FOR OFFICIAL USE ONLY

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1 Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD883 Public Disclosure Authorized PROJECT PAPER ON A PROPOSED ADDITIONALCREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 91.3 MILLION (US$ 140MILLION EQUIVALENT) TO THE FEDERAL REPUBLIC OF NIGERIA FOR A COMMUNITY AND SOCIAL DEVELOPMENT PROJECT (CSDP) MARCH 3, 2014 Public Disclosure Authorized Social Protection West and Central Africa Country Department AFCW2 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2014) Currency Unit = Nigerian Naira (NGN) NGN = US$1 SDR = US$1 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing IP Implementation Progress CAF Country Assistance Framework IPF Investment Project Financing CBO Community Based Organization ISR Implementation Status Reviews CDD Community Driven Development IT Information Technology CPF Country Partnership Framework LEEMP Local Empowerment and Environmental Management CPRP Community Poverty Reduction Project LGA Local Government Area CSDA Community and Social Development Agency LGA Local Government Authority CSDP Community and Social Development Project LGRC Local Government Review Committees CSO Civil Society Organization MDG Millennium Development Goals DA Disbursement Arrangements M&E Monitoring and Evaluation DFID Department for International Development O&M Operation and Maintenance DO Development Objective ORAF Operational Risk Assessment Framework ESMF Environmental and Social Management PDO Project Development Objective Framework F&A Finance and Administration PFMU Project Financial Management Unit FAM Finance and Administration Manager PIU Project Implementation Unit FM Financial Management RAP Resettlement Action Plan FPFMD Federal Project Financial Management Division RPF Resettlement Policy Framework FPSU Federal Project Support Unit SDR Special Drawing Rights GAAP Governance and Accountability Action Plan SSN Social Safety Net GVG Gender and Vulnerable Groups UNICEF United Nations Children s Funds IBRD International Bank for Reconstruction and Development USAID United State Agency for International Development ICT Information Communication Technology WHO World Health Organization IEC Information Education Communication WHT Withholding Tax IDA International Development Association YESSO Youth Employment and Social Support Operation IFR Interim Financial Reports Vice President: MakhtarDiop Country Director: Marie Francoise Marie-Nelly Sector Manager: Stefano Paternostro Task Team Leader: FolusoOkunmadewa

3 FEDERAL REPUBLIC OF NIGERIA COMMUNITY AND SOCIAL DEVELOPMENT PROJECT (CSDP) ADDITIONAL FINANCING CONTENTS Project Paper Data Sheet i Project Paper I. Introduction 1 II. Background and Rationale for Additional Financing 2 III. Proposed Changes 6 IV. Appraisal Summary 13 Annexes Revised Results Framework and Monitoring Indicators 18 Operational Risk Assessment Framework 24

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5 . ADDITIONAL FINANCING DATA SHEET Nigeria Community and Social Development AF ( P ) AFRICA AFTSW Basic Information Parent Parent Project ID: P Original EA Category: B - Partial Assessment Current Closing Date: Project ID: 31-Dec-2014 Basic Information Additional Financing (AF) P Additional Financing Type (from AUS): Scale Up Regional Vice President: MakhtarDiop Proposed EA Category: B - Partial Assessment Country Director: Marie Francoise Marie- Nelly Expected Effectiveness Date: 30-May-2014 Sector Director: Tawhid Nawaz Expected Closing Date: 31-Dec-2017 Sector Manager: Stefano Paternostro Report No: PAD883 Team Leader: FolusoOkunmadewa Borrower Organization Name Contact Title Telephone Federal Ministry of Finance Mrs. AbidemiAremu Director, IERD aremuklie99@yahoo. com Project Financing Data Parent ( Community and Social Development Project-P ) Key Dates Project Ln/Cr/TF Status P IDA Effectiv e Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date 01-Jul Nov Feb Dec Dec-2014 Disbursements Project Ln/Cr/TF Status Currency Original Revised P IDA Effectiv e Cancelle d Disburse d Undisbur sed % Disburse d XDR i

6 Project Financing Data Additional Financing Community and Social Development AF ( P ) [ ] Loan [ ] Grant [ ] IDA Grant [X] Credit [ ] Guarantee [ ] Other Total Project Cost: Total Bank Financing: Financing Gap: 0.00 Financing Source Additional Financing (AF) Amount BORROWER/RECIPIENT International Development Association (IDA) Total Policy Waivers Does the project depart from the CAS in content or in other significant respects? Explanation No Does the project require any policy waiver(s)? Explanation No Bank Staff Team Composition Name Title Specialization Unit Antonia T. Koleva Operations Officer Operations AFTSE Luis M. Schwarz Senior Finance Officer Senior Finance Officer CTRLA FolusoOkunmadewa Sector Leader Team Lead AFTHD VaralakshmiVemuru Senior Social Development Specialist ii Social Safeguards AFTCS OmobowaleAyoola Oni E T Consultant E T Consultant AFTSW Evarist F. Baimu Senior Counsel Senior Counsel LEGAM Joseph EseAkpokodje Helen OgochukwuOkeke Senior Environmental Institutions Specialist Environmental Institutions AFTN1 Operations Analyst Operations AFTP3 SulaimanAdesina Yusuf Consultant Consultant AFTSW Ogo- OluwaOluwatoyinJagha Senior Monitoring & Evaluation Specialist Monitoring & Evaluation AFTDE AkinrinmolaOyenugaAk Sr Financial Financial Management AFTMW

