’ salary and incentives to CHW and G M P promoters, or other s m a l l O&M costs. This approach o f engaging communities builds o n other successful models o f community-based interventions around the wor ld as we l l as locally.

A port ion o f the grant will be allocated as contingency fund to overcome food insecurity should such event occur.

0 Format o f IFR agreed between Bank and implementing entity at Negotiations. Finance staff number increase agreed between Bank and implementing entity at Negotiations .

0 In ter im internal control reviews to be carried out by independent external auditors every six months

L

S

M

M

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Procurement

Substantial, and i s expected to reduce to Moderate when agreed measures are implemented - as in

Social and environmental safeguards Other (for example project specific corruption risks, country ownership o f project/prograq cost escalation, prevalence o f failures in similar projects, adverse external developments affecting costshenefits o f the tlroiect

Lack o f SBD in compliance with the N e w Guidelines; weak capacity for selection o f consultants; and Lack o f adequate records

None

H para 781.

SBD in compliance to the new guidelines will be prepared by effectiveness. The Procurement Officer wil l take refresher training course in Selection and Employment o f consultants (current edition); improvements in procurement records management wil l be introduced.

- S

See country level risks above

> . ' I

I

H = High; S = Substantial; M = Moderate; L = Low

F. Loadcredit conditions and covenants

Effectiveness conditions:

(a) A Project Implementation Manual (including updated Financial Management Procedures Manual, updated OVC Grants Manual, and complete Community Grants Manual) acceptable to IDA is finalized.

(b) Six zoba Finance Officers are deployed (one to each o f the six zobas).

Disbursement condition, only for the community grants category:

Capacity building training workshops held o n community grants f low o f funds and accountability process/procedure for Project PMT staff at national, zoba and sub-regional levels by holding workshops at sub-regional levels

Dated Covenants

(a) Long term financing strategy for sustainability o f the E C D interventions at the community level for Eritrea prepared and endorsed by the Government by the end o f the third year o f implementation. Inputs into the strategy would include an

22

independent evaluation o f the grant scheme program and a Participatory Beneficiary Assessment in the project villages.

(b) An evaluation o f the OVC subcomponent would be completed by the end o f the third year following the TORS that were used for the evaluation under IECD.

(c) Semi-annual interim internal control review.

IV. APPRAISAL S U M M A R Y

A. Economic and Financial Analyses

65. on the grounds o f equity and poverty reduction (World Development Report, 2006). Many areas in the country with low human development indicators, particularly education attainment, also have a high poverty rate. The most significant benefit o f government investment in ECD programs is leveling the starting ground for the disadvantaged children, ensuring they have an equal opportunity to achieve higher human development levels and earnings potential in later l ife, which would lead to breaking the intergenerational cycle o f poverty and to lowering the overall poverty rate in the future (World Development Report, 2006).

An economic case for government intervention in early childhood education can be made

66. that there are market failures in this area including liquidity constraints, incomplete information, and externalities. Liquidity constraints may prevent parents from making optimal investments in the human capital o f their children. Information on child-care provision i s also asymmetric in many cases. The Government can improve outcomes by developing, publicizing and implementing standards.

A second broad justification for government intervention in early childhood education i s

67. A third justification could be made on the basis o f cost-effectiveness o f such interventions. ECD can be a powerful tool to help stop deficits in education and health from taking hold and accumulating throughout youth: international research shows that children who participate in good ECD programs are less l ikely to drive up education costs by repeating classes in primary school and are less susceptible to chronic health issues which require expensive remedies. Furthermore, people who start out with very unequal endowments in terms o f wealth, ability, and opportunities are l ikely to end up with very unequal outcomes. A government that is concerned with equity can compensate the differences in final outcomes.

68. Early childhood development public programs targeted to the poor have shown significant impact in both developed and developing countries. Many findings also suggest that the payoff to early intervention i s greatest for the most disadvantaged children. Analyses also show that E C D programs are more cost-effective than alternative special education programs aimed at helping disadvantaged children achieve primary education completion. Given the high unit cost o f providing special primary education, investment o f public resources in E C D programs in most cases i s more cost-effective in helping disadvantaged children complete primary education.

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B. Technical

69. available and also specific work done in this sector in Eritrea. I t also builds on the lessons learned from IECD. Success o f IECD stemmed from the fact that most o f the project interventions had been based on sound knowledge as wel l as strong commitment and implementation support from the Government. There was also continued support for capacity building during implementation. This project, designed as a repeater, continues to be strong in i t s share o f tested interventions and - even in the case o f relatively new interventions - training manuals, guidelines and human resource have been reasonably wel l developed now and form the asset base for implementation o f IECD 11. The final impact evaluation o f IECD has been a major source o f information in the preparation process.

This operation builds on the extensive technical background work on ECD generally

C. Fiduciary

70. committees and structures are already in place and operational. A Project Steering Committee (PSC) made up o f the Ministers o f the implementing ministries has been set up, which wil l act as the pol icy setting and oversight body for the Project. The Technical Support Committee (TSC) made up o f the Director Generals o f the implementing ministries has also been set up. The Project Management Team (PMT) which will coordinate the day to day activities o f the Project is operational and i s appropriately staffed. The P M T already has a Project Manager, the Finance Officer and a Senior Accountant. Both the Finance Officer and the Senior Accountant have the requisite professional qualifications and were engaged on the IECDP phase I in the same capacity and hence are appropriately experienced in managing World Bank projects. The Finance Officer has a Bachelor o f A r t s Degree in Accounting and 20 years relevant experience while the Senior Accountant has a Diploma in Accounting and over 8 years relevant working experience. In addition, a Junior Accountant and Cashier will be deployed in the PMT by December 3 1 , 2008.

Financial Management. The Assessment revealed that the key Project management

71. headquarters and at the zoba offices, and is deemed adequate to support the accounting and financial reporting needs o f the Project. The P M T wil l work under the direction o f the TSC and wil l be responsible for a l l the fiduciary aspects o f the Project.

The P M T has a computer accounting software which has been installed both at the

72. The Government wil l open a Designated Account denominated in U S dollars, a Special Account denominated in Nakfa and the Government o f Eritrea (GOE) Counterpart fhding account in Nakfa. All these 3 accounts shall be held in the National Bank o f Eritrea and wil l be managed by the PMT. Six Regional Project Accounts denominated in local currency (Nakfa) will be opened in local commercial banks acceptable to IDA (one in each o f the six zobas). The Regional zoba Accounts will be managed by the zoba Administrator or his designate and the zoba Finance Officer. All the bank accounts shall be segregated and utilized strictly for the Project.

73. Project wil l be required to prepare and submit quarterly financial reports (IFR) to the Bank for

The Project will use the report-based method o f disbursement to access funds. The

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purposes o f monitoring the financial progress o f the Project and making disbursement o f fwnds. The accounting system i s deemed robust enough to support this method o f disbursement.

74. The audit arrangements are deemed adequate and the audit reports and management letters for IECDP, were o f good quality and were received on time and appropriately acted on by management. The Project wil l be required to appoint auditors acceptable to the Bank and to prepare and submit annual audit reports. These audit reports and management letters wil l be submitted to the World Bank as soon as available but in any case within six months after the end o f the relevant financial year.

75. Basic financial operating procedures are in place at the PMT. However, given the lack o f internal audit function, the Project’s external auditors wil l conduct interim internal control reviews (every six months) covering national, regional, sub-regional and village levels, and issue systems audit reports. This wil l supplement the quarterly visits that the PMT will be making to the various zobas to assess project performance. The first internal control review will be done for the period ended December 3 1 , 2008, and subsequent reviews wil l be done for the period ended June 30 and December 31 during Project implementation. The relevant reports wi l l be submitted to the PMT by the auditors for action and copies sent to the Bank within 2 months o f end o f each half-year (by August 3 1 and February 28). The Project’s external auditor (who will also conduct the internal control review), wil l be appointed by October 3 1 , 2008.

76. Management Capacity in order manage the project h n d s more effectively. The following Financial Management (FM) Conditions need to be completed as a precedent to the Project being declared Effective.

Nevertheless, the Project would be required to take some actions to enhance i t s Financial

(a) Prepare an updated Financial Management Procedures Manual and a satisfactory Grant Operations Procedures Manual as part o f the Project Implementation Manual (PIM) in form and content satisfactory to the Bank.

(b) Deployment o f six zoba Finance Officers (one to each o f the six zobas).

Another major Financial Management Covenant (Disbursement Conditions for Community Grants) i s capacity building training workshops on the grants f low o f funds and accountability process/procedures for the Project staff at national, zoba and sub-regional levels.

77. The PMT i s already working on the updating o f the Financial Management Procedures, the updating o f the O V C Grants Manual, and development o f the Community Grant Manual as part o f the PIM. The deployment o f six zoba Finance Officers i s expected to be done as soon as the project i s approved by the Bank. These officers were re-assigned to other government departments on the completion o f IECDP so as to cut down o n operating costs. However, they can be re-deployed once the new Project i s on-line. The Project is therefore considered to be in a position to substantially address al l the Effectiveness conditions at an early date.

78. overall risk rating o f the implementing entity has been assessed as Substantial. However, this

Pending the completion o f the on-going enhancement o f the FM arrangements, the

25

could improve to Moderate once the recommended Financial Management (FM) arrangements as per the FM Action Plan are implemented.

79. Procurement, The assessment concluded that procurement under IECD I1 will continue to be carried out centrally by the PMT. The rationale for this arrangement i s that the P M T has demonstrated competence under IECD to effectively and efficiently carry out procurement. With regard to the grant scheme program, procurement wil l follow i t s manual. The key issues and risks have been identified and corrective measures have been agreed and described in the Action Plan (Annex 8). The actions proposed include: (i) updating the procurement section of the Project Implementation Manual; (ii) preparation o f standard bidding documents; (iii) refresher courses on Selection and Employment o f Consultants; and (iv) introducing improvements in the procurement filing system. The residual risk for procurement i s Substantial.

D. Social

80. The program i s likely to have a positive social impact because it aims to contribute to the improved health and development o f young children. It also seeks to promote equity by emphasizing services geared towards rural, under-served areas, as wel l as disadvantaged groups, including orphans and children with disabilities, Health and ECE interventions wil l also seek to target the nomadic populations (about 30 percent o f the total population in Eritrea is composed o f ago-pastoralists). The M o H wil l expand its present I M C I program and M o E wil l also focus o n establishing appropriate ECE interventions in rural areas.

8 1. In the design o f the grant scheme, communities have continued to be consulted. During the preparation o f the IECD 11, the grants scheme and the results framework were discussed in a workshop with some 40 zoba level officers from al l sectors. During implementation, communities wil l be in the ‘driver seat’ with respect to implementing the grants after being trained in building group cohesiveness and in business activity start-up. Project preparation has involved the participation o f the ministries o f Education, Health, and Labor as well as the P M T staff. The project has been discussed with key external partners such as the EC and UNICEF.

82. six and under. I t wil l also benefit mothers, caregivers, families, children facing difficult circumstances, teachers, social workers, and health workers. In particular, O V C wil l benefit from IECD I1 in that i t continues to support the government’s O V C grants program. A pi lot for the program Evaluation studies conducted in the second hal f o f the 1990s showed that the orphan reunification program was significantly more cost-effective than the traditional orphanages. More importantly, the psychosocial condition o f the children benefiting from the O V C grants program was found to be much better than that o f the institutionalized children. The community grants scheme is an innovation and therefore it will need to start with a pilot.

The project wil l benefit the target group o f about 132,000 Eritrean young children aged

26

E. Environment

83. environmental and social impact.

F. Safeguard policies

As with the IECD, the project i s expected to be rated ‘C’, with no significant

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP 4.01) [I [XI Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OPBP 4.1 1) [I [XI Involuntary Resettlement (OPBP 4.12) [ I [XI Indigenous Peoples (OPBP 4.10) [I [XI Forests (OPBP 4.36) [I [XI Safety o f Dams (OPBP 4.37) [I [XI Projects in Disputed Areas (OP/BP 7.60)* [I [XI Projects on International Waterways (OPBP 7.50) [I [XI

G. Policy Exceptions and Readiness

84. Effectiveness in August, 2008.

Readiness :

There are no Policy Exceptions and the Recipient i s expected to be ready for

Key institutions, including the PSC, TSC, and the core PMT staffing in place. An 18 month procurement plan has been prepared. A draft Project Implementation Manual has been prepared and i s under review and finalization. TORS for the M&E and Communication Officers in the national PMT are part o f the manual.

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Annex 1: Country and Sector or Program Background EFUTREA: Integrated Early Childhood Development Project I1

1. Eritrea is located along the Red Sea, north o f the Horn o f Afiica, between Djibouti and Sudan. Eritrea’s longest border i s shared with Ethiopia to the south. Since the resumption of conflict with Ethiopia in 1998, there has been an impasse in the transition to a market-based economy. At the time o f the last Interim Strategy Note (ISN 2005-07 Report No. 31665-ER) which was discussed at the Board in March 2005, promising signals from the Government o f the State o f Eritrea (GoE) led to a Bank strategy based on support for economic and fiscal reforms. GoE also considered participation in the Heavily Indebted Poor Country Initiative (HIPC) for which it remains potentially eligible to receive debt relief. However, client commitment to the necessary reforms has been uneven over the course o f the I S N period as the border dispute with Ethiopia remained unresolved. Hence, the Bank shifted focus to maximize improved service delivery through the existing portfolio and planned analytical work.

2. The impact o f the current policies on the economy has not been entirely conducive to retain the gains f rom post-conflict boom. There has been progress in addressing macroeconomic imbalances as fiscal deficits were brought down from 21 percent o f GDP to 10 percent o f GDP during 2005-07 though further adjustment i s needed. The decline in imports improved external imbalances but has acted as a constraint on economic growth. Annual GDP growth 2005-2007 averaged around 1 percent and declined on a per capita basis. T o revitalize the economy, the GoE strategy has been to improve broad-based growth through rural development, and to develop several specific economic initiatives to: (i) explore and extract valuable mineral deposits; (ii) develop tourism and commercial fishing; and (iii) encourage inward investment in newly-established economic tax-free zones, In addition to continuing to correct fiscal imbalances, GoE indicated during the International Monetary Fund’s Article I V mission that i t would consider steps to correct external imbalances in 2008. Despite the weak overall economic performance, the Government support for the social sectors has remained strong and World Bank assistance has achieved positive results in the health and early childhood and education sectors

3, In general, reliable data i s difficult to obtain and poverty data needs updating. The last household survey and Participatory Poverty Assessment (PPA) undertaken in 2003 estimated around two thirds o f the population were living below the poverty line. Although the reliability o f the estimate i s questionable (data showed favorable agriculture production following a bad drought year in 2003), i t is fair to assume that poverty rates are very high. Women remain among the most disadvantaged. Forty-seven percent o f households are headed by women, half o f these are widows as a result o f Eritrea’s turbulent history, and they are overwhelmingly poor - as high as 85 percent according to the PPA. There has been limited progress toward achieving the Millennium Development Goals (MDGs), but gains have been made in indicators o f health and to some extent education outcomes where development partners have continued to provide support.

