Business Case and Intervention Summary Intervention Summary Title: Arab Partnership Economic Facility (APEF): Jordan Emergency Services and Social Resilience Programme (JESSRP) Aries Project Number: 204269 What support will the UK provide? The UK will provide up to £12 million over two years from October 2013 to support Jordanian municipalities address the needs of communities hosting Syrian refugees. These needs include water, construction and maintenance of markets, waste collection roads and municipal parks. UK support will be provided through a joint World Bank/DFID/CIDA/EU programme totalling up to $60 million over 3 years. Why is UK support required? How does the funding contribute to delivering the Operational Plan or published DFID results commitments? Supporting host communities to contain the consequences and manage the risks associated with regional overspill of Syrian refugees is one of the UK’s strategic objectives in addressing the Syrian humanitarian crisis. In Jordan the UK has prioritised 1) meeting the immediate needs of refugees and host communities; (2) reducing the risks to short-term instability in Jordan; and (3) supporting the Government in addressing the longer-term risks to stability through political and economic reform. The Arab Partnership prioritises support to governments to undertake reforms necessary to respond to the impact of the Arab Spring. Support provided through this programme will contribute directly to these wider objectives although the main focus is on meeting the needs of host communities as well as refugees living outside camps. What needs are we trying to address? The influx of refugees into northern Jordan is placing a considerable burden on public services including those managed and delivered by municipal governments such as waste collection, street lighting, water, pest control, parks and public spaces, the labour and rental markets. As of early October 2013, approximately 525,000 Syrians have sought refuge in Jordan, with 250,000 having arrived in 2013 alone. While some of the Syrians are living in camps, the majority – approximately 70% - are staying in urban centres where they share space, resources and services with their Jordanian hosts. Some municipalities in the north have seen their populations grow by over 20% since the start of the conflict in 2011. This programme will address the need for increased delivery of municipal services in areas which have received significant refugee populations from Syria. This will build Jordanians’ confidence in their government’s ability to deliver services and ultimately reduce community tensions. If these needs are not addressed, social tensions between host and refugee communities are expected to increase and could lead to political instability. 1 What will we do to tackle this problem? Through this programme, we will provide grants to municipal governments hosting the largest concentration of Syrians. The grants will allow municipalities to finance additional public services and programmes to help improve living conditions, reduce community tensions and enhance social cohesion. The programme will also assist municipal governments to consult with communities to plan, implement and manage activities funded by the municipal grants. From year two onwards, the activities funded by the municipal grants may be altered or expanded to reflect community priorities for municipal government spending. Risk planning, emergency preparedness systems and local economic development plans will strengthen municipal governments and communities’ ability to respond to future shocks and crises. This component will be implemented by UNDP, building on UNDP’s support to community consultation elsewhere in the region. Project management support will help the Ministry of Municipal Affairs (MOMA), Jordan’s Cities and Villages Development Bank (CVDB) and other relevant agencies to coordinate, manage and oversee project implementation. This is overseen by the World Bank programme secretariat. Who will be implementing the support we provide? The programme will be managed by the World Bank with local planning support provided by UNDP. Funding for the municipal grants will be channelled through the Jordan Central Bank, which will then be transferred to the CVDB and on to municipalities. What are the expected results? What are the planned outputs? How will we determine whether the expected results have been achieved? The objective of this programme is to help Jordanian municipalities and host communities address the immediate service delivery impacts of Syrian refugee inflows and strengthen municipal capacity. The planned outputs are that municipalities provide additional services, they have enhanced engagement with communities and they manage their finances effectively. Outcome indicators include the amount of waste collected, number of beneficiaries of municipal services (such as waste collection, local roads, street cleaning, parks and recreational services), the quality of participatory planning processes and the transparency of budgeting processes. Regular joint review missions are planned to track progress and to guide implementation. DFID will undertake annual reviews and a project completion review to determine whether the expected results have been achieved. 2 Business Case 2. Strategic Case 2.1 Context and need for a DFID intervention Context Impact of the Syria crisis in Jordan Jordan is under growing social and economic pressures from the ongoing conflict in Syria. Around 525,000 Syrians have sought refuge in Jordan up to October 2013, with 250,000 having arrived in 2013 alone. UNHCR estimates that by the end of 2013, the number of refugees in Jordan could surpass one million. There are already municipalities experiencing influxes of over 20 percent in the north of the country. The influx of refugees is placing considerable strain on already overburdened municipal systems, as well as the labour and rental markets. In doing so, it threatens social stability and cohesion within Jordan. While some of the Syrians are living in camps, as many as 70 per cent are staying in urban centres, where they share space, resources and services with their Jordanian hosts. Core public services provided to Jordanians have been extended to Syrians. The Government of Jordan estimates the fiscal impact of providing public services at about US$250 million for 2012 and the first quarter of 2013. The key sectors affected are waste management, energy, health, water and education.1 There is also significant strain on the labour and rental markets. Many individuals and households in affected areas are now experiencing a drop in their incomes due to an oversupply of labour as well as increased competition for housing, employment and basic commodities. The strain of the Syria crisis is adding to existing political and economic pressures in Jordan. The political settlement in Jordan sees Trans-Jordanians (East Bankers) dominate the public sector and state security system whereas Palestinian Jordanians lead private sector industries. Jordan is an upper-middle income country with a population of six million and a GDP of $27.5 billion. However, the fiscal and liquidity situation of the government is precarious. Jordan has agreed a standby agreement with the IMF which includes several policy measures to ensure debt sustainability but which may require strong leadership to deliver. These include the reduction in fuel subsidies. Areas which are particularly vulnerable to economic shocks include poor East Bank areas (Kerak, Ma’an, Tafeleh) and border regions in the north near Syria which have the highest concentration of refugees. Despite these pressures, Jordan has remained relatively stable during the “Arab Spring”. However, persistent demonstrations have challenged the government and Royal Court to improve accountability, address economic concerns and improve political inclusion. The UK’s response Since the start of the Syria crisis, the UK has committed £500 million to provide life-saving support to households affected by the conflict and refugees inside Syria and in neighbouring countries. In Jordan, DFID’s support is part of a broader cross-HMG effort to meet three According to GOJ’s Rapid Response Plan (April 2013), the estimated cost of hosting accommodating up to one million Syrian refugees in 2013 is US$850 million, covering both camp population and host communities. The main expenditures were in subsidies (US$371.8 million), energy (US$178.8 million), health (US$93.6 million), water (US$91.3 million) and education (US$26.2). 