7 inyele Adebayo Adeniyi Management Specialist Senior Procurement Specialist Procurement AFTPW Stanley Garuba E T Consultant E T Consultant AFTSW Mariam Denise Brain E T Temporary Administration AFTSE Non Bank Staff Name Title Office Phone City Locations Country First Administrative Division Location Planned Actual Comments Nigeria Federal Republic of Nigeria Nigeria Kwara Kwara State X Nigeria Katsina Katsina State X Nigeria KatsinaAla Nigeria Abuja Federal Capital Territory Federal Capital Territory Nigeria Abia Abia State X Nigeria Adamawa State Adamawa State X Nigeria Bayelsa Bayelsa State X Nigeria Ebonyi Ebonyi State X Nigeria Ekiti Ekiti State X Nigeria Gombe Gombe State X Nigeria Nassarawa Nassarawa State X Nigeria Zamfara Zamfara State X Nigeria Taraba State Taraba State X Nigeria Abia State Isiala-Ngwa North Nigeria Benue State Logo Nigeria Ekpoma Ethiope West Nigeria Ekpoma Ethiope East Nigeria Ekpoma Ika North East Nigeria Ekpoma Ukwuani iii X

8 Nigeria Imo State Aboh-Mbaise Nigeria Imo State Ahiuzu-Mbaise Nigeria Imo State Ehime-Mbano Nigeria Imo State Ihitte/Uboma Nigeria Imo State IsialaMbano Nigeria Imo State Mbaitoli Nigeria Imo State Ngor-Okp Nigeria Imo State Njaba Nigeria Imo State Obowo Nigeria Imo State Ohaji/Egbema Nigeria Imo State Okigwe Nigeria Imo State Oru East Nigeria Imo State Oru West Nigeria Imo State Owerri West Nigeria Abia State Ohafia Nigeria Imo State Unuimo Nigeria Kogi State Adavi Nigeria Adamawa State Fufore Nigeria Kogi State Bassa Nigeria Kogi State Ibaji Nigeria Kogi State Igalamela-Odolu Nigeria Adamawa State Gombi Nigeria Kogi State Ijumu Nigeria Kogi State Kabba/Bunu Nigeria Adamawa State Madagali Nigeria Kogi State Mopa-Muro Nigeria Kogi State Ofu Nigeria Kogi State Okehi Nigeria Kogi State Okene Nigeria Kogi State Olamabor Nigeria Kogi State Omala Nigeria Kogi State Yagba East Nigeria Kogi State Yagba West iv

9 Nigeria Niger State Agaie Nigeria Niger State Agwara Nigeria Niger State Bida Nigeria Niger State Borgu Nigeria Bauchi Bogoro Nigeria Niger State Chanchaga Nigeria Niger State Edati Nigeria Bauchi Darazo Nigeria Bauchi Misau Nigeria Benue State Buruku Nigeria Benue State Gboko Nigeria Benue State Kwande Nigeria Enugu State Abi Nigeria Cross River State Boki Nigeria Abia State Afikpo South Nigeria Enugu State Ikwo Nigeria Enugu State Izzi Nigeria Enugu State Enugu East Nigeria Enugu State Igbo Eze North Nigeria Kebbi State Ngaski Nigeria Kebbi State Yauri Nigeria Kebbi State Zuru Nigeria Niger State Gbako Nigeria Niger State Gurara Nigeria Plateau State BarikinLadi Nigeria Niger State Lavun Nigeria Plateau State Pankshin Nigeria Plateau State Shendam Nigeria Niger State Muya Nigeria Niger State Paikoro Nigeria Osun State Atakumosa East Nigeria Osun State Atakumosa West Nigeria Osun State Atakumosa West v

10 Nigeria Yobe State Bursari Nigeria Osun State Boripe Nigeria Yobe State Gujba Nigeria Oyo State Ibarapa East Nigeria Oyo State Ibarapa North Nigeria Yobe State Gulani Nigeria Oyo State Ido Nigeria Oyo State Kajola Nigeria Oyo State Lagelu Nigeria Oyo State Ori Ire Nigeria Oyo State Oyo East Nigeria Oyo State Oyo west Nigeria Oyo State Saki West Nigeria Oyo State Surulere Institutional Data Parent ( Community and Social Development Project-P ) Sector Board Social Protection Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Co-benefits % Health and other social services Other social services 35 Education Primary education 20 Transportation Public Administration, Law, and Justice Rural and Inter-Urban Roads and Highways Public administration- Other social services Water, sanitation and flood protection General water, sanitation and flood protection sector Mitigation Cobenefits % Total 100 Themes vi

