Document ofThe World Bank

Report No: 23806-ET

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LEARNING AND INNOVATION LOAN

IN THE AMOUNT OF SDR 4. 1MILLION

(US$5.00 MILLION EQUIVALENT)

TO THE

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FOR A

CULTUTRAL HERITAGE PROJECT

March 5, 2002

Environment and Social Development UnitAfrica Regional Office

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CURRENCY EQUIVALENTS

(Exchange Rate Effective November 29, 2001)

Currency Unit = Ethiopian Birr1 Ethiopian Birr = US$0.12

US$1.00 = 8.44 Ethiopian Birr

FISCAL YEARJuly I -- June 30

ABBREVIATIONS AND ACRONYMS

APC Assistant Project CoordinatorARCCH Authority for Research and Conservation of Cultural HeritageAWPB Annual Work Program and BudgetCAS Country Assistance StrategyDCA Development Credit AgreementEHT Ethiopian Heritage TrustETC Ethiopian Tourism CommissionFMR Financial Management ReportGOE Government of EthiopiaICCROM Intemational Center for the Study of the Preservation

and Restoration of Cultural PropertyIDA Intemational Development AssociationLIL Learning and Innovation LoanM&E Monitoring and EvaluationMOF Ministry of Finance and Economic DevelopmentPCU Project Coordination UnitPHRD Policy and Human Resources DevelopmentPMR Project Management ReportUNESCO United Nations Educational, Scientific, and Cultural OrganizationWMF World Monuments Fund

Vice President: Callisto E. MadavoCountry Director: Ishac Diwan

Sector Manager: Agnes I. KissTask Team Leader: Peter A. Dewees

ETHIOPIACULTURAL HERITAGE PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 32. Main sector issues and Government strategy 43. Learning and development issues to be addressed by the project 64. Learning and innovation expectations 6

C. Project Description Summary

1. Project components 72. Institutional and implementation arrangements 93. Monitoring and evaluation arrangements 11

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

E. Summary Project Analysis

1. Economic 112. Financial 123. Technical 124. Institutional 125. Environmental 146. Social 157. Safeguard Policies 17

F. Sustainability and Risks

1. Sustainability 172. Critical risks 173. Possible controversial aspects 19

G. Main Credit Conditions

1. Effectiveness Condition 192. Other 19

H. Readiness for Implementation 19

I. Compliance with Bank Policies 20

Annexes

Annex 1: Project Design Summary 21Annex 2: Detailed Project Description 25Annex 3: Estimated Project Costs 29Annex 4: Cost-Effectiveness Analysis Summary 30Annex 5: Financial Summary 31Annex 6: Procurement and Disbursement Arrangements 32Annex 7: Project Processing Schedule 39Annex 8: Documents in the Project File 40Annex 9: Statement of Loans and Credits 41Annex 10: Country at a Glance 43Annex 11: Social Assessment 45Annex 12: Key Performance Indicators 52

MAP(S)IBRD 31720

ETHIOPIACultural Heritage Project

Project Appraisal DocumentAfrica Regional Office

AFTES

Date: March 5, 2002 Team Leader: Peter A. DeweesCountry Director: Ishac Diwan Sector Manager: Agi KissProject ID: P057770 Sector(s): MY - Non-Sector SpecificLending Instrument: Learning and Innovation Loan (LIL) Theme(s): Social Development

Poverty Targeted Intervention: N

Program Financing Data[ ] Loan [Xp Credit [ ] Grant 1 ]Guarantee 1 Other:

For Loans/Credits/Others:Amount (US$m): $5.00

Proposed Terms (IDA): Standard CreditGrace period (years): 10 Years to maturity: 40Financing Plan (US$m): Source Local Foreign TotalBORROWER 0.65 0.05 0.70IDA 1.90 3.10 5.00Total: 2.55 3.15 5.70Borrower: GOVERNMENT OF ETHIOPIAResponsible agency:Ethiopian Tourism CommissionAddress: P.O. Box 2183, Addis Ababa, EthiopiaContact Person: Yusuf Abdullahi Sukkar, Commissioner of TourismTel: 251-1-513991 Fax: 251-1-513899 Email:

Other Agency(ies):Authority for Research and Conservation of Cultural Heritage

Address: P.O. Box 13247, Addis Ababa, EthiopiaContact Person: Jara Haile Mariam, General ManagerTel: 251-1-157630 Fax: 251-1-510705 Email:

Estimated disbursements (Bank FYIUS$m):FY 2003 2004 2005 2006 2007

Annual 0.70 1.40 1.30 1.20 0.40Cumulative 0.70 2.10 3.40 4.60 5.00

Project implementation period: 4 yearsExpected effectiveness date: 07/01/2002 Expected closing date: 01/15/2007

OCS PAD Fn F M. Ma.. 2CI

A. Project Development Objective

1. Project development objective: (see Annex 1)

Ethiopia is the site of some of the oldest human settlements in Africa. Though the beginning of recordedEthiopian history dates to the reported meeting around 1000 BC of King Solomon and the Queen of Sheba,relatively recent discoveries have shown that it has a rich prehistory as well. Early Christian influences dateto around 400 AD and Islamic influences followed several hundred years later, and these have had aprofound impact on Ethiopian culture and tradition. A rich civilization flourished around Axum until the7th century AD which was an amalgam of indigenous culture and external influences, notably fromSouthern Arabia. Other dynasties, such as the Zagwe (responsible for the construction of eleven monolithicchurches in Lalibela some time before the late 1200s) left a deep imprint on Ethiopia as well. The fortresscity of Fasil Ghebbi in Gondar, residence of the Emperor Fasilidas and his successors during the 16th and17th centuries, contains palaces, churches, monasteries and unique public and private buildings marked byHindu and Arabic influences, and transfonned by the baroque style brought by Jesuit missionaries.

While evidence of Ethiopia's culture and history is found in its ancient monuments, cities, and prehistoricsites, its living cultures are reflected in the work of architects, musicians, writers, artisans and craftspeople. Strong traditions have long contributed to Ethiopia's material wealth by producing illuminatedparchment manuscripts, leatherwork, metalwork, jewelry, basketry, woodwork, and pottery. Much of thisrich heritage is being eroded by rapid development and growth, and ancient craft skills are being lost asmarkets and values for artisanal crafts change over time.

Government is seeking World Bank support with a Learning and Innovation Loan with the objective oftesting out and developing, on a pilot basis, the means for more fully integrating the conservation andmanagement of its cultural heritage into local and national economic development. The project wouldsupport the development of approaches to the conservation of cultural heritage assets through site planningand conservation of archaeological and historic buildings and sites, and through the development of betterinformation for conservation planning and threat mitigation. The project would also contribute to therevitalization of economic activity by testing out approaches for small crafts-based enterprises and bycapitalizing on tourism potential.

The decision to process it as a LIL instead of as a larger project is because of strong capacity buildingelements, the pilot nature of individual components for which viable technical, financial, and socialsolutions need to be tested and developed, and the need for experimentation with different partnershiparrangements with respect to the involvement of NGOs, local, regional, and central administrations,communities, and groups of artisans and craftsmen.

2. Key performance indicators: (see Annex 1)

The Cultural Heritage LIL will test an operational model and implementation mechanism for more fullyintegrating cultural heritage concerns into multiple development sectors at the national, regional and locallevels. As a LIL, the success of the project will be determined by the effectiveness of institutionalpartnership arrangements at these several levels in:

* developing and implementing, on a pilot scale, site conservation, management and visitor interpretationplans, identifying 'good practices' for doing so, building the capacity and laying the groundwork forconservation activities, and building on synergies between sectors with common interests (such as thetourism industry);

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* more fully integrating local and community development and poverty reduction efforts into cultural sitemanagement efforts;

* broadening the involvement of other partners in cultural asset management, particularly the privatesector, NGOs, and international organizations with interests in cultural heritage, in a way whichmobilizes both resources and expertise;

* improving the information base for cultural asset conservation and management, particularly buildingthe capacity to identify and mitigate threats to cultural sites and objects;

* supporting the development of the artisanal crafts sector and increasing its contribution to local incomegeneration, and improving the basis for innovation and development of crafts and artisanal design.

Experience with project implementation will provide a basis for determining the potential for replicatingand/or modifying the approaches taken in other sites of national or local cultural importance. Keyperformance indicators will measure the technical and managerial capacity of the implementing agenciesand the effectiveness of a multistakeholder coordinating mechanism. The impact of project investments onvarious stakeholders will also be assessed through monitoring and evaluation, particularly to determine theextent of local positive development impacts, income generation, and employment creation. KeyPerformance Indicators are described in greater detail in Annex I and Annex 12 to this PAD.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: IDA/R2000-198 Date of latest CAS discussion: December 5, 2000

The Interim Support Strategy (ISS) for Ethiopia was discuss by the Board in conjunction with its review ofthe Demobilization and Reintegration Project. The Interim Support Strategy reviewed implementation ofthe Bank's assistance strategy to Ethiopia prior to the outbreak of hostilities with Eritrea, and articulated aprogram of future Bank support for meeting near-term emergency humanitarian needs, for reconstruction,and for Ethiopia's wider economic recover and development efforts. The ISS anticipated that, in addition tosupporting reconstruction and recovery, future lending would focus on institutions, capacity building, andservice delivery, complemented by activities to revive the private sector which would be necessary togenerate growth and employment. It is within this framework that the Cultural Heritage Project has beenproposed.

The need for investment in cultural heritage conservation is not explicitly identified in the Interim SupportStrategy. The Bank agreed to consider providing support for this area at the specific request of the PrimeMinister, Meles Zenawi, during discussions with President Wolfensohn in January, 1998. The approachproposed in this LIL is consistent with the previous CAS's objectives related to capacity building,increasing sources of growth and poverty alleviation.

* Capacity building will be the focus of training activities associated with the development of siteplanning and conservation in selected pilot sites and with the development of regional inventories ofcultural heritage databases. Capacity to undertake these tasks had formerly rested with the centralAuthority for Research and Conservation of Cultural Heritage (ARCCH), which continues to haveoverall responsibility for the management of Ethiopia's World Heritage Sites. Regional culturalbureaus, which are under the mandate of regional governments (and not ARCCH) have assumed someof the responsibility for management of the World Heritage sites, and for developing and maintainingregional inventories, but lack trained staff to do so.

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* The project will provide opportunities for increasing sources of growth by bringing aboutimprovements in the planning, conservation, and interpretation of historic sites in a manner whichincreases their value for the tourist industry and which improves the context for urban growth aroundthese sites. The project will also support the development of the artisanal crafts industry by providingopportunities for strengthening the local crafts trade to meet both domestic and export market demandsfor quality craft production.

* Poverty alleviation is a specific focus of the artisanal crafts development component, which was alsodesigned to reflect the idea that culture and sustainable development are closely linked, and thatcultural heritage can be a theme ofjob creation and development. Craftspeople traditionally are amongthe poorest groups in Ethiopia, and this specific activity will increase incomes and reduce poverty inthis group.

2. Main sector issues and Government strategy:

Main sector issues

Elsewhere in Africa, the loss of cultural heritage assets -- language, music, dress, the arts, architecture,religious traditions -- was accelerated by the colonization process. In Ethiopia, the loss of culturaltraditions has been accelerated primarily by neglect. Notwithstanding the ratification of the World HeritageConvention in 1977, and the classification of Ethiopia's seven World Heritage Sites between 1978 and1980, much of its important heritage was ignored during the Dergue regime, and the remains ofarchaeological sites, marketplaces, historical and religious structures have, over time, been forgotten.Building and crafts skills, healing traditions, and language skills are similarly being lost with time.Expressions of artistic traditions are at the risk of degenerating into 'airport art' to meet the demands of alimited market, constrained from innovating into new forms of material culture. There is also a growingconcem about the need to prevent the further loss of cultural artifacts which are stolen from churches andother public places, and their sale on international art markets.

As Ethiopia continues its recovery from the years of mismanagement and neglect during the Dergue regime,rapid development, too, poses a significant threat to the loss of ancient sites and cultures. Planned newhydroelectric dams and roads may obliterate ancient settlement and archeological sites, long before there isany understanding of what might be lost. There is a growing recognition of the need better to documentthese cultural sites, and then to mitigate the potential negative impacts of further development.

Until recently, few of Ethiopia's historic sites had been managed with the view that they have much to offerto the national, regional, and local economies. Despite their significant influence on Ethiopian heritage,these rich centers of culture are surrounded by communities of poverty. These contradictions have becomeincreasingly clear to the current government, which is seeking ways of strengthening the role of culture inthe country's economic life. At the heart of the federal state is the idea that regional identities are stronglyrooted in cultural expression.

The main sector issues with regard to cultural heritage conservation and management in Ethiopia relate tothe need to:

* more fully integrate a cultural dimension into Ethiopia's economic and social development program andto incorporate this approach into local development efforts;

* build the capacity to prevent the loss of cultural heritage assets through strategic conservationplanning, protection and threat mitigation, and the development of better information about the extentand condition of these assets; and to

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* coordinate institutional efforts for cultural heritage management amongst multiple stakeholders:between central, regional and zonal authorities; within communities; between tourism and culturalinterests; and with other institutions such as the Supreme Islamic Council and the Orthodox Church.

Government strategy

In this post-conflict period, Government's overriding development objective is to attain relatively fast,broad-based, and more equitable economic growth with macroeconomic stability. A rapid increase inagricultural output, coupled with accelerated growth in the industrial and services sectors, is thecomerstone of economic growth and poverty alleviation in Ethiopia. Macro stability is expected to be aconsequence of structural reforms, which are focusing on export promotion and private sector development,on liberalizing the investment code, and on accelerating privatization. This overall strategy aims to createan environment conducive to export diversification. Closely related to the twin objectives of economicgrowth and macroeconomic stability is the aim of progressively integrating Ethiopia into the globaleconomy.

In the early 1990s, Ethiopia found itself the beneficiary of a growing global market for cultural tourism,and has sought the means for addressing the dual needs of cultural heritage conservation and tourismmarket development and growth. Visitor numbers are small, currently around 125,000 visitors per year.The bulk of these are ovemight visitors. Only around 25,000 tourists per year stay for the purposes ofholiday, while another 42,000 arrive on business. There is a small, but growing, group of private touroperators in Ethiopia, and until the recent conflict, visitor numbers had been increasing at a rate of around7 percent annually. Responsibility for tourism policy, planning, and promotion rests with the EthiopianTourism Commission (ETC, in the Prime Minister's Office), which, in 1995, completed a RegionalTourism Development Plan for North, East, West Ethiopia. The Tourism Development Plan articulatesGovernment's strategy for developing more fully the potential of cultural tourism. The Commission hasalso focused on the potential linkage between cultural tourism, community development, and the artisanalcrafts industry, having extensively reviewed the sector in a 1997 Feasibility Study of TraditionalHandicrafts Development in the Tourist Industry of Ethiopia.