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Sector Issues - Health, Nutrition and Food Security. Education and Early Childhood Development

Health

4. resources, especially the healthy development o f i t s young children. Since independence, Eritrea has made admirable progress in improving the health o f i t s people, especially in malaria, HIV/AIDS and chi ld survival. Malaria morbidity and mortality have been reduced more than 80 percent since 1999 given good control efforts, making Eritrea one o f few SSA countries to have met the Abuja Ro l l Back Malaria targets. HIV prevalence in Eritrea is relatively l ow at 2.4 percent o f the adult population, compared to the SSA average o f 7 percent. According to the Demographic and Health surveys, between 1995 and 2002, infant mortality fe l l dramatically from 72 to 48 deaths per 1,000 live births, and under-five mortality fel l from 136 to 93 deaths per 1,000 l ive births. Around 76 percent o f children aged 12-23 months are h l ly immunized. The upcoming 2008 D H S wil l confirm whether these improvements have continued.

The Health Sector plays the most fundamental role in strengthening a country’s human

5. Despite such achievements, several health challenges remain. Child health improvement is s t i l l an unfinished agenda. While there have been dramatic reductions in infant and under-five mortality as discussed above, the neonatal mortality rate remains around 25 per 1,000 l ive births for the last decade. Poor access to safe water and sanitation contributes to diarrhea, which i s the leading cause o f i l lness in children. Maternal health i s another challenge. There are different estimates for maternal mortality ratio (MMR), a more recent estimate i s 450 per 100,000, which is high. Disparity in reproductive health outcomes is large, with maternal mortality ratio many times higher in remote areas such as the Southern Red Sea region than in the capital c i ty o f Asmara. W h i l e 40 percent o f pregnant women have the 4th antenatal visit, only 30 percent deliver in a health facility. The majority o f deliveries (70 percent) are conducted at home by non- medical personnel. The rate o f health facility deliveries i s much higher in urban areas (62 percent) than in rural areas (8.6 percent). The GoE has a strategy under implementation to address these issues, supported in large part by HAMSET I and 11.

Nutrition and Food Security

6. evaluation for the previous IECD project estimated that 42 percent o f children < 3 years old were malnourished, o f which 13 percent were severely (e3 sd) underweight.

Malnutrition i s a major concern in Eritrea. Data collected at the end o f 2006 for the final

7. as chi ld health and nutrition practices as wel l as the broader context o f food security/ food availability. The Integrated Early Childhood Development Project (IECD) implemented in Eritrea showed that food security problems can dampen the overall impact o f health/ nutrition interventions; and that any reversal would require both additional efforts at the local level through programs such as Growth Monitoring and Promotion GMP and the need to address food security issues.

Causes o f malnutrition in young children include both its ‘immediate’ determinants such

GMP i s Growth Monitoring and Promotion, a community-based approach that helps prevent and treat malnutrition 9

in young children through both education/ training and therapeutic feeding interventions.

29

8. due to the cumulative effects o f repeated droughts, deforestation, and soil erosion and degradation. Despite relatively good harvests in the last two years, the prices o f essential food items and cereals have been increasing - possibly the impact o f higher global food prices. Global food prices have r isen by 26 percent in the last three years, and along with other resource-poor, small SSA countries, Eritrea has suffered a significant terms o f trade shock as a result o f commodity price changes (the size o f the shock is estimated to be -10 percent o f GDP). Eritrea’s food security strategy attempts to mitigate the impact on household consumption through centrally managed food supplies and rationed availability o f basic commodities at fixed prices. Wheat, sorghum, and barley can be sold only to the GoE, and are therefore subject to price controls. Fair price shops sel l sorghum, sugar, beans, oil, tea, and pasta, which are rationed for eligible residents based on family size. I t is important to emphasize that there is no independent assessment o f the success o f this strategy. The GoE and EC have recently agreed to a new program o f support focused on food security/rural development, road infrastructure and regional connections, and capacity building. Overall, food security remains a major r isk in Eritrea, and i s a specific concern for this proposed follow-on operation.

Some 40 percent o f the Eritrean population i s estimated to be chronically food insecure

9. strategy to deal with malnutrition issues:

In l ine with international best practice, the Government has adopted a two-pronged

(a) The Government has a strong program, with the support o f WHO and UNICEF, to help address issues o f community nutrition, including GMP. The program i s aimed at engaging families and communities to help prevent severe malnutrition (for children who are moderately malnourished) through educational programs/ behavioral change and help refer severely malnourished children to health units for community-based therapeutic and supplemental feeding.

(b) In addition, food security i s a government priority. The Food Security Strategy, 2003, aims to make “food o f sufficient quantity and acceptable quality readily accessible to al l at an affordable price at any time and place within the country.” To lower aid- dependence, a cash-for-work pol icy was introduced in 2006 to replace free distribution o f food aid. Since the cash-for-work programs were introduced, food aid has effectively ceased. A Grain Board and a Crop Early Warning system have been established to manage food supplies. The Board has intervened in the market for food in times o f scarcity, to stem price increases and i s expected to hold sufficient stocks so that in times o f drought, food can be supplied immediately from domestic sources. A Food Security Fund was also set up to ensure that the government could purchase an additional three months worth o f food on the world market to supplement the stocks kept by the Grain Board.

Education

10. independence, but currently only 50 percent o f children complete primary school, compared to a SSA average o f 57 percent. On the supply side there are insufficient numbers o f primary schools, textbooks, and trained teachers to ensure that quality education can be provided. . On the demand side, a large nomadic population poses particular challenges facing the authorities

In the Education Sector, primary school attendance increased rapidly following

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for getting al l children into school. The GoE recognizes that the development o f human capital wil l be critical for future economic prospects. The E C D program will help address both supply and demand side challenges by promoting young children’s healthy growth, better development o f language abilities and social sk i l ls thus improving their school readiness.

Early Childhood Education and Development

11. Enrolment in preschools (four and five year old) is limited but has increased substantially - by about six times over the period 2000-2006 - and gross enrolment rose from about 4.5 percent to 19 percent, owing largely to a strong community-based approach. In addition, owing in some part to the government program, there was a substantial decrease in repetition and dropout rates in Grade 1. In spite o f this achievement, there is a vast majority o f rural children who s t i l l do not have access to pre-school and early childcare. Some development partners such as UNICEF have continued to provide assistance to the Government in the area o f ECE policy, including support on capacity building for ECE policy making and program development.

12. Early Childhood Development (ECD), and the psychosocial protection o f vulnerable children as a fundamental condition to achieving i t s long-term development goals. There i s a keen awareness o f the importance o f investing in young children and the long-terms economic and social returns i t can generate. In l ine with this principle, the GoE ratified the convention on the Rights of the Chi ld (CRC) in 1994. The government formulated pol icy guidelines for ECEC in 1995, and for Primary Health care, Food security and HIV/AIDS in 1998. Several articles in the 1997 National Constitution also aff irm the ECD imperative. These sectoral policies culminated in the finalization o f the draft Integrated E C D Policy in 2005. With funding from the Education Program Development Fund (EPDF) the Bank provided the GoE technical assistance to cost the implementation o f the program endorsed by the Policy. This preliminary costing exercise provides the development partners (DPs) with information o f financing gap. The Bank task team i s engaged in a dialogue with the GoE to explore further fiscal space issues and financing options.

As part o f i t s broad-based growth strategy, the Government o f Eritrea (GoE) regards

13. institution, communities, families and International and National Development Partners for investing in and implementing integrated ECD programs that contribute towards realizing the well-being o f young children.

The IECD policy also provides a framework o f Government, Regional, Administration,

14. ECD:

Different ministries are implementing sector-specific policies and programs related to

0 The Ministry o f Education (MoE) implements the ECEC policy, supporting equal access to and improved quality o f ECEC interventions, and the promotion of cost- effective community-based interventions that promote and strengthen community responsibility with the intent to achieve sustainability o f interventions. The Ministry o f Health (MOH) has prepared pol icy guidelines on food security and nutrition that focus on children and mothers because o f their observed vulnerability to malnutrition.

0

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0 The Ministry o f Labor and Human Welfare (MOLHW) has programs in place to strengthen the traditional safety nets with a focus on supporting children in need of special protection, especially orphans. On the civ i l society side, the National Union o f Eritrean Women (NUEW) and the National Union o f Eritrean Youth (NUEY) are actively engaged in advocacy efforts that promote the rights and well-being o f women and children.

15. they are integrated at the community level with support from al l administrative levels in the government. In this regard, the National Decentralization Policy (Proclamation No. 86/96 for the Establishment o f Regional Administration) and i t s framework play a critical role in enhancing effective ECD implementation. This policy aims to devolve program management responsibility to regions (zobas), sub-regions (sub-zobas), and communities as a means o f improving performance, financial transparency and accountability, effectiveness and sustainability.

The GoE recognizes that ECD interventions yield strong and sustainable results when

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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies

ERITREA: Integrated Early Childhood Development Project I1

1. and IECD have been instrumental in addressing important health and early childhood education and care issues faced by young children. E S P has been instrumental in addressing education sector issues, including early childhood education issues. HAMSET I1 i s expected to sustain and consolidate the benefits derived from its predecessor in improving health conditions. There are substantial complementarities between IECD I1 and the other human development operations active in Eritrea: (i) between the Reproductive Health component o f HAMSET I1 and the Maternal and Child Health and Nutri t ion component o f IECD 11; (ii) between improved school readiness (especially for the more disadvantaged children) pursued by IECD and ESP’s objective o f improving equitable access to and quality o f primary and secondary schools. IECD also complements and benefits from the ongoing programs o f WHO and UNICEF. From the institutional development point o f view, IECD I1 provides the opportunity for the line ministries implementing HD programs to come together and develop the skill o f multi-sectoral planning for better results at the community level.

The following projects have been and are related to the proposed operation. HAMSET

2. Project (Closed: 03/31/2006, PDO rating: Satisfactory). Malaria rates fe l l by 60 percent during the project period; adult HIV prevalence was kept comparatively l o w at 2.4 percent; TB cure rate was 80 percent. Sustainability was rated Likely, the institutional development impact Substantial, the Bank performance was rated Satisfactory and the Recipient performance was rated Highly Satisfactory.

HIV/AIDS, Malaria, STD, Tuberculosis Control and Reproductive Health (HAMSET)

3. Integrated Early Childhood Development (IECD) Project (Closed: 03/3 1/2007, PDO rating: Satisfactory). Most health and early childhood education targets were attained. The outcome sustainability r isk was Substantial, and the Bank performance and the Recipient performance were Satisfactory. Concerns about sustainability arose due to the decision by the government not to fimd the work initiated under the project. Development objectives and implementation progress were considered Moderately Satisfactory and Satisfactory throughout the previous I S N period.

4. Education Sector Investment Project (Active, latest PDO rating: Moderately Satisfactory). The implementation o f this project was rated as Moderately Unsatisfactory for most o f the previous I S N period. This was because implementation suffered serious problems when a government review o f regulations for the construction industry suspended activities o f local construction firms. The project was restructured in June 2007 to address this problem, and decentralizing small school construction to communities was initiated. However, larger construction projects, which require competitive bidding, remain difficult.

5. HAMSET I1 (Active, latest PDO rating: Satisfactory). Although H A M S E T I1 was not originally envisaged in the new lending under I S N 2005-07, i t was prepared and approved as a follow-on project in 2005 as the Bank’s timely response to the government’s needs to sustain the impressive health outcomes achieved under the first HAMSET project. Project scope was also

33

expanded to include Reproductive Health and Human Resource for Health. The implementation o f HAMSET I1 has been rated Satisfactory and several indicators have improved over the baseline (2004 and 2005 data). For example, in 2006, the number o f malaria cases has decreased from 35,2 15 to 10,148 and the number o f health centers with at least one nurse has increased from 28 to 68.

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Annex 3: Results Framework and Monitoring ERITREA: Integrated Early Childhood Development Project I1

Results Framework

PDO

To improve the health, nutrition, and access to pre- school education of Eritrean children aged 6 and under in the project villages.

Intermediate Outcomes

(i) Improved maternal and chi ld health and nutrition practices.

(ii) Increased awareness o f the importance o f t imely enrolment and the benefits o f integrated E C D among families and communities.

(iii) Improved quality o f early education.

I Results Framework

Rate from the five main childhood illnesses in the project villages.

(ii) % o f children enrolled at the correct age (4 and 5 years old) in KGs and CCGs in the project villages.

the f i rs t six months in the project villages.

(ii) % o f families adopting appropriate maternal and chi ld health, nutrit ion & sanitation practices in the project villages.

(iii) H W C - I M C I equipment sets distributed to GMP sites in project villages.

(iv) % o f E C D villages covered for parenting enrichment training in the project villages.

(v) % o f KG teachers and CCG providers who received refresher training in project villages.

(vi) % o f ECEC supervisors who received refresher training in project villages.

35

(iv) Increased participation o f communities in provision o f ECD services.

Results Indicators

Project &veto To improve thc in the project i Combined Case Fatality Rate f iom the five main childhood illnesses in the project villages % o f children enrolled at the correct age (4 and 5 year olds) in KGs and CCGs in the project villages.

% o f mothers exclusively breastfeeding children 0-6 months in the project villages. % o f families adopting appropriate maternal and chi ld health, nutrition & sanitation practices in the project villages. H W C - I M C I equipment sets distributed to

Baseline

4.5%

65%

To be collected during pre- intervent i on baseline survey

0

(vii) % o f recurrent costs o f the ECD program paid by communities receiving

Arrangements for results monitoring

YR1

70%

40%

Target Values

YR2

80%

50%

300

YR3

90%

50%

172

YR4

95%

70%

Frequency & Reports

Annual

Annual

In Annual

Annual

Annual

Data Collection Instruments

Surveys

E M I S

- Annual reports

Annual reports

Annual reports

Responsibility for Data CollectiodRep

MoE/ P M T

zoba, M o H & P M T

zoba, M o H & P M T

zoba, M o H & P M T

36

GMP sites in project

Refresher 0 1800 733 Semi-Annual Semi- training to GMP Annual

% of ECD

zoba, MoH & PMT

project villages covered for parenting enrichment

Refresher I 0 I 302 I 300 I

training. % o fKG

I Semi-annual I Semi- I zoba, MoH &

teachers and CCGs providers who received refresher training in the project

Annual Reports

villages. Yo of ECEC

PMT

supervisors who received refresher training in the project villages. % of recurrent costs of the ECD program paid by communities receiving grants

In-service 0 50 100 158 Semi-Annual training for K G teachers. In-service 0 50 100 191 Semi-Annual

0

Semi- zoba, MoE & Annual PMT reports Semi- zoba, MoE &

arlyS 30%

3 0%

3 0%

5%

P

dhbod 45%

50%

60%

40%

- dueatior 55%

70%

80%

E 65%

100%

100%

90%

Semi- Annual

Semi- Annual

Semi- Annual

Semi- Annual

Semi- Annual reports

Semi- Annual reports

Semi- Annual reports

Semi- Annual reports

zoba, MoE & PMT

zoba, MoE & PMT

zoba, MoE & PMT

zoba, MoE & PMT

training to health workers. Training o f new health workers on HWC-IMCI in project sub-

Semi-Annual I Annual I P M T reports Semi- I zoba, MoH &

37

training for CCG providers. In-service training for lower elementary school teachers o n ECEC In-service training primary school directors. Replenishment o f learning materials and teaching equipment in KGs, CCGs, and RRCs. TOT for teachers

Training o f elementary school teachers o n school based delivery o f health and nutr i t ion

0

0

0

0

0

3 00

100

50%

school health materials and equipment to KGs.

adult education facilitators. Communities that have initiated implementation o f the grant scheme program in

Training o f

24

300

20

100 0

0 50

families with o v c s Refresher 0 40 Semi-Annual training to jocial workers. community 9 0 6 3 Semi-Annual member

Semi-Annual

Annual M o L H W & reports PMT Semi- zoba, Annual M o L H W & reports P M T Semi- zoba, Annual M o L H W &

Semi- Annual

Semi-Annual

Semi-Annual

Semi- Annual

Semi-Annual

Semi-Annual

Semi- Annual

Annual reports Semi- Annual reports

Semi- Annual reports

Semi- Annual reports

Semi- Annual reports Semi- Annual reports

Semi- Annual reports

Semi- Annual reports Semi- Annual Reports

P M T

zoba, M o E & P M T

zoba, M o E & P M T

zoba, M o E & P M T

zoba, M o E & PMT

zoba, M o E & PMT

zoba, M o E & PMT

zoba, M o E & P M T

zoba and national P M T

38

sensitization reports sessions on OVC issues.

