[PDF] World Bank Document 28-Nov-2007 Décentralisation

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PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB3421

Project Name

Local Development and Decentralization

Region AFRICA

Sector Other social services (20%);General education sector (20%);Health (20%);General water, sanitation and flood protection sector (20%);Roads and highways (20%)

Project ID P104049

Borrower(s) REPUBLIC OF MADAGASCAR

Implementing Agency

Republic of Madagascar

Madagascar

Ministère auprès de la Présidence de la République chargé de la Décentralisation et de l'Aménagement du Territoire Anosy

Madagascar

101

Tel: (261) 202457924 Fax: (261) 202256917

rymdat@mel.wanadoo.mg Environment Category []A[X] B [ ] C [ ] FI [ ] TBD (to be determined)

Date PID Prepared November 29, 2007

Estimated Date of

Appraisal Authorization February 11, 2008

Estimated Date of Board

Approval May 15, 2008

1. Key development issues and rationale for Bank involvement

Key development issues:

While Madagascar experienced positive economic growth (about 6 percent per annum) during the period 2003-06, the poor did not participate fully in it. Sixty eight percent of the population still live below the poverty line with no or poor access to basic services such as health, education and water. According to the 2006 Country Assistance Evaluation "overall, the country has made no systematic inroads into poverty as measured in income and consumption terms." 1 After a deep political crisis that lasted for six months and ended in 2002, the newly instated government embarked on an ambitious development agenda outlined in a first PRSP in 2003 and followed by a second PRSP in end-2006: the Madagascar Action Plan 2007-2012 (MAP). The MAP's first objective is to improve the effectiveness and responsiveness of the government, 1

World Bank. 2006. Madagascar: Country Assistance Evaluation. Report No. 38213. December 13.p. 22. Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized

while decentralization and improvement of public service delivery are the key challenges that must be met in order to achieve this objective. 2 Although decentralization is not a new concept in Madagascar (the country first engaged in a decentralization process in the 1990s), the process has so far suffered from inconsistencies and a hesitant pace of reforms. 3 As a result, the country remains highly centralized and the mandate, capacities, and financial resources of Collectivités Territoriales (CTs) (1,558 communes and 22 newly created regions) as well as Services Techniques Déconcentrés (STDs) remain limited. 4 Important advances have recently been made regarding decentralization. In November 2004, the Government adopted an ambitious Policy Letter on Decentralization and Deconcentration (LP2D) which was soon followed by an implementation program covering the years 2007-2008. 5

The Ministère de la Décentralisation et de l'Aménagement du Territoire (MDAT) was created in

January 2005.

The LP2D is articulated around three pillars: (i) consolidating decentralization by putting communes and regions at the core of the decentralization process; (ii) strengthening services techniques deconcentrés so that they can better support communes and regions; and (iii) improving civic participation and enhancing collaboration between communes and regions on one side, and public and private implementing agencies on the other side. Actions that have been taken so far to implement the LP2D include: (i) the development of a fiscal decentralization strategy; (ii) the creation by decree in June 2007 of the Fonds de Developpement Local (FDL) as a mechanism to finance communal investments; 6 (iii) the piloting of Centres d'Appui aux Communes (CAC), with the aim to strengthen communal capacities, 7 ,and (iv) the establishment of decentralization and deconcentration units (cellules

2D) in key ministries. More recently, under the leadership of the President, all heads of the

17,000 Fokontany (communities below the communal level - there is an average of 10

Fokontany per commune) have received capacity building training, which may be a prelude to their reinforced role in local development. Despite these activities, the overall implementation of the strategy has proven challenging.

Functional, fiscal and administrative responsibilities of the collectivités territoriales still need to

be clarified, and so does the division of responsibilities between the collectivités territoriales and

2 Government of Madagascar. 2006. "MAP Madagascar Action Plan 2007-2012. A Bold and Exciting Plan for

Rapid Development". October.

3

For example, the 6 provinces that were created in 1998 were abolished in 2007. The provinces were replaced by 22

regions, which were established in 2004. 4

Services Techniques Déconcentrés represent the central government, particularly the line ministries, at the level of

the region, district and commune.For more details on decentralization in Madagascar, see: World Bank. 2003.

"Madagascar Decentralization". Report No. 25793-MAG. November 5. 5

1) Government of Madagascar. 2005. "Lettre de Politique de Décentralisation et de Deconcentration (LP2D)".