The institutional mandate for management and protection of the country's cultural heritage assets rests inpart with the Authority for Research and Conservation of Cultural Heritage (ARCCH) and in part withregional cultural bureaus. Among other things, ARCCH legally has oversight for management of thecountry's World Heritage Sites, and finances some site conservation activities through regional culturalbureaus. Regional cultural bureaus, in contrast, operate under the mandate of regional administrations butusually have extensive, though informal, contacts with ARCCH. They vary widely in their capacity andability to deliver on the cultural heritage conservation agenda. Capacity is constrained, and they remaindependent on technical support from ARCCH. There is growing recognition that ARCCH shouldincreasingly work toward building the capacity of regional cultural bureaus to take on a wider range oftasks responsive to regional and local development priorities.

Legislation which provides for the conservation of assets with major artistic, scientific, cultural, orhistorical value, was adopted in 1989, and has recently been revised. The revised legislation provides forthe establishment of ARCCH. The Proclamation to Provide for Research and Conservation of CulturalHeritage (Proclamation 209/2000) was endorsed by the Council of Ministers and has now been adoptedby the National Assembly. Despite the strong synergies and interests between tourism and cultural heritageinstitutions, they have tended to operate in isolation from one another, the former focusing primarily onmarket and infrastructure development, and the latter focusing primarily on site management.

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Additional key stakeholders with regard to cultural heritage include the Ethiopian Orthodox Church and theSupreme Islamic Council. These institutions maintain much of the living heritage of the country, in itschurches and mosques, in its illuminated parchments, fine ecclesiastical metal and wood work, religiouspaintings, language, and architecture. Both institutions retain custody of large collections of immensehistorical significance as well, having been inextricably involved in matters of state for generations prior tothe Dergue regime.

The most significant challenge for Goverrnent, then, will be to build on the institutional synergies betweenthese many stakeholders, especially between the tourism, community development, and cultural subsectors,and to support ways of more strongly coordinating their activities. A key element of this approach dependson finding ways of more fully involving communities in cultural site management. Because of this,mediating between community, zonal, regional and national interests becomes a central element inGovernment's cultural heritage strategy.

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

The project will provide resources to pilot the development of site planning and conservation initiatives inselected priority sites and to build national, regional, and local capacity for site planning and conservationin a way which integrates cultural site management with local development priorities. The creation of amultistakeholder steering committee to oversee project implementation, the scope for partnerships withnational and international NGOs, and the need to collaborate closely with communities on site managementand development initiatives will provide opportunities to test out alternative approaches toward institutionalcollaboration, and will promote innovative opportunities for institutional learning.

Govenmment's more general strategy of developing mechanisms for identifying - and then mitigating - thepotential negative impacts of development activities on cultural sites and assets will be strengthenedthrough the project, by developing core national standards for inventory and documentation, and guidelinesfor managing sites likely to be affected by development.

Finally, the project will provide opportunities for preserving and reviving artisanal traditions and forreestablishing craft making as a vital part of community and national economic life. The project will pilotlearning opportunities for artisans and craftsmen, with design guidance, business training, improvedtechnical skills, and by developing market links to generate sales to local, tourist, regional, and exportmarkets.

4. Learning and innovation expectations:

2I Economic 1 Technical 1 Social OI ParticipationO Financial 1 Institutional ] Environmental ] Other

Technical

The project is expected to provide opportunities for strengthening the technical capacity at the national,regional, and local levels for site conservation, planning, and interpretation; for museum curation; forinventory and documentation; and for artisanal crafts development. Government's strategy of developingmechanisms for identifying - and then mitigating - the potential negative impacts of development activitieson cultural sites and assets will be strengthened through the project.

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Institutional

The creation of a multistakeholder steering committee to oversee project implementation, the scope forpartnerships with national and international NGOs, and the need to collaborate closely with communities onsite management and development initiatives will provide opportunities to test out alternative approachestoward institutional collaboration, and will promote innovative opportunities for institutional learning. TheSteering Committee on Cultural Heritage will have a central role in moving these opportunities forward.

Social

The project will provide opportunities for involving communities in site planning and conservation, and formore fully integrating communities into the life of important historic sites. It will also focus on preservingand reviving artisanal traditions and for reestablishing craft making as a vital part of community andnational economic life. The project will pilot learning opportunities for artisans and craftsmen, with designguidance, business training, improved technical skills, and by developing market links to generate sales tolocal, tourist, regional, and export markets.

C. Project Description Summary

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

The Cultural Heritage Project has four components: Site Planning and Conservation, Inventory andDocumentation Development, support for the development of Artisanal Crafts, and support for ProjectManagement. Central to the design of the project is the idea that these components are closely related, andshould be carried out in a way which brings together the conservation of historic sites, support for livingculture, and economic development through support to the tourism and small enterprise sectors. Theopportunity for learning different methods of institutional cooperation to bring this about is at the core ofthis LIL.

(a) Site Planning and Conservation

The project will provide resources for site planning and conservation in two pilot sites, Gondar and Axum.The project would finance a conservation plan for the walled fortress palace complex of Fasil Ghebbi inGondar to identify priorities for future site conservation activities, taking into specific concern the potentialfor increasing benefits to the community as a result of their proximity to the palace complex (to which theycurrently have no access). This work would be carried out in conjunction with efforts to improve siteinterpretation, for local, national, and foreign visitors to the site. The development of an interpretation anddocumentation center will be planned in the process, and the project will partly finance its establishment.Training and capacity building for site planning and interpretation will be key elements of this activity.Finding mechanisms for the fuller involvement of the people of the town of Gondar in the management anduse of the site will be an underlying objective of the planning process.

With regard to Axum, the project will finance site planning activities for the town's archeological sites,including the development and planning of an expanded archeological museum in part as a local culturaleducation facility, as well as to house more recent historical acquisitions. Museum planning will be carriedout in conjunction with efforts to increase the institutional capacity, through curation skills training, at thenational and regional levels better to handle the tasks of museum curation and management. Site planningwill focus on specific needs for better site presentation and interpretation to assist in the management of

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visitors to Axum, and for taking into account of the results of an inventory of 19th and 20th centuryvernacular Tigrayan architecture in the older parts of Axum, which was completed as an input into thetown's master plan. The Site planning process is seen to be a complement to the new master plan, which isa local and regional priority, and which will assist in identifying how to go about developing infrastructurein the old town in a manner which is sensitive to the specifics of the site. The interests of the community inthe future of old Axum, and the potential for closer cooperation with the Ethiopian Orthodox Church in theconservation of ecclesiastical art will be explored.

(b) Inventory and Documentation Development

This component is designed to build the capacity for establishing a better information base about culturalassets for the purposes of planning, conservation, and threat mitigation. Capacity development will becoordinated by ARCCH, which will work with regional and zonal bureaus to improve methodologicalapproaches, technologies, and capacity to manage documentation requirements, and to ensure consistencywith accepted standards and practices, in priority zones and regions. Pilot inventories are expected to beundertaken in 3 regions: Tigray, Amhara, and Oromiya regions.

As a first step, and working closely with the regional bureaus, ARCCH will review and assess the extent ofexisting national, regional, local, and project specific inventories, and would then manage a series ofworkshops to gain a consensus about core national standards and methodologies and about the mosteffective system for coordinating the collection and exchange of inventory information between the centerand the regions. Once core national standards have been agreed, ARCCH would mount a series ofworkshops and training initiatives in the three pilot regions more fully to develop the skills of regional andzonal staff to carry out inventory work, and to build the capacity of professionals and local organizationsfor priority-setting, participation, and involvement in selected pilot inventory sites. This work would becarried out in conjunction with recent UNESCO proposals for inventory development.

A critical and growing need, which the project would also address, relates to the development of thecapacity within ARCCH, to provide specific rapid assessment capabilities in advance of the establishmentof hydroelectric and other dams, roads, and other development activities. The objective of developing thiscapacity would be to enable ARCCH quickly to survey potentially threatened archeological sites whichcould be inundated as a result of dam or other development projects and to put in place mitigationmeasures, such as the relocation of project activities, modifications in project design so that sites andstructures can be conserved, studied, documented, and, as appropriate, preserved in situ, or, as a lastresort, physical removal of artifacts. ARCCH would develop a methodology for rapid assessment, andwould prepare mitigation guidelines to assist regional bureaus in responding to this immediate threat toarcheological sites. Pilot efforts would be focused on Oromiya, or another region, in agreement with theBank.

(c) Artisanal Crafts Development

The rich material culture of Ethiopia is captured in the work of traditional craftsmen and artisans. Thiscomponent of the Cultural Heritage Project has the objective of finding ways of preserving these ancientcraft traditions and of reestablishing craft making as a vital part of community and national economic life.Working on a pilot basis, tentatively in Axum, Addis Ababa, and Harar, this component will provideartisans with design guidance, technical skills, business training, and direct market links to generate sales tolocal, tourist, regional, and export markets and to develop the market momentum and local capacity neededto sustain craft industry growth for the coming decades.

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Key strategies for achieving these objectives will include bringing experienced commercial designers towork with artisans to create tradition-based but market-driven products with increased salability to keymarket segments. The project will also provide training in costing and pricing, quality and productionmanagement, and marketing to increase independent entrepreneurial capacity. In addition, assistance willbe provided to improve links between artisan producers and retailers, exporters, and shippers to increaselocal craft sales opportunities and to support the export trade. Craft product lines developed through theproject will be exhibited in local galleries and at international trade shows with the support of the project.

Subject to reaching an agreement with regional culture and tourism bureaus, the project will establish smallartisan resource centers, also on a pilot basis, in renovated historically or architecturally significantstructures as a place for training, and to provide a venue for demonstration of traditional craft making, andfor exhibiting locally-made crafts. The artisanal centers would be established also as a means offacilitating access of producers to alternative and expanded markets, and of established buyers to a widerrange of dealers, craftsmen, and craft product. The project will also seek to develop the capacity of NGOsto become involved in craft development and marketing by working with them to organize artisans, providetraining and marketing guidance, and other support designed to foster independent craft entrepreneurshipand craft market growth.

d) Project Management

The project will provide funds for project management, particularly, to cover the costs of the ProjectCoordination Unit. Funds are provided to employ specialist staff to work in the unit, as needed. It isenvisaged that the Coordination Unit will separately employ an Accountant, Procurement Specialist, andMonitoring and Evaluation Specialist. The positions of Project Coordinator and Assistant ProjectCoordinators are likely to be filled by existing staff within ETC and ARCCH respectively, but provisionshave been made to employ qualified staff for these positions on a contract basis.

Indicative Bank- % ofComponent Sector Costs % of financing Bank-

(US$M) Total (US$M) financingSite Planning and Conservation Non-Sector Specific 2.00 35.1 1.80 36.0Inventory and Documentation Non-Sector Specific 1.30 22.8 1.10 22.0DevelopmentArtisanal Craft Development Non-Sector Specific 2.00 35.1 1.80 36.0Project Management Non-Sector Specific 0.40 7.0 0.30 6.0

Total Project Costs 5.70 100.0 5.00 100.0

Total Financing Required 5.70 100.0 5.00 100.0

2. Institutional and implementation arrangements:

The project is to be implemented over a period of four years. The main implementing institutions are theEthiopian Tourism Commission (ETC), the Authority for Research and Conservation of Cultural Heritage(ARCCH), and regional cultural bureaus in Tigray, Amhara, and Oromiya.

The primary responsibility for providing overall guidance about the scope and direction of the project willrest with a project Steering Committee, which has already been established (and which has been centrallyinvolved in project design). The Steering Committee is chaired by the Ethiopian Tourism Commission, andcomprises representatives from MFED, ARCCH, the Ethiopian Orthodox Church, the Supreme Islamic

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Council, and representatives from Regional cultural and tourism bureaus. The composition of the SteeringCommittee is subject to change in order flexibly to respond to some of the perceived needs and interests ofvarious sectoral stakeholders. It is envisaged that the Steering Committee will have primary responsibilityfor overseeing project performance and progress, reviewing and approving annual work plans, evaluatingproject impact on the basis of project performance indicators, and for providing guidance about the overallscope and direction of the project. The Steering Committee will be the primary mechanism for ensuringthat the interests of key stakeholders, particularly those in the regional bureaus, are adequately addressedduring project implementation. It is envisaged that the Steering Committee will meet on a quarterly basis,or at other times as needed.

Because of the multiple institutions which are to be involved in project implementation at the national andregional levels, the effective coordination of project activities amongst implementing partners will be key.With this in mind, the Steering Committee concluded that day to day project management responsibilitiesshould rest with a Project Coordination Unit (PCU) established within the Planning Division of theEthiopian Tourism Commission. The Coordination Unit will be responsible for overall projectadministration, financial management, procurement, monitoring and evaluation, and overall projectsupervision. The Unit will comprise a Project Coordinator assigned by the ETC, one Assistant ProjectCoordinator for each of the project's three components, an Accountant, a Procurement Specialist, and aMonitoring and Evaluation Specialist. It is envisaged that the Project Coordinator will have primaryresponsibility for overall project management.

ETC will be responsible for the overall management of project funds and will maintain the project'saccounts. A Financial Management Specialist conducted a review of the financial management systems ofETC during the Preappraisal Mission and found the systems adequate for the purpose of implementing theproject. Details of financial management arrangements, disbursements, and special account operations aresummarized in Annex 6. Project financial reports (including SOEs, Special Accounts, and related financialinformation) will be prepared by ETC and will be audited by an independent auditor acceptable to IDA. Asingle audit report on the project's annual financial statements will be submitted to IDA no later than sixmonths after the end of the govemment fiscal year, and will also include opinions on the use of SOEs andthe Special Accounts.

With respect to implementation of project activities, ETC will have primary responsibility for implementingthe Artisanal Crafts Development Component, and, in collaboration with regional and municipal authoritiesas appropriate, for operating the proposed Addis craft center, and regional centers in Harar and Axum.

ARCCH will have primary responsibility for facilitating the implementation of the Site Planning andConservation component, and will work in close partnership with regional cultural bureaus in Tigray andAmhara in order to do so. ARCCH will also be responsible for implementation of the Inventory andDocumentation component, also working in close partnership with regional cultural bureaus in Tigray,Amhara and Oromiya. The Inventory and Documentation component is primarily intended to improve thecapacity of regional cultural bureaus to prepare cultural asset inventories, and to use information fromthese inventories to provide guidance for future cultural asset conservation activities. The main roles ofARCCH are to provide services to regional cultural bureaus to: a) facilitate access to funds by regionalcultural bureaus to implement project activities; b) facilitate access to technical inputs needed for projectimplementation at the regional level; and c) provide technical supervision and assistance to regional culturalbureaus, as needed. ARCCH should cooperate closely with ETC in developing site interpretation inputs,and in marketing historic sites.

