Proposed Grant Assistance Nepal: Support for Targeted and Sustainable Development Programs for Highly Marginalized Groups

Transcription

1 Grant Assistance Report Project Number: March 2011 Proposed Grant Assistance Nepal: Support for Targeted and Sustainable Development Programs for Highly Marginalized Groups (Financed by the Japan Fund for Poverty Reduction)

2 CURRENCY EQUIVALENTS (as of 28 February 2011) Currency Unit Nepalese rupee/s (NRe/NRs) NRe1.00 = $ $1.00 = NRs72.20 ABBREVIATIONS ADB Asian Development Bank CPS country partnership strategy CSO civil society organization DAC district advisory committee DDC district development committee DNF Dalit Nongovernment Organization Federation GESI gender and social inclusion IPO indigenous peoples organization JFPR Japan Fund for Poverty Reduction JICA Japan International Cooperation Agency LGCDP Local Governance and Community Development Program MLD Ministry of Local Development NEFIN Nepal Federation of Indigenous Nationalities NFDIN National Foundation for the Development of Indigenous Nationalities NPD national project director NPM national project manager PCU project coordination unit PMU project management unit PRA participatory rural appraisal PSC project steering committee REFLECT Regenerated Freirean Literacy through Empowering Community Techniques VDC village development committee NOTES (i) (ii) The fiscal year (FY) of the government ends on 15 July. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2011 ended on 15 July In this report, "$" refers to US dollars Vice-President X. Zhao, Operations 1 Director General S.H. Rahman, South Asia Department (SARD) Country Director B. Hitchcock, Nepal Resident Mission, SARD Team leader P. Spantigati, Principal Country Specialist, SARD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 I. Basic Data Name of Proposed Activity Country JAPAN FUND FOR POVERTY REDUCTION (JFPR) JFPR Grant Proposal Support for Targeted and Sustainable Development Programs for Highly Marginalized Groups Nepal Grant Amount Requested $2,700,000 Project Duration 4 years Regional Grant Yes / No Grant Type Project / Capacity building II. Grant Development Objective(s) and Expected Key Performance Indicators Grant Development Objectives: The objective of the project is to provide targeted support to several of the most disadvantaged communities in Nepal. The impact of the project is expected to be reduced income and non-income poverty among and empowerment of target populations in the pilot districts. The expected outcome of the project is enhanced participation by men and women in the target groups in local decision-making processes and economic activities. The project will directly contribute to outcome 1 Citizens and communities engaged actively with local governments and hold them accountable of the government s ongoing Local Governance and Community Development Program (LGCDP). The project aims to pilot rapid-impact interventions to increase the empowerment and reduce poverty among some of the most socially marginalized communities in Nepal which currently cannot even participate in the ongoing LGCDP activities due to their extreme poverty so that they can more meaningfully participate in and benefit from the LGCDP. This will (i) provide practical feedback to the LGCDP to support to replication and scaling up of these efforts, and (ii) provide information to the Government of Nepal to enable it to make informed policy decisions on inclusive development. Expected Key Performance Indicators: (i) At least 75% of new entrepreneurs supported by the project are continuing their microenterprises at the end of the project. (ii) Individual income of at least 1,500 new entrepreneurs (30% women) increases by at least 50% by the end of the project. (iii) At least 80% of the 2,000 participants (50% women) complete the Regenerated Freirean Literacy through Empowering Community Techniques (REFLECT) course. (iv) At least 80% of the target population (50% women) in the project area are found to have participated in at least one social awareness campaign launched by the project. III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures Amount of Grant Percentage of Category Allocated in $ Expenditures 1. Civil works 120, Equipment and supplies 48, Training, workshops, and seminars 794, Consulting services 373, Grant management 402, Livelihood development costs and microenterprise startup seed 879, money to establish revolving funds to finance microenterprises 8. Contingencies 82, Total 2,700, Incremental Cost 100, Source: Asian Development Bank.

4 2 JAPAN FUND FOR POVERTY REDUCTION A. Other Data JFPR Grant Proposal Background Information Date of Submission of 5 March 2010 Application Project Officer P. Spantigati, Principal Country Specialist Project Officer s Division, , Phone Nepal Resident Mission pspantigati@adb.org; Other Staff Who Will Need Access to Edit/Review the S. Rajbhandari, Associate Programs and Operations Analyst srajbhandari@adb.org Report Sector Multisector Themes (subthemes) Economic growth (widening access to markets and economic opportunities); social development (indigenous people, other vulnerable groups); gender equity (human capabilities, economic opportunities, empowerment and rights) Targeting Classification Household (TI H) Was JFPR Seed Money used to Yes [ ] No [ ] prepare this grant proposal? Have Staff Review Committee Yes [ ] No [ ] Meeting comments been reflected in the proposal? Name of Associated Asian Development Bank (ADB) Financed Operation(s) N/A Executing Agency Ministry of Local Development (MLD) Joint Secretary, General Administration Division Ministry of Local Development Tel: Fax: Grant Implementing Agency Project Management Unit Chief, Gender and Social Inclusion Section Ministry of Local Development Tel: Fax:

