ASIAN DEVELOPMENT BANK JFPR: AFG 37713

PROPOSED GRANT ASSISTANCE (Financed by the Japan Fund for Poverty Reduction)

TO THE

ISLAMIC STATE OF AFGHANISTAN

FOR

INTEGRATED COMMUNITY DEVELOPMENT IN NORTHERN AFGHANISTAN

December 2003

CURRENCY EQUIVALENTS (as of 12 December 2003)

Currency Unit – afghani (AF)

AF1.00 = $0.02083 $1.00 = AF48.0000

ABBREVIATIONS

ADB – Asian Development Bank CSPU – country strategy and program update DFID – Department for International Development EIRRP – Emergency Infrastructure Rehabilitation and Reconstruction

Project FAO – Food and Agriculture Organization GIM – grant implementation manual INGO – implementing nongovernment organization JBIC – Japan Bank for International Cooperation JFPR – Japan Fund for Poverty Reduction JICA – Japan International Cooperation Agency MISFA – Microfinance Investment and Support Facility for Afghanistan MOF – Ministry of Finance MRRD – Ministry of Rural Rehabilitation and Development NGO – nongovernment organization NSP – National Solidarity Programme O&M – operation and maintenance PIU – project implementation unit PPR – project performance report PRA – participatory rural appraisal PSC – project steering committee RRA – rapid rural appraisal

NOTES

(i) The fiscal year (FY) begins on 22 March. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2002 ends on 21 March 2002.

(ii) In this report, “$” refers to US dollars.

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JAPAN FUND FOR POVERTY REDUCTION (JFPR) JFPR Grant Proposal

I. Basic Data Name of Proposed Activity Integrated Community Development in Northern

Afghanistan

Country Afghanistan

Grant Amount Requested $3,000,000

Regional Project No

Grant Type Project II. Grant Development Objective(s) and Expected Key Performance Indicators Grant Development Objectives (GDO): The goal of this JFPR project is to enhance the living standards of communities in northern Afghanistan through social and economic development. The project purpose is to enable communities to participate in and make informed choices leading to social development and sustainable livelihoods. The project outputs, which will lead to attainment of the purpose, include (i) participatory decision-making structures at the community level; (ii) key Infrastructure — e.g., water pipelines, link roads - to promote the production and/or sale of goods and services; (iii) availability of timely and effective extension services and inputs to foster growth in the forestry-horticulture sector; and (iv) access to credit and marketing knowledge through a community-based microfinance facility to help create micro-enterprises. While the outputs and, in turn, the purpose are directly attributable to the project, the goal is a broader objective that the project aims to contribute to, along with other programs and projects in Afghanistan. Expected Key Performance Indicators1: Goal: 1. 15% increase in income of the poorest households in the project area by June 2015

2. 10% decrease in the incidence of diseases due to malnutrition, and unsafe drinking water by June 2007

Purpose: 3. 90% of communities achieving 70% of objectives within their community development plan for 3 years by June 2007

Outputs: 4. 72 village organizations established by June 2005 5. 70% of a community with access to improved resources and making use of the infrastructure

built under the project by June 2007 III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures Category Amount of Grant Allocated ($) Percentage of Expenditures

1. Community Mobilization 452,960 15.10

2. Infrastructure Development 921,600 30.70

3. Natural Resource Management 732,400 24.40

4. Microcredit Development 360,000 12.00

5. Project Management 353,040 11.80

6. Project Impact Assessment 60,000 2.00

7. Contingencies 120,000 4.00

JFPR Financing 3,000,000 100.00

Incremental Costs (4.2%)2 126,500

1 Indicators will be disaggregated by gender, where applicable. 2 Financed by JFPR administrative budget.

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JAPAN FUND FOR POVERTY REDUCTION

JFPR Grant Proposal Background Information

A. Other Data Date of Submission of Application 18 November 2003 Project Officer (Name, Position) Sunniya Durrani-Jamal, Economist/Country Programs Specialist Project Officer’s Division, E-mail, Phone

South Asia Operations Coordination Division sdjamal@adb.org 632-4434

Other Staff Who Will Need Access to Edit/Review the Report (Enter the names of all staff, e.g., team members, who will need access to this application.)

Frank Polman, Senior Advisor (AFG) Craig Steffensen, Senior Country Programs Specialist (AFG) Allan Kelly, Project Implementation Officer (AFRM)

Sector Horticulture -Forestry Theme Community Development Name of Associated ADB- Financed Operation(s)

Emergency Infrastructure Rehabilitation and Reconstruction Project (EIRRP)

Executing Agency

Ministry of Rural Rehabilitation and Development (MRRD)

Grant Implementing Agency(ies) (Names, Exact Address, Contact Persons, E-mail, Phone, Fax)

No nongovernment organizations (NGOs) have been contracted as yet.

B. Details of the Proposed Grant 1. Description of the Components, Monitorable Deliverables/Outcomes, and Implementation Timetable Component A Component Name Community Mobilization Cost ($) 452,960 Component Description The project aims to raise the living standards of 72 communities

(population 30,000–40,0003) settled in the vicinity of a road being rehabilitated under the Emergency Infrastructure Rehabilitation and Reconstruction project (EIRRP). The road covers a distance of 412 kilometers (km) across five provinces,4 from Pule Khumri in the east to Andkhoy toward western Afghanistan. Although predominantly rural, the project area is not homogeneous; it comprises five provinces, each with its own natural resource base and institutional structures. Even within provinces, the priority needs of communities differ, and the needs evolve over time, since communities include different interest groups with dynamic interests.

3Exact population data will be available after the national census in July 2005. However, we have made a conservative estimate of population at an average of 70 households/community, with 7 members per household.

4 Baghlan, Balkh, Faryab, Jowzjan, and Samangan, with an estimated population of 4.7 million. Source: Afghanistan Information Management Service (AIMS) database.

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Given these realities, what is needed for community development is an institutional structure and processes that enable people to participate in making decisions about their collective needs both immediate as well as strategic. Community mobilization will therefore involve bringing together people to help them define some common objectives, identify acceptable rules of engagement, and devise conflict resolution mechanisms.5 The Government of Afghanistan recently launched a National Solidarity Program (NSP), which was established to systematically build the abilities of Afghanistan's vulnerable communities to plan for and manage their own development. This will be done primarily by establishing formal governance structures and processes at the community level that will enable collective work.6 NSP is being implemented in phases to cover all villages in three districts per province per year. Although the JFPR project will be implemented in specific communities along the EIRRP road (Appendix 1), the community mobilization process envisaged is consistent with NSP. It will help lay the groundwork for successful expansion of the NSP to these communities in the future. Community mobilization under the JFPR project will be undertaken by contracted NGOs, who will be assigned a set of communities to work with over a 3-year time frame (June 2004–June 2007). NGOs will identify an "entry point7" into the community; which can either be the local shura (i.e., a council of local elders and notables), the imam(local religious leader) or the local teacher. A village meeting will be initiated, and people informed about the community development project the role and responsibilities of the NGO and the community, and the steps that will need to be undertaken to develop a partnership agreement between the parties. Subsequently, communities that agree to the assistance will be organized into separate groups for men and women and will elect the community development council that will act on behalf of and be accountable to the community in accordance with the functions specified in the program. Using Rapid Rural Appraisal (RRA) and or Participatory Rural Appraisal techniques (PRA), the communities will undertake a basic survey of the village resources (irrigation canals, pasture lands, irrigated area, etc.), location of community facilities like schools and health centers (if any), as well as a social and wealth ranking mapping exercise. On the basis of the survey, the community will be asked to develop a community development plan for 3-5 years, which clearly identifies their priorities in infrastructure, skills development, and investments

5 Mobilization is aimed at increasing people's awareness of the benefits of dialogue, mainly but not exclusively through

"facilitators" who can help resolve minor issues (through the trust that they have developed), and enable people to be aware of alternatives available. However, conflicts are often caused by scarcity of resources.