11 Theme (Maximum 5 and total % must equal 100) Major theme Theme % Rural development Rural services and infrastructure 30 Social protection and risk management Other social protection and risk 30 management Social dev/gender/inclusion Participation and civic engagement 30 Public sector governance Decentralization 10 Total 100 Additional Financing Community and Social Development AF ( P ) Sector Board Social Protection Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Co-benefits % Public Administration, Law, and Justice Public administration- Other social services Education Primary education 20 Health and other social services Other social services 20 Transportation Rural and Inter-Urban Roads and Highways Water, sanitation and flood protection General water, sanitation and flood protection sector Total Mitigation Cobenefits % I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Social protection and risk management Other social protection and risk management Social dev/gender/inclusion Participation and civic engagement 20 Rural development Rural services and infrastructure 20 Public sector governance Decentralization 10 Total vii

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13 I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional credit in an amount of SDR 91.3 million (US$140 million equivalent) to the Federal Republic of Nigeria Community and Social Development Project (P148215). The closing date of the Additional Financing would be December 31, The objective of the proposed additional credit is to increase access by the poor to improved social and natural resource infrastructure services in a sustainable manner throughout Nigeria. In this regard, it aims to enhance impact of the successful community driven interventions under the current project and to provide support to vulnerable and disenfranchised households and individuals.to this end, the Additional Financing would:(i) increase opportunities for social and livelihood activities for poor households; (ii) strengthen the local level mechanism of support for poor and vulnerable households; and (iii) provide information for input into the process of development of a national strategy for a community driven development approach for inclusive growth and development in Nigeria.In general, the main changes introduced through the proposed additional financing are: (i) revision to the Results Framework, (ii) introduction of a new component to ensure vulnerable groups also have increased access to social support services, and (iii) triggering of two new safeguards policies. There is no substantive change to the PDO. However, as there was a discrepancy in the wording, though not the meaning, of the PDO and titles of the three original components in the PAD and Financing Agreement of the original project, the wording in the Additional Financing Project Paper was aligned to coincide with that of the Financing Agreement. 3. The Results Framework has been slightly revised to take into account the new emphasis on social assistance (safety net) for the poor and vulnerable, in addition to increasing the scale of current interventions, this would result in anadditional component (Component 4) which was not part ofthe original design of the Community and Social Development Project. The new component would create a window for social and economic support to the vulnerable 1 such as widows, marginalized households, physically challenged and chronically poor individuals and households in the communities. The current component on community investment (Component 3) has been deemed unable to adequately respond to this.component 1 will involve Federal coordination, including a focus on CDD policy and strategy assessment and formulation, technical support, monitoring and impact evaluation. Components 2 and 3 will remain as in the original project while the new component 4 will usethe same approach and project cycle as component 3but focus on a targeted vulnerable group of households and individuals in the poor communities. 1 The vulnerable are a subset of the households in a poor community that are extremely poor or susceptible to further deteriorating of their welfare situation because of the occurrence of uninsured risks, such as physical deformity, adverse climatic events, conflicts, death of breadwinner, fire disasters, etc. Such groups of people include internally displaced poor households due to conflict situations, widows, physically handicapped, culturally marginalized, etc. The conflict and emergency situation in the North East States of Nigeria has increased the number of such groups. While the parent project takes the whole geographical community/ward as a poor enclave consisting of poor households and individuals who are desirous of implementing a program to improve their access to social services and natural resource services, the new component 4 targets the vulnerable within the poor communities. Gender and Vulnerability Studies under the parent project confirm that these groups do not take active part in the community gathering and decision making and therefore their voices and needs are not reflected in the community development plans under the parent project. 1

14 4. The AF would use the current structure and institutional arrangementsof the original CSDP project at the State level, while the FPSU will be restructured, reconstituted and strengthened. Likewise, financial management and procurement arrangements will remain as they are under the parent CSDP and disbursement estimates would be revised to account for the additional funding. Furthermore, there will be no changes in the environmental category of the credit, although two additional safeguards policies would be triggered, namely OP 4.36 Forests and OP 4.04 Natural Habitat. II.Background and Rationale for Additional Financing in the amount of US$140 million Background 5. The original credit for CSDP was approved by the Board of Executive Directors on July 1, 2008 for an amount of SDR (US$200 millionequivalent), with the related Financing Agreement being signed on November 24, 2008, and becomingeffective on February 23, The original closing date of the original credit for CSDP was December 31, However, as of October 2013, 98 percent of the IDA resources had been disbursed and, to allow for full disbursement, at the request ofgovernment, the closing date of the original credit was extended to December 31, The original credit is expected to be fully disbursed by the revised closing date. 6. The CSDP is a community-driven development (CDD) project and its project development objective (PDO) is to increase access by thepoor to improved social and natural resource infrastructure servicesin a sustainable manner throughout Nigeria. Therefore the CSDP supports: (i) the empowerment of communities to develop, implement and monitor micro social infrastructure projects (public and common pool goods) including natural resource management interventions; and (ii) strengthening the skills and capacity of Local Government Authorities (LGAs) and sectoral public agencies to support communities and build a partnership between them. The original Project has three components as per the Financing Agreement of the parent project: Component 1: Overall Project Support and Coordination; Component 2: Capacity Building and Partnerships Development in State Ministries and LGAs; and Component 3: Community-Driven Investments Facility. 7. The first component is managed by a Federal Project Support Unit (FPSU), supervised by the Federal Ministry of Finance, while the latter two are currently managed at the State level by 26 (twenty six) State Agencies established by law plus FCT Specialized Unit. Performance Status 8. Over the life of the project, 11 Implementation Status Reviews (ISR) over 5 years were conducted, and ratings for implementation progress (IP) and progress towards achievement of the development objective (DO) have consistently been rated satisfactory and CSDP is on course to fully meet the project development objective. There is actually a high probability of the project exceeding the target number of poor communities and households with increased access to social and natural resource management services. As of November 2013, more than 2

