PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB3313 Project Name. BO-Enhancing Human Capital of Children and Youth Region

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1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB3313 Project Name BO-Enhancing Human Capital of Children and Youth Region LATIN AMERICA AND CARIBBEAN Sector Other social services (100%) Project ID P Borrower(s) Government of Bolivia Implementing Agency Ministry of Planning and Development Ministry of Planning and Development Mr. Gabriel Loza Telleria Av. Mariscal St. Cruz esq. Oruro Piso 5 Bolivia Tel: (591) Fax: (591) Environment Category [ ] A [] B [ x] C [ ] FI [ ] TBD (to be determined) Date PID Prepared September 11, 2007 Estimated Date of January 22, 2008 Appraisal Authorization Estimated Date of Board March 25, 2008 Approval 1. Key development issues and rationale for Bank involvement The Government of Bolivia faces the challenge of reducing the vulnerability of the poorest and building their capacity to escape poverty. Past public policies and social programs in Bolivia have failed to raise the welfare of poor and vulnerable households in a meaningful way. Vulnerable groups are especially exposed to risks affecting their human development including: malnourished and stunted infants, some groups of school age children with insufficient or poor quality of education, and youth lacking job skills and access to opportunities. The persistence of these conditions causes irreversible losses of human capital, which largely explain why Bolivia is trapped in a vicious circle of transmission of poverty across generations. Malnourished children are prone to have lower levels of concentration and cognitive development, which eventually can generate lower academic achievement, and higher rates of repetition and school drop outs. As a result, a significant proportion of the population will reach post-school age hampered by poor skills and low productivity. These groups are less likely to find quality jobs, and therefore have lower earning potential and a higher probability of being poor. Thus a significant share of the population is prevented not only from coping with and mitigating the shocks affecting their income, but also from leaving poverty and taking advantage of opportunities offered by economic growth. Children and youth are particularly vulnerable to social risks. About 60 percent of the Bolivian population is less than 25 years old; the head count ratio of poverty for this group is well above the national average and reaches over 80 percent among children less than 5 in rural areas. In general, the population younger than 25 is highly exposed to economic shocks. Higher levels of malnutrition, school drop outs, unemployment and inactivity among youth are usual

2 consequences of economic downturns. In Bolivia, as a result of the recent economic stagnation, progress in reducing chronic malnutrition was zero between 1998 and 2003; primary enrollment among the poorest children (Quintile 1) fell from 84 percent in 2000 to 80 percent in 2004 and attendance from 84 percent to 79 percent in the same period; and open unemployment among individuals younger than 25 grew from less than 5 percent in 1996 to more than 14 percent in While basic education policies have help to address vulnerabilities among school-age children by expanding coverage and supporting school participation, pre-school infants and youth who have left the education system need stronger protection. Even though the GOB has maintained the level of social protection spending, the effectiveness of SP programs has been less than satisfactory. Despite the fact that Government expenditures on social protection have steadily grown over the last few years, allocation of public funds and benefits have failed to prioritize key groups and effective interventions, reducing the effectiveness of the use of public funds. In 2004, apart from resources allocated through BONOSOL, about half of central government spending in social assistance involved social funds-related expenditures, including social infrastructure (i.e., education, health, water, and sanitation) and the workfare programs. The remaining 60 percent had been fragmented into a myriad of small programs, many following no clear strategic guidelines. There were a large number of programs with very low budgetary appropriation, which did not contribute to an efficient and well coordinated strategy. In most cases, either coverage was well below the target, or resource allocation and interventions did not reach the most vulnerable groups. Most social protection programs allocated funds on a universal basis using no targeting mechanisms, which usually have affected groups living in remote and indigenous areas. Under the umbrella of its National Development Plan, the GOB has formulated a social protection strategy aimed at addressing vulnerability and poverty in Bolivia. The Morales administration is aware of the weaknesses of past social protection programs in the country and has reformulated its SP strategy, creating the Red de Protección Social y Desarrollo Integral Comunitario (RPS), and revising the institutional and implementation arrangements. A central priority of the Government s social protection strategy is strengthening the human capital development of children and youth. The Morales administration s social protection strategy involves a cross-sector approach in which structural policies to strengthen the supply and quality of education and health services are complemented with social protection interventions targeted to improve the welfare of vulnerable groups. Investments to increase the welfare of young children and youth will complement government efforts to improve basic education and will help diminish human development gaps 1. To achieve this goal, under the umbrella of the RPS and under coordination of the Ministry of Development Planning, the Government has launched two comprehensive strategies and asked the Bank to support their implementation and scaling up the Desnutrición Cero program (ZMP) and the asked the Mi Primer Empleo Digno program (PED) 1 In addition to structural education policies to improve coverage and quality of basic education, the GOB is implementing a cash transfer program to increase enrollment and decrease drop out in primary education in public schools. (through the Juancito Pinto Program JPP.)