5 B. Details of the Proposed Grant 3 1. Description of the Components, Monitorable Deliverables, Outcomes, and Implementation Timetable Component A Component Name Household socioeconomic survey and resource mapping Cost ($) 117,800 Component Description Given the volatile political situation in Nepal, the project will hold regional- and district-level consultations during project inception to confirm the target districts, and then select specific village development committees (VDCs) within those districts. The poorest households among the target groups will be identified to ensure they are reached by the project. (A targeting approach flow chart is in Appendix 9.) Demographic data that is ethnically disaggregated to the VDC level is available in Nepal, based on the population census. 1 Many districts have also completed disadvantaged group mapping, which rates different VDCs based on certain socioeconomic data. By combining census data and disadvantaged group mapping data VDCs can be identified as those that (i) have a high percentage of the target group population, 2 and (ii) are relatively impoverished in comparison with other VDCs in the district. Using the above criteria as the basis for VDC selection, widespread consultations will be held with all relevant stakeholders, including local bodies, integrated planning committees, indigenous peoples organizations (IPOs) of the target indigenous groups (Bote, Kumal, and Majhi), and Dalit civil society organizations (CSOs) working in the target districts. These consultations will help the project team select VDCs with a high concentration of poor target group members. Poor households within these VDCs will then be selected. Limited information is currently available on the level of poverty at the household level. 3 A detailed household-level socioeconomic survey will therefore be conducted to clearly identify the socioeconomic conditions and needs of target group members and other poor within these VDCs. The survey will help identify the poorest households, which will be the target of the JFPR project. The survey will also provide baseline data for use in the project design and monitoring framework. The socioeconomic survey will employ a participatory rural appraisal (PRA) approach. Once the target VDCs have been selected, 1 The last census was carried out in Many demographic changes have occurred since then, but the general ethnic composition of villages remains unchanged. Consequently, using the 2001 census data to target VDCs for the purpose of the project remains valid. 2 The target groups are (i) Hill and Terai Dalits and (ii) Bote, Kumal, and Majhi (indigenous people). Details on the selection of the target groups is provided in section B.3 Background. 3 In Nepal the term poverty encompasses three dimensions: (i) income poverty (the lack of sufficient income to meet minimum basic consumption needs); (ii) human poverty (the lack of basic human development needs, particularly health and education); and (iii) political poverty (the lack of equal opportunity in decision-making and governance). The national poverty line in Nepal, which is calculated using the cost-of-basic-needs approach, is NRs7,696 per year in 2003 prices.

6 4 approximately 80 social mobilizers, including at least 50% women, will be recruited to assist the socioeconomic survey team. The social mobilizers will be recruited by the project management unit (PMU) in consultation with the respective district advisory committee (DAC). 4 Preference will be given to youth from the target groups in the target VDCs. The social mobilizers will be trained in PRA techniques by the survey team prior to conducting the socioeconomic survey. With technical support from the survey team, the social mobilizers will employ PRA techniques to conduct household surveys that will identify a range of issues pertinent for effectively addressing the needs of the target communities. The socioeconomic survey will provide information on literacy levels, the use of literacy, and grassroots organizations in the area, and include a daily routine calendar, natural resources map, health and hygiene map, agricultural calendar, gender workload calendar, income and expenditure calendar, and matrix of the sources and uses of credit. For the fishing communities (Bote and Majhi) inclusion of a calendar of fish catches, fishing timelines, and out-ofseason work calendar could also be explored. Monitorable Deliverables/Outputs (i) Socioeconomic survey team formed; (ii) social mobilizers recruited; (iii) at least 33% of women from each community are surveyed; (iv) household and resource mapping of target communities completed; and (v) socioeconomic survey report prepared, including genderdifferentiated information on the target groups' social, economic, and political status including gender-related vulnerabilities (such as the practice of gender-based violence) in the communities. Implementation of Major Activities: Number of months for grant activities A socioeconomic survey team led by an economist will lead the socioeconomic survey work. The team will be supported by a statistician and the project management unit. Months 4 12 Component B Component Name Capacity building for social empowerment of target groups Cost ($) 767,800 Component Description The project is targeting some of the most marginalized communities in Nepal who have consistently failed to reap the benefits of mainstream development efforts. The objective of this component is to socially empower such groups to increase their ability to participate in decision-making processes in their communities. The term social empowerment as used in Nepal has the same elements as legal empowerment as used by ADB, which defines legal empowerment as the ability of women and disadvantaged groups to use legal and administrative processes and structures to access resources, services, and opportunities. 5 To avoid confusion, the project retains the term social empowerment. The impact of this component is expected to be the empowerment of target group members to increase their ability to take part in the social mobilization activities of the government s LGCDP. The most 4 Please see component D (grant management, monitoring, and audit) for a description of the PMU and DAC. 5 ADB Legal Empowerment for Women and Disadvantaged Groups. Manila.