6 Communities will be assisted by NGOs to manage "block grant" for infrastructure projects and engage different development partners including the private sector, for provision of services.

7 The community mobilization approach recognizes the presence of existing power structures, as it works to create more participatory processes, especially for women.

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in natural resources. NGOs will facilitate an understanding of how communities can develop the selection criteria for priorities, e.g., activities that benefit a majority of the households, especially the poorest; activities that can be sustained; and activities that can be undertaken to minimize losses to existing resources. In addition, NGOs will help communities set up monthly savings schemes that will be linked to a microcredit facility, and provide basic hygiene education and information on nutrition, during monthly meetings.

Monitorable Deliverables/Outputs 1. Contracts signed with the implementing NGOs by June 2004 2. 72 community organizations (with separate men and women

groups) functioning in 5 provinces by June 2005 3. Baseline data collection and documentation for all 72 communities

by December 2004 4. Clearly identified community development plans for 90% of the

villages by June 2005 5. 60% of communities linked with MRRD, Ministry of Education

(MOE), Ministry of Public Health (MOPH), Ministry of Agriculture and Animal Husbandry (MAAH), and other agencies by December 2006

Implementation of Major Activities: Number of months from grant activities

1. Creation of separate groups for men and women 2. Election of community development councils 3. Training of community development councils in conducting

meetings, recordkeeping, bookkeeping, and reporting 4. Establishment of monthly savings schemes 5. Training in PRA/RRA 6. Regular meetings of community groups The community mobilization efforts will be most intense during the first year, i.e., social organizers will need to make frequent visits to work with the community; facilitate meetings and savings, and the development of community plans. Once the communities are organized, undertaking prioritized activities and maintaining records of activities and expenditure, NGOs will visit less frequently essentially to monitor activities and to help provide strategic support, e.g., expertise for microenterprise investment plans. Although the project will provide 3 years of support, it takes 10–15 years of support to develop communities, and the institutional mechanisms (including linkages with the government, and agencies and the private sector) that provide sustained access to resources. This aspect is further discussed in B5, Sustainability. Expected number of months: 36 months

Component B Component Name Infrastructure Development Cost ($) 921,600 Component Description One of the key components of the community development plan is

expected to be investment in an infrastructure scheme. Such schemes are both an asset and help in developing other community assets, e.g., an irrigation scheme can develop agricultural and forestry land.

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Both men and women's groups will be asked to list their priorities, and a scheme that meets the needs of both will be selected. In some cases, where their priorities differ, the top priorities of both will be addressed if they can be met within the budget allocation per community. Based on the information collected during factfinding, the most urgent need for communities currently is safe drinking water. Therefore, infrastructure to provide that, such as deep wells, is expected to be a priority. Digging wells and installing a piped water supply scheme can meet demand in the short term, but given the recent drought, water tables are low, posing a significant risk to the Afghan population's livelihoods and well-being. Other infrastructure priorities that were identified include irrigation schemes and link roads. Irrigation schemes are critical to the development of the agroforestry sector, and the project will provide funds to repair/clean existing irrigation channels, especially where these channels also provide the only source of drinking water. The construction of link roads also offers a number of benefits. It allows (i) agricultural produce to be transported by vehicles rather than farm animals, thus significantly shortening the time to market, and (ii) large quantities and/or bulky inputs to be brought to the communities via lorries and/or tractor trolleys. An added benefit of link roads, especially during winter is access to public transport. If link roads are damaged —large potholes etc.—, public transport drivers are reluctant to use them as such roads may cause accidents or damage their vehicles. Travel by animals is especially inconvenient when ill people have to be taken to hospitals in more developed towns. Infrastructure development will require substantial contribution of labor and local materials from the communities. Construction will therefore have to be undertaken during the presowing, postharvest seasons, and before the winter months.

Monitorable Deliverables/Outputs 1.Construction of infrastructure schemes in 90% of communities by December 2005

2.Establishment of subcommittees to manage the construction and maintenance of the infrastructure in 90% of communities by December 2005

Implementation of Major Activities: Number of months from grant activities

The activities required for the infrastructure schemes include 1. identification of an infrastructure scheme that benefits 70% of the

population including women and the very poor by December 2004; 2. detailed surveys and or infrastructure design by the NGO staff,

e.g., engineers by March 2005; 3. time lines, work plans, and costs for the project, including 10%

contribution from the community on labor and local materials by March 2005

4. procurement of materials and supervision of construction by a subcommittee of the community organization by December 2005;

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5. creation of operations and maintenance (O&M) subcommittee for the infrastructure projects, by December 2005 and

6. Completion of 90% of schemes by June 2006. Expected number of months: 21 months

Component C Component Name Natural Resource Management Cost ($) 732,400 Component Description The project has three key objectives in natural resource

development. The first is to enhance the nutritional intake of communities through the provision of inputs (to the most vulnerable) for kitchen gardens. Emphasis will be on growing vegetables, which provide high nutrition and critical vitamins. Women will be targeted for the development of kitchen gardens. The second is to promote the growth of forest and fruit trees. Trees form an important part of the natural assets of most rural communities. Therefore, in the short term, communities, especially enterprising women will be assisted in developing nurseries. A number of cost-sharing arrangements will be explored. In some cases, inputs such as seeds and fertilizer will be subsidized, with the subsidy decreasing each year. Another arrangement is to provide inputs free of cost to individuals with the right skills, under the agreement that 30% of the produce, i.e., saplings will be shared with the community. A third option is for individuals to purchase inputs at cost, using loans from the microfinance facility, and then to sell their produce commercially. In addition to the provision of inputs, the project will provide training in forestry and horticulture techniques. Training will initially be done by NGOs who will, over the course of the 3 years, link these village specialists to a relevant line ministry extension worker. The line ministry extension worker will be a source of new and improved information and can ensure quality control. The third objective is to assist interested communities in enhancing the productivity of their livestock assets. Communities will receive training in animal husbandry and disease prevention . The project will offer opportunities for communities to select persons for training in basic veterinary skills. Different cost-sharing options can be explored in terms of medicinal supplies to these veterinary specialists. However, to encourage the adoption of new techniques, especially by the risk- averse poor, veterinary services may need to be provided free of cost in the first year. Over time, the veterinary specialists will need to purchase supplies and charge for services. Veterinary supplies can be purchased from specialized agencies such as the Dutch Committee of Afghanistan at a nominal price, again making use of credit facility from the microcredit fund. Over time, the private sector is expected to supply the needed inputs.

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The community investment in horticulture-forestry growth will lead to the production of fruit and timber in 4-5 years, and with effective marketing will lead to income generation. Poplar trees are needed for the ongoing construction boom in Afghanistan, while fruit trees will provide a sustainable source of food as well as a source of income.