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Regional cultural bureaus in Tigray, Amhara and Oromiya and in Region 14 (Addis Ababa), will beresponsible for overseeing day-to-day project activities in Axum, Gondar, Harar, and Addis Ababarespectively and for ensuring that these activities are consistent with regional development priorities.

3. Monitoring and evaluation arrangements:

The Project Coordination Unit will implement a systematic and detailed monitoring and reporting system,focusing on both the outputs and outcomes of the project. The system should allow for an effectiveevaluation of (i) the project's delivery mechanisms, implementation procedures, and institutionalarrangements; (ii) performance effectiveness, evaluated on the basis of the project's development objectivesand the input, output, outcome, and impact indicators identified in the Project Design Summary (Annex 1);and (iii) the potential replicability of project activities on a wider scale. Progress towards project outcomeswill be evaluated during project supervision and during a Mid-Term review. The Mid-Term Review woulddetermine the extent to which the project is performing against the objectives set for it, and would carry outa preliminary assessment of the potential for wider scale replication. Preparation of an hmplementationCompletion Report will be initiated by the Bank prior to the project's closing date, in conjunction with thepreparation of Government's own evaluation report. Monitoring and Evaluation will be the responsibilityof a M&E Officer, employed by the Project Coordination Unit.

D. Project Rationale

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

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

1. Economic (see Annex 4):[For LIL, to the extent applicable]O Cost benefit NPV=US$ million; ERR = % (see Annex 4)* Cost effectivenessO Other (specify)In the context considered here, 'cultural heritage' includes both the material aspects of culture (forexample, historic sites and buildings, landscapes, and objects of particular historical, architectural,aesthetic, or cultural significance) as well as nonmaterial aspects such as social practices, symbolic formsof expressions (for example, the arts, music, dance, oral traditions, literature, etc.), values and beliefs.

In light of the pilot nature of this project, only notional and qualitative economic analyses will beundertaken a priori. The project is expected to generate a range of benefits associated with: a) experiencegained with various institutional partnership arrangements for cultural heritage conservation; b) improvedplanning and site interpretation to accommodate conservation needs and tourism interests in cultural sites;c) growth and poverty reduction associated with better access to local, regional, and intemational marketsfor artisanal crafts products; d) conservation of cultural assets which might otherwise have been lost, forexample, to theft or as a result of development; e) community involvement in cultural site conservation andmanagement; and f) improved institutional capacity to formulate and implement cultural asset managementprograms.

Cost-effectiveness was carefully considered during project design. As pilot operations, interventions underall components are expected to be relatively small-scale and will seek to optimize the impacts of resourceuse by developing partnership arrangements with domestic and intemational organizations such as theEthiopian Heritage Trust (an NGO), the World Monuments Fund, ICCROM, and UNESCO. Siteconservation activities are expected to use local building materials and techniques and labor intensive

methods. There is a very strong element of capacity building in the project design, which is intended tocontribute to longer-term sustainability.

2. Financial (see Annex 4 and Annex 5):NPV=US$ million; FRR = % (see Annex 4)[For LIL, to the extent applicable]Because of the nature of the LIL, particularly its size and emphasis on testing and innovation, the monetaryand non-monetary benefits have not been analyzed in the comprehensive way normally associated withmore traditional Bank investment projects. As the LIL is effectively a pilot operation, the project will test avariety of approaches for providing resources through several institutional arrangements. Site Planning andConservation activities are expected to provide resources to the regions, through the Authority for Researchand Conservation of Cultural Heritage and through partnership arrangements with other institutions such asthe World Monuments Fund, ICCROM, and UNESCO, contributing to the longer-term viability of thesesites as cultural centers. The Inventory and Documentation component will similarly provide resources forcapacity building at the regional level, again through ARCCH. The Artisanal Crafts Developmentcomponent is expected to focus strongly on the need for financial sustainability, and will examine furtherthe prospects for working through communities and local organizations in doing so.

3. Technical:[For LIL, enter data if applicable or 'Not Applicable']The need for technical studies associated with site conservation in Gondar and Axum will be identified asan outcome of the planning process. These studies might include activities related to archeologicalinvestigation, building stabilization, drainage improvement, or archival studies. The scope for usingadvanced dating, remote sensing, and conservation technology (GPS, radiocarbon dating, etc.) to enhancethe planning and conservation process will also be explored and developed for wider-spread applicationelsewhere in Ethiopia. The Inventory and Documentation component will also provide limited resources,through technical assistance, to develop the use of enhanced documentation tools for records management.Finally, the Artisanal Crafts Development component will provide resources for technical specialists incrafts technologies (such as vegetable-based leather tanning, natural dye production, and ceramicsproduction) to work with designers to assist in developing marketable products and in reviving traditionalcrafts and technologies. It is expected that new technologies piloted in the LIL would be evaluated for theirpotential for scaling up in subsequent activities.

4. Institutional:Implementation responsibilities are described more fully in Section C.2.

4.1 Executing agencies:

The project will be executed primarily by the Ethiopian Tourism Commission, the Authority for Researchand Conservation of Cultural Heritage, and regional cultural bureaus in Tigray, Amhara, Harar, andOromiya regions, under the direction of a project Steering Committee, chaired by the Commissioner of theEthiopian Tourism Commission and on which a range of stakeholders are represented.

4.2 Project management:

Project management responsibilities will rest with a Project Coordination Unit established within thePlanning Division of the ETC. The Project Coordination Unit will comprise a Coordinator (from ETC),one Assistant Project Coordinator for each project component (one assigned by ETC, and two assigned byARCCH), a Monitoring and Evaluation Specialist, a Procurement Specialist, and an Accountant. Whereneeded, implementation capacity will be strengthened with technical assistance, training, and capacitybuilding.

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4.3 Procurement issues:

Procurement financed under the project will be limited to recruitment of consultants services, officeequipment, a limited number of vehicles, some civil works, and incremental operating costs. Anexperienced Procurement Specialist will be recruited by the Planning Division of ETC and is to beresponsible for ensuring that procurement for works and goods is carried out in accordance with the Bank'sGuidelines for Procurement under IBRD Loans and IDA Credits (dated January 1995 and revised inJanuary and August 1996, in September 1997, and January 1999). Consultancy services financed by IDAwill be procured in accordance with the Bank Guidelines for the Selection and Employment of Consultantsby World Bank Borrowers (dated January 1997, and revised September 1997 and January 1999).

A General Procurement Notice will be published in United Nations Development Business (UNDB) andwill include a description of required services or goods, the client agency, and the budgeted cost. Thisnotice will be updated every year during the execution of the projects until all contracts and assignmentshave been procured. In the case of contracts which are expected to cost more than $200,000 equivalent,Specific Procurement Notices will be issued seeking expressions of interest through the national press.

To the extent possible, procurement arrangements have been designed to respond to the need for flexibleuse of procurement methods, given the institutional capacity of the implementing agencies. A ProcurementPlan, based on the inputs identified in Project Implementation Plan has been prepared, and this will berevised annually during preparation of the Annual Work Program and Budget. Whenever possible,procurement items will be consolidated into appropriately-scaled contracting packages.

4.4 Financial management issues:

Disbursements will be in accordance with the Bank's Disbursement Handbook on the basis of incurredeligible expenditures. ETC will be responsible for the management of project funds, including the proceedsof the credit and counterpart funds. A review of ETC's accounting and financial management systemsconcluded that these are basically sound, but that capacity should be strengthened to take on the tasks ofmanaging project funds. The following steps will be carried out to help build this capacity:

* a qualified Accountant will be recruited as a condition of effectiveness;* a detailed Chart of Accounts, appropriate for the project will be developed, within 6 months of

effectiveness;* a financial reporting format acceptable to the Bank will be developed, within 6 months of effectiveness.

The Finance Division of ETC will establish a financial reporting system which will include the followingfeatures: (a) application of consistent accounting principles for documenting, recording, and reporting itsfinancial transactions; (b) a Chart of Accounts, and a coding system, will be prepared which allows theAccountant to prepare meaningful summaries of financial transactions for financial reporting purposes; (c)the use of an asset register; (d) regular closing and reconciliations of accounts and statements; (e) theproduction of annual financial statements acceptable to IDA. These systems will be supplemented byspecific measures covering the project budget, and the management of the Special Accounts and a ProjectAccount. Financial Management Reports (FMRs) are expected to be prepared every six months and willinclude, at a minimum, the following documents: (a) a Summary of Sources and Uses of Funds; (b) uses ofFunds by Project Activity; (c) summaries of the Special Accounts activities and of SOE disbursements, and(d) notes to the financial statements.

The Commission and the Project Coordination Unit, with the agreement of the Bank, may choose eithertraditional or Project Management Report (PMR)-based disbursements, though is expected to use

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traditional disbursement methods in the first instance. In the event that the PCU wishes to adoptstreamlined PMR-based disbursement methods, this decision will be made in consultation with the BankFinancial Management Specialist who will:

* review experience to date with the quality of withdrawal submissions, operation of the SpecialAccount, SOE submissions and documentation retention in the field, and the general effectiveness ofproject management and accounting staff;

* ensure that the Special Accounts have been reconciled and any outstanding issues resolved;* review supervision reports to assess implementation progress and issues;* review any available audit information, as well as any other financial reports, with a view to forming

an opinion on the reliability of project accounts.

All applications to withdraw proceeds from the Credit will be fully documented, except for expenditures foroperating costs and for contracts with a value of $30,000 or less for goods and equipment or for civilworks, and for consultant services under US$ 100,000 for firms and US$ 50,000 for individuals for whichreimbursements may be made against Statements of Expenditure (SOEs). Supporting documentation willbe retained by the PCU and will be available for inspection and review as requested by IDA SupervisionMissions and by project auditors. Above these thresholds, the borrower would submit fully documentedwithdrawal applications.

Two Special Accounts, acceptable to IDA, will be established. The first is to be used for activitiesassociated with Project Management, and costs associated with the Artisanal Crafts Developmentcomponent (which is primarily implemented by the Ethiopian Tourism Commission) and the second is to beused for costs associated with the Site Planning/Conservation and Inventory/ Documentation components(which are primarily implemented by the ARCCH.) The authorized allocation of these accounts will beUS$ 250,000 each. The advance to the Special Account is to be used by the Borrower to finance IDA'sshare of program expenditures under the Credit. Requests for replenishment of the Special Account couldbe submitted to IDA every month under normal circumstances, but in any event, not less frequently thanonce every three months. Project accounts and counterpart accounts would both be opened at the CentralBank of Ethiopia, or at a commercial bank, under terms and conditions satisfactory to IDA.

The borrower shall appoint an independent auditor acceptable to IDA. The auditor shall be responsible forthe audit of the annual financial statements. A single audit report will include an opinion on the financialstatements as well as opinions on the eligibility of the expenses disbursed on the basis of SOEs andtransactions from the Special Account. The audit shall be conducted in accordance with auditing standardsand under terms of reference acceptable to IDA. The costs of the audit will be covered with project funds.

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

There are not expected to be any significant negative environmental impacts of the project. Possible minorimpacts may be associated with site conservation activities, but these are expected to be negligible. Theimplementing agency will invite the National Environment Agency to review the Project ImplementationPlan and, where any monitoring is required, will involve the Agency.

In terms of limiting potential future negative impacts of development activities, through the Inventory andDocumentation Development component, the project will prepare guidelines, and pilot an approach, formitigating impacts of development on cultural sites (particularly, archeological sites).

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

n/a

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft:

n/a5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

n/a

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

n/a

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

Preliminary stakeholder analyses have been carried out in Axum by the regional government, which isintent on improving the urban fabric of old town Axum through better planning. A symposium held inApril 1998 identified priority actions to be undertaken to ensure that development needs are balanced withthe safeguarding of cultural heritage assets. Similar work is needed in Gondar, and this may be carried outin partnership with the World Monuments Fund. The project seeks to build on these early findings tostrengthen the role of the community in planning and managing these sites.

The 1997 Study of Traditional Handicrafts Development in the Tourist Industry of Ethiopia focused onthe social dynamics of craftspeople, and the fact that these are often the most impoverished groups lackingaccess to markets and new skills. The project seeks to provide assistance to address the factors which areconstraining sectoral performance, in particular by developing new markets for Ethiopian crafts and bystrengthening traditional craft production methods to meet these market demands. A series of consultationsin Axum and Harar were carried out with respect to establishment of local craft centers. The project willwork with both men and women artisans, keeping in mind specific needs and barriers that may pertain towomen. The project will establish links with the Women's Development Initiative (LIL), also funded by theBank.

It is expected that a Social Assessment will be carried out within the first six months of credit effectiveness,and will begin to articulate social and community issues with respect to site planning and conservation, andartisanal crafts development, using a range of qualitative and quantitative methods. The qualitative aspectof the social assessment will focus on a range of stakeholders, in particular the communities around Axumand Gondar, as well as artisan communities. The Social Assessment will consider the potential socialimpacts of the involvement of these communities and groups in project activities, and will contribute to thedevelopment of a project Monitoring and Evaluation system. The quantitative dimensions of the socialassessment will provide baseline infornation and will focus on socio-economic data collected at thehousehold level (including income), for a sample of main beneficiary groups. The Terms of Reference forthe Social Assessment are included as Annex 11 to this Project Appraisal Document.

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

Project ComponentForm of Site Planning and | Inventory and Documentation | Artisanal Crafts Development

Stakeholders Participation Conservation I(a) Primary beneficiaries and other affected groupsCommunities living close to IS, CON, COL Residents of Axum and Gondar Involvement in participatory Local residents consulted for theircultural sites of Axum and would be involved in the inventory and documentation dependence on traditional craftsGondar development and implementation activities as input into urban in Axum, Gondar, and Harar

of site planning and conservation planning activitiesactivities;

School children iS Dissemination of information N/A Some training may be provided.through site interpretationactivities

Craftspeople and artisans IS, CON, COL N/A Consulted for knowledge about Heavily involved in all aspects oftraditional artisanal production component implementationmethods

Traditional building tradespeople IS, CON, COL Involved in site conservation Consulted for knowledge about May be consulted and involved inactivities as source of knowledge, traditional building methods renovation of arts centersand as skilled site workmen

Urban and regional planners IS, CON. COL Involved in site planning as it May be involved in urban N/Arelates to urban town planning inventones

_b) Other key stakeholdersEthiopian Orthodox Church and IS, CON Church is involved in all aspects of implementation as a member of the project Steering Committee.its membersIslamic Council and its members IS, CON Islamic Council is involved in all aspects of implementation as a member of the project Steering

Committee

National heritage NGOs and IS, CON, likely Likely consultation and possible Will be kept appraised of project Collaboration likely to be soughtcultural organizations COL collaboration in site planning and activities, and consulted for as appropriate.

conservation activities. inputs into design of core nationalinventory standards.