15 2500 new communities were already covered by the completed micro-projects, compared to a total target of 3,000. Micro-projects in an additional 800 communities are at final stages of completion. A total of 5,596 micro-projects across the States have been completed in all the benefiting communities with close to 800 under implementation and about 1,200, yet to be commenced. The distribution of the micro-projects cuts across eight sectors, including: education, environment, health, rural electrification, rural markets infrastructures, skill acquisition centers and equipment, transport, and water infrastructure. Water supply infrastructure tops the list of the micro-projects with a total of over 1,600 water-related microprojects already completed. Also, the number of direct project beneficiaries is now over 2 million, higher than the target of 1.5 million. 9. The national impact assessment (recently conducted by independent firms across all participating states and summarized by a National Consultant) shows that CSDP has directly benefitted about two million people across all the 26 participating States. The summarized report shows that the project has contributed to significant outcomes in all the sectors of interventions. There has been increase in primary and secondary school enrolments in the project communities. Compared with non-csdp communities there is a higher increase in number of additional children that are registered in schools and those in science classes in CSDP communities. In the water sector, average distance to water source reduced and the number of people with access to potablewater increased more in CSDP communities. Average distance reduced to 2.3Km in CSDP communities compared with 6.2Km in non-csdp communities. There is an increased number of children immunized per cycle in CSDP communities beyond what is recorded in non-csdp communities. More households are now connected to electricity with more businesses springing up as a result in CSDP communities relative to non-csdp communities. The CSDP also intervened in the areas of channelization, land reclamation and erosion control. As a result of these interventions, many communities have been protected from natural disasters. The colossal loss of lives and properties to these natural disasters is averted in the participating communities as seen in the Osun state channelization project by Osun CSDP. Also the impact evaluation shows that a national average of m 2 of land has been reclaimed or protected in the participating communities while about m 2 of land is under threat in the non-participating communities. The report also shows that CSDP is more cost effective ranging from a comparative cost ratio of 1:1.97 for lock-up stalls to 1:4.58 for open stalls. A unit classroom and health center in CSDP is on the average 1:2.25 and 1:2.72 times respectively lower than the cost of putting the same structures together by other agencies. 10. Implementation is also progressing smoothly with the State level agencies and the local government institutional partnership with community level groups. The structure for the successful institutionalization of the community driven development approach is also improving. The State Agencies are receiving government contributions to complement the IDA resources. More than 15 State governments, out of the 26 States participating, are contributing an average of 100 million Naira (about US$700,000) annually to the resources of their Agencies. In two States (Edo and Bayelsa) the State Agencies are also being used to execute the CDD interventions of another World Bank assisted project. A total of 439 Local Government Review Committees (about 80 percent of participating LGAs) are fully functioning across the participating States and more than 2,600 Community Development Plans have been approved by the State Community and Social Development Agencies. More than 65 percent of the total resources provided by IDA have been utilized and managed at the community level by the 3