Monitorable Deliverables/Outputs 1. 20% increase in the consumption of carrots, beets and other nutritious vegetables in 60% of communities by December 2006 2. 20% increase in fruit trees by December 2006 3. 20% increase in timbre trees by December 2006 4. 20% decrease in the incidence of preventable diseases in livestock by December 2006 5. 50 horticulture-forestry and 50 veterinary specialists trained by December 2006

Implementation of Major Activities: Number of months from grant activities

1. Provision of free inputs for kitchen gardens to the most vulnerable by March 2005 2. Provision of horticulture-forestry inputs by March 2005 3. Training for veterinary and horticulture-forestry specialists by December 2005 4. Provision of supplies and free tool kits (one time) to veterinary and horticulture-forestry specialists by March 2005 Expected number of months: 18 months

Component D Component Name Microcredit Development Cost ($) 360,000 Component Description Afghanistan very recently laid the foundation for a formal financial

sector. The Central bank Act, which paves way for the banking legislation, was passed on 16 September 2003, and a banking license was granted to the Aga Khan Fund for Economic Development (AKFED) for the establishment of the First Microfinance Bank (FMFB) in Afghanistan on 18 September 2003. However, it will be a while before formal financial institutions provide services across Afghanistan. Moreover, the financial sector problem in Afghanistan runs deeper than simply the absence of formal institutions. Given the 23 years of war, there are little if any savings. The recent 3-year drought left many people indebted as they sold whatever little assets they had, such as agricultural tools and machinery. Given these conditions, the credit needs of most people in the rural areas are being met through the nonformal system. Recent studies show that use of credit is common as a coping strategy for poverty, with two thirds of all loans being used to meet consumption expenses. Shopkeepers and traders provide 75% of all loans and interest rates can go as high as 100% for some sections of the population.8

8 Pain, A. and S. Lautze. 2002. Addressing Livelihoods in Afghanistan. Issues Paper Series. Afghanistan Research and Evaluation Unit, Kabul.

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Under these circumstances, the establishment of microcredit schemes that provide a continuous source of affordable credit to the poor is much needed. The microcredit component of this project aims to inculcate regular savings habits, enhance the availability of credit on the basis of savings for making investments, and reduce communities' sense of vulnerability, due to usurious interest rates charged by moneylenders. Experience in other countries shows that microfinance activities yield greatest return to investment when they are targeted at women. Women tend to be more responsible at money management and tend to use earnings from investment to develop household assets and to invest in the health and education of their children rather than for consumption items such as cigarettes or tobacco. In addition, targeting loans to the poorest for productive activities will have the greatest impact on reducing their poverty. Loans will be available for both farm and nonfarm activites. Several NGOs in Afghanistan are engaged in microfinance activities with varying rates of success. External assistance9 in Afghanistan has recently led to the creation of Micro Finance Investment and Support Facility for Afghanistan (MISFA), which will fund grant proposals and build the capacity of microfinance institutions, including NGOs, by promoting best practice models. Microfinance funds for this project will be channeled to communities via MISFA. MISFA will issue request for proposals (RFPs) to NGOs specialized in microfinance services; and contract some to deliver these services. The Asian Development Bank (ADB) will be involved in developing guidelines for the use of microcredit funds and in selecting those NGOs contracted to provide services in the JFPR project area.

Monitorable Deliverables/Outputs 1. 80% members of all community organizations able to save AF5 every week

2. 10% growth in community savings at the end of each calendar

year 3. 1,000 active borrowers by December 2005, and 3000 by

December 2006 4. Bad loans equal 20% of total loans

9 Consultative Group to Assist the Poor (CGAP) and the Afghanistan Reconstruction Trust Fund (ARTF) have provided initial funding totaling $6 million, and the Department for International Development (DFID) and the United States Agency for International Development (USAID) are considering providing funds to MISFA as well.

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Implementation of Major Activities: Number of months from grant activities

1. Establishment of weekly savings schemes in each community organization by December 2004

2. Establishment of microcredit subcommittees by June 2005 3. Development of terms and conditions for loans including rate of

interest, administrative and management fees, and progressive loan size by September 2005

4. Development of selection criteria for borrowers by September 20055. Development of loan disbursement procedures by September

2005 6. Development of loan repayment procedures by September 2005 7. Provision of training in microcredit by September 2005 8. Ongoing provision of loans from October 2005 Expected number of months: 36 months

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Component E Component Name Project Impact Assessment Cost ($) 60,000 Component Description The impact assessment undertaken for the project will combine

quantitative, qualitative, and participatory techniques. It will involve discussion with MRRD, contracted NGOs, and the communities to define what they consider adequate indicators of poverty reduction, the data that will need to be collected and the assignment of responsibility for collecting this. This process will be facilitated by international and domestic consultants (who are part of the team at the project implementation unit (PIU)) at the beginning of the project to refine the indicators, develop a work plan for data collection, provide guidelines for monitoring outcomes, and gain agreement on the project impact assessment after project completion. This process will help increase ownership of the project

outcomes and minimize disagreement on the assessment methodology. Key stakeholders in the preceding process are communities that will play a prominent role in data collection and ongoing monitoring. This role will be agreed upon with the communities. The educational spinoff of this exercise is noteworthy; by engaging communities in participatory monitoring and evaluation, the project will build their analytical and problem solving skills, as well as their sense of empowerment. The project is particularly interested to see the impact of investment in large infrastructure such as under the EIRRP on community and rural development. The long-term impacts expected from the proposed interventions include improved incomes, diversification of incomes, improved natural resource management, and greater social cohesion. Over time, the social and economic status of women may also improve.

Monitorable Deliverables/Outputs 1. Basic data report by January 2005 2. Bi-Annual monitoring reports for 2005, 2006 3. Final Project Impact assessment report by December 2007

Implementation of Major Activities: Number of months from grant activities

1. Contracting consultant by June 2004 2. Workshop to gain agreement on Impact assessment methodology and indicators by September 2004 3. Basic data collection by all communities and NGOs by March 2005

4. Regular monitoring of community development plans by communities and NGOs by December 2006 5. Participatory project impact assessment by selected communities and the consultant in December 2007

Expected number of months: 6 months between September 2004 and December 2007

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Component F Component Name Project Management Cost ($) 353,040 Component Description One of the objectives of this project, which is critical to both the exit

strategy as well as the sustainability of investments, is to build the capacity of MRRD to design and manage the delivery of community services by NGOs. Under this project, an international (oversight) consultant will be hired, to work with counterpart staff at a PIU at MRRD to build this capacity. This would include activities such as managing implementing NGOs (INGOs), developing and coordinating work plans of INGOs, program management, financial management, ongoing monitoring, project impact analysis, reporting, auditing and establishment of institutional linkage A detailed grant implementation manual will be developed to meet the specific needs of this project. A project steering committee (PSC) comprising the Ministry of Rural Rehabilitation and Development (MRRD), Ministry of Finance (MOF), ADB, and the Government of Japan will be constituted. The PSC will review the project implementation on a quarterly basis and give guidance on key issues such as the contracting arrangements for the NGOs.

