Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 32321

IMPLEMENTATION COMPLETION REPORT(PPFI-P9580 IDA-28410 TF-20958 TF-20822 TF-20838 TF-20858 TF-20962 TF-20773 IDA-28411)

ON A

CREDIT

IN THE AMOUNT OF SDR 80.80 MILLION (US$120.00 MILLION EQUIVALENT)AND

ON A SUPPLEMENTAL CREDIT IN THE AMOUNT OF SDR 21.5 MILLION (US$28.3 MILLION EQUIVALENT)

TO THE

GOVERNMENT OF ETHIOPIA

FOR AN

ETHIOPIAN SOCIAL REHABILITATION AND DEVELOPMENT FUND

June 24, 2005

Human Development IIICountry Department 06Africa Region

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

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CURRENCY EQUIVALENTS

(Exchange Rate Effective )

Currency Unit = Birr (ETB) ETB 8.65 = US$ 1.00

US$ 1.00 = ETB 8.65

FISCAL YEARJuly 1 June 30

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance StrategyCBOs Community-based OrganizationsCO Central Office-ESRDFCPC Community Project Committee

CSA Central Statistical Authority CWIQ Core Welfare Indicators QuestionnaireDCA Development Credit AgreementDO Development ObjectiveERP Emergency Recovery Project

ERR Economic Rate of ReturnERRP Emergency Recovery and Reconstruction ProgramESRDF Ethiopian Social Rehabilitation and Development FundESRF Ethiopian Social Rehabilitation Fund

GOE Government of Ethiopia HICE Household Income, Consumption and Expenditure SurveyHS Health and SanitationIGA Income Generating Activities

ISS Interim Support Strategy M&E Monitoring and Evaluation M&O Maintenance and Operations MDG Millennium Development Goals MIS Management Information System MOFED Ministry of Finance and Economic Development MTR Mid-Term ReviewNGOs Non-Governmental OrganizationsNRM Natural Resource ManagementOM Operational ManualPCM Post Completion Monitoring

PVS Primary Village Schools QSA Quality of Supervision AssessmentRWS Rural Water Supply SchemesSAR Staff Appraisal ReportSDPRP Sustainable Development Poverty Reduction Paper

SNNPR Southern Nations, Nationalities and Peoples RegionSSI Small-Scale Irrigation Schemes

TA Technical AssistanceTCB Training and Capacity BuildingUNDP United Nations Development ProgramUSD United States Dollar

WCT Water Catchment TreatmentWDF Woreda Development Fund

WMU Welfare Monitoring Unit WMS Welfare Monitoring SystemWUA Water Users AssociationWUC Water Users Committee

Vice President: Gobind NankaniCountry Director: Ishac DiwanSector Manager: Laura Frigenti

Task Team Leaders/Task Managers: Giuseppe Zampaglione/Endeshaw Tadesse

ETHIOPIANSOCIAL REHABILITATION AND DEVELOPEMENT FUND

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 45. Major Factors Affecting Implementation and Outcome 146. Sustainability 157. Bank and Borrower Performance 178. Lessons Learned 209. Partner Comments 2110. Additional Information 21Annex 1. Key Performance Indicators/Log Frame Matrix 22Annex 2. Project Costs and Financing 23Annex 3. Economic Costs and Benefits 25Annex 4. Bank Inputs 28Annex 5. Ratings for Achievement of Objectives/Outputs of Components 32Annex 6. Ratings of Bank and Borrower Performance 33Annex 7. List of Supporting Documents 34Annex 8. ICR Workshop - Addis Ababa - March 7, 2005 36Annex 9. Context Overview 39Annex 10. Targeting 40Annex 11. ESRDF Contribution 41Annex 12. WMU and CSA Contribution 52

Map No. IBRD 33405

Project ID: P000771 Project Name: Ethiopia Social Rehabilitation and Development Fund

Team Leader: Endeshaw Tadesse TL Unit: AFTH3ICR Type: Core ICR Report Date: June 24, 2005

1. Project DataName: Ethiopia Social Rehabilitation and Development

FundL/C/TF Number: PPFI-P9580; IDA-28410;

TF-20958; TF-20822; TF-20838; TF-20858; TF-20962; TF-20773; IDA-28411

Country/Department: ETHIOPIA Region: Africa Regional Office

Sector/subsector: Other social services (35%); Health (20%); General education sector (20%); General water, sanitation and flood protection sector (15%); Irrigation and drainage (10%)

Theme: Rural services and infrastructure (P); Participation and civic engagement (P); Other social protection and risk management (P); Gender (P); Poverty strategy, analysis and monitoring (S)

KEY DATES Original Revised/ActualPCD: 09/01/1993 Effective: 08/08/1996 08/08/1996

Appraisal: 02/20/1995 MTR: 06/26/1999 06/29/1999Approval: 04/09/1996 Closing: 12/31/2001 12/31/2004

Borrower/Implementing Agency: The Government of Ethiopia/ESRDF - WMU - CSAOther Partners: The Governments of the Netherlands, Italy, Norway, and Belgium and UNDP

STAFF Current At AppraisalVice President: Gobind Nankani Callisto E. MadavoCountry Director: Ishac Diwan James AdamsSector Manager: Laura Frigenti Jacob van Lutsenburg MaasTeam Leader at ICR: Endeshaw Tadesse Lee RobertsICR Primary Author: Giuseppe Zampaglione

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: UN

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The objectives and design of the Ethiopian Social Rehabilitation and Development Fund (ESRDF) are discussed here in the context of the overall economic, institutional, and social conditions prevailing in Ethiopia during the Project life, which spanned July 1996 to December 2004 (see Annex 9).

The Project’s objective was to provide to poor, mainly rural communities in Ethiopia, the assets and services needed to improve their economic and social standards. In particular, ESRDF was to:

support community initiatives to construct, rehabilitate, and maintain basic economic and social linfrastructure and services necessary to improve communities’ social services conditions and incomes;increase community capacity to identify development priorities, manage Project implementation, land maintain ESRDF-financed assets;support measures beneficial to environmental conservation and rehabilitation;lrespond to the needs of vulnerable groups, especially of poor women;lsupport the establishment of a Welfare Monitoring System (WMS) in Ethiopia to improve the lcollection and analysis of information to guide poverty reduction efforts and track the impact of policy measures on the poor.

3.2 Revised Objective:No formal revisions were made to the project objectives.

3.3 Original Components:The total project costs were estimated at US$242.40 million equivalent (US$120.00 million IDA credit, US$61.80 million from donor contributions, US$36.35 million as Government's contribution, and US$24.25 million from communities). The Project had three main components and several subcomponents.

Component 1. Construction and Rehabilitation of Social and Economic Infrastructure and Improvement of Related Services, also referred to as ESRDF (US$207.82 million equivalent or 85.7 percent of total base cost). The aim of this component was to support communities in (i) the construction and rehabilitation of essential local and economic social infrastructure, including basic health care and primary education facilities, rural water supply and urban sanitation systems, and small scale irrigation schemes; and (ii) in improved service delivery of primary education and health. This component was to finance only social and economic infrastructure subprojects that were community initiated and suitable for community management.

Component 2. Welfare Monitoring System, also referred to as WMS (US$3.13 million equivalent or 1.3 percent of total base cost). This component aimed at assisting the development of poverty reduction policies and programs, and at improving monitoring of the social consequences of wide-scale development activities. This component would finance investments to (i) carry out studies and data analysis and (ii) to build capacity in collection, processing, analysis, and dissemination of data on living conditions.

Component 3. Training and Capacity Building, also referred to as TCB (US$18.3 million equivalent or 7.6 percent of total base cost, inclusive of US$5.16 million for equipment and vehicles). The aims of this component were to (i) provide ESRDF with the capacity to manage financial resources and to carry out its Project responsibilities; (ii) provide local community leaders and associations with the skills and knowledge

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required to participate fully in subproject identification and management; (iii) build critical technical capacity to regional administrations and non-governmental entities involved in the implementation of the first component.

US$13.15 million equivalent, or 5.4 percent of total base cost, would finance expenditures related to Project administration, management and operating costs of ESRDF.

3.4 Revised Components:At the end of 2000, US$17.5 million of Component 1 of the Credit were earmarked to support the rehabilitation and reconstruction of community infrastructure in the Woredas most affected by the Ethio-Eritrean conflict of 1998-2000, as part of the Emergency Recovery Project (ERP).

In February 2003, the Bank Board approved a Supplemental credit of US$28.3 million to refinance the Project (and the DCA was amended accordingly). The Supplemental credit confirmed all Project objectives and strengthened the emphasis on some subcomponents that up to then had been carried out on a pilot basis only, in particular Income Generating Activities (IGA) and the Woreda Development Fund (WDF). Moreover, the Supplemental credit introduced additional outputs under the WMS component (national poverty map and survey data storage system).

3.5 Quality at Entry:Quality at Entry was moderately satisfactory, but since the ICR format does not give this rating option, it has been rated as satisfactory.

Consistency with country strategy. ESRDF spans over a period of three Bank Country Assistance Strategies (CAS) and one Interim Support Strategy (ISS). During this period, the Bank program in Ethiopia focused on economic growth and poverty reduction by supporting (i) private sector development, (ii) agricultural productivity, (iii) macro framework stabilization, and (iv) the development of human capital through the provision of basic social infrastructure and services. The aims of ESRDF were consistent with these objectives, with the last one in particular, and with the overall priority of improving gender balance, protecting the environment, and building capacity in the Government.

Project design: ESRDF was established following the positive evaluation of the Ethiopian Social Rehabilitation Fund (ESRF), a pilot component of the Emergency Recovery and Reconstruction Project (ERRP), implemented between 1992 and 1995 in three regions. ESRDF extended ESRF to the entire country and established a decentralized structure of Regional offices and Regional Steering committees to support subproject selection, approval, local government endorsement, and implementation. ESRDF was responsible for appraising subproject proposal received from communities, to ensure their cost effectiveness, sustainability and environmental soundness. Once the decision was taken to finance a subproject, communities were to enter into formal agreement with ESRDF to implement subprojects using standard bidding documents for goods, works and consulting services. All details on subproject implementation were in the Operational manual and in sector handbooks. ESRDF monitored and supervised implementation, and ensured the final hand-over to communities. The Staff Appraisal Report (SAR) reveals a remarkable focus on and understanding of the major economic and social problems of rural Ethiopia, a comprehensive, technically sound and innovative approach to local development issues, and a very strong coordination and harmonization with major donors. However, the Project suffered from the following shortcomings:

i) ESRDF allocated funds on the basis of a Government formula which did not take into account differences in capacity of regions, rather their population and indicators on health and education services

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and on tax collection. Under such a formula, it was inevitable that most regions with low capacity disbursed very slowly and that most regions with higher capacity performed much better. Despite the fact that during project design and at appraisal the Bank analyzed the disparities between the regions and suggested introducing some flexibility in resource allocation for subprojects, the Government did not agree. Under such circumstances, project design should have envisaged a massive up-front investment in capacity building activities, especially for the weakest regions.

ii) The Project was too complex, requiring substantial investments in M&E and in supervision with a mix of sector expertise which was not always available. The QSA highlighted similar problems of Project design complexity. The indicators listed in the SAR and confirmed by the Supplemental credit, were mostly process/output indicators, which were not only cumbersome to collect and input in the system but which gave little information on the long term impact of subprojects. Moreover, the Project went to great length in calculating the economic rate of return and other financial indicators for all major sectors, which proved to be of limited relevance during implementation and at completion, while complicating Project design and its management.

iii) The Project was too ambitious in terms of total number of subprojects to be completed by ESRDF (13,800), especially on Rural water supply schemes (13,035) and Small scale irrigation schemes (18,175 hectares). The weak country capacity, the difficulty of access to subproject sites and their remoteness, the significant disparity in geologic and orographic characteristics of potential sites, and other factors such as the limitation to five regions only for SSI subprojects implementation, should have suggested a reduced number of subprojects as a target.

Project risk evaluation. The SAR rated the overall risk of the Project as moderate. Three critical risks were identified (from Outputs to Objective): 1) Lack of institutional capacity in some regions, 2) limited financing of recurrent costs for facilities created under ESRDF, and 3) constraints in retaining high calibre staff in ESRDF. Risks 1) and 3) proved to have a negative impact on implementation and their severity was underestimated at SAR which rated them as modest. The project triggered the following safeguards: Environment Assessment, Involuntary Resettlement, Safety of Dams, and International Waters.

Project preparedness for implementation. The Project was ready for implementation, especially the first and third components which were based on the experience gained during the pilot phase. Plans for the preparation of the Operational manual and of handbooks, and for setting up the MIS were in place at Project launch. A controversial legal issue about riparian waters and SSI projects in related basins had been addressed at negotiations and an overall acceptable solution was found. (During project implementation, ESRDF requested to finance SSI projects in the Wabeishebele and Genale Basin. However, since SSI subprojects on these rivers designated as international waterways, were explicitly excluded in the DCA, the request was not accepted). A better integration between the first and second component, could have benefited the Project by having the WMS provide ESRDF with data and analytical tools to target poor communities and, on the other hand, by having ESRDF provide inputs to the WMS on the impact that ESRDF and other development programs were having on communities.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:Satisfactory.

Overall, the Project delivered on its objectives and the assessment for each outcome indicator is as discussed in the next paragraphs (see also Annex 1). However, beyond its successes in supporting the

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completion of a large number of subprojects, ESRDF has created an important although intangible asset in Ethiopia: i.e. a culture and practice of local development based on a) empowering local communities to make decisions on their own needs and priorities; b) the devolution of responsibilities to local authorities (the Woredas) through the transfer of block grants; and (c) the creation of a sense of interdependence between local and central authorities, and across sectors and line agencies. This has improved the efficiency of the project, and has strengthened community cohesion and social accountability. The assessment by specific outcome and achievement of objective is as follow: Support the provision of social infrastructure and services. Roughly 20 million people benefited from ESRDF subprojects, more than 2.5 times the number of beneficiaries estimated at SAR and 83% of those at Supplemental credit. At ICR, the number of subprojects completed or under completion was 5,679. This figure is lower than the SAR target of 13,800 subprojects, as the number of Rural water supply schemes (RWS) completed was significantly lower than the SAR target. The ESRDF delivered above estimates on Education and Health subprojects. In terms of services, the Project contributed to the improvement of service provision in all sectors, as discussed in each subcomponent impact section (4.2). Satisfactory.

Increase community capacity. ESRDF was a “demand based program financing only community-initiated subprojects suitable for community management” (SAR). To this end the project financed training of members of communities and of Community project committees (CPC), facilitators, and staff of NGOs, regional sector bureaus, private firms and of ESRDF. Training was on subprojects identification, preparation, appraisal and implementation, with an emphasis on community participation. The Project has financed 854 training and capacity building (TCB) activities, of which 402 were targeting community members or 90% of all beneficiaries (315,000 people). Despite these achievements, follow up activities on community capacity building, on M&O especially, remained limited. Moreover, in supporting regional capacity the project should have adopted a phased approach whereby regions with weaker capacity would be targeted first and with more resources. Moderately satisfactory.

Support measures beneficial to the environment. ESRDF was designed to approach environmental preservation goals at two levels: (1) making sure that subprojects were appraised using environmental criteria, that potentially negative environmental consequences were early detected, and that measures to mitigate them were adopted; and (2) using ESRDF as a vehicle to pursue the GOE’s objective of promoting better conservation practices. On balance the two goals were attained. Potentially negative consequences of ESRDF subprojects were treated preventively (e.g. small incinerators for waste treatment at health centers) and to a greater extent than in non-ESRDF financed subprojects. This was one of the findings of the 2002 Beneficiary and impact assessment (GBA Consultancy Ltd. Impact Assessment of ESRDF Financed Subprojects). On the second goal, the Project financed the rehabilitation of watershed treatment systems (52,305 hectares) mitigating the process of soil degradation and financed 126 Natural resources management subprojects (as indicated in the ESRDF contibution to the ICR, see Annex 11). Satisfactory.

Respond to the needs of vulnerable groups, of poor women especially. Most subprojects were implemented in regions with the highest number of people living in extreme poverty, i.e. Oromiya, Amhara, Tigray, SNNPR (Annex 10). As highlighted in the 2002 Beneficiary and impact assessment, ESRDF subprojects were mostly in rural areas and far from main roads or centres (average distance was more than 50km). As part of the GOE’s strategy to improve women conditions in Ethiopia, ESRDF was to focus especially on poor women. Accordingly, ESRDF developed a Plan to (i) encourage women participation in subprojects' selection and implementation, (ii) include gender indicators in the MIS, and (iii) encourage the design of activities and subprojects in which women had a greater chance to participate in and benefit from. At ICR, the estimate is that 49.6% of beneficiaries were women, with a positive impact on their overall

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conditions (increase in primary education enrolment of girls, reduced time to collect water, improved access to health facilities). However, these achievements flow from ESRDF financing of services and infrastructures essential for the entire population and yet delivered by women (water) or with strong women's participation (health services for the family), rather then from a sustained effort to promote gender equity. Women participation in project or users committees was rarely over the 20-30% ratio and few chairpersons were women. Moderately satisfactory.

Support the establishment of a Welfare Monitoring System. Despite some serious delays in analyzing poverty data and in preparing studies, especially during the period 1996-2000, the Project delivered on its objectives to: (i) strengthen capacity to collect and analyze data related to causes, patterns and incidence of poverty in Ethiopia; and (ii) improve the basis for developing poverty reduction strategies. Moderately satisfactory.

4.2 Outputs by components:Component 1. Construction and Rehabilitation of Social and Economic Infrastructure and Improvement in Related Services. Satisfactory.

This component financed goods and works, consultant services, TA, equipment, vehicles and materials for subprojects identified, implemented, and operated by communities, through a representative CPC. Communities were to finance 10% of total cost (in cash, labour or materials).

The ESRDF process was demand driven, but the SAR anticipated that most demand would be in Rural Water Supply (RWS: 94% of number of subprojects). The rest was anticipated to be in health (2.5%), education (2.4%), and Small scale irrigation schemes (SSI), and sanitation. At ICR, 43% of total subprojects were in RWS, 23% in education, 20% in health and sanitation, and 2.8% in SSI.

Table 1: ESRDF subprojects by Region and Sector Sector Region

Educ. HS RWS SSI Agr.