16 community groups. Communities are also contributing (in cash and kind), more than the stipulated 10% of total cost of operation. 11. At the Federal level, the performance of the coordinating unit is weak and based on a comprehensive review, a proposal to strengthen the Federal Project Support Unit (FPSU) to make it more effective is in place and its implementation is underway. A restructured FPSU will be responsible for implementing the additional financing. The FPSU currently manages a robust ICT based Monitoring and Evaluation (M&E) system for the project and also houses the financial management system for the entire operation. The FPSU recently produced a draft CDD policy strategy note for integration of the CDD approach into the development agenda of the Federal and State Governments in Nigeria. The strategy note will be revised and disseminated during the additional financing. Procurement, Financial Management and Safeguards issues 12. The World Bank records indicate that there are no major outstanding financial and procurement management issues. The Financial Management review carried out in early 2013 recommended a number of minor management practices, such as monitoring of Withdrawal Applications on a monthly basis, the need to accurately apply Withholding Tax (WHT) rate on payments to Consultants at the various State Agencies, using the 5 percent prescribed under the relevant Tax, and for all State Agencies to make the appropriate tax deductions to protect the project against a potential tax liability. The review also recommended that internal control systems of the State Agencies be improved with adequate retirement of advances, documentation and classification of expenditures. The comprehensive report of the FM review was circulated to FPSU and all State Agencies so the implementation of recommendations could be supervised. On safeguards, the project has been implementing environmental and social measures for the micro-projects, based on guidance from the ESMF. An Environmental Safeguards Audit of the project in all the participating Stateshas been prepared and publicly disclosed. The Audit includes recommendations for strengthening capacity on implementation of environmental and social measures. An Environmental and Social Impact Assessment of the Bemi Bridge in Cross River Statehas been finalized, following stakeholder consultations and has been publicly disclosed in-country and in the World Bank s Infoshop. Rationale for Additional Financing 13. In a letter to the World Bank dated September 20, 2013 the Coordinating Minister of the Economy and Minister for Finance requested a year s extension of the closing date for the original Project, which has already been processed, as well as additional financing of US$150 million for the Project. 14. In line with the request of the government, the Bank team is in support of a US$140 million proposed additional financing to the Project with a closing date of December 31, 2017.The closing date of the original credit for CSDP has already been extended to December 31, As the signing of the additional credit is expected to take place before December 31, 2014 and considering that the original credit is almost fully disbursed, no further extension of the current closing date of the original credit is necessary at this point. 4

17 15. The Bank team considers that there is a strong justification for further support to CSDP with an additional financing as proposed. Further to the impressive performance of the CSDP to date and the need to ensure appreciation of the CDD approach in thegovernment s strategy for inclusive growth and shared prosperity, the rationale for additional financing includes: (i) the need to respond to the emerging individual and household challenges as well as needs of the chronically poor and vulnerable, especially with the Boko Haram conflict situation in the North East of Nigeria; (ii) the need to further strengthen the institutional mechanism for community driven development partnership especially at the local government level; and (iii) the need to expand the coverage of the project to more communities and local governments, particularly to increase the number of poor households and individuals with access to basic social services. The new component would create a window for investment in vulnerable groups for increased access to social support services by responding to the demands and specificitiesof the groups. Such vulnerable groups include internally displaced poor people, widows, marginalized households, physically challenged and chronically poor households in the communities. Lessons of experience and documentation in CSDP show that the current community investment component in CSDP is unable to adequately respond to these groups. There is, for instance,a limited number of education micro-projects with provision for physically challenged and or health centers and services with provision for those who cannot even pay for health cards. There is no opportunity for internally displaced poor households to integrate into their host communities especially in terms of housing and other social and economic facilities and services. The major reason is that the voices and needs of these sets of people are not considered as priority in the community gatherings and decision making which is a key stage in the CDD cycle of the CSDP. The number of these vulnerable and chronic poor is also on the increase especially as a result of current uninsured risks and uncertainties. This is evidenced by the increasing inequality statistics in the current poverty assessment in the country. This is also arising from climatic, policy changes, and conflict (Boko Haram) situations in the country. 16. In recognition of the growing and large inequality, the Country Partnership Strategy under preparation is making provisions for a broadened Social Safety Net operation in the next fiscal year (FY 15/16) and the seamless linkage with the CSDP (a CDD type intervention) in each of the participating States will need to be ensured. In the future it is envisaged that the Social Safety Net (SSN) platform, which is currentlyunder development under the World Bank assisted Youth Employment and Social Support Operation will be expanded, especially to more States,and the CSDP will be one of the interventions to use the platform s targeting and coordinating systems. Component 4, in particular, would be the connecting point of CSDP to the SSN platform. So the preparation of the additional financing and the addition of the new component will ensure linkage of CSDP to the Social Safety Net platform in each of the States. 17. Government has shown increasing commitment to address the challenge of low human capital development in the country, especially with the increasing provision of additional resources to the CSDP for increasing access of poor households to basic social and livelihood support services. It is possible to leverage more government resources and commitment into this approach by strengthening the mechanism at the local government level for partnership with the communities, a mechanism that has proven successful so far. Institutionalization of the CDD approach, especially at the local government level that started in the parent project, will be reinforced in the additional financing. This will continue to serve as a major platform for strong 5

18 partnership between community groups and the lowest tier of government. The participatory planning process and the partnership continue to ensure effectiveness and sustainability. III. Proposed Changes Summary of Proposed Changes The main change from the parent project is to increase emphasis on support to vulnerable groups, expand scope of assistance to such households beyond public goods (schools, health center, water, etc.), to also include demand side support for safety nets. This new emphasis on safety nets results in an additional component for grants to vulnerable groups. In general, the main changes introduced through the proposed additional financing are: (i) revision to the Results Framework, (ii) Introduction of a new component to ensure vulnerable groups also have increased access to social support services, and (iii) triggering of two new safeguards policies. There is no substantive change to the PDO. However, as there was a discrepancy in the wording, though not the meaning, of the PDO and titles of the three original components in the PAD and Financing Agreement of the original project, the wording in the Additional Financing Project Paper was aligned to coincide with that of the Financing Agreement. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ X ] No [ ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] 6

