JAPAN SOCIAL DEVELOPMENT FUND Emergency Window Grant Proposal

JAPAN SOCIAL DEVELOPMENT FUND Emergency Window Grant Proposal FY10 ROUND 1 A. Basic Information A.1 Beneficiary Country Nicaragua A.2 Grant Recipient. NicaSalud A.3 Grant Implementing Agency NicaSalud (NGO Federation) A.4 JSDF Grant Type Project A.5 Is the Implementing Agency a Government No entity? A.6 Grant Name ROUND 1: NICARAGUA-FOOD EMERGENCY SUPPORT PROGRAM FOR SCHOOL CHILDREN A.7 Grant Amount in USD (includes incremental 3,000,000 Bank costs) B. Grant Development Objectives and Expected Key Performance Indicators B.1. Grant Development Objectives The proposed-grant Development Objective is to maintain nourishment intake of pre- and primary school children in 67 most vulnerable municipalities in Nicaragua, which have been negatively impacted by diminishing resources for school feeding due to the combined effects of the economic and food prices crisis. Preventing hunger among school-aged children and ensuring their continued assistance in school is a key priority. The proposed-grant would, thus, ensure that children enrolled in targeted pre- and primary schools will continue to benefit from school lunches during the current 2010 school year, when other sources of funding for the Nicaragua National School Feeding Program (Programa Integral de Nutrición Escolar - PINE) (Government and donors) would be depleted. More specifically, the proposed-grant would seek to maintain in public and community pre- and primary schools of 67 targeted municipalities: (i) the intake of nutritive and fortified food amongst school children enrolled in pre-primary and primary education in poor and vulnerable areas of Nicaragua particularly at risk in terms of food security; (ii) school attendance, and therefore decrease dropouts in targeted pre-primary and primary schools, and (iii) active community participation and the adoption of good feeding and sanitary practices. B.2 Expected Key Performance Indicators (maximum of five) Maintaining the number of children receiving school lunches in pre-primrary and primary schools in the 67 targeted municipalities between September and end of November 2010 Target Value: 346302 (number of beneficiaries is maintained) Maintain attendance rate in pre-primary and primary schools in the targeted 67 municipalities is maintained at the pre-existing level Target Value: Attendance rate is maintained at the pre-existing level (79%) Beneficiary communities are knowledgeable about good nutrition practices and put them in practice in the preparation of school lunches Target Value: At least 75% of the communities visited in the sample demonstrate that they are knowledgeable about good nutrition practice and they are effectively put in practice. C. Eligible Expenditures List all applicable eligible expenditures below in one or more categories as necessary. Eligible expenditures include consultant services (including audits), local training and workshops, small civil works, goods, sub-grants and incremental Bank costs. Category Amount (US. Dollars) Percentage of Expenditures to be Financed GOODS 2,640,567 89% 88% CONSULTING 329,820 11% 11% Total Grant to Recipient 2,970,387 Incremental Bank Cost 29,613 1% Percentage of Grant Amount 1