7 5 marginalized groups are now insufficiently empowered to access the benefits provided by the LGCDP and other programs because they are voiceless in comparison with other groups, including even other indigenous and Dalit groups. 6 This component will thus focus on: (i) rights-based empowerment of target communities, (ii) promotion of groups to manage the microenterprise startup seed money as a revolving fund, and (iii) organizational development of Dalit IPOs and CSOs. The social mobilizers who assisted with the socioeconomic survey will be trained on REFLECT methodologies. 7 Once trained, they will facilitate the establishment of participatory learning groups (REFLECT circles) within their village and facilitate a REFLECT course. By the end of the REFLECT course, which is expected to last about 6 months, each group (consisting of participants) will have produced maps, matrices, calendars, and diagrams representing a detailed analysis of their own communities. This information will then be used to produce community action plans, which will identify viable income-generating activities in addition to education, health, sanitation, and nutrition needs in their own communities. Community members will thus have a permanent record of their own socioeconomic analysis, which could be used for planning their own development initiatives. This information will also assist the project team to design awareness campaigns and will help community members develop proposals for their communities, which could be submitted to the local bodies or development partners working in the area. The JFPR project will promote these groups to manage the microenterprise startup seed money as a revolving fund. 8 Approximately, 2,000 beneficiaries are expected to undertake the course, of whom at least 50% will be women. Given the poor socioeconomic conditions of the beneficiaries that will be targeted under this project, a modest allowance of NRs50 per 2-hour meeting (corresponding to an average daily wage, prorated for a 2 hour period) will be provided to participants of REFLECT circles to compensate for the opportunity cost of joining the circle. 9 Community members will provide the venue for the meetings in their homes on a rotational basis; this will be their inkind contribution, and help build ownership of the process. To minimize administrative costs and simplify monitoring, the allowance 6 The term Dalit is reserved for a certain socially marginalized caste group in Nepal who have historically suffered from caste based discriminations such as untouchability, and which led to religious, social, political and cultural marginalization of Dalits. Dalits constitute 13% of Nepal s population. Within the Dalit community, there are five sub-caste groups who are from the hills (Hill Dalits) and 22 sub-caste groups who are from the Terai (Terai Dalits). 7 REFLECT is a new approach to adult literacy which fuses the theory of Paulo Friere (Brazilian educator and influential theorist of critical pedagogy) and the practice of PRA. In a REFLECT program, there are no textbooks. Each literacy circle develops its own learning materials through construction of maps, matrices, calendars, and diagrams that depict local realities. These then become the basis for constructing words and sentences and related numeracy work, which the participants can use in their daily contacts with members of their community and the outside world. 8 See component C for details. 9 Various projects, including ADB Technical Assistance to Nepal for Reaching the Most Disadvantaged Groups in Mainstream Rural Development. Manila (TA 4759-NEP), have reiterated the need to compensate the poorest of the poor for their opportunity cost of attending training and workshops because they survive on a day-today basis and thus cannot afford to give time to attend such programs. 10 If the purpose of the grant is to cover the opportunity cost of attending the REFLECT meetings, the funds need to be given out on the same day the poor attend the meetings.

8 6 will be in the form of cash rather than food. To ensure transparency, the cash handouts will be made by the social mobilizers at the end of every REFLECT session and recipients will acknowledge receipt of these payments by signing a payment record sheet. 10 Detailed records of attendance and payments will be maintained by the social mobilizers and one copy of this record will be furnished to the project coordination unit (PCU) at the end of each month, with another copy posted in the VDC office or community centers. The social mobilizers will be given an advance to cover the necessary payments on a monthly basis. To ensure accountability, the PCU staff and members of IPOs or Dalit CSOs will conduct random spot checks each month to verify payments by social mobilizers. Social audits will also be conducted by the monitoring team, who will carry out semiannual field monitoring visits. In addition to the REFLECT course, the JFPR project will finance social awareness campaigns, which will focus on the rights of target groups. The project recognizes the need to focus on changing the value systems of other ethnic groups in the community, as well as those of the target group members. This is particularly true with regards to the Dalit community, who are traditionally treated as the scheduled caste. Empowering the marginalized target communities to become more vocal must be accompanied by changes to the value systems of those around them in order to change social attitudes. This will also help promote harmony in the community, as opposed to simply targeting and empowering one particular group in an environment where there is already a delicate balance in community interactions. In this regard, in addition to sensitization campaigns, where feasible the project will promote partnerships among the target group members and others, such as through joint business ventures. The third focus of this component will be organizational development of IPOs and Dalit CSOs. The focus will be on institutional strengthening of: (i) community chapters of IPOs of Bote, Kumal, and Majhi and Dalit CSOs; (ii) district and regional level IPOs and chapters of Dalit CSOs; and (iii) district and regional chapters of the Nepal Federation of Indigenous Nationalities (NEFIN) and Dalit Nongovernment Organization Federation (DNF). The project will strive to enhance networking among these organizations (and at different levels) and will promote greater participation of women in these organizations. Organizational development training will focus on (i) building the capacity of IPOs and CSOs to carry out participatory rural appraisals so they can identify problems and solutions; (ii) enhancing their communication and negotiation skills to enable them to better deal with local bodies, CSOs, and other development partners; and (iii) building capacity to better manage projects and funds, including the capacity to monitor results. Formal networking will also be strengthened, including between the various levels of IPOs and Dalit CSOs, and between these CSOs and government organizations such as the National Foundation for the Development of Indigenous Nationalities (NFDIN) and the Dalit