19 Project s Development Objectives Original PDO Development Objective/Results 7 PHHHDO Development objectives. The project development objective is to sustainably increase access of poor people to social and natural resource infrastructure services. The key performance indicators are: - Increased number of poor people (of which 70% are women) with access to social services. - Increased number of poor people with access to natural resources infrastructure services. - Increased percentage of participating Local Governments that are incorporating Community development plans in their budget. Change in Project's Development Objectives Explanation: PHHCPDO There is no substantive change to the PDO. There was a discrepancy in wording, though not in meaning, between the PAD and Financing Agreement of the parent project. The wording in the Additional Financing project paper was revised to be the same as that of the Financing Agreement. Proposed New PDO - Additional Financing (AF) The project development objective is to increase access by the poor to improved social and natural resource infrastructure services in a sustainable manner throughout Nigeria. Change in Results Framework Explanation: PHHCRF The changes in the Results Framework include revision of some indicators wording, targets and additional new intermediate indicators. Target values of PDO indicators were increased because of the additional component 4. New targets were set for women, vulnerable group and the people reached with the project, as a result of the new emphasis on safety nets. Two new intermediate indicators were added to track the progress of the intervention with component 4. The intermediate indicator 6 was revised to align with description of what is tracked. Targets for current intermediate indicators were increased because of the extension of the project closing date as well as the additional financing available. Change in Safeguard Policies Triggered Explanation: Compliance PHHCSPT PHHHCompl The ESIA audit recommended that two additional safeguard policies namely, OP 4.36 Forests and OP 4.04 Natural Habitat should be included to the already triggered safeguard instruments - OP 4.01 Environmental Assessment and OP 4.12 Involuntary Resettlement. Current and Proposed Safeguard Policies Triggered: Current(from Current Parent ISDS) Environmental Assessment (OP) (BP 4.01) Yes Yes Natural Habitats (OP) (BP 4.04) No Yes Forests (OP) (BP 4.36) No Yes Pest Management (OP 4.09) No No Physical Cultural Resources (OP) (BP 4.11) No No Indigenous Peoples (OP) (BP 4.10) No No Proposed (from Additional Financing ISDS)

20 Involuntary Resettlement (OP) (BP 4.12) Yes Yes Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP No 7.50) No Projects in Disputed Areas (OP) (BP 7.60) No No Covenants - Additional Financing ( Community and Social Development AF - P ) Source of Funds IDA IDA IDA Finance Agreement Reference Article III (a) Article III (b) Article IV (a) Description of Covenants The recipient shall cause each participating State to require its respective CSDA to deposit into its CSDA Project Account an initial amount of at least N150 million The recipient shall cause each participating State to require its respective CSDA to replenish its CSDA Project Account by the first day of each calendar semester with an amount of at least N25 million At least one Subsidiary Agreement has been executed on behalf of the Recipient and one Participating State, in form 8 Date Due 31-Oct Oct Recurrent Frequency Action CONTINU OUS New New New

21 and substance satisfactory to the Association (Effectiveness Condition) IDA Article IV (b) The Recipient, through the Federal Ministry of Finance, has restructured the Federal Project Support Unit, in form and substance satisfactory to the Association (Effectiveness Condition) CONTINU OUS New IDA Section I. F. 1 (a) The Recipient shall, no later than 9 months after Effectiveness Date, prepare and furnish to the Association for its review and approval, an operations manual which shall set forth detailed implementation arrangements for Part D of the project. CONTINU OUS New IDA Section IV. B. 1. (b) Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made for payments under any Category to be made with CONTINU OUS New 9

22 respect to any Participating State until the Recipient has furnished to the Association evidence satisfactory to the Association that eligibility criteria have been fulfilled. (Disbursement Condition) IDA Section IV. B. 1. (c) Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made for payments under Category (4) unless and until the Recipient has adopted the VG Manual in the form, substance and manner satisfactory to the Association. (Disbursement Condition) CONTINU OUS New IDA Section IV. B. 1. (d) Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made for payments under Category (1) until the Recipient has furnished to the Association evidence CONTINU OUS New 10

23 satisfactory to the Association that it has deposited in the FPSU Project Account an initial deposit in the amount of at least fifty million Naira (N50,000,000). (Disbursement Condition) Finance 11 PHHHFin Loan Closing Date - Additional Financing ( Community and Social Development AF - P ) Source of Funds International Development Association (IDA) Proposed Additional Financing Loan Closing Date 31-Dec-2017 Change in Disbursement Estimates (including all sources of Financing)PHHCDE Explanation: The Additional Financing has added US$140 million equivalent as a scale-up and the revised disbursement estimates reflect the additional amount spread over the 3 year life of the project. Expected Disbursements (in USD Million) (including all Sources of Financing) Fiscal Year Annual Cumulative Allocations - Additional Financing ( Community and Social Development AF - P ) Source of Fund IDA IDA Currency XDR XDR Category of Expenditure GOODS/CS/TRN/OP COSTS PT A GOODS/WKS/CS/TRN/ OP COSTS PT B&C&D Allocation Proposed Disbursement %(Type Total) Proposed 3,800, ,000, GRANTS PT C 43,500, VG EXPENDITUREs - PT D Total: 91,300, ,000,