Monitorable Deliverables/Outputs 1. 3 MRRD staff trained in project management by June 2005 2. 25 MRRD staff trained in social organization by December 2004 3. 72 community organizations (with separate men and women's groups) registered with MRRD by December 2006

Implementation of Major Activities: Number of months from grant activities

1. PSC established by MRRD by May 2004 2. International (oversight) consultant hired by ADB by April 2004 3. Counterpart staff at PIU assigned to the project by May 2004 4. Grant implementation manual developed by March 2004 5. Quarterly monitoring reports by the international (oversight)

consultant on funds disbursement and progress of activities 6. Annual audit of the JFPR project by external auditor

2. Financing Plan for Proposed Project to be supported by JFPR

Financier $ JFPR 3,000,000

Government 301,900

Community contribution 160,060

Total 3,461,960 3. Genesis Briefly describe the origin of this proposal and its early proponents

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ADB 's Guidelines for Incorporation of Social Dimensions into Bank Operations necessitated a poverty and social analysis 10 of the EIRRP area. The report was based on extensive public consultations with communities and provided basic information on existing socioeconomic conditions. Different ethnic groups— Tajiks, Uzbeks, Pashtoons, and Hazaras— inhabit the area. Approximately 60% of the population lives below $1 a day; only 23% have access to safe drinking water, while 60-70% malnourished. Communities vary in size from 19 to over 800 households. Some areas along the road are more populous (e.g. Mazar-e-Sharif to Sheberghan) than others (e.g., Nainabad to Hairatan). Incomes are agrarian based (farming, herding) and are supplemented by work as casual labor, as well as skilled labor (carpet weaving). Drinking water and salinity are a consistent problem throughout the area. People, especially female heads of households, were very eager to work on income-generating activities. Improving these bleak living conditions provided the first impetus for the proposal. The second impetus came from the fact that a number of ADB's road projects are being supplemented by activities that enhance the social development of communities in the vicinity of these projects. This is being done for a number of reasons. First, at the macroeconomic level, while empirical evidence shows a positive correlation between road infrastructure and gross domestic product (GDP) growth, the "trickle down" or redistribution of benefits to local communities is not obvious. Community development will thus ensure that the benefits of infrastructure development occur at both the macro and micro levels. For instance, involving communities in the construction of the road leads to gainful employment and skills development and this activity will be undertaken in the EIRRP. However, given the fact that the poorest of the poor such as women and the disabled are unlikely to engage in road construction (for various reasons), the JFPR project will provide alternate income-generating opportunities to them. The third impetus came from the fact that when communities are direct beneficiaries of projects, they can help stabilize volatile situations or prevent these from occurring, thus leading to communal stability.11 The fourth impetus came from the fact that northern Afghanistan has a lot of potential for increasing Afghanistan's exports of horticulture products. The area is one of the most fertile in Afghanistan, containing the Amu Darya (Oxus River) and two main agricultural belts: the flat irrigated farmlands and the rain-fed agricultural area. Lastly, Mazar-e-Sharif and its environs is one of the three priority regions12 under the Ogata initiative of the Ministry of Foreign Affairs, Government of Japan. The initiative's aim is to undertake comprehensive development in these areas while promoting empowerment of communities. 4. Innovation Briefly describe the innovative features of the proposed grant in responding to the needs of the poor and vulnerable groups. The project has been designed keeping in view a multitude of the needs of the poor, the marginalized, and the vulnerable. First, at the community level, the very concept of creating broad participatory decision- making organizations is novel to Afghanistan, which has traditionally relied on the patriarchal Jirga system (tribal council). However, given the power wielded by these centuries-old system, NGOs will work with the Jirgas to create broader participatory organizations, which will make their value evident by doing more than act simply as decision-making bodies. Second, women will be members of a formal decision-making 10 Consultants and Technocrats Pvt Limited. 2003. Initial Poverty and Social Analysis (IPSA) Report. Manila. Prepared

under ADB. 2002. Proposed Technical Assistance Cluster to the Republic of Afghanistan for Capacity Building for Reconstruction and Development. Manila. (Subcomponent 3b: Capacity Building for Project Planning and Sustainability in the Transport Sector.

11 However, peace and stability are complex processes and while increased incomes contribute to stability in postconflict societies, they cannot guarantee it.

12 The Ogata Initiative, named after its creator Sadako Ogata, Special Representative of the Prime Minister of Japan for Afghanistan Assistance, focuses on developing the region surrounding Mazar-e-Sharif (north), Jalalabad (east) and Kandahar (south).

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process and will be encouraged to voice their concerns, list their preferences, and gain access to resources that invest in schemes that directly benefit them. Third, the project is innovative in that it allows for flexibility in meeting the distinct needs of nonhomogeneous communities in building four critical assets, human, physical, financial, and natural resources. Fourth, the main components are targeted at meeting the needs of the poorest in the communities, e.g., microcredit loans will be targeted to the poor as will the provision of inputs for horticulture development. 5. Sustainability Indicate the mechanism for long-term sustainability or the “exit strategy” after the grant activity is completed. At the institutional level, the project recognizes that communities selected under the JFPR project will continue to require additional support beyond a 3-year time frame. Experience elsewhere has shown that it takes at least 10–15 years of investment in community-level institutions before they mature. Therefore, while the JFPR project will be implemented in specific communities along the EIRRP road, the community mobilization process envisaged is consistent with the NSP and will therefore help lay the groundwork for successful expansion of the NSP to these communities in the future. The NSP will coordinate external assistance and will continue to provide communities with access to resources (both financial and technical). This will help ensure sustainability of the project's investment in community development. For sustainability of infrastructure, operation and maintenance (O&M) committees will be set up to collect affordable user fees. This will be easier to do for priority projects such as clean drinking water than for link roads, which may attract a number of free riders. However, transparency in collecting and using funds as well as having trusted people on the O&M committees will greatly enhance the chances of successful O&M and thus the sustainability of infrastructure. For natural resource development, the project will have trained basic specialists who will eventually provide service for a fee. These horticulture, forestry, and livestock specialists will be linked with provincial departments that would certify their skills and be a source in updating their knowledge. Other agencies such as the Food and Agriculture Organization (FAO) can play a critical role in building the capacity of these specialists and linking them to sources of high-quality inputs such as improved seeds. Eventually, the more enterprising and cost-effective of these specialists will thrive and lead the private sector's provision of extension services, with regulation/quality control by Government agencies. Channeling funds through MISFA will ensure the sustainability of credit facilities which has been set up as one of the seven programs of MRRD. 6. Participatory Approach (i) Briefly explain how local participation and control of decision-making in the design and implementation of the grant activity have been and/or will be achieved. Participation of communities in designing and implementing projects is important for a number of reasons: it empowers communities and enhances their sense of ownership of development outcomes, communities are convinced that their views are important and that they have a right to decide how (public) resources allocated to them are used for their benefit, and communities become highly aware that they have certain "collective" responsibilities to ensure overall well-being. The project ensures participation in a number of ways. First, community organizations will be formed with membership of at least 70% of the community. However, the project recognizes that inclusive membership, although a prerequisite is not sufficient to ensure participation. Marginalized groups may lack the confidence to speak up or may be fearful of letting their true views be known. The project will address these

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obstacles by utilizing social organizers who are trained to "encourage" people, or by presenting the interests of certain groups, such as women, to other members of the community. Second, communities will participate in developing a 3-5year-development plan. They will thus have a definite role in the use of resources provided under this project. Third, by participating in monitoring and impact evaluation of the project, communities will develop the capability to plan and analyze the outcomes of certain choices made, and to consider appropriate alternatives in the future. All along, social organizers will monitor the evolution of participation over the course of the project and strengthen the process where needed. (ii) Primary and other stakeholders (including any nongovernment organizations, especially Japanese NGOs) and brief description of their involvement:

Primary Beneficiaries and Other Affected Groups and Relevant Description

Other Key Stakeholders and Brief Description

The primary beneficiaries of the project will be the inhabitants of the 72 communities, particularly the poor. They will be involved in mapping out the existing socioeconomic condition of the community, designing the community's development program over a 3-year time frame, participating in the savings and credit schemes, and benefiting from training in horticulture-forestry and livestock rearing. They will also have the opportunity to develop microenterprises, with support for basic business planning and marketing from theINGOs.