9 7 Commission. Limited support will be provided to upgrade existing office buildings of IPOs and Dalit CSOs in the project districts. The PMU will ensure that all civil works supported by the JFPR will comply with all applicable government regulations. Monitorable Deliverables/Outputs (i) At least 80% of the target population (50% women) in the project area are found to have participated in at least one social awareness campaign launched by the project; (ii) at least 80% of the 2,000 participants (50% women) complete the REFLECT course; (iii) at least 80% of REFLECT groups prepare their community action plan; and (iv) formal communication networks enhanced among the various levels of IPOs and Dalit CSOs, and between these CSOs and government organizations. Implementation of Major Activities: Number of months for grant activities This component will be delivered by the PMU social development team in collaboration with relevant civil society organizations. Months Component C Component Name Entrepreneurship development for economic empowerment Cost ($) 1,259,000 Component Description This component of the project will focus on entrepreneurship development of target group members for microenterprise development. 11 The project will follow a sequenced approach to microenterprise creation, building on the findings of the baseline socioeconomic survey of the target communities and the priority areas identified in the community action plans. One member each from 2,000 of the poorest households in the project area 12 will be given basic entrepreneurship training, which will focus on developing the entrepreneurial skills of the participants. The project will ensure at least 50% of the participants are women. Participants will identify and prioritize potential microenterprises based on their newly acquired knowledge and prepare their business plans. 13 The project will encourage group initiatives where feasible. This will be followed by detailed market surveys to assess the feasibility and viability of identified priorities and other viable alternatives. Where the market survey shows that identified initiatives are inappropriate, participants will be assisted in identifying other viable microenterprises. Those participants who have identified viable microenterprises will graduate to the next phase of the training. The next step will focus on (i) provision of skills training, and (ii) working with individual or group entrepreneurs to develop their microenterprise. Participants will be provided training on technical skills enhancement, developing market linkages, basic accounting 11 The entrepreneurship development approach differs from traditional skills development approach in that it provides beneficiaries with basic entrepreneurial skills, which will help them to identify and establish sustainable microenterprises and market their products, as opposed to simply providing skills training. 12 Selection of beneficiaries will be based on the socioeconomic survey and widespread consultations with the local stakeholders. 13 The PMU will ensure that microenterprises supported are not in the ADB Prohibited Investment Activity List in Appendix 5 of the Safeguard Policy Statement (2009).

10 8 and microenterprise management skills, and management of revolving funds. Because the households being targeted by this project are the poorest of the poor, the project has set aside $300,000 as microenterprise startup seed money for establishing revolving funds to finance project startup and operation. If the startup funds are divided equally among the 2,000 beneficiaries, each beneficiary will receive $150. In Nepal, this is enough to start small-scale microenterprises such as vegetable farming or to purchase livestock, to start a small bicycle repair shop, or similar small initiatives which would provide a sustainable path out of poverty for the poorest of the poor. The microenterprise startup seed money will be distributed by the PCU through the business development service providers (subcontracted to implement the entrepreneurship training). The PMU will prepare and propose procedures and governance safeguards for the revolving fund for MLD and ADB approval before ADB disburses the funds. To ensure that funds are not misused, the entrepreneurship trainees will be promoted as microenterprise groups according to the type of microenterprise they are pursuing, and the microenterprise startup seed money will be released to the groups on an installment basis on the condition that group members establish revolving funds and monitor the use of the loans from the revolving fund by fellow members as per the agreed business plans and norms and standards set by the groups. This will provide a basis for each individual to monitor and pressure the others on the proper use of the loans, in addition to ensuring that the seed money is managed sustainably. The groups will be provided training on managing revolving funds, and norms and standards will be established on the use of the funds. To ensure transparency, the name of the loan recipient, the purpose for which the loan was received, and the terms and conditions will be clearly communicated to the PCU through the social mobilizers; in addition to the regular monitoring by the social mobilizers on the use of the loans by recipients, social audits will be conducted during project monitoring visits by the PCU, PMU and the spot checks by the ADB staff consultant. The project has also set aside $100,000 for technological support, which would contribute to larger-scale business ventures where the prospects for high returns on investments are possible. If the demand arises and the market survey reveals that larger group initiatives are viable, for which the microenterprise startup seed money is insufficient, the project will fund small civil works or mechanical or electrical equipment necessary for business development. These could include solar dryers to preserve meat and fish products or vegetables and fruits, and other such devices that would add value to products. The fund could also be used for setting up market centers, or construction of kilns for use by the Kumals, who are traditional pottery makers, or by Dalits, who specialize in metallurgy. Such works will be subcontracted in 14 The project areas are located in well populated districts so the prospects for marketing the goods and services have high potential. The marketing strategy would also look into marketing products in the tourist centers and the major towns, including handicraft outlets in Kathmandu.