NRM IGA TCB Others Total

Addis Ababa 117 66 1 0 0 0 1 39 0 224 Afar 65 34 33 0 8 1 0 38 0 179 Amhara 224 174 1008 56 68 34 19 118 26 1727 B&G 45 55 163 0 9 2 3 32 4 313 D.D 49 282 19 6 9 15 7 74 0 461 Gambela 26 15 49 0 0 0 8 20 0 118 Harare 26 46 35 0 1 5 7 38 2 160 Oromiya 360 218 405 34 114 46 41 126 0 1344 SNNPR 191 71 188 24 20 17 15 69 5 600 Somali 94 87 60 0 12 0 6 27 0 286 Tigray 114 111 531 43 36 6 5 120 2 968 Central Office 0 0 0 0 0 0 0 153 0 153 Total 1311 1159 2492 163 277 126 112 854 39 6533 Subprojects in % 20 17.7 38 2.5 4.2 1.9 1.7 13 0.5 100 In % excl. TCB 23 20.5 43.8 2.8 4.8 2.2 1.9 - 0.7 100 Expenditures in % 33 22 15 10 - - 0.2 7 13* 100 In % excl. TCB 35.5 23.4 16.5 10.6 - 0.2 - - 13.8** 100

*Includes WDF (3%) and ERP (7%) financing. **Includes WDF (3.3%) and ERP (7.2%) financing. Sources: ESRDF – ICR contribution. February 2005

The SAR anticipated that RWS (36%) and SSI (36%) would absorb most of this component's resources.

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Instead, at completion, the credit supported Education and Health to more than 55% of total ESRDF disbursements, and RWS accounted for only 15% and SSI for 10%. Factors explaining why the number of subprojects in Education and Health was higher than anticipated include strong community demand, low community contribution to recurrent costs in education subprojects, and government national policy encouraging education and health infrastructure. Under others, the project financed community subprojects, small roads, and other local infrastructure (3%), the WDF scheme (3%) and ERP operation (7%). The allocation of ERP and WDF expenditures by sector shows a bias in favour of RWS and of agricultural activities.

As a direct result of ESRDF capacity building and sensitization activities, out of 10,465 applications submitted to ESRDF, 78% were initiated by communities, 10% by Government bureaus, 6% by civic organizations, 5% by NGOs and 1% by local administrations. To finance subprojects, communities mobilized resources (in cash and in kind) equivalent on average to 8.5% of total costs. In the case of the WDF, community contributions were on average 15% and in some cases up to 40% of total cost. In subproject implementation, the level of participation of the CPCs and of communities ranged from full responsibility in the implementation of all subproject phases (more than 50%), to monitoring and supervision of the implementation when the subproject was managed by an NGO or a Regional bureau. This is consistent with the SAR, which emphasized that implementation arrangements were to be kept flexible to reflect very different conditions among regions in terms of availability of services, markets, local contractors, and community capacity. Most of the subprojects (64%) were of satisfactory technical quality. What follows is a discussion of the ouputs and impact of major subcomponents.

Basic Health and Sanitation. This subcomponent financed (i) the rehabilitation, expansion and construction of primary health care facilities, using accepted Government standards, (ii) training on public health issues (basic health practices, disease prevention, good nutrition practices, and family planning methods), and (iii) urban sanitation subprojects, such as latrines and drainage systems. 50% of associated recurrent costs were the responsibility of the government, while the other 50% was to be financed by communities. Overall rating of this subcomponent is satisfactory.

Outputs: The SAR estimated that US$28.85 million would finance 357 primary health facilities, benefiting over 3 million people, and US$2.18 million would finance sanitation subprojects (45 latrines and 23 drainage schemes). At ICR, US$39.87 million had been disbursed to finance 1,159 subprojects of which 535 health facilities (85 health centres, 28 health stations, and 422 health posts) and the rest in health services and in sanitation subprojects. This increase is explained by the higher than expected demand for health infrastructure and services by communities. Quality of health infrastructures was rated as good by the 2002 Beneficiary and impact assessment, by Bank supervision missions, and by ICR field visits. The number of beneficiaries has skyrocketed from the SAR estimate of 3,147,000 to 11,348,487, also because many more health centres were built than initially foreseen.

Impact: By 2003, ESRDF facilities accounted for more than 25% of the health centres and 30% of the health posts in Ethiopia. Outpatients services have also increased significantly since health infrastructures have been completed: at the Andasa Health Post (Amhara), patients indicated that they doubled their visits to the doctor since the new post was inaugurated. At Selam Health Centre in Gugele (Addis Ababa), 203,000 citizens are the potential beneficiaries of the new health centre, and 17,500 patients received services during the first six months. With four doctors in the centre at five working days, this is an average of 30 patients a day per doctor, which compares very favorably with averages in the region, ranging from 5 to 15 visits per doctor. Although there is no tangible evidence showing a reduction of illness episodes and disability as a result of ESRDF investments, the response of 80% of those interviewed by the 2002 Beneficiary and impact assessment, confirmed that because of ESRDF-financed health subprojects, malaria

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had been significantly reduced, while 50% mentioned tuberculosis and 30% pneumonia. While the impact of sanitation subprojects is less positive, it does not affect the overall rating of this subcomponent. At ICR, most of the latrine facilities visited was unclean, mainly because of lack of water supply, and when clean it was because they were not used, confirming a general trend in village latrines subprojects in most developing countries. Often, the potentially positive impact on public health conditions of urban drainage subprojects visited by the ICR team was limited by design problems and by the fact that the resources available were not sufficient to address some broader technical issues, typically downstream of the subproject.

Primary Education. This subcomponent supported (i) the rehabilitation, expansion, or construction and equipping of primary schools, based on accepted Government standards and using simple technologies, and (ii) adult training (literacy, business, etc.). Most of the associated recurrent costs (96%) were the responsibility of the government. Overall rating of this subcomponent is satisfactory.

Outputs: The SAR estimated that US$26.80 million would finance 340 schools of which 238 were Primary village schools (PVS). At ICR, ESRDF had disbursed US$60.49 million to finance 850 schools (510 PVS, 140 complete primary schools, and 200 other educational infrastructures) and 461 subprojects for training and literacy services (total of 1,311 education subprojects). At SAR, new facilities were estimated to add each year 108,000 children to educational enrolment, i.e. about 5 percent of the primary school population. At Supplemental credit the total number of children benefiting from ESRDF schools was reassessed at 2,233,569. At ICR, this figure was of 2,058,353 (92% of the target at supplemental), supporting access to primary education to more than 157,000 annually (45% more than SAR estimates).

Impact: From 1996/97 to 2001/02, the total number of Ethiopian primary education establishments increased of 1,690 units, of which 850 were financed by ESRDF, about 50% of new establishments. ESRDF investments in education contributed to the increase in Ethiopian primary enrolment ratio, which rose from 35% in 1996/97 to 62% in 2001/02 (compared to a target of 50% set for the period). ESRDF has also contributed to the national goal of increasing the share of girls in primary schools to 45% by 2001/02. While this target has not been reached, the percentage of girls has increased from 36% in 1996/97 to 41.2% in 2002/03. ESRDF contributed substantially to this increase: the 2002 Beneficiary and impact assessment estimated that 47.9% of students in ESRDF schools were girls, while the national average at that time was 38.5%.

Rural Water Supply. ERSDF financed water-supply subprojects to raise the health standards of rural communities and reduce the burden on the population in fetching water. RWS subprojects were to promote the use of low-cost and simple-to-maintain technologies. Recurrent costs related to the provision of water-supply scheme were to be financed by user fees collected and invested by community Water users associations. Overall rating of this subcomponent is moderately satisfactory, mainly because the initial target was not reached and maintenance arrangements were not always fully satisfactory.

Outputs: The SAR anticipated that ESRDF would invest US$75.04 million to finance 13,035 Rural water supply schemes, of which 8,913 hand-dug wells (68.4%), 1,492 spring developments (11.4%), and 2,630 shallow boreholes (20.1%), providing safe water to 3,381,500 people (15 litres a day per person). At ICR, US$28.11 million had been disbursed to finance 2,492 subprojects, benefiting 3,056,158 people. Out of a sample of 2,286 subprojects (91% of RWS completed), 38.7% were hand-dug wells, 23.3% were spring developments, 19.6% were shallow boreholes, 6.8% were drilled boreholes and distribution, 6.0% were other subprojects, and 5.3% were the schemes abandoned because of wrong site selection, subsequent lack of water and in some cases failed design (percentage is within international standards). The significant shift in number and type of RWS subprojects can be explained by (i) technology choices, as hydro

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geological conditions proved to be more challenging than expected, not allowing simple technologies such as hand-dug wells, (ii) a higher than expected demand of communities for relatively sophisticated technologies, even when conditions allowed for simpler technologies, (iii) low capacity in implementing and utilizing more complex schemes such as motorized boreholes powered by diesel generators and with a distribution system, and (iv) ESRDF limited success to contract out to local partners RWS subprojects, to NGOs especially, despite several attempts to reach and sensitize NGOs. At Supplemental credit, the number of RWS to be completed by end of Project was reassessed at 1,713, indeed a more realistic figure, with 3,924,726 beneficiaries. Quality of simple RWS was satisfactory, but with increased complexity the quality of execution and of maintenance suffered.

Impact: The impact of new RWS has been remarkable, especially in reducing workload to collect water and in improving the quality of drinking water with a positive impact on general health conditions of beneficiaries. According to a 2000 ESRDF report, the average time saved to collect water from ESRDF financed RWS, was of 1.5 hour per day (ESRDF, An Impact Assessment of Social Infrastructure and Rural Water Supply, Nek International Consultancy, July 2000). 80% of the women interviewed by the 2002 Beneficiary impact assessment had improved considerably their employment opportunities because of time saved after the new RWS was operating. According to the same report, more than 60% of beneficiaries confirmed that the new RWS had significantly reduced water-borne diseases in the community.

Small Scale Irrigation (SSI) - Water Catchment Treatment (WCT). This subcomponent was to help poor farmers overcome water constraints to production by securing a sufficient supply of water for cultivation and livestock, hence improving food security. The initial focus was on schemes promoting the use of traditional technologies suited to local management. Overtime, ESRDF was to introduce and adapt modern technologies. This subcomponent also financed WCT as part of a broader strategy to address issues of water scarcity and soil degradation. Safeguards on riparian waters, limited the number of regions eligible for SSI investments to five (Tigray, Amhara, SNNPR, Oromiya and Dire Dawa). Overall rating of this subcomponent is moderately satisfactory.

Outputs: The SAR anticipated that US$74.95 million would finance earth dams and river diversion schemes providing irrigation to 18,715 hectares of arable land, with related additional production and income for 87,844 households or 439,220 people. At ICR, this subcomponent had disbursed little more than US$18.06 million on 163 subprojects (120 SSI subprojects with distinct command area and 43 subprojects in SSI-related study, design and capacity building subprojects and on other activities). SSI subprojects provided irrigation to 9,355 hectares of arable land (6,331 hectares with new schemes and 3,024 through the upgrading of existing ones), benefiting around 40,000 households or 165,000 people. This shortfall is due to (i) the limited outsourcing of design and construction to the private sector, mainly because of its structural weakness, (ii) the capacity limitation of public agencies when later they became the implementing agencies of SSI schemes, (iii) the lack of heavy duty machinery when needed, and (iv) an overall bias (both supply and demand driven) which encouraged relatively complex schemes instead of traditional ones, which were on balance easier to design, implement and maintain. Water catchment treatment subprojects supported 52,305 hectares. The SAR had no specific target for WCT subprojects.

Impact: A 100% increase in farmers’ revenues is a conservative estimate of the impact of SSI on economic conditions of beneficiaries. In all SSI schemes (i) cropping seasons are now two (in some cases three); (ii) preference is given to high cash crops such as onions, garlic, lentils and tomatoes; and (iii) productivity per hectare and per season has increased considerably (in some cases of 40%). As a result, families have improved their social conditions: they have bought water pumps, milk cows, radio and TV set, they have sent regularly their children to school, have opened bank accounts and made investments in grain mills,

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shops, in cattle or in a pair of oxen to intensify land use. Scheme design, civil works and hardware investments are on balance of good quality. Concerns expressed with regards to a potential increase of malaria prevalence as a result of potential mosquitoes’ breeding grounds created by new SSI schemes, were addressed by ESRDF through awareness campaigns. The rare cases requiring a focus on resettlement issues, such as the Tebi Dam in Amhara, were handled in ways that met the Bank safeguards standards. The economic impact of WCT was also relevant and helped to reduce soil degradation and increase water availability for irrigation.

Income Generating Activities (IGA). During Project implementation, with the support of the Bank, ESRDF launched a pilot to support village level microfinance organizations that would serve communities as a source of microcredit. The IGA scheme was based on the following principles: i) targeting beneficiary groups with good relationships with ESRDF, (ii) counterpart financing from beneficiaries of at least 10% of the micro loan, (iii) repayment of the loan and initial grant to be capitalized in a newly established Savings and Credit Association; and (iv) targeting communities where no MFI services were being provided. The first phase of this subcomponent is rated unsatisfactory. while the second one is still under implementation and rating is not available.

Outputs: A total of 112 income-generating subprojects were approved for implementation, most in agriculture and petty trade. Total financing was approximately US$340,000.

Impact: The program went through two phases: during the first one, only 15% of the principal and interests was paid back by beneficiary groups, mainly because of poor compliance with IGA principles and low capacity to run the schemes; a second phase was started in July 2004 (and is still on-going) based on the experience of the first one and with greater support by ESRDF. Although it is too early to make an assessment of the second phase, there is field evidence that i) repayments are on schedule and between 70-90%, (ii) IGA are having a positive impact on the economic conditions of beneficiaries: after repayments, the margins at Edget Betiret – Amhara cattle fattening scheme were of 10-30% per animal; the 15 IGA in Oromiya generated Birr 330,000 as additional income after repaying Birr 708,000 (72% of the loan); women at the Ashebaka sheep rearing scheme (Oromiya) had been able to pay back their loans, buy more sheep, repay other loans, purchase fertilizers and food even during droughts; at the Agiudom poultry IG scheme (Tigray), margins on loan after repayment were estimated at 500% a year.

Woreda Development Fund (WDF). Under the WDF, Woredas submitted to the ESRDF Regional Office (RO) annual work plans and budgets of subprojects identified in a participatory manner. ESRDF RO would then transfer a block grant (up to Birr 1.5 million) to the Woreda Council which would then transfer it to communities to finance subprojects. The beneficiary communities would manage the entire subproject cycle. The scheme included capacity building activities at Woreda and community levels. Overall rating of this subcomponent is highly satisfactory.

Outputs: Birr 49.03 million (US$5.62 million at the exchange rate of 8.65 Birr per US$), were disbursed under this subcomponent. The WDF was started in 1999 as a pilot in four Woredas. It was then expanded to 56 Woredas selected from all regions but Afar and financed 824 subprojects. WDF has financed subprojects in education (25% of a sample of 362), Health and sanitation (19%), RWS (28%), Agriculture activities (17%) and other activities (11%). The WDF piloted activities such as non-formal basic education, community health services run by agents, small-scale community nurseries, community libraries and farmers training centers.

Impact: The general conclusions on impact under the regular ESRDF apply to WDF. However, WDF subprojects were smaller in size, less expensive, and cofinanced by community at a level of 15% (against

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8.5% in regular ESRDF operations). These factors have improved community ownership, subproject quality, their level of maintenance, and ultimately their social and economic impact. The institutional impact of WDF is significant because of its overall consistency and synergy with the Government decentralization program.

ESRDF-Emergency Recovery Project (ERP). ESRDF was given the responsibility to implement the reconstruction of some components of another Bank project, the ERP, in the areas affected by the 1998-2000 Ethio-Eritrea conflict. Financing was provided for the reconstruction of community infrastructure in the Tigray and Afar regions, and in support of returning displaced people and refugees in the Afar region. Overall rating of this subcomponent is moderately satisfactory.

Outputs: Out of the ESRDF-ERP allocation of Birr 150.2 million, Birr 101.26 million were either disbursed or transferred to regional ESRDF offices for disbursement (67.5%), approximately US$12 million. A total of 523 applications were approved and transferred for implementation, 458 in Tigray and 38 in Afar. At ICR, 400 subprojects were under completion, well above the 280 subprojects identified at appraisal, and 123 were transferred to other agencies for completion or had been terminated, mainly in the RWS sector (for reasons such as well drying up or unfavourable geological conditions). In Tigray, out of the 370 subprojects under completion, 47 were primary schools, 56 in Health and Sanitation and 261 in RWS. ESRDF-ERP also supported the clearing of debris at the severely destroyed town of Zalambessa. In Afar, out of 30 subprojects, 14 were primary schools, 9 were in health and sanitation, and the rest in agriculture and in other sectors. In Afar, ESRDF-ERP also assisted IDPs with agricultural/income generation support and household rehabilitation.

Impact: Expectations are that the PDO of the ERP project will be achieved by closing date (December 31, 2005). Despite some delays in this subcomponent, as of March 2005, 90% of the displaced persons have returned to their homes and farms. The reconstruction of homes, businesses and community infrastructures in Zalambessa is underway, but still far from completion. In ERP there was no requirement for cash or in kind contributions by communities and this has limited their level of participation, ownership, and the quality of M&O which was on balance lower than under regular ESRDF.

Other subprojects. The SAR, also envisaged subprojects in areas such as rural and feeder roads, grain storage facilities, other agricultural subprojects and natural resources management, depending on the needs expressed by communities. 3% of total expenditures, US$5.6 million, financed subprojects in these sectors. The limited field evidence available on the impact of these subprojects, shows an increase of farmers' incomes and improvements in environmental conditions, as a result of cash for work implementation subprojects, of schemes to cut, carry and deliver wood for domestic uses, and of soil conservation and afforestation investments . The limited availability of data on this subcomponent hinders our ability to rate it.

Component 2. Welfare Monitoring System (WMS). Moderately Satisfactory.

Activities financed under this component were grouped under two main categories: (a) Supply of relevant data to be collected by the Central Statistical Authority (CSA); (b) coordination of the overall poverty analysis and preparation and dissemination of relevant reports, carried out by the Welfare Monitoring Unit (WMU). At appraisal the cost estimate of this component was of US$3.13 million, with significant support by the Norwegian cooperation. At ICR disbursement was of US$3.49 million.

a) Data collection. Satisfactory.