Total Grant Amount 3,000,000 2

Grant Supplementary Information Section 1 - Administrative Information Task Team Leader Mr Michael Drabble TTL Email mdrabble@worldbank.org TTL Phone Number 458-1134 Section 2 - Details of the JSDF Grant Section 2.1 - Grant Components and Activities Component 1 Component 1: Provision of school lunches in 67 most vulnerable municipalities Cost (USD) 2,640,567 The proposed-grant would finance the purchase of basic food ration at the average cost of US$0.17 per capita and per day. The rations would include rice, corn, mixed cereals, beans and vegetable oil. The rations are sometimes adapted by the schools to include local products or fruits and vegetables provided by parents or communities. The school lunch provides between 30 and 45 percent of the daily recommended intake for children of pre- and primary school age. These inputs would be purchased and delivered to distribution points that MINED uses under the existing PINE in order to be delivered in a second stage directly to schools. The cost of the transportation of food from distribution points to schools and the preparation of meals would be borne by the community, teachers and parents. Monitorable Deliverables/Outputs Approximately 346,302 pre- and primary school aged children in those 67 municipalities (9 departments) benefit from school lunch for a period of about 44 days after May 2010 Component 2 Component 2: Management, administration and M&E of the grant Cost (USD) 329,820 The proposed-grant would finance the management/administration costs that the grant implementing agency would incur (5% of the total proceeds of the proposed-grant). In addition, the second component would finance specific M&E activities carried out by the grant implementing agency. These activities will include at least three visits in each municipality, covering a sample of no less than 10 schools for each visit. Visits will be carried out: i) before the food is distributed to ensure that the school feeding program in the beneficiary-schools is operational; 2) during the two-month period when the school lunches are distributed to pre- and primary school children; and finally, 3) when the school feeding is completed. The grant implementing agency will sometimes carry out the site visits with the staff of PINE, which is also responsible for supervising and monitoring all school feeding activities nationwide. The grant implementing agency would recruit, train and supervise local consultants to conduct the planned field visits. During these field visits, the grant implementing agency will collect data and specific records on the beneficiary communities and schools, the functioning of the school feeding program and the number of beneficiaries before the launch, during and after the completion of grant activities in addition to the data currently collected through the PINE information system. Indicators to be measured would include: food assistance, enrollment, attendance, food control, management and community participation and community's knowledge of good nutrition practices. Under this second component, the grant implementing agency would collect baseline and target values to measure the grant's outcome indicators. After completing each school visit, the grant implementing agency will prepare a brief report containing the main recommendations to improve the school feeding program in the community, as well as an assessment score and rating, which is : excellent, vey good, fair and poor. The M&E activities would serve to: (i) evaluate the grant implementation in terms of the service quality; (ii) evaluate parents'organization and participation; and (iii) analyze the program cost-effectiveness. After the completion of grant activities, the grant implementing agency will prepare a final evaluation report based on field visits to be carried out before, during and after the program and present findings of the final evaluation in workshops where the stakeholders, donors, and the civil society will be invited. This component also includes provision for the audit of the grant. Monitorable Deliverables/Outputs A total of 201 technical field visits carried out in the 67 municipalities and data collected to superivse and monitor the implementation of the grant. Summary Description for Grant Agreement The proposed-grant has two components. The first component would serve to fill a financing gap in the provision of school lunches for pre- and primary school children in 67 most vulnerable municipalities in Nicaragua. Approximately 346,302 pre-primary and primary school aged children in those 67 municipalities (9 departments) classified as having high or very high food vulnerability and/or presenting severe or high poverty levels (defined in terms of unsatisfied basic needs) would benefit from it for a period of about 44 days. These schools already benefit from school feeding, but it is expected that Government and donors resources would not be sufficient to cover the current school year. The Grant resources would, therefore, be used to ensure that school feeding activities in these highly vulnerable 67 municipalities would not be 3

interrupted. It is expected that the grant resources would cover the needs for the last two and half months of schooling (or between September and end of November 2010). Specifically, the proposed-grant would finance the purchase of basic food rations at the average cost of US$0.17 per capita and per day (including transport and insurance costs). The ration would include rice, corn, mixed cereals, beans and vegetable oil. The rations are sometimes adapted by the schools to include local products or fruits and vegetables provided by parents or the community. The school lunch provides between 30 and 45 percent of the daily recommended intake for children of pre-primary and primary school age. These inputs would be purchased and delivered to distribution points being used under PINE implemented by the Ministry of Education of Nicaragua (MINED). In a second stage, the cost of transportation of the basic food rations to the beneficiary-schools from the distribution points as well as the preparation of school meals would be borne by the community, teachers and parents. The innovative aspect of the proposed-grant is the extensive use of the beneficiary-communities to manage the school feeding program. The communities are responsible for transporting the food to the schools and for ensuring that meals are adequately prepared during school days. PINE and the implementing agency will essentially supervise and monitor the compliance by the communities of the norms and standards for school feeding. The second component would finance the management/administration costs and the Monitoring and Evaluation (M&E) activities carried out by the grant implementing agency. For the latter, the grant implementing agency would ensure that beneficiary schools receive the food rations and that school meals are being prepared according to the prescriptions of the PINE. The grant implementing agency would also keep records of number of children enrolled in the beneficiary schools. Under this second component, the grant implementing agency would collect baseline and target values to measure the grants outcome indicators. For this, the grant-implementing agency would deploy supervision teams