11 9 accordance with ADB s Procurement Guidelines (2010, as amended from time to time), and community-based management committees will be formed to manage the facilities. The nature of the technological support would vary from district to district, according to the needs of the target beneficiaries. In addition to regular business development services, the project will pay special attention to product branding and marketing, keeping in mind that many of the traditionally manufactured products have limited competitive advantage unless marketed as specialty items. The central theme of the marketing strategy will be the contribution of these products to poverty alleviation. In this regard, linkages will be established with handicraft outlets in the urban and tourist areas and key products will be advertised through the local media and other channels. The marketing strategy will also focus on establishing networks with local markets. 14 This may include building partnerships with government agencies and other projects in the area. This task will be subcontracted to a reputed advertising or marketing firm. Lastly, once the new entrepreneurs have gained some experience, they will be provided business development training, which will focus on business expansion and sustainability of their microenterprises. In this regard, in addition to business development training, the project will facilitate potential entrepreneurs to access sustainable financing from microfinance institutions. Specific training on the types of financing available to entrepreneurs in the area, how they can access such credit, and how they need to manage these loans will be provided on an asneeded basis. Monitorable Deliverables/Outputs (i) One member from each of 2,000 poor households (50% women) provided entrepreneurship training; (ii) at least 75% of entrepreneurship training participants start their own microenterprise; (iii) at least 75% of the entrepreneurship trainees establish revolving funds; (iv) at least 75% of new entrepreneurs supported by the project fund continue their microenterprises at the end of the project; and (v) individual income of at least 1,500 new entrepreneurs (30% women) increases by at least 50% by the end of the project Implementation of Major Activities: Number of months for grant activities The project team will be supported by the DACs in the selection of potential entrepreneurs. Business development service providers, who will be subcontracted, will implement the training; and marketing or advertising firms, also subcontracted, will conduct the marketing surveys and product branding and advertising works. The PMU will provide overall supervision for implementing this component. Months Component D Component Name Grant management, monitoring, and audit Cost ($) 473,000 Component Description A PMU (national consultant) will provide the services for

12 10 implementation, management, and progress monitoring of the JFPR grant, including all financial reporting to ADB and the MLD. The PMU will arrange to conduct external financial audits and the reports will be submitted to the MLD and ADB within 6 months of the end of all fiscal years and closing of the project. The MLD will be the executing agency for the proposed JFPR project and will nominate the joint secretary of the General Administration Division of MLD as the national project director (NPD) and the undersecretary of the Gender and Social Inclusion (GESI) Section to head the PMU as national project manager (NPM). The NPM will be supported by (i) one team leader, who will have a strong project management background, and who will have overall responsibility for the day-to-day management of the project; (ii) one indigenous peoples specialist, who will lead the social development works related to indigenous peoples; (iii) one Dalit specialist, who will lead the social development works related to Dalits; and (iv) one microenterprise development specialist, who will lead the works related to entrepreneurship and microenterprise development. This team of specialists will be supported by (i) one monitoring and evaluation officer, (ii) two accountants, (iii) two assistants, and (iv) one helper. The terms of reference for consultants are in Appendix 7. The PMU will establish four regional PCUs each staffed with (i) one project coordinator, (ii) one accountant, (iii) one assistant, and (iv) one helper to support project implementation. The PCUs will be based in the following districts: Gulmi, Mahottari, Nawalparasi, and Surkhet. To provide overall policy guidance, a project steering committee (PSC), chaired by the secretary of the MLD, will be established. The PSC will include the NPD, and representatives from the (i) Ministry of Finance; (ii) National Planning Commission; (iii) NFDIN; (iv) NEFIN; (v) National Dalit Commission; (vi) Neglected, Suppressed, Dalit Class Upliftment Committee; (vii) DNF; (viii) Nepal Kumal Society; (ix) Nepal Majhi Society; (x) Nepal Bote Society; and (xi) the project team leader. The NPM will be the member secretary of the PSC. Representatives from ADB and other agencies may be invited as observers upon request. PSC meetings will be held semiannually to (i) approve the annual work plan and budget, (ii) review annual and overall project implementation, and (iii) provide overall policy guidance to the PMU. It shall be convened additionally if necessary. To coordinate project activities in the field, a DAC chaired by the local development officer of the district will be formed in all nine project districts. The membership in this advisory committee will be (i) respective district development committee (DDC) officer in charge of social development; (ii) representative of the District Coordination Committee of Dalits; (iii) representative of the District Coordination Committee of Janajatis (indigenous peoples); (iv) representative of the Women Development Office in the district; (v) representatives of relevant IPOs and CSOs working in the district; and (vi) the project coordinator, who will be the member secretary to