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Under this subcomponent, CSA carried out all the envisaged data collection activities and also carried out an additional Household Income, Consumption and Expenditure (HICE) survey and a Core Welfare Indicators Questionnaire (CWIQ) pilot survey. Overall, since 1996, the CSA has carried out two HICE surveys and four Welfare Monitoring surveys. Quality of data is good and significant improvements have been achieved throughout the program’s life-cycle, especially in terms of reduced time gap between data collection activities and the release of survey reports. Furthermore, although there is room for improvement, especially in terms of integration of different data sets, the consistency in data collection approaches during Project life allows for comparisons over time of key indicators. On the other hand, availability of a database system as part of a broader data dissemination policy is an area in need of improvement.

b) Coordination of poverty analysis, preparation and dissemination of reports. Moderately Satisfactory.

Between 1996 and 2000, Project performance under this subcomponent was unsatisfactory, affecting the overall rating of the component. During this period the only noticeable contribution was the preparation of the ‘Poverty Situation Report’ (1999) based on the 1995/96 HICE and WM surveys. The Sustainable Development Poverty Reduction Paper (SDPRP) process, launched in 2000, has been managed by the WMU, which since then has produced many more reports and has significantly improved teh performance of this subcomponent. However, this subcomponent did not prepare a national poverty map, as required under the Supplemental credit and the number of national and regional workshops to disseminate existing information on poverty organized during the Project life was below expectations (only four in 9 years: one in the period 1996-2000, and three in the period 2001-2004). Despite these shortcomings, the rating of this subcomponent is Moderately satisfactory, as the WMU showed during its second phase a strong commitment to improve its performance, has delivered on main outputs, and has re-established the role and status of the WMS after a very weak first phase.

Table 2: Reports after 2002 - WMU

Date Report March 2002 Development and Poverty Profile of Ethiopia April 2002 Patter of Growth and Inequality in Ethiopia. Which Way for a Pro-poor Growth? 2002 SDPRP – Design of the SDPRP ,matrix and updates July 2002 SDPRP – Coordination and final report July 2003 SDPRP- Progress Report 2002/03 July 2004 SDPRP – Progress Report 2003/04 2004 Participatory Poverty Assessment – Study Proposal 2004 Sectoral MDG Assessment Studies – Coordination Sources: WMU – 2005

Component 3. Capacity Building, Training and Research. Moderately Satisfactory.

This component was designed to support community members, CPC, facilitators, local agencies and the ESRDF in subproject selection, implementation and management, operations and maintenance of completed subprojects (such as training of water caretakers and pump operators), basic procurement and accounting skills, and training on specific subjects such as environmental protection.

Outputs: At appraisal the cost estimate of this component was of US$18.3 million, and at ICR it was of US$20.06 million, of which US$12.00 million for training programs and US$8.06 million for vehicles. Since 1996, largely with the support and collaboration of UNDP, ESRDF has financed 854 activities on TCB. This compares favorably with the target of 275 TCB subprojects as discussed in the Supplemental

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credit and less favorably with the number of total beneficiaries to be targeted by the component (314,179 against 2,010,200). Out of the total, 402 activities were targeting communities, 161 were ESRDF staff training events, 87 were studies, manuals, surveys, and action oriented research initiatives, under a specific Study fund allocation. Finally, under this component, the Project financed ESRDF and partner institutions in purchasing office/IT and field equipment, furnishing, surveying instruments, vehicles and in some cases laboratories and related materials.

Impact: ESRDF made a significant contribution in building capacity at the national and regional level, and in supporting the diffusion of a Community Driven Development culture. With ESRDF, a significant number of managers were trained and got direct exposure to field work. Two shortcomings can be mentioned.

(i) Despite the significant role that ESRDF had in improving community sensitization and in training caretakers of completed subprojects, Bank supervision continuously and systematically emphasized the need to (a) undertake training of water caretakers, water users, and users of other infrastructure well before the completion of the subproject; (b) carry out periodic reviews of performances of trained CPC members; and (c) upgrade the skills of CPC/WUA members, water caretakers and other operators. On these recommendations, follow-up activities were limited and their impact is hard to detect.

(ii) TCB activities were unable to balance the level of capacity of the various Regional offices and more broadly the capacity of local public and private partners in subproject implementation. During Project implementation, this has affected the disbursement performance of ESRDF, especially its balance among regions. It was at Project completion only that ESRDF managed to disburse almost in full the Credit resources.

4.3 Net Present Value/Economic rate of return:Although the SAR calculated the ERR and the Project NPV for subprojects in five sectors (basic health, basic education, rural water supply, urban sanitation, and small scale irrigation), the Supplemental credit dropped both ERR and NPV requirements. But also before then, soon after implementation started, Bank supervision concurred on the futility of some of these calculations, especially in health and education. The ICR does not attempt to recalculate the ERR for the following additional reasons: i) lack of data on direct returns generated by subprojects, for example in terms of reduced number of sick days per patient; ii) lack or irrelevance of data on regional shadow wages and other monetary indicators, as communities are based on predominantly non-monetary economies; and iii) methodological constraints in aggregating regional indicators at the national level. Under Annex 3, this ICR has a cost-benefit analysis which comes to the following conclusions:

Operational costs of ESRDF are within acceptable limits in relation to similar bank-financed lsubprojects (roughly 10% of total costs);ESRDF subprojects were more cost-effective than non-ESRDF subprojects (cost per m2, quality, lcompletion time, and targeting of remote communities);SSI and RWS were cost-effective. However, in SSI this was especially the case of simple upgrading of lexisting schemes. In RWS, cost-effectiveness is reduced by overexploitation and limited water availability;Costs per unit were in line with similar subprojects in other countries.l

4.4 Financial rate of return:The SAR approaches the issue of Project financial savings under a section on cost savings for the Government, which at completion were projected to be in the order of US$46 million. At ICR they were of

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US$33 million, 28% less than SAR estimates. However, savings as a percentage of total costs are 22% both at appraisal and completion, although as a result of different cost savings by sector and of lower resources disbursed by the Project.

Table 3: ESRDF Savings - Estimates SAR ICR Sector Cost

US$m Es. Cost saving %

Community cont. %

Savings US$m

Cost US$m

Es. Cost saving%

Community cont. %

Savings US$m

Educ. 27.0 10 10 5.40 56.2 4.5 8.5 7.3 Health S 31.2 10 10 6.02 37.5 4.5 8.5 4.8 SSI 75.0 15 10 18.75 17.0 23.5 11 5.8 RWS 75.0 12 10 16.50 25.5 43.1 8.5 13.1 Total 208.2 46.67 136.2 31 Note: On calculations see Annex 3.

4.5 Institutional development impact:Considering the significant amount of resources that were invested in capacity and institutional building, the institutional impact of ESRDF was modest.

The Project created two new institutions: ESRDF, under the direct responsibility of the Prime Minister; and the Welfare Monitoring Unit (WMU) under the Ministry of Finance and Economic Development (MOFED). Well into Project implementation, oversight of ESRDF was transferred to the Vice-Prime Minister and Minister of Agriculture. This latter arrangement did not seem to work that effectively, and ERSDF lost its previously high status within the public administration. Especially during the first years of Project implementation, this status had allowed ESRDF to have easy access to and timely feedback from all ministries and agencies.

Under ESRDF, the Project established and equipped 15 offices in the country (11 regional offices, 3 sub-regional offices and one at federal level). Under such a decentralized structure (with Regional Steering Committees and regional technical and administrative offices), ESRDF worked in coordination with regional offices, regional technical bureaus, and representatives of line ministries, thus strengthening local institutions. ESRDF also strengthened the private sector, although to a limited extent.

The Project impact on Ethiopia statistical institutions and capacity was relevant. The CSA was strengthened by the Project, which also inspired a new law strengthening the overall institutional framework of statistical activities in Ethiopia. The WMU is now fully in charge of the SDPRP process. ESRDF established and strengthened grassroots organizations such as CPC (approximately 4,000 were established), Water Users Committees (2,000), Water Users Associations (120) and Saving and Credit Associations. However, the extent to which such institutions are still operational and effective is unclear. In some cases, these institutions were actively engaged in submitting new subproject proposals and in supporting their implementation. In other cases their efficiency is questionable as they were unable to continue the work initiated with the support of ESRDF, often because of the departure of key members of the Committee, lack of follow-up on capacity building, economic and legal limitations in the collection of funds, and other external factors such as displacement or droughts.

ESRDF also had a role in supporting the decentralization process in Ethiopia, whereby regions and Woredas have played an important role in prioritizing local economic and social priorities, and in implementing and financing subprojects. With the Woreda Development Fund, ESRDF supported the

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decentralization, and prepared operational manuals and guidelines to be used at the local level to plan and finance community development. While other World Bank financed projects have internalized these approaches, the systemic impact of such process is modest.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:5.1 Factors outside the control of government and implementing agency:

The Project had to operate in a context of very scarce capacity, especially in some regions. Private lcontractors were few and with limited equipment.The donor community responded extremely well to the need of coordinating efforts and cofinance the lProject. Outside factors such as droughts and the deterioration of terms of trade, affected the overall economic lcontext and reduced the impact of the Project.

5.2 Factors generally subject to government control:Government’s policy on decentralization supported the overall ESRDF approach to community ldevelopment. The SDPRP provided a framework to WMS to put its experience and resources at best use. lLack of action on recommendations to: (a) reallocate funds among regions, once it was clear that some lof them were not able to disburse while other regions had fully used their allocations; (b) prepare, discuss, share and agree on a clear exit strategy for ESRDF and to best use its experience, know-how, and assets. Slow and limited action to increase ESRDF salary levels and to address the issue of professionals lquitting or not joining the institution.

5.3 Factors generally subject to implementing agency control:Delays in implementation, especially during the first two years, also due to the fact that ESRDF was lunable to attract and retain qualified staff. Limited emphasis in capacity building activities in regions with weaker overall capacity such as lSomali, Dire Dawa, Harari and SNNPR.Limited action in strengthening inside capacity to implement gender strategies.lVery slow start up of the WMU, also as a result of lack of adequate management commitment.l

5.4 Costs and financing:At SAR, estimates of total Project costs were of US$242.40 million of which US$120.00 million from the credit, US$61.80 million from donors, US$36.35 million as Government’s contribution, and US$24.25 million as communities’ contributions.

During Project life the following events and decisions had a direct impact on funds availability:

Due to the depreciation of the SDR to the US$, the Project suffered substantial exchange rate losses, lwhich as of April 30, 2002 totalled US$13.4 million.On December 31, 2001, IDA cancelled US$11.5 million of the credit proceeds, because of overall low ldisbursement of regions with weak capacity in particular.At the end of 2000, US$17.5 million from the ESRDF credit were earmarked to finance recovery needs lof war affected Woredas in Tigray and Afar (ERP).On February 19, 2004, the Board approved a Supplemental credit of US$28.3 million to finance about l840 ongoing subprojects, retention fees for about 860 completed subprojects, and the completion of activities under the WMS component. The Supplemental credit replenished the Bank’s support to the

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Project at its original level of US$120 million.

As of March 2005, Donor cofinancing of the first and third components was of US$50.10 million (The Netherlands US$22.76 million, Italy US$9.54 million, Belgium US$5.46 million, UNDP/NORAD US$10.24 million, and Norway US$2.59 million) mainly to finance civil works, equipment, capacity building and technical assistance. A Norwegian contribution co-financed the Welfare Monitoring System in the amount of US$2.1 million. Donor resources were channeled through six trust funds and by direct contributions to the project (UNDP). Government contribution was US40.08 million, 60% higher than SAR estimates and was provided in a timely manner. Community contributions (US$14.50 million) were on average 8.5% of total cost (see Table 3, Annex 3) and were 60% lower than SAR estimates although, in many cases, the amount contributed was far more than the required percentage. (For example, to allow trucks to reach the subproject site, some communities built the entire access road which was then not accounted for. Contributions were undervalued because there was no systematic method for assessing the value of community contributions.).

At the time of ICR preparation -- March 2005 -- of the US$120 million Bank support to the Project (original and supplemental credit), US$ 111.2 million had been disbursed, i.e. 92.6%.

6. Sustainability

6.1 Rationale for sustainability rating:The SAR discusses sustainability of (i) the ESRDF mechanism and (ii) ESRDF financed subprojects.

i) The SAR strategy was to rely on the decentralization of the ESRDF mechanism to regional management and mainstream it into regular operations. To some extent this has happened, through the implementation of the WDF and the collaboration among ESRDF, Regional districts, and regional technical bureaus. However, this was more the result of ESRDF commitment, than of a clear strategy on the side of the Government to mainstream the resources and experience of ESRDF. Moreover, achievements under the WDF were limited to 3% of total resources.

ii) At the subproject level, sustainability was to be reached by: Community ownership. This was significant, although the percentage of subprojects initiated by lcommunities was 78%. In some areas, such as SSI, subprojects were originated by regional bureaus more than by communities, and this was reflected in design which was often too complicated for community M&O. Only in little more than 50% of subprojects, implementation was managed directly by communities. Community contributions. At ICR, contributions by communities were 8.5% of total costs, below l10% although under the WDF they were up to 15% (but 0% in ERP). Screening at appraisal. The documentation reviewed by the ICR team reveals compliance with lappraisal and sustainability criteria (number of beneficiaries, user fees arrangements, sustainability analysis of SSI and RWS subprojects). Technical quality was good as assessed by the 2002 Beneficiary and impact assessment, supervision (64% of subprojects) and at ICR (majority of approximately 90 subprojects visited).Provisions for maintenance. Subprojects were approved by the Regional steering committee, lmade also of main sector heads who endorsed the recurrent cost implications for their ministries. Although not always efficient, handing-over agreements were signed and local committees in charge of M&O (and of collection of fees) were in place.

From these findings, the rating on sustainability for both i) and ii) remains uncertain. In fact, under i) a

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valid argument can be made that ESRDF has indeed formed the nucleus for a more efficient local development process. However, it is uncertain how this nucleus can be sustained and nurtured over time, since the Government is unlikely to continue the ESRDF mechanism or to mainstream it in a systematic way in local institutions. Sustainability of achievements under ii) is also uncertain. In fact, beside the mixed picture as described above, the single most serious challenge to subproject long-term sustainability remains the weak follow-up given to community capacity building activities on M&O, especially of RWS and of community infrastructure in which the involvement of communities is key for long-term sustainability (Health and Sanitation, SSI). Most likely, subprojects will suffer from limited technical training update and follow-up, from insufficient support to the creation of a culture of preventive maintenance, and by limited if no legal right for CPC to collect fees to finance M&O.

In fact, capacity building is where sustainability of the ESRDF mechanism rejoins the discussion on sustainability of subprojects. By mainstreaming the ESRDF approach at the regional level (and/or by transforming ESRDF in a TA-TCB agency), local governments and technical departments could have had a tool to address the issue of capacity for subproject sustainability in an efficient, targeted and systematic way. But this has not happened. Moreover, because of the different sector mix of subprojects, total recurrent costs for the Government are estimated to be at least 34% higher than SAR estimate, in Education 47% higher, and in health 33%. (Annex 3).

While sustainability of achievements under component 1 and 3 are uncertain, sustainability of achievements of the second component (WMS) is likely, as they will be consolidated beyond Project life. Despite the unsatisfactory performance in implementing its mandate during initial years, the WMU is now fully committed to deliver on its mandate through Participatory poverty assessments (PPA), field work, selection and training of researchers, preparation of annual progress reports and of sectoral MDG Needs Assessments. The CSA has been strengthened considerably by the Project in terms of analytical tools, skilled and better trained human resources (a study tour to other statistical agencies in Africa was financed by the Project), and equipment. The Project has also improved CSA approaches to data collection and dissemination. These achievements will stay with CSA, and will actually be reinforced by the new Statistics Act, approved by Parliament in March 2005, which has confirmed the role of CSA in data collection and dissemination and has reinforced its institutional framework by introducing a federal Statistics Council. The WMU and the CSA have jointly prepared a five-year strategy which has received the full support of the GOE and a Project agreement was signed between MOFED and the Development Assistance Group covering the period 2004-2009.

Because of the preponderant importance of subcomponents 1 and 3 over subcomponent 2, the overall assessment of the Project sustainability remains uncertain. However, such rating is not listed as an option in the ICR guideline and the ICR team has concluded to rate sustainability as unlikely.

6.2 Transition arrangement to regular operations:No specific transition arrangements are foreseen for the ESRDF component of the Project. The WDF is having a positive impact on how resources are allocated and spent at the Woreda level. However, the WDF has operated in 56 Woredas only and has invested 3% of total ESRDF resources.

Specific transition arrangements for the WMS component are in place: current and future operations of the WMU are part of the overall strategy of the MOFED which is committed to support it financially, in terms of capacity, and providing appropriate visibility and leverage. CSA is a well established institution, to which international experts often refer to as one of the best statistical offices in Africa. CSA has fully absorbed the analytical tools developed or introduced by the Project, in particular the Household Income, Consumption and Expenditure Survey, the Welfare Monitoring Survey, and other survey instruments.

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7. Bank and Borrower Performance

Bank7.1 Lending:Lending: Satisfactory.The Bank dialogue with the Government has been fruitful, has leveraged on the experience gained with ESRF, but was often hijacked by considerations of a political nature such as balancing resource allocations among regions. At Project design, a full subcomponent on microcredit was designed, but was then dropped because of significant differences between the Borrower and the Bank on issues such as interest rates and repayment policies. An IGA subcomponent was later financed under a pilot scheme. Outreach to the donor community was remarkable and helped involve donors in all phases of Project design and implementation. The Bank team provided critical inputs to the borrower, and addressed complex legal issues such as those related to the use of international water resources. On the number of subprojects to be implemented, the Project was too ambitious, considering the very weak capacity in the country, the novelty of the approach in some regions, and the extreme diversity among them. These considerations should have suggested a more flexible approach in project design. However, the Project team was under considerable pressure to support the completion of project preparation according to the indications and needs of the Government, also to the sacrifice of greater Project flexibility and simpler design. To a great extent such pressure was the result of a growing interest on Ethiopia, of realistic prospects of a strong reengagement in the country by the international community in general and by the Bank in particular, and by the huge development challenge which was (and is) Ethiopia; one of the largest, most populous, and poorest countries in Africa.

7.2 Supervision:Supervision: satisfactory.During Project life - especially from effectiveness to MTR – the supervision missions were frequent, well organized, and with an adequate skill mix, although they were made difficult by the Project complexity and by the high geographical dispersion of subprojects. The dialogue during implementation was on balance fluid although at times it became tense, as when the Bank recommended increasing salaries and benefits of ESRDF staff to address the issue of staff retention. Other issues such as compensation of all resettled people from the Tebi Dam were timely identified and solved, in compliance with Bank safeguards.