The Government of Afghanistan is a key stakeholder both ensuring and benefiting from the economic and political stability that this community development process will generate. MRRD, in particular, is a key stakeholder in terms of knowledge sharing, i.e., it will need to coordinate and assess lessons from different communities, and use these in future rural development program designs. INGOs are a stakeholder in the sense that they are helping to build critical bridges between the State and the people. The private sector is a key stakeholder in that improving incomes of communities in the long run will lead to demand for more goods and services. ADB is a key stakeholder in that the success of this project will enhance the social and economic returns from the EIRRP. Over the long run, the project will contribute to enhanced standard of living for the communities, thus contributing to ADB's mandate to reduce poverty.

7. Coordination Explain the coordination arrangements with Japanese aid agencies (JBIC, JICA) and the World Bank, in the design of grant activities, selection of NGOs, monitoring arrangements, etc. The Government of Afghanistan has developed a consultative group (CG) mechanism to coordinate 12 national development and 3 national security programs. Community development projects fall under the purview of the Livelihoods and Social protection CG led by MRRD on the government side with the World Bank (WB) and European Commission (EC), as the focal points for external assistance. It was understood that community development in Afghanistan is being consolidated under the NSP, which is being managed by MRRD. The project design therefore considers existing institutional arrangements for managing development programs such as the NSP, which has been designed and is being delivered with funding of $22 million from the International Development Association (IDA) of the World Bank.

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The project design was discussed with the Japanese Ambassador to Afghanistan who was supportive of the project components, the geographic focus of the project, as well as the implementation arrangements. The proposal was also shared with the office of the Minister–Councilor (Aid Coordination) at the Japanese Embassy in Kabul. Discussions were also held with the Aga Khan Foundation, which is a major aid agency involved in successful rural development programs. Lastly, a number of NGOs were consulted, to get their professional assessment of the JFPR project design and relevant risks in implementing community development projects, and to confirm the accuracy of the project budget. 8. Detailed Cost Table See Appendix 2. C. Linkage to ADB Strategy and ADB-Financed Operations 1. State below the relevant documents, such as country strategy and program (CSP), poverty reduction strategy paper (PRSP), poverty partnership agreement (PPA), or other sector study papers and the objective(s) supported by the proposed grant. (Please limit to the most recent [up to 2 years old] and most relevant document(s); please do not simply mention “poverty reduction” as the objective).

Document Document Number

Date of Last Discussion

Objective(s)

CSPU

AFG2003-15 Approved June 2003

The main objective of the CSPU is national reconstruction, which is supported by sub-objectives such as social development, revitalizing agriculture and rural development, rehabilitation of physical infrastructure and gender empowerment, among others.

2. Linkage to Specific ADB-Financed Operation Project Name Emergency Infrastructure Rehabilitation and Reconstruction Project

(EIRRP) Project Number 1997

Date of Board Approval 3 June 2003

Loan Amount ($ million) 150

3. State the above-mentioned project’s development objective The goal of the EIRRP is to enhance economic growth, as this is a prerequisite for overall poverty reduction. The purpose is to rehabilitate and, where needed, reconstruct critical physical infrastructure in the transport (roads) and energy (gas and electricity) sectors, to improve production and trade of goods and services. 4. List the project’s main components

No. Component Name Brief Description 1. Road Infrastructure 1.1 A portion (392 kilometers (km)) of the primary road network (ring

road) will be rehabilitated.

1.2 International road links 55 km to Uzbekistan (Naibabad to Hairatan) will be rehabilitated.

16

2. Power Infrastructure 2.1 Transmission lines — 230 circuit kilometers (cct-km) of 220 kilovolts (kV) and 50 cct-km of 110 kV— will be rehabilitated and reconstructed. 2.2 Reconstuction of Khulm and Pule Khumri substations 2.3 Installation of 75 distribution transformers and 30,000 meters.

3. Gas Infrastructure 3.1 Gas production and distribution facilities in Sherberghan will be rehabilitated.

3.2 Transmission line (13 km) to Mazar-e-Sharif will be rehabilitated. 5. Rationale for Grant Funding versus ADB Lending Describe briefly why the proposed activities can or could not be financed under the ADB-financed operation. Although Afghanistan has always been a relatively poor country, 13 the socioeconomic and agrarian landscape has deteriorated much over the last two decades: agricultural land was heavily mined, irrigation schemes and roads fell into disrepair, bridges were destroyed and natural resources such as forests and pastures were depleted. These conditions were further exacerbated by a 3-year drought (1999-2001), which further destroyed crops, and livestock and diminished surface water and groundwater resources, especially sources of potable water. These conditions have called for substantial investment in rehabilitation, and even more so in reconstruction. However, Afghanistan's financial resources are meager. In SY1381 (21 March 2001– 20 March 2002), aid agencies funded 60% of the recurrent budget of $324.8 million, and the entire development budget of $1.7 billion.14 The development budget includes contributions from the $150 million Postconflict Multisector Program loan from ADB. In addition, the government borrowed another $150 million from ADB in June 2003 for the EIRRP. The reason the proposed activities cannot be financed under the EIRRP is that the loan focuses on reviving key physical infrastructure such as all weather roads, gas production and distribution schemes, and electricity transmission lines, and not on building social capital. The loan components are aimed at reviving industrial growth, and direct benefit at the community and/or household level is therefore limited. For instance, electricity and gas distribution will benefit only communities that live in the metropolises of Kabul, Mazar-e-Sharif, and Shebergan. Road construction will offer employment opportunities, that will most likely not include any women due to social constraints on women’s participation. The use of grant funds to invest directly in community development will enhance the returns to the EIRRP project. It will lead to revitalization of the horticulture-forestry, and livestock sectors, while thematically it will contribute to social development, private sector development, as well as gender empowerment. D. Implementation of the Proposed Grant 1. Provide the Name of the Implementing Agency

MRRD will be the Executing Agency of the project. The JFPR project will be implemented under the overall guidance of a steering committee comprising of MOF, ADB, and MRRD. ADB will hire an oversight consultant to work with MRRD staff in the PIU, and be responsible for managing the work of INGOs hired to deliver the JFPR

13 Per capita gross domestic product (GDP) in 1980 was estimated at $187. 14 ADB. 2003. Country Strategy and Program Update (2004–2006). Afghanistan. Manila.

17

project. See Appendix 3 for fund flow arrangements, Appendix 4 for the implementation arrangements, and Appendix 7 for the implementation schedule.

If the implementing agency(ies) is(are) not a government entity, briefly describe the organization’s mission, track record, program of activities, source(s) of financing, evidence of financial probity, and arrangements to assure appropriate use of JFPR. 2. Risks Affecting Grant Implementation Identify and explain briefly any risks such as political, environmental, problems with the executing and/or implementing agencies, problems between the implementing agency and government agencies, civil war or postconflict situations, etc. that may affect the implementation of the grant. Describe measures to mitigate these risks.

Type of Risk Brief Description Measure to Mitigate the Risk Challenging the status quo

At present, there are traditional decision-making structures at the community level in Afghanistan. Prominent among these is the shura (in Dari), or the Jirga, (in Pashto), which is a traditional council that makes community decisions and functions as a judicial system. The shura meets as needed and includes only adult males. Creation of community organizations will challenge this status quo of how decisions are reached and may lead to conflict.