13 11 the committee. DAC meetings will be held every four months to (i) coordinate project planning and implementation, and (ii) review progress of the project. The DAC will convene additional meetings if necessary, and other stakeholders may be invited if needed. The PMU will monitor project activities on a regular basis. In addition to regular project monitoring through the project s own monitoring systems, a monitoring team comprising of central and local government officials (GESI unit, DDC), and IPOs and CSOs, will visit the field semiannually to monitor the project. During these monitoring visits, the team will also conduct social audits to verify compliance with requirements and assess progress towards achieving project results. The social audits will also provide an opportunity to air any grievances and facilitate their resolution. Similarly, a midterm review will be conducted after 2 years to assess the project and make necessary changes in the project design and implementation structures. Information from these monitoring trips will be shared with a wide range of government officials and other stakeholders. In particular, lessons from this pilot will contribute to the design of interventions under the government s Local Governance and Community Development Program. A team of external experts will conduct a project evaluation at the end of the project. Monitorable Deliverables/Outputs (i) PMU established, (ii) PSC established, (iii) PCUs established, (iv) DACs established, (v) minutes of PSC meetings, (vi) minutes of DAC meetings, (vii) annual work plan and budget, (viii) midterm review report, (ix) financial and progress reports, (x) external audit reports, (xi) project completion report, and (xii) project evaluation report. Implementation of Major Activities: Number of months for grant activities ADB and the MLD will recruit the PMU staff. The PMU will implement the project under the overall supervision of the MLD. External auditors will audit the project on an annual basis and an independent evaluation team will evaluate the project at the end. Months Financing Plan for Proposed Grant to be Supported by JFPR Funding Source Amount ($) JFPR 2,700,000 Government (in kind) 60,000 Community contributions (in kind) 19,900 Total 2,779,900 JFPR = Japan Fund for Poverty Reduction Source: Asian Development Bank.

14 12 3. Background 1. Although the overall incidence of poverty has fallen drastically (from 41.8% in FY1996 to 30.8% in FY2004), significant disparities persist between rural and urban areas, geographically, and across various ethnic groups: (i) (ii) (iii) In urban areas 9.6% of the people live below the poverty line, compared with 34.6% in rural areas. 15 Poverty incidence is 27.6% in the Terai, 34.5% in the Hills, 27.1% in the Central Development Region, and 44.8% in the Mid-Western Development Region (footnote 15). The proportion of people living below the poverty line varies widely between ethnic groups: 14% among Newars, 19% among Brahmans and Chhetris (high caste Hindu), 47% among Dalits, and 44% among Hill Janajatis Human development and political empowerment indicators also vary among ethnicities: (i) Under-5 mortality rate per 1,000 live births is 95 among Hill Dalits (highest), 87 among Terai Janajatis, 81 among Terai Dalits, and 76 among Hill Janajatis, compared to 43 among Newars (lowest) and 45 among Hill Brahmans (high caste Hindu). 17 (ii) Over half (51.5%) of Terai Dalits cannot read at all; figures for other ethnic groups include 38.2% of Muslims, 31.0% of Hill Dalits, 24.5% of Terai Janajatis, 17.2% of Hill Janajatis, and 3.1% of Hill Brahmans. 18 (iii) A secondary education has been completed by 21.4% of Madhesi (people from the Terai) Brahmans and Chhetris; in contrast, only 0.6% of Terai Dalits, 0.8% of Hill Dalits, 1.1% Terai Janajatis, 1.6% of Muslims, and 3.8% of Hill Janajatis (indigenous group) possess a secondary education (footnote 18). (iv) In 2005, 82% of the leadership positions in the judicial, executive, legislative, and constitutional bodies were filled by Brahman, Chhetri, Thakuri, and Sanyasi groups compared to 14% by Newars, 9% by Madhesis, 8% by Janajatis, and 2% by Dalits. These groups make up the following approximate proportions of the total population: Brahman and Chhetri, 31%; Newar, 6%; Janajatis (excluding Newar), 23%; Madhesi caste and ethnic groups, 23%; and Dalits (Hill and Terai combined), 11% (footnote 18). 3. There is a clear need for targeted interventions that reach out to those who have remained excluded. The concept for the project materialized from the feedback from the regional consultations held during the country partnership strategy midterm review in An overwhelming response was received, especially from the local people, on the gap in reaching out to the most excluded groups despite the recent focus on inclusive development by the 15 Government of Nepal, Central Bureau of Statistics Resilience Amidst Conflict: An Assessment of Poverty in Nepal, and Kathmandu. 16 The World Bank and Department for International Development of the United Kingdom Unequal Citizens: Gender, Caste and Ethnic Exclusion in Nepal. Kathmandu. 17 Government of Nepal, Ministry of Health and Population, New ERA, and Macro International Inc Nepal Demographic and Health Survey Kathmandu. 18 United Nations Development Programme (UNDP) Nepal Human Development Report Kathmandu. 19 ADB Country Partnership Strategy Midterm Review: Nepal, Manila.