On balance, Bank resources were adequate with a good mix of expertise and a good balance between staff from HQ and from the resident mission. AMs and PSRs (23) were accurate and consistent. However, on two instances, rating could have been more accurate: PSRs should have rated as high, or at least substantial, the critical risks of Retaining high calibre staff in ESRDF, instead of modest; and all PSRs, but the last one, have rated as Satisfactory the Safeguards Management and Compliance, although since the first PSRs, Bank staff signalled the need to complete the Safety dam and Resettlement audits. The Safety dam audit was delivered only at the very end of the Project while the Resettlement audit was never delivered.

MTR was well prepared, all partners and donors were involved, documentation was accurate and most studies and assessments requested were available and of good quality. The MTR mission devoted considerable time and effort to addressing procurement, disbursement and MIS issues.

Issues of sustainability of ESRDF mechanism and of M&O capacity building activities at the community level were detected early on in Project implementation and were also raised by the QSA in September 2000. Gender focus of the Project and of subprojects did not receive similar attention during supervision and monitoring on progress of this issue could hardly be found in supervision Project documents. With the benefit of hindsight, oversight of capacity building activities in weak regions should have been

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strengthened.

Supervision of the WMS was satisfactory. This component has been correctly rated unsatisfactory until June 2001, because of slow delivery of the agreed outputs under the WMU managed subcomponent and the unsatisfactory level of capacity that it built. It was after the end of 2000 that the subcomponent started making significant progress, since the WMU was staffed at a more appropriate level and the WMU was designated as focal point for the SDPRP process and from that point onwards the Bank team upgraded the rating of this component to satisfactory.

7.3 Overall Bank performance:Satisfactory.

Borrower7.4 Preparation:Satisfactory.

The Project benefited from strong borrower’s ownership at the highest levels of Government. Technical staff of the Ministries of Finance and Economic Development, Agriculture, Water Resources, of other ministries, and of donor agencies and other partners was actively involved in Project preparation. In this context, the experience gained under the pilot ESRF program was of great help. Major differences of opinions between the Government team and the Bank on IGA and on related interest rates policy led to drop this component. Different legal interpretations of the International water safeguards, led to extensive negotiations between the Bank, the GOE, and some neighboring countries, which delayed project approval.

7.5 Government implementation performance:Moderately Satisfactory.

The borrower regularly provided counterpart funds and showed strong commitment to the ESRDF component. However, the Government was repeatedly asked to revise the reallocation formula of ESRDF’s funds and to commensurate the transfers to regions to their absorptive capacity. But results of the Bank and of donors' efforts on this score were limited. Moreover, the Government did not offer any clear and formal indication on the future of ESRDF, leading to a deterioration of the overall working environment in ESRDF and making many staff leave ESRDF well before completion, especially the most competent and experienced one. During the final phase of the Project, relations between ESRDF management and the supervising Government authority – the Ministry of Agriculture – were not always that conducive in finalizing a strategy to utilize at best the capacity and expertise of ESRDF after Project closing.

The commitment of the Government on the WMS was weak during the first period of the Project. It was only after 2000, as the SDPRP agenda picked up, that the Government – through MOFED -- provided the adequate support to WMS. The new context which emerged from the launching of the SDPRP, improved the status of the WMS and was a contributing factor in enhancing its capacity to provide timely analysis for policy decision-making.

7.6 Implementing Agency:Satisfactory.

ESRDF showed strong commitment throughout Project implementation, with dedicated staff and management. On balance, reports were prepared on time, with the exception of some audits, specifically

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the Dam safety audit and the Resettlement audit. Moreover, while most regions delivered good and on time reports, others were behind schedule or unable to provide them, for example on procurement (Somali). The MIS provided information on process and output indicators, but less than 50% of the post-completion reports were inputted in the system. Possibly, a stronger focus on gender issues, also by reinforcing the unit responsible for such activities would have helped mainstreaming on a more systematic and strategic way gender issues into subprojects. Similarly, on capacity building, ESRDF could have taken more measures to ensure high quality of community management of the entire Project cycle. (Such as simplifying technical and cost standards, breaking down subproject components for easier management, using local techniques, updating of skills of care-takers, strengthening users associations on M&O, etc.). ESRDF Central Office could have played a more active role in encouraging innovations from the field, support field staff to test new ideas, and encourage more learning between regions.

Despite these shortcomings, the performance of the implementing agency of components 1 and 3 is rated as satisfactory, considering the complexity of the Project, the limited capacity, and how ambitious the Project objectives were, especially in terms of number of subprojects under subcomponents RWS and SSI.

The performance of the WMS was moderately satisfactory. While CSA performed at a satisfactory level, supporting the program in all its aspects, the performance of the WMU was less satisfactory, especially during its first period from effectiveness till 2000. Lack of commitment in delivering the outputs as agreed in Project documents, very weak capacity, and lack of commitment in strengthening it have hampered the WMU’s work especially during its initial years.

7.7 Overall Borrower performance:Satisfactory.

8. Lessons Learned

Following are some of the many lessons one can draw from the Project.

Project targets must be realistic and design must be simple and flexible. Social Funds should set realistic targets in terms of total number of subprojects to be completed by end of Project. Moreover, their design must be as simple as possible and should not be overburdened by too many indicators. MIS should place less emphasis on quantitative/process aspects and more on information on quality/impact also to capture the views of beneficiaries. SF should have the flexibility to link fund allocations to capacity and performance of regions, especially in decentralized and highly diversified country contexts such as Ethiopia. Timely and appropriate capacity building support is key to subprojects implementation and sustainability. Capacity building should anticipate all phases of subproject implementation, should be both demand and supply driven, should have a strong focus on maintenance and operations, and should be updated regularly. Investments in regional public and private capacity should come prior to investments in subprojects and should be relatively higher in weakest regions. Moreover, capacity development should build on indigenous strengths and local dynamics, paying attention to informal institutions as well.

Gender promotion requires strategic and sustained approaches. In contexts where cultural beliefs and attitudes are a significant impediment to the promotion of women, particularly at village level, gender approaches need to be realistic, gradual and strategic, and be continuously supported by dedicated units within the implementing agency – both at the Central and regional levels -- focusing specifically on gender issues.

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Income generating activities are fundamentally different from social sector activities and require different approaches. Income generating activities, such as SSI or Microcredit activities, are fundamentally different from social infrastructure subprojects and their implementation requires a shift of emphasis from a “beneficiary culture” to a “business culture”. SSI and Microcredit activities should be governed by business agreements between partners (Water bureaus with Water user associations or ESRDF with Microcredit associations) rather than by an agency-beneficiary partnership relationship, as in the case of health and education subprojects. This requires a different approach by the implementing agency and suggests that SSI and microcredit activities should be kept as a separate component in SF or be a separate project all together.

Timely dissemination of economic and data analysis is essential. The WMS component, shows that although difficult, it is possible to create a good information and monitoring system on welfare and poverty in a country with limited capacity. However, data access and dissemination should be given strong attention. Increased access to and usage of data by a broader audience can avoid duplication of efforts, lead to effective demand-driven data collection and analysis, and increase capacity to use data in policy-making.

Parallel structures are efficient, but transitional in nature. Parallel governmental structures such as ESRDF, are efficient mechanisms to finance and implement local projects and to foster community participation in local development. Compared to line ministries and to local government authorities, the raison d' être of such parallel structures lies in their strong capacity, their overall high efficiency, on a different set of staff incentives, and on their ability to introduce new and successful approaches to development. However, their nature is transitional. The context in which they operate is one of emergency, when statuary institutions are fragile and the country needs are unprecedentedly high. When successful, social funds are able to mainstream their experience in regular institutions, and to phase out their activities in planned and efficient ways.

Exit strategies require careful preparation and overall agreement between partners. Mainstreaming in local administration and transformation in Capacity Building/TA agency are two viable options. Both require extensive preparation, definition of criteria and parameters, flexibility in approaches and coordinated and coherent action on the side of all donors and partners.

9. Partner Comments

(a) Borrower/implementing agency:The Borrower has submitted two completion reports which are presented in slightly edited versions, as Annex 11 and Annex 12. One is a report prepared by ESRDF on the first and third components. The other one is a joint report prepared by the WMU of MOFED and the CSA on the second component.

The overall assessment of the first and third components is consistent with the ICR. The report states that the Project has created access and improved quality of infrastructures/services, it has build and strengthened grassroots capacity through support to the implementation of TCB activities, and has played an influential rule in disseminating participatory development approaches among the general public. The ESRDF’s report cites a number of challenges faced by the project, including: slow progress in accepting and internalizing ESRDF’s procedure and approaches; low capacity at all levels; and shortage of funds and lack of capacity in ESRDF to respond to and process all funding requests received. The report has a section on lessons learned emphasizing the advantage of subprojects initiated by communities (strong ownership, reduced costs, high sustainability); the importance of local selection of member of CPC; the fact

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that CDD approaches can reach remote areas more efficiently than other approaches; the importance of community level capacity building; the need to addressing community problems in an integrated approach, and the importance of introducing participatory review and evaluation processes that can generate feedback on design of other subprojects.

The second report describes the activities financed by the Project under the second component, the establishment of the Welfare Monitoring System, through the Welfare Monitoring Unit and the Central Statistical Authority. On WMU, the report acknowledges that until 1999 generating standard indicators of poverty and welfare of national scope has not been possible. It was only after 1999/2000 that the WMU started delivering on some of the main outputs, such as the “Poverty Situation Report” (March 1999) and more importantly the activities after 2002 linked to the SDPRP. The report does not mention that on selected outputs such as a Poverty map or more frequent activities for dissemination of data and reports, this component has delivered in part only.

The report also describes the activities of the CSA and how Project resources have been used to increase the number, quality, and coverage of the Household Income, Consumption and Expenditure Surveys, and the Welfare Monitoring Surveys. In conclusion the report makes the judgment that this component has been a success.

(b) Cofinanciers:Cofinanciers have actively participated in all phases of the ICR and share its main conclusions.

(c) Other partners (NGOs/private sector):

10. Additional Information

None

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Annex 1. Key Performance Indicators/Log Frame Matrix

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SAR Supplemental ICR

(i) Number of subprojects 13,800 3,650 5,6791 Rural Water Supply 13,035 1,713 2,492 Education 340 909 1,311 Health and sanitation

357 68

702 1,159

Small scale irrigation (Hectares)

NA (18,715)

114 (NA)

163 (9,355)

Other2 NA 212 554 (ii) Completed subprojects with satisfactory technical quality rating

NA NA 64%

(iii) Number of beneficiaries reached (approved subprojects)

7,075,720 23,031,531 19,167,884

Rural Water Supply 3,381,500 3,924,726 3,056,158 Education 108,000 2,233,569 2,058,353 Health and sanitation

3,000,000 147,000

13,474,552 11,348,487

Small scale irrigation 439,2203 231,342 164,4104 Other5 NA 3,167,342 2,540,476 (iv) % of female beneficiaries 51%6 45%7 49.6% (v) Average total community investment as percentage of sub-project costs

10 6.7 8.58

(vi) Number of TCB subprojects NA 275 854 (vii) Number of beneficiaries trained NA 2,010,200 314,179 (viii) % of female trained to total NA 41.14 NA Sources: SAR – From the Staff Appraisal Report; Supplemental -From Schedule F of the Supplemental Credit document; ICR - From ESRDF Contribution to the ICR – February 2005

1 Total number of subprojects completed or under completion (transferred to implementation). The number of subprojects completed as of February 2005 was 5,212. 2 Subprojects in Natural resources conservation, agriculture, income generating and other sectors. 3 87,844 households, with an estimate of 5 people per household. 4 Approximately 40,000 households, with an estimate of 4.1 people per household. 5 See note 2. 6 Based on the SAR objective that subprojects were to benefit women especially. 7 Based on an estimated number of female beneficiaries of 10,382,487. Ratios by sector were as follow: RWS 55%, Education 50%, Health and Sanitation 50%, SSI 10%, Others 10%. 8 Based on disbursements as of March 3, 2005: Communities’ contributions of US$14.50 million on a total of US$170.4 million for Social and Economic Infrastructure and Services. The ESRDF contribution to the ICR, indicates a percentage of 10% although total expenditures by sector (excluding TCB, IGA, ERP and the community contribution) were of Birr 1,189.54 million, while community contributions were Birr 102.34 million, i.e. 8.6%, of total costs, which is consistent with the calculation in US$ terms.

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionRural Water Supply 75.04 28.11 37.5Small-Scale Irrigation 74.95 18.06 24.2Health and Sanitation 31.03 39.87 138.2Education 26.80 60.49 225.7TA/Training and study fund 13.14 12.00 91.3Welfare Monitoring 3.13 3.49 111.5Equipment/Vehicles 5.16 8.06 156.2Operating Costs 13.15 21.92 166.6Woreda Development Fund 0.00 5.62 0Emergency Recovery Project 0.00 12.26 0Income Generating Activities 0.00 0.30 0Others 0.00 5.62 0

Total Baseline Cost 242.40 215.80Total Project Costs 242.40 215.80

Total Financing Required 242.40 215.80

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 84.20 66.29 0.00 150.49(0.00) (51.67) (21.00) (0.00) (72.67)

2. Goods 11.58 19.67 16.74 0.00 47.99(11.58) (10.00) (15.00) (0.00) (36.58)

3. Services 0.00 0.00 25.61 0.00 25.61(0.00) (0.00) (5.59) (0.00) (5.59)

4. Miscellaneous 5.16 0.00 0.00 0.00 5.16Office Equipment/Vehicles (5.16) (0.00) (0.00) (0.00) (5.16)5. Miscellaneous Operational Costs

0.00(0.00)

0.00(0.00)

0.00(0.00)

13.15(0.00)

13.15(0.00)

6. Miscellaneous 0.00(0.00)

0.00(0.00)

0.00(0.00) (0.00)

0.00(0.00)

Total 16.74 103.87 108.64 13.15 242.40(16.74) (61.67) (41.59) (0.00) (120.00)

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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 93.58 38.73 0.00 132.31(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 0.00 6.05 5.27 0.00 11.32() (0.00) (0.00) (0.00) (0.00)

3. Services 0.00 1.10 2.81 0.00 3.91(0.00) (0.00) (0.00) (0.00) (0.00)

4. Miscellaneous 0.00 0.00 0.00 0.00 0.00Office Equipment/Vehicles (0.00) (0.00) (0.00) (0.00) (0.00)5. Miscellaneous Operational Costs

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

6. Miscellaneous(0.00) (0.00) (0.00) (0.00)

0.00(0.00)

Total 0.00 100.73 46.81 0.00 147.54(0.00) (0.00) (0.00) (0.00) (0.00)

1/ Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.3/ The table does not include operating costs and vehicles. The exchange rate applied to contracts varies significantly from the time the project was commenced until it was completed. According to ESRDF, the exchange rate varied from 7.00 to 8.66 Birr for one US dollar. Discrepancies between disbursement figures and the figures in this table are due mainly to such fluctuations.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

IDA Govt. CoF. IDA Govt. CoF. IDA Govt. CoF.Social and Economic Infrastructure and Services

102.30 16.58 73.05 105.70 12.79 52.00 103.3 77.1 71.2

Capacity Building 16.50 6.50 10.20 2.47 7.09 10.50 15.0 109.1 102.9Welfare Monitoring System

1.20 0.12 2.80 1.19 0.11 2.10 99.2 91.7 75.0

Operating costs 0.00 13.15 0.00 1.84 20.09 0.00 0.0 152.8 0.0Total 120.00 36.35 86.05 111.20 40.08 64.60 92.7 110.3 75.1

The latest estimate of cofinancing by communities of the first component is of US$14.5 million (US$24.25 million appraisal), while donors cofinancing was of US$37.50 million. Cofinancing of remaining components was entirely by donors ( US$12.60 million) bringing total donor cofinancing to US$50.10 million.

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Annex 3. Economic Costs and Benefits

This Annex is divided into three sections. Section 1 addresses some cost-efficiency issues; Section 2 has some estimates on cost savings for the Government as a result of ESRDF; and Section 3 estimates the impact of subprojects on recurrent costs.

1. Subprojects cost-efficiency issues

The ICR has a broad assessment of the ESRDF cost-effectiveness.

- Operational costs at appraisal. One way in which cost-effectiveness is measured is by analysing the ratio between operational costs and total expenditures. The SAR estimated operational costs at 5.4%, a percentage which was at the low end of the experience in operating costs of large Social funds. At Mid term review, the average operational costs were estimated at 10.29% of total costs, but with major variations among regions (Beninshanghul-Gomez was at 20.4%, Dire Dawa 19.73%, Harari at 19.72%, Afar at 19.13%; at the other extreme, Amhara had operational costs of 4%, Oromiya 5.27%, and Tigray 6.08%). Operating costs ended up at US$21.92 million which on a reduced total disbursement of US$215.88 is equivalent to 10.15%. This performance is within acceptable limits in relation to similar Bank-financed subprojects.

- Comparison with non-ESRDF financed subprojects (Health and Education). The 2002 Beneficiary and impact assessment analyzed costs issues and compared ERSDF subprojects with non-ESRDF subprojects (schools and health centers). According to that study, direct costs per square meter of ESRDF financed social infrastructure subprojects were 4.5 % lower than those of non-ESRDF financed subprojects (Birr 1,124 /m2 against 1,174/m2). Cost-effectiveness was also assessed on the shorter completion time of ESRDF subprojects (10 months compared to 13 months for non-ESRDF subprojects) and quality of subprojects, which was rated as good for ERSDF subprojects and fair for non-ESRDF subprojects. These findings are even more relevant considering that the average distance from the main road or center of ESRDF subprojects sampled by the report was of more than 50 km against 10km of non-ESRDF subprojects.

- SSI and RWS. All three types of irrigation system financed under the SSI (upgraded schemes, new schemes, rehabilitation of “modern” schemes) are cost effective, while upgrading seems to top the other two because investment is less and yields are likely to be higher during the first few years after subproject completion. Most of RWS schemes are used by a much higher number of beneficiaries than originally planned, at times up to four times, such as in some RWS visited in the Tigray region. Although from a pure cost-benefit point of view, this can be seen as a positive development – in Tigray, on a sample of 101 shallow drilled boreholes and hand pumps cost per beneficiary was 8.95US$ against 22.04US$ at appraisal -- a much higher number of beneficiaries raises issues of overexploitation of water resources and of reduced water availability per person (from 15 liters to 6 liters a day). No.