P M T

Advocacy & I 0 ( 1 1 1 7 I 11 Annual reports

7 I Semi-Annual

39

awareness campaigns at the zoba level. Baseline survey

M id te rm

Within the first year o f implementatio n August 2010

Final evaluation I I August 2012

Annex 4: Detailed Project Description ERITREA: Integrated Early Childhood Development Project I1

1. children aged six and under. The proposed IECD I1 wil l consolidate and strengthen the existing IECD interventions to address young children's needs in the areas o f Maternal and Child Health and Nutrition, and Early Childhood Education and Care (ECEC) through three main components, namely: (i) Maternal and Chi ld Health and Nutrition; (ii) and Early Childhood Education and Care (ECEC); and (iii) Project Management, Monitoring and Evaluation, and Strategic Communication.

The main objective o f IECD I1 i s to promote the healthy growth and development o f

2. health care, nutrition, cognitive stimulation, and early education. The project will continue equipping parents, mothers, caregivers and the community with knowledge and services to support chi ld growth and development, targeted at various stages o f the young child's development. Mothers and caregivers wil l be provided with knowledge on how to deal with childhood illnesses, improve existing nutrition behaviors, and the value o f cognitive stimulation in the early years. Health clinics and communities wil l be equipped to address the major childhood illnesses. Access to early childhood education through preschool centers wil l also be improved.

3. over the l i f e o f the project. O f these, 185 villages are in 'ready to implement' status given that most o f them already have implementation structures, and also have C C G K G centers and ongoing GMP interventions. The remainder 165 villages are those with ongoing C C G K G centers; and wil l become fully integrated within the f i rs t two years o f the proposed operation, as health and nutrition interventions are rolled in. Among other inputs, the proposed operation wil l support the recurrent costs o f the interventions while the communities prepare and implement an experimental grant program, the objective o f which i s to generate a stream o f income to help defray recurrent costs o f running CCGsKGs and CHW/GMP interventions over the long term.

The project wil l provide services and support for maternal and young children's needs:

Interventions wil l target 35010 villages, where the project will finance integrated services

Maternal & Child Health and Nutrition (US$4.3 million)

4. components - strengthening the health system, improving the health workers' skills, and H W C - IMCI. The M o H used a large portion o f IECD funds and other donors' support to strengthen and mainstream the f i rst two components o f I M C I during the past 8 years. While the current work program o f the Ministry continues to consolidate the gains, the focus has now shifted to the H W C - I M C I piloted during the previous project - expanded to include coverage o f the newly born.

The main program M o H uses to address chi ld health i s IMCI, which has three

lo Villages in rural areas in Eritrea are uniformly disadvantaged in access to basic social services. Villages in rural areas in Eritrea are uniformly disadvantaged in access to basic social services. The target 350 villages for IECD I1 were chosen o n the basis of: (i) prior IECD coverage; and (ii) readiness to implement an integrated package o f ECD services based o n availability of pre-school centers, and planned health and nutr i t ion activities (per MoH's program).

40

5. The component wil l aim to: (i) improve case management and ski l ls o f health workers, community health workers ( W C - I M C I , covering children aged 5 and under) through training in prevention and treatment o f childhood illnesses with the highest morbidity and mortality, and prevention o f malnutrition in children under five years o f age; (ii) improve the nutritional status o f children 2 years and under, and pregnant and nursing mothers through improving health and nutrition practices in communities, with particular emphasis on exclusive breastfeeding during the f i rst six months from birth; improving household and community response to childhood illnesses, nutrition issues, and quality o f care provided to pregnant mothers and young children at home; and (iii) empower communities and caregivers to improve familykhild health care practices through promoting a supportive and enabling environment at the household and community level for children’s survival, growth and development; improving appropriate and timely health care seeking behavior when children need assistance outside home; and increasing compliance to recommended treatment and advice from health professionals. The unallocated amount o f US$1 mi l l ion will be used to meet any unforeseen needs, e.g. to procure therapeutic feeding should an episode o f food insecurity arise in the project areas during implementation. The GoE (Policy Steering Committee), in consultation with the Bank, wil l determine on how to use this amount as the project gets implemented, according to demand and effectiveness o f interventions.

6. effective: (i) provision o f essential I M C I drugs as close to the communities as possible with appropriate training o f persons responsible for dispensing them; and (ii) implementing protocols for treatment and management o f severe and moderate malnutrition, including provision o f therapeutic feeding. For these two interventions, the Government is expected to work closely with other partners providing support to GoE, especially UNICEF which has expertise in the area o f H W C - I M C I and GMP implementation. The unallocated amount o f U S $ l mi l l ion wil l be used to meet any unforeseen needs, e.g. to procure therapeutic feeding - through UNICEF - should an episode o f food insecurity arise in the project areas during implementation. At midterm review the Bank team and the GoE wil l agree on how to use uncommitted funds in the last year o f the project if food insecurity episodes have not occurred by then. The f inds would be allocated according to demand and effectiveness o f interventions.

This component wil l also address two essential requisites for H W C - I M C I and GMP to be

7. The project wouldfinance: relevant training for Health Workers, CHWs and GMP promoters; H W H W C - I M C I medicine kits, including drugs to equip CHWs; eventual therapeutic feeding to prevent and cure severe malnutrition cases.

8. modifications as required):

Key activities wi l l include the following ‘generic’ cycle in every village (with

0 Sensitization and orientation o f communities 0 Pre-intervention KAP study in al l the H W C - I M C I intervention areas 0 Establish sub-zonal working groups for the H W C - I M C I 0 Re -training o f zonal and sub zonal facilitators and GMP promoters 0 Training o f zonal facilitators, sub-zonal working groups, village health committees and

0 Provide the necessary drugs and medical equipment for CHWs 0 Case management o f sick children in the communities

CHWs on H W C - I M C I

41

0 Refresher training for CHWs during the monthly meetings 0 Conducting monthly weighing sessions o f 0-3 year o ld children 0 Implementing protocols for treatment and management o f severe and moderate

0 Monitoring and supervision malnutrition, including provision o f therapeutic feeding.

9. initiated i t s ECEC program in the mid-90s. In the year 2000, at the f i rst opportunity for large scale public investment in young children, the M o E expanded the ECEC program, while updating the curriculum and launching a non formal approach that has proven to be cost effective to reach the rural population. Expansion led to increased enrollment, which has been noted before. A large number o f education officers and supervisors at various administrative levels have received training, which made it possible to mainstream supervision and monitoring of pre- school centers. 10. This component wil l aim to: (i) consolidate quality in ECEC services in the 350 target villages through refresher training o f current service care providers, provision of enhanced learning materials and teaching aids for the KGs and CCGs, professional capacity building for al l new ECEC service providers, parenting enrichment training (through training 2500 adult education facilitators), and introduction o f pre-school based delivery o f preventive health services; (ii) enhance inclusion of OVCs (mainly orphans) through the community based program that aims to integrate orphans into families. It i s estimated that 4400 orphans will be re- united with families through provision o f O V C grants to support income generating schemes for the benefit o f the families; and (iii) pilot grant scheme program ofECD services at the community level through establishing a mechanism o f providing small grants that the communities can use to acquire and build assets. The O V C grants are a well-established program the government started in the 1990s to meet the challenge o f the large number o f war orphans. Under the program orphans are reunified with their closest relatives, and the host family receives a small grant to use for income generating activities to meet the incremental costs (food, healthcare, school fees and materials, clothing). Evaluation studies conducted in the second hal f o f the 1990s showed that the orphan reunification program was significantly more cost-effective than the traditional orphanages. More importantly, the psychosocial condition of the children benefiting from the O V C grants program was found to be much better than that of the institutionalized children. The community grants scheme i s an innovation and therefore it wil l need to start with a pilot. Approximately 50 to 100 villages will be selected to implement the pilot o f the small grants scheme. The approach will be scaled up in al l project villages based on evidence o f success and wil l take into account the lessons learned from the pilot villages. There will be a process established o f continuous assessment and feedback o f experiences in the implementation o f grants. In order to maximize learning from the pilot, villages wil l be selected to represent the microclimatic/agricultural variety in the country (e.g. lowlands vs. highlands), as well as l ow and high capacity levels. A detailed implementation plan wil l guide the roll-out o f the pi lot grants scheme as wel l as the subsequent scaling-up. If successful, such an approach would both empower communities and help improve the quality and sustainability o f ECE programs. An independent evaluation o f the approach i s planned by the third year o f the project.

Early Childhood Education and Care (US$6.6 million). The Ministry on Education

10. further strengthened and supported to become centers o f excellence for E C D in each zoba, including ensuring its use in training programs and illustrating model teaching, monitoring and

Furthermore, the ongoing Regional Resource Centers (RRC) built in Phase I will be

42

evaluation. UNICEF wil l provide support to the MOE in assessing the needs and requirements o f these RRCs and in helping to strengthen their services. The Project would finance: relevant technical assistance and training for ECEC supervisors and adult education facilitators; in-service training for KG teachers, CCGs, as well as sensitization of lower primary school teachers and directors on E C D issues; learning materials and teaching aids for KGs and CCGs; OVC grants; and grants to develop community level sustainability of ECD interventions.

11. modifications as required):

K e y activities wil l include the following ‘generic’ cycle in every village (with

(a) Sensitization and orientation o f communities; (b) re-intervention baseline data collection in target villages; (c) Establish sub-zonal and village level working groups; (d) Refresher trainings conducted for existing KG teachers and CCGs; (e) Enhanced learning materials and teaching aids for al l the preschool centers procured (9 RRC strengthened; (g) Provision o f continuous support to teachers and CCGs to help them adapt the ECEC

program to their own local situation, introduce innovations, and develop their own supplementary learning materials and aids (mainly through the six regional resource centers);

(h) Training o f service care providers conducted; (i) Provision o f simple equipment and training for the preschool health and sanitation

program; (j) OVC programs o f integration initiated in villages; (k) Select villages for piloting sustainability mechanisms; (1) Pilot sustainability mechanisms; (m) Monitoring and supervision;

As regards the OVC program, the PIM wil l include: (a) criteria for the selection o f orphans and vulnerable children; (b) mechanisms for allocating grants based on needs o f identified families; (c) mechanisms for providing supervision and support to fami l ies in the implementation o f their income generating schemes after grants are allocated; (d) mechanisms for the financial management o f the grants (flow o f funds and accountability); and (e) mechanisms for the overall monitoring and evaluation o f the grants, including an independent evaluation o f the grants.

Project Management, Monitoring, Evaluation, Advocacy and Strategic Communication (US$1.8 million)

12. an efficient system o f coordinating project activities across the Ministries o f Health and Education and at various administrative levels; timely monitoring, supervision and evaluation, including collecting relevant data and information, analyses, and reporting on results; and ensuring reliable and timely procurement functions and financial management and reporting; and (ii) implement effective Advocacy and Strategic Communications, through various communication mechanisms and exchanges o f informationl knowledge for increasing awareness

This component aims to: (i) strengthen project management and implementation through

43

o f parents and caregivers with regard to their children’s health, nutrition, education and psychosocial development.

The Project would finance: operating costs (including auditing costs); consultancies; training; printing o f advocacy and communication materials.

13. village (with modifications as required):

K e y activities for this component will include the following ‘generic’ cycle in every

Enhance institutional capacity at various levels to implement and manage the integrated E C D program Support to pre-intervention baseline data collection in target villages Initiate systematic monitoring o f project inputs, outputs, and outcomes Initiate regular reporting on Procurement and FM functions Implement programs to strengthen communications for behavior change Implement public sensitization on maternal and children’s needs and well-being Analyze data and initiate/ sustain pol icy dialogue on the importance o f E C D among pol icy makers Overall monitoring and supervision

44

Annex 5: Project Costs ERITREA: Integrated Early Childhood Development Project I1

Project Cost By Component Local Foreign Total US$ million US$ million US$ million

1. Maternal & Child Health and Nutrition 1.1 3.2 4.3 2. Early Childhood Education and Care 6.2 0.4 6.6 3. Project Management, Monitoring, Evaluation, 1.4 0.4 1.8

Advocacy and Strategic Communication

Total Project Costs 8.6 4.0 12.7

45

Annex 6: Implementation Arrangements

ERITREA: Integrated Early Childhood Development Project I1

1. The project wil l be implemented using the administrative structure o f the Government. The institutional and implementation arrangements remain the same as those established under IECD, riding on the Government's pol icy o f devolving responsibility to the decentralized levels and o f partnership with the communities in the implementation o f national development programs, as prescribed by the National Decentralization Policy (1 996). Furthermore, these arrangements follow a multi-sectoral organizational structure and working principles that emphasize participation and feed-back, ensuring the delivery o f ECD interventions in an integrated manner and o f quality in the project villages.

Organizational structure

National level

2. The Policy Steering Committee (PSC), a multi-sectoral committee composed o f the Ministers o f Education, Health, Labor and Human Welfare, and chaired by the Minister o f Education, sets ECD policies and provides overall guidance in project implementation. I t convenes at least twice a year and when the need arises.

3. The Technical Support Committee (TSC), also a multi-sectoral committee comprised o f the Director Generals (DG) o f the ministries o f education, health, and labor and human welfare and chaired by the DG o f education provides technical guidance, ensuring technical quality of the interventions. It meets at least four times a year and when the need arises.

4. Education during IECD, is responsible for the day-to-day project coordination and progress monitoring. In addition, it supervises the flows and utilization o f f inds and provides guidance on matters related to procurement, planning and budgeting, financial management and accounting. I t i s also responsible for the entire project reporting as required by the Bank. The Project Manager i s assisted by a Procurement Officer, a Financial Management Officer, an M&E Officer and a Communications Officer as wel l as by a team o f support staff (accountant, procurement assistant, cashier, administrative assistant). Having managed IECD in a satisfactory manner, the key staff o f the PMT (Manager, Procurement and Financial Officers) is already in their positions and wil l bring solid experience in the implementation o f E C D interventions in a fully integrated fashion. In addition over the years, the PMT knowledge o f Bank's procedures and implementation compliance has been significantly strengthened.