December. 2) Government of Madagascar. 2006. "Programme National de Décentralisation et de Deconcentration

(PN2D), Phase I [2007-2008]". October. 6

Government of Madagascar. Decree No. 2007-530. June 2007. We do not know whether this decree has been

signed, while it has not been gazetted. 7 See Government of Madagascar. Undated. "Manuel de Procedures pour la Gestion des Centres d'Appui aux

Communes ». Draft. MDAT and FID.

the de-concentrated central government structures at the local level. 8

Meanwhile, communes and

regions face serious financial and administrative difficulties, including their limited ability to mobilize own resources 9 ,ad-hoc central government grants, weak planning, budgeting and expenditure management, and lack of qualified staff.

Rationale for Bank involvement:

The Bank will support the Government's decentralization and deconcentration program through an investment lending operation, which might evolve into a Sector Wide Approach (SWAp). The proposed program is expected to be supported by the E.U. and a number of other development partners including Swiss Aid, GTZ, UNDP and the French Cooperation. Bank's support for the proposed project is fully consistent with the Country Assistance Strategy for Madagascar for the period FY2007-2011 (CAS), which explicitly recognizes the Bank's ambitions to support the MAP and to harmonize and align its activities with other external partners. 10 The proposed project supports the second pillar of the CAS, which brings together activities geared toward improving access to and quality of services. It also contributes to a number of cross-cutting implementation aspects that are identified as being critical to the governance agenda, including decentralization, public expenditure management, and capacity building. In each of these areas, the Bank has committed to improve government capacity and efficiency by emphasizing measures that increase transparency, encourage the participation of users in service provision, and involve citizens in monitoring the quality of service delivery. Given its regional and global experience and expertise in decentralization, deconcentration and local government capacity development, the Bank is in a unique position to spearhead this operation in collaboration with the European Union (E.U) and a number of key development partners in Madagascar. 11 The proposed program will build on three existing donor-supported local development programs in Madagascar, and seeks to integrate these initiatives. Since 2004, the E.U. has been supporting the ACORDS program (Appui aux Communes et aux Organisations Rurales pour le Développement du Sud)which supports the Government's decentralization strategy in the southern regions of Madagascar. 12

The Swiss Cooperation is similarly supporting

six regions through its program SAHA. 13

The Bank has also supported a social fund (Fonds

d'Intervention pour le Développement -FID) in Madagascar for almost 15 years which has evolved from a primarily demand driven social infrastructure project into a project that has 8

For more details, see ACORDS. 2007. "Les Relations entre STD et Communes" and Ramaroharinosy, W. 2007.

"Rapport provisoire des Ateliers regionaux dans la Province de Tulear sur le Secteur Eau potable et Assainissement: Pour une Maitrise d'Ouvrage de la Commune." UGP ACORDS. 2007. 9 Regions will have their own budget starting in 2008. 10

World Bank. 2007. "Country Assistance Strategy for the Republic of Madagascar for FY2007-2011". Report No.

38135-MG. March 7.

11 This project will be integrated in the Limelette process. See: 12

For more details, see European Union. 2006. "Note de Dossier sur les choix et methodes de mise en oeuvre du

Programme d'Appui aux Communes et Organisations Rurales pour le developpement du Sud." May. 13

See Mossigue, A., Rasendrasoa, M. 2007. "Mise en Oeuvre du Fonds de Developpement Local et Integration des

Mecanismes de Financement des Communes." June, which also provides information on ACORDS and the FID.

adapted a comprehensive vision of participatory development empowering communities. 14 A window to finance communes was created in the FID in 2002. 15 Finally, it is imperative to support the decentralization and deconcentration strategy of the MAP in order to ensure that the increased allocation of fiscal resources to local governments requested under the Poverty Reduction and Strategy Credits (PRSCs) lead to an increase in basic services delivery at the local level. 16 This proposed program will also strengthen the linkages with reforms in public financial management and civil service, and enable the adaptation of national level reforms at the local level. Finally, the program will seek to harmonize mechanisms to deliver public services at local level, in particular in the mining areas.