15 13 government and development partners. The need for targeted programs, in parallel with mainstreaming interventions, was thus highlighted. 4. The Government of Nepal has ratified core international human rights instruments such as the International Labour Organization Convention 169 on Indigenous and Tribal People and the International Convention on Elimination of All Forms of Racial Discrimination. The Three Year Interim Plan (FY2008 FY2010) has identified, as one of its pillars, the need to adapt an inclusive development process and carry out targeted programs. These are consistent with ADB s country partnership strategy for Nepal, (CPS), 20 which identifies inclusive social development as one of its four pillars. It is also consistent with ADB's policy on indigenous peoples, which highlights the need to "legally recognize the ancestral domain and traditional rights of indigenous people over land and resources and their right to direct the course of their own development and change." Poverty incidence in was highest among the Dalits (46%) and Hill Janajatis (44%) compared to the national average of 31%. More importantly, although both groups experienced declines in poverty (by 21% and 10%, respectively) between and , these declines were more modest than the declines among the upper castes and Newars (which declined by 46% and 28%, respectively). Income inequality worsened with Gini increasing from 34.2 to 41.4 during this period. The need for targeted interventions is thus much warranted in Nepal to reduce income inequalities. 6. In terms of targeting, disaggregated poverty data was analyzed, and two of the poorest groups Dalits and Hill Janajatis were selected. The next step involved sub-selection from within these groups. National experts from the Dalit and indigenous groups assisted in carrying out a participatory assessment and background study. 22 This involved wide consultations with Dalit CSOs and IPOs, and other stakeholders at the central level. Given the current political realities in Nepal, the consultations led to the conclusion that both Terai and Hill Dalits needed to be targeted. The next step led to the selection of two target districts Mahottari in the Terai and Surkhet in the hills based on population of Dalits in these districts, their socioeconomic status, and ongoing support in the districts. However, given the current volatile political situation, particularly in the Terai, the final decision on the target districts will be made during inception. 7. Similarly, for the indigenous group (Hill Janajatis), the consultations led to the conclusion that the Kumal group should be selected based on existing information on socioeconomic status of indigenous groups, and level of other support being provided to particular groups. The target districts for Kumals (Nawalparasi and Gulmi) were selected based on the large population of Kumals in these two districts and the level of other support being provided to the group. Field visits were carried out to these districts and consultations were held with the local government and various stakeholders, including representatives of the Kumal community. The initiative received broad support, and it was suggested that in addition to targeting the Kumals in Nawalparasi and Gulmi, the project should also target Kumals in the adjoining district of Baglung as well as the Bote and Majhi communities in these districts, as these groups were the most deprived in the area. Further consultations with the Nepal Bote Society revealed that Bote and Majhi communities were very sparsely populated along the rivers between Nawalparasi and Baglung. It was agreed that the project would target Bote and Majhi communities along the Narayani River and along the Kali Gandaki River as far as Baglung district, thereby 20 ADB Country Partnership Strategy: Nepal, Manila. 21 ADB The Bank s Policy on Indigenous Peoples. Manila. 22 Dr. Om Gurung, former chairperson of NEFIN, carried out the study and facilitated discussions on indigenous peoples while Hira Vishwakarma, a prominent scholar on Dalits, led the same task for the Dalits.

16 14 encompassing Majhi and Bote communities in a total of seven districts: Baglung, Gulmi, Nawalparasi, Palpa, Parbat, Syangja, and Tanahu The 2001 population census estimated the population of Kumal to be 20,558, including 12,376 in Nawalparasi, 7,452 in Gulmi, and 730 in Baglung. There are estimated to be approximately 4,000 Botes and 3,500 Majhis in the seven districts. It must be noted, however, that owing to limited funds, the project will focus only on Majhi and Bote groups along the rivers identified above, and will sub-select VDCs to target the Kumal within the target districts. Broad consultations will be carried out at the district level during inception to select the target VDCs. This will be followed by the socioeconomic survey in these VDCs, and 1,000 of the poorest households will be selected. 9. Regarding the Dalit group, the population of Dalits is approximately 94,070 in Mahottari and 80,683 in Surkhet. As project funds are limited, it has been agreed that the project will select up to five VDCs in each of the two target districts; based on the socioeconomic survey, a total of 1,000 of the poorest households will be selected. 10. Some participants voiced concerns on exclusive targeting of some groups, and the project will therefore provide equal benefits to nontarget group poor households in the selected clusters of target groups. The targeting approach is further elaborated in Appendix Innovation and Knowledge Sharing 11. The project adopts several innovative approaches: (i) (ii) (iii) Learning from the past social empowerment efforts, the project gives equal emphasis to economic empowerment of target communities. It is now widely believed in Nepal that social empowerment without accompanying economic empowerment often leads to disillusionment with the system and government and makes people vulnerable to revolt. Economic empowerment, on the other hand, can empower people socially as well. Nevertheless, the groups that are being targeted under the project are some of the most marginalized groups in Nepal, who have traditionally been socially discriminated against; many of these societal values persist, particularly in rural areas. The social empowerment component will be undertaken with a view to overcoming persistent social stigmas. Overcoming social discrimination requires changing the attitudes, values, and culture of those who discriminate, as well as empowering the discriminated. The project will therefore include awareness programs to educate elites in the community, and will encourage joint undertakings by different caste and ethnic groups within the community, with opportunities given to target community members to lead initiatives. As part of this strategy, the project will recruit (to the degree possible without hampering project quality) members from the target communities to administer the project. Social mobilizers will be recruited from the target group and the PMU and PCUs will be staffed (to the degree possible) with target group members. Livelihood development efforts have often failed, as they focused exclusively on skills training without adequate focus on market opportunities, access to 23 Although the population of Bote and Majhi are significant in Chitwan district, which adjoins Nawalparasi, it was decided that the project would not target the Bote and Majhi communities in this district as there is an ongoing project targeting these groups in Chitwan.