The INGOs will be cognizant of the existing power and decision-making structures, as they work to develop more participatory and equitable institutional structures. How accepting the Shuras will be of the community organizations is hard to predict. However, these developments need to be observed closely for any sign of potential conflict. MRRD, and other government agencies will need to define the scope of work for the shura and the community organizations, and get agreement on this from the communities under the partnership agreement.

Unrealistic Expectations of Project benefits

Communities may develop unrealistic expectations of the type of benefits they will receive from the project. These expectations may be linked to increase in incomes, free goods and services, etc.

The INGOs will have to set realistic expectations of what the project will yield; namely providing the community with skills to plan for and invest in their development. The project will provide some initial support such as training, microfinance, infrastructure, etc., but communities are responsible for ensuring these benefits continue over time, through maintenance of infrastructure, resource generation, and private sector development.

Increasing violence

Increase in violence directed against the local communities and project implementation personnel including consultants, ADB, MRRD, and NGO staff, will disrupt project activities.

Project personnel will keep in close contact with United Nations (UN) agencies, Afghanistan Resident Mission (AFRM) and MRRD that monitor the security situation.

Scarcity of female staff

The project will encounter problems in recruiting female field staff who are willing to work in communities.

The project will recruit women from major towns and will assign them to work with nearby communities. From Mazar-e-Sharif, the farthest communities are at best 5–6 hours

18

drive away, and therefore female staff can make day trips to these. Secondly, female staff are more willing to undertake field visits if accompanied by a male chaperone. The project will pay for the per diems of both.

3. Incremental ADB Costs An application may include a request for financing of incremental costs of up to 5% of the grant amount related to the implementation of the grant under exceptional circumstances,. i.e., the grant is unusually complex and would need additional resources beyond those provided by the regular administration budget. The additional resources may be needed to facilitate community participation or NGO collaboration or hiring consultants. Please include the additional costs in the total grant amount and in the detailed cost table. Component Incremental Bank Cost

Amount requested $126,500

Justification

To hire consultants to develop the grant implementation manual (GIM) following JFPR guidelines, and train the PIU on project administration based on the PIM. The funds will also be used to fund annual audits of the project

Type of work to be rendered by ADB

Management of JFPR administrative obligations and related contractual arrangements

4. Monitoring and Evaluation Describe expected key performance indicators (consistent with those provided in Section II of page 1), reporting mechanism(s), plan, and timetable for monitoring and evaluation (M&E).

Key Performance Indicator Reporting Mechanism Plan and Timetable for M&E

1. 15% Increase in income of the poorest households in the project area by June 2015

Basic data collection Participatory poverty impact assessment

Basic studies completed during first quarter of implementation Project impact assessment conducted after project closure

2. 10% decrease in the incidence of diseases due to malnutrition and unsafe drinking water by June 2007

Basic study Participatory poverty impact assessment

Biannual monitoring

3. 90% of villages achieving 70% of the objectives of their community development plan for 3 years by June 2007

INGOS reports Project progress reports (PPRs) Community organization records

Quarterly INGO reports Biannual PPRs Monthly community records

4.72 village organizations established by June 2005

INGOS reports PPRs Community organization records

Quarterly INGO reports Biannual PPRs Monthly community records

5. 70% of households with access to resources such as improved agroforestry inputs, microcredit, and infrastructure built by the project by June 2007

INGOS reports PPRs Community organization records

Quarterly INGO reports Biannual PPRs Monthly community records

19

5. Estimated Disbursement Schedule Maximum 4 years following grant approval

Fiscal Year (FY) Amount ($) FY 2005 1,000,000 FY 2006 1,058,000 FY 2007 910,000 FY 2008 32,000 Total Disbursements 3,000,000

E. Clearances Director General of relevant regional department endorses the cleared JFPR grant proposal to the Government of Japan, through the Office of Cofinancing Operations (OCO).

To Be Cleared By Name / Division Comments 1. Director General of the relevant regional department

Yoshihiro Iwasaki, DG, SARD Cleared

2. Director of the division in the relevant regional department

Richard Vokes, Director, SAOC Cleared

3. Staff review committee (SRC) members

Frank Polman, SARD Craig Steffensen, SAOC Monawar Sultana, SASS Vincent De Wit, SASS Risa Teng, COSO Richard Marshall, COPP Megumi Araki, OCO Johannes A. Van Ommen, OCO

Cleared

4. Other reviewers Monawar Sultana, SASS R. Rasuman, CTL Xianbin Yao, EREA Carl B. Amerling, OED 1 Caroline Vandenabelee,OGC

Cleared

5. CC list

COPP = Project Coordination and Procurement Division, COSO = Central Operations Services Office, CTL = Controller’s Department, EREA = Economic Analysis and Operations Support Division, OCO = Office of Cofinancing Operations, OED = Operations Evaluation Department, OGC = Office of the General Counsel, SAOC = South Asia Operations Coordination Division, SARD = South Asia Department, SASS = Social Sectors Division.

20

F. Checklist

OCO will use the answers you provide to the following questions to evaluate the application’s eligibility for funding. After answering “yes” or “no” to questions 1 to 7 below, refer to the section number in the application where the question is fully addressed. DO NOT provide detailed description below, as details should be included in the relevant sections of page 1 and sections B to D. 1. Does the application support activities that will assist the poorest and most vulnerable groups eligible for JFPR funding? Yes Response is found in Section B 1 2. Do the proposed activities fit within at least one of the following basic purposes of the JFPR?

a. Support innovative social programs, which directly respond to the needs of poor and vulnerable groups in recipient countries and have high potential for ameliorating their destitute living conditions.

b. Provide relatively rapid, demonstrable benefits for affected populations through initiatives and mechanisms with positive prospects for sustainability over the long term.

c. Provide direct assistance to programs designed and implemented by local populations, civil society, and NGOs to facilitate their empowerment and enhance their participation in the development process. Yes Response is found in Section B 1 3. Are the proposed activities designed and expected to be implemented with full participation by local community groups and NGOs? Yes Response is found in Section B 6 4. Do the activities support interventions that will have a catalytic effect or magnify the impact of ADB-financed operation(s)? Yes Response is found in Section B 3 5. Does the application identify methods to monitor and evaluate outcomes, implementation progress, and the impact of the grant on the beneficiaries? Yes Response is found in Sections B1, B6 (ii), D1 and D4 6. Are Japanese NGOs participating in this JFPR activity? Yes Japanese NGOs such as Peacewinds have indicated an interest in the project. 7. Have Japanese aid agencies (e.g., JBIC, JICA) been consulted in the development of the JFPR application? Yes Response is found in Section B7

21

Please confirm statements 8-16 below. 8. Proposed JFPR activities are not eligible or cannot be funded under loans, or through other sources of funding available to ADB. Confirmed 9. Proposed JFPR activities are not being used to prepare projects or supplement existing project preparation activities being funded through JSF or other project preparation fund. Confirmed 10. The application does not include pilot activities that are not linked to ADB-funded operations in the pipeline or under implementation. Confirmed 11. The application includes an exit strategy or a mechanism to ensure long-term sustainability. Confirmed 12. The legal status, financial soundness, track record, and arrangements for use and accounting of grant funds have been checked for grants that are expected to be executed by community groups or NGOs. Not Applicable 13. Where funding of incremental costs (staff or consultants) for grant preparation and/or implementation is requested, a full justification is provided. Confirmed 14.. The grant will not include study tours or foreign training. Confirmed 15. The application does not include support for academic training, research work, and core program activities of global/regional programs. Confirmed 16. The director-general and the director of the relevant regional department have endorsed the grant activity. Confirmed