Intemational cultural heritage IS, CON, COL IS as required by statute, CON Partnership arrangements likely 'Fair trade' NGOs will beorganizations and COL when possible. to be developed to bring expertise consulted. Possibilities for

Partnership arrangements likely and resources. collaboration.to be sought.

Tourism private sector IS, CON, COL Views of the industry sought N/A Opportunities for collaborationduring site planning will be explored.

Visitors to cultural sites in IS Views will be assessed about N/A Views will be sought regardingEthiopia potential improvements in visitor tourist market for craft products.

I . experience.

Notes:VS - Information Sharing; CON = Consultation; COL = Collaboration

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

Consultations will be key for implementation of the site planning and conservation component and thecrafts development component. These consultations are integrated into the implementation process. It isexpected that links will be established with other groups involved in cultural asset management, such as theEthiopian Heritage Trust, World Monuments Fund, and NGOs specializing in crafts product development.

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

Social assessments are considered a key part of the site conservation and planning component, and thiscomponent heavily derives from the results of the inventory and social and economic survey completedwithin the historic areas of Axum and Gondar. The project will include monitoring of social impacts, aspart of its monitoring and evaluation work. Terms of Reference for a Social Assessment are included asAnnex 1.

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

An M&E specialist is to be employed to develop and implement monitoring mechanisms, derived fromsocial assessments and household studies which have already been, or will be, completed. The M&Especialist is expected to work closely with social scientists employed through the project in doing this. TheSocial Assessment will include a quantitative assessment for the M&E baseline, as well as qualitativeanalysis.

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

Policy ApplicabilityEnvironmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes * NoNatural Habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes * NoForestry (OP 4.36, GP 4.36) 0 Yes * NoPest Management (OP 4.09) 0 Yes * NoCultural Property (OPN 11.03) 0 Yes 0 NoIndigenous Peoples (OD 4.20) 0 Yes 0 NoInvoluntary Resettlement (OP/BP 4.12) 0 Yes * NoSafety of Dams (OP 4.37, BP 4.37) 0 Yes 0 NoProjects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes 0 No

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

n/a

F. Sustainability and Risks

1. Sustainability:

This section is not to be completed in LIL PAD.

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

Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveSite Conservation and Planning. N Involvement of ETC in Project SteeringConserved sites will be attractive to Committee to ensure tourism needs aretourists. addressed.

Other partners will be willing to N Partnerships already established with UNESCO,participate in cultural heritage ICCROM, Ethiopian Heritage Trust, Worldconservation activities. Monuments Fund, and others.

Institutions within Ethiopia are able and S Steering Committee has central role ininterested in collaboration to meet the coordination with multiple stakeholders.project's objectives.

Inventory and Documentation M Developers are legally required to financeDevelopment. Resources will be available mitigation steps. The effectiveness of thisto implement mitigation plans in legislation will depend on Govenmment's

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threatened sites. willingness in enforcing it.

Partnerships can be developed to assist in N Partnerships have already been established andfinancing and implementing priority are being used to mobilize additional resourcesactions identified through the inventory. for site conservation and management activities.

Inventory process should assist in identifyingpriorities for future action through partnerships.

Artisanal Crafts Development. M Business training and market development haveInstitutional sustainability is possible been designed as components of the project.given existing fiscal constraints.

Tourism potential is developed and H Project seeks to diversify markets for craftprovides market for craft product. product, depending on local, regional, and

national markets.From Components to OutputsAdequate financial management and M Recruitment of Accountant and Procurementprocurement skills are in place for project Specialist are conditions of effectiveness.management.

Mechanisms for collaboration and H Steering Committee must give priority tocooperation between implementing establishing mechanisms for collaboration.agencies are clear;

Counterpart funds are made available in a M Future co-financing possibilities are beingtimely manner; co-financing obtained for explored.key activities;

Overall Risk Rating M

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

There are two significant risks. The first relates to the continuing challenges of development in thepost-conflict period. The second relates to the challenge of coordination between the multiple institutionsinvolved.

The recent conflict will limit the extent to which economic retums may be realized, because of thesensitivity of the tourism industry to regional conflict. Much damage to the tourism industry, which isheavily dependent on cultural resources, has been done. Longer term recovery of the industry will dependon regional stability.

With regard to the more immediate impacts of the conflict on project management and implementation, itmay be difficult to recruit the specialists needed in the face of the perception of instability. Consultingfirms and individuals can be expected to bid high, to reflect continuing concems of placing employees intopotential conflict situations. Other problems may include logistical issues such as the cancellation offlights and airport closures. Project supervision may equally be constrained, though this is less likely to bean immediate concem outside of project areas in northem Ethiopia.

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Institutional coordination will be a central challenge during implementation, both with regard tocoordination between central and regional institutions, within some of the lead institutions involved, andbetween government and nongovemment and religious organizations. The success of the project willdepend on cooperation and joint action of central and regional authorities. Ill will or mistrust couldjeopardize project implementation. These risks will be mitigated by the establishment of the projectSteering Committee, on which the primary implementing institutions are represented. The SteeringCommittee could be used as a means for resolving implementation difficulties, for conflict resolutionbetween stakeholders, and for clarifying responsibilities and actions required by various stakeholders.

3. Possible Controversial Aspects:

There are no particularly controversial aspects of the project envisaged. The most significant challengewill be to foster effective coordination and collaboration between the multiple stakeholders involved.

G. Main Credit Conditions

1. Effectiveness Condition

A PCU has been established and Government has appointed the Project Coordinator, Assistant ProjectCoordinator, Accountant and Procurement Specialist, all with experience and qualifications satisfactory tothe Association.

The Borrower had opened the Project Account and made the Initial Deposit into it.

The Borrower has established a Financial Management and Accounting system satisfactory to theAssociation for the Project.

2. Other [classify according to covenant types used in the Legal Agreements.]

H. Readiness for Implementation

D 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.

Z 1. b) Not applicable.

1 2. The procurement documents for the first six months' activities are complete and ready for the start ofproject implementation; and a framework has been established for agreement on standard biddingdocuments that will be used for ongoing procurement throughout the life of LIL

1 3. The LIL's Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

FI 4. The following items are lacking and are discussed under loan conditions (Section G):

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1. Compliance with Bank Policies

1 1. This project complies with all applicable Bank policies.O 2. The following exceptions to Bank policies are recommended for approval. The project complies with

all other applicable Bank policies.

Peter A. Dewees Agi Kiss shac DwanTeam Leader Sector Manager Country Director

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Annex 1: Project Design Summary

ETHIOPIA: Cultural Heritage Project

Key Performance Data Collection StrategyHierarchy of Objectives Indicators Critical Assumptions

Sector-related CAS Goal: Sector Indicators: Sectorl country reports: (from Goal to Bank Mission)To support Govemment's * National, regional and * Targeted ESW (possible Cultural heritage conservationcultural heritage conservation local governments institutional assessment contributes to increasedagenda, particularly with actively involved in for cultural heritage income through tourism, craftregard to capacity building, cultural heritage conservation) development, associatedincreasing sources of growth conservation initiatives; * Public Expenditure businesses, and generaland poverty alleviation. * Integration of cultural Reviews economic growth and

heritage conservation * Country Economic development.work with tourism Memoranduminitiatives; Political stability in the region

* Increased contribution of creates an enablingthe crafts/artisanal sector environment for tourismto local development and developmentincome generation.

Follow-on DevelopmentObjective:

* Scope for expandedaction is identified

* Pilot initiatives areassessed for usefullessons, and used as abasis for a wider programof support

* Additional financing issought from other donors

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Key Performance Data Collection StrategyHierarchy of Objectives Indicators I Critical Assumptions

Project Development Outcome / Impact Project reports: (from Objective to Goal)Objective: Indicators:To test the effectiveness of * Good practices for * Project M&E 'good Partnerships have theapproaches for managing cultural heritage practice' reports prepared potential for bringing aboutEthiopia's cultural assets conservation activities are for Gondar and Axum cultural heritage conservation.through partnerships in pilot identified and lay thesites. groundwork for future

investment and support;* Regional and local * Monitoring of Regional and local

govemments gain involvement of regional govemments share theperspectives on how and local authorities in national cultural heritagecultural heritage project implementation/ agenda.conservation can generate involvement in Steeringbenefits; Committee

* Partners (i.e. the private * Project reports on Private sector has the capacitysector, NGOs, regional partnership arrangements to bring resources to bear ongovernments) take a more and involvement in cultural heritage conservation.active role in cultural meetings.heritage conservation;

* Improved basis for * M&E of progress withinnovation and crafts/centers work anddevelopment of crafts and Social Assessment.artisanal design.

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Key Performance | Data Collection StrategyHierarchy of Objectives Indicators Critical Assumptions

Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:1. Appropriate system has * Model conservation plan * M&E of site conservation Conserved sites will bebeen tested and is in place for developed and site plan development attractive to tourists;cost-effective development of conservation activities process. Site inspections.site plan for Gondar and launched in Gondar, and Regular project reporting.Axum; in Axum. First phase of

site conservationactivities is launched.

* Visitor interpretation * M&E reports. Site Other partners will be willingwork completed. inspections. to participate in cultural

heritage conservationactivities.

* Additional partners are * M&E reports. Regular Institutions within Ethiopiainvolved in communications with are able and interested inimplementation of site partners and involvement collaboration to meet theconservation plans; in meetings. project's objectives.

* Community-based * M&E reports and projectactivities are incorporated reports. Site inspections.into implementation Community members areplans. given responsibility for

specific implementationsteps.

* Craft/cultural center * M&E reports for thisintegrated into site component, Gondar, andplanning and Axum work. Siteimplementation, where inspectionsappropriate

* Axum museum planned * Planning documentsand designed

* 12 regional and national * Training reportsstaff trained in museumcuration

2. Databases of cultural assets * Methodology and pilot * Database. M&E of its Resources will be available toare developed in pilot regions database of cultural use and applications; implement mitigation plans inand are functional and heritage assets developed threatened sites.accessible to key stakeholders; through integrated effort

of national and regionalinstitutions andcommunities. Includespriority setting process,critical assets and threats.

* Plans in preparation for * Planning outputs. Project Partnerships can be developedsteps to conserve cultural reports of the planning to implement additionalheritages in specific process. activities related to theareas. planning process.

* Guidelines are prepared * Project reports, andoutlining how threatened Guidelinessite mitigation plansshould be prepared

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3. Functioning craft advisory * Functioning craft and * Site inspections. M&E Institutional sustainability isservices are provided through cultural centers established reports. Market studies. possible given existing fiscaltwo regional craft centers in which artisans and Social Assessment and constraints.which are established in producers design, develop, Baseline surveys ofrenovated architecturally display, and sell local craftspeople Tourism potential is developed.significant structures, and products, and testintegrated into local cultural marketing approaches.heritage conservation efforts. Increased income of

craftspeople.* mechanisms are in place to * Mid-term review. Final

ensure sustainability and evaluation. Projectquality standards are reports. Client surveys.developed and Guides to qualityimplemented through local standards prepared.and export marketingefforts

* evaluation system is in * Project reports. Evidenceplace which provides that evaluation systemframework for affected outdecision-making at craftcenter level

* increased site visitor * Visitor surveyssatisfaction

Project Components / Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Conservation planning IDA: 1.8 * Supervision Mission Needed staff are hired in aand physical site restoration GOE: 0.2 interviews with project timely manner byin Gondar and Axum Subtotal: 2.0 staff/ stakeholders, implementing agencies

periodically reported inPSR.

2. Pilot inventory and IDA: 1.1 * Regular PMR Mechanisms for collaborationdatabase of cultural heritage GOE: 0.2 and cooperation betweenassets in Tigray, Amhara, and Subtotal: 1.3 implementing agencies areOromiya clear;

3. Establishment of pilot IDA: 1.8 Counterpart funds are maderegional centersfor GOE: 0.2 available in a timely manner;traditional artisans and Subtotal: 2.0 co-financing obtained for keycraftsmen in Addis Ababa, activities;Axum, and Harar

4. Project management IDA: 0.3GOE: 0.1Subtotal: 0.4

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Annex 2: Detailed Project Description

ETHIOPIA: Cultural Heritage Project

This Annex is condensed from the Working Papers which describe each project component morefully, and which comprise part of the Project Implementation Plan. Project costs in this Annexinclude physical and price contingencies and counterpart financing.

By Component:

Project Component 1 - US$2.00 millionSite Planning and Conservation

The project will provide resources for site planning and conservation in two pilot sites, Axum and Gondar.Two specific sets of activities will be undertaken in both sites:

* Site planning. The project would provide the resources for development of documentation and afull site analysis leading to the formulation of a conservation, development and interpretation master planfor both the Axum and Gondar World Heritage Sites. A document search and an integrated planningexercise will be undertaken with the orchestrated inputs of an interdisciplinary team of experienced nationaland intemational specialists and technical advisers, which will focus on the principal site conservationproblems in light of local infrastructure needs and development priorities and the identification of practicalsolutions adapted to the local context. The results will eventually be consolidated into a set of conservationguidelines, which will complement and reinforce ongoing efforts. The documentation and site analysiswork will contribute directly to the planning and development of an interpretation and community outreachand participation program.

* Site conservation and interpretation. The project would finance the development of a series ofpilot activities in architectural conservation and archaeological consolidation coupled with the productionof interpretative aids and exhibits, and community involvement in the process, to bring the conservation andinterpretation master planning exercise into the real world. Detailed planning of this second phase will needto take place upon inception of the project with strategic inputs provided by the different short-termexperts. The aim is three-fold, to stabilize the structures and archaeological remains most at risk, toproduce visible results as quickly as possible in order to learn and lay the groundwork for further worksand public programs, and to strengthen the framework for interpreting the site to visitors.

In Gondar, the project would finance the development of a conservation plan for the walled fortress palacecomplex of Fasil Ghebbi to identify priorities for future site conservation activities, taking into specificconcern the potential for strengthening the involvement of the community in the use of the palace complex.This work would be carried out in conjunction with efforts to improve site interpretation, specifically toenhance the experience of local, national and foreign visitors to the site. The development of aninterpretation center will be planned in the process, and the project will fnance its establishment. Trainingand capacity building for site planning and interpretation will be key elements of this activity. Findingmechanisms for the fuller involvement of the people of the town of Gondar in the management and use ofthe site will be an underlying objective of the planning process.