The Project Management Team (PMT), established under the umbrella o f the Ministry o f

Zoba level":

5. The implementation at the regional levels wil l be carried out through the regional administrations, with the same multi-sectoral structure as at the national level. E C D activities fal l under the mandate o f the Social Services Department o f the region. Under the leadership o f the

" There are 6 zobas, 59 sub-zobas and 2,606 villages.

46

Governor, the Director General o f the Social Service Department, who plays a key role in al l social development activities at the regional level, wil l manage the implementation o f the project in collaboration with the directors o f the departments o f education, health, labor and human development. In addition to this multi-sectoral collaboration, fostering the functional linkages and the joint planning o f interventions, there will be increasing advocacy and partnership with the National Unions o f Women and Youth to benefit from their well-established l i n k s with the communities.

6. zoba level through a small-sized structure with a project coordinator and a financial officer as key staff, Functions related to M&E and communications wil l be performed using the zoba’s administrative structure with support from the PMT at the national level.

The day-to-day project coordination and progress monitoring wil l also be ensured at the

Sub-zoba level:

7. coordinating the activities o f village working groups in the sub-zoba and o f information channeling between the villages and the zobas.

There will be a staff in the Administrative office playing the intermediary role o f

Village level:

8. Working groups are established at the village level and wil l be the “direct” entity responsible for the implementation o f ECD in an integrated manner, including the follow-up o f program interventions. The working group i s constituted by members o f the village; i t s composition can vary to include groups representing women and youth but will have a core group with kindergarten teacher, and/or care giver, and/or growth promoter, and/or community health worker. The village working group wil l receive technical support f rom the Village Administrator and other service providers, I t is headed by a Village Administrator, knowledgeable o f E C D implementation in an integrated approach, having been member o f working groups under the IECD project. The Village Administrator wil l monitor, supervise and report on the activities o f the working groups.

9. structure are defined in the Implementation Manual.

Roles and responsibilities o f the staff working at each level o f the implementation

Implementation strategies and principles, ensuring the delivery of ECD interventions in an integrated manner and o f quality in the project villages

10. progressively over the years due to several factors, notably: (i) a strong Government commitment; (ii) communities’ increased knowledge about the benefits o f integrated E C D services; (iii) awareness o f decision makers that the village is the center for integration; and (iv) experiences acquired throughout the implementation o f the IECD project. To sustain the knowledge and experiences in the integration approach, the following main implementation strategies and principles will be applied:

The integration approach in the delivery o f ECD interventions has been strengthened

47

(a) Cascading communication and supervision from the national level to the zoba levels to the village working groups, and a bottom-up communication and reporting from the village working groups to the zoba levels to the national level.

(b) Systematic application o f the ECD integrated package model that includes growth monitoring, household and community level management o f childhood illness, pre- school health, early childhood education, integration o f orphans and vulnerable children as well as advocacy and communication interventions.

(c) Regular site visits for technical and supervision support by multi-sectoral teams with PMT staff that wil l include joint planning with the communities for the implementation o f the interventions in an integrated manner.

(d) Using findings during the site visits to provide feedback to the decision makers as well as the village working groups and coordinators for implementation improvements.

(e) Promoting a participatory approach in the communities and building partnerships within the village working groups, coordinators and other service providers to share experiences in the implementation o f E C D integration services.

( f ) Conducting advocacy and communication activities to promote the understanding o f the benefits o f ECD under an integrated approach.

Summary implementation description of the Grant Scheme Program to communities

1 1. Scheme Program i s designed to assist the communities in meeting the recurrent costs associated with the implementation o f E C D interventions in an integrated manner.

Within the overall objective o f sustaining the benefits o f E C D interventions, the Grant

12. basis o f recurrent cost needs) that wil l be used to create community resources for ECD. This wil l include income-generating activities that are most suitable to the community, such as community farminggardening, poultry or other livestock, etc. Parents and community members wi l l be required to contribute labor and to manage and make the assets productive. A Memorandum of Understanding wil l be signed between the recipient community and the zoba, following a process o f community empowerment and assessment o f eligibility criteria. The Grant Scheme Program wil l be implemented and coordinated using the project implementation structure. Details on the piloting approach, phasing, implementation approach, and monitoring and evaluation have been discussed with the Government and a detailed Community Grants Manual will be finalized by effectiveness (as part o f the PIM).

Each eligible community wil l receive a grant (average o f US$5,000 calculated on the

13. The grant concept builds on the strengths o f the Government’s Savings and Micro Credit Program (SMCP) that was developed under the World Bank funded Eritrean Community Development Fund (ECDF) and has been operating as an autonomous governmental entity since 2002. As such, the Grant Scheme Program, implemented in a decentralized manner at the

48

regional levels, wi l l receive technical support from SMCP, in the form o f training for community-based organizations to build group cohesiveness, guidance in the choice o f business activities, business set-up, development o f business plans, monitoring and reporting.

14. benefiting 50-100 villages. The main processing steps are as follows:

The Grant Scheme Program wil l be implemented in phases, with the first phase

(a) Phasing and prioritizing communities in the project villages based on defined criteria (needs, existence o f a KG/CCG, different levels o f capacity, different microclimates, etc.).

(b) Communications o f the grant program, i t s objective and benefits.

(c) Support to establish a “community-based organization” (CBO).

(d) Training and technical assistance to the CBO in building group cohesiveness and in simple project management (business development/plan, bookkeeping, business follow-up, etc.).

(e) Assistance to the CBO in the selection and development o f business activity based on recurrent costs needs for ECD interventions.

( f ) Contract signing between the regional administration and the beneficiary CBO.

(g) Monitoring o f the CBO activities.

Implementation of the OVC Grants program

The details o f the implementation modalities o f the O V C Grants program wil l be in the updated O V C Grants Manual to be adopted by effectiveness.

49

Annex 7: Financial Management and Disbursement Arrangements ERITREA: Integrated Early Childhood Development Project I1

1. The IECDP I1 is a repeater multi-sectoral project being implemented by 3 ministries, namely; Ministry o f Education (MoE), Ministry o f Health (MoH) and Ministry o f Labor and Human Welfare (MoLHW). The Project wil l be coordinated by a Project Management Team (PMT) drawn from the 3 ministries. The Project i s a follow-on operation, processed as a Sector Investment Loan (SIL) and financed through an IDA Grant. The init ial Project IECDP I closed successfully in March 2007 with a satisfactory rating in the Implementation Completion Report (ICR). The P M T for the Project was not disbanded and would be used to manage the activities o f IECDP 11.

2. The objectives o f an assessment carried out by the Bank are to determine: (a) whether the PMT has adequate financial management arrangements to ensure the Project funds wil l be used for purposes intended in an efficient and economical way; (b) the Project financial reports wil l be prepared in an accurate, reliable and timely manner; and (c) the assets acquired using Project fimds will be safely guarded.

3. The financial management (FM) assessment was carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Sector Board on November 3,2005.

I. EXECUTIVE SUMMARY

4. The Assessment revealed that the key Project management committees and structures are already in place and operational. A Project Steering Committee (PSC) made up o f the Ministers o f the implementing ministries has been set up, which wil l act as the pol icy setting and oversight body for the Project. The Technical Support Committee (TSC) made up o f the Director Generals o f the implementing ministries has also been set up. The Project Management Team (PMT) which wil l coordinate the day to day activities o f the Project i s operational and i s appropriately staffed. The P M T already has a Project Manager, the Finance Officer and a Senior Accountant. Both the Finance Officer and the Senior Accountant have the requisite professional qualifications and were engaged on the IECDP phase I in the same capacity and hence are appropriately experienced in managing World Bank projects, The Finance Officer has a Bachelor o f A r t s Degree in Accounting and 20 years relevant experience while the Senior Accountant has a Diploma in Accounting and over 8 years relevant working experience. In addition, a Junior Accountant and Cashier wil l be deployed in the PMT by December 3 1 , 2008.

5. headquarters and at the zoba offices, and i s deemed adequate to support the accounting and financial reporting needs o f the Project. The P M T wil l work under the direction o f the TSC and will be responsible for a l l the fiduciary aspects o f the Project.

The PMT has a computer accounting software which has been installed both at the

6. The Government wil l open a Designated Account denominated in U S dollars, a Special Account denominated in Nakfa and the Government o f Eritrea (GOE) Counterpart fimding account in Nakfa. All these 3 accounts shall be held in the National Bank o f Eritrea and wil l be

50

managed by the PMT. Six Regional Project Accounts denominated in local currency (Nakfa) wil l be opened in local commercial banks acceptable to IDA (one in each o f the six zobas). The Regional Accounts wil l be managed by the zoba Administrator or his designate and the zoba Finance Officer. All the bank accounts shall be segregated and utilized strictly for the Project.

7. The Project will use the report-based method o f disbursement to access funds. The Project will be required to prepare and submit quarterly financial reports (IFR) to the Bank for purposes o f monitoring the financial progress o f the Project and making disbursement o f funds. The accounting system is deemed robust enough to support this method o f disbursement.

8. The audit arrangements are deemed adequate and the audit reports and management letters for IECDP, were o f good quality and were received on time and appropriately acted on by management. The Project wil l be required to appoint auditors acceptable to the Bank and to prepare and submit annual audit reports. These audit reports and management letters wi l l be submitted to the World Bank as soon as available but in any case within six months after the end o f the relevant financial year.

9. Basic financial operating procedures are in place at the PMT. However, given the lack o f internal audit hnction, the Project’s external auditors wil l conduct interim internal control reviews (every six months) covering national, regional, sub-regional and village levels, and issue systems audit reports. This will supplement the quarterly visits that the P M T wil l be making to the various zobas to assess project performance. The f i rst internal control review wil l be done for the period ended December 3 1,2008, and subsequent reviews wil l be done for the period ended June 30 and December 3 1 during Project implementation. The relevant reports wil l be submitted to the PMT by the auditors for action and copies sent to the Bank within two months o f end o f each half-year (by August 3 1 and February 28). The Project’s external auditor (who wil l also conduct the internal control review), wil l be appointed by October 3 1 , 2008.

10. Management Capacity in order manage the project funds more effectively. The following Financial Management (FM) Conditions need to be completed as a precedent to the Project being declared Effective.

Nevertheless, the Project would be required to take some actions to enhance i t s Financial

(a) Prepare an updated Financial Management Procedures Manual, an updated O V C Grants Manual, and develop a satisfactory Community Grants Manual as part of the Project Implementation Manual (PIM) in form and content satisfactory to the Bank.

(b) Deployment o f six zoba Finance Officers (one to each o f the six zobas).

1 1. Community Grants) i s capacity building training workshops o f the Project staff at national, zoba and sub-regional levels.

Another major Financial Management Covenant (Disbursement Conditions for

12. The PMT i s already working on these such as the updating o f the Financial Management Procedure and o f the O V C Grants Manuals, as wel l as the development o f the Community Grants Manuals as part o f the PIM. The deployment o f six zoba Finance Officers i s expected to

51

be done as soon as the project i s approved by the Bank. These officers were re-assigned to other government departments on the completion o f IECDP so as to cut down on operating costs. However, they can be re-deployed once the new Project i s on-line. The Project i s therefore considered to be in a position to substantially address al l the Effectiveness conditions at an early date.

13. Pending the completion o f the on-going enhancement o f the FM arrangements, the overall risk rating o f the implementing entity has been assessed as Substantial. However, this could improve to Moderate once the recommended Financial Management (FM) arrangements as per the FM Action Plan are implemented.

11. PROJECT INFORMATION

14. Development Objective: The Project’s Development Objective (PDO) i s to improve the health, nutrition, and access to pre-school education o f Eritrean children aged six years and under in the project villages.

15. Eritrea donor funded projects. The PIU wil l be made up o f the Project Management Team (PMT) that wil l manage the day to day activities o f the Project. The use o f a PMT as opposed to country systems is justified on account o f the following: (i) the Project is multi-sectoral and i s being implemented by 3 different ministries (MOE, MOH and MLHW). I t would be difficult to main- stream and coordinate the project activities through one ministry hence the need for a PMT approach; (ii) the PMT i s the same one that was used to implement phase one o f the IECDP and therefore has the necessary experience to implement phase 11; and (iii) the Government o f Eritrea traditionally manages donor funded projects using PMTs and i t wil l take time and policy change to move to substantial use o f country systems.

Implementing Entity: The Project wil l be implemented by a PMT as i s the case with

16. regional and community/village level. The key coordination bodies which have already been set up are the following:

Project Coordination: The Project coordination structures wil l be set up at national,

(a) Project Steering Committee (PSC): Composed o f the Ministers o f Education, Health and Labour and Human Welfare. The Committee is chaired by the Minister o f Education and wil l be responsible for pol icy oversight.

(b) Technical Support Committee (TSC): Composed o f Director Generals o f the ministries o f Education, Health and Labour and Human Welfare, and chaired by the Ministry o f Education Director General. The Committee will provide technical guidance to the Project.

(c) Project Management Team (PMT): This team wil l be formed at both the national and regionayzoba levels. At the national level, the P M T is already operational and wil l be responsible for the day to day operations o f the Project. However, the Ministry o f Education shall exercise a supervisory role over the national PMT on behalf o f the other two Ministries. The national PMT shall be made up o f the following five key staff; the Project Manager (who shall be the head o f the PMT), the Project Finance

52

Officer, the Procurement Officer, the Communications Officer and the Monitoring and Evaluation (M&E) Officer. For Financial Management purposes, the Project Manager, the Procurement Officer and the Finance Officer are already on board. The national P M T wil l have overall fiduciary responsibility for the Project under the direction o f the Project TSC. The P M T will ensure that adequate financial management arrangements are in place and continue to be effective and shall also be responsible for preparing and submitting the quarterly un-audited interim financial reports (IFR) on a timely basis in form and substance acceptable to the Bank. They will also be responsible for ensuring that the annual audit reports and management letters are submitted to the Bank within six months as required.

(d) RegionaYzoba PMT: This is headed by the zoba Administrator supported by the following technical staff the Regional Program Coordinator and the Regional Finance Officer. Functions related to M&E and communications are mainstreamed in the zoba’s administrative structure, with support from the PMT at the national level. However, the zoba Administrator will delegate the running o f the program day-to-day operations to the Regional Social Services Department Director General. The technical staff wil l be assigned as soon as the Project is approved.

(e) RegionaYzoba Technical Support Committee (TSC): This committee i s headed by the zoba Administrator. However, he has delegated this responsibility to the Director General o f the Department o f Social Services. Other members o f this committee are the Regional Director Generals o f the Departments o f Health, Education and Labour and Human Welfare. This committee i s already in place.

(9 Committees at CommunityNillage Levels (CAC): Each Project Village shall constitute a Village Project Management Committee headed by the Village Administrator (VA) which will be in charge o f the project activities at the village level. An accounts clerk will give the necessary accounting support to each Village Committee. This committee is already in place under the name o f the Community Economic Development Committee and can easily be reconstituted to take over the Project activities.

17. Through the Community Grants sub-component funds wil l be disbursed to communities to support income generating activities that wil l ensure the sustainability o f the E C D program at the community level in the long run. This sub-component will form about 13 percent o f the overall Project funds. The O V C Grants sub-component (about 20 percent o f the Project costs) goes in support o f a well established government program that aims at sustainable reunification o f orphans with their closest relatives (the host families). The accounting unit for both types o f grants wil l be the zoba PMT office and not the communities/families. Due to l imited capacity, the communities will not manage project funds, However, the capacity o f the communities on financial management will be supported as part o f the project.