24 Current Proposed Current Proposed IDA XDR GOODS PT A 528, IDA GOODS PT B & C CS/AUD/TRN/WKSP - PT A CS/AUD/TRN/WKSP - PT B & C OPERATING COSTS - PT A OPERATING COSTS - PT B & C GRANTS 4,866, ,811, ,825, ,250, ,720, ,500, UNALLOCATED Designated Account Designated Account Total: 121,500, Change to Components and Cost Explanation: PHHCCC Components 12 PHHHCompo Components 1, 2, and 3 do not change. However, as there was a discrepancy between the wording of the titles of the components between the PAD and the Financing Agreement of the parent project, the wording has been revised to coincide with that of the Financing Agreement. The new emphasis on safety nets has resulted in an additional component for vulnerable groups investment grants (component 4). This component would create the enabling system and investment that would allow the vulnerable groups to access public social and natural resource services. In the parent project, component 3 supports only public goods and services, such as education, health and water infrastructures facilities and services, that have no exclusion practices, that is, all members of the community (public) have user rights. The proposed new component 4 is more targeted and would apply to specific vulnerable groups (including widows, deprived, internally displaced, physically challenged). The goods and services may not always be purely social but could also be socio-economic. A detailed list of eligible micro-projects would be included in the project implementation manual. Such micro-projects would include: specialized skills centers, classrooms, and health centers; specialized tools and equipment; community housing; one time start-up grants into revolving funds, scholarship funds or other welfare funds for vulnerable groups. As in the parent project, the use of a community managed approach and emphasis on local government active partnership with community groups will be retained and strengthened to deliver the micro-projects. In CDD practice, emphasis is given to providing a separate window with more specific rules to target the vulnerable groups.

25 The parent CSDP attempts to respond to this type of demand but there are challenges in targeting and counterpart contribution rules. Therefore, targeting rules, group counterpart contribution, procedures and guidelines for the micro-project cycle in the new component 4 will be clearly defined in the manual prior to the start of implementation. However, the new component will follow the same project development and implementation cycle as component 3 from the parent CSDP. The proposed costing has been revised to include the parent project cost and Additional Financing. Current Component Name Federal Level Coordination and Monitoring LGA Partnership and Capacity Building Community-driven Investments Proposed Component Name Overall Project Support and Coordination Capacity Building and Partnerships Development in State Ministries and LGAs Community-Driven Investments Facility Vulnerable Groups Investments Facility Current Cost (US$M) Proposed Cost (US$M) Action Revised Revised Revised New Total: Economic and Financial Analysis Explanation: Appraisal Summary PHHASEFA PHHHAppS Economic Analysis: The analysis of costs and financial flows in CSDP contained in the recent impact evaluation study (2013) clearly justifies the CSDP in terms of the economics and justifies the proposed additional financing. The CSDP uses detailed technical criteria, standard designs and simple economic criteria to determine micro-project economic viability before financing. This includes application of a comprehensive list of unit costs by type of micro project. The impact evaluation study established the fact the CSDP, relative to other interventions, is more cost effective ranging from a comparative cost ratio of 1:1.97 for lock-up stalls to 1:4.58 for open stalls. A unit classroom and health center in CSDP is on the average 1:2.25 and 1:2.72 times respectively lower than the cost of building the same structures by other agencies. Also in comparison to other agencies, CSDP have a more positive impact on the private and public sector by setting points of reference such as prices and procedures, for the social and natural resource infrastructure industry. This explains the justification for increased budgetary provisions to the State Agency for CSDP by some State Governments. The CSDP approach fosters greater allocative efficiency in public expenditure in relation to the needs of the poor. Through the promotion of participatory decision-making at the local level (the participatory community planning process), the CSDP empower communities to allocate scarce resources across sectors, thereby ensuring that such resources are applied most efficiently in response to local priorities. Broadbased participation creates local ownership, which combined with other complementary activities that CSDP provides (such as capacity building, etc.), makes the sub-projects sustainable and extends the life of 13