Compl. Beneficiaries Beneficiaires/

Project Cost/Benefic.

Birr Cost/Benefic.

US$ Litres avail.

/Benefic. Actual/ 101 87,233 864 75.92 8.95 6.0 Appraisal/Design 101 35,350 350 187.35 22.04 15.0 Sources: ICR – AM – Annex 10. Exchange rate Birr 8.48/1US$

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- International comparison. At ICR, costs per unit were in line with similar subprojects in other countries. For example, in Tigray the average cost for a primary village school (1 building four classrooms, 1 administrative building with pedagogic center, latrines, fence, flag pole) was Birr 421,000, US$48.000 at 1US$/8.6Birr rate, which compares well with costs of similar structures in other countries. International experience indicates that for simple RWS facilities costs should be at US$25 pr user. In the case of ESRDF, cost per user per RWS varied significantly, from US$8.95US$ to US$22.04, hence below or in line with experiences in countries such as Tanzania or Ghana. In the case of SSI, there is a lot of variation depending on the technology used.

SSI Technologies Total Hectare Total Households Cost/HectareUS$

Cost/HouseholdUS$

Upgrading tradional SSI

4,079 14,575 864 242

New Construction 2437 8605 2,151 609Rehabilitation of modern SSI

1,680 5,330 198 62

Sources: ICR AM – Annex 5. Figures are averages for the five regions: Tigray, Amhara, SNPPR, Oromiya and Dire Dawa.

ESRDF cost per hectare in the upgrading of traditional SSI was at US$864 (US$242 per household), in the case of rehabilitation of modern schemes the cost per hectare was of US$198 (US$62 per household), and in the case of new construction the cost was of US$2,151 per hectare (US$609 per household). All these costs are fully acceptable, internationally speaking,

2. Government cost savings estimates

In section 4.4 of this report there is the following table:

Table 3: ESRDF Savings - Estimates

SAR ICR Sector Cost

US$m Es. Cost saving

%

Community cont. %

Savings US$m

Cost US$m

Es. Cost saving%

Community cont. %

Savings US$m

Educ. 27.0 10 10 5.40 56.2 4.5 8.5 7.3 Health 31.2 10 10 6.02 37.5 4.5 8.5 4.8 SSI 75.0 15 10 18.75 17.0 23.5 11 5.8 RWS 75.0 12 10 16.50 25.5 43.1 8.5 13.1 Total 208.2 46.67 136.2 31

Table 3 ICR figures are calculated as follows:

SSI Community contributions are based on SSI average total costs and community contributions for limplementation of SSI subprojects during four years 1997-2001. Community contributions for other sectors are average contributions as calculated at ICR. lCost savings on schools and health centres/posts are based on 2002 Beneficiary and impact l

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assessment. Cost savings for RWS were calculated considering that a realistic number of beneficiaries of RWS was lin the order of 40% of the total number of recorded beneficiaries, and that the cost per beneficiary was on average (for the three technologies, Hand-dug wells, Spring development and Shallow drilled wells) of US$14 per beneficiary (compared to an estimated cost at appraisal of non-ESRDF financed RWS of US$24.64).Estimates on SSI cost savings are based on comparisons of average costs of most simple schemes l(15,000 Birr at SAR and 10,166 at ICR, and the more complex ones 30,000 Birr at SAR and 25,305 Birr at ICR. In the first case the average saving is 32%, in the second is 15% with a median value of 23.5%).

3. Recurrent costs

Because of the different sector mix of subprojects, the recurrent costs for the Government are estimated to be at least 34% higher than those calculated at SAR, 47% in the Education sector, 33% in health. These ratios are underestimations as: i) they do not take into account salary increases from 2000 to 2005, ii) in SSI and RWS, the bias has been towards design and technologies requiring more intensive financing from the government than from communities; iii) they assume that the recurrent cost to infrastructure ratio has remained unchanged during almost ten years, while quality standards have improved and now require higher recurrent expenditures.

Table 4: Impact on recurrent costs (in US$ million)

SAR ICR Subp. Gover. Comm. Total Subp. Gover. Comm. Total Education 340 2.99 0.11 3.1 650 5.7 0.21 5.91 Health 357 1.53 1.59 3.12 535 2.29 2.38 4.67 Irrigation Ha

18715 0.77 1.56 2.33 Ha 9,355 0.38 0.77 1.15

RWS 13,035 0.22 2.63 2.85 2,492 0.04 0.50 0.54 Total 5.51 5.89 11.4 8.41 3.86 12.27 Sources: SAR and AM-ICR

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation05/23/1994 NA

Appraisal/Negotiation01/15/1996 NA

Supervision

07/17/1996 5 Health Specialist (RM) (1);Accounting & Auditing Spec (1);Proc. & Disb. Officer (1);Sr. Loan Officer (1);HR Impl. Spec (1);

S S

11/07/1996 7 Social Sector Spec (1);Task Team Leader (1); Acctg & Auditing Spec (1); Procur. Spec./Anthropo. (1);Disbursement Officer (1); Irrigation Specialist (1);Monitoring Specialist (1)

S S

01/27/1997 8 Social Sector Spec. (1);Task Team Leader (1); Economist (1); Irrigation Specialist (1);Disbursement Officer (1);Environmental Spec (1);Monitoring Specialist (1); Water Supply Spec (1)

S S

05/02/1997 3 Agricultural Spec (1);TTL/Impl. Spec (1);Program Officer (1)

S S

10/20/1997 10 Economist/General (1);Operations Analyst (1);Environmental Spec (1);Social Fund Expert (1);Agricultural Spec (1);TTL/Implem. Spec (1);Water Supply Spec (1);Irrigation Engineer (2);Health Specialist (1)

S S

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05/02/1998 16 Reg. Proc. Adviser (1);TTL/Implem. Spec (1);Agricultural Spec (1);Water Supply Spec (1);Environmental Spec (1);Health Specialist (1);Disbursement/Procurement (1);Information Specialist (1);Operations Analyst (1);Economist (1);Irrigation Engineer (2);Gender & Comm. Part (1);Rural Water Supply Eng. (1);Financial Management (1);Statistician (1)

S S

11/17/1998 12 TTL/Operations Spec (1);Agric/Irrig Team Leader (1);Operations (1);Education (1);Water Supply (1);Training (1);Health Specialist (1);Gender/Community (1);Statistician (1);Financial Specialist (1);Irrigation Engineer (1);SSI Engineer (1)

S S

12/01/5999 9 Mission Leader (1);Rural Water Supply Eng (1);Irrigation Engineer (1);Informatics Spec. (1);Communication Spec (1);Operations Officer (2);Gender Specialsit (1);Principal HD Spec (1)

S S

04/26/2000 6 Operations Officer (1);Financial Officer (1);Procurement Officer (1);Health Specialist (1);Lead Specialist (1);Principal Statistician (1)

S S

06/30/2000 9 Mission Leader (1);Rural Water (1);Informatics (1);Procurement (1);Consultant Rural Water (1);Mission Ldr., Irrigation (1);Consultant Dams (1);

S S

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Consultant Bio Resources Engineer (1);Sr. Advisor Income-Gen (1)

12/22/2000 11 Team Leader (1);Sr. Operations Officer (1);RWSS Team Leader (1);Sr. Health Specialist (1);Lead Statistician (1);Financial Management (1);Consultant WMS (1);Connsultant RWSS (1);SSI Team Leader (1);Consultant DAMS (1);MIS/Informatics (1)

S S

12/22/2000 9 Team Leader (1);Sr. Operations Officer (1);RWSS Team Leader (1);Health (1);Lead Statistician (1);Financial Management (1);RWSS Consultant (1);Poverty Monitoring Cons. (1);Small Scale Management (1)

S S

06/01/2002 11 Team Leader (1);Sr. Operations Officer (1);Small Scale Irrigation (1);Rural Water Supply (2);ERP/Welfare Monitoring (1);Consultant (1);Financial Management (1);Operations Officer (1);DAM Specialist (1);Environmental Spec (1)

S S

ICR02/22/2005 12 Sr. Oper. Officer/TTL (1)

Operations Officer/TTL (1)Sr. Operations Officer (1)Sr. Social Protection (1)Sr. Finan. Magmt. Spec. (1)Procurement Specialist (1)Sr. Health Specialist (1)Sr. RWS specialist (1- CTF)Sr. SSI specialist (1-CTF)Sr. Economist (2 - Donors)Sr. Gender specialist (1-CTF)

S S

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(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation NA 122,449.19Appraisal/Negotiation NA 759,107.28Supervision NA 1,103,502.40ICR 12 75,000Total NA 2,060,005

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

Lending: Moderately Satisfactory

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

Government implementation performance: Moderately Satisfactory

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Annex 7. List of Supporting Documents

Bank preparation documents

- Pre-Appraisal mission terms of reference, Aide-Memoire and Back to Office report. World Bank- Appraisal mission terms of reference, Aide-Memoire and Back to Office report, World Bank- Staff Appraisal Report, World Bank. March 1996- Proposed Supplemental Credit, Report P7505-ET, November 22, 2002

Bank project implementation documents

- 23 Project Status Reports (PSR). World Bank. 1996-2004- Aide-Memoires of Supervision missions. World Bank- Mid-Term Review- Relevant Letters from World Bank to ERSDF or Ministries

Other project implementation documents

- Operational Manual- Handbooks- Development Credit Agreement (DCA)- Amendments to the DCA- Project notes

Main documents prepared by the borrower during implementation

- Annual reports of ESRDF, various years, ESRDF- Construction quality and O&M evaluation of Rural Water Supply Sub-projects financed by ESRDF, Continental Consultants, March 15, 1999- Evaluation of construction quality and cost effectiveness of Social Infrastructure Sub-projects of ESRDF, GBA Consulting Engineers, April 26, 1999- Revising the existing organization structure and job description of each post, Vision Consultancy, November 17, 1998- Environmental impact assessment on projects funded by ESRDF, Ethio-Forest Agricultural Consulting Service Centre, June 7, 1999- Reviewing the existing MIS and prepare a plan for information system and networking structure of ESRDF, Vision Information and computer service, December 14, 1998 starting date- Assess and monitor the need for micro finance in Ethiopia to prepare a handbook for implementation of the micro finance program and prepare a training material and conduct training for trainers, African Business and Development Consultants, July 10, 1997- Preparation of water supply handbook, Carl Bro International, December 10, 1996- Training need identification analysis of ESRDF, Progress Management Consultants Crown Agents, February 1997- Preliminary assessment and needs analysis of ESRDF training and capacity building component, Progress Management Consultants, June 1996- Preparation of operational manual (handbook) for Health and education sub-projects of ESRDF, Ethio Education Consultants, December 1997- Evaluation of ESRDF’s TCB performance and impact assessment, Tropics Consulting Engineers, 75 days October 1999

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- Maintenance service of computers and networking, Micro Sun & solution consultants, December 31, 1998- Impact assessment (social) of projects financed by ESRDF, NEK International Consultancy, April 1999- Environmental impact assessment on projects funded by ESRRDF, Ethio-Forest Consultancy, August 1999- Assessment of procurement activities (procurement Audit), Partners information consultancy- Review of Financial Manual and procedure of ESRDF, Excellent Management and Accounting Consultancy, February 2000 (completion)- Impact assessment of the ESRDF, GBA Consultancy ltd., June 2002- Evaluation of ESRF pilot phase project and assessment of impact on beneficiaries and sustainability of assets created with ESRF support, Metaferia Consulting Engineers, April 1998 (completion)- ESRDF’s SSI projects (gravity) technical handbook preparation, Continental consultants plc in association with consulting Engineers Service Plc., November 1997- Preparation of W.D.F. Guidelines, Afri-Tech PLC & Excellent Management, July 2003- Assessment of Community Capacity created through ESRDF’s subproject, B&M Development Consultants PLC, December 2004- Assessment of Model Water Projects Financed by ESRDF, Iyob Management Consultant, November 2004

Other documents

- Ethiopia: Toward Poverty Alleviation and a Social Action Program. World Bank, 1993- Country Assistance Strategy, Various years, World Bank- SDPRP, Government of Ethiopia, 2001

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Additional Annex 8. ICR - Workshop - Addis Ababa - March 7, 2005

Program

8:30 - 9:00 Registration9:00 - 9:10 Welcome9:10 - 9:30 ESRDF Presentation on performance 9:30 - 10:00 ICR objectives - Some thoughts on the overall context - ICR process10:00 - 10:30 Gender issues and questions10:30 - 11:00 Break11:00 - 11:30 Health and Education11:30 - 12:00 Discussion12:00 - 12:30 Rural Water Supply and questions12:30 - 13:30 Lunch13:30 - 14:00 Welfare Monitoring System presentation and questions14:00 - 14:30 Small Scale Irrigation systems and questions14:30 - 15:00 Income Generating activities and questions15:00 - 15:30 Lessons learned and questions15:30 - 16:00 Concluding remarks

Workshop conclusions

On March 7, 2005, ESRDF organized a workshop to discuss the main findings from the ICR mission led by the World Bank. The Workshop was chaired by Dr. Aseffa, General Manager of ESRDF. Representatives of the donor community (the Netherlands, Italy, Norway, and China), NGOs, line ministries and ESRDF regional and central staff attended. More than 60 participants discussed the main findings of the World Bank mission, in particular on the following issues: Targeting, Gender, Impact, Community participation, Sustainability, Compliance with safeguards, Capacity building. The focus was also on Health, Education, Rural Water Supply and Sanitation, Small Scale Irrigation Systems and Environment, Income Generating activities. One session discussed the Welfare Monitoring System component. The main conclusions of the workshop are as follow:

1. ESRDF achieved remarkable results, with an impressive economic and social impact on the lives of millions of Ethiopian. Moreover, the project has successfully introduced the notion of community participation as a viable and efficient approach to social and economic development. On balance ESRDF, CSA, and – during its second phase only – WMU have performed satisfactorily and at an acceptable level of efficacy.

2. Specific findings of the Workshop were:

Targeting and Economic and social impact were seen as satisfactory, also considering the lack of 1.specific targeting tools and delays in building up capacity.Gender and capacity building issues were thought to be areas in which improvements could have 2.benefited the project, essentially by making these issues more visible and strategic (gender) and more sustainable and targeted to regional needs (capacity building).On community participation and sub-projects sustainability, the workshop felt that significant 3.progresses were made under ESRDF, but that sustainability of subprojects’ arrangements was linked to the extent to which ESRDF community approaches were mainstreamed in regular regional activities, in

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new projects, and as part of the overall capacity building approach. From this perspective, findings differed widely from region to region.

3. ESRDF has built significant capacity at both the regional and national level, by developing technical and managerial expertise, networks and procedures and by operationalizing them in community development, although with some differences between regions, and with limited impact on the private sector. Considering that (i) in Ethiopia capacity is limited, that (ii) new projects for poverty reduction are being launched by the Ethiopian government (with support from donors and international institutions), and (iii) that such projects are in many cases based on community participatory approaches, the workshop and all donor representatives concluded that ESRDF expertise should not be lost and should be used efficiently in on-going and future development projects.

List of Participants

Sr. No.

Name Region Organization Position

1 A. Mohammed Harar ESRDF R. Manager2 Abebaw Kebede Amhara ESRDF SSI Team Leader3 Afework G/Egziabher Central Office ESRDF DGM4 Amsalu Asfaw SNNPR ESRDF A/Head5 Andria Senatori Italian Cooperation Head6 Aragaw Haile Somali ESRDF RWS Expert7 Arif Abdlahafiz Dire Dawa ESRDF RM8 Aster Stephanos Addis Ababa MOARD H. PDD9 Bent Kjellerup World Bank Consultant

10 Berhanu Tusho Addis Ababa ESRDF-CO SE11 Betseu Elias SNNPR ESRDF PO12 Biresaw Sime Dire Dawa Manager13 Biruk Regassa Central Office ESRDF Adm. & Gen./Sec14 Camilla Valmarana Italian Cooperation Consultant15 Endeshaw Tadesse World Bank Operations Officer16 Ephrem Legesse Addis Ababa Ministry of Water R. Geologist17 EspenVillanger WB mission18 Fikru Dibissa Addis Ababa CSA Head, Dep.19 G. Nicolay Helvels Director 20 Gebeyehu Bizuneh Central Office ESRDF SSI Team Leader21 G. Okubagzhi World Bank Sr. Health Specialist22 Geert Diemer World Bank Consultant23 Geremew Sahilu Central Office ESRDF Advisor 24 Getachew Adem MOFED Head, WMU25 Getahun Gebru Addis Ababa World Bank Sr. Op. Officer26 Getahun W/Meskel Addis Ababa ESRDF S. Expert27 Girma Shegute Federal ESRDF WDF-IG T. Leader28 Girma TS Central Office ESRDF Expert

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29 Giuseppe Zampaglione World Bank Sr. Op. Officer30 Hans Raadschilders Netherlands Emb. First Secretary31 Kedir Gelchu Oromia ESRDF Head, SRO 32 Kendie Bizuneh Addis Ababa ESDD Manager33 Legesse Geda Oromia ESRDF RM34 Likezhen Chinese Embassy 3rd Secretary35 Mack Omud Addis Ababa ESRDF Gambella36 Melka Beyene Addis Ababa Water Action PO-Officer37 Merid Atnafu Central Office ESRDF RWS Expert38 Mesfin Assefa Central Office ESRDF Sea Expert39 Meskele Berhan M. Federal ESRDF FE40 Mulugeta Itilaf Central Office ESRDF PPS Head41 Negussie Bekele Addis Ababa ESRDF Manager42 Nurehi Abidulahi Harrari ESRDF SCR-43 Pim de Keizer NL MOFA Ss Pol Adv.44 Rahel Wegayehu UNDP P.A.45 Samantha de Silva World Bank Sr. SP Specialist46 Samuel Eshetu Central Office ESRDF SI Senior Expert47 Shewadeg Molla Central Office ESRDF MIS-Head48 Solomon Kebede Central Office ESRDF FATL49 Tarekegn Anteneh Central Office ESRDF MIS Expert50 Tenaye Assefa Addis Ababa MOE Expert51 Tesfaye Desta Central Office ESRDF DGM52 Teshome Nebi Afar ESRDF PO53 Teshome Zegaye Amhara ESRDF Office Head54 Tizita Jemberu Addis Ababa MFA Expert55 Tsegaye Berhane Addis Ababa Member of House R. Rural Development56 Vibeke Munk Petersen World Bank. Consultant57 Wondwessen Taffera Central Office ESRDF Team Leader58 Yazachew H/Mariam Federal FMOH Expert59 Yifred Kassa B. Gumuz ESRDF B/G Ro Head - SI Dept

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Additional Annex 9. Context Overview

The objectives and design of the Ethiopian Social Rehabilitation and Development Fund (ESRDF) are discussed here in the context of the overall economic, institutional, and social conditions prevailing in Ethiopia during the Project life, which spanned from July 1996 till December 2004. In broad terms, the period covered by the Project can be divided into three phases:

1996-1997. During this phase, the Government pursued the reform agenda launched in 1991, after the Ethiopia Peoples’ Revolutionary Democratic Front (EPRDF) assumed power. The focus was on the reform of the agricultural sector, on opening up to the private sector and to its increased role in the economy, on liberalization of most prices and trade, and on a massive cutting back of defence expenditures which benefited social sectors and other pro-poor expenditures. During such period, the fiscal deficit fell from 8.5% of GDP in 1991-92 to about 2% in 1997-98. To a large extent, the ESRF and the ESRDF were a direct result of the strong commitment of the Government on a renewed and progressive structural reform agenda.