Community Grants Scheme Program and OVC Grants Program sub-components:

18. The RegionaYZoba PMT will rely on the existing Government systems and structures of disbursing and accounting for funds through the sub-regional zoba Offices (who have accountants and cashiers as a government requirement) and the Village Administrator, who

53

represents the community members in the government structure. Any payments required at community level will be made by the zoba P M T through the sub-regional zoba offices. The Project bank accounts for the community grants wil l be opened at the RegionaVzoba level in commercial banks acceptable to IDA. As needed, the RegionaVzoba office wi l l provide advanceshmprests to the sub-regional zoba offices for which expenditure statements will be submitted. N o project accounts wil l be opened at the community level. The accountability o f the Project finds including the grant proceeds wil l be done by the zoba PMT and the zoba Finance Officer will be responsible for collecting and compiling expenditure returns from the sub- regional offices and submitting these to the national PMT office in Asmara.

19. capacity. For instance, village groups could be supplied with seeds or fishing nets which would be expected to boost their incomes in the long term, Such investments are expected to continue even after the Project is complete. To be sustainable, i t would be advisable to build financial management capacity at the village level by training the community on basic financial management principles o n the basis o f social responsibility.

Nevertheless, the Project i s expected to enhance the community’s income generating

20. set out the basic accounting records, for the Community Grants component i s being developed by the PMT. Development o f a satisfactory Grant Operations Manual i s a Condition of Project Effectiveness.

A Grant Operations Manual, which wil l define the financial and operating procedures and

21. villages across Eritrea. The IECDP I1 Grant wil l be allocated to villages in stages, following a process o f community empowerment and the villages meeting a set o f criteria at each stage. Although the communityhillage will not handle project finds, the community wi l l be involved in income generating activities, and need to develop their capacity to handle finds on a sustaining basis. The fiduciary criteria wil l therefore include having the grant management CAC’s in place, preparing and submitting viable grant proposals, signing o f a Memorandum of Understanding (MOU) with the zoba PMT, having trained accounts clerks, ability to prepare and submit monthly income and expenditure statements, ability to plan, monitor and account for funds and activities handled by the village/community. The eligibility criteria would be documented in the Grant Operations Manual as part o f the PIM. that project funds for community grants are made available only for villages that meet the eligibility criteria. Arrangements at the zoba PMT level to ensure adherence to eligibility criteria will be covered as part o f the internal control review by the external auditors (see para 29 below).

Eligibility Criteria for funding to Villages: The Project is expected to cover 350

The zoba PMT would ensure

22. The project would support the financial management capacity development o f the communities/village to manage their finds (e.g., through income generating activities). An accounts clerk wil l give the necessary accounting support to each Village Committee. They will be provided necessary training. The internal control reviews (discussed later, see para 29 below) wil l also review the arrangements at the communityhillage level, covering a sample o f villages in each round.

Development of financial management capacity at the CommunityNillage Level.

54

111. COUNTRY FINANCIAL MANAGEMENT ISSUES

23. Limited available information indicates P F M weaknesses (e.g., weak budget-policy link, low level o f fiscal transparency, non-availability o f budget plan or budget execution information outside o f government).

Analytic work on public financial management (PFM) in Eritrea i s not available.

IV. DETAILED RISK ASSESSMENT

Budgeting

24. have already been prepared and approved for the Project. The GOE budget process i s undertaken by the Department o f Budgeting in the Ministry o f Finance. Separate budget codes wil l be assigned to the Project and the project wil l be included in GoE’s capital budget. GOE’s existing budgeting systems are deemed adequate for purposes o f the Project. However, the P M T wil l be required to prepare the Project budget and submit i t to MOF for inclusion into the National Budget.

Budgeting for the Project will be undertaken by the national PMT. Detailed cost tables

Accounting

25. Staffing: The national PMT i s currently staffed by a Finance Officer and a Senior Accountant who are professionally qualified and experienced. The Finance Officer has a Bachelor o f A r t s Degree in Accounting and 20 years relevant experience while the Senior Accountant has a Diploma in Accounting and over eight years relevant working experience. Both o f them were involved in the IECDP I from inception until the time the Project closed in the year 2007. Hence they have good experience in managing World Bank projects. However, the Project would require 2 additional staff in the national PMT namely, a Junior Accountant (accounts clerk) and a cashier. Most o f the Project’s accounting transactions wil l take place at the RegionaVzoba level. Each o f the six zobas wil l be required to have a Project Accountant (to be known as Finance Officers) who should have at least a diploma in accounting. These zoba Project Accountants are yet to be assigned. The Government wil l deploy six zoba Finance Officers (one for each o f the six zobas) by the date o f Project Effectiveness. Nevertheless, the Project wil l rely on the existing GOE RegionaVzoba and sub-regional staff structures such as cashiers to support i t s accounting activities. The Government would also deploy a junior accountant and a cashier to the PMT by December 3 1,2008.

26. Computer Accounting System: The PMT has an existing tailor-made computer accounting package which i s deemed adequate for accounting and financial reporting purposes. The software is capable o f generating monthly, quarterly and annual financial reports including trial balance, balance sheet, and income and expenditure statements. The software has also been installed at a l l the zoba/Regional P M T offices. The accounts classifications in PMT’s Chart o f Accounts wil l be updated, and this will be done within one month after project effectiveness.

27. management, accounts staff and even the communities in financial management good practices.

Capacity Building Training: The Project will provide a budget for regular training o f

55

The Bank will conduct a fiduciary capacity building training for the national PMT staff by the time the Project i s ready to make the first disbursement. Subsequent training wil l be provided as needed. The PMT will be required to conduct orientation training o f the regional PMT and sub- regional staff in financial and project management as a precedent to disbursement o f community grants. The costs o f these training events wil l be catered for in the Project budget for consultancies and training.

V. INTERNAL CONTROLS

28. fknction and there i s no audit committee. This i s the practice in Eritrea and i t i s a Portfolio-level issue which is not unique to this Project. Given the complex nature o f the Project design and intricate procedures for the f low o f funds especially to the community level, and internal audit function i s necessary. After discussions with the implementing agency, i t has been agreed that the Project’s external auditors will be required to conduct interim internal control reviews (every six months) and issue systems audit reports, copies o f which wil l be submitted to the Bank. The TORS for the internal control review were prepared by the PMT and agreed upon at Negotiations. The external auditor, acceptable to the Bank, wil l be appointed by October 3 1 , 2008. The f i rst internal control review will be done for the period ended December 3 1,2008, and subsequent reviews wil l be done for the period ended June 30 and December 3 1 during Project implementation. The relevant reports wil l be submitted to the PMT by the auditors for action and copies sent to the Bank within two months o f end o f each half-year (by August 3 1 and February 28). The cost o f conducting these reviews wil l come from the Project budget for consultancies and audit. The implementing agency wil l be expected to address al l internal control weaknesses raised in this reports and not i fy the Bank accordingly. These interim reviews wil l be separate from the annual audit and wil l focus mainly on the accounting, internal control and management structures and systems o f the Project at national, regional, sub-regional and community levels.

Internal Audit and oversight committees: The PMT does not have an internal audit

29. oversight committees such as Finance and Audit Committees. However, the PSC and the TSC wil l provide the necessary oversight and supervision fimctions to the Project. The Ministry o f Finance Department o f Budget as wel l as Department o f Public Debt and Investment Division also provide adequate supervisory oversight.

Oversight Committee: As a general rule, Eritrea as a country has not adopted the use o f

30. FM Operating Procedures: The PMT’s FM operating procedures are deemed adequate. The approval and authorization controls over payments are deemed sufficient. A fixed assets register i s maintained and regularly updated. However, only the motor vehicles are insured. The rest o f the fixed assets are not insured. This is also the accepted government pol icy for Eritrea. There i s adequate segregation o f duties in the accounts section. Nevertheless, the recommended interim internal control reviews will provide additional assurance o f the continued effectiveness o f the internal control systems at the national as wel l as the regional, sub-regional and community levels.

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3 1. o f updating the Project’s Financial Management Procedures Manual as part o f the PIM. This Manual was prepared earlier for use by phase I o f the Project. The Manual does not make any provisions for budgetary control procedures and variances analysis. The Manual further needs to be updated to include World Bank Procedures for preparing quarterly IFR, and procedures under the report-based method o f disbursement. The P M T will complete updating o f the FM Procedures Manual and submit a copy to the Bank for review. Development o f a satisfactory FM Procedures Manual i s a Condition o f Project Effectiveness.

Financial Management Procedures and Policies Manual: The P M T i s in the process

32. Community Grants and OVC Grants Manuals. The P M T i s also developing the Community Grants Manual which will also be translated into the local language, for easier reference by the local communities. The Manual should include eligibility criteria for villages and the procedures for ensuring adherence to eligibility criteria by the PMT. It should also include the simplified accounting records for finds handled by the community (e.g., arising from community investment ventures supported by the project), public reporting and social accountability procedures, basic audit procedures, and other fundamental financial management principles. The Community Grants Manual wil l be completed and a copy submitted to the Bank for review. Development o f a satisfactory Community Grants Manual i s a Condition o f Project Effectiveness. The existing O V C Manual will also be updated and adopted by Effectiveness.

33. and i t i s important to set up appropriate mechanisms to ensure adequate community participation in the monitoring the financial management aspects o f the Project. This can be done by creating structures for public information and reporting. This wil l ensure that Project financial management information is promptly disseminated to the community and that the community members are able to give feedback on various aspects o f the Project. This can be achieved by displaying the community grant budgets, financial statements and audit reports at prominent places at the zoba headquarters and village meeting places. The community financial statements should be prepared by the zoba Accountants using returns submitted by the sub-regional offices. The reports should be prepared at least once every six months and should be subject to the interim internal control reviews by the external auditors. The PMT should also make i t a practice to hold regular scheduled meeting with the village committee so as to l is ten and attend to the concerns o f the community.

Social Monitoring and Accountability: The Project has a community grants scheme

VI. FINANCIAL REPORTING

34. Interim un-audited Financial Reports (IFR): The project has the necessary capacity to adopt the report-based method o f disbursement. The PMT’s accounting system would be used to generate quarterly un-audited Interim Financial Reports (IFR) in form and content satisfactory to the Bank, which will be submitted to the Bank within 45 days after the end o f the quarter to which they relate. This is in l ine with Bank’s Financial Management Procedures O P B P 10.02 which makes it mandatory for a l l Bank projects to prepare and submit quarterly IFRs. The quarterly IFRs will be used as a basis for the disbursement. The PMT has been preparing monthly and quarterly financial reports using the existing accounting system and submitting these to M o F for the GoE f inds that they are managing. The most recent reports are for the month o f March 2008 and their quality i s acceptable. The Finance Officer and the Senior

57

Accountant are deemed competent enough to be able to prepare and submit timely quarterly IFRs. The computer accounting system has been installed at the national and regional levels and i s deemed robust enough to meet the financial reporting needs o f the Project. The P M T wil l assign more accounts staff to the P M T at both the national and regionavzoba levels. This wil l enhance the capacity o f financial reporting for the Project and make it possible for the P M T to adopt the report-based IFR method o f disbursement immediately at Project Effectiveness.

35. information:

Content o f the quarterly IFR. The IFRs will contain the following minimum

(a) A statement o f sources and uses o f funds for the reported quarter and cumulatively since project inception, reconciled with bank, cash and other fund balances at the end o f the quarter.

(b) An analysis o f sources o f funds (receipt) by date and amount for each source.

(c) An analysis o f uses o f knds (expenditure) by project expenditure categories and components against the budget, with explanations for significant variances.

(d) An expenditure forecast for the next two quarters (six months) as a basis for justifying the amount o f the additional cash replenishment required.

(e) The Project Account Activi ty Statement, reconciling the receipts into and payments out o f the project Account.

( f ) Supporting bank statements and reconciliations for the bank, cash and other knd balances at the end o f the quarter.

36. from the regional, and sub-regional for purposes o f preparing the IFR on time. However this can be mitigated by having adequate staff (a competent zoba Finance Officer) at the regional levels and giving sufficient orientation and training to the Project staff as to the financial reporting requirements. The interim internal audit reviews would hr ther reveal any weaknesses in the system that would create delays and make recommendations as to the appropriate management action. It is also expected that the national PMT staff wil l make frequent visits to various zobas and sub-regions to assess the financial reporting structures as part o f Project implementation.

The possible r isks to be monitored would be delays in receiving accountability returns

37. the IFRs are prepared and submitted to the Bank on time in the form and content satisfactory to the Bank. The formats o f the IFRs have been discussed and agreed at Project Negotiations.

The PMT, which has overall fiduciary responsibility over the Project, shall ensure that

Audit Arrangements

38. auditors acceptable to the Bank appointed by the borrowers on the basis o f TOR’S reviewed by the Bank. The audit reports and management letters should be submitted to the Bank as soon as available but in any case within six months after the end o f the financial year to which they relate. The implementing agencies would address and resolve any audit issues raised by the auditors in both the auditors report and the management letter promptly and advise the Bank

Annual Audited Financial Statements: Annual audits would be conducted by external

58

accordingly. The Bank has the right under the Financing Covenants to apply remedies for late or non-submission o f audit reports and management letters or for failure to address the issues raised therein. This may include suspension o f disbursements until the relevant matter i s resolved.

Audit Report Project Financial Statements (including IFRs and Designated Accounts with appropriate notes and disclosures).

39. The audit reporting arrangements are deemed adequate. The audit reports and management letters for the IECDP I for the years ended December 3 1,2005 and 2006 were submitted to the Bank within the required six months after the end o f the respective year ends. The auditors issued clean (unqualified) audit opinions for both years.

Due Date By June 30 each year (starting for the year ended December 3 1,2008).

40. completion o f the annual audit and the submission o f the audit report and management letter. The audit reports to be submitted are summarized below:

Audit Completion Timetable: The PMT has also committed to a clear timetable for the

41, In order to meet the above deadlines, the P M T has committed to the following timetable:

42. 10.02 stipulates that Bank funded projects should be subjected to annual audits by Client appointed external auditors acceptable to the Bank, appointed by the PMT. In line with the above requirement, the Terms o f Reference for the external auditors were prepared by the PMT and agreed upon with the Bank at negotiations. The external auditor, acceptable to the Bank, shall be appointed by October 3 1,2008. After discussions with the PMT, it has been agreed that the previous external auditor o f IECDP shall be re-appointed to audit IECDP 11.

Appointment of External Auditors: The Bank’s Financial Management Policy OP/BP

43, Designated Accounted balances shall be included in the Project Financial statements with appropriate notes and disclosures. The format o f the Project financial statements have been discussed and agreed upon at negotiations.

Format of Financial Statements: The Project financial statements including the

Flow of Funds and Disbursement Arrangements

44. Disbursement Method: The Project shall adopt the report-based method o f disbursement

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by use o f quarterly IFRs. The P M T has successfully managed phase I o f the IECDP and the accounts staff have adequate experience in this regard.

45. experience on the IECDP-1 to adopt the report-based IFR method o f disbursement immediately on Project Effectiveness.