With regard to Axum, the project will finance site planning activities for the town's archeological sites,including the development of plans for an expanded archeological museum which may also be designed andconstructed to house more recent historical acquisitions as well, and to serve as a local cultural educationresource. Museum planning will be carried out in conjunction with efforts to increase the institutional

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capacity, through curation skills training, at the national and regional levels better to handle the tasks ofmuseum curation and management. Site planning will focus on specific needs for better site presentationand interpretation to assist in the management of visitors to Axum, and on integrating the results of aninventory of 19th and 20th century vernacular Tigrayan architecture in the older parts of Axum into the siteplan, in conjunction with the recently completed town master plan. The interests of the community in thefuture of old Axum, and the potential for closer cooperation with the Ethiopian Orthodox Church in theconservation of ecclesiastical art will be explored.

Implementation of this component would be the responsibilities of regional and zonal culture and tourismbureaus in Axum and Gondar, with technical support and resources provided through the ConservationDepartment of ARCCH. The project will also include financing in the third or fourth project years toinitiate priority conservation activities identified as an outcome of the planning process. Site Planning andConservation activities will be undertaken on a pilot basis to develop the capacity and techniques for thesetasks amongst local, regional, and national staff and to lay the basis for future site conservation activitieselsewhere in Ethiopia, for example, in other World Heritage Sites such as Lalibela and Tiya. The projectwill seek to establish stronger links between ARCCH and ETC in marketing and promotion of these sites.

Project Component 2 - US$1.30 millionInventory and Documentation Development

The objective of this component is to develop the capacity to enable regional govemments more effectivelyto manage cultural resource assets by establishing a better information base for the purposes of planning,conservation, and threat mitigation. Capacity development in this area will be a central function ofARCCH, which will coordinate its activities with regional and zonal bureaus to improve methodologicalapproaches, technologies, and capacity to manage documentation requirements, and to ensure consistencywith accepted standards and practices, in priority zones and regions. Pilot inventory activities will beregionally identified and then reviewed by the Steering Committee and are expected to be undertaken in 3regions: Tigray, Amhara, and Oromiya regions. The role of the ARCCH will be incrementally to supportthe development of an enhanced and coordinated system of inventorying and assessment that directly servesthe needs of regional bureaus in conserving and developing sites and cultural resources.

Implementation of this component would be the responsibility of a team assembled from two Departmentswithin ARCCH, the Conservation Department and the Inventory Department with technical assistance asneeded. The objective of developing a closer working relationship between these two Departments is toensure that inventory activities are undertaken in a way which leads directly to planning for conservationand other activities, rather than as an end in itself. As a first step, and working closely with the regionalbureaus, the Inventory Department will review and assess the extent of existing national, regional, local,and project specific inventories. ARCCH would then manage a series of workshops to gain a consensusabout core national standards and methodologies and about the most effective system for coordinating thecollection and exchange of inventory information between the center and the regions. Within this basicframework, the needs for adaptive inventory information to meet specific local or regional demands, wouldalso be identified. The project will build on recently completed UNESCO efforts in the area of inventoryand documentation.

Once core national standards have been agreed, ARCCH would mount a series of workshops and traininginitiatives in the three pilot regions more fully to develop the skills of regional and zonal staff to carry outinventory work, and to build the capacity of professionals and local organizations for priority-setting,participation, and involvement in selected pilot inventory sites. The equipment needed to support inventorypreparation on a pilot basis would also be provided through the project.

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A number of potential regional pilot inventory activities have been identified. During the earliest stages ofproject implementation, agreement would be reached between the regional bureaus and ARCCH about theactivities which should receive priority. In Tigray Region, for example, there are needs for the applicationof consistent national standards to archeological surveys proposed for old town Axum, as well as needs todevelop better information in an inventory format about the rock-hewn churches of Tigray and their artisticholdings. In Amhara region (and in conjunction with site planning and conservation work in Gondar), thereare needs to focus attention on the application of consistent national standards to the development of aproposed documentation center, scope for improved inventory and documentation development of historicsites around Gondar, and needs for an inventory of ecclesiastical holdings (in cooperation with the Church)of the island monasteries of Lake Tana.

A critical and growing need, which the project would also address, relates to developing the capacity withinARCCH's Archeology Department, to provide specific rapid assessment capabilities in advance of theestablishment of hydroelectric and other dams, roads, and other development activities. The objective ofdeveloping this capacity within ARCCH would be to enable it quickly to survey potentially threatenedarcheological sites which could be inundated as a result of dam development projects and to put in placemitigation measures, such as the relocation of project activities, modifications in project design so that sitesand structures can be conserved, studied, documented, and, as appropriate, preserved in situ, or, as a lastresort, the physical removal of artifacts. ARCCH would develop a methodology for rapid assessment, andwould prepare mitigation guidelines to assist regional bureaus in responding to this immediate threat toarcheological sites. Pilot efforts would be focused on Oromiya region or on another region, to be agreedwith the Bank.

Project Component 3 - US$ 2.00 millionArtisanal Crafts Development

The rich material culture of Ethiopia is captured in the work of traditional craftsmen and artisans. Thiscomponent of the Cultural Heritage Project has the objective of finding ways of preserving these ancientcraft traditions and of reestablishing craft making as a vital part of community and national economic life.Working on a pilot basis, tentatively in Axum, Addis Ababa, and Harar, this component will provideartisans with design guidance, technical skills, business understanding, and direct market links to generatesales to local, tourist, regional, and export markets and to develop quality standards, market momentum,and local capacity needed to sustain craft industry growth for the coming decades. One of the outcomes ofthe activity would be an increase in tourist spending in pilot sites, and the linkage of crafts production withthe cultural life in these areas.

Key strategies for achieving these objectives will include bringing experienced commercial designers towork with artisans to create tradition-based but market-driven products with increased salability to keymarket segments. The project will also provide training in costing and pricing, production management,and marketing to increase independent entrepreneurial capacity. In addition, assistance will be provided toimprove links between artisan producers and retailers, exporters, and shippers to increase local craft salesopportunities and to support the export trade. Craft product lines developed through the project will beexhibited in local galleries and at intemational trade shows with the support of the project.

Subject to reaching an agreement with regional culture and tourism bureaus, the project will establish smallartisan centers, also on a pilot basis, in renovated historically or architecturally significant structures as aplace for training, and to provide a venue for demonstration of traditional craft making, and for exhibiting

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locally-made crafts. The artisanal centers would be established also as a means of facilitating access ofproducers to alternative and expanded markets, and of buyers to a wider range of dealers, craftsmen, andcraft product.

The project will also seek to develop the capacity of NGOs to become involved in craft development andmarketing by working with them to organize artisans, provide training and marketing guidance, establishlinkages with the private sector, and other support designed to foster independent craft entrepreneurshipand craft market growth.

Project Component 4 - US$0.40 millionProject Management

The project will provide funds for project management, particularly, to cover the costs of the ProjectCoordination Unit. Funds are provided to employ specialist staff to work in the unit, as needed. It isenvisaged that the Coordination Unit will separately employ an Accountant, Procurement Specialist, andMonitoring and Evaluation Specialist. The positions of Project Coordinator and Assistant ProjectCoordinators are likely to be filled by existing staff with ETC and ARCCH respectively.

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Annex 3: Estimated Project CostsETHIOPIA: Cultural Heritage Project

(US$ 000)Components Project Cost Summary Local Foreign Total

A. Site Planning and Conservation1. Gondar 400 440 8402. Axum 370 520 890

Subtotal Site Planning and Conservation 770 960 1,730B. Inventory and Documentation Development

1. Inventory Development 310 450 7602. Capacity Building for Rapid Assessment and Mitigation 130 180 310

Subtotal Inventory and Documentation Development 440 630 1,070C. Artisanal Crafts Development 570 1,160 1,740D. Project Management 400 - 400Total BASELINE COSTS 2,180 2,750 4,930

Physical Contingencies 160 170 330Price Contingencies 210 230 440

Total PROJECT COSTS 2,550 3,150 5,700

Project Costs by Category

Total Project Costs (US$ '000)Expenditure Category Total Local Foreign

1. Civil Works 1,000 1,000 02. Goods and Equipment 940 270 6703. Consulting Services 2,780 720 2,0604. Training 540 210 3305. Operating Costs 440 350 90Unallocated - - -

Total Project Costs 5,700 2,550 3,150

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Annex 4: Cost Effectiveness Analysis SummaryETHIOPIA: Cultural Heritage Project

In the context considered here, 'cultural heritage' includes both the material aspects of culture (forexample, historic sites and buildings, landscapes, and objects of particular historical, architectural,aesthetic, or cultural significance) as well as nonmaterial aspects such as social practices, symbolic formsof expressions (for example, the arts, music, dance, oral traditions, literature, etc.), values and beliefs.

Summary of benefits and costs:In light of the pilot nature of this project, only notional and qualitative economic analyses will beundertaken a priori. The project is expected to generate a range of benefits associated with: a) experiencegained with various institutional partnership arrangements for cultural heritage conservation; b) improvedplanning and site interpretation to accommodate conservation needs and tourism interests in cultural sites;c) growth and poverty reduction associated with the development of enterprises to support artisanal craftdevelopment; d) conservation of cultural assets which might otherwise have been lost, for example, to theftor as a result of development; e) community involvement in cultural site conservation and management; andf) improved institutional capacity to formulate and implement cultural asset management programs.

Main Assumptions:Cost-effectiveness was carefully considered during project design. As pilot operations, interventions underall components are expected to be relatively small-scale and will seek to optimize the impacts of resourceuse by developing partnership arrangements with domestic and intemational organizations such asEthiopian Conservation Trust, ICCROM, the World Monuments Fund, and UNESCO. Site conservationactivities are expected to use local building materials, local techniques, and labor intensive methods. Thereis a very strong element of capacity building in the project design, which is intended to contribute tolonger-term sustainability.

Cost-effectiveness indicators:

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Annex 5: Financial Summary

ETHIOPIA: Cultural Heritage Project

Years EndingJune 30

IMPLEMENTATION PERIOD

Year 1| Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7Total FinancingRequiredProject CostsInvestment Costs 0.7 1.5 1.4 1.2 0.4 0.0 0.0Recurrent Costs 0.1 0.1 0.1 0.1 0.1 0.0 0.0

Total Project Costs 0.8 1.6 1.5 1.3 0.5 0.0 0.0Total Financing 0.8 1.6 1.5 1.3 0.5 0.0 0.0

FinancingIBRDIIDA 0.7 1.4 1.3 1.2 0.4 0.0 0.0Government 0.1 0.2 0.2 0.1 0.1 0.0 0.0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.00.0 0.0 0.0 0.0 0.0 0.0 0.0

Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0Total Project Financing 0.8 1.6 1.5 1.3 0.5 0.0 0.0

Main assumptions:

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Annex 6: Procurement and Disbursement Arrangements

ETHIOPIA: Cultural Heritage Project

Procurement

General

Procurement financed under the project will be limited to recruitment of consultants services, officeequipment, a limited number of vehicles, office rental, and some civil works. An experienced ProcurementSpecialist in the Project Coordination Unit will be responsible for ensuring that procurement for works andgoods is carried out in accordance with the Bank's Guidelines for Procurement under IBRD Loans andIDA Credits (dated January 1995 and revised in January and August 1996, in September 1997, andJanuary 1999). Consultancy services financed by IDA will be procured in accordance with the BankGuidelines for the Selection and Employment of Consultants by World Bank Borrowers (dated January1997, and revised September 1997 and January 1999). Procurement arrangements and prior reviewthresholds are detailed in Table A and Table B.

A General Procurement Notice will be published in United Nations Development Business (UNDB) for theprocurement of ICB goods and major consulting assignments and will include a detailed description ofrequired services or goods, the client agency, and the budgeted cost. This notice will be updated every yearduring the execution of the projects until all contracts and assignments have been procured. In the case ofcontracts which are expected to cost more than $200,000 equivalent, Specific Procurement Notices will beissued seeking expressions of interest through the national press and UNDB.

To the extent possible, procurement arrangements have been designed to respond to the need for flexibleuse of procurement methods, given the institutional capacity of the implementing agencies. A detailedProcurement Plan summarizing procurement requirements for the first year of the project has beenprepared, and this will be revised annually during preparation of the Annual Work Program and Budget.Whenever possible, procurement items will be consolidated into appropriately-scaled contracting packages.

Procurement Evaluation Committee

Most procurement of goods, works, and services will be carried out by the PCU. Participating agencieswill be able to procure a limited number of small items (i.e. incremental operating expenditures such asfuel, office supplies, DSA, etc.) to facilitate the timely execution of tasks.

A Procurement Evaluation Committee (PEC) will be constituted by the Steering Committee to support theimplementation of the Cultural Heritage Project. Its primary function will be to evaluate tender documentsfor all goods, works, and services to be financed by the Project, and on the basis of these evaluations,provide recommendations for contract awards. The Committee consists of:

Project Coordinator, ChairmanProcurement Specialist, PCU (Member & Secretary)Accountant, PCU (Member)Other members to be assigned on an ad hoc basis

The presence of all PEC members will be required for all bid evaluations.

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Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

Procurement MethodExpenditure Category ICB NCB Other' N.B.F. Total Cost

1. Works 0.00 0.25 0.75 0.00 1.00

(0.00) (0.15) (0.60) (0.00) (0.75)

2. Goods 0.29 0.25 0.40 0.00 0.94

(0.21) (0.17) (0.30) (0.00) (0.68)

3. Services 0.00 0.00 2.78 0.00 2.78

(including audits) (0.00) (0.00) (2.63) (0.00) (2.63)

4. Training 0.00 0.00 0.54 0.00 0.54

(0.00) (0.00) (0.51) (0.00) (0.51)

5. Operating Costs 0.00 0.00 0.44 0.00 0.44(0.00) (0.00) (0.43) (0.00) (0.43)

Total 0.29 0.50 4.91 0.00 5.70

(0.21) (0.32) (4.47) (0.00) (5.00)

"Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.

2 1/ ncludes civil works and goods to be procured through national shopping, consulting services, services ofcontracted staff of the project management office, training, technical assistance services, and incrementaloperating costs related to managing the project.

The Procurement Specialist, who may require short term TA to assist in the preparation of TORs and

evaluations, will carry out two basic tasks: (1) advertising for, supporting and overseeing the process of

selecting consultants and contractors, and procuring goods and equipment required by the executing

agencies (ETC, ARCCH, and Regional Bureaus); and (2) contracting all procurement actions for the

Project. Procurement tasks will involve preparing detailed TORs for consultants, specifications for bidding

documents, preparation of short lists, evaluation of proposals and bids (in accordance with criteria set-out

in standard RFPs and bidding documents) and selection/award recommendations.