3 Rationale for Bank Involvement and Lessons from Experience Since 2003, the Bank has supported the GOB s efforts to consolidate social protection interventions through analytical and operational work. The Social Protection Project responds to GOB priorities and is consistent with the Interim Strategy Note for FY07-09 and supports the three pillars of the ISN. The proposed Project addressed government s request to support its social protection strategy and thus is expected to directly improve social inclusion by implementing and increasing effectiveness of GOB priority programs targeted to vulnerable children and youth. Additionally, the operation will have secondary benefits to the other two pillars. The youth training program is a component of the GOB s employment creation strategy, while both programs are expected to support good governance through efficient and transparent management of the CCT and the youth training programs. Last, the project involves a proposed technical assistance component to strengthening institutional arrangements and decision-making and coordination within the RPS. The Project also is closely coordinated with the analytical and operational human development program that the Bank is providing to Bolivia. Analytically, the Social Protection AAA program, initiated in FY07 has been proceeding in parallel with project preparation. The Social Protection project will complement Bank s health APL series to improve the health system in the country. Both operations will support the national strategy to improve nutrition status of the population living in the most vulnerable municipalities the Zero Malnutrition Program The health APL involves strengthening the supply of basic services, while the proposed Project will address demand-side (income-related) barriers to facilitate access of poor households to basic services and increase household consumption of food. The Bank has also gained large experience in designing, implementing, and improving the operational arrangements and management of CCT programs to increase utilization of social services, and improve social indicators among the poorest. The proposed project will support policy areas in which the Bank has acquired substantial expertise and can provide significant value added. The operation will support the GOB in implementing, institutionalizing and increasing effectiveness of two priority social protection interventions to enhance the human capital of specific vulnerable groups. The Bank has acquired large expertise on youth development programs, including skills training linked to internships. 2. Proposed objective(s) To increase the effectiveness of the Mi Primer Empleo Digno program and enhance its capacity to improve employability of the poor young population, the Project would support the program by developing mechanisms to identify the most vulnerable youths, address market needs regarding trained youths, and enhance Government capacity to manage and monitor the program. The project is also expected to support government in defining a mid-term youth development strategy. The proposed project is aimed at strengthening the recently launched social protection network by supporting the implementation, scaling up, and improving effectiveness of two key interventions the Zero Malnutrition Program aimed at improving nutritional status in rural

4 areas, and the Mi Primer Empleo Digno program seeking to increase labor market opportunities for youth in urban areas. The project development objectives will be achieved through: (i) increasing demand of pregnant women and mothers with children under two living in the poorest rural municipalities for basic health services needed to reduce chronic malnutrition; and (ii) improving the effectiveness of the Mi Primer Empleo Digno for increasing employability of youth. The proposed project also aims at improving management of the social protection network by enhancing government institutional capacity and developing appropriate instruments and mechanisms to better monitoring, coordination, following up and evaluation.. To contribute to reduce chronic malnutrition, the project will provide technical assistance and funds to support the ZMP by implementing and carrying out a conditional cash transfer program. Transfers to families are expected to be an effective incentive for families to (a) increase the proportion of pregnant women and children younger than 2 living in the poorest municipalities who have access to basic health service providers and to an appropriate maternal and infant health referral system, and regular monitor of children s growth and development, (b) improve household s feeding, hygiene, and child care practices; and (c) raise food consumption of beneficiary households. 3. Preliminary description Component 1 Conditional Cash Transfers to reduce chronic malnutrition - This component will complement the ZMP through designing, implementing, and scaling up a conditioned monetary benefit to families with children less than 2 living in the municipalities with the highest levels of nutritional vulnerability. The objective of this intervention is (i) to create an incentive for very poor families to invest in the human capital of their young children through adequate health and nutritional care and to provide an income support to improve consumption; and (ii) provide a monetary support to families to increase their household food consumption. To achieve this objectives, the program will pay transfers to families subject to the utilization of basic health services to prevent chronic malnutrition among children younger than 2, including periodical ante- and post-natal check-ups, regular monitoring of children s height and weight, and pertinent counseling about feeding practices, exclusive breastfeeding, hygiene practices and knowledge about illness s alerts. The conditional cash transfer program will benefit about 45,000 families living in the most vulnerable 52 municipalities. Component 2 Improving the effectiveness of the Skills Training Program for Low Income Unemployed Youth in Urban Areas The proposed project aims at increasing effectiveness of the PED Program and provide technical assistance to formulate a mid-term youth development strategy in Bolivia.. The PED Program seeks to improve employability of low income youth through increasing their knowledge, skills and behavior and offering a labor market experience. Given the estimated capacity of private firms to offer jobs to the labor force trained by the program, the Government has set a conservative target for the PED Program and expects that the program will benefit about 20,000 youths in four years. Component 3 - Institutional strengthening of the RPS - This component has the purpose of enhancing the GOB s capacity to design and strengthen management, coordination, and

5 monitoring of the RPS. This component will help the government to improve planning and policy making of the RPS, and define, test and implement mechanisms for better coordination and monitoring program implementation and progress. 4. Safeguard policies that might apply The Enhancing Human Capital of Children and Youth Project is expected to trigger the Bank s Indigenous Peoples (OD 4.10) policy. As part of project preparation a social assessment will be carried out and an indigenous people plan will be prepared in consultation with indigenous communities. Results from the IPP will inform project preparation and will be included in the project s manual of operation. 5. Tentative financing Source: ($m.) BORROWER/RECIPIENT 6.0 International Development Association (IDA) 10.0 Total Contact point Contact: Manuel Salazar Title: Sr Social Protection Specialist Tel: (202) Fax: (202) msalazar2@worldbank.org