The P M T has been assessed as having adequate capacity and acquired the necessary

46. account opened in the National Bank o f Eritrea and wil l subsequently be transferred to a local currency denominated account in the safe bank. A separate bank account wil l be maintained in the same bank for any GOE counterpart funds. These 3 accounts shall be under the control o f MOF and the national P M T in line with GOE financial practices and the Bank’s disbursement procedures. All payment for the Project at the national level wil l be made by the P M T from these accounts.

Funds Flow Arrangements: The IDA funds wil l be deposited in a foreign exchange

47. All other Project payments including grant expenditures wil l be made by the RegionaVzoba P M T from the Regional Project Account opened in each o f the six zobas. The national P M T wil l transfer funds to these accounts based on quarterly approved work-plans and budgets.

48. Bank Accounts: The following bank accounts wil l be opened:

Designated Account denominated in US dollars and held in the Eritrea National Bank (Central Bank). This account wil l receive the Project funds from IDA and wil l be managed in accordance with GOE and World Bank procedures for such accounts.

Special Account denominated in local currency (Nakfa) and held in the National Bank o f Eritrea and managed in accordance GOE procedures. This wil l be a segregated transit account which wil l be used strictly for Project funds.

GOE Counterpart Account denominated in local currency (Nakfa) and held in Eritrea National Bank that would be used for any GOE counterpart funded Project expenditures.

Regional Project Accounts denominated in local currency (Nakfa) and opened in a commercial bank acceptable to IDA in the respective zobas. These are segregated bank accounts that wil l be used strictly for Project activities.

49. effectiveness.

The relevant bank accounts are expected to be opened within one month o f project

50. GOE Counterpart Account (if any) wil l have 2 signatories, namely:

Bank Signatories. The Designated Account, the Special Account (in Nakfa) and the

(a) the Project Finance Officer (mandatory signatory), and either; (b) the Project Manager (national PMT); or

60

(c) the Chairman o f the national Technical Support Committee (TSC) who is also the Director General, Ministry o f Education.

5 1. The Regional Project Accounts will have the following 2 signatories:

(a) The zoba Finance Officer (mandatory signatory); and either.

(b) The Chairman o f the Regional TSC, who i s the Regional Director General o f the Department o f Social Services; or

(c) The zoba Administrator.

52. Bank.

The banking arrangements for the Project as detailed above as deemed acceptable to the

53. IDA Disbursement methods: (a) Report- based Disbursements: IDA disbursements will be made into the respective

Designated Account based on quarterly IFRs which would provide actual expenditure and cash f low projections for the next two quarters. Init ial cash f low forecasts upon which the advance disbursement wil l be made from the IDA Grant should be prepared within one month after the Date o f Effectiveness. A duly authorized Withdrawal Application for the additional cash replenishment required into the Project Account wi l l be provided along with the IFRs. The IFR together with the Withdrawal Application (WA) wil l be reviewed by the Bank’s Financial Management Specialist (FMS) and approved by the Task Team Leader (TTL) before the request for disbursement i s processed.

(b) Other Methods: In addition, whenever needed the direct payment method o f disbursement, involving direct payments to suppliers for works, goods and services upon the borrower’s request, may also be used. Payments may also be made to a commercial bank for expenditures against pre-agreed special commitments. These payments will also be reported in quarterly IFRs. The IDA Disbursement Letter wil l stipulate the minimum application value for direct payment and special commitment procedures as wel l as detailed procedures to be complied with under these disbursement arrangements.

54. from Project Account, the Borrower will be obligated to refund the same. If the Project Account remains inactive for more than six months, IDA may reduce the amount advanced. IDA will have the right, as to be reflected in the terms o f funding agreement, to suspend disbursement o f the funds if significant conditions, including reporting requirements, are not complied with.

Remedies for non-compliance: If ineligible expenditures are found to have been made

VII. RISK ASSESSMENT TABLE

55. The analysis o f the assessment is as follows:

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Type of Risk

INHERENT R I S K S Country Level

Entity Level

Project Level

OVERALL INHERENT RISK CONTROL RISKS Budgeting

Accounting

Internal Controls

Funds Flow

Residual Risk

Rating

H

M

S

S

L

M

S

S

Brief Explanation

Limited information available on the country’s P F M systems. Rating based on available information. The P M T i s relatively autonomous and has established management structures. The staff have adequate experience in managing World Bank projects. Project design rather complex on account o f the sectoral nature o f the Project and the geographical scope. It also has a community grant scheme category.

Budget system deemed adequate for purposes o f the Project.

Finance Officer and Senior Accountant in PMT with adequate past experience o f managing World Bank projects. Computer accounting software installed and national and zoba levels. However, additional staff required at national and zoba levels.

No internal auditor function and no oversight audit committee. However, adequate approval and authorization procedures and segregation o f duties.

F M Procedure and Grant Operations Manual yet to be updated.

Multi-level funds f low process at national, regional, and sub-regional levels.

Risk mitigating measures incorporated into project design

Clearly defined activities and funds flow mechanisms for the Project at national, regional/zoba and sub- regonal levels.

Detailed project budgets prepared and agreed. Regular reporting including variance analysis. P M T to get additional staff including accounts clerk and cashier at national level. Finance Officer for each o f the six zobas to be deployed.

Interim internal control reviews to be carried out by independent external auditors every six months.

FM Procedures and Grant Operations Manuals to be updated ahead o f Project Effectiveness. Separate Designated and Regional Project Accounts to speed up disbursement and accountability o f funds by creating clear responsibility for management o f funds. Project on report-based system which provides six months cash- f low and quarterly replenishment Accounts staff numbers to be increased at national and zoba levels.

Condition o f Effectiveness

(Y/N)?

No

N o

No

N o

Yes

TORS agreed at negotiations

Yes

N o

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Typeof Risk I Residual I Brief Explanation Risk

Auditing

OVERALL CONTROL RISK OVERALL RISK

Financial Reporting

L Audit reporting arrangements deemed adequate.

S

S

Rating M

3.

4.

Accounting system deemed capable o f generating quarterly IFR and annual financial reports. However, possibility o f delays in financial reporting as a result o f geographical dispersion.

Project computer system. Project Effectiveness Develop the Community Grants Manual for By Project PMT community grants. Effectiveness Update and adopt the Financial Management By Project P M T

,

5.

Risk mitigating measures I Condition of

Procedures Manual. Effectiveness Update and adopt the OVC Grants Manual. Assign an appropriately qualified Finance Officer By Project TSC

incorporatedinto project design

Format o f IFR agreed between Bank and implementing agency at Negotiations. Accounts staff number increase agreed between Bank and implementing agency at

6.

Effectiveness (Ynv)?

No. IFR formats agreed at Negotiations

for each o f the six zobas. Assign additional accounts staff- Junior accountant December 3 1,2008 TSC

Effectiveness

Negotiations. Commitment by the PMT to a clear I No. TORS timetable o f actions to ensure timely audit reports.

agreed at Negotiations

H = High; S = Substantial; M = Moderate; L = Low.

V I I I . FINANCIAL MANAGEMENT (FM) ACTION PLAN

56. are due to be completed as well as the person(s) responsible for the specific actions. The FM Action plan has been discussed and agreed with the PMT.

The action plan below indicates the actions to be taken and the dates by which the actions

1 1 Action 1 Date due by 1 Responsible I Prepare Project budget and submit i t to M O F for by June 30,2008 I 1 . I amroval.

PMT

I 2. I P M T to update codes for Chart o f Accounts in the I One month after I P M T I

I and cashier for national PMT.

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7.

8.

9. 10.

11.

- 12.

IX.

57.

External auditor to conduct internal audit review o f the internal control systems at national, regional sub-regional and village levels.

Capacity building training workshops held on community grants f low o f hnds and accountability process/procedure for Project PMT staff at national, zoba and sub-regional levels by holding workshom at sub-regional levels. Amo in t the auditors. Open Designated and Project Bank Accounts.

Submit audit reports and management letters for the Project.

Prepare and submit Withdrawal Applications for reimbursement o f b d s together with the quarterly F R in form and content satisfactory to the Bank.

First review to be done for the period ended December 3 1, 2008 and subsequent reviews to be done every six months (June and December) and the reports rel ied and copies sent to the Bank within 2 months o f the end o f the Deriod. Condition o f Disbursement for community grants.

By October 3 1,2008 Within one month after Project Effectiveness. Within six months after the end o f the relevant financial year end. Within 45 days after the end o f the quarter to which these relate.

TSC

P M T

P M T and TSC PSC

PMT

PMT

IMPLEMENTATION SUPPORT PLAN

Based on the outcome o f the financial management risk assessment, the following implementation support plan i s proposed:

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FM Activity Frequency

Desk reviews Interim financial reports review Quarterly Audit report review o f the program Annually Review o f other relevant information such as interim Continuous as they become internal control systems reports. available On site visits Review o f overall operation o f the FM system Six monthly (Implementation

Support Mission) As needed

Monitoring o f actions taken on issues highlighted in audit reports, auditors’ management letters, internal audit and other reports Transaction reviews (if needed) Capacity building support FM training sessions Before project start and

As needed

thereafter as needed

The objectives wil l include that o f ensuring that satisfactory financial management systems are maintained for the project throughout its l i fe.

65

Annex 8: Procurement Arrangements

ERITREA: Integrated Early Childhood Development Project I1

A. General

1. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated M a y 2004 with corrigenda October 2006; and “Guidelines: Selection and Employment o f Consultants by World Bank Recipients” dated M a y 2004 with corrigenda October 2006, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Recipient and the Bank in the Procurement Plan. The thresholds below are for the purpose o f the init ial procurement plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

2. Procurement of Works: There will be no procurement o f Works under this project.

3. micronutrients and drugs for c-IMCI; (ii) medical supplies and equipment for the preschool health program; and (iii) learning/manipulative materials for the preschool centers. In the case o f medical supplies and equipment, procurement wil l be carried out in coordination with PHARMACOR which assures quality control. Contracts costing the equivalent o f US$300,000 or more wil l be procured following I C B procedures. The Bank’s current Standard Bidding Documents for Goods wil l be used for I C B contracts. National Standard Bidding Documents that are acceptable to the Bank may be used for N C B contracts whose value range between the equivalent o f US$75,000 or more and less than US$300,000 per contract (Bank Standard Bidding Documents shall be utilized until such time as the National Standard Bidding Documents are cleared by the Bank). Goods which are estimated to cost less than the equivalent o f US$75,000 wil l be procured through Shopping. O n exceptional basis and upon prior agreement o f the Bank, Goods may be procured through Direct Contracting.

Procurement of Goods: Goods procured under this project would mainly include: (i)

4. include few small studies and few training activities in the different components. In general, large consulting assignments wil l be managed by the PMU and awarded under “Quality and Cost based selection” (QCBS) procedures with the exception o f assignments o f a standard or routine nature such as audit assignments, where wel l established practices and standards exist and Least Cost selection (LCS) will be used. The remaining consulting contracts wil l be few relatively simple assignments below the threshold for prior review. Consulting f i r m s for services estimated to cost more than US$200,000 would be selected through QCBS. Consulting firms for services estimated to cost less than US$200,000 may be selected using the consultant’s qualification method. Individual consultants wil l be selected on the basis o f their qualifications in accordance with the procedures o f articles 5.1 to 5.4 o f the Bank’s Consultant Guidelines and detailed in the Procurement Manual. Single source selection may be used where it can be justified. Short l i s ts o f consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may

Selection of Consultants: Consulting services to be procured under this project would

66

be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. In the event that there i s a need, for capacity reasons, UN agencies and NGOs could be selected to assist where they have advantage over commercial f i rms.

5. as coordination o f cross-cutting activities and general supervision costs including office supplies, operation and maintenance costs for vehicles, and utility expenses among others.

Operating Costs: The operating costs o f IECD I1 shall consist o f PMT’s expenses such

6. Others: The grants - to be managed by the zoba administration - represent the: (i) sustainability grants for communities on the basis o f an approved business plan with the aim o f attaining financial independency by the end o f the project; and (ii) the O V C grants the reunified households receive for income generating purpose that wil l go towards covering the extra expenses o f the reunited orphans. The goods and consultants’ services to be financed from the proceeds o f the O V C Grant shall be procured by the Village committees in accordance with procedures for ensuring efficiency and economy and in accordance with the provisions o f Schedule 2, Section I11 o f the Financing Agreement 7. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for goods procured, are presented in the Project Implementation Manual.

B. Assessment o f the agency’s capacity to implement procurement

7. Project Management Team. The IECD I1 i s staffed by a small and effective PMT, and the procurement h c t i o n i s staffed by a Procurement Officer who has served under IECD to be supported by the Project Manager who i s also a procurement specialist. An in-depth assessment o f the capacity o f the Implementing Agency to implement procurement actions for the project has been carried out in April 2008. The assessment reviewed the organizational structure for implementing the project and the interaction between the project’s staff responsible for Procurement Officer and the Ministry’s relevant central unit for administration and finance. The key issues and r isks concerning procurement and for implementation o f the project have been identified and are presented in the table below. O n the basis o f past experience with this type of project, the key issue i s procurement o f Works and the risk i s mitigated by ruling i t out.

Procurement activities wil l be carried out centrally by the M o E through the IECD I1

Country Procurement Environment

8. A Country Procurement Assessment (CPAR) was completed in June 2002 and a report submitted to the Government. One o f the main findings o f the CPAR i s lack o f procurement capacity in Eritrea. The CPAR highlighted key weaknesses which remain valid, as follows: (i) the country does not have updated procurement systems and procedures in line with intemationaVacceptable practices; (ii) the institutional capacity i s weak; (iii) the centralized public procurement o f goods has i t s effects on open competition; (iv) market not operating efficiently, etc. The report incorporated an action plan for implementing recommendations for reforming the procurement system in Eritrea. An IDF grant was approved in M a y 16,2003 to assist the Government in implementing these reforms. The expected outputs o f the IDF grant were procurement legislation; procurement regulations, standard bidding documents; and guidelines for establishing an institutional framework which i s weak at the moment and needs

67

improving. Unfortunately, the IDF was closed on M a y 25,2006 due to lack o f progress. IECDI I is being implemented under the same arrangement o f the successfully completed I E C D I and with the same people.

Action Risk Factor Action to Mitigate Risk by

Inadequate National PrepareiRevise the Project I E C D

9. Since the recommendations o f the CPAR were not fully implemented, an appropriate legal and regulatory framework, an acceptable procurement Regulations and Procedures and national standard bidding documents are not yet in place. IECD wil l continue using the Bank’s SBDs for I C B contracts but for N C B a revised SBD will have to be prepared and submitted to the Bank for review because the current SBD i s based on the old Guidelines while IECD I1 wil l use the new (May 2004 revised October 2006) Guidelines.

Dead Line for Completing Action Effectiveness

Institutional arrangements

Regulations and Procedures. N o revised SBDs.

10. As mentioned above, IECD I1 i s a direct continuation o f IECD and hence will be able to count o n a wel l experienced PMT consisting o f a Manager, a Procurement Officer and a Finance Officer and working closely with a procurement agent ( PHARMACOR) which assures quality control on medical supplies and equipment The decentralized implementation mode wil l also be retained through the zoba, sub-zoba and Village Administrator. Day-to-day project management responsibilities will be handled by the existing PMT in the Ministry o f Education. The PMT will be responsible for budget preparation and planning, f low o f funds to the regions, accounting, procurement, and management o f the grant from IDA, ensuring compliance with the Development Grant Agreement (DGA). The roles and responsibilities o f the staff who are involved in the procurement process, terms o f reference have been included in the Implementation Manual.