Civil works

Civil works to be carried out under this project are expected to consist of small contracts under

US$100,000 and therefore no procurement under ICB procedures is envisaged. Individual contracts for

civil works under US$75,000, up to an aggregate amount of US$200,000 will be procured following lump

sum contract procedures, and on the basis of three quotations from eligible contractors. It is envisaged that

contracts for larger site conservation for which extensive specialist skills are not required, and which cost

more than US$75,000 but less than US$100,000 per contract will be procured under National Competitive

Bidding (NCB). Smaller works executed under the direct supervision of staff from Regional Bureaus and

ARCCH and costing less than US$30,000 per contract, up to an aggregate amount of US$400,000 may be

procured under Force Account, particularly where experienced specialist craftsmen and builders who have

typically been employed by Regional Bureaus in the past are needed.

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Goods and Equipment

Contracts for the procurement of goods (e.g. vehicles, computers and other office equipment not availablelocally) will be packaged into larger contracts wherever possible. Goods with an estimated value of morethan US$ 100,000 per contract will be procured through International Competitive Bidding, using theBank's Standard Bidding Documents (SBD). Equipment/furniture which is available locally with anestimated value of less than US$100,000 per contract, up to an aggregate amount of about US$250,000equivalent will be procured following National Competitive Bidding (NCB) procedures. Goods andequipment may be purchased through the Inter-Agency Procurement Services Office (IAPSO) of the UnitedNations, provided that individual contracts do not exceed $50,000 for an aggregate not to exceed $200,000.National Shopping procedures, based on comparing price quotations from at least three domestic suppliersin response to written invitation, may be used for items available off-the shell for individual contracts ofUS$30,000 equivalent or less, up to an aggregate amount of about US$200,000. All ICB contracts and allother contracts above US$100,000 will be subject to Bank prior review. In addition, the first threecontracts procured under NCB will be subject to prior review by the Bank.

Consulting Services and Training

Consultancy services for all components of the project, including studies, technical assistance, supervisionof works, and training, requiring the recruitment of consulting firms or individual consultants will beprocured in accordance with the Bank's Guidelines for the Selection and Employment of Consultants byWorld Bank Borrowers. Contracts for assignments above the threshold of $100,000 for firms, and $50,000for individuals will be awarded, following Quality and Cost Based (QCBS) procedures.

Individual consultants contracts and consulting firms contracts below the threshold of US$50,000 andUS$100,000 respectively may be awarded on the basis of qualifications and experience in accordance withBank guidelines. For these contracts, IDA's prior review will be required of all TORs, proposed budgets,contracts, and consultant qualifications. Sole sourcing may be allowed on an exceptional basis and with theprior agreement with IDA, subject to the conditions outlined in the Guidelines. Prior review will also berequired of all single-source consultancy or training contracts, regardless of their value. Contracts forindividual consultants below US$50,000, and for consulting firms below US$100,000, will be subject topost-review. Technical evaluation report for contracts exceeding US$100,000 will require IDA'sno-objection. With regard to workshops, training, and study tours, IDA's prior review of arrangementsrelated to participation in workshops and training, including proposed budget, agenda, participants,location of training, and other relevant details, will be required. For most activities, however, prior reviewwill be limited to ICB and to contracts above the thresholds stated above. IDA may request prior review ofbid documents, evaluation methods and contracts for which they require more detailed information.Similarly, any request for no objection from Secretariat will be formally replied by IDA.

Incremental operating costs

Incremental operating costs are defined to mean building, equipment, and vehicle maintenance costs, fuel,office supplies, building rental charges, utilities, and telecommunications costs, and the costs of Projectsupport staff, but excluding salaries of officials of the civil service (which are, in any event, not eligible forIDA financing).

Post review

Under the project, the procurement actions not subject to prior review as described above, will be subject to

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post-review. This to allow for fast disbursement of fimds while assuring transparency and consistency withthese procedures. All documentation used for the procedures of contracting , recruitment of consultingservices, evaluation and award shall be retained by the Secretariat for subsequent examination byindependent auditors and IDA supervision missions. The number, timing and pattern of supervisionmissions will be determined at the start of the implementation program.

Overall Procurement Risk Assessment

Procurement risks are assessed to be average for this project. It is expected that procurement matters willbe explicitly addressed in supervision missions twice during the first project year, and once per yearthereafter.

Prior review thresholds (Table B)Table B: Thresholds for Procurement Methods and Prior Review

Contracts subjectExpenditure Category Contract value Procurement method to prior reviewA. Civil Works /a < $30,000 Force account to be used for none

small, specialist tasks, up to anaggregate amount of US$ 400,00(

< $75,000 Fixed price contracts (up to an first three contractsaggregate value of $ 200,000),awarded on the basis ofquotations obtained from threequalified national contractors

> $75,000 but NCB first three contracts< $100,000

B. Goods and Equipment < $30,000 Local shopping, for an aggregate nonenot to exceed $200,000

> $30,000 but NCB, for an aggregate not to first three contracts< $100,000 exceed $250,000 subject to prior

review> $100,000 ICB All< $50,000 IAPSO. Contracts < $50,000 for none

an aggregate not to exceed$200,000.

C. Consulting Services and > = $50,000 for QCBS. Sole sourcing may be AllTraining (including Audits) individuals; allowed, subject to clauses 3.8 -

>= $100,000 for 3.11 of Guidelines.firms

< $50,000 for Individual Qualifications. Sole TORs, budget,individuals; sourcing may be allowed, subject qualifications,< $100,000 for to clauses 3.8 - 3.11 of contractfirms; Guidelines.

Workshops, Acceptable national practice Alltraining, studytours

D. Incremental Operating All operating Local shopping NoneCosts costs and field

expenses

QCBS - Quality and Cost-based SelectionNCB - National Competitive BiddingICB - International Competitive BiddingIAPSO - Inter-Agency Procurement Services Organization

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Disbursement

Allocation of credit proceeds (Table C)General

Disbursements would be in accordance with the Bank's Disbursement Handbook on the basis of incurredeligible expenditures. The proposed allocation of loan proceeds is shown in Table C.

Accounting and Financial Reporting

Financial management arrangements

ETC is responsible for the management of project funds, including the proceeds of the credit andcounterpart funds. A review of ETC's accounting and financial management systems during thePreappraisal mission concluded that these are basically sound, but that capacity should be strengthened totake on the tasks of managing project funds. Experience with Bank disbursement procedures was gainedthrough the management of various resources made available for project preparation. The Commission hasalso gained considerable experience in managing projects which have been financed from the capitalbudget, as well as a UNDP project which was intended to build the capacity of the Commission and TourOperators. A qualified Accountant is to be recruited, by credit effectiveness, to handle project financialmanagement within ETC's Finance Division. The Finance Division is part of ETC's Finance andAdministration Department. The Division is comprised of 3 staff who hold Diplomas from the CommercialCollege.

Accounting Arrangements

Most Ministries and Commissions in Ethiopia use single-entry accounting systems. Most are alsodependent on annual budgetary allocations, and only record receipts and payments using a standardizedjournal. Ministry accounts are periodically inspected by the Inspection Department of the Ministry ofFinance and audited by the Auditor General, who reviews the use of funds allocated. Ministries themselvesdon't normally prepare annual accounts, as such, using accountancy standards. The preparation of annualaccounts is carried out by the Ministry of Finance.

In contrast to this prevailing practice, and in order to ensure sound project financial management, theFinance Division of ETC will maintain accounting systems for the project in accordance with currentsingle-entry accounting practices which will include the following features: (a) application of consistentaccounting principles for documenting, recording, and reporting its financial transactions; (b) a Chart ofAccounts, and a coding system, will be prepared which allows the Accountant to prepare meaningfulsummaries of financial transactions for financial reporting purposes; (c) the use of an asset register; (d)regular closing and reconciliations of accounts and statements; (e) the production of annual financialstatements acceptable to IDA. These systems will be supplemented by specific measures covering theproject budget, and the management of the Special Accounts and a Project Account.

Project expenditures will be recorded and reported by the Finance Division based on the accountsmaintained by it, as well as on information prepared by ARCCH and provided by regional culture andtourism bureaus to ETC and ARCCH. Financial Management Reports (FMRs) are expected to beprepared every six months and will include, at a minimum, the following documents: (a) a Summary ofSources and Uses of Funds; (b) uses of Funds by Project Activity; (c) summaries of the Special Accountsactivities and of SOE disbursements, and (d) notes to the financial statements.

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A review of accounting and financial management which was carried out during the Preappraisal Missionconcluded that, while the Ethiopian Tourism Commission's financial management system is basicallysound, it's capacity should be improved.The following steps will be carried out to help build this capacity:

* a qualified Accountant will be recruited as a condition of effectiveness;* development of a Chart of Accounts, appropriate for the project (within 6 months of effectiveness);* development of a financial reporting format acceptable to the Bank (within 6 months of effectiveness);

Table C: Allocation of Loan Proceeds

Loan Amount FinancingExpenditure Category (in US$ '000) Percentage1. Civil Works 700 90 %2. Goods and Equipment 650 100 % of foreign

expenditure;90 % of localexpenditures

3. Consulting Services 2,500 100 %4. Training 500 100 %5. Operating Costs 400 90 %Unallocated 250Total 5,000

The loan amount will be allocated by expenditure category amongst the project's two implementingagencies to reflect expected expenditures in each component.

The Commnission and the Project Coordination Unit, with the agreement of the Bank, may choose eithertraditional or Financial Management Report (FMR)-based disbursements, though is expected to usetraditional disbursement methods in the first instance. In the event that the PCU wishes to adoptstreamlined FMR-based disbursement methods, this decision will be made in consultation with the BankFinancial Management Specialist who will:

* review experience to date with the quality of withdrawal submissions, operation of the SpecialAccount, SOE submissions and documentation retention in the field, and the general effectiveness ofproject management and accounting staff;

* ensure that the Special Accounts have been reconciled and any outstanding issues resolved;* review supervision reports to assess implementation progress and issues;* review any available audit information, as well as any other financial reports, with a view to forming

an opinion on the reliability of project accounts.

Use of statements of expenditures (SOEs):

All applications to withdraw proceeds from the Credit will be fully documented, except for expenditures foroperating costs and for contracts with a value of $30,000 or less for goods and equipment or for civilworks, and for consultant services under US$ 100,000 for firms and US$ 50,000 for individuals for whichreimbursements may be made against Statements of Expenditure (SOEs). Supporting documentation will

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be retained by the PCU and will be available for inspection and review as requested by IDA SupervisionMissions and by project auditors. Above these thresholds, the borrower would submit fully documentedwithdrawal applications.

Special account:Two Special Accounts, acceptable to IDA, will be established. The first is to be used for activitiesassociated with Project Management, and costs associated with the Artisanal Crafts Developmentcomponent (which is primarily implemented by the Ethiopian Tourism Commission) and the second is to beused for costs associated with the Site Planning/Conservation and Inventory/ Documentation components(which are primarily implemented by the ARCCH.) The authorized allocation of these accounts will beUS$ 250,000 each. The advance to the Special Account is to be used by the Borrower to finance IDA'sshare of program expenditures under the Credit. Requests for replenishment of the Special Account couldbe submitted to IDA every month under normal circumstances, but in any event, not less frequently thanonce every three months.

Project Accounts/Counterpart Accounts

Project accounts and counterpart accounts would both be opened at the Central Bank of Ethiopia, or at acommercial bank, under terms and conditions satisfactory to IDA. The Project Coordination Unit withinthe ETC would have financial monitoring responsibilities.

Auditing Arrangements

The borrower shall appoint an independent auditor acceptable to IDA. The auditor shall be responsible forthe audit of the annual financial statements. A single audit report will include an opinion on the financialstatements as well as opinions on the eligibility of the expenses disbursed on the basis of SOEs andtransactions from the Special Account. The audit shall be conducted in accordance with auditing standardsand under terms of reference acceptable to IDA. The costs of the audit will be covered with project funds.

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Annex 7: Project Processing Schedule

ETHIOPIA: Cultural Heritage Project

Project Schedule Planned ActualTime taken to prepare the project (months) 5First Bank mission (identification) 11/05/1998 11/05/1998Appraisal mission departure 02/15/1999 01/10/2002Negotiations 04/15/1999 02/20/2002Planned Date of Effectiveness 10/15/1999 07/01/2002

Prepared by:

On Government's behalf, the project was prepared by the Ethiopian Tourism Commission, the Authorityfor Research and Conservation of Cultural Heritage, and Regional culture bureaus from Tigray, Amharaand Region 14 (Addis Ababa) with close involvement of the World Bank.

Preparation was halted between June 1999 (when a Technical Mission was launched to finalize projectpreparation), and January 2002 (when the Appraisal was completed) because of the conflict with Eritrea.

Preparation assistance:

Preparation assistance was provided by the World Monuments Fund, ICCROM (the Intemational Centerfor the Study of the Preservation and Restoration of Cultural Property), and Aid to Artisans. Additionalinputs have been financed with a Japanese Policy and Human Resources Development (PHRD) Grant($177,000).