1998-2000. The momentum of reforms was interrupted by the outbreak of the border conflict with Eritrea in May 1998, which strained public finances, reduced donor support, and reduced capital expenditures and transfers to the regions for anti-poverty programs. Military expenditures rose from the 1996-97 level of 2.5% of GDP, to 8.7% in 1998-99, and 13.3% in 1999-00. Consequently, capital expenditures slipped from 10.4% of GDP in 1996-97 to 6.7% in 1999-00. The economic, humanitarian and social impact of the conflict on the two most affected regions, Tigray and Afar, was devastating. The total number of IDPs in the two regions was 364,000 and 110,000 Ethiopians returned from Eritrea. 36,000 Ethiopian war casualties were bread winners, and about 144,000 people were directly relying on their incomes. An estimated US$200 million of public infrastructure has been destroyed and damaged by the conflict.

2001-2004. Soon after the end of the war with Eritrea, the Government put in place a demobilization, emergency humanitarian needs and reconstruction plan. And resumed its economic reform program, strengthened its commitment to poverty reduction, and embarked on a program of rapid devolution to regional districts, and subsequently to woredas. In July 2002, the Government finalized its Sustainable Development and Poverty Reduction Program (SDPRP) centred on a three-pronged strategy: build a free market system; reduce food aid dependence, and step up the pace towards reaching the MDGs.

During Project life, there were two years of unforgiving drought (1997 and 2002) which created severe food shortfalls. In addition to the conflict with Eritrea, the deterioration in international terms of trade (which can be summarized in falling prices of Ethiopia’s main export, coffee, and rising bill of imports such as oil), and the AIDS epidemic (with a 6% prevalence in 2002) had a cumulative negative impact on the economic and social situation of Ethiopia.

ESRDF was one of the largest social funds projects financed by the World Bank in Africa, and came at a time when the discussion on the impact and economic benefits of SF was particularly lively among development experts and practitioners. The discussion benefited from lessons learned from a first generation of Social funds, and Project design was challanged by traditional approaches to social service delivery and infrastructure financing through line ministries, which also challenged the validity of community approaches on the basis of economic and financial indicators. To a great extent this explains why the Project had rather detailed estimates on some economic and financial indicators, although during project preparation it was clear that calculating a full economic rate of return would not be possible given the demand-based nature of the project and due to problems in aggregating data from different regions.

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Additional Annex 10. Targeting

The correlation between distribution of subprojects by region and poverty levels, is significant. According to the combined Household Income, Consumption and Expenditure (HICE) and Welfare Monitoring survey (WM) results, in 1999/2000, in Tigray, 61% of the people were living in absolute poverty, 56% in Afar and 54% in Benshangul-Gumuz. Harare region had the lowest poverty incidence followed by Dire Dawa and Addis Ababa (25.8%, 33.1% and 36.1% respectively). However, if total population is considered, then the regions with the highest number of poor are Oromiya and Amhara, followed by SNNPR and Tigray. Gambella and Harare are the regions with the lowest number of poor. The table hereby compares the ranking of the regions by number of poor and by number of ESRDF subprojects. There is consistency at the two extremes: among very poor regions (Oromiya, Amhara, Tigray and SNNPR) and among less poor regions (Harare and Gambela).

Region Head Count Index

1999/2000

N. of poor(in 000)

Ranking by Number of Poor

Subprojects by Region

(%)

Ranking by Number

SubprojectTigray 61.4 2,459 4 15.1 3Afar 56.0 728 7 2.8 9Amhara 41.8 7,385 2 27.0 1Oromiya 39.9 9,733 1 21.0 2Somali 37.9 1,516 5 4.4 7Benis. G. 54.0 313 8 4.9 6SNNPR 50.9 6.966 3 9.4 4Gambela 50..5 115 10 1.9 11Harare 25.8 45 11 2.5 10Addis Ababa 36.1 983 6 3.5 8Dire Dawa 33.1 118 9 7.2 5Sources: ESRDF, 2005 and SDPRP 2002

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Additional Annex 11. ESRDF Contribution

1. BACKGROUND

The Ethiopian Social Rehabilitation and Development Fund (ESRDF) is one of the institutions established on February 1996 (Proclamation No. 19/1996) to implement community-based poverty reduction programs throughout the country. The ESRDF is as an expansion (to all regions of Ethiopia) of the pilot Ethiopian Social Rehabilitation Fund (ESRDF) implemented in three regions (Addis Ababa, Tigray and South) from 1992-1995 as component of the Emergency Recovery and Reconstruction Program (ERRP). A program financed by the World Bank and other donors was under implementation since July 1996. This program, as per the Development Credit Agreement (DCA) is closed on December 31, 2004. In the past years of its operation, the ESRDF has provided financial, technical and capacity building support to the construction, rehabilitation and upgrading of several community-based projects that addressed priority needs of mainly the rural poor. It has successfully contributed to poverty reduction effort in Ethiopia. This is, therefore, an implementation completion report prepared to meet World Bank's requirement. The report is comprised of 10 sections that review ESRDF's performance against its development objectives of ESRDF, design and other success parameters as indicated in the SAR and in the OM.

2. DEVELOPMENT OBJECTIVES AND DESIGN OF ESRDF

2.1 Development Objectives: The overall development objective (DO) of the ESRDF is to provide the poor, mainly rural communities the assests and services needed to improve their economic and social standards (SAR 1996). In order to attain this overall DO, ESRDF was assigned specific development objectives (Operational Manual of ESRDF-June 1996). An OM describing ESRDF's operational policies, its working mechanism/standard procedures and the project cycle was developed for the ESRDF before operation started. The OM is part of the establishment operation. All involved including implementing agencies are expected to strictly adhere to and apply it uniformly. Generally, the ESRDF is compatible with most policies and strategies formulated even long after its commencement and its experience has been useful in their design (example is the water policy and sector program). It is considered as one of the response mechanisms to vulnerability at both household and community level in the Sustainable Development Poverty Reduction Program (SDPRP). As a rural focused program and as it strives to build grassroots and institutional capacity the ESRDF is fully in harmony with the rural developmentand capacity building strategies. It does not only conform, but serves as alternative means to implement several government reform measures and programs i.e. sector, decentralization and food security programs.

2.2 Design (Operational Modality) of ESRDF: The ESRDF is designed to operate as a Social Investment Fund (SIF) in all regions of the country considering existing government structure. Its mission is to provide mainly funding support to poor communities (rural poor and women) for the construction, expansion and up-grading of basic social and economic infrastructure/services in which they are willing to invest. Intervention areas focusing on basic-services were identified and selected as a start-up menu i.e. small-scale irrigatrion, rural water supply, primary health, basic education and training and capacity building. With the demand of communities, agriculture, natural resource management, income generation and other types of projects were also added to the list. As a funding agency, ESRDF promotes and applies bottom-up and participatory approach. Support from ESRDF is given up-on request/demand for sustainable and cost effective development initiatives. Besides, ESRDF promotes integration and partnership among stakeholders in addressing needs of the poor. In light of this, ESRDF does not involve itself int he identification of project ideas and does not prescribe projects from top. Unless it is necessaqry and delegated, ESRDF does not act as implementing agency. ESRDF's responsibility revolves mainly around promotion, appraisal, financing and monitoring implementation of funding requests it receives from

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the beneficiary communities themselves and/or their development partners. In order to increase participation of communities and reduce the capacity gap ESRDF is also expected to provide technical assistance and capacity building support.

An organizational structure with a decentralized management system and functional/sector arrangement was introduced to facilitate speedy provision of technical support to needy communities and regions with weak capacity. As per the operational manual, the ESRDF has a National Board (NB) and Regional Steering Comittees (RSC) to oversee implementation of the ESRDF and administer its operations at federal and regional level, respectively. At the grassroots level community project committees (CPCs) are organized to ensure representation of beneficiary communities. In the process of accomplishing its mission, the ESRDF is expected to operate with Low administrative and operational cost ranging between 10-15% of the total program budget.

3. ACHIEVEMENT OF OBJECTIVES AND OUTPUTS

During the past eight years, ESRDF has attempted to fulfill the DOs assigned to it. The ESRDF has provided financial and technical support for the implementation of 5,679 community initiated projects. With these projects, it has created access to and improved the quality of infrastructure/services. Moreover, it has build and strengthened grassroots capacity thorugh support to the implementation of 854 training and capacity building interventions. ESRDF has played an influential role in disseminnating and instilling participatory development and importance of cost sharing among the general public. In general, the ESRDF has performed well in glimmering hope to the poverty ridden and miserable life of millions of poor people by providing basic infrastructure and services. As stated by GBA in the impact assessment,"..., ESRDF's physical performace can be judged as more satisfactory....". Contribution of ESRDF's intervention has been considerable in improving access to basic-infrastructure/services and changing quality of life of poor people. This was confirmed by the beneficiary communities in their response to B&M Development Consultants who conducted capacity assessment"... 91.1% of the total respondents stated that they have got now better access to basic- services as a result of ESRDF's intervention in their locality."

3.1 Access to Basic Social Services: About 13,406,840 people (appraisal estimate) are expected to benefit from 1,311 education, 1,159 health and sanitation projects. This is higher by 386% and 270% from the estimated target in the Staff Appraisal Report (SAR) i.e. 425 health and 340 Education. Major reasons for the increase are high community demand, availability of standard design and relatively better presence/capacity of contractors. Since the education facilities are focusing mainly on primary schools and the rural set-up, they have given to multitude deprived school aged children the chance to attend modern education. Construction of the facilities around the villages or inthe vicinity encouraged many families to send their children and in particular girls to school. Thus, contributing towards increase in primary enrollmetn ratio and reducing drop-out rates. The GER in Ethiopia increased from 41.8% in 1997/98 to 64.4 % in 2002/2003 (Ministry of Education). With regard to the health projects, in addiition to community education, many people now are able to access basic health services without traveling very long distance. As a result of which health problems of communities such as malaria have been reduced. In most cases, it is women and children who use the services better (GBA). Sanitation wise, ESRDF projects have had significant role in improving cleanliness of cities like Addis Ababa and Dire Dawa, which are considered a health hazard few years ago. Some parts of Addis Ababa are now easily accessible because of the access roads implemented by ESRDF.

As a step to increase quality of services, many existing social amenities were rehabilitated and up-graded. Moreover, provision was made to purchase and supply furniture, books and equipment to both ESRDF and

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non-ESRDF financed infrastructure. The ESRDF has also played an effective role in rehabilitating and addressing needs for basic services of people residing in areas affected by the Ethio-Eritrea border conflict. ESRDF was assigned to implement community infrastructure component of the Emergency and Recovery Program in Tigray and Afar regions. A total of 523 projects were implemented in the two war affected regions. SAR estimate for RWSS- 13,035 schemes- was not realistic seen in terms of capacity, technologymix and source viability. However, the construction of 2,492 water supply projects is really substantial in Ethiopia where less than 30% fetch water from safe sources. Beneficiaries interviewed by GBA have indicated that "....there have been significant improvements in the prevalence of water born dieseases because of the new schemes." Reduction on workload, distance and time spent to fetch water are some of the additional benefits registered from water supply schemes. About 72% and 70% of respondents to GBA impact assessment expressed that distance and time traveled have been reduced, respectively. The major beneficiaries of the rural water supply intervention are mainly women.

3.2. Income Generation and Access to Economic Services: Although less in number, ESRDF financed economic infrastructure projects are producing positive impact in improving the livelihood of poor people. Poor farmers, specially have benefited from the creation of employment opportunity, increased agricultural production and raised income. These are critical elements to possess asset by farmers and other crisis prone 140 schemes (implemented in five regions only). The actual irrigated farm land (9,355 ha.) and number of families benefiting (40,000) in small scale-irrigation (SSI) is quite small as compared to the Staff Appraisal Report (SAR) estimates - 18,715 ha and 87,844 households. Like in the RTWSS, the SAR estimates for SSI were very ambitious. In addition tolow capacity, restriction of financing projects int he Wabi-Shebele basin was a cause for low performance. With the implementation of the SSI projects the ESRDF has created awareness on the importance of irrigation and the possibility of harvesting more than two times. As observations made by the ESRDF, farmers working on irrigable land are food self sufficient and therefore, are no more thinking of food shortage or food aid. Farmers have acquired some type of asset and have source of income, which is an important condition to absorb natural as well as man made shocks. Although market is a critical challenge to most of irrigation beneficiaries, there is no doubt that farmers are getting some benefit. Changing the cropping pattern to high value crop is being practiced in some schemes as a strategy to win markets and high price for their produce.

Extent of damage that could be caused on the environment is one the appraisal criteria used to select projects for ESRDF finnancing. This is particulary true for SSI and RWSS projects, which has greater implication on the environment. In addition, the ESRDF initiated implementation of natural resource conservation and utilization related projects (126) after the mid-term review. Apart from protecting the fragile soil from erosion and restore its natrual vegetation, these activities, conceived in an integrated way, have contricuted to reducing impacts (silting, rain storm, etc.) on dams and appurtenant structures. As most of these projects were implemented in cash-for-work modalityk they served as safety net that transferred money to the needy. Such a measure coupled with tree planting allowed farmers to collect fodder for their animals and fuel wood without damaging forests and steep slopes. Construction of veterinary clinics, particularly in pastoralist areas, is an important step in improving livestock health. Availability of animal health service in turn, enables increase production, improve breeds and access international market, which are critical factors to raise income.

Another area where encouraging result is observed is in income generation related activies (112). ESDRF avails finance, which is critically needed to start small production or service giving venture for self employment or generating additional income. Most of the income generation projects are engaged in agriculture and petty trade. Through these projects poor people (farmers, women and unemplyed youth) generate new/additional income and acquire assets. It is also necessary to mention here that ESRDF financed activities have created employment opportunity for many Ethiopians in both rural and urban

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areas. Some of them are employed as permanent staff in the institution such as schools and health centers. Others are hired as skilled or unskilled labor in the construction or supply business.

3.3 Capacity Building: Capacity limitation was considered in the SAR as "...major implementation challenge for the ESRDF". About 854 training and capacity building projects (excluding WDF) have been implemented by ESRDF so as to fill the capacity gap. As an effort to strenghthen technical and managerial capacity of communities, 601 community outreach trainings were conducted. In total 314,179 people from different walks of life benefited from the ESRDF support. One of the major achievements of ESRDF is creation of public awareness and change of attitude on communituy-based development and participation. According to B&M consultants "...97.6% of sample beneficiary respondents indicate that they are aware of the importance of community participation in the development process." Another important achievement of ESRDF financed training activities is transfer of skill and knowledge to poor people. Such type fo trainings, as confirmed by B&M facilitated presence of people with some technical skills in rural areas. Moreover, the trainings contributed to increased participation, high contribution and effective implementation of project, which are important signs of strengthened grassroots capacity and confidence. This situation motivated communithy members to contribute more and implement additional projects that address their problems. As indicated in the B&M assessment". ... 97.9% of sample beneficiary respondents expressed their willingness to make further contribution ... to similar subprojects...". In addition to the 161 staff trainings, support (Birr 15.6 million) has also been given to different partner institutions in the form of material purchase such as laboratory, office and field equipment, surveying instruments, etc. These supports are believed to strengthen their working capacity and subsequently have enhanced efficiency and effectiveness in implementing development interventions. Furthermore, ESRDF has implemented or/and financed 87 studies, manual production and pilot interventions so as to increase the effectiveness of ESRDF financed projects and learn lessons for improvement of future similar interventions.

3.4. Institutional Development: ESRDF has been organizing community project committees (CPCs) in order to empower communities, facilitate proactive and increased participation and proper representation of beneficiaries. More thatn 4000 CPCs, about 100 water users associations and 2000 water users committees have been established. ESRDF has also supporte the formation of different types of cooperatives, particulary saving and credit associations/cooperatives to ensure sustainability of income generation projects. Some of the institutions are registered and have got official certification, which is a necessary condition to operate legally and access bank credit. Thus, they have proved essential to empower grassroots communities, increase confidence and ensure sustainability of projects. Institutional sustainability is strong in SSI and RWSS projects, whereby CPC s are evolved to WUAs/WUCs. On the other hand, CPCs formed for health projects cease to operate formally after project handover. In the case of education parents and teachers associatlion (PTA) continue to function.

Building its own capacity was an essential activity and a great institutional accomplishment for ESRDF. Institutionally, ESRDF has become a strong and dependable national capacity in community-based and participatory development. ESRDF was able to develop a system that has been refined and amended on the basis of experience. As a consolidation of the OM, operational guidelines for WDF and IGP were produced. Several sector manuals and technical handbooks (education, health, water supply and sanitation, small-scale irrigation, community training, community facilitators, finance) were prepared to facilitate implementation and increase effectiveness of ESRDF and other community-based projects. A computerized financial/accounting system and customized management information system were developed to record financial transactions and capture history of each project financed. These activities have been instrumental in directing and streamlining community-based and participatory development interventions of ESRDF. Having a workable good system was the salient reason for ESRDF's success and quick response to community requests. Recocognizing this fact, many institutions and community-based alike programs

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(example: Women's Development Fund, Energy Fund, Water and Sanitation, etc.) have adopted or replicated the ESRDF modality and working mechanism.