26 the investment s benefits. This same approach is envisaged for the additional financing. Financial Analysis: In line with the Country Financing Parameters, IDA will finance 100 percent of most project investment costs, including incremental operational costs. However, in view of the significant impact and results of the parent project (CSDP), State governments did provide budgetary contributions, in an incremental fashion, to the investment as well as operational costs, of the CSDP. The last implementation support mission report provided evidence that more that 60% of the participating States are providing regular budget allocations to the State Agencies, while the others are making firm commitment to provide allocations. Upon completion of social and natural resource micro-projects contained in the CDPs, additional overhead and maintenance costs associated with these infrastructures are financed by the communities, LGAs and State governments as appropriate. It was estimated that the total contribution by State and Local Government represents less than a 5% increase in State and Local government expenditure and therefore does not constitute any fiscal instability for the governments. Technical Analysis Explanation: PHHASTA The proposed additional financing of CSDP has been designed based on the lessons learnt from the parent CSDP which merged the approaches of both CPRP and LEEMP. This includes the satisfactory performance of the project, significant benefits to people across all participating states, and establishment of the structure for institutionalizing and integrating a CDD approach into the government development agenda. The following key design elements of the additional financing have been guided by the following lessons learnt from the parent CSDP: Implement the additional financing for CSDP only in States that have demonstrated interest, ownership and funding of the State agency which has been set up to facilitate the adoption of a CDD approach in formulating development strategies. This way, funding, ownership and sustainability can be best assured. Implement the additional financing for CSDP through the autonomous State agency which has been set up to prevent substantial government interference in the project implementation. In new participating States such as Borno State in North East, a specialized unit of an existing MDA with delegated authority and acceptable to IDA, would be eligible to implement the CSDP. Provide input into the development of the CDD approach into government strategy for inclusive growth and shared prosperity. Maintain institutionalization of the CDD approach at the local level, set out by a bye-law, which delineates specific roles and responsibilities between the LGA and its communities, and by adopting and funding of CDPs. Strengthen the LGAs through capacity building and skills training to enhance their active engagement with communities and improving local governance. Expand the coverage of CSDP to more communities and local government, particularly to increase the number of poor households and individuals with access to basic social services. Create a window for social and empowerment support to the individuals and households as well as the needs of the chronically poor and vulnerable. Social Analysis Explanation: PHHASSA The project will build on the success and lessons emerging from the CSDP to further expand the access for poor populations to both social and natural resource infrastructure services; but also put in place basic service delivery opportunity for the more vulnerable households. The groups currently affected by the 14

27 conflict in the North East of the Country and the emergency rule will find support from the additional financing and particularly from the new component. These groups include the internally displaced poor households, the widows and the physically challenged. The new component will provide opportunity for access to basic social services for such groups. The identification of micro-projects will be based on participatory and inclusive approaches that have proved effective under CSDP where in micro-projects implemented have been cost-effective, functional and providing services to communities. Community contribution of a minimum of 10% of micro-project costs, either in cash or kind, will guide community grants allocation. Community contribution under the vulnerable grant facility will be reduced to less than 10%. The planning and implementation process will reflect primacy to people s service priorities; close partnership between communities, LGAs and civil society in finalizing and implementation of microprojects; and coordination with sector agencies for implementation and meeting recurrent costs and O&M expenses. Under the new vulnerable group facility component, the identification of beneficiaries for social and livelihoods support will be based on community identification, profiling and the willingness of the group of beneficiaries to work together. In the future the identification methodology will adopt mechanisms that have been designed under the Youth Employment and Social Support Operation (YESSO) so as to maintain consistency and coherence in approaches under Bank funded projects. CSDP has been successful in establishing essential elements of social accountability to enable a greater interaction and collaboration between the participating entities including communities, LGAs, CBOs, sector agencies and the project implementation entities. Dissemination of essential project information related to investments, processes, roles and responsibilities of different entities (as detailed in the Project Implementation Manual) is an important starting point. The establishment of Local Government Review Committees (LGRC) at the LG level will continue to serve as an institutional mechanism to establish and nurture a partnership relationship between the LGA and the communities. All communities in LGAs with a functional LGRC will be able to submit Community Development Plans and expect funding for community prioritized social and natural resources infrastructure. OP 4.12 on Involuntary Resettlement is triggered. To date, no RAPs have been prepared. Most microprojects have not involved land take; in some cases, communities have voluntarily donated community land for the micro-projects. Since the range, scale, locations and number of micro-projects will emerge from a participatory process, the social impacts of the micro projects, as well as possible negative impacts in terms of land acquisition, loss of economic activities and/or possible displacement are not known. Therefore, the Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF), updated by the borrower in line with national and World Bank policies, and disclosed in-country on February 19, 2014 and at the Bank s Infoshop on February 20, 2014; will guide implementation under the project. RAPs will be prepared, consulted upon and disclosed as and when necessary. The environmental safeguards audit of CSDP implementation confirms the adequacy of the instruments and approach. However, the audit has noted the need for the safeguards implementation capacity for the project states and LGAs to be reinforced and strengthened. Environmental Analysis Explanation: PHHASEnvA As in the parent project, the additional financing is a Category B project, resulting from the site specific environmental and social impacts associated with small infrastructure projects associated with the CDD micro-projects. The micro-projects have been implementing environmental and social measures, based on the ESMF. For the AF, the environmental and social impacts of micro-projects are expected to be minimal, site specific and manageable to an accepted level. However, in those cases where environmental impacts are more substantial, ESIAs and/or ESMPs will be prepared, consulted upon and disclosed. 15