1 3 strategic objectives: (1) to meet the immediate needs of refugees and host communities; (2) to reduce the risks to short-term instability in Jordan; and (3) to support Government in addressing the longer-term risks to stability through political and economic reform. The vast majority of DFID’s programme spend has been focused on the first objective. 'The total allocated to Jordan from the Syria humanitarian programme is currently £87m. Initially the majority of DFID's humanitarian funding was focused on support to camps although other support outside camps is now being developed. In June, the Prime Minister announced a £50m commitment to assist Jordan to cope with the impact of the Syria crisis. This will also help to mitigate an additional threat to stability in Jordan and complement our wider support for political and economic reform through the Arab Partnership and increased support for stability through the Conflict Pool. As part of our efforts to meet the needs of refugees and reduce instability, DFID has been exploring options outside of the traditional humanitarian instruments. With the majority of refugees living outside of the camps, DFID will extend scope of support in Jordan to work more with host communities experiencing real pressures on local government services and resources. Addressing these pressures will help build the confidence of Jordanians in their government’s ability to deliver, and reduce community tensions. A key part of how the UK is responding to the Syria crisis and how we are supporting the Government of Jordan is to work with and through other development partners in the region. DFID has consistently encouraged humanitarian and development actors to coordinate efforts in-country and work together to support the needs of Jordanians as well as Syrian refugees. The Bank has a strong record of delivery in Jordan and are experienced in working with the Government and providing finance through government systems. DFID has worked closely with the Bank and UN agencies to achieve a more strategic, harmonised approach to supporting the Government in Jordan. This engagement has focused on programmes to adapt existing interventions to new realities of refugee and conflict pressures, but also improve coordination in Amman as well as in municipalities most affected by refugee inflows. Why support municipal services? The UN-led Regional Response Plan for 2013 (known as RRP5) estimated the cost of providing support to refugees and host communities in Jordan at $495 million for 2013. This included $155 million for shelter and services in refugee camps, $93 million for cash and vouchers and $62 million food. Within this appeal, the World Bank estimates that the largest funding gap is currently in the provision of municipal services such as solid waste management, water and sanitation and energy sectors. In addition, anecdotal evidence suggests that the most common cause of tension between Jordanians and Syrians are housing prices, competition for employment, overcrowding in schools and inadequate rubbish collection. The targeting of national and international assistance towards refugees rather than Jordanians has left some poor Jordanians feeling that their needs are not being addressed while Syrians have ample help.2 Some studies have pointed to very limited social interaction between refugees and Jordanians beyond greetings and accessing services and support. 3 While there have been few violent incidents between Syrian refugees and Jordanian host See Oxfam GB: Integrated Assessment of Syrian refugees in Host Communities – Jordan. March 2013. 3 See Oxfam GB: Integrated Assessment of Syrian refugees in Host Communities – Jordan. March 2013. 2 4 communities to date, experts predict that there is a risk of increased violence unless significant efforts are made to address some of the causes of these tensions. Focusing on the provision of municipal services in this programme is designed to meet a clear and urgent gap in the current support being provided to Jordan. Education and health sectors, whilst under considerable strain, are being targeted by other donors and services are being scaled up. However, services that would be provided through municipal government, as well as the Yarmouk Water Company, are struggling and in clear need of support. While a number of services such as education and health are channelled directly from line ministries, municipalities remain responsible for a range of functions and services such as solid waste collection, road construction, rehabilitation and maintenance, street lighting and cleaning, , markets and public parks, , and town planning activities. Municipalities have had difficulties keeping up the quality of services in face of rapidly increasing number of users. The rising demand and lagging supply of housing has led to significant increases in rental costs, especially in northern towns, and renting suitable and affordable housing has become harder for Jordanians. Investors have been constructing new housing, which has resulted in the establishment of new neighbourhoods needing roads, street lighting and connections to electricity, water and sewage networks. Rubbish is piling up in many urban centres — in cities like Irbid and Mafraq, waste has doubled, by some accounts — leading many municipalities to overwork their waste collection fleets. In addition, high unemployment has highlighted the need for municipalities to take on a more active role in promoting local economic development, fostering livelihood opportunities and enhancing communal wellbeing. Municipalities operate under the Ministry of Municipal Affairs (MOMA). Municipal activities are funded through their own revenues, central government grants, and loans channelled through the Cities and Villages Development Bank (CVDB). The World Bank is currently financing municipal infrastructure through the Regional and Local Development Project (RLDP), whose objectives also include the improvement of central-local resource transfers, financial management, revenue generation and service delivery capacity. B. Impact and Outcome that we expect to achieve The expected impact of this programme is improved satisfaction amongst host communities with the delivery of services by municipal governments in the selected Districts. The outcome which will be delivered through this programme is improved municipal service delivery. Evidence linking provision of municipal services with increased confidence in municipal government and reduced tensions: Community life has also been interrupted with the large influx of Syrian refugees. To date most support has been provided by the international community and to camps. The Jordanian Government has been criticised by its citizens for lack of response to address the needs to host communities. Because of the close ties across the border and a belief in the short-term nature of the crisis, Syrians benefitted from large amounts of in-kind and financial support from Jordanian individuals, charities and businesses. However, there are increasing tensions between the two communities in some areas – particularly in areas where there are 5 larger concentrations of refugees.4 Source data - primarily Oxfam and Mercy Corps - is set out in the conflict section. See Oxfam GB: Integrated Assessment of Syrian refugees in Host Communities – Jordan. March 2013. 4 6 Appraisal Case A. What are the feasible options that address the need set out in the Strategic case? The strategic case identifies the need to provide support to host communities. There are several options for meeting this need, and a number of principles should be considered in deciding how to do this. Any intervention should: 1. be tailored to address specific tension/conflict risks in communities and minimise harm by not exacerbating tensions; 2. emphasise areas of greatest need and avoid duplication with existing programmes or planned support. 3. build Jordanian host communities’ confidence in their government to meet key needs; 4. support long term sustainable improvements in service delivery; and 5. avoid fraud and fiduciary risks. Funding mechanism – building confidence in the Jordanian government and ensuring long term sustainability while managing risks. Budget support through the central government. The DFID design team considered providing financial aid to the central government during their mission to Jordan in June 2013. They assessed that the UK’s contribution would not be large enough to make a substantial difference to the Government of Jordan’s financing needs and would not be sufficient to leverage reform. Funding through NGOs or UN System. Funding through NGOs or the UN System can be more easily targeted to assess and mitigate potential tensions and conflict risks, and provides assurance that the money will be spent for the project purpose. The impact is directly attributable to DFID, but misses the opportunity to build the capacity of Jordanian government counterparts to consult on community needs and is not able to reinforce Jordanian citizens’ confidence in government service delivery. It establishes parallel delivery systems and may pose challenges for sustainability. Support targeted to the host communities via municipalities. Funding though municipal governments is able to make use of local systems. Whilst responding to refugee needs is often an international role, support to the hosting communities is more appropriately managed by the local structures and government. This presents an opportunity to develop Jordanian citizens’ confidence in their own government to deliver services in their communities. The World Bank is able to manage funds and provide oversight and technical support. Given that education and health needs are being met through other programmes and it has been decided that budget support is not a feasible option, there are then three main options for further appraisal: Option 1: Do nothing (counterfactual scenario) In the absence of APEF funding for Jordan’s municipal governments, service delivery at the municipal level will continue to decline with increasing numbers of refugees and the consequent strain on authorities’ ability to deliver. As the inflow of Syrians continues to increase, the capacity of the existing infrastructure will no longer be sufficient to meet the excess demand, and urgent 7 public investments in the sectors that are under particular pressure will go unaddressed. Conflicts are likely to increase. Under this scenario, the World Bank programme is expected to go ahead without DFID funding but would be slightly delayed, cover fewer municipalities and assist fewer beneficiaries. Option 2: Support service delivery through NGOs / UN system (DFID £12 million over 2 years) DFID channels bilateral support through selected partners such as suitable NGOs or UNDP to assess needs and then deliver refuse collection, waste management, water distribution and sanitation services. Services are coordinated through a mechanism to be determined. Option 3: Support municipalities to deliver services (Total programme £50 million of which DFID £12 million over 2 years) DFID provides support to municipalities to deliver key services such as waste collection, street lighting, parks and recreational facilities and water and sanitation through a World Bank Trust Fund. B. Assessing the strength of the evidence base for each feasible option In the table below the quality of evidence for each option is rated as either Strong, Medium or Limited Option Evidence rating 1 Medium. There is no strong indication whether other international community funding will continue without UK contribution. Service gaps are difficult to predict given unknown refugee numbers and municipal response, but the general trend is likely to be negative. 2 Medium. There is evidence from previous programmes that support through NGOs can help identify joint community activities and joint service provision to reduce tensions. Similarly DFID finds that working outside government does not build government ownership. 3 Medium. There is evidence that Trust Funds are an effective way to organise multilateral aid. The World Bank has already established trust funds in Jordan. The mechanism of financial flows through municipalities has been used in a previous World Bank programme, RLDP). Economic analyses of decentralised service delivery point to greater allocative, technical and fiscal efficiency than centralised service delivery systems.5 D. Climate change and environment Categorise as A, high potential risk / opportunity; B, medium / manageable potential risk / opportunity; C, low / no risk / opportunity; or D, core contribution to a multilateral organisation. See for example World Development Report 2004. Also see the World Bank’s Independent Evaluation Group’s report: Decentralisation in Client Countries: An Evaluation of World Bank Support, 1990-1997. 5 8 Option Climate change and environment risks and impacts, Category (A, B, C, D) 1 A/B 2 B 3 B Climate change and environment opportunities, Category (A, B, C, D) C B A Rapid urban growth is a key driver of environmental change, and creates both local impacts, such as stresses on water and land, and solid waste and wastewater generation, and contributes to global environmental changes - while cities cover just 1–2 per cent of the Earth’s land surface, they produce 70–80 per cent of total greenhouse gas emissions (UNEP 2012). In Jordan, the rapid expansion of urban areas due to mass inward migration of people fleeing the crisis in Syria has outstripped the existing capacity of municipal systems and services, and is causing tensions between host and refugee communities. Particular challenges include: Natural disaster risks: the region is prone to earthquakes, and unplanned expansion of settlements can increase risk of damage to due flash flooding; Energy security: provision of reliable and affordable energy to increased numbers of users; Water and sanitation: Jordan is highly water scarce, and much of the municipal infrastructure is old and in need of repair. The additional burden from additional users is stressing water supply from aquifers that are already being drained beyond their ability to be replenished. The wastewater and sewage infrastructure is also overloaded, which could create public health risks. Solid waste and hazardous wastes: waste collection services and landfill facilities are unable to process the additional volumes of waste. Rubbish left on the streets or burnt poses a public health risk. Municipalities are also demanding insecticides, rodenticides, and fumigation vehicles. The use of such chemicals may affect children, water supply, animals, and the natural environment if not properly managed. However, if insects and rodents remain unchecked, there are considerable impacts on human health. Option 1: Do nothing counterfactual scenario Opportunities: There is a limited opportunity to have a positive impact if DFID does not intervene. If the World Bank programme goes ahead with reduced funds coverage of waste collection, pest control and water services is reduced to approximately 60% of the current predicted output levels. It is unlikely that green technologies such as water conservation or renewable energy systems would be introduced. Risks: Insufficient waste collection and pest control is likely to have negative environmental consequences. Water use may exceed supply, in particular there will be quantities of water wasted through leaking pipes and poor maintenance of the water infrastructure, and provision of tinkered water will be expensive, and unlikely to reach all communities. Option 2: Support through NGOs / UN system This depends on precise support provided through NGOs or the UN which should be designed to address some of these risks. Some NGOs and some UN agencies have robust environmental management processes and would ensure high standards of operation; others would not afford 9 this priority. Option 3: Support targeted to the hosting Communities via Municipalities Opportunities: The Project is designed to mitigate the impact of a surge in population in Northern Jordan on its already-stretched municipal services. As such, positive impacts of this project are that currently unmanaged municipal and water waste will be able to be collected and channelled effectively to current collection facilities. Particular opportunities include: Improving public utilities and infrastructure by increasing resource efficiency in utilities and management of infrastructure, seizing opportunities to make use of renewable energy – for example solar-powered street lighting, etc. Exploring opportunities for recycling to reduce the volumes of waste going to landfill Enhancing the efficiency of water use by public utilities, installing water meters in all new buildings, and promoting localised means of water conservation – in public buildings and in private homes. Ensuring municipal expansion is through the appropriate regulatory framework of building codes, planning and land-use planning, development strategies, etc., and ensuring their monitoring and enforcement. Conducting environmental impact assessments and strategic environmental assessments (EIAs and SEAs) of development plans, programmes and policies. Public participation/consultation, particularly in spatial planning exercises. Risks: Any construction related impacts are expected to be small-scale in nature with most of it consisting of rehabilitation of existing roads, sidewalks, public parks and cemeteries. Any new construction will be of highly limited nature and these, if they occur, will be on already-owned municipal/state lands. The siting of any new construction will be flexible in nature (i.e., their location is not fixed). During construction, anticipated Project impacts include worker health and safety; safety of proximate pedestrians and motor vehicles; generation of dust, noise, and construction debris; and possible small detours in order to create safe space for construction teams and their equipment to conduct work unimpeded. During operation, increased solid and water waste vehicles will lead to increased impact of municipal vehicles on municipal roads as well as on disposal facilities Mitigation: The programme is classified as environmental category “B”, in accordance with the World Bank’s Operational Policy A ‘Safeguards Action Plan’ (JESSRP-SAP), provides safeguards instruments. CVDB is staffed with a full-time qualified environmental specialist, with solid understanding of the Bank’s social and environmental policies, as well as experience on the ground in monitoring and mitigating the anticipated social and environmental implications created by implemented subprojects. DFID should require monthly updates setting out progress on environmental screening and application of safeguards. E. Social impact appraisal The targeting of resources towards municipal service delivery in crisis affected governorates of 10 North Jordan has the potential to improve relations between host and refugee populations – though this will be dependent on the selection and management of municipal projects and how resources are directed towards those with need. A formal needs assessment of host communities has not been undertaken but NGO studies (e.g. Mercy Corps) suggest that the current crisis has worsened social grievances outlined in poverty assessments prior to the current crisis. These include: 32% of the population in Mafraq lives below the poverty line of US$1 per day compared to 8% in Amman in 2010, making it the poorest governorate. Female headed households are particularly disadvantaged. i Mafraq has the highest level of inactive youth of Jordan’s 22 poverty pockets – 31% of young people live in poverty and only 38% have passed the tawjihi exam ii. Over 70% of the population across Jordan are under the age of 30 (Jordan Statistics Dept.). Ineffectiveness in municipal service provision.(Arab Investigative Reporters) Lack of resources for local economic activity particularly agriculture. These highlight four key factors that should be built into local municipal planning and service delivery to address grievances: Involve young people in economic development planning, implementation and monitoring of service delivery. Increase the representation of women in local government decision making bodies. Create an independent monitoring framework that assesses effectiveness of municipal service delivery and which provides beneficiary feedback from Syrian as well as Lebanese communities. Improve information and consultation on municipal service delivery – through advertising tenders and project information, publishing local tariffs for government services and holding town hall meetings. While Jordan has made efforts to decentralise in recent years spending on municipal services has remained low. Spending on local services was less than 3% of GDP in Jordan in 2003 compared to a global average of 5% - and this has not seen much change. Municipal resource allocation does not recognise social inequality within municipalities for example the Ain El Bayda poverty pocket which was merged with Mafrak. Local council representatives are normally elected on the basis of tribal affiliation (NDI) which can mean that those from lesser represented groups loose out from patronage networks. A study commissioned to inform this programme outlined that “There is a strong tradition of community development projects in Jordan6, but these do not usually make an explicit connection to governance or forms of organising”. This highlights the need for more accountable mechanisms to be introduced into local governance particularly for lesser represented and vulnerable groups ideally through an independent monitoring mechanism. The UNDP planning and consultation processes provide an opportunity to address this. G. What are the costs and benefits of each feasible option? At present, the exact needs of each municipality are not known so it is not possible to determine how the funds will be used or what the benefits will be. As a result, it is not possible to model the 11 returns on each option in a comprehensive cost-benefit appraisal. Option 1: Do nothing (counterfactual scenario) DFID would incur no costs under this option. The World Bank’s State and Peace-building Fund is expected to grant US$10 million, Canada’s DFATD will provide CAD 20-25 million and counterpart financing by the Government of Jordan is planned at US$ 3 million. If the World Bank programme were to go ahead without DFID funding, the number of municipalities being served by the programme would need to be reduced. This would leave municipalities such as Garb Irbid (10,000 refugees), Sahel Horan (9,000 refugees) and Al Serhan (15,000 refugees) without support. Proportionally the reduced funding would allow for 463,000 beneficiaries instead of 748,000 direct beneficiaries – a reduction of 284,000 beneficiaries. Option 2: Support through NGOs / UN system The UNICEF programme ‘Water, Sanitation, Hygiene, and Child Protection Support for Syrian Refugees and Host Communities in Jordan’ provides improved WASH services to vulnerable Syrians and urban and rural host communities. A DFID contribution of £1.39 million would purchase six utility trucks and improve access to safe drinking water for 200,000 people, to be implemented through Relief International, Mercy Corps and Oxfam. This covers only part of the services implemented under Options 1 and 3 – but provides a cost comparison for this component. Option 3: Support targeted to host communities via municipalities DFID’s contribution of £12 million over two years will provide municipal services to an additional 284,000 beneficiaries in supported municipalities. Tangible benefits are the investments by municipalities in local infrastructure and services. Intangible benefits include the enhanced consultative and participatory processes underlying service delivery, livelihood and local economic development at the local level. Central government fiscal transfers to municipalities in 2013 were about US$105 million, with little change expected in 2014. Additionally, own source revenues of municipalities are around 30 per cent of total revenues. Based on this, it is estimated that per capita municipal revenues are about US$25 annually. On the expenditure side, bulk of resources goes into wages and operating costs. Municipal Grants in year one will amount to approximately $52 per capita. This project will help participating municipalities ramp up services in a significant manner, as well as potentially provide a short term stimulus to the local economy. The types of public infrastructure that may be created under Component 1 are likely to yield a higher rate of return (production efficiencies) than those under alternative arrangements (through central agencies or NGOs). The decisions taken by local governments are likely to better reflect the local preferences identified through a local planning process. The resulting choices of local public investments paid for using discretionary Municipal Grants provided by the project are likely to yield higher rates of return over time. Since the spending choices of municipalities cannot be determined a priori, a framework approach will be adopted to estimate the economic efficiency of sample investments financed by Municipal Grants. The Bank will conduct economic analysis of a sample of about 5-10 per cent of municipal investments in local roads, solid waste management, water and sanitation, and 12 drainage. Smaller investments (< $500,000) will be subject to standard cost effectiveness analysis, while larger ones (> $500,000) will be sampled for cost benefit analysis. Comparison of options will not be possible in absolute terms but the initial period of the programme will be used to develop a value for money assessment – see below. Economic analyses of decentralised service delivery are assessed in three ways typically: allocative efficiency (choices better reflect local preferences since there is greater sharing of information between agents and principals); technical efficiency (more units are produced or delivered for the same cost); and fiscal efficiency (the right fiscal instruments – taxes, transfers and own revenues — are funding the right services/priorities). There is concrete evidence from several WB projects (for example, Ethiopia, Uganda, Bangladesh, Tanzania, India, etc.) and the World Development Report 2004 to suggest that there are greater allocative and technical efficiencies in decentralized service delivery. More generally, the World Bank’s Independent Evaluation Group’s report, Decentralization in Client Countries An Evaluation of World Bank Support, 1990—2007 , notes that, “in supporting the development and/or strengthening of decentralization frameworks, the Bank generated outcomes that were high or substantial in 7 countries, modest in 12, and negligible in 1. H. Theory of change for the preferred option Diagram: Intervention logic OUTPUTS 1 Supported municipalities provide additional services 2 Enhanced municipal engagement with communities 20% 3 Effective management of funds by GoJ 10% OUTCOME IMPACT Improved municipal service delivery levels in selected districts. Improved satisfaction with municipal governments in selected districts 70% I. What measures can be used to assess Value for Money for the intervention? Value for money for the chosen intervention can be assessed according to absence of conflict, investments in local infrastructure and services, livelihood and economic development at the local level, water savings and effective consultation with local communities. Value for money calculations will be developed over the first year of the programme based on WB studies of specific investments made by Municipalities. J. Summary Value for Money Statement for the preferred option A net present value comparison of options has not been possible given the non-monetised nature of most of the benefits. Option 3 is the feasible option. 13 The size of and the rules surrounding the municipal grant will be flexible and evolve over the life of the Project. Initially, the grant size to each municipality will be based on number of refugees hosted — about US$52 per capita in year one. While the municipalities will have significant discretion to determine the expenditure priorities in year one, based on ground conditions and emerging needs, additional norms may be tagged to the Grant in years two or three. For example, provision of critically undersupplied municipal services may dominate year one, but with improved services, in later years, the use of grants may include greater focus on local economic development/livelihood activities and services, and/or strengthening community and municipal level crisis coping mechanisms. This will be determined based on biannual reviews involving the municipalities, MOMA, Ministry of Interior (MOI) and donor partners. 14 Commercial Case Direct procurement The programme does not require DFID to contract directly for the supply of goods or services. Indirect procurement through third party entity A. Assurance of the organisation’s capability and capacity to deliver The proposed funds will be managed in accordance with the Contributions Agreements between DFID and the World Bank, and the Financial Procedures Agreements between DFID and the Bank and agreed project documents and project arrangements with the Government of Jordan (GoJ). Project funding will be routed through a World Bank Trust Fund. The World Bank has a good record of delivery in Jordan. It is experienced in working with the Government of Jordan and providing financing through government systems. Procurement: Whilst the UK’s Multilateral Aid Review (MAR) in 2011 assessed the strengths and weaknesses specifically of the International Development Association (IDA), its assessment of Value for Money systems was applicable across the World Bank. The Bank’s strengths were identified as: (i) adequate cost control systems to ensure costs do not inflate; (ii) robust financial accountability processes and policies; and (iii) largely predictable, transparent financing and extensive financial policies. Weaknesses were identified as being: (i) limited incentives to generate cost savings in projects; (ii) staff pay mechanisms leading to automatic increases; and (iii) perceptions that the Bank has relatively high transaction costs. Procurement will be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011 and the provisions stipulated in the Financing/Loan Agreement the Bank guidelines shall prevail for all procurement under the project. World Bank commercial and procurement procedures will be followed for all large scale procurement. For smaller procurement this follows Government of Jordan regulations. The municipalities’ procurement of goods up to JD10,000 (US$14,000 equivalent) and works up to JD100,000 (US$140,000), both of which are below the World Bank’s Shopping threshold, shall be done following the Government of Jordan’s regulations. Expenditures under municipalities’ own thresholds may be treated either as operating costs or shall be procured using shopping and direct contracting, as the case may be. The municipalities shall directly contract Yarmouk Water Company for water, wastewater and sanitation related activities. A positive list of eligible expenditures shall determine the nature of such activities. Full details are to be found in the Projects’ Operations Manual which is currently being prepared. Under RLDP, CVDB has gained good experience on World Bank procedures to process works. Similar methods are foreseen under this Project. 15 Technical assistance: Technical expertise to manage the project will be supplied by the World Bank and UNDP. The Bank’s policy guidance and advice has been an integral part of preparation of the project. There are two areas that merit extra focus during implementation: the channelling of Municipal Grants to Participating Municipalities, the utilization of Grants for service delivery and local economic development, and the embedding of participatory processes that will be integral to the success and sustainability of the investments. The Bank along with partner agencies (DFID and DFATD) will provide proximate technical advice to MOMA and the municipalities on these aspects during implementation. the development of institutional resilience systems and capacities. This is a relatively new area for both Bank and the Government under Component 2B. A comprehensive study undertaken during year one will inform the activities to be supported under the project. The Bank team will seek the services of experts from the Centre for Conflict and Development, the Conflict and Violence Prevention thematic group at the Social Development anchor and the Disaster Risk Management anchor as well as other external experts during implementation to support and advise the relevant stakeholders in Jordan. Indicative list of eligible expenditures1/ Allowable municipal items are likely to include the following for the first year: waste compactor, tipper, loader, sewage tanks, water tanks, pick up, trailed sprayer, fumigation vehicles, garbage containers, pesticides for rodents, insecticides, rehab of existing parks, construction and expansion of cemeteries, opening new roads, road maintenance, pavements, lighting, suction pumps for water, parks, libraries and community centres, waste collection employees and waste collection vehicles (manual vehicles). Indicative positive list of eligible municipal expenditures Waste compactor Waste collection vehicles Tipper Parks and other community recreational spaces Loader Libraries Sewage tanks Community centres Water tanks Women’s and youth centres Pick ups Construction and expansion of cemeteries Fumigation vehicles Construction of new roads and sidewalks, maintenance of existing roads and sidewalks Garbage containers Water suction pumps Insecticides Rehabilitation/maintenance of public wells Rehabilitation/maintenance slaughter houses Short term hiring of technical and operational and markets personnel for Project related support B. Risk management: The World Bank has developed a detailed risk management framework. DFID has asked that risks be managed as part of the steering arrangements for the programme. C. Financial aid to governments 16 The World Bank has carried out an assessment of government financial systems to implement this programme. Municipalities’ ability to absorb funds has been tested through their ongoing management of funds, ranging from US$30 to US$200 per capita. The additional funds to be transferred as a result of this programme are 17-35% of current funds. With the additional technical assistance provided by the programme, this is assessed to be within the municipalities’ capabilities. Fund management will be assessed by the six-monthly review missions, and can be recalibrated if required. The World Bank team includes fiduciary management staff to provide routine supervision of FM and procurement activities. Since MOMA — which is the main implementing agency at the central level — and CVDB—which will be the fiduciary agent of the project — are very familiar with relevant Bank rules and guidelines on fiduciary aspects, major issues are not anticipated. Municipalities, on the other hand, are unfamiliar with Bank’s fiduciary rules and guidelines. They are likely to require extensive handholding during the early phase of project implementation. In addition to comprehensive training for relevant municipal staff before the commencement of project implementation, external technical support will be made available to municipalities on fiduciary matters via CVDB and Bank financed consultants. In addition, Bank’s fiduciary staff will provide guidance to the municipalities, MOMA and CVDB on financial management guidelines, and withdrawal applications, compliance with the Bank guidelines and other issues as they arise during the implementation. The main implementing agencies, MOMA and CVDB, have been successfully implementing the ongoing Regional and Local Development Project (supported by WB and AfDB) working with municipalities for the past 4.5 years. The overall performance of this project is satisfactory. Municipalities are already implementing similar activities as part of their routine responsibilities. A UNDP led Technical Assistance (TA) programme to support municipalities in year one is part of project design. Municipalities can also procure urgent and short TA using a share of the Municipal Grants. The PMU will be supported by CVDB on fiduciary and safeguards aspects. Based on RLDP experience and other assessments, no major problems are anticipated. A full implementation review has been agreed among partners for June-July 2014 and a second one for November-December 2014. Any major capacity issues will be addressed as part of these reviews. The World Bank will provide focused training to participating municipalities on the World Bank financial management and disbursement guidelines and procedures, and provide close financial management support during the first year of project implementation. The PAD identifies most of the fiduciary risks, and DFID has asked the World Bank to include: An explicit assessment of fraud and corruption risk especially given the relatively high risk areas of roads and infrastructure included. Preventative controls to stop funds being used for other purposes. This is now listed in the ‘eligible expenditures’ and will be regularly checked by the World Bank during the life of the project. The project allows that the size and rules surrounding the Municipal grant to be flexible and evolve. It also identifies a substantial level of risk with implementing agencies in both capacity and governance. Municipalities are graded either A, B and C. The World Bank 17 has carried out assessments of financial management systems in three sample municipalities. Two of these municipalities are being funded initially. Clearer information on the value of funding, based on numbers of refugees, to be given to each of the municipalities has still to be included (the table on page 22 is blank). Therefore, is no way of telling whether a high proportion of funding will be provided to municipalities which do not at present have the capacity to deliver effectively. The risk assessment recognises that municipalities graded at B or C may have limited ability to scale up and absorb additional resources. Mitigation measures are proposed, including the appointment of Financial Controller, this will be a key measure. The audit arrangements described appear to be appropriate, but these are retrospective controls. Para 50 also concludes that after the agreed actions are implemented from the assessments, the FM arrangements will satisfy minimum requirements – which implies they may not meet the standard prior to implementation. It will be important to ensure the effective implementation of these actions and this should be closely monitored. In view of the limited information available on implementation at this stage in project development, additional risk management support throughout the development phase may be beneficial. 18 Financial Case A. What are the costs, how are they profiled and how will you ensure accurate forecasting? The level of contribution to the Jordanian Emergency Services and Social Resilience Programme (JESSRP) World Bank Trust Fund will be £12m. There is adequate funding profiled with DFID’s Arab Partnership Economic Facility (APEF) to cover the costs of the intervention, and the required delegated authority for approval has been obtained. In addition to the £12 million £100,000 will be allocated to DFID managed studies undertaken during the programme to collect additional planning and monitoring data to improve programme effectiveness, and to better assess the impact of the programme The contribution to the Trust Fund is expected to be made according to the following annual budget profile: 2013/14 £6,100,000 2014/15 £6,000,000 Total £12,100,000 Contributions will be made upon satisfactory progress by the World Bank in putting in place Fund arrangements. Accuracy of forecasting will depend on the rate of spend from the Trust Fund, and robust proposals being presented to the Steering Committee. If there are delays to spend or proposals, funding tranches and financial forecasts will be adjusted accordingly. The project will be financed through the pooling of World Bank and bilateral grants. Current indications from the Governments of Canada, the United Kingdom and the World Bank point towards an initial financing envelope of US$ 50 million for a period of 3 years. The Governments of Canada and the United Kingdom have shown initial interest in supporting the envisioned project. The Government of Canada has already approved a CAD 5 million grant for the support of host communities in Jordan, and is considering an additional grant of CAD 15-20 million, while the United Kingdom is envisioning a £12 million grant contribution. The World Bank will aim to provide another US$10 million of grant financing from its State and Peace-building Fund. The World Bank will set up a free-standing, multi-donor trust fund to which both donor and Bank grant financing will be pooled. The Fund will be disbursed to the recipient (the Government of Jordan) on the basis of an agreed project document and grant agreements. B. How will it be funded: capital/programme/admin? DFID’s contribution will be financed from within the existing aid framework for the Middle East and North Africa Regional Team. All funding will be drawn from the programme budget. There are no contingent liabilities associated with this funding. C. How will funds be paid out? 19 Funds will be paid six-monthly, upon receipt of the World Bank’s request for funds, and in line with the Administrative Agreement. The proceeds of the Grant will be disbursed in accordance with the World Bank's disbursements guidelines as outlined in the Disbursement Letter and in accordance with the World Bank Disbursement Guidelines for Projects. Disbursement will be Report-based; the initial disbursement for CVDB will be submitted to the Bank after project effectiveness, based on forecast for two (2) quarters as provided in the quarterly IFRs. Thereafter, disbursements will be made into the Designated Account (DA) based on quarterly IFRs which would provide actual expenditure for the preceding quarter (three months) and cash flow projections for the next two quarters (six months). All supporting documentation will be retained at CVDB. They will be kept in a manner readily accessible for review by World Bank missions and internal and external auditors. The supporting documentation for reporting eligible expenditures paid from the DA will be summary reports and records evidencing eligible expenditures for payments against contracts for prior and post reviews. DFID’s due diligence assessment of this project shows that sound financial management policies and procedures will be applied by the World Bank in managing this Trust Fund. Overall the risk of project resources not being used for the intended purpose is deemed to be substantial. However, with proposed mitigation measures, the project will have acceptable financial management arrangements and the risk rating will be moderate. The main financial risk will be the misuse of funds by grant recipients. E. How will expenditure be monitored, reported, and accounted for? The project will track expenditure and other fiduciary data relevant to Municipal Grants. This will be overseen by CVDB via quarterly reports and financial statements provided by the municipalities and annual financial audits of municipalities by independent auditors contracted under the Project. CVDB and MOMA will report on this data six monthly to the World Bank and donor partners. Annual progress reports will be prepared by MOMA and CVDB and submitted to the World Bank on key activities, outputs and results. Accounting and Reporting: The project will follow the International Public Sector Accounting Standards (IPSAS) cash basis of accounting where resources and uses of funds are recorded when cash is received or when payments are made. Expenditures according to the Project’s chart of accounts will be broken down by category, component, and municipality. Supporting documents will be kept by the relevant party implementing the components. Internal Controls: Project will be implemented under the general context of CVDB internal control policies and procedures while direct grants provided to municipalities will follow the Jordan municipalities’ financial bylaw of 2007 and its amendments. There are four levels of controls under this project: (i) technical approvals of related departments (at municipalities’ level, this will be performed by the “Public Works Department”, while this task will be performed by the Engineers at the Planning and Development at CVDB; (ii) Finance Department checking and approving payments; (iii) resident Internal Auditors, and (iv) the 20 Audit Bureau verifying of the financial accuracy and compliance with the applicable laws in Jordan and the grant terms and conditions. These controls will be complemented by additional measures related to verification and approval of payments by the Project’s Manager and Finance Team at CVDB, financial reporting requirements, and disbursement procedures. All financial policies and procedures applicable to the Project will be documented in the OM, which will also outline the flow of funds, and reporting and auditing arrangements. External Auditing: An external independent auditor financed by the Project and acceptable to the World Bank will be hired to perform annual technical and financial audit. The audit report and management letter will be submitted by CVDB to the World Bank within six months after the end of the audit period. CVDB will be responsible for preparing the TORs for the auditor and submitting them to the Bank for clearance. The scope of the auditor will be extended to cover the participating municipalities and provide an opinion of the eligibility of funds distributed to beneficiaries as per the agreed list of eligible expenditures. The auditor will also assess the effectiveness of internal controls of the Project – procurement, environmental and social safeguards. The final payment for the auditor after the closing date will be transferred from the Grant account to an escrow account. According to the World Bank Policy on Access to Information issued on July 1, 2010, the audit report with audited financial statements of the Project will be made available to the public. Management Case A. What are the Management Arrangements for implementing the intervention? An inter-ministerial Steering Committee (SC) will provide strategic direction and exercise overall coordination and oversight at the national level. It will be headed by the Secretary General of MOMA and include key ministries and agencies such as MOPIC, MOI, MOMA, MWI and CVDB. It will also include representatives of participating governorates and municipalities. The SC will be established prior to project effectiveness. MOMA (especially the PMU) will provide secretarial assistance to the SC and ensure that the SC will meet at least once every six months. MOMA will be responsible for overall project coordination, management and reporting and for managing Component 2b. Within MOMA, a Project Management Unit headed by a Project Director and supported Deputy Director and other support staff will be responsible for day to day project management and implementation oversight. Project coordination will involve, inter alia: (i) providing support to the SC, planning and supervision of project activities, coordination amongst institutional partners and with the various donors, preparation and chair of the project steering committee, preparation and monitoring of the annual assessment mission, etc.; (ii) overall fiduciary oversight of the project, including financial reporting, monitoring, audits etc.; (iii) project reporting to the Government and donors, including the preparation and dissemination of project progress reports; (iv) project related information and communication activities; and (v) management and implementation of Component 2b, which involves building capacities for emergency preparedness and risk management systems in Jordan. Part of the activities programmed under Component 2, under the Municipal Support/ Service 21 Delivery Sub-Component, may be executed with UNDP support for the first year of project implementation. In the event, the World Bank and UNDP would need to sign a Memorandum of Understanding (MoU) detailing the content and implementation of the program. The Cities and Villages Development Bank (CVDB) will be responsible for providing: (i) fiduciary support to the project, including the preparation of withdrawal applications and other financial requests; (ii) procurement of works, goods and services for items that exceed the amounts that can be procured by the municipalities, according to their category, under the current regulation; (iii) financial management and reporting; and (iv) procurement of annual audits for the entire project, including expenses made under Component 2 and assurance audits of participating municipalities. CVDB will assign a nodal officer who will be a member of the PMU and will report to the Project Director on the above set of activities. The Ministry of Water and Irrigation (MWI) through Yarmouk Water Company (YWC) will be responsible for supporting municipalities identify short term priorities and implementing subprojects in water, wastewater and sanitation (e.g., rehabilitation of wells, wastewater container units, household connections to wastewater networks, urgent supplies and equipment, etc.). A MOU between MWI and MOMA will facilitate this collaboration and enable municipalities to contract YWC. MWI will also be a member of the SC. The participating municipalities will be responsible for the identification and delivery of priority infrastructure and services to be financed through the project, in close collaboration with the beneficiary communities. This will involve (i) the identification of priority needs, the costing of alternative programs affordable within the financial envelop allocated through the project, an arbitrage amongst the various alternatives, and the final consolidation of the priority list of eligible expenses; (ii) formulation of local economic development plans, working with governorate level LDUs; (iii) detailed programming of technical requirements, procurement of works, good, and services according to the current regulatory thresholds; and (iv) management of activities, including consultation with the communities and work supervision. The beneficiary communities will contribute to the selection of priority activities through participatory processes which are outlined in the Project OM and which includes guidelines for ensuring participation of women, youth and groups that are considered vulnerable. Local social organizations (NGOs, CBOs, charities, etc.) will be expected to facilitate the process. Selection criteria for these groups will also include whether they explicitly represent the interests of women and youth. The local communities and organizations will also be consulted throughout project implementation and will be able to track progress and results through the publication and dissemination of relevant Project information. Detailed description of implementation arrangements will be given in the Project OM, which will be prepared and updated as required by MOMA, and approved by the Bank and the SC. The OM is expected to be completed and key Project stakeholders, including municipalities, trained on implementation authorities, responsibilities and tasks by November 30, 2013. 22 B. What are the risks and how these will be managed? Risk Summary Table Risk Likelihood Impact Mitigation Political and economic instability and insecurity in Jordan. (Including demands from the Arab Spring, protests over economic reforms and IMF conditions, rapid influx of much higher numbers of refugees). Medium High Close monitoring of country and macroeconomic environment. Early and regular consultation with the government. Government of Jordan diverts funds away from municipalities. Low High World Bank agreement with the Government of Jordan to maintain transfers to municipalities at minimum of current levels. Community galvanization and advocacy around needs. Poor municipal capacity to implement services and plans. Medium Medium Municipalities will be supported by the World Bank on financial controls and UNDP on other capacity requirements, including mechanisms to manage consultation, procurement support. Government pressure to include municipalities not affected by Syrian refugee inflows. Medium Medium Clear agreement of criteria with the Government from the outset. Strong Steering Committee and donor support for the project objectives. Fraud and corruption. Relatively robust legal framework is hampered by weak institutional capacity to prevent corruption. Medium Medium Independent external audit function. Close ongoing monitoring of procurement. Value for money checks. Transparency of grants to allow beneficiary monitoring. Selection of projects not based on public participation and demand, which do not address tensions, or ignore the needs of vulnerable groups. Medium Medium Strong management of consultation by UNDP. Thorough analysis of conflict risks to inform the consultation processes. Sustainability. Investments in services and infrastructure may not be maintained Medium Low Government contributions to ongoing operating costs. Limited and focused set of municipalities to allow thorough and extended engagement. Well-developed local economic plans. The overall risk for this operation is medium. 23 C. What conditions apply (for financial aid only)? Not applicable. This is project finance through a World Bank managed Trust Fund. D. How will progress and results be monitored, measured and evaluated? The Project will track inputs, outputs and results through the following modalities: On a routine basis, the Project will track the budget and expenditures relevant to Municipal Grants. This will be overseen by CVDB via quarterly progress reports and financial statements provided by the municipalities and annual financial audits of municipalities by independent auditors contracted under the Project. CVDB and MOMA will report on this data biannually to the World Bank and donor partners. On a half yearly basis, the Project will track key activities and outputs of participating municipalities — for example, the number of community infrastructure subprojects undertaken, the amount of solid waste collected or the number of household wastewater connections provided and the number of local economic development subprojects supported. At the aggregate level, this will be tracked by MOMA and MOI through two means: 1) a monitoring specialist hired under the Project will support the PMU and municipalities on project monitoring aspects, and 2) annual technical audits will help MOMA/MOI verify physical and institutional activities and outputs of participating municipalities. Half yearly progress reports prepared by MOMA and CVDB, and submitted to the Bank and the SC, will report on key activities, outputs and results. Every six months, a review mission consisting of the World Bank, donors and government counterparts will assess progress on the project and identity any problems or issues arising. At the end of the review mission, an expanded Steering Committee consisting of the World Bank, donors and government counterparts will confirm the focus and approve any expansion of municipalities. The Bank team will undertake a limited evaluation of the Project, in close coordination with MOMA and other Jordanian stakeholders and with the Centre for Conflict, Security and Development within the Bank. This will involve baseline and end-of-project surveys of beneficiary households and other key stakeholders. The evaluation design could involve treatment and control groups, as appropriate, and employ appropriate evaluation techniques to estimate project-specific benefits and impacts. Further, based on availability of resources, cutting edge geo-mapping technology will be combined with traditional evaluations to gather disaggregated information on the socio-economic conditions in project areas, as well as for timely knowledge sharing of special needs in the changing demographic landscape of Jordan. Logframe Quest No of logframe for this intervention: 4159867 24 Globaljounrals.org Students teachers and organisational capacities impact on overall students’ performance in Mafraq Governorate. ii Ww.youthforthefuture.org/mafraq i 25