2. Proposed objective(s)

The overall development objective of the program is to improve public service delivery through the financing of basic infrastructure and the provision of capacity building at local level. The program seeks to enhance the capacity of local authorities to utilize participatory and transparent planning, budgeting, implementation, and monitoring systems and to strengthen the capacity of service providers (prestataires de services). It will also assist in improving local revenues and transfers to CTs and STDs. Finally, an important objective of this program is to harmonize existing donor-support in the area of local development (see above) and provide a vehicle for future local development initiatives, including mining areas. To reach this objective, the program will support the Government in the elaboration of its decentralization and deconcentration strategy, and in its implementation. The program will provide financial and capacity development support to the collectivités territoriales (communes

and possibly regions), and will seek to strengthen the services techniques déconcentrés so that

they can better support communes and regions. Principal output indicators may include: (i) overall resources (central capital and recurrent

transfers, own revenues) and staff available to collectivités territoriales, (ii) overall resources and

staff available to services techniques déconcentrés,(iii) number of collectivités territoriales who

are able to prepare development plans and budgets through adequate process, (iv) number of

collectivités territoriales who receive LDF grants, (v) number of collectivités territoriales with

annual audit records, (vi) number of local projects operated and maintained satisfactorily, (vii) increase in number of people satisfied by LDF activities. 14 See Fruchart, V. 2005. "Revue a Mi-Parcours du Projet de Developpement Communautaire." March 16. 15

See Fruchart, V. 2004. "Rapport d'Evaluation de la Composante Financement Direct des Communes du Projet de

Developpement Communautaire (FID IV)." December 27. 16

See World Bank. 2006. "Program Document for a Proposed Credit in the Amount of SDR 26.9 million (US$40

million equivalent) for a Third Poverty Reduction Support Credit to the Republic of Madagascar". Report No.

36416-MG. June, and World Bank. 2007. "Program Document for a Proposed Credit in the Amount of SDR 26.3

million (US$40 million equivalent) for a Fourth Poverty Reduction Support Credit to the Republic of Madagascar".

Report No. 39028. May 25.

3. Preliminary description

The program is expected to have 4 components:

Component 1: Support to the decentralization process.In coordination with other Bank activities such as the Governance and Institutional Development Program (PGDI), the PRSCs and the health SWAp, this component consists of activities to (i) support the formulation and implementation of the decentralization and deconcentration strategy, and alignment with sectoral strategies, (ii) strengthen central-local fiscal framework to support local revenue mobilization, ensure adequate transfers to STDs and CTs including for O&M of basic infrastructure, (iii) strengthen STDs to respond to incremental demands for their services, Component 2: Capacity building.This component will support the development of a national capacity building strategy for CTs, provide capacity building grants to CTs, and provide capacity building to service providers (prestataires de service). Component 3: Infrastructure grants to Collectivités Territoriales.This component will finance local infrastructure investments through a central-local intergovernmental transfer. For the duration of this project, grant funds are expected to be channeled through the recently created public agency

Fonds de Developpement Local (FDL).

Component 4: Support to program implementation, and Monitoring and Evaluation (M&E).This component will support, project management, monitoring, evaluation and audits of the account of the program and accounts of all grant beneficiaries. It will also finance activities to ensure transparency and accountability and engage beneficiaries in the process of verifying outcomes.

4. Safeguard policies that might apply

Environmental Assessment (OP/BP 4.01)

The project has a category B rating. The investments under this project will focus on the improvement of the delivery of basic services and are expected to result in improved living conditions. The investments under the project will be sectorally varied, given that they will be determined by local level priorities which will differ from one local government to another and cannot be determined a priori. The types of investments are common community development projects whose potential environmental and social effects are well understood, unlikely to be significant, and readily manageable. The main potential environmental issues associated with the project include soil erosion (construction and during road use), health effects to construction workers during construction, land disturbance (construction), waste management for schools, markets place, and community clinics, and noise (primarily during construction). Following the National law on the Protected areas, it is not possible to build infrastructures within protected areas in Madagascar. Therefore, there will be no direct impacts on protected areas.

Involuntary Resettlement (OP/BP 4.12)

Land acquisition, compensation and resettlement of people may be inevitable for certain categories of sub-projects. This is a social issue of critical concern to the Government and the World Bank, as its impact on poverty if left unmitigated, is negative, immediate and can be wide spread. The infrastructure projects developed in several localities by the "collectivites territoriales" could result in involuntary resettlement and lands acquisition. These could occur in the case of the widening of roads, the construction of markets, schools, community clinics, etc. While the Ministry of Decentralization could apply the National Law on Land Acquisition, this is not considered to be sufficient according to the Bank Policy on the Involuntary Resettlement OP 4.12. Therefore, it is proposed to prepare a Resettlement Policy Framework for the Local

Development Fund (LDF) project.

5. Tentative financing

Source: ($m.)

BORROWER/RECIPIENT 0

International Development Association (IDA) 26

EC: European Commission 72

Total 98

6. Contact point

Contact: Philippe Auffret

Title: Sr. Social Protection Specialist

Tel: (202) 473-7174

Fax: (202) 473-8107

Email: pauffret@worldbank.org

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