One of the major constraints of rural people is lack of access to credit. ESRDF has played a significant part in the establishment of micro finance institutions in Ethiopia and strengthened their operational capacity. It has supported staff training, client conferences and financed the purchase of office and field equipment. Currently, micro financing institutions are operating in many regions and they proovide financial support to the needy people. It may not be the only factor, but ESRDF's operation in general has had some influence in the development of the private sector. Number of civil work contractors has grown steadily as a result of financing construction of large number of infrastructure. The same is true with the suppliers of construction materials, furniture and equipment.

3.5 Enhancing Decentralization: After the mid-term review and on the basis of lessons learned from a visit to Brazil, the ESRDF started implementing a new component-Wereda Development Fund (WDF) as a pilot. Initially it was implemented in a very limited scale in four weredas of Amhara. In order to facilitate expansion and guide implementation systematically an operational guideline is prepared assessing domestic experience. The objectives of the WDF are to enhance the decentralization process, to increase empowerment of communities and to strengthen capacity of local administration and grassroots. Annual block-grant of Birr 1.5 million is allocated for each wereda for the implementation of community initiated projects. According to the guideline, the block-grant would be utilized for investment (88%), training and capacity building (7%) and monitoring and supervision (5%) activities. Besides, at least 15% of the resource must be utilized for projects addressing women's problems. Furthermore, the WDF encourages plan based and integrated approach ot local development. A negative list was also given to avoid implementatioon of complex projects, which discourage community participation. Currently, the WDF pilot is expanded to 56 weredas in all regions, except Afar. A total of 824 projects have been financed under the pilot WEF. Of this 787 (96%) were completed in only one year in the pilot weredas. Review wrokshops have been conducted at region level in the presence of all stakeholders. Accordinly, WDF's performace is satisfactory and quite positive. Capacity of local administration to plan, implement and monitor has been enhanced through the wereda development fund pilot of ESRDF. For some of the pilot weredas, the WDF is their first opportunity in managing resources and implementing investment projects. With the WDF, some weredas have already started to think strategically and as a result they have prepared medium and long-term integrated development plan for their wereda. The WDF approach resulted in high community participation and contributioon raging up to 40% of project cost. It has also demonstrated that large number of projects can be implemented in a short time with a limited budget. WDF proved to be a quick response mechanism to address community priority needs.

3.6. Community Participation and Empowerment: The aim of ESRDF is not merely helping poor people have access to basic social and economic infrastructure/services. To empower poor communities in decision making process and to deliver basic services that they have prioritized and in which they are willing to participate and invest is a primary goal. For this reason, ESRDF has been advocating about the importance of community-based development and facilitating and ecnouraging active community participation and contribution. As a mechanism to enhance community participation, ESRDF's intervention focused mainly on small, cost effective and sustainable projects i.e. simple to implement and operate and maintain with their limited capacity grassroots communities. The promotional activities coupled with quick response of the ESRDF encouraged communities to come with their applications/requests. From observation and information gathered druing field visits, community's contribution has been increasing and some communities have come with upfront contributions. Recording and valuation was a major problem with community contribution. A change in attitude is being observed as a result of ESRDF's effort to disseminate participatory development and its encouragement for direct

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involvement of communities in the overall process. Beneficiary ability to enjoy benefits from the services of the projects in a short period is another factor for a change in public attitude. This change has resulted in growing sense of ownership, self-reliance and willingness to participate in other development effort.

3. Target Beneficiaries and Coverage

Although ESRDF has broader target groups, as per the OM poor communities mainly the rural poor and women are major beneficiaries. The projects financed under ESRDF are expected to benefit more than 20 million citizens (appraisal estimate), mainly poor people residing in rural parts of Ethiopia. Women account for 49.6% of total beneficiaries. Health and sanitation is the sector with highest number of beneficiaries (11,348,487 or 58.6%), because health facilities serve more users within and outside the targeted community due too shortage. The ESRDF approach has proved to be important in reaching the underserved and marginalized communities. Impact assessment conducted by GBA indicated that ESRDF financed projects are on average 90 Kms far from centers. Some of these areas have never had any type of infrastructure prior to ESRDF intervention (example: Dima in Gambela, Teru in Afar, Kurax in SNNP, Mekane Birhan in Amhara). In terms of regional distribution, ESRDF has established branch offices in all the nine regional states and two city administrations. Three sub-offices have also been organized in the three large regions (Amhara, Oromiya and SNNP) with vast geographic coverage. The number of projects implemented in a region is dependant on the number of eligible projects, capacity of the region and regional budget allocation. As can be seen from the table below out the the total 5,697 projects financed by ESRDF, 783 (14%) were implemented in the four backward/emerging regions: Somali, Afar, Benishangul-Gumuz and Gambela. Further more, these regions implemented 113 (14%) training and capacity building projects to enhance grassroots and institutional capacity. As indicated by GBA, "In general the impact of ESRDF financed subprojects in these regions (emerging regions) was significant. As proposed in the SAR, special attention was given to these regions in terms of technical assistance from ESRDF CO. As for the other regions, Amhara and Oromiya implemented large number of projects followed by Tigray and SNNP. In Amhara, Tigray and Behishangul Gumez regions, water supply schemes accounted for about 62%, 61% and 58%, respectively. Overall "the results recorded in the regions" as described by GBA "witness that ESRDF's performance has been good by any standard." Sector wise (see table below) the rural water supply component accounted for 38% of ESRDF supported projects. The other components with higher share are education, health and sanitation and TCB with 20%, 18% and 13%, respectively. Remaining components all together have about 23% share, i.e. small-scale irrigation (2%), agriculture (4%), natural resource management (2%) and income generation and other types (2%).

Table 1: ESRDF Support Projects by Sector and Region

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Sector Region Educ HS RWSS SSI Agr. NRM IGP TCB Others

Total

A.A 117 66 1 0 0 0 1 39 0 224 Afar 65 34 33 0 8 1 0 38 0 179 Amhara 224 174 1008 56 68 34 19 118 26 1727 B&G 45 55 163 0 9 2 3 32 4 313 D.D 49 282 19 6 9 15 7 74 0 461 Gambela 26 15 49 0 0 0 8 20 0 118 Harari 26 46 35 0 1 5 7 38 2 160 Oromiya 360 218 405 34 114 46 41 126 0 1344 SNNP 191 71 1881 24 20 17 15 69 5 600 Somali 94 `87 60 0 12 0 6 27 0 286 Tigray 114 111 531 43 36 6 5 120 2 968 Central Office

0 0 0 0 0 0 0 153 0 153

Total 1311 1159 2492 163 277 126 112 854 39 6533

The data in this table is congruent with the structure of funding requests and a good demonstration of ESRDF's responsiveness to community demand. Out of the total 10,465 applications (ESRDF regular), 34% was for rural water supply followed by education (29%) and health and sanitation (22%). While education and health projects are implemented using standard government designs. For other projects specific designs (based on studies as necessary) are prepared for each project and approved by concerned office, if technically accepted. Comprehensive appraisal report that assessed social, technical, economic and other aspects of the project is prepared, as well for each project.

5. PROMOTING PARTNERSHIP

ESRDF encouraged the involvement of all stakeholders, fosters partnership among all those involved and promotes integrated approach in community-based development and poverty reduction. Several meetings were organized in collaboration with the World Bank to bring in more NGOs. However, NGOs participation was not as expected. Including civil societies, their share in application and implementation was 6% and 12%, respectively (for regular ESRDF). On the other hand, sector offices and local administration, including regional governments have been involved in implementing and monitoring the ESRDF program. Out of the 10,465 applicaitons for regular ESRDF 1059 came from sector offices, while 641 originated from local administration. With regard to implementation, their contribution was 25% for sector offices and 7% for local administration. Besides, sector offices were assisting communities technically in preparing proposals, implementing and supervising projects. Sector offices were an important partner of ESRDF in promotion, providing technical information, technically assessing viability of projects and experience sharing.

As for the relationship with donors, it was smooth and based on partnership. Except for some fund flow and procurement related delays, donors were assisting the ESRDF technically and in program managemetn aspects. Donor supervision missions, which were in most cases done by World Bank staff, were useful and have had significant contribution to the success of ESRDF. The effort to jointly resolve some problems (at time by assigning professional consultants) with clear understand of the issue was really to be appreciated. Collaboration, commitment, team work of donor staff with a feeling of belongingness was remarkable and has helped ESRDF to attain its targets. Donors agreement and acceptance (except UNDP) to use the procedures in the ESRDF operational manual was an important decision that avoided confusion, collusion and unnecessary workload. Such an action was a factor in expediting implementation.

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6. HANDLING OF THE PROJECT CYCLE

The ESRDF OM clearly shows stages of the project cycle and all the steps to go through with the requirements that should be met at each stage. Attempt has been made to adhere to the OM in a transparent and efficient manner. In the past nine years of operation, ESRDF through its regular intervention was able to support the implementation of 4,331 community-based projects in all parts of the country. In addition, through the pilot WDF 824 community initiated projects were implemented in 56 selected weredas of 10 regions. Another 50 projects were implemented under the pilot IG. The ERP, on its part, has financed 523 projects in the two regions (Tigray and Afar) affected by the Ethio-Eritrea border war. As it can be observed from the the table below, a total of 12,068 funding requests were processed in the 11 regional offices. However, the ESRDF was capable to appraise only 7519 (62%). Major reasons for low appraisal are capacity limitation, geographic dispersion of sites and fund shortage.

Table 2: Number of Projects Processed by ESRDF

Project Cycle ESRDF Regular WDF IGP ERP TotalApplications Received

10,465 865 90 648 12,068

Appraised 6,046 855 74 544 7,519Approved by RSC/wereda

4649 855 62 523 6089

Transferred to Implementation

4,331 824 51 523 5,729

Completed 4,028 787 47 400 5,262Terminated/interr.

303 37 4 123 467

ESRDF however, was more effective and efficient in transferring approved projects in to the implementation stage (94%) and subsequently completing staqrted projects (92%). In the process of implementation, 412 projects were abandoned/terminated due to lack of water, site change, budget shortage and financed by others. Only 55 projects were interrupted because of the closing period and these projects have been handed over to other institutions to carry out remaining activities.

7. FUND MANAGEMENT AND DISBURSEMENT

As per the SAR the esmimated fund requireemnt to implement the ESRDF was USD 242 million. Until December 31, 2004, a total of USD 237 million was pledged from the different sources (including ERP USD 17.5 million). Thus, the ESRDF was able to raise about 98% of its fund requirement. However, it is very low seen against community demand/request received in ESRDF. Government on its part has shown its commitment to the implementation of the ESRDF covering mainly administrative costs in cash and in kind. Its contribution is high if tax and other costs are included. Government has also facilitated communication with donors and provided quick response to ESRDF's financial requests. Additional fund (Birr 3.66 million) was also mobilized from an NGO known by the name Helvetas (Swiss Association for International Cooperation) for implementing community-based interventions in two weredas of Amhara. A Chinese NGO (USD 48,000) has also financed the implementation of one primary school in Oromiya region.

Any project to be financed by ESRDF must be approved by the regional steering committee. The next

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important step is signing of financing agreement between the beneficiary community, implementing agency and ESRDF. The financing agreeement clearly states activity to be financed, location, role of stakeholders, contributions made, etc. Subsequrently, preconstruction activities, i.e. site handover, procurement, etc. are executed. As of December 31, 2004, ESRDF has transferred Birr1.63 billion for the implementation of different community based-initiatives, training and capacity building and administrative activities. Out of these, Birr 86.24 million is utilized for ERP projects in Tigray and Afar regions, while Birr 103.83 million is expended for training and capacity building activities. In relation to the administrative cost, Birr 166.15 million is expended for all components including ERP. This is 10% of the total project cost and is within acceptable level for a social investment fund. ESRDF's performance and financial transaction is audited annually and has been audited until Sene 30, 1996 E.C (July 7, 2004).

Table 3: Source and Amount of Fund (in million USD)Source of Fund SAR Estimate Pledged in %IDA Credit 120.0 135.92 113Grant from Other Donors/UNDP

61.80 52.10 84

Government of Ethiopia 36.35 36.00 99Community Contribution 24.25 13.00 54Total 242.40 237.02 98

Fund allocation to components depends on the incoming request/demand of communities. Regional allocation, on the other hand was determined by allocation criteria of the Council of Federation. In terms of expenditure, Birr 822.69 million (%) went for social infrastructure projects (health, education and sanitation), while Birr 231.77 million (%) and 148.83 million (%) is utilized for RWSS and SSI schemes. Seen against the SAR the expenditure reflects the demand-driven nature of ESRDF. The decentralized fund management system introduced under the WDF is expected to utilize about Birr 82.5 million (total transfer as of 31/12/04 is Birr 58.22 million) in less than one year. The WDF approach in addition to empowering local administration has helped them to expose themselves to and experience project fund management, procurement, etc.

8. GENDER PERSPECTIVE OF ESRDF

All basic documents of ESRDF (SAR, OM) indicate that women are a target group given emphasis. Thus, relevance of a project in addressing gender issues and in particular problems of women is included as one major checklist of appraisal for ESRDF financed projects. Projects implemented with financial suppport of ESRDF are expected to benefit more than 22 million people. Women constitute 49.6% of the total beneficiaries. Although all projects are benefiting women as members of the community, they were major beneficiaries of health and water supply projects. The projects are believed to reduce hardship and workload in traveling long distance to fetch water. Health facilities have enabled women get maternal and other health services in the vicinity. Moreover, construction of schools around their villages, provision of separate toilet's and furniture are considered as major factors contributing to the increase in girrls' enrollment ratio in primary school. Women specific projects were also supported through income generation, training (22) and WDF (13) interventions. These projects have created an opportunity for women to develop skills, get job and generate income. For some of the projects women groups or associations were the initiators of funding requests. They are also closely involved in implementing women specific projects and running them. Women have been participating actively and in the different stages of the project cycle. As per the observation of B&M "women have played greater role in the identification and the setting up of priority among the problems that affected their lives." They were

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attending equally community meetings organized to discuss and decide on problemm identification, priority setting, contribution, selecting CPC members, etc. Most CPC's had one or more women as members, thus, their role during implementation of projects was encouraging. They were also equally contributing labor and local material to the projcet in their locality. Most important contribution of women was observed in water users association, in which they are the major actors.

9. FUNCTIONALITY AND SUSTAINABILITY

The ultimate objective of ESRDF's effort is to enable poor communities get the services (quality service) through the infrastructure created. Thus, ensuring proper operation and sutainability of facilities is an important step in fulfilling community demand. In order to facilitate this, the ESRDF has introduced several mechanisms. Projects are appraised with pre-designed criteria, which include communtiy ability to operate it, maintenance and sustainability. Endorsement from relevant sector offices, their commitment and signing of financing agreement are hedges against non-functioonality. Participation of community in decision making and cost sharing are effective mechanism to instill sense of ownership and belongingness. Practice has demonstrated that such a condition guarantees sustainable use of facilities created. To train beneficiary community and streghthen their managerial and technical capacity is an indispensable element of sustainability. In light of this, ESRDF has provided training with the aim of strengthening grassroots and institutional capacity to operate and maintain projects. Examples are trainings for water care takers, pump attendants, irrigation users, water user's committee/association, primary health workers, teachers, etc. Furthermore, provisioons of working tools to beneficiaries are also to be mentioned. Another important mechanism related to proper functioning and sustainability is handing over of projects and transfer of ownership to communities and concerned authorities with a handover agreement signed.

All these steps have produced encouruaging results and as per our field visit observations, beneficiary communities have serious concerns and are doing what they can towards protecting, operating and maintaining facilities. From the Post Completion Monitoring (PCM) conducted in the regions, we can see that most ESRDF financed projects are operational. However, the rate of malfunction or non-functionality is higher for water supply projects, which have critical operation and maintenance problems: For example in Gambela and Harari 50% of the water suppply schemes are not working. While in Amhara, where ESRDF financed about 40% of RWSS projects, the rate of functionality is 84%.

10. CONCLUSION, LESSONS LEARNED

During the past nine years, ESRDF's operation was facing different challanges and bottlenecks. Some of them were surmounted through coordinated efforts and gradually in time. Others, however, persisted affecting its pace and success. ESRDF's experience has enabled generate several lessons in community-based and participatory development. Some of them are quite relevant for others in the design and implementatioon of future iinterventions. Attempts have been made by the ESRDF, through website, review workshops, books and reports to transfer its experience and lessons learned. Among others the following are considered very relevant:

Projects initiated by the community and addressing priority demand have advantages such as: are limplemented quickly and at less cost, communitities participate actively and willinngly and high contribution (up-front). If given the chance, proper guidance and assisted technically, even those with weak capacity can perform well and do a lot of things. Interventions that truly empower both the community and local administration (ex. WDF) are instrumental to expand basic infrastructure to rural communities and raise service coverage in a short period of time. Besides, it is possible to implement large numbe of small projects with limited budget;

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Organizing communities in some sort of CBO like CPCs and if leaders are selected by the lcommunities themselves, it is much simpler to call community meetings, identify priority needs and mobilize resources;Commmunity-based development approaches like ESRDF enable to reach remote and inaccessible lareas. Communities that WERE considered very diifficult to work with can be easily reached and enabled to participate in the implementation of projects;To provide focused and need oriented training and other capacity building support addressing lmainly grassroots communities and wereda/kebele strurctures. The capacity at this level still is weak and, therefore, extensive effort is quite necessary to strengthen working capacity, which is critical to improve confidence, increase participation and enhance work efficiency;Implementing a single project might reduce a specific problem of certain communtiy. But, to apply lan integrated planned development approach helps to see problems in comprehensive and interrelated manner, with a long-term development perspective and reflects local reality. Thus support is given in a package form that brings some change in the community/wereda;To introduce participatory review and evaluation mechanism gives opportunity to get feedbak on lprogram/project performance, achievements, weakness and strengths, lessons learnd, etc. Such feedback is used as an input to improve systems and procedures applied and think of possible corrective measures for some drawbacks observed.

Overcoming all the problems and constraints in its course, ESRDF has effectively achieved the development objectives for which it is established. Apart from the expansion of basic economic and social infrastructure and services, the most significant achievement of ESRDF is that it has widely promoted participatory, demand-driven and community-based approach. It has shown that fast development is possible only with true empowerment of communities. If supported, communities can really play their leading role in development. At the time of design and launch of ESRDF the capacity at all levels and in particular at community level was so weak. Currently the situatioon has much improved and the contribution of ESRDF in strengthening community capacity has been remarkable. However, it would be appropriate for the government to facilitate transfer of lessons learned from ESRDF to other institutions and arrange a mechanism that would ensure sustainability of ESRDF created facilities. On the other hand, ESRDF has now become a strong national capacity to implement community-based development and poverty reduction programs. Through long years (more than 12 years) of investment, it has developed matured institutional capacity. ESRDF has a tested system, has got experience, owns sufficient office equipment, has established wide network in the society that reach up to the grassroots level, has built trust/respectability and acceptability, its system allows to recruit competent and committted staff. Thus, for the Government, it would be prudent to assess the capacity of the ESRDF and utilize it in future development endeavors.