Implementation Manual. Prepare SBD for NCB in I E C D July 3 1 , 2008

1 1. the Ministry o f Labor and Human Welfare.

Executing agencies. The Ministry o f Education supported by the Ministry o f Health and

Strengthen capacity o f the Procurement Officer.

Records Management.

12. the previous project wil l be responsible for pol icy decisions on project activities. This wil l be chaired by the M o E and wil l include members o f the M o H and M o L H W .

Project oversight and policy guidance. The Policy Steering Committee formed under

compliance to the N e w Guidelines. Train Procurement Staff in IECD Effectiveness Selection o f Consultants. Introduce improvements in September 30, procurement filing system. 2008

The overall residual project risk for procurement i s Substantial.

13. Action Plan to Mitigate the above Risks

68

14. Prior Review Thresholds and Supervision Plan

4llocation of Grant Proceec

Expenditure Category

Goods

Consultancy Services Firms

Individuals

Contract Value

Threshold (US$ in000)

- >300

- >75<300

No Limit - <200

Procurement Method

ICB

NCB

Shopping

Direct Contractine:

QCBS CQS QBS FBS LCS

sss

Individual Consultants

sss Individual Consultants

Contracts Subject to Prior Review (US$ in000)

All contracts for ICB

Thefirst two NCB contracts of any value would be prior review

Post Review

All

All - >loo

All

All Contracts

All None

ICB - International Competitive Bidding QCBS- Quality and Cost Based Selection QBS- Quality Based Selection LCS - Least Cost Selection

NCB - National Competitive Bidding CQS Consultants Qualification Selection FBS- Fixed Budget Selection SSS- Single Source Selection

C. Procurement Plan

15. The IECD I1 has at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. The plan has been agreed between the Recipient and the Project Team at negotiations and was posted in the project’s database and in the Bank’s external website. The Procurement Plan wil l be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

D. Frequency of Procurement Supervision

16. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the Implementing Agency has recommended supervision missions to visit

69

the field once every six months and to carry out post review o f procurement actions (which includes special procurement supervision for post review/audit) once a year.

No. Contract Description Estimated Review by Bank Cost in US$ PriorFost

1. Pharmaceuticals and Medical 1,500,000 Prior

Details of the Procurement Arrangements Involving International Competition

Expected bid Opening Date (d/m/y) 29/11/08

Goods and Non Consulting Services

(a) L i s t o f contract packages to be procured following I C B and direct contracting:

Supplies (Consumable).

(b) Goods contracts estimated to cost above US$300,000 per contract and al l direct contracting will be subject to prior review by the Bank.

Consulting Services

L i s t o f consulting assignments with short-list o f international f i rms: N/A

Category

(1) Goods

(2) Consultants services

(3) Grants:

(a) OVC Grants under Part 2(2) o f

(b) Community Grants under Part the Project; and

2(3) o f the Project

(4) Training (5) Operating Costs

(6) Unallocated

TOTAL AMOUNT

Amount of the Financing Allocated (expressed in SDR)

2,100,000

130,000

1,500,000

1,000,000

1,170,000 900,000

600,000

7,400,000

Percentage of Expenditures to be Financed

(inclusive of Taxes)

100% o f Foreign Expenditures and 85% o f Local Expenditures

100% o f Foreign Expenditures and 85% o f Local Expenditures

100% o f amount disbursed

100% 85%

70

Annex 9: Economic and Financial Analysis ERITREA: Integrated Early Childhood Development Project I1

Benefits of Early Childhood Development

1. directly related to the synergistic effect o f good health, good nutrition, and appropriate stimulation and interaction with others. A large body o f research has proven the importance o f early brain development and the need for good health and nutrition in the early years. Malnutrition can slow down brain development, impair child’s ability to learn, harm intellectual ability and social ski l ls development. Malnutrition is also related to delayed school enrollment and low school performance.

A child’s ability to think, form relationships, and l ive up to his or her fill potential i s

2. economic returns. Early interventions yield higher returns as a preventive measure compared with remedial services later in l i fe. Policies that seek to remedy deficits incurred in the early years are much more costly than initial investments in the early years. Finally, the body of research and evidence on the far reaching consequences o f malnutrition is so impressive that i t prompted Repositioning Nutrition as Central to Development (World Bank, 2006) to argue that no MDG can be reached unless malnutrition i s addressed.

A healthy cognitive and emotional development in the early years translates into tangible

3, Differences in early childhood development outcomes often have lifetime impact on social and economic status o f the individuals. There are about 700,000 children six years o f age and under today in Eritrea12, including over 80 percent living in rural areas. As l o w income levels are often positively related to women’s higher fertility rate and larger household size, there are disproportionately more poor children than adults. These children from poor and rural families are more l ikely to suffer from malnutrition, illness or to l ow school performance, which in turn i s l ikely to lead to lower income and human development level in later l i fe as the diagram in Figure 1 below illustrates. If the intergenerational cycle o f poverty i s to be halted, children particularly at risk deserve special attention and support in their development.

l2 Based on information from the National Statistics Office.

71

Figure 1. The vicious cycle of poverty and malnutrition

- Low Food Frequent Hard Frequent

Infections physical pregnancies labor

Intake

Income Poverty . j I :

Large families

Direct loss in Indirect loss in productivity from

poor physical status

I I

productivity from poor cognitive development

and schooling

from increased health care costs o f ill

health

Source: Modified from World Bank (2002a); Bhagwati and others (2004)

Economic rationale for Governmental involvement in Early Childhood Development

Theoretical foundation

4. Recognizing the importance o f early childhood development o f preparing children for better education performance, improving future productivity and other social outcome for the lifetime, the GoE has committed to increasing the participation rate, improving quality, and enabling wider service provision. An economic case for government intervention in early

72

childhood education can be made on the grounds o f equity and poverty reduction. The most significant benefit o f government investment in ECD program is the leveled starting ground for the disadvantaged children, ensuring they have an equal opportunity to achieve higher human development levels and earnings potential in later life, which would lead to the break o f intergenerational cycle o f poverty thus lowered overall poverty rate in the future. A second broad justification for government intervention in early childhood education is that there are market failure in this area including liquidity constraints, incomplete information, and externalities. Liquidity constraints may prevent parents from making optimal investments in the human capital o f their children. Information on child-care provision i s also asymmetric in many cases. The government can improve outcomes by developing, publicizing and enforcing standards. A third justification could be made on the basis o f cost-effectiveness o f such interventions. People who start out with very unequal endowments in terms o f wealth, ability, and opportunities are l ikely to end up with very unequal outcomes. A government which i s concerned with equity can compensate the differences in final outcomes. In addition, improved child outcome can also reduce overall cost to the society by, for example, reducing crime rate and reducing the number o f welfare receivers.

Impact o f Interventions: Empirical Evidence

5. The available evidence suggests that the benefits o f early intervention are greater for more disadvantaged children. For example, an evaluation o f the Carolina Abecedarian project shows that the positive effects o f the program are twice as large for children from the poorest and least educated families. Many findings suggest that the payoff to early intervention i s greatest for the most disadvantaged children. A study o f a program in India also shows that the program helped reduce the dropout rate o f the poorest children by 46 percent (Chaturvedi et al. 1987), while hardly affected that o f the richer children. Early childhood development public programs have shown significant impact in developed countries. In the United States, for example, the “Carolina Abecedarian Project’’ found that the children who had received the preschool intervention had higher scores on achievement test and reduction in the incidence o f grade repetition and special education. The “Perry Preschool Project’’ shows that the project has significant on achievement test scores, grades, high school graduation rates, and earnings, as wel l as negative effects on crime rates and welfare use. “Head Start”, a larger scale public preschool program for disadvantaged children has also shown long-term impact on earnings when participants reach adulthood (Graces, Thomas and Currie, 2002, AERY Vol. 92, No. 4 (Sept, 2002) 999-1012).

6. Malnutrition costs low-income countries billions o f dollars a year. At the country level, i t has been estimated that obesity and related NCDs cost China about 2 percent o f GDP and in India productivity losses (manual work only) from stunting, iodine deficiency, and iron deficiency together are responsible for a loss o f 2.95 percent o f GDP. Preventing micronutrient deficiencies alone in China wil l be worth between US$2.5 and US$5 bi l l ion annually in increased GDP, which represents 0.2 to 0.4 percent o f annual GDP in China. Other studies have suggested that micronutrient deficiencies alone may cost India US$2.5 bi l l ion annually, about 0.4 percent o f India’s annual GDP. One estimate suggests that the productivity losses in India associated with malnutrition, i ron deficiency anemia, and iodine deficiency disorders (IDD), in

No t addressing malnutrition has high costs in lost GDP and higher budget outlays.

73

the absence o f appropriate interventions, wil l amount to about US$114 bi l l ion between 2003 and 2012 (India’s annual GDP i s about US$601 billion). Another study, examining only the productivity losses associated with forgone wage employment resulting from child malnutrition, estimates the loss at US$2.3 bi l l ion in India (0.4 percent o f annual GDP). In Sierra Leone, lack o f adequate policies and programs to address anemia among women wil l result in agricultural productivity losses among the female labor force exceeding US$94.5 mi l l ion over the next five years. Malnourished children require more health services and more expensive types of care than other children. They have poorer schooling outcomes and may repeat years more often, thus increasing education costs. Developing countries are also spending an average o f 2 to 7 percent o f their health care budgets on direct costs for treatment o f obesity and associated chronic diseases. All o f these costs fall largely on governments, which provide extensive public sector financing for health and education for the poor.

Project analysis

Benefit-cost analysis

7. Eritrea will have to continue being sustained for a long time before i t can be evaluated for i t s long-term benefits. However, as documented by the Copenhagen Consensus, the expected rates o f returns from investing in nutrition are high. Compared with many possible development investments, including trade reform and private sector deregulation, malaria eradication, and water and sanitation, the provision o f micronutrients was identified as the second best opportunity for meeting the world’s development challenges (see Table 1 below for examples of benefit-cost ratios).

Considering the long-term nature o f investments in young children, the program in

Table 1. The benefit-cost ratios for nutrition/ECD programs Intervention programs Beneft-cost Breastfeeding promotion in hospitals 4-57

Vitamin A supplementation (children <6)

Integrated child care programs 9-16 Iodine supplementation (women) 15-520

4-43 6-14 Iron supplementation (per pregnant woman)

Iron fortification (per capita) 176-200 Source: Behrman, Alderman, and Hoddinott (2004)

The benefits o f ECE programs can be classified in short-, medium-, and long-term. The short- term and direct benefits include improved health and nutrition, prevention o f abuse and neglect, and benefits to other family members including parents and siblings. Medium-term benefits include preventing special education, and preventing grade repetition and drop-out in primary school. Long-term benefits include improvement in school attainment and wages as wel l as reduction in crime. The most significant and measurable benefit i s the education benefit in the medium term and improved labor earnings in the longer term.

74

Cost-Effectiveness Analysis

8. In the area o f Early Childhood Education and Care, the previous project implemented two different approaches - the Kindergartens (KGs) and the Community Care Giver (CCG) approach. Though conceptually the CCG was to be a non-formal outreach service to be provided at community level, in reality the demand for center based pre-school services was so high that parents/communities organized a space for Community Care Giver to provide developmental activities for children. These centers were set up at a fraction o f the cost o f setting up formal KGs. In terms o f the outcome, it i s wel l known that healthy adult chi ld interaction i s the most crucial o f the inputs. While a wel l organized physical environment l i ke building, equipment and furniture are conducive for learning, in a resource constrained situation, i t i s justifiable to reach more number o f children with a less expensive model than limit the access to a few because o f the high cost o f formal KG facility.

9. In the area o f providing care and protection for children with special needs, Eritrea had already a very successful model o f reintegration o f orphans into immediate/extended families with economic support to the host families. This model not only provides psychosocial support that i s as close to a natural home for children, but i s also very cost effective compared to institutional care for children. Future operations are also expected to fol low this model and strengthening the support systems that help the host families.

10. showed that the results varied widely among the different zobas. In the HH/C-IMCI and GMP pi lot areas the reduction was most significant at 27 percent indicating to a clear advantage in integrating both approaches. In terms o f actual grassroots level volunteers to be involved in the follow-up operation, the GoE and i t s development partners have been developing a cost-effective model that combines the resources o f H W C - I M C I and GMP approaches at community, sub-zoba and zoba levels to address al l health, food security, feeding and caring practices in an integrated manner.

The nutrition outcome was not realized fully in the Project areas, but disaggregated data

1 1. delivery model that was adopted after mid term review under IECD for implementing the activities in the E C D village also opened up opportunities for joint planning, training, supervision and monitoring by the working groups at the zoba level. In a resource constraint situation, apart from helping in convergence o f services, the joint supervision also made best use o f limited resources like vehicles and fuel.

Regarding supervision and monitoring for al l services to children, the integrated service

12. Provision o f ECD services to children with special needs did not receive sufficient priority in IECD, except for those orphans reintegrated by the Ministry o f Labor and Human Welfare. For instance, early detection o f disabilities and community based re-habilitation, awareness generation on learning disabilities and training to teachers on helping children with such disabilities are areas the project did not address and the GoE envisages addressing them through the pre-school health program in the proposed IECD 11.

75

Annex 10: Safeguard Policy Issues EIUTREA: Integrated Early Childhood Development Project I1

1. environmental and social impact, and no safeguard pol icy i s triggered.

As with the IECD, the project i s expected to be rated ‘Cy, with no significant

2. improved health and development o f young children. It also seeks to promote equity by emphasizing services geared towards rural, under-served areas, as wel l as disadvantaged groups, including orphans and children with disabilities, Health and ECE interventions will also seek to target the nomadic populations (about 30 percent o f the total population in Eritrea i s composed o f agro-pastoralists). The M o H wil l expand i t s present I M C I program and M o E wil l also focus on establishing appropriate ECE interventions in rural areas.

The program i s l ikely to have a positive social impact because i t aims to contribute to the

3. In the design o f the community grants scheme, communities have continued to be consulted. During the preparation o f the IECD 11, the community grants scheme and the results framework were discussed in a workshop with some 40 zoba level officers from al l sectors. During implementation, communities will be in the ‘driver seat’ with respect to implementing the community grants after being trained in building group cohesiveness and in business activity start-up. Project preparation has involved the participation o f the ministries o f Education, Health, and Labor as wel l as the P M T staff, The project has been discussed with key external partners such as the E C and UNICEF.

4. six and under. I t will also benefit mothers, caregivers, families, children facing difficult circumstances, teachers, social workers, and health workers.