17 (iv) (v) (vi) (vii) 15 financing and the creation of market linkages. The project adopts an entrepreneurship development approach, and will focus on creating entrepreneurs and then helping them develop microenterprises. In view of the destitution of the poor households that will be targeted, the project will link entrepreneurship training with microenterprise startup seed money to facilitate establish by beneficiaries of revolving funds to finance microenterprises. In view of the subsistence nature of the lives of the poor who cannot afford to spare time to attend training and workshops, the project will provide a modest allowance to participants of REFLECT circles to compensate for the opportunity cost of joining the circle. Joint monitoring by the project team, officials from the local governments and MLD, and representatives from NEFIN, NFDIN, DNF, and the Dalit Commission will be undertaken periodically to ensure project outcomes. Information dissemination will also reach a wide audience through the PSC, and provide lessons for scaling up under the government s LGCDP. Lessons from past initiatives show that capacity building of grassroots organizations and social empowerment take a relatively long time. Hence, the project will be implemented over 4 years to achieve the envisaged outcomes. 5. Sustainability 12. The following design features have been taken into consideration to ensure the sustainability of the interventions: (i) Social mobilizers (to be recruited from target groups) will be recruited at project commencement and trained to assist the socioeconomic survey team identify problems and opportunities in their own communities. They will be trained in employing PRA techniques and will produce, as part of the socioeconomic survey, household and resource maps of their own communities. This is expected to assist in identifying the real community needs, and will foster ownership. (ii) The social mobilizers will be further trained to facilitate participatory nonformal learning tools such as REFLECT in their respective communities. This will have the dual objective of empowering the target communities and providing skills to the social mobilizers to enable them to lead community mobilization processes, thereby increasing their prospects of future similar employment. (iii) Participatory learning processes are expected to lead to community empowerment through development of literacy skills, and assist communities organize for collective action with respect to benefits and to voice their demands to the agencies concerned. (iv) Linking entrepreneurship development to skills development will ensure that beneficiaries apply their new skills in establishing their own microenterprises. The project will assist them to strengthen their microenterprises, thereby increasing the sustainability of these enterprises. (v) Revolving funds will be established to finance microenterprises, thereby ensuring the continuity of financing to the poor households in the project area. (vi) Organizational development of the IPOs and Dalit CSOs will provide a sustainable approach for grassroots outreach to the most marginalized groups.

18 16 The development of formal channels of communication between communities and central CSOs will ensure that the concerns of the most marginalized are heard at the center. 6. Participatory Approach 13. The project concept was formulated after extensive stakeholder consultations during the midterm review of the CPS ( ), held between January and April 2008, when concerns were raised regarding outreach to the most vulnerable groups. With JFPR seed money support, a series of consultations were organized in Kathmandu and the project districts between October 2008 and March 2009 to discuss major constraints to the development of highly marginalized groups and how best to support them. The selection of the target groups followed the methodology discussed above (paras. 3 10). 14. Furthermore, on the basis of feedback received from these consultations, the preliminary project objectives and implementation arrangements were formulated and further discussed with the MLD. The MLD secretary was supportive of the initiative and suggested (i) adoption to the degree possible of a decentralized approach, (ii) making maximum use of the community-level organizations and local bodies, and (iii) basing the external experts within the districts as far as possible. 15. A fact-finding mission was fielded intermittently from 8 September to 21 October 2009 to further develop the proposal. Meetings were held with the (i) Ministry of Finance, (ii) MLD, (iii) NFDIN, (iv) NEFIN, (v) National Dalit Commission, (vi) DNF, (vii) Federation of Women Entrepreneur s Association of Nepal, (viii) Micro Enterprise Development Program, (ix) Nepal Bote Society, and (x) Nepal Kumal Society. 16. MLD, in its capacity as the executing agency, fully supports the project. Primary Beneficiaries and Other Affected Groups and Relevant Description Approximately (i) 1,000 Dalit families in one Terai district and one hill district; and (ii) 1,000 indigenous families in seven districts. Source: Asian Development Bank Other Key Stakeholders and Brief Description Other poor people within the same cluster as the primary target population will also receive project benefits. 7. Coordination 17. The concept paper was shared with Asami Nakabai, third secretary at the Embassy of Japan and Madhusudan Rajbhandari, program manager in the Economic Cooperation Department of the Embassy of Japan. Extensive consultations were also held with officials from the Japan International Cooperation Agency (JICA) at various stages of project development. Following the approval of the concept by ADB, and upon further consultations with relevant stakeholders and further development of the proposal, the Embassy of Japan was again briefed on 11 September 2009 and 22 April JICA referred to their ongoing Gender Mainstreaming and Social Inclusion Project, which seeks to build the capacity of local bodies, women development officers, and coordination committees at the district level to more effectively mainstream gender and social inclusion issues in programming at the local level. It was agreed that the project team leader would coordinate with the JICA project officials in matters relating to capacity building of the GESI unit at MLD, local bodies, IPOs, and CSOs. The Embassy of Japan and JICA are supportive of the initiative.