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Additional Annex 12. WMU and CSA Contribution

I. Background and Overview

Poverty reduction and its ultimate eradication have been and still is the overriding agenda of the Government even before the advent of the PRSP. Following the assumption of power by the Transitional Government of Ethiopia in July 1991 and subsequent issuance of the Transitional Economic Policy, the Government of Ethiopia launched a package of reform programs in the economic domain (first generation reforms). The Welfare Monitoring System Program (WMSP) has been introduced to monitor the socio-economic impact of the Government’s economic reform program and its contribution to decision making and planning. The WMSP has been established around 1995. The establishment of the WMSP has been primarily aimed at assessing the impact of the economic reform programs on household welfare particularly the poor and vulnerable groups, establish follow-up procedures on the various programs and activities targeted towards poverty reduction, conduct regular statistical surveys to assess changes at different levels and establishing an information system that provides built-in mechanisms to monitoring the status of poverty in the country on a continuous basis.

The Central Statistical Authority (CSA) and Welfare Monitoring Unit (WMU) of the then Ministry of Economic Development and Cooperation (MEDaC) now the Ministry of Finance and Economic Development (MOFED) have been the key actors of the WMSP. The CSA has been primarily responsible for generating basic household level data that have been used as crucial inputs to the monitoring system. In this regard, the CSA has included in its Statistical Priority Program Periodic surveys like the Household Income Consumption and Expenditure Survey (HICES) and Welfare Monitoring Survey (WMS) that provide basic data on the poverty situation of the country. These surveys have been undertaken since 1995/96. The outputs of these surveys has enabled assess the level and profile of poverty at all-country and regional levels. The Welfare Monitoring Unit (WMU) was established to oversee the implementation of the WMSP. The WMU has been primarily responsible for undertaking in depth analysis of the HICES and WMS data sets as provided by the CSA. Besides, the WMU has also been responsible for coordinating the overall implementation of the Program and for ensuring that outputs are generated from the system in the form of timely and relevant reports to inform policy makers and planners on the state of poverty in Ethiopia and on the impact on welfare of policies and poverty-oriented programs implemented by the Government.The core task of WMU is to ensure that all the existing data are fully utilized for poverty monitoring and those findings are disseminated and used to inform public policy. Its activities have been central to ensuring that there is transparent and broad-based monitoring and evaluation of SDPRP implementation based on high quality data that feeds in to the poverty/welfare analysis conducted by the WMU of MOFED. The feedbacks from analysis works of the WMU has also helped improve the household level data collected by the CSA through HICES and WMS. The Welfare Monitoring System Program (WMSP) which was established in 1996(at the same time that the Ethiopia Social Rehabilitation and development fund –ESRDF was established) has been financially supported by a grant from the Government of Norway, valued at approximately $2.4 million and a $ 1.1million IDA credit. The sections below describe in detail the activities carried out and major outputs produced by the WMU of MOFED and the CSA with in the framework of the WMSP.

II. The WMU Component

2.1. Objectives. The Welfare Monitoring System is built around an annual Review of social trends and Welfare reflecting changes in the status of different population groups and identifying key policy issues for further consideration. The WMSP has been designed to: Present a national and regional review of welfare

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indicators showing their spatial distribution and movements overtime; Identifying the poor and vulnerable groups that require targeted assistance; Assess the short and medium term effects of macro economic and sect oral policies and programs on the poor;Monitor changes in status of the poor and vulnerable groups.

2.2. Major Activities and Accomplishments of the WMU since 1996. The scope of responsibilities of the WMU has broadened following the commencement of the PRSP process in Ethiopia, the preparation of the Sustainable Development and Poverty Reduction Program – SDPRP. Based on existing welfare monitoring system structures, besides undertaking poverty/Welfare analysis based on the HICES and WMS survey data sets supplied by the CSA, the role of the WMU has broadened by incorporating activities related to SDPRP formulation and follow up of its implementation. This includes design of SDPRP policy matrix and its refinement over time. Its activities also include coordination in the process of monitoring and evaluation of SDPRP implementation. The WMU is also currently involved in the coordination of MDG needs assessment exercise in collaboration with the Millennium Project, the UN Country Team and the World Bank. The poverty reduction effort has already taken a longer-term perspective. The WMU is currently at the center of the overall coordination of monitoring and evaluation of SDPRP implementation as well as the MDGs in the context of Ethiopia

2.2.1. Major Activities of the WMU Since 1996. The major areas of activities of the WMU since 1996 include he following, among others: The conduct of the preparatory work for the launching of the analysis of the 1999/2000 HICES and WMS data sets (January 2001 to July 2001); The conduct of the analysis of the 1999/2000 HICES and WMS data sets (August 2001 to December 2001); The conduct of Growth-Poverty Linkages study as an input into the preparation of Ethiopia’s first PRSP (the SDPRP); Coordination of the consultation process (September 2001 to March 2002); The formulation of the Full-fledged SDPRP Document (February 2002 – July 2002); The preparation of the Annual Progress report for 2002/03; Preparation of the PPA Study Proposal and Technical Design including organization of overall logistics and field operation; Preparation of the PPA field Operation Manual; The preparation of the Interim Annual Progress Report (I-APR 2003/04); The preparation of the 2003/04 APR (in progress); Launching of the PPA field operation (Third Week of November 2004).

2.2.2. Major Outputs of WMU Activities. Generating standard indicators of poverty/welfare of national scope had not been possible up until 1999. The 1995/96 HICE and WM surveys have helped establish baseline indicators of national scope on poverty/ welfare. In this regard, the WMU of MOFED issued the 1995/96 HICE and WM surveys-based “Poverty Situation Report” in March 1999. The second HICE and WM surveys were conducted in 1999 and the second study t Report on poverty/welfare entitled the “Development and Poverty Profile of Ethiopia” was issued in March 2002. This study Report was based on the 1999/2000 HICE and WM surveys data sets. Significant improvement was witnessed in this second report in contrast to the first Poverty Situation Report of March 1999. This time a great deal of improvement has been achieved in terms of clearly articulating methodologies adopted, making utmost use of the available data sets, handling the data and undertaking the analysis work and issuing the results with in the time frame set in the Analysis Plan. This Report served as an important input in the preparation of Ethiopia’s first PRSP entitled the Sustainable Development and Poverty Reduction Program (SDPRP) issued in July 2002 and immediately submitted to the World Bank and IMF 2002. The SDPRP (2002/03-2004/05) served as a framework for development cooperation between the Government of Ethiopia and Development partners.

2.2.3. Ongoing Activities of the WMU. One major activity of the WMU during the second half of 2003/04 and almost the whole of 2004/05 is the conduct of the Participatory Poverty Assessment (PPA) field operation. The PPA is designed to shed new light on the understanding of poverty in Ethiopia and to ensure that the perceptions and voices of poor people themselves are brought to fore with the use of

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participatory research methodologies. The overall goal of the Ethiopian PPA 2004/05 is to assist the poverty reduction strategy process (the Sustainable Development and Poverty Reduction Program-SDPRP) to achieve its objectives, with outcomes of reducing poverty in its many different manifestations throughout Ethiopia. The WMU of MOFED is currently busy with the finalization of the Annual Progress Report on the second year of SDPRP implementation (2003/04). It is also coordinating the sect oral MDG Needs Assessment studies (which are being finalized) and the synthesis work, which would the basis for the formulation of the upcoming Ethiopia’s second PRSP (SDPRP II), which covers the five-year period 2005/06-2009/10.

2.3. Staffing and Capacity Building. The WMU is now being mainstreamed in the Development Planning and Research Department (DPRD) of MOFED. Some 11 professionals of different levels of qualification and specializing in either economics and/or statistics are required for the WMU according to the new man power structure of the WMU. Some 50 percent of the requirement is already met. The professional staff of the WMU has been exposed to a number of short-term skill upgrading training programs, workshops, seminars, conferences both locally and abroad. More important of all, all the WMU professional staff passed through on-the job training during the conduct of the analysis of the 1999/2000 HICE and WM surveys data sets from July 2001 to March 2002. A two weeks intensive hands-on training was conducted in June 2001 by way of launching the analysis of the 1999/2000 HICE and WM surveys data sets. The 2 members of the WMU who have been fully acquainted with the analysis have now left for postgraduate studies in the USA. We are currently working on a training program for the four professional staff of the WMU by way of preparing them for the analysis of the 2004/05 HICE and WM surveys data sets expected to be ready for analysis by June 2005. The PPA training and field supervision has already given them some insight in to the upcoming activities of the WMU.

2.4. Financial Performance(WMU Component). The disbursement amount were of USD 359,809.14 and were made from cash advance to our account only. This does not include direct payments advanced by the World Bank. As the PPA field, operation is currently in progress the disbursement figures and hence the balance is going to be firmed up subsequently. The financial activities of the project have been under regular audit by external auditors (Audit Service Corporation). Slight discrepancies may be observed because of currency fluctuation as well as the fact that the entries are not taken from audit reports. The remaining balance (if available) also is not indicated owing to lack of adequate information at present.

2.5. What has been achieved so far by the WMU? The Way Forward. The WMU is currently in a far better shape than it used to be 4 years a go in 2001. It was a one-man Unit with even no internal capacity to run the routine activities of the WMU. Now, for one thing it is mainstreamed in a bigger Department. For another, it has got the necessary focus and attention given the broadening of its scope of responsibilities in the context of SDPRP implementation and the MDGs. Currently a staff expansion program is under way, and some recruitment has recently taken place. The WMU acknowledges that it urgently needs several highly qualified professional staff for analytical, management, coordination and dissemination activities. The partnership established with higher education and research institutions both locally and abroad (especially with the Economics Department of Addis Ababa University) in the course of undertaking the analysis of the 1999/2000 HICE and WM survey data sets in 2001 has helped augment and strengthen the in-house technical capacity of the WMU and MOFED at large since 2001. The partnership with the Department of Economics of Addis Ababa University in conducting the 1999/2000 HICE and WM surveys data sets and the subsequent issuance of the Report entitled the Development and Poverty Profile of Ethiopia and the Growth Poverty-Linkage Study that both fed in to the SDPRP, the on-going PPA Study are worth mentioning in this regard. The main goal of the WMU of MOFED for the coming period is to contribute to a better and broad-based monitoring and evaluation of welfare based on high quality data and analytical framework through further strengthening and broadening the base for in-house analytical

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capacity. Given the on-going further devolution and the role of woredas as centers of socio-economic development, this will help create necessary evidence, both qualitatively and quantitatively at low levels of aggregations (sub-national level particularly woreda level) on welfare outcomes and inputs, via new data collection, integration of existing data and advanced analysis of all available data. Looking forward in line with requirements of monitoring and evaluation of the SDPRP and MDGs, the WMU of MOFED and the CSA have jointly prepared a five-year Project Proposal entitled Strengthening Data Collection, Analysis and Dissemination on Poverty Monitoring and the Millennium Development Goals to the Development Assistance Group (DAG) covering the period 2004/05 to 2008/09. The Project agreement was signed in July 2004 between the MOFED and the DAG and is currently under implementation. The WMU of MOFED and the CSA have articulated their joint action plans for the coming five years taking in to consideration the complementarities of their activities/roles. The WMU of MOFED is currently preparing the groundwork for the launching of the analysis of the upcoming 2004/05 HICE and WM surveys data sets. The 2004/05 PPA as already indicated and the APR for the second year of SDPRP implementation and the preparation of the second SDPRP based on the on-going MDG Needs Assessment exercise are the major activities of the WMU during the whole of 2004/05.

III. The CSA Component

This is a brief report on the activities carried out by the Central Statistical Authority (CSA) since the commencement of the Welfare Monitoring System in 1995/96 in Ethiopia. The major activities carried out include survey activities, capacity building in terms of manpower, and equipment and supplies.

3.1. Survey Activities. The survey activities of the CSA include the Household Income, Consumption and Expenditure Survey (HICES) and Welfare Monitoring Survey (WMS) articulated to reflect the income and non-income aspects of poverty, respectively. The two surveys are inseparable and provide basic data that reflect the standard of living of households, individuals, and the society as a whole. The HICE and WMS surveys have been utilized as crucial inputs in designing and monitoring and evaluation of the country’s poverty reduction strategy: Ethiopia: Sustainable Development and Poverty Reduction Program (SDPRP), the various socioeconomic policies and programs and hence monitor and evaluate the progress towards meeting the Millennium Development Goals (MDGs). As mentioned above, the Household Income, Consumption and expenditure Survey basically provides data/result that reflect income dimension of poverty. Thus the main objectives of HICES are to provide income, expenditure and consumption statistics useful for assessment of the economic well being of households and individuals. Specific objectives are: To provide data used to determine poverty line; To assess income/expenditure levels, pattern and distribution; To estimate calorie intake based on consumption data; Determination of basket of goods and services and expenditure weights for the construction of Consumer Price Indices (CPI); Estimation of consumption expenditure in National Accounts Statistics; and Helps to formulate, monitor and evaluate economic policies and thereby assess the impact of these policies on households’/individuals’ living standard. HICES provides indicators on level, pattern and distribution household income, consumption and expenditure. In addition to the statistics on level and distribution of income and expenditure, several indicators such as poverty head count index, poverty gap index, household economic & demographic characteristics, etc can also be obtained. WMS aims at providing statistical data that reflect the non-income dimension of poverty, which include Health, Education, Nutrition, access to and utilization and satisfaction of basic facilities/services and other related non-income dimension of poverty. Specific objectives are to: Assess the level and distribution of non-income dimensions of poverty; Help assess the quality of life of households/individuals; Design, monitor and evaluate the impact of socioeconomic policies and programs on households/individuals living standard; and Provide indicators on households’ and individuals’ living standard with respect to basic needs such as education, health, child nutrition, access and utilization of basic facilities/services, water and sanitation, energy, housing etc.

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The HICE is conducted every five years, as usually is the case in many countries, and have been conducted in 1995/96 and 1999/2000. The WMS has been conducted together with the HICES and had also been carried out in 1997 and 1998. The Core Welfare Indicators Questionnaire (CWIQ) pilot survey has also been carried out in four Woredas to test for the methodological approach, assess budgetary requirements and data processing mechanisms. Several reports have been produced based on these surveys including the statistical reports produced by the CSA: report on the 1995/96 HICES and WMS, report on the 1999/2000 HICES and WMS, summary reports for the 1999/2000 HICE and WMS and report on the 1998 WMS survey as well as the two in-depth analytical reports on poverty situation of the country produced by Ministry of Finance and Economic Development (MoFED). The two surveys cover all sedentary population of the country. The report for household income, consumption and expenditure survey can be obtained at country level and for all regions, disaggregated by rural-urban residence. In addition, the survey design also allows reporting for regional capitals and few other towns. The reporting level for WMS is the same as for HICES except that the WMS results additionally are available at zonal level for rural areas of all regions. Gender desegregation is also considered in all possible cases. The project has shown progressive improvements. Substantive developments have been made with survey instruments as well as with the scope and coverage of the two surveys over the past 10 years through accumulated experience that has also been supplemented by consultations made with subject matter specialists from international organizations including the World Bank, ILO and others. Inputs have also been received from users consultation seminars and dissemination seminars, which constitute the main data users WMU of MoFED, the World Bank, Universities, other governmental and non-governmental stakeholders (DAG, etc.). The sizes of the sample households have also been increased through time. The sample household covered in WMS has increased from about 11, 600 1995/96 to 25, 928 households in year 2000. The corresponding HICES sample households have increased from 11,600 in 1995/96 to 17,332 in 1999/2000. The ongoing survey of 2004/05 covers more than 36,000 households for WMS survey and more than 21,000 households for HICE survey.

3.2. Capacity Building. In terms of capacity building a lot of work has also been put in place since 1995/96. Long term trainings at Masters level was given to four of the CSA professional staff members, two has taken short term training and not less than 15 have participated in different study tours, training workshops and seminars that had been arranged in different countries (Africa, America, Europe). Two of the CSA staff members have also participated, together with the WMU of MOFED, in the analytical work of the 1995/96 survey that had been organized by the Bank in Washington DC. Capacity building has also been materialized in terms of logistics, material and equipment. Procurement of 14 field vehicles, three automobiles, several computers and accessories, anthropometrical measurement scales, printing equipment and survey expendable equipment, etc. has also been put in place through the support from the Bank.

3.3. Ongoing Activities. Currently, the first round of the 2004/05 HICES and WMS has been completed and data processing activities are underway. Preparatory activities for the second round HICE survey that will be carried out during December-January 2004/05 are also going on. Training of trainers for the second round will be held at the CSA’s Head Office from 25 November to 9 December 2004 as part of the preparatory activity for the training of the field staff that will take place from 13-31 December 2004. Data collection will then be carried out from January 2005 until the first week of February 2005.

3.4. Financial Aspects. The financial activities of the project have been under regular audit that has been done annually by external auditors. The following ammounts were utilized: US$192,182.95 (IDA Cr. 2841-0), Birr 7,078,156.54 (IDA Cr. 2841-1); US$894,642.01; JPY 42,368,189.25; and Birr 11,497,429.56 (Norwegian Trust Fund). Slight discrepancies may be observed because of currency fluctuation as well as the fact that the entries are not taken from audit reports.

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IV. Conclusion

In conclusion, judged against what has been planned when the Project was initiated in 1996, both the activities and corresponding outputs of both the WMU of MOFED and the CSA show that the Project has been a success. Both the WMU of MOFED and the CSA would like to express their deep appreciations for the continued support the Bank has been providing since the establishment of the Welfare Monitoring System Program in Ethiopia. We would like to emphasize that in line with the growing need for monitoring and evaluation of the ongoing poverty reduction program and the MDGs further strengthening of both the WMU of MOFED and the CSA is crucial. We, there fore, would like to emphasize once again that it is in the interest of both institutions (and MOFED at large) to continue working with the Bank to produce and disseminate reliable and timely statistical data and results over the coming years.

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ETHIOPIA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 50 100 150

0 50 100 150 Miles

200 Kilometers

IBRD 33405

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ETHIOPIASELECTED CITIES AND TOWNS

PROVINCE CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES