FOR OFFICIAL USE ONLY

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR2.3 MILLION (US$3.6 MILLION EQUIVALENT) TO THE REPUBLIC OF HONDURAS FOR A NUTRITION AND SOCIAL PROTECTION PROJECT May 17, 2011 Human Development Sector Management Unit Central America Country Management Unit Latin America and the Caribbean Region Report No: HN This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's Policy on Access to Information.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective May 3, 2011) Currency Unit = Lempiras Lempiras = US$1 US$1.62 = SDR 1 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AF AIN-C CADERH CCT FM FEP GOH IDA INE IPDP IPP ISN ISR LAC M&E OP PAD PDO PP SDR SOH SOP SSD SLSS TOR UAP UATP UNAT Additional Financing Community-Based Nutrition Intervention Advisory Services to Human Resources Development Conditional Cash Transfers Financial Management First Employment Program Government of Honduras International Development Association National Statistics Institute Indigenous Peoples Development Plan Indigenous Peoples Plan Interim Strategy Note Implementation Status Report Latin America and the Caribbean Monitoring and Evaluation Operational Policy Project Appraisal Document Project Development Objective Project Paper Special Drawing Rights Secretariat of Health Secretariat of the Presidency Secretariat of Social Development Secretariat of Labor and Social Security Terms of Reference Administrative Unit for Projects with Secretariat of the Presidency Technical Support Unit within Secretariat of the Presidency Technical Unit within Secretariat of Presidency (replaced by UATP) Vice President: Pamela Cox Country Director: C. Felipe Jaramillo Country Manager Giuseppe Zampaglione Sector Manager: Helena Ribe Co-Task Team Leaders: Cornelia Tesliuc/Karla McEvoy ii

3 HONDURAS ADDITIONAL FINANCING FOR NUTRITION AND SOCIAL PROTECTION PROJECT CONTENTS Page Project Paper Data Sheet Project Paper I. Introduction 1 II. Background and Rationale for Additional Financing 1 III. Proposed Changes 4 IV. Appraisal Summary 7 Annexes 1. Revised Results Framework and Monitoring Indicators Operational Risk Assessment Framework Macroeconomic Background Updated Indigenous Peoples Plan 22 iii

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5 HONDURAS ADDITIONAL FINANCING FOR NUTRITION AND SOCIAL PROTECTION PROJECT DATA SHEET Country Director: C. Felipe Jaramillo Sector Manager/Director: Helena Ribe/Keith Hansen Co-Task Team Leaders: Cornelia Tesliuc/Karla McEvoy Project ID: P Expected Effectiveness Date: October 1, 2011 Lending Instrument: Specific Investment Loan Additional Financing Type: Specificd Investment Loan Basic Information - Additional Financing (AF) iv Sectors: Social Protection Themes: Child Nutrition, Youth Development Environmental category: C Expected Closing Date: June 30, 2013 Joint IFC: N/A Joint Level: N/A Basic Information - Original Project Project ID: P Environmental category: C Project Name: Nutrition and Social Expected Closing Date: May 31, 2012 Protection Lending Instrument: Specific Investment Loan Joint IFC: N/A Joint Level: N/A AF Project Financing Data [ ] Loan [ X] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: Specific Investment Credit that has a final maturity of 20 years, including a grace period of 10 years. AF Financing Plan (US$m) Source Total Project Cost: Cofinancing: Borrower: Total Bank Financing: IBRD IDA New Recommitted Total Amount (US $m) Client Information Recipient: Republic of Honduras Responsible Agency: Secretariat of the Presidency Contact Person: Ms. Rocio Tabora Telephone No.: Fax No.: rtabora@sdp.gob.hn AF Estimated Disbursements (Bank FY/US$m) FY Annual Cumulative

6 Project Development Objective and Description Original project development objective: The objectives of the Project are to assist the Borrower in: (i) improving the nutritional condition and basic health status of infants and young children inside its territory; and (ii) increasing the job marketability of its disadvantaged youth. Revised project development objective: The PDO does not change in substance; however, it is re-worded to improve clarity as follows: The project development objective is to improve Honduras social safety net for children and youth by: (i) strengthening the Recipient s capacity to administer social assistance programs; (ii) improving nutritional and health status of young children by expanding the AIN-C program, and (iii) increasing employability of at-risk youth by piloting a First Employment program. Project description: Component 1: Institutional Strengthening of the Recipient s Social Protection Framework for Children and Youth (US$1 million). Component 2: Support for the Implementation of the Recipient s AIN-C Program (no additional financing required). Component 3: Implementation of Recipient s First Employment Program (FEP) for disadvantaged youth (US$2.6 million) Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) Does the project require any waivers of Bank policies? Have these been endorsed or approved by Bank management? N/A [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [X]Yes [ ] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [ X ] No [ ]Yes [ ] No v

7 Financing Agreement Reference Schedule 2, Section I.A.3 Conditions and Legal Covenants: Description of Covenant Implementation arrangements: The Recipient, through SOLSS, shall amend the Service Agreement, satisfactory in form and substance to the Association, for purposes of updating, inter alia, the terms of reference, the service fees, and the financial obligations related to the provision of management services in respect of the implementation of Part C of the Project Date Due Ongoing vi

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9 I. Introduction 1. This Project Paper (PP) seeks the approval of the Executive Directors to provide an additional credit in an amount of SDR 2.3 million (US$3.6 million equivalent) to the Republic of Honduras for the Nutrition and Social Protection Project (P082242, Cr. 4097). The proposed Additional Financing (AF) will fund costs associated with the implementation of new activities (the development of a targeting instrument for urban areas and implementation of a household survey), and a cost overrun and scaling up of training activities related to the First Employment Program (FEP). In addition, the Project is being restructured as follows: (i) the Project Development Objective is being re-worded to improve clarity; (ii) changes in activities and implementation arrangements under Component 1 are being made; and (iii) project indicators are being revised. 2. Summary of changes and expected outcomes: Under Component 1, the proposed AF would finance the development of a targeting instrument for urban areas and a household survey leading to the identification of roughly 75,000 eligible beneficiaries for the Country s Conditional Cash Transfer (CCT) Program. Restructuring under Component 1 includes the revision and addition of results indicators, a change in implementation arrangements, and the elimination of financing of one subcomponent which is now financed with national resources. Under Component 3, the proposed AF would finance the training of 2,300 youth. This would allow the Project to reach its original target of 6,000 trained youth (original financing only allowed for the training of 4,800 due to cost increases), and exceed that target by 1,100. Given the continued high unemployment of at-risk youth in the country, the Government of Honduras (GOH) has established the expansion of the youth employment program as a priority. Restructuring under Component 3 includes the revision of eligibility criteria for FEP beneficiaries and a change in the target values of some of the intermediate results indicators. No changes are proposed for Component 2. II. Background and Rationale for Additional Financing in the Amount of SDR2.3 million (US$3.6 million equivalent) 3. Honduras remains one the poorest and most unequal countries in Latin America. Consumption-based poverty figures for 2009 show that about 44.5 percent of the population was living in poverty and 20.1 percent in extreme poverty. Unemployment of youth remains high, particularly in urban areas, where it stands at 9.6 percent, with another 8 percent being underemployed. A high percentage of unattached youth engage in risky behavior, including crime and violence. 4. With the advent of the new administration in January 2010, Honduras introduced a new CCT program, Bono 10,000. This is the Government s flagship social assistance program and is targeted to poor families with children. IDA supports the program through a Credit that includes technical assistance and financial support for the transfers. Along with the CCT program, the new administration articulated a National Plan that includes a focus on providing resources for the poorest segments of society through a social protection strategy. 5. The original Credit amount was for SDR13.3 million (US$20.0 million equivalent). It was approved by the Board on July 7, 2005 and became effective on February 28, The 1

10 Project Development Objective (PDO) was to assist the Borrower in: (i) improving the nutritional condition and basic health status of infants and young children inside its territory; and (ii) increasing job marketability of its disadvantaged youth. This would be achieved by expanding the community based nutrition intervention (AIN-C) to over 1,000 communities with a high incidence of chronic malnutrition, and the piloting of the First Employment Program in poor urban areas. The PDO does not change in substance, but will be re-worded to improve clarity. There are no changes to the original Credit s design or scope. 6. The Project is progressing well overall, and is currently rated Moderately Satisfactory on both its Development Objectives and Implementation Progress. It has remained in satisfactory status over the last 12 months. Results recorded in the most recent Implementation Status and Results Report (ISR) for the project show that its impact so far has been consistent with the expectations set out in the PAD: Under Component 1, the Secretariat of Social Development (SSD) was created and a Social Protection Policy drafted. Under Component 2, 1,036 communities are receiving AIN-C services, exceeding the original target of 1,000, and evidence from the first monitoring cycle of the program indicates that 94 percent of children under 2 in beneficiary communities are participating in weighing sessions, exceeding the 90 percent target. Regarding Component 3, 32 percent of graduates of the First Employment Program are employed six months after graduation (target is 40 percent), and over 400 businesses are offering internships tied to the training that youth receive (target was 100 businesses). 7. In February 2010, the closing date was extended to May 31, The extension was mainly due to slow implementation as a result of the June 2009 political crisis (and subsequent removal of the President), when much of the international community put aid programs on hold. IDA followed a process consistent with Operational Policy (OP 7.30), which included conducting an assessment of the prevailing situation with respect to the de facto Government. During the assessment period IDA paused implementation of the existing portfolio and stopped processing withdrawal applications, in line with OP Without new IDA resources during that period, the project was unable to continue financing ongoing contracts for the delivery of AIN-C under Component 2 and of the youth employment training. The situation remained fluid for much of 2009 and IDA began to resume disbursements in December 2009, once it was clear that the conditions of OP 7.30 were fulfilled. However, just as IDA resources began to flow again, project implementation slowed due to the political transition following the elections. 8. The proposed additional credit is consistent with the current World Bank Honduras Interim Strategy Note (ISN, Report No HN) discussed by the Executive Directors on November 9, 2010, although it was not explicitly included in it. Reduction of extreme poverty is one of the Government s key priorities articulated in its National Plan 1 and one of the principles of the ISN. 1 Visión de País y Plan de Nación , República de Honduras, January

11 9. The rationale for the Additional Financing is to allow the following: (i) (ii) Funding for household data collection and development of a targeting methodology for urban areas. This activity would lead to: (a) improved targeting of safety net programs, which was planned under the original project; and (b) the enrollment of more beneficiaries into the CCT program. The target value for the coverage of Bono 10,000 is 600,000 households. To date, 160,000 families are enrolled in the Program, and 150,000 have been identified. The AF would survey an additional 100,000 households, which would lead to identifying about 75,000 families eligible for Bono 10,000 in 2011, thereby facilitating the Government s desire to provide resources for the poorest segments of society, and allowing the CCT program to reach its enrollment goal. Financing a cost overrun and expansion of the First Employment Program. Component 3 experienced an overrun due to a higher cost per trained youth than the amount originally planned. This increase resulted from a higher number of required training hours than was previously envisaged, to allow participants to obtain a competency certificate, and from unforeseen changes in market conditions as a result of a competitive process of selection of training courses. As a result, the original allocation would allow only 4,800 youth to be trained, against the target of 6,000. The cost per trainee, even after this unforeseen increase, of about US$1,048 remains in the range of US$600-US$2000 of similar programs in the LAC region. In view of the continuing problem of unemployed youth, the Government also wishes to expand the program to cover training for an additional 2,300 youth. Minor changes are proposed in the eligibility criteria for beneficiaries of First Employment Program based on lessons learned in the implementation of the pilot. 10. Alternatives to finance the proposed new activities and scaling up of the FEP (such as counterpart funds), were discussed with the Government, and it was agreed that an Additional Financing Credit would respond well to the GoH s needs. The AF supports the original PDO and it is clearly focused on activities already supported under the original credit. The magnitude of the scale up can be easily accommodated in the context of the ongoing project, relying on the Recipient s existing implementation capacity. 11. Rationale for restructuring activities. (i) (ii) Changes to outcome and intermediate results indicators: The AF allows an opportunity to clarify language around some indicators and adjust the target values, add indicators related to new activities under Component 1; and add a new indicator to measure the health status of beneficiary children under Component 2. Changes to implementation arrangements for Component 1. Originally this subcomponent financed technical support, assistance, training, and equipment for the Secretariat of the Presidency (SOP) and the Technical Unit (UNAT) within 3

12 SOP to strengthen its capacity for policy development and coordination of all three of the original project s components. In 2009, in order to improve the institutional coordination for the social sectors, the government created the Secretariat of Social Development (SSD). The SSD was given a mandate to: (a) formulate, coordinate, execute, and evaluate public policies for poverty reduction in the social sectors; and (b) plan, administer, and execute programs, projects and strategies in the social sectors oriented to poverty reduction. In parallel, changes were made within the SOP, and it now has a technical unit Technical Support Unit (UATP), and a fiduciary unit (UAP) that provides procurement and financial management support to the project. The AF provides an opportunity to reflect this change in implementation arrangements for the Nutrition and Social Protection Project. III. Proposed Changes 12. Project Development Objective. The PDO does not change in substance; however, it is re-worded to improve clarity, as follows: The project development objective is to improve Honduras social safety net for children and youth by: (i) strengthening the Government s capacity to administer social assistance programs; (ii) improving nutritional and health status of young children by expanding the AIN-C program; and (iii) increasing employability of at-risk youth by piloting a First Employment Program. Component 1. Institutional Strengthening of the Recipient s Social Protection Framework for Children and Youth (US$1 million) 13. The new activities added to this component are the collection of household data to identify eligible beneficiaries for Bono 10,000 and provision of technical assistance for development of a targeting methodology for urban areas. The AF would allow the identification of roughly 75,000 households in urban and rural areas. While the targeting methodology for rural areas is already developed, the one for urban areas is not, so the AF would finance technical assistance consulting services to achieve this by: (i) defining a targeting scoring formula; (ii) designing a data collection instrument; and (iii) piloting said data collection instrument. 14. The National Statistical Institute (INE) would carry out the data collection given its considerable experience with household surveys (INE collected the first round of surveys for Bono 10,000) and because of the need to have a government institution that could ensure continuity in the process. It is foreseen that INE will be hired as a service provider to carry out the data collection, in accordance with the Bank s Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers, published by the Bank in January Technical assistance for the identification of community counterparts, and the development of participatory instruments for local level monitoring would be dropped, since the Government s new Social Protection Strategy will include participatory social monitoring of social programs mechanisms and their implementation would be financed with national resources. 4

13 16. The SSD and SOP have entered into an agreement whereby SSD is responsible for implementation of project activities and the technical oversight of Component 1, including preparation of periodic progress reports and updating the implementation plan. Meanwhile, the SOP, through UAP, will provide fiduciary support (procurement and financial management) for Component 1. The SOP will also, through the UATP, coordinate, monitor, and supervise the entire Project. This role is in accordance with Article 19 of Honduras National Plan, under which the SOP is mandated with ensuring the fulfillment of the Social Cabinet s commitments. As such, using Government resources, the SOP is in the process of designing a results-based management system (the Presidential Management System), which will be linked to the Information System for Monitoring and Evaluation of Social Protection programs that is being developed by SSD under the original Nutrition and Social Protection Project. These systems also will be linked to the National Planning System (SINAPLADEH). 17. Indicators for Component 1 are being revised to clarify wording. See Annex 1 for details. Component 2. Support for the Recipient s AIN-C Program (No additional financing required) 18. An indicator is being added to measure health status of beneficiary children, which was not included in the original results matrix. 19. Clarification of the wording in the PDO indicator is proposed. See Annex 1 for details. Component 3. Implementation of Recipient s First Employment Program (FEP) for disadvantaged youth (US$2.6 million) 20. Following the original project design, the AF would provide financial support for the implementation of the First Employment Program. The component would finance activities under four subcomponents: (i) Carrying out of selection processes with respect to determining eligible FE Program Beneficiaries; (ii) Carrying out of relevant employment training programs and job internships in partnership with selected public and private companies; (iii) Promotion and dissemination of information about FE Program to eligible FE Program Beneficiaries, civil society, training institutions, prospective employers; and provision of job counseling services and employment referrals for labor market insertion of FE Program Beneficiaries; and (iv) Development of a monitoring and evaluation system in SLSS and provision of support for the institutional and operational capacity building of SLSS. (i) Subcomponent 1. Carrying out of selection processes with respect to determining eligible FE Program Beneficiaries. Youth aged living in poor urban areas, who are not enrolled in formal education and who are unemployed or visibly underemployed, would be eligible for the program. A minor change would be introduced to expand the age limit for participants in the program from 18 years to 21 years old, based on lessons learned from the first stage of implementation that showed there is a large number of at risk youth in the older age group who could benefit from the intervention. In addition, the requirement to be enrolled in a program of alternative education 5

14 would be eliminated to avoid excluding disadvantaged youth who may not find a place because of limited supply. Notwithstanding the elimination of the requirement to be enrolled in alternative education, the FEP would continue to emphasize the importance of being enrolled in a second chance education program. The additional credit would finance a series of promotion activities in communities, schools, and with NGOs through a variety of modalities (mass media, job orientation sessions, workshops with graduates of the program, etc.), as well as specially organized enrollment and eligibility determination sessions. For indigenous communities, the program would organize mobile enrollment units working together with the training institutes and the indigenous Federations. (ii) (iii) Subcomponent 2. Carrying out of relevant employment training programs and job internships in partnership with selected public and private companies. The training would be offered by private and public training centers, contracted out through a competitive bidding process, which would be responsible for defining the specific areas of training based on internships they have previously identified and agreed with employers. While in training, FEP participants would benefit from: (a) 3-4 months of technical vocational training combined with life skills training; (b) a stipend to cover the costs of transportation and food for each day of assistance; (c) training materials; and (d) sitting in an exam to obtain a competency certification. The training is followed by an internship period of about three to four months in duration, preferably in private companies operating in business directly linked to training. So far, most internships have been offered in large services companies (hotels, supermarkets, restaurants), but also in some small and medium-size enterprises (garments, construction, hairdresser, greenhouses, among others) as well as public organizations (museums). The SLSS delegated the administration of training services through a service contract to the Advisory Center for Human Resources Development (CADERH), a nonprofit organization with a leading role in the accreditation of training institutes and development of occupational standards in Honduras. Under FEP, CADERH is responsible for accreditation and maintenance of a Registry of Training Providers, and handles requests for proposals, evaluation of proposals, contracting of training providers, supervision of contracts and beneficiaries during training and internship, certification of competencies, and reporting to the SLSS. Subcomponent 3. Promotion and dissemination of information about FE Program to eligible FE Program Beneficiaries, civil society, training institutions, prospective employers; and provision of job counseling services and employment referrals for labor market insertion of FE Program Beneficiaries. After the training and internship phase, graduates would be registered in the database of the National Employment Service of SLSS, and would be eligible to receive assistance in job search and job placement. In addition, program participants would receive personalized, intensive psychological support, to manage frequently encountered traits among 6

15 beneficiaries including low self esteem, depression, impacts from sexual and domestic violence, and the affects of low school attainment. (iv) Subcomponent 4. Development of a monitoring and evaluation system in SLSS and provision of support for the institutional and operational capacity building of SLSS. The AF would finance the cost associated with the annual audit of the project. The current monitoring and evaluation activities would continue to be carried out with funding from the original credit. Targets for the expansion of the FEP are being revised. See Annex 1 for details. Costs by Component, US$ Component Original cost Changes with AF Revised cost 1. Institutional strengthening of the social protection framework 2. Consolidation and expansion of AIN-C 3. First Employment Program for at- risk Youth Total Extension of the closing date of the original Project. The current closing date of the original Project would be extended until June 30, 2013 and the original Credit (Cr. 4097) will also be extended to June 30, IV. Appraisal Summary 22. The economic rationale for investing in at-risk youth in Honduras remains valid and is based on two considerations: (i) (ii) Participants would improve their employability (increased employment, higher earnings, higher quality of employment). The labor market insertion of youth who neither work nor study would diminish the probability of them engaging in risky behavior, which in turn would decrease future expenses for rehabilitation and treatment related to these behaviors. 23. An impact evaluation of the First Employment program is at the stage of collecting the second round of survey data and will provide information on direct benefits from improved employability by September Direct benefits of youth employment training programs in Argentina, Chile, Colombia, Dominican Republic, and Peru, which are similar to the First 7

16 Employment pilot supported under this project, have already been measured through impact evaluations. As shown in the table below the outcomes of these programs differ, but in general they show a positive impact in employment and/or earnings of the program beneficiaries. Impact on employment* Impact on Employment and Wages for Youth Employment Training Programs Youth Project (Proyecto Joven) (AR) Young Chile (Chile Joven) (CH) Youth in Action (Jovenes en Accion) (CO) Youth and Employment (Juventud y Empleo) (DR) Pro Youth (ProJoven) (PE) 10% (f) 21% 5% (f) 0% 6% (f) Impact on wages* 10% 26% 18% (m) 35% (f) 10% 18% Cost-Benefit NPV> NPV>0 NPV>0 *Compared to control group. 24. A follow up survey showed that one-third of FEP participants were employed six months after graduating from the program. This is below the expected value, mainly because: (i) the original target group for the program (15-19 years old) experienced significant constraints in finding jobs due to national labor laws regulations that limit employment for this age group; (ii) hourly employment, (the most convenient form of employment for youth who want to study and work), was interdicted until March 2011; and (iii) the global economic crisis that had adverse impacts on Honduras labor market. In 2009, the unemployment rate for years olds in urban area increased to 7.6 percent in 2009 and 9.6 percent in With the change in legislation that allows hourly employment, the increase in the age limit for FEP participants, and the economic recovery, it is expected that the likelihood of program participants of finding gainful employment or obtaining better earnings would increase. 25. Financial Management. This AF operation will continue to use the accounting and financial management (FM) arrangements applicable to the Nutrition and Social Protection Project, with respect to the two implementation agencies that will execute the AF. Therefore, Component 1 will be managed by the Secretariat of the Presidency through the UAP, and Component 3 will be managed by the SLSS through its Project Implementation Unit. 26. A follow-up supervision mission was carried out on April 12-14, 2011 to verify the status of the Action Plan arising from the latest qualified audit report for the original Project. From the review it was confirmed that the FM action plan was substantially completed, as the main issues that were the basis for the qualification of the audit were resolved by the Project and only minor internal control issues remain, which are now being addressed under the same Action Plan. 8

17 27. An update to the FM assessment that was carried out at the time of appraisal was undertaken which found that both implementation agencies have the necessary staff and system in place to manage the Project, inclusive of the scaled up activities, and that there were no significant pending FM issues. 28. Retroactive financing. Withdrawal up to an aggregate amount not to exceed US$600,000 equivalent may be made for payments made prior to the date of the Financing Agreement but on or after May for eligible expenditures under Component Procurement. Procurement for the proposed Additional Financing would be carried out in accordance with the World Bank's Guidelines 2 and the provisions stipulated in the Credit Agreement. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are established in the Procurement Plan, dated May 9, The Procurement Plan would be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. The Procurement Plan also identifies the specific activities and items to be financed and the associated procurement rules to be applied. 30. A desk review was completed for the project. The procurement risk was determined to be Moderate. The rating is based on the fact that the overall procurement of the current Nutrition project is progressing well and procurement personnel has remained in the project. 31. Social and Environmental Safeguards. The environmental category of the project continues to be C. The additional financing does not trigger any new safeguard policies. The OP/BP 4.10 (previously OD 4.20) was triggered under the original Project, and remains relevant for the AF. Consequently, the Recipient carried out a series of free, prior and informed consultations: on April 11, 2011, with Afro-Honduran federations, and on April 14, 2011 with Indigenous Federations. Based on lessons learned during implementation of the original project, and the results of the consultations, the Indigenous Peoples Plan (IPP) was updated and disclosed in Honduras and in the Bank s website prior to appraisal. 32. Some of the activities included in the IPP for the AF are: (a) Permanent consultations and follow-up with the youths from the moment they register for FEP, through training, and after exit from the program, to ensure they receive enough counseling to resolve social issues, academic/performance problems, and are successful in accessing their first jobs. (b) Project promotion will be done locally, at registration sites and through fairs. Promotion will take place in Spanish or possibly in Garifuna, depending on the audience, with the support of the Federations, youth groups, and community programs. 2 Guidelines: Procurement under IBRD Loans and IDA Credits, dated January 2011; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated January

18 (c) Organization of culturally-appropriate trainings targeted to indigenous youths emphasizing trades and occupations in high demand, including self-employment. 33. Moreover, based on lessons learned, for all the youths in FEP (including indigenous), activities introduced during implementation of the original project will continue, including: (i) training that includes topics dealing with social exclusion, sexuality, stress management, peer pressure, civil responsibility, entrepreneurship, etc., and (ii) professional counseling, and followup to monitor those who have received counseling, using resources and materials from the Adolescent Services Program at the Secretariat of Health. The counseling services will be coordinated with the Job Search Services Program of the SLSS. 10

19 ANNEX 1: RESULTS FRAMEWORK AND MONITORING PDO Revisions to the Results Framework Comments/ Rationale for Change Current (PAD) The objectives of the Project are to assist the Borrower in: (i) improving the nutritional condition and basic health status of infants and young children inside its territory; and (ii) increasing the job marketability of its disadvantaged youth PDO indicators Proposed Revised. The project development objective is to improve Recipient social safety net for children and youth by: (i) strengthening the Government s capacity to administer social assistance programs; (ii) improving nutritional and health status of young children by expanding the AIN-C program, and (iii) increasing employability of at-risk youth by piloting a First Employment program The original PDO articulated in the legal agreement is broad (improving nutritional condition of children inside its territory as opposed to those who are poor and vulnerable), and vague ( marketability is not a term used in social protection parlance, and disadvantaged is not defined) PDO Indicators for Component 1: Institutional strengthening of the Recipient s social protection framework for children and youth Current (PAD) Proposed change Coherent institutional structure for policy formulation, planning budgeting, coordination, implementation and M&E of social protection actions for C&Y in place Revised. Institutional structure for social protection policy formulation, planning, implementation, and evaluation is created by Governmental decree Coherent is not defined, and the institutional structure for social protection goes beyond children and youth, and should be set up accordingly Intermediate Results indicators Current (PAD) M&E system strengthened and in use with results feedback to policy and program design as well as budget allocations Coordination mechanisms defined and in use Draft social protection policy for C&Y with its 3 year implementation plan which defines roles, responsibilities and products of each participating institution Proposed change Revised: Information System for Monitoring and Evaluation of Social Protection Programs is designed and operational Dropped New: Household data collection to identify beneficiaries for Bono 10,000 New: Targeting mechanism for urban area validated Revised: Social Protection Policy finalized and approved by the Social Cabinet The new articulation reflects that the Government has not had a M&E system in place (so it could not have been strengthened as noted in the original indicator) It is not clear to which coordination mechanisms the indicators is referring and in any case, coordination is covered under the PDO Indicator for this component (e.g., institutional structure in place) This is a new indicator that reflects an additional activity that would be funded under the Additional Financing, not foreseen in the original project s design This is a new indicator that reflects an additional activity that would be funded under the Additional Financing, not foreseen in the original project s design Since Honduras does not have a social protection policy, the one produced under this project should cover the entire lifecycle, including children and youth. Also, the original indicator called for a draft, but given the importance of a SP policy to organizing the sector, the new indicator calls for its finalization 11

20 Revisions to the Results Framework Comments/ Rationale for Change PDO Indicators for Component 2: Support for the implementation of the Recipient s AIN-C Program Current (PAD) Percentage of reduction in the rate of chronic malnutrition of children under 2 years old Intermediate Results indicators Proposed change Revised: Reduction in chronic malnutrition for children under 2 years of age participating in AIN-C The original indicator is slightly more complex and does not articulate that the reduction would be measured in beneficiary communities Current (PAD) Number of new communities covered by program Percentage of children under 2 years old who participate in the weighing sessions Percentage of children under 2 years old with inadequate growth in two successive checkups Percentage of children under 2 years old who began to participate in the program before 3 months of age Percentage of children exclusively breastfed for 6 months Proposed change Continued Continued Continued Continued Continued New: Percent reduction in number of children with reported cases of diarrhea in the last two weeks, in beneficiary communities This is a new indicator. The PDO articulates that children s nutritional and health status would be improved under the project; there was no indicator to measure health status under the original Project. The proposed new indicator fills this gap PDO Indicators for Component 3: Implementation of Recipient s FE Program for Disadvantaged Youth Current (PAD) Percentage of program graduates in paid employment or self employment 6 months after program graduation Intermediate Results indicators Current (PAD) Number of youths who use the SLSS Information Service in project areas Number of businesses that offer internships Number of youths participating in First Employment program Percentage of youths successfully completing all phases of the FEP Proposed change Continued Proposed change Continued Continued Change in target value. Original target: 6,000 New Target: 7,100 Continued New: percentage of Indigenous and Afro-Honduran beneficiaries, from the total of beneficiaries; New: percentage of Indigenous and Afro-Honduran youths finishing the program, from the total registered Need to have evidence on effectiveness of active outreach for Indigenous and Afro- Honduran beneficiaries Need to have evidence on effectiveness of active outreach for Indigenous and Afro- Honduran beneficiaries 12

21 REVISED PROJECT RESULTS FRAMEWORK PDO Level Results Indicators 1. Institutional structure for social protection policy formulation, planning, implementation, and evaluation is defined and approved by Governmental decree 2. Reduction in chronic malnutrition for children under 2 years of age participating in AIN- C 3. Percentage of program graduates in paid employment or self employment 6 months after program graduation Beneficiaries Project beneficiaries Core Unit of Measur ement N/A Baseline Original Project Start (2005) Institutional and Legal Framework for PRSP Implementation (Social Cabinet, UNAT and Consultative Council) Progress To Date Cumulative Target (2011) 3 Value SSD created and has substituted the institutional structure first put in place under the project. SSD has mandate to coordinate, design, implement and evaluate social policy % % Number 4,883 7,100 Frequency Data Source/ Methodology Once SSD and SOP at 6 and 18 months being in the program End of Project Impact Evaluation Impact Evaluation Responsibility for Data Collection SOH SLSS 3 For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value. 13

22 Intermediate Results Indicators Core Unit of Measure ment Baseline Original Project Start (2005) Progress To Date (2011) Target Values Frequency Data Source/ Methodology Responsib ility for Data Collection Information System for Monitoring and Evaluation of Social Protection Programs is designed and operational. Household data collection to identify beneficiaries for Bono 10,000 New targeting mechanism for urban area is validated Social Protection Policy finalized and approved by the Social Cabinet. Number of new communities covered by program N/A Number of surveys Poverty Reduction Strategy information and monitoring system established N/A 0 N/A PRSP MIS installed in Legal framework establishing : (i) Unique Registry of Beneficiarie s (RUB); (ii) Registry of Programs and Services (RPS); and (iii) System of Evaluating Social Policies 0 0 Draft SP Policy prepared with its conceptual basis and principal implementation instruments. Draft Policy prepared Design of Unique Registry of Beneficiarie s and of Registry of Programs and Services are completed 100,000 surveys completed Targeting algorithm developed and piloted SP Policy is finalized and approved by Social Cabinet URB is registering information on beneficiarie s and RPS is recording information on programs Targeting methodolog y manual completed Implementa tion plan for SP Policy is completed Monitori ng Reports on key Social Protectio n Program s are produced Number 0 1,036 1,036 1,036 1,036 Annual Annual Reports generated by Inf System Reports of service provider and Recipient SOP and SSD Recipient Once SOP/SSD Once Annual Project supervision reports M& Information system for SDS will present products to IDA SOH 14

23 AIN-C Percentage of children under 2 years old who participate in the weighing sessions Percentage of children under 2 years old with inadequate growth in two successive checkups Percentage of children under 2 years old who began to participate in the program before 3 months of age (To be updated at appraisal) Percentage of children exclusively breastfed for 6 months. Percent reduction in number of children with reported cases of diarrhea in the last two weeks, in beneficiary communities Percentage of providers who meet at least 80% of the quality standards for service delivery Number of youths who use the SLSS Information Service in the project areas % % 94% 94% % % % % To be collected by project baseline study 87.5 % 10.5 % Number ,000 monthly monthly monthly Every 2 years Annually Two times per year M& Information system for AIN-C M& Information system for AIN-C M& Information system for AIN-C Impact Evaluation Reports of service providers M& Information system for AIN-C SOH SOH SOH SOH SOH Nurse in Network Annual MIS of SLSS SLSS 15

24 Number of businesses that offer internships Number Number of youths participating in FEP Number 0 4,883 7,100 Annual MIS of SLSS SLSS Annual MIS of SLSS SLSS Percentage of youths successfully completing all phases of FEP Percentage of Indigenous and Afro-Honduran beneficiaries, from the total of beneficiaries Percentage of Indigenous and Afro-Honduran youths finishing the program, from the total registered % % % Annual MIS of SLSS SLSS Annual MIS of SLSS SLSS Annual MIS of SLSS SLSS 16

25 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Project Development Objective(s) The project development objective is to improve the Recipient social safety net for children and youth by: (i) strengthening the Government s capacity to administer social assistance programs; (ii) improving nutritional and health status of young children by expanding the AIN-C program; and (iii) increasing the employability of at-risk youth by piloting a First Employment program. PDO Level Results Indicators: 1. Institutional structure for social protection policy formulation, planning, and implementation is defined and approved by Governmental decree 2. Reduction in chronic malnutrition for children under 2 years of age participating in the AIN-C Program 3. % of Program graduates in paid employment or self employment six months after program graduation Risk Category Risk Rating 1. Project Stakeholder Risks L Risk Description Political Opposition to scaled up activities. Certain political groups might oppose expansion of First Employment and carrying out survey activities to collect socio-economic information on households who would be potential beneficiary of the CCT program, afraid that it might produce political gains for the government in power. Exclusion of at-risk youth who could benefit from First Employment program because of age limit restrictions and barriers at enrolling in the program Proposed Mitigation Measures Maintain active engagement with the Recipient, as has been done during the political transition and between Administrations Under the new credit the age limit will be raised, program promotion will be expanded, and special mobile enrollment sessions will be organized for indigenous communities 17

26 Risk Category Risk Rating Risk Description Staff turnover: Frequent changes in staff in Ministry of Labor and Soc Security (SLSS) and Ministry of Health (SOH) has hampered implementation. The project technical staff in the SOH is hired under very short term consultancy contracts posing a high risk of job insecurity Proposed Mitigation Measures Project finances institutional strengthening of all institutions involved All supervision missions focus on sensitizing the senior authorities on importance of staff stability 2. Implementing Agency Risk MI Limited counterpart funding for hiring qualified human resources at SOH regional and local level provide for weak monitoring of AIN-C providers Change in coordination roles: Ministry of Presidency (SOP) after recent administrative restructuring has transferred its role of coordinating and monitoring social protection policy to SSD which has limited capacity Counterparts funds to be used to pay for salaried workers thus providing more job security A comprehensive institutional development plan for the SOH Department of Coverage Extension and Finance of Health Services has been prepared waiting implementation A system for providers contract monitoring has been developed Limited capacity in INE to carry out high volume of data collection over a short period of time Financial Management: Weak internal controls, audit delays Procurement: Delays, particularly in the SOH, can affect improvement in key operations particularly those related to contracts of AIN-C providers and hiring of key technical staff Need for improved oversight and accountability Use of private firms for data collection if INE has limited capacity FM and Procurement continuous training of staff Support in drafting ToRs Both SOH and SLSS prepared action plans, to address the FM issues detected by the auditors during FY09 audit which were approved by IDA Accountability mechanisms and controls will be strengthened and put in place where missing Existing SEPA use for monitoring procurement plans improves transparency SIAFI use for budget execution monitoring Monitoring System is operational and Rigorous 18

27 Risk Category Risk Rating Risk Description Proposed Mitigation Measures cuasi experimental impact evaluation of AIN-C in process Monitoring system developed and Impact evaluation of First Employment in process Publish results data on webpage 3. Project Risks Beneficiaries could manipulate their information to gain fraudulent access to program benefits Project encompasses three components with limited coordination among them following SOP restructuring First Employment program design encourages mostly at-risk youth unemployed and or underemployed with low earnings willing to spend 6-7 months on the program unpaid AIN-C uses geographical targeting selecting entire communities Project implementation arrangements will clearly define roles and responsibilities between various entities involved. Limited interest of training providers in First Employment because reticence to work with at-risk youth and reluctance of signing contracts that enforce performance Lessons learned from First Employment will be documented to allow institutionalizing the program, if government resources permit 3.1 Design ML Low interest of at-risk youth to participate Weak employment generation in the HN economy limits employment of program graduates Restrictive age limit (15-19) and the requirement to be enrolled in an alternative formal education for First Employment participants reduces the likelihood of employment given restrictive labor legislation for youth younger than 18 Contracts with providers are closely monitored to ensure timely payment Training courses spaced out to avoid large groups due for internship SLSS capacity to offer job search assistance will be strengthened Age limit for First Employment program will be increased to 21 and the requirement of being enrolled in alternative school will be eliminated to avoid exclusion errors 3.2 Social & Environmental L If no special strategies (local recruitment, promotion in native language, registration in situ, The IPP has been updated to incorporate lessons from the first years of implementations. 19