---------------------------------------------------------------------------- Appendixes

1. List of Villages Along the Emergency Infrastructure Rehabilitation and Reconstruction Project (EIRRP) road

2. Cost Estimates 3. Fund Flow Arrangements 4. Implementation Arrangements 5. Terms of Reference for Consultants 6. Terms of Reference for Implementing Nongovernment Organizations (INGOs) 7. Implementation Schedule

Appendix 1

22

VILLAGES ALONG THE EMERGENCY INFRASTRUCTURE REHABILITATION AND RECONSTRUCTION PROJECT (EIRRP) ROAD

Pol-e-Khomri to Nainabad (162 km) 1. Block-e-cement 2. Navabad 3. Arbaba village 4. Chasmesler market 5. Duste Khuja Alwon 6. Jorabi Robotech 7. Samangon Valley 8. Largon 9. Dalkhaki 10. Sakkukhana Hazarete Sultan 11. Khuje Peresham 12. Surubticul 13. Surubtu 14. Thangi Saiyat 15. Saiyat Market 16. Saigon Chi 17. Tangi Tajkargoan 18. Taj Kargaon market 19. Aria Europa Pump station Nainabad to Hairatain (56 km) 20. Togai Nainabad - Mazar-e-Sharif (24 km) 21. Purja 22. Mubakholi Mazar-e-Sharif to Shirbergan (122 km) 23. Kamarband Zorat 24. Langarkhana 25. Maktab Narsaeed 26. Bahurakh 27. Takhata Pal 28. Sanchol 29. Deswan 30. Mumbai mubarak 31. Kangmurat 32. Pyashar 33. Boka 34. Babayusafe

35. Alamkher village under Balkh District 36. Kunk Murat 37. Alangkher Buka market 38. Mangiteba 39. Balkh Bazar 40. Alman 41. Deodadi 42. Aghabai 43. Satazan 44. Khale Khulmabad 45. Sararak 46. Balasherman 47. Chorbulak 48. Afrosh 49. Akhteba 50. Gurteba 51. Gurteba Dawan 52. Labak 53. Tamarak olia 54. Kali sojan 55. Aliyabad 56. lebdariya 57. Aekeha Crossing 58. Alerabad 59. Khamabad 60. Chek chi 61. Surarukh Afghana 62. Jalalabad 63. Sultan Wote 64. Chorchambey 65. Hasanabad 66. Nukarabad Sherbergan-Andkhoy Road (48 km) 67. Labajar 68. Libajar Quarish 69. Navabad Chaubas 70. Khuzadakou 71. Chackman 72. Andkhoy

J~~.o~u~~

-"EE~U)

23

24A

ppendix 2

252

Appendix

262

Appendix

Appendix 3

27

INGO = Implementing nongovernment organization, MOF=Ministry of Finance, MRRD= Ministry of Rural Rehabilitation and Development, PIU= Project Implementaion Unit

FUND FLOW ARRANGEMENTS

JFPR/Asian Development Bank $3,000,000

MRRD's PIU/Consultant $2,880,000

INGOs

Communities in 72 settlements in five provinces in northern Afghanistan

MIFSA Micro credit

Revolving Fund $360,000

Project Impact Assessment

$60,000

Contingencies $120,000

Project Management

$413,040

Community Mobilization

$452,960

Infrastructure Development

$921,600

Natural Resource Management

$732,400

Microfinance $360,000

Grant Management Unit (MOF)

Training and Consulting Services $272,400

Equipment, Supplies and Operational. costs

$80,640

Appendix 4

28

IMPLEMENTATION ARRANGEMENTS

A. Organizations Involved 1. The Ministry of Rural Rehabilitation and Development (MRRD) will serve as the Executing Agency for the JFPR project. This is suitable because MRRD is the lead government agency coordinating the Ogata Initiative, which the JFPR project seeks to support.

2. A project steering committee (PSC), chaired by the Deputy Minister of Rural Development, will oversee and guide project implementation. Ideally, the project should use existing steering committee mechanisms. The Ministry of Finance (MOF), Asian Development Bank (ADB), and the Government of Japan, will be represented on the PSC. The PSC will review project implementation on a quarterly basis and will provide guidance on key issues such as the contracting arrangements for the nongovernment organizations (NGOs).

3. The project implementation unit (PIU), established for the National Solidarity Program (NSP) within MRRD will coordinate with relevant departments of MRRD, provincial and district offices, NGOs, and sponsoring agencies. The PIU will be responsible overall for project planning, implementation, accounting, monitoring, as well as selection, contracting, managing, and monitoring of implementing NGOs (INGOs). The PIU will have a project director and 1–2 assistants (technical and financial) appointed by MRRD to act as focal points for the JFPR project. 4. Due to administrative requirements under the JFPR, the PIU will be assisted by international and domestic consultants in implementing the JFPR project.

B. Consulting Services

5. All contracts for consulting services will be awarded in accordance with ADB's Guidelines on the Use of Consultants and other arrangements acceptable to ADB for engaging consultants. A total of 90 person-months of consulting services and 4-5 implementing NGOs will be required. 6. 90 person-months of consulting services: ADB will directly engage 12 person-months of international and 78 person-months domestic consultants from Deutsche Gesellschaft für Technische Zusmmenarbeit (GTZ)1/ Development Alternatives Incorporated (DAI), using the simplified technical proposal. GTZ/DAI is a consortium currently engaged as the oversight consultant for the NSP. MRRD has requested ADB to contract one or both agencies within this consortium to provide project management services for the JFPR project, which is similar to the NSP2. 7. Considerable time and resources will be saved by directly contracting GTZ/DAI to deliver the JFPR project, using financial and project management systems already developed by them, but reporting in accordance with the needs specified in the grant implementation manual. The performance of GTZ/DAI is deemed satisfactory.

1 German Agency for Technical Cooperation (GTZ). 2 It will be determined later whether it is feasible to engage the consortium or one of the two agencies.

Appendix 4

29

8. The main tasks of the consultants will include assisting MRRD with contracting the INGOs, project management (both programmatic as well as financial), equipment procurement, as well as the day-to-day administration related to project activities carried out by INGOs. The consultants will also assist INGOs in monitoring activities and will facilitate the design of the project impact assessment methodology, data for which will be collected by INGOs. The consultants will also assist the MRRD to commission yearly independent audits. The outline terms of reference (TOR) for the consultants are provided in Appendix 5. 9. INGOs will be selected and contracted by MRRD through the PIU, with the assistance of the consultants using the quality and cost-based selection (QCBS) method and a simplified technical proposal. The contract will outline the scope of work, implementation arrangements, selection criteria for and prioritization of communities to begin work in, monitoring and reporting arrangements, breach of contract guidelines, and other matters.

10. Eligibility criteria for INGOs will include relevant work experience with communities, especially in northern Afghanistan. Short-listed NGOs will be invited to submit technical and financial proposals.