The project will benefit the target group o f about 132,000 Eritrean young children aged

76

Annex 11: Project Preparation and Supervision ERITREA: Integrated Early Childhood Development Project I1

Planned Actual PCN review 03/06/2008 03/06/2008 Initial PID to PIC 03/10/2008 03/10/2008 Initial ISDS to PIC 03/12/2008 031 1 2/200 8 Appraisal 04/30/2008 04/17/2008 Negotiations 05/09/2008 05/28/2008 BoardiRVP approval 06/17/2008 06/19/2008 Planned date o f effectiveness 08/18/2008 Planned date o f mid-term review 08/3 1 /20 1 0 Planned closing date 08/17/20 12

Key institutions responsible for preparation o f the project:

MoE, M o H and MoLHW. Bank staff and consultants who worked on the project included:

Name Title Unit Carla Bertoncino Economist/ TTL AFTH1 ArunR. Joshi E.V. Shantha Dung-Kim Pham Saba Solomon Tekle Son Nam Nguyen Bassam Ramadan Christopher D. Walker Efrem Fitwi Henry Amuguni Luis Schwarz Samuel Zerom Nightingale Rukuba-Ngaiza Helen Taddese Yi-Kyoung Lee Harold Alderman

Education Cluster Leader Nutrition and ECD Consultant Operations Officer Executive Assistant Senior Health Specialist Lead Operations Officer Lead Health Specialist Procurement Analyst Financial Management Specialist Senior Finance Officer Resource Management Analyst Senior Counsel Program Assistant Peer-Reviewer Peer-Reviewer

AFTH1 Consultant MNSHD AFCER AFTH1 AFTH1 AFTH1 AFTPC AFTFM LOAFC AFTRM LEGAF AFTH1 AFTH2 AFTHD

Bank finds expended to date on project preparation: 1. Bank resources (variable BB): US$20,000 2. Trust funds: nil 3. Total: US$20,000

Estimated Approval and Supervision costs (variable BB): 1. Remaining costs to approval: US$32,000 2. Estimated annual supervision cost: US$25,000

77

Annex 12: Documents in the Project File ERITREA: Integrated Early Childhood Development Project I1

Official Project Documents

1. Project Concept Note 2. 3. 4. 5. Project Information Document (PID) 6.

Project Concept Note - Review meeting minutes Draft Project Appraisal Document: April 2008 - ROC Review meeting minutes Project Appraisal Document Data Sheet

Integrated Safeguard Data Sheet (ISDS)

Background Reports and Studies

7. 8. 9. 10.

11. 12. 13. 14.

Interim Strategy Note (2008) Implementation Completion Report for the Integrated Early Childhood Development Project Appraisal Document for the Integrated Early Childhood Development Costing o f the ECD program endorsed by the Eritrean Integrated Early Childhood Development Policy Early Childhood Development: from Measurement to Action (World Bank, 2007) World Development Report (World Bank, 2006) Repositioning Nutrition as Central to Development (World Bank, 2006) Evaluation o f the National School Health Program (2002-2006)

78

Annex 13: Statement of Loans and Credits EFUTREA: Integrated Early Childhood Development Project I1

Difference between expected and actual

disbursements Original Amount in US$ Millions

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Fnn. Rev’d

PO57929 2005 ER-Power Distribution S I L (FY05) 0.00 50.00 0.00 0.00 0.00 36.92 19.41 0.00 PO94694 2005 ER-HN/AIDS/STWTB/Malan~ SIL 0.00 24.00 0.00 0.00 0.00 12.47 1.39 0.00

PO70272 2003 ER-Education Sec SIL (FY03) 0.00 45.00 0.00 0.00 0.00 30.79 20.86 -0.21

PO73604 2002 ER-Emerg Demob & Reint ERL (FY02) 0.00 60.00 0.00 0.00 0.00 6.53 -4.10 0.00

(FY05)

PO34154 1998 ER-Ports Rehab S I L (FY98) 0.00 30.30 0.00 0.00 0.00 8.87 7.10 7.05

Total: 0.00 209.30 0.00 0.00 0.00 95.58 44.66 6.84

ERITREA STATEMENT OF IFC’s

Held and Disbursed Portfolio In Millions o f US Dollars

Committed Disbursed

IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment FY Approval Company Loan Esuity Quasi Partic.

Total pending commitment: 0.00 0.00 0.00 0.00

79

Annex 14: Country at a Glance ERITREA: Integrated Early Childhood Development Project I1

Eritrea a t a glance 4/24/06

Key Development Indicators

2007

Population, mid-year (millions) Surface area (thousand sq. km) Population growth (%) Urban population (% of total population)

GNi (Atlas method. US$ billions) GNI per capita (Atlas method, US$) GNI per capita (PPP, international $)

GDP growth (%) GDP per capita growth (%)

(most recent estimate, 200&ZaO7)

Poverty headcount ratio at $1 a day (PPP, %) Poverty headmunt ratio at $2 a day (PPP, %) Life expectancyat birlh (ysars) Infant mortality (per 1,000 live birlhs) Child malnutrition (% of children under 5)

Adult iiterecy, male (% of ages 15 and older) Adult literacy, female (% of ages 15 and older) Gross primary enrollment, male (% of age group) Gross primary enrollment, female (% of age group)

Access to an improved Water source (% of population) Access to improved sanitation facilities (% of population)

Eritrea

4.7 116

3 20

0.9 200

1,090

1.3 4 . 6

57 48 40

69 56

60 9

Sub- Saharan

Africa

762 24,270

2.5 36

646 629

2,032

5.6 3.0

41 72 50 94 27

69 50 99 87

56 37

LOW income

2,420 29,220

1.6 30

1,571 650

2,696

6.0 6.1

60 74 35

72 50

106 96

75 36

Net Aid Flows

(US$ millions) Net ODA and official aid Top 3 donors (in 2006):

Norway EC Japan

Aid (%of GNI) Aid per capita (US$)

Long-Term Economic Trends

Consumer prices (annual % change) GDP implicit deflator (annual % change)

Exchange rate (annual average, local per US$) Tems of trade index (2000 = 100)

Population, mid-year (millions) GDP (US$ millions)

Agriculture Industry

Services

Household final consumption expenditure General goVt final consumption expenditure Gross capital fomation

Exports of goods and services Imports of goods and services O m s savings

Manufacturing

1980

2.4

I990 zoo0

67 176

4 39 25 19 7 6

27.7 22 49

1.7 19.9 -1.4 25.0

4.6 9.6 95 100

3.0 3.6 477 634 (% of GDP)

30.6 15.1 12.0 23.0 8.2 11.2

57.4 61.9

104.0 70.9 21.8 63.6

7.8 31.9

11.4 15.1 45.0 61.6

20.4

2007

I29

17.9 14.9

10

12.0 28

9.3 12.0

15

4.7 1,316.1

17.5 23.0 8.7

59.5

80.9 42.4 13.1

13.1 -72.0

Age dlstributlon

Male Female

70-74

m a 54-54 4044

30.24 20-24 10.14

w m 10 0 10 m

oercent

Under4 inortalky rate (per 1,000)

150

100

M

0 L OEntrea LD Sub-Saharan Afnca

Growth of GDP and GDP per caplta (V.)

l aT

85 W 05

GDP per capita I *GDP -

1980-90 1990-2000 2000-07 (average annual gmowth %j 2.4 1.6 4.0

5.7 7.1

1.5 2.0 15.0 4.1 10.6 6.6 5.7 3.5

-5.0 4.2 22.6 5.0 19.1 26.3

-2.5 5.04 7.5 0.05

Note: Figures in italics are for years other than those specified. 2006 data are preliminary. .. indicates data are not available.

Development Economics, Development Data Group (DECDG).

80

Eritrea

Balance of Payments and Trade

(US$ millions) Total merchandise exports (fob) Total merchandise imports (cif) Net trade in goods and services

Workers' remittances and Compensation of employees (receipts)

Current account balance as a % of GDP

Reserves. including gold

Central Government Finance

(% of GDP) Current revenue (including grants)

Current expenditure

Overall surplusldeficit

Highest marginal tax rate (%)

Tax revenue

Individual Corporate

External Debt and Resource Flows

(US$ millions) Total debt outstanding and disbursed Total debt service Debt relief (HIPC, MDRI)

Total debt (% of GDP) Total debt service (% of exports)

Foreign direct investment (net inflows) Porffolio equity (net inflows)

2000

31 422

-343

3

6 1 .o

37

53.4 15.0 70.6

-41.9

311 3

49,l 1.9

28 0

2007

13 -371 -388

-94.4 -7.2

34.3

25.3 2.5

35.3

-10.0

2,064 21

156.8 28.1

15.7 0

Composition of total external debt, 2005

IDA. 381

Private Sector Development 2000 2007

Time required to start a business (days) - 84

Time required to register property (days) - 101 Cost to start a business (% of GNI per capita) - 126.0

Ranked as a major conslraint to business (% of managers surveyed who agreed)

Access totcost of financing 57.0 Skills and education of workers 40.5

Stock market capitalization (% of GDP) Bank capital to asset ratio (%)

I Governance Indicators

Voice and aaountability I l l

Regulatoryquallty E 1 ~ ~

Rule of law

Control of mrmptlon

0 26 50 76 IC0

zoo6 02000

Country's percentile rank (0.100) higher vaIu(u imply &Her n*ngs

Source: Kaulmann-KmayMasmzzi, WOM Bank

Technology and Infrastructure

Paved roads (% of total) Fixed line and mobile phone

High technology exports subscribers (per 1,000 people)

(% of manufactured exports)

Environment

Agricultural land (% of land area) Forest area (% of land area) Nationally protected areas (% of land area)

Freshwater resources per capna (cu. meters) Freshwater withdrawal (% of internal resources)

C02 emissions per capita (mt)

GDP per unit of energy use (2000 PPP 0 per kg of oil equivalent)

2000

21.8

9

75 15.6

10.7

0.17

2006

18

75 15.4 5.0

636

0.17

Energy use per capita (kg of oil equivalent)

(US$ millionsj

IBRD Total debt outstanding and disbursed Disbursements Principal repayments Interest payments

Total debt outstanding and disbursed Disbursements Total debt service

IDA

IFC (fiscal year) Total disbursed and outstanding portfolio

Disbursements for IFC own account Portfolio sales, prepayments and

repayments for IFC own account

of which IFC own account

MlGA Gross exposure New guarantees

0 0 0 0

84 32 0

1 1 0

0

- -

0 0 0 0

209 113

0 0 0

0

- -

Note: Figures in italics are for years other than those specified. 2007 data are preliminary .. indicates data are not available. -indicates observation is not applicable.

Development Economics, Development Data Group (DECDG).

4/24/08

81

Millennium Development Goals Eritrea

With selected targets to achieve between 1990 and 2015 (esthnate closest to date shown, +/- 2 years)

Goal 1: halve the rates for S I a day poverty and malnutrltlon I990 1995 2000 2006 Poverty headcount ratio at $1 a day (PPP, % of population) Poverty headcount ratio at national poverty line (% of population) Share of income or consumption to the poorest qunitile (%) Prevalence of malnutrltion (% of children under 5) 43.7 39.6

53.0

Goal 2: ensure that children are able to complete primary schooling Primarv school enrollment (net. %) 16 41 47 . . . Prima4 completion rate (% of relevant age group) Secondary school enrollment (gross, %) Youth literacy rate (% of people ages 15-24)

25 40 50 27 31

Goal 3: ellmlnate gender dlsparlty in education and empower women Ratio of girls to boys in primary and secondary education (%) Women employed in the nonagricultural sector (% of nonagricultural employment) Proportion of seats held by women in national parliament (%)

77 72 32 21 15 22

Goal 4: reduce under4 mortallty by two-thlrds Under-5 mortality rate (per 1,000) 147 122 97 93 Infant mortality rate (per 1,000 live births) Measles immunization (proportion of one-year oids immunized, %)

80 74 61 48 18 5a 06 04

Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) Bllths attended by skilled health staff (% of total) 21 2a 20

630

Goal 6: halt and begin to reverse the spread of HlVlAlDS and other major dlseases Prevalence of HIV (% of population ages 15-49) 2.4 Contraceptive prevalence (% of women ages 15-49) a 8 Incidence of tuberculosis (per 100,000 people) 220 239 260 282 Tuberculosis cases detected under DOTS (%) 3 14 13

Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 43 46 54 60

Forest area (% of total land area) 15.6 15.4 Nationally protected areas (% of total land area) 5.0

GDP per unit of energy use (constant 2000 PPP $ per kg of oil equivalent)

Access to improved sanitation facilities (% of population) 7 a 8 9

C02 emissions (metric tons per capita) 0.1 0.2 0.2

Fixed line and mobile phone subscribers (per 1,000 people) Internet users (per 1,000 people) Personal computers (per 1,000 people) Youth unemployment (% of total labor force ages 15-24)

Goal 8: develop a global partnership for development 4 6 9 18 0 0 1 16

2 0

ducatlon indicators (%)

Ilj 0

2000 2002 2005

&Primary net enrollmnl ratio

-C+ Ratio of girls to boys in primary 8 secondary education

measles immunization (% of I-year olds)

100

75

50

25

0 1980 1895 2000 2005

0 Entrea USubSaharan Afnca

CT Indicators (per 1,000 people)

2o 1 -

0 Fixed + mobile subscribers Internet users

Note: Figures are for year given or else are the closest figure to that year .. indicates data are not available.

Development Economics, Development Data Group (DECDG)

4/24/08

82

Annex 15: Map ERITREA: Integrated Early Childhood Development Project I1

83

Erghershatu(2576 m)

D e n a k i l

Hagar NishPlateau

CENTRAL(MAEKEL)

A N S E B A

S O U T H E R NR E D S E A(DEBUB-KEIH-

BAHRI)

NORTHERNREDSEA

S O U T H E R N

(DEBUB)

G A S H - B A R K A

(SEMIEN-KEIH-BAHRI)

Karora

Sala

Andale

Teseney

Um-Hajer

Sebderat

Akurdet

Nakfa

Dekemhare

Idi

Adi Keyh FatumaAreza

Adi Quala

Buia

ASMARA

Keren

Barentu

Mendeferas

Alighede CENTRAL

(MAEKEL)

A N S E B A

S O U T H E R NR E D S E A(DEBUB-KEIH-

BAHRI)

NORTHERNREDSEA

S O U T H E R N

(DEBUB)

G A S H - B A R K A

(SEMIEN-KEIH-BAHRI)

Karora

Sala

Beylul

Andale

Teseney

Um-Hajer

Sebderat

Akurdet

Gulbub

Nakfa

Dekemhare

Jemahit

Idi

Tio

Adi Keyh FatumaAreza

Adi Quala

Ingal

Buia

Keren

Assab

Massawa

Barentu

Mendeferas

ASMARA

SUDAN

DJIBOUTI

REP. OFYEMEN

E T H I O P I A

Bark

a

Anseba

Tekeze

Alighede

Gash

RE

D

SE

A

To Adi Abun

To Kassala

To Port Sudan

To Djoboiti

To Adirgat

To Logiya

D e n a k i l

Dahlac

Archipelago

Hagar NishPlateau

Erghershatu(2576 m)

36°E 38°E 40°E

36°E 38°E 40°E

42°E

42°E

18°N 18°N

16°N

14°N 14°N

ERITREA

0 20 40 60 80

0 20 40 60 80 100 Miles

100 Kilometers

IBRD 33403R

MA

RCH

2007

ER ITREA

SELECTED CITIES AND TOWNS

REGION CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

REGION BOUNDARIES

INTERNATIONAL BOUNDARIES

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endo r s emen t o r a c c e p t a n c e o f s u c h boundaries.