Bank staff who worked on the project included:

Name SpecialityPeter Dewees Task Team Leader

Stephen Stem Cultural Heritage and Partnerships Specialist, SDVAnn Pulver Conservation Planning Specialist, World Monumnents Fund

Karla Hostetler Artisanal Crafts and Marketing Specialist, Aid to Artisans

Joseph King Site Conservation Specialist, ICCROM

Getahun Gebru Operations Specialist, AFMETEshetu Yimer Financial Management Specialist, AFMET

Marylou Bradley Operations Officer, AFTH4

Roxane Hakim Social Anthropologist, AFTESQUALITY ASSURANCE TEAMFrancesco Samo Procurement SpecialistIraj Talai and Brighton Musungwa Financial Management SpecialistsPEER REVIEWERS

Maryse Gautier Senior Municipal Engineer, MNSIDJune Taboroff Cultural Heritage Consultant

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Annex 8: Documents in the Project File*ETHIOPIA: Cultural Heritage Project

A. Project Implementation Plan

Project Implementation Plan, SurnmaryWorking Paper 1: Site Planning and Conservation, AxumWorking Paper 2: Site Planning and Conservation, GondarWorking Paper 3: Inventory and DocumentationWorking Paper 4: Artisanal Crafts DevelopmentWorking Paper 5: Project Management

B. Bank Staff Assessments

Minutes of the Concept Review Meeting (10/26/1998);Minutes of the Decision Meeting (6/14/1999);Peer Reviewer's Comments (Maryse Gautier, 10/21/1998; June Taboroff, 10/20/1998)

C. Other

Integrated Safeguards Data Sheet.Including electronic files

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Annex 9: Statement of Loans and CreditsETHIOPIA: Cultural Heritage Project

O 1 -Mar-2002Difference between expected

and actualOriginal Amount in US$ Millions disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig Frm Rev'dP069083 2001 GLOBAL DISTANCE LEARNING 0.00 4.90 0.00 0.00 0.00 4.86 0.94 0.00

P067084 2001 EMERGENCY RECOVERY AND REHAB. PROJECT 0.00 230.00 0.00 0.00 0.00 181.86 96.03 0.00

P069886 2001 ETHIOPIA MULTISECTORAL HIV/AIDS PROJECT 0.00 59.70 0.00 0.00 0.00 47.03 2.63 0.00

P073196 2001 Demobilization and Reintegration Project 0.00 170.60 0.00 0.00 0.00 109.18 30.00 0.00

P050342 2001 WOMEN'S DEVELOPMENT INITIATIVES PROJECT 0.00 5.00 0.00 0.00 0.00 4.40 0.53 0.00

P052315 2001 CONSERVATION OF MEDICINAL PLANTS 0.00 2.60 0.00 0.00 0.00 2.41 -0.12 0.00

P035147 2001 CONSERV.& SUSTAIN. USE OF MEDIC. PLANTS 0.00 0.00 0.00 1.80 0.00 1.64 0.07 0.00

P000756 1999 HEALTH SECTOR 0.00 100.00 0.00 0.00 0°00 58.22 46.23 0.00

P000755 1998 ROAD SEC. DEV. PROG. 0.00 309.20 0.00 0.00 0.00 169.85 171.48 60.49

P000736 1998 ET ENERGY II 0.00 200.00 0.00 0.00 0.00 91.07 56.85 0.00

P000733 1998 AG. RESEARC & TRAIN 0.00 60.00 0.00 0.00 0.00 37.04 23.37 0.00

P000732 1998 EDUCATION SECTOR INVESTMENT 0.00 100.00 0.00 0.00 0.00 33.45 23.46 0.00

P000764 1996 WATER SUPPLY DEV&REH 0.00 35.70 0.00 0.00 0.00 9.56 14.08 0.00

P000771 1996 Social Rehab (ESROF 1) 0.00 120.00 0.00 0.00 11.46 21.63 47.29 10.65

P000752 1995 NATIONAL SEEDS PROJECT 0.00 22.00 0.00 0.00 4.19 4.14 10.06 0.00

P000753 1995 NAT. FERTILIZER PROJ 0.00 120.00 0.00 0.00 0.08 38.68 2.76 0.00

P000734 1993 ROAD REHASILITATION 0.00 96.00 0.00 0.00 0.00 15.14 21.73 12.40

Total: 0.00 1,635.70 0.00 1.80 15.75 829.95 547.39 83.55

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ETHIOPIASTATEMENT OF IFC's

Held and Disbursed PortfolioJan - 2002

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

Total Portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic

Total Pending Commitment: 0.00 0.00 0.00 0.00

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Annex 10: Country at a Glance

ETHIOPIA: Cultural Heritage ProjectSub-

POVERTY and SOCIAL Saharan Low-Ethiopia Africa Income Development diamond'

2000Population. mid-year (millions) 64.3 659 2,459 Life expectancyGNI Per capita (Atlas method, US$) 100 480 420GNI (Atlas method, US$ billions) 6.7 313 1.030

Average annual growth, 1994-00

Population (%) 2.6 2.6 1.9Labor force (M) 2.3 2.6 2.4 GINI / Gross

per primaryMost recent estimate (latest year available, 1994-00) capita 7 enrollment

Poverty (% of population below national poverty line)Urban Population (% of total population) 18 34 32Life expectancy at birth (vears) 43 47 59Infant mortalitv (per 1.000 live births) 107 92 77Child malnutrition (% of children under 5) .. .. .. Access to improved water sourceAccess to an Improved water source (% of population) .. 55 76Illiteracy (% ofpopulation aoe 15+) 62 38 38Gross primarV enrollment (% of school-aqe Population) 43 78 96 Ethiopia

Male 55 85 102 - Low-income groupFemale 31 71 86

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1980 1990 1999 2000Economic ratios'

GDP (US$ billions) .. 8.6 6.5 6.4Gross domestic investmentVGDP 11.8 16.0 14.3 TradeExports of qoods and services/GDP 7.8 14.1 15.4Gross domestic savings/GDP 7.2 1.2 -1.0Gross national savinqs/GDP 9.0 8.0 8.9

Current account balance/GDP -2.8 -8.1 -5.4 Domestic InvestmentInterest oavments/GDP 0.6 1.3 1.3 savingsTotal debt/GDP 100.4 85.7 85.9Total debt service/axports 7.6 34.9 61.9 54.0Present value of debt/GDP 37.5Present value of debt/exports 239.3

Indebtedness1980-90 1990-00 1999 2000 2000-04

(everage annual growth)GDP 1.1 4.7 6.5 5.3 6.8 EthiopiaGDP Per capita -1.9 2.4 4.0 2.8 4.5 Low-income groupExports of goods and services 2.4 9.5 -2.6 23.6 6.5

STRUCTURE of the ECONOMY1980 1990 1999 2000 Growth of Investment and GDP (%)

(% of GDP)Agriculture 49.3 52.3 52.3Industry 12.7 11.1 11.1 1=

Manufacturing 7.8 7.0 7.0 oServices 38.0 36.5 36.5 .10 ss o 97 N o

Private consumption 74.3 80.1 76.7 -20General government consumption 18.5 18.7 24.4 GDI e*GOPImports of goods and services 12.4 29.0 30.7

1980-90 1990-00 1999 2000 Growth of exports and imports 1%)(average annual growth)Agriculture 0.2 2.1 3.8 1.9 Industrv 0.4 6.1 12.9 3.0 20

Manufacturing -0.9 6.5 17.7 4.2 20

Services 3.1 7.1 7.8 9.5 _ _ \ __ 0

Private consumption 0.2 2.9 3.1 -2.0General qovernment consumption 4.5 9.2 37.3 33.2 |20Gross domestic investment 2.1 9.4 13.4 -6.2 Exports ImportsImports of qoods and services 1.5 6.4 18.4 6.3

Note: 2000 data are preliminary estimates.

* The diamonds show four kev indicators in the countrv tin bold) compared with its income-group averaae, If data are missing, the diamond willbe incomplete.

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Ethiopia

PRICES and GOVERNMENT FINANCE1980 1990 1999 2000 Innatlon I%)

Domestic orlces

(% change) 15 .Consumer Drices 4.5 5.2 3.9 4.2 o Implicit GOP deflator 35 15 14 o

Government finance(% of GDP. includes current grants) sCurrent revenue 17.7 17.8 18.3 soCurrent budqet balance -3.9 -3.0 -8.2 - GDP deflator e CPIOverall surplus/deficit -12.0 -12.1 -14.8

TRADE1980 1990 1999 2000 Export and import levels (US$ mill.)

(US$ millions)

Total exports (tob) 459 366 484 486 2,000Coffee 196 281 262Leather and leather products 64 32 35 1.500Manufactures . *.

Total imports (dn) 692 881 1.558 1.611 oo0* *Food 73 100 116 jFuel and enerav 109 111 213Capital goods .. 340 643 755 o

94 gs 9r, 97 99 59 0oExport price index (1995=100) .. 77 78 64Import price index (1995=100) .. 91 92 97 MExports * ImportsTerms of trade (1995=100) .. 85 84 66

BALANCE of PAYMENTS

(USS millDons) 1980 1990 1999 2000 Current account balance to GDP (%)Exports of goods and services 569 672 915 984 oImDorts of qoods and services 782 1.069 1,878 1.962 _ _ EResource balance -213 -397 -963 -978 -2 fNet income 7 -67 -52 -60 -.Net current transfers 80 220 494 691 s *l iCurrent account balance -126 -244 -521 -346

Financing items (net) 86 196 500Changes In net reserves 40 48 21 o-

Memo:Reserves Includina gold (USS millions) 262 55 434 348Conversion rate (DEC, locallUS$) 2.1 2.1 7.5 8.1

EXTERNAL DEBT and RESOURCE FLOWS1980 1990 1999 2000

(USS millions) Composition of 2000 debt (USS mill.)Total debt outstandino and disbursed 824 8.630 5.544 5.481

IBRD 56 27 0 0 F: 117 G: 77IDA 249 824 1,739 1.779

Total debt service 45 U 236 585 540 l . B 1.779IBRD 10 9 0 0IDA 2 10 31 34

E: 2,098Composition of net resource flows

Official grants 124 604Official creditors 67 279 -274 -277 c 86Private creditors 26 -57 -7 -10Foreign direct Investment 0 12 O FPortfolio eouitv 0 0 D: 1,324

World Bank programCommitments 0 79 160 0 A - IBRD E -BilateralDisbursements 28 74 148 137 B -IDA D -Other multilateral F -PrivatePrincipal repaevments 4 11 19 21 C.-IMF G- Short-termNetflows 24 63 129 116Interest pavments 8 8 12 13Nettransfers 16 55 117 103

Development Economics 9/18/01

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Additional Annex 11: Social AssessmentETHIOPIA: Cultural Heritage Project

Terms of Reference

1. Background

The Government of Ethiopia intends to implement, with World Bank financing, a Cultural Heritage Project.The overall aim of this "Learning and Innovation Loan" is to test out the effectiveness of a multistakeholdercoordination mechanism in the context of cultural asset management, and its overall link to the country'seconomic and social development. The project is to be implemented over a period of 4 years and is expectedto become effective in April 2002.

The project comprises 3 main components:

Component I - Site Planning and Conservation: The project will finance site planning and conservation intwo World Heritage sites, Axum and Gondar. Site plans will attempt to marry conservation approacheswith the fostering of local economic development through tourism. The location of the sites within vibrantcities highlights the attention needed to local community involvement in site planning. The project aims todevelop a participatory approach to site conservation planning, through which local people are broughtcloser to their physical heritage, and can benefit from the use of some structures. The project will alsofinance some implementation of the plans to kick-start the process.

In Axum, the focus will be on the town's archaeological sites, including the development of plans for anexpanded museum as a local cultural education facility, and improved visitor experience. The plan wouldbe in harmony with the larger master plan for the city. In particular, the issue of the community role in thefuture of old Axum and the potential of collaboration with the Ethiopian Orthodox church will be explored.The Gondar sub-project has as its focus, the walled palace fortress complex of Fasil Ghebbi, which issituated in the center of the city. The site interpretation is poor and falls far below the potential that exists.There is need for discussion on opening the site to the community and the use of some structures to serve itspriorities.

Component 2 - Inventory and Documentation Development: This component is designed to build capacityfor establishing a better information and record base on cultural assets, for purposes of planning,conservation, prevention of theft and threat mitigation. In addition, this component will focus on buildingcapacity at the regional level to provide rapid assessment capability for large infrastructure projects thatwould impact cultural assets. This component will be piloted in Tigray, Amhara and Oromiya districts.

Component 3 - Artisanal Crafts Development: This component has the objective of finding ways ofpreserving ancient craft traditions, while making them sustainable through their improved marketing, bothwithin Ethiopia, and on the international market. The project will establish 3 craft centers in restoredarchitecturally significant structures, which will both provide training and serve as exhibition centers. Thiswill also serve a purpose of organizing the artisan community, resulting, it is envisioned, in there-establishment of craft making as a vital part of community and national economic life. The project willfund pilots in this component in the cities of Axum, Harar (Oromiya district) and Addis Ababa (capital).

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2. Rationale for the Social Assessment

The proposed project enshrines within its overall objective and approach, the integration of culturalconservation and crafts development approaches with economic and social development of people, at thenational, regional and most important, the local level. This requires that the wider community be consultedon their views regarding project activities, and that they be included in the site development plans, so thatthey can be effectively involved in implementing the sub-projects and benefit from them.

Social Assessment (SA) is an appropriate methodology to assist in better designing and implementing theproposed project in a way that supports the active involvement of individuals and groups that are itsintended beneficiaries, as well as those directly affected by project activities. Experience has shown thatprojects designed and implemented with the active input and participation of the intended beneficiaries andthose affected by a project have far greater likelihood of sustainable success. Participation can range fromsimple one-way communication, such as information disclosed in a publicity campaign, to more intensiveinteractions involving two-way discussions in which the informant's opinion is recorded and considered inthe Project's design and implementation arrangements. While this exercise will outline the mainimplementation implication of the SA process, social analysis will be systematically carried out throughProject implementation, and should be viewed as an iterative process of consultations and analysis, to takeplace throughout the Project's life cycle.

The two main objectives of the SA are:* To inform project implementation with regard to the involvement of local communities in Site Planning

and Conservation and in Artisanal Crafts development; and* To inform the monitoring and evaluation process. This includes contributing to baseline data, informing

initial M&E indicators that will be set up for the project, and continued analysis feeding into therefinement of these indicators at later stages of the project.

The SA process is particularly relevant to components 1 and 3 of the project, and will be limited to thesecomponents. Site plans developed in Axum and Gondar through component I will be based on athree-pronged strategy that reconciles the objectives of structure conservation, economic impact (incomegeneration and stimulation of local and national economy) and the socio-economic development of thesurrounding local community. It is envisaged that this latter objective will be achieved by involving localsin site plans such that:

* They develop a sense of ownership for their local history as embedded in these structures;* Benefit economically to the extent possible from the increased tourism in the area;* Have physical access to and use of some structures so that they become a living part of their

community space and activities.

Component 3 goes beyond simply improving artisan income through increased sales and marketing ofimproved and standardized products. Much of the approach is concerned with understanding how thecommunity of artisans is structured, the formal and informal norms governing relations both within thegroup and with external stakeholders. A SA is well suited to such analysis.

3. Methodolo2ies and Scope

It is important that the consultant reviews the project documents and working papers for each component indetail, and has brief discussions with the 2 assistant project coordinators responsible for the implementationof components I and 3.

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The SA is structured in two parts: a qualitative study and a quantitative study. The qualitative approachrequires a deeper focus on issues over a longer period with relatively less groups. The quantitative study isintended to serve as a baseline study to measure project impact on affected households. It will form thebasis of the work to be taken up by the Project Co-ordination Unit's M & E specialist.

Qualitative Analysis: This will involve the use a range of participatory techniques, outlined below, to betteridentify and understand specific issues pertaining to the involvement and participation of locals in the siteplan at Axum and Gondar, and the revival of the crafts industry as a sustainable economic resource and anintegral part of community life, in the cities of Axum, Harar and Addis Ababa.