11. The key responsibilities of the INGOs include working with communities to create community development plans, provide training, initiate savings, provide basic equipment, develop assets (physical infrastructure as well as natural resources), monitor services and community participation. Community organizations will be an integral part of the JFPR project. The implementing NGOs will also work in close collaboration with the provincial departments of MRRD and key line ministries. The outline terms of reference (TOR) for the INGOs are provided in Appendix 6. 12. The PIU-consultants and MRRD will also facilitate INGOs work in a coordinated manner with NGOs that may already be working in the communities, as well as with provincial departments of MRRD and other key line ministries. 13. Procurement under the project will be conducted in accordance with ADB's Guidelines for Procurement. INGOs will seek approval from the PIU-consultants for any procurement costing more than $10,000. Where major savings are possible, equipment and supplies will be packaged into one larger contract. 14. Since community involvement is envisaged in infrastructure development/civil works and natural resource development, communities will procure goods and materials in line with ADB's Guide on Community Participation in Procurement3 (Appendix 2, PAI 3.05), as well as the procurement guidelines established for the NSP. C. Fund Flow 15. The Grant Management Unit (GMU) at the MOF will open an imprest account for the project at Da Afghanistan Bank. 16. ADB and MRRD will request the GMU to make payments to the consultants for allocation of funds to INGOs, for all project components, based on satisfactory performance. Funds for the

3 ADB. 2003. Guide on Community Participation in Procurement Project Administration Instructions 3.05.

(LNADBG1, Lotus Notes database)

Appendix 4

30

microcredit facility will be allocated to Microfinance Investment and Support Facility for Afghanistan (MISFA), and INGOs will assist community organizations in applying for these funds. 17. MRRD will hire an independent audit firm to conduct annual audits of the PIU/consultants and INGO accounts. Appendix 2 outlines the fund flow arrangement. D. Reporting 18. The PIU/consultants will submit quarterly reports to the Government and ADB concerning the i) use of JFPR funds, ii) goods and services and other items of expenditure financed out of JFPR funds, iii) JFPR project, and iv) any other matter relating to the purposes of the JFPR assistance.

Appendix 5

31

OUTLINE TERMS OF REFERENCE FOR CONSULTANTS

1. The Asian Development Bank (ADB) will recruit a firm to provide a team of international and domestic consultants to support the project implementation unit (PIU) established at the Ministry of Rural Rehabilitation and Development (MRRD) for all areas of work related to the management and assessment of the Japan Fund for Poverty Reduction (JFPR) project. 2. The firm will have expertise in project management, monitoring and evaluation (M&E), project impact assessment, gender analysis, and comprehensive rural development training and workshop facilitation, as well as contracting and managing implementing NGOs (INGOs). Since the JFPR project draws on the approach of the National Solidarity Program (NSP), the firm will be familiar with the policy framework within which NSP and the Microfinance Investment and Support Facility for Afghanistan (MISFA) programs have been developed. A. International Consultants (12 person-months) 3. The international consultants tasks will include the following:

(i) Establish financial and management systems according to JFPR procedures.

(ii) Develop the capacity of counterpart staff at the PIU to manage all aspects of the project.

(iii) Assist the PIU staff in selecting and contracting INGOs in accordance with ADB's Guidelines on the Use of Consultants. (iv) Assist PIU in managing the performance of INGOs. (v) Assist MRRD and the Grant Management Unit (at the MoF), to ensure the timely release of payments to INGOs.

(vi) Provide on-the-job training to PIU staff in managing INGO services as they relate to the main components of the JFPR project.

(vii) Assist the PIU in procuring equipment in accordance with ADB's Guidelines for Procurement. (viii) Assist MRRD in recruiting an independent audit firm to conduct annual audits of the PIU and INGOs (ix) Facilitate consultations with relevant government departments, INGOs, and communities to design an approach for and conduct project monitoring and impact assessment. (x) Train, mentor, and monitor INGOs in delivering the JFPR project according to the Grant Implementation Manual, and on the basis of lessons learned continuously from the field.

32 Appendix 5

(xi) Analyze whether the JFPR project components are meeting their intended objectives and provide timely feedback to the project steering committee (PSC) (xii) Participate in the PSC meetings as required.

4. One month after the start of the project, the team leader will be required to submit a brief inception report, which will establish time lines and key milestones for the project agreed upon with ADB and MRRD. Quarterly progress reports on fund disbursements and progress in activities will be submitted to ADB. A comprehensive interim report will be submitted at the end of 18 months since project start-up and a draft final report will be delivered 1 month before project completion.

B. Domestic Consultants (78 person-months)

5. The domestic consultants will bring expertise in project administration, financial management, M&E, natural resource management, and participatory appraisal. They will work with the international consultants in establishing and managing the JFPR project. In addition the domestic consultants will undertake these tasks:

(i) Play a lead role in design and delivery of training workshops, including assessing needs, inviting participants, setting the agenda, preparing Dari/Pushto language training materials, conducting workshops and preparing and disseminating reports. Workshops will cover project management, financial management, as well as M&E. (ii) Work with the INGOs and communities to develop techniques for data collection using PRA and RRA techniques. (iii) Conduct regular monitoring visits to project sites along with PIU staff to assess progress of activities. (iv) Assist INGOs in establishing reporting systems (both programmatic as well as financial) for the JFPR project. (v) Contribute to the preparation of key planning and reporting documents.

Appendix 6 33

OUTLINE TERMS OF REFERENCE FOR IMPLEMENTING NGOs

International and Afghan nongovernment organizations (NGOs) will be contracted by the Ministry of Rural Rehabilitation and Development (MRRD), subject to the Asian Development Bank’s (ADB) approval for the delivery of the JFPR project. Activities include community mobilization, infrastructure development, natural resource management, as well as project impact assessment. Each implementing NGO (INGO) will be assigned a set of communities to work with during project duration. Specific tasks are the following:

(i) Facilitate participatory community-level planning for a 3-5 year time frame

(ii) Facilitate inclusive elections of the community development councils

(iii) Provide technical assistance for the design and construction of infrastructure projects

(iv) Assist communities in procuring equipment and supplies for infrastructure and natural resource management activities in line with ADB's Guide on Community Participation in Procurement, as well as procurement guidelines established for the National Solidarity Program (NSP)

(v) Train communities in basic planning and management, e.g., bookkeeping, contracting, procurement

(v) Select and train community-level specialists in natural resource management (NRM) activities, such as horticulture, forestry, and veterinary techniques

(vi) Conduct monitoring and assess progress of activities

(vi) Participate in meetings of the project steering committee (PSC), project implementation unit (PIU) and others as requested

34 Appendix 7

Implementation Schedule

Activity 2004 2005 2006 2007 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Component A: Community Mobilization Contract INGOs Establishment of men and women's community groups Regular meetings of community groups Training in PRA/RRA and collection of baseline data Election and Training of Community Development Councils Ongoing saving schemes, hygiene and nutrition information Component B: Infrastructure Identification of schemes Designs /surveys/timelines/costs Construction of schemes Establishment of Operations and Maintenance Committees Component C: Natural Resource Management One time provision of inputs( seeds, fertilizer) and tool kits Training in forestry and horticulture techniques

Appendix 7 35

Activity 2004 2005 2006 2007 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Component D: Microcredit Ongoing savings scheme Selection and Training of micro credit subcommittee Development of Terms and Conditions for loans Development of selection criteria for borrowers Ongoing provision of loan products Component E: Project Impact Assessment Contract Consulant Participatory workshop to develop design of PIA Basic data collection by INGOs+communities Monitoring of progress by INGOs +communities Project Impact Assessment by communities + consultant Component F: Project Management Contracting Consultant and INGOs

Project Steering Committee meetings GIM developed Quarterly Monitoring Annual Audits