The Consultant will spend approximately 10 days each, in Axum and Gondar, and 7 days in Harar andAddis Ababa. However, the final time-line will depend significantly on the size of the team and the mix ofmethodologies implemented. While the main focus groups for the SA are the local communities of Axumand Gondar, and the artisans in the 3 craft center cities, some time (budget in an additional 7-10 days) willbe marked for discussions with other stakeholders such as relevant NGOs, regional authorities responsiblefor implementing the 2 components, tourists in Axum and Gondar, church authorities in Axum and Gondar,and the local private sector in the cities.

1. Open-ended interviews will be the preferred method used with NGOs, private sector, religiousauthorities and regional government authorities. Experience has shown that individual discussions aremore effective here as they permit the service provider to focus on 'specific' issues as he/she hasexperienced them, rather than the 'general' and 'known' issues which are often prioritized in groupdiscussions and structured interviews.

2. Focus Group Discussions (FGDs) will be used with local residents of Axum and Gondar, tourists inAxum and Gondar, and artisans who will work in the crafts centers. While tourist focus groups will bemixed,. other focus groups would benefit from being targeted. For example, women residents may havea very different interaction with regard to their current and perceived use of structures, young men maybe interested in focusing on a specific issue such as the potential to work as guides, a marginal groupsuch as blacksmiths may need a specific focus with regard to their involvement and role in the project,women artisans may have special issues with regard to their interaction with male middlemen forproduct marketing etc. As a general guide, gender, age, ethnicity, religion and occupation areclassically used to draw lines around focus group categories.

3. In-depth individual and/or household level discussions and/or case studies with a small sample of about4 male and 4 female artisans, and about 5 local residents in each Gondar and Axum (these shouldrepresent different ethnicity, religion, income bracket, gender, and social strata of the community to theextent possible). These in-depth informal discussions (rather than structured interviews) should bedesigned to allow the respondents to provide a history of their experience with leaming, practicing andmarketing their craft (component 3), and narrate their experience over a period of time with regard totheir interaction with, use of, and vision for the structures in question (component 1). This provides auseful complement to the FGDs as it draws out specific problems faced by these individuals andidentifies coping strategies that are in use, as well as those that are potentially possible. While thedirect focus would be on the specific individual e.g. the artisan, much relevant analysis can be got frominvolving other household members in the discussion.

4. Participant observation: The Consultant will be expected in Axum and Gondar, to reside in the houseof a local resident/s (preferably a resident in the old part of the city and whose house is a potentialrestorable structure), and in Harar and Addis, with an artisan family, during the study period. The aimof this technique is to draw a different perspective on more sensitive issues that are not effectivelyunderstood or addressed through more formal techniques of interviews and focus group discussions.

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The consultant is encouraged to use this technique to observe and report on behavior such as householddynamics, which is not easily assessed through questioning and self-analysis.

5. Participatory Rural Appraisal technique (PRA): Although this technique has been developed for a ruralcontext, it could be effectively adapted for discussing site development involvement of localcommunities in Axum and Gondar. The exercise would work well if implemented along with thetargeted focus group technique for Component 1.

6. Documenting experiences versus asking questions: While asking people's views on a topic is important,SAs often make the error of assuming that this is an adequate perspective of an issue. People are rarelyself-analytical and may not see connections that may be obvious to an outsider. It is hencerecommended, that the Consultant not frame all discussion in the form of questions, but encourage thestakeholders to narrate experiences related to the topic under discussion, and make use of his/herpresence in the area to gain an understanding of issues. Casual conversation, informal social discussionetc., often reveal a range of issues, which may not surface through direct questioning. For examplespending time around the area where women wash clothes on the Axum stelae may show that womenchoose to come here as it provides an informal community space for them to socialize, thus indicatingthat communal wash stands rather than fencing the stelae or having home washing facilities would be amore effective and cheaper option.

Quantitative Analysis: This analysis is aimed at collecting baseline socio-economic data to assess projectimpact on households impacted by the project. This will involve administering an appropriately designedsurvey to reflect household level monetary and nonmonetary income, access to basic services, use of sites inAxum and Gondar. It will be administered on a sample of households living within the site in Axum andtargeted to be resettled outside the area, Axum households living within the site and who will continue tolive there, households in Axum and Gondar living in close proximity to the sites, households/individualsearning a direct income from site activities in Axum and Gondar, and artisans in Axum, Harar and AddisAbaba who will be impacted through the project.

It is proposed that this component will need about 6 weeks in total: week I develop instrument and test,weeks 2 & 3 train field staff and administer questionnaire, week 4-6 collate data, prepare draft report andfinalize.

Once the M & E specialist of the Project Co-ordination Unit is appointed, the Consultant will work closelywith him/her, especially with regard to the provision of baseline data and the development of M & Eindicators. The quantitative data (analyzed and raw) will be handed over to the Project Unit, to serve as thebaseline for the project.

4. Main Issues of Focus (lar2elv for qualitative studv)

To be an effective input into project design, implementation and supervision, the social assessment will usethe above-described methodologies to focus on the following issues (the analysis will include but not belimited to these):

Institutional and Organizational Arrangements1. Capacity and role of NGOs working in the community at Axum and Gondar.2. Capacity and role of NGOs working with artisans, specifically in the 3 cities and in general in the

country (the NGO Alma has been identified as one such group).3. Community Based Organizations (CBOs), formal and informal that exist in within the community in

Gondar and Axum (e.g. women's credit society, burial society, occupation guilds of private sectoretc.), and explore the potential if any for them to be involved in project activities (for example, a

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women's credit society may be well organized and may be interested in investing in a small eatery inthe site that they would run, a local business consortium may be interested in helping maintain a theatrearena for culture performance if allowed to advertise there, etc.).

4. Formal and informal organization of the artisan community with regard to credit, pooling implementsand other resources, apprenticeship and passing on of skill, marketing of products (specify if differentfor men and women).

5. Leadership criteria and role in the local community (this could be an informal role which means thatthe most educated and articulated ends up talking with authorities and wrongly being seen asrepresenting people), and identification of potential individuals for specific responsibilities relating tosite conservation implementation and craft revival. Leadership structure amongst artisan community (ifany).

6. Potential options for the use of the NGO grant fund.

Identification of Special Focus Groups1. Are there specific sub-groups that tend to physically frequent specific monuments? Is their presence

disruptive and does it need to be restructured, limited, encouraged? (for example women washingclothes on stelae could be destructive, whereas local school children wandering around the site mayneed to be regulated but encouraged. What would be an effective communication strategy with thesegroups?

2. Are there specific sub-groups within the local community such as belonging to a minority religion,ethnicity, trade that may be excluded from both economic benefits of site development as well ascommunity access to structures? (for example a house owner of a potentially restorable old house maybe discriminated with regard to credit for restoring her structure to serve as a guest house on groundsof being a widow, or of a certain faith or ethnicity).

3. Is there any issue of marginalization within the artisan community, both based on personal traits suchas religion, ethnicity, gender as well as craft type and family trade.

4. Any group/s that may be negatively impacted by a project activity (for example the focus on the craftscenter in Axum may put smaller, relatively unskilled younger boys making cheap tourist artefacts outof business, fencing off and regulating entry to the sites may adversely affect illegal squatters andvendors who may need to be compensated), and recommend accordingly. Specifically, the impact of thecraft centers on other artisans who may not be in the center, issue of aesthetic versus utilitarian craftand discussion on criteria for eligibility to work in craft centers (also issue of positive discriminationand reservation if any - for example for young artisans, higher fee for artisans who want to join but areoutside region etc.).

Options for Site Use and Economic Development1. Identify specific structures that the community in Gondar feel could be used and for what purpose

(discussion of priority of needs). In particular, the discussion should refer to a possible library site.2. Explore the following site use options: a space (need not even be within a structure which can serve

simply as a backdrop) to be used for specified community festivals/ceremonies at specific times of yearand marketed as such; use of a specific structure for cultural dance, theatre, music (explore the districtinitiative in this and resource people if any in local community); use of structure for a public functionsuch as town hall or a leasable hall; capacity of locals and potential to operate cafes, restaurants, drinkstalls in the site; potential to recruit all guides from local community and who would be best suited(unemployed youth who are becoming street nuisance or school kids on a rotating basis etc.); capacityand capital in community to manage transport options within sites; the interest in and capital needed forfamilies to restore and run guesthouses, especially in old Axum; the need for communal spaces such aswedding halls and whether any structure or site space could be used for this and any limitations thatmay be needed,

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3. Linked to the above- develop a strategy to lever the revival of nonphysical culture such as songs,dance, through the restoration of physical cultural assets (e.g. a sound and light show with folk tales inGondar).

4. Any other strategy that would encourage locals to take an active role in both enjoying their physicalculture as well as benefiting from it (e.g. issuing ID cards to permit free entry to locals, maybe aspecial discount in the restaurants/eateries and for functions within the site). Specifically, the role ofschools and education curriculum needs to be recommended on with regard to the Axum museumplans.

5. Explore possible arrangements for targeting the use of a section of income from site (e.g. a percentageof local guide fee) towards a locally beneficial activity (e.g. purchase of equipment for the localschool).

Artisan Component1. Outline specific details of problems with regard to marketing (middlemen, bribes, policy, state trade

fines and taxes) that people may discuss2. Explore the potential for using the artisan community as a focus for HIV/AIDS initiative in the region,

in the context of it being an urgent problem within the community, as well as using artisans to spreadthe message through their work.

Policy Implications1. Any formal or informal rules that have to be put in place to regulate and encourage community

relationship with and use of cultural assets in Axum and Gondar sites, and methods to enforce thesewithin accepted conmmunity system of penalties.

2. Rules regarding membership to craft centers (as discussed above).3. Any rules regulating local-tourist relationship, rights, access issues.

6. Deliverables

1. Main Report A: The report will be written within the overall framework of the qualitative data, but willuse quantitative data to enrich and support its findings. The information will be presented and analyzedin the context of their operational implications. Where relevant, recommendations will be made. Thesewill include but not be restricted to the following areas:* Suggestions for indicators to be used to monitor the participation of locals in site development

plans in Gondar and Axum, and the impact of the craft component on building social capital withinartisan community, and impact on surrounding communuity in Axum, Harar and Addis Ababa.

* Qualitative baseline information on socio-economic condition of artisan community and localhouseholds in Gondar and Axum

* Institutional set-up (formal and especially infonnal) as outlined above. Recommendations onchanges to the current set-up, and potential extended use of set-ups for project activities.

* A section on options for community use of structures in Axum.* A section on options for community use of structures in Gondar (specifically referring to the

library if this is deemed a priority by the community).* A section on economic benefit options for the local community from Axum and Gondar site

developments* A section on policy implications.* A section on organization of artisan community and how to address identified special needs that

may go beyond economic dimension of marketing craft.* A discussion of the relationship between main focus groups i.e. local community in Axum and

Gondar and artisans - and extemal partners - describing the current relationship if any, and

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potential for collaboration and possible conflict.* Other sections as deemed appropriate.

2. Annexes to Main Report A will include but not be restricted to:* A summary of 6 of the informal discussion/case studies* A short description of the basic methods used* A note on the scope of study and any issues concerning replicability of findings to other areas of

the country.* Beneficiary participation action plans for Gondar and Axum outlining specific actions/activities

recommended to enable community involvement over the 4 year project period.* Any other annex of a discussion or issue that has specific relevance to the project.

3. Main Report B: This will contain an analysis of the quantitative data, with a section on M & Eindicators and a time-line framework for M & E through the life of the project. The survey instrumentsused on the listed target groups should be included as annexes.

4. Raw Quantitative Data: will be handed over to the M & E officer in the Project Co-ordination Unit.

7. Reporting

The Project Co-ordination Unit based in the Ethiopian Tourism Commission will contract the Consultant.The draft and final reports will be submitted to the Project Coordinator as well as a copy to the WorldBank. A Draft report is expected approximately 6-8 weeks after the commencement of the study and a finalreport 2 weeks following comments by the project authorities and World Bank team. The report andsupporting documents will be in English although it is expected that most of the research will be conductedin local languages.

8. Elieibilitv and Application Process

These TORs are designed to allow for a proposal from a qualified team of individuals or consulting firn. Itis envisaged that the team will have a task leader, who will have overall responsibility and willhimself/herself be responsible for the qualitative component (report A) along with 1-2 assistants. Themethodology is suited to working intensely in the area over a longer period. The quantitative componentwill have a qualified leader who would design the survey instrument and train field staff. He/she would bethe main author of report B.

The task leader must have a PhD. or a Masters Degree in social science - preferably, social anthropology,sociology, or social geography. Some previous work experience in social assessment for projects isnecessary, and knowledge of project management is desirable. Experience in the field of communitytourism will be attractive. The quantitative analysis leader must have a PhD. or a Masters Degree insociology, with some qualification in statistics. Knowledge of local languages is necessary in the team, anda good knowledge of the country and regional context is highly desirable. Ability to write fluently inEnglish is a requirement of the task leader.

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Additional Annex 12: Key Performance IndicatorsETHIOPIA: Cultural Heritage Project

1. Comprehensive site conservation and interpretation plans are completed for Axum and Gondar and firstphase of site conservation and interpretation activities is launched, in particular taking into accountmunicipal planning efforts.

2. Local community living within old Axum and in Gondar, municipal authorities, and the church inAxum and Gondar are involved in preparation of their respective site plans, have participated in aseries of meetings and decisions during plan development, and see themselves as beneficiaries of theproposed plan.

3. A plan for museum development, including site identification, architectural designs and a proposedbudget, is completed for a museum in Axum; 12 national and regional staff are trained in museumcuration.

4. The comnmunity in Gondar has clearly defined access to and use of structure/s within the Fasil Ghebbicomplex, and perceive an increase in benefits (as individuals or as a community) as a result of theirproximity to this World Heritage site. An information and documentation center is established inGondar and linkages are developed with local schools curriculum.

5. Site interpretation work is completed in Gondar and Axum.

6. Core national standards and guidelines are established for inventory and documentation of culturalassets through an iterative process with key national, regional and local stakeholders.

7. Pilot inventories are completed in Tigray, Amhara and Oromiya regions, prepared jointly by ARCCHand regional staff. Capacity at the national, regional, and local levels is increased to carry outinventories.

8. Guidelines are prepared outlining how threats to important cultural sites (from development activities)can be assessed and mitigated. Capacity is strengthened for site assessment and mitigation, on thebasis of pilot activities carried out in Oromiya region (or another region to be agreed with the Bank).

9. Three artisanal craft centers are established in Harar, Addis Ababa and in Axum where artisansexecute, display and sell craft products.

10. Income to craftspeople from the sale of crafts is increased by the development of local, national, andexport markets. Capacity for business planning and marketing amongst craftspeople is increased.

11. Ethiopian craft products are marketed at 4 major intemational venues. Marketing and business plansare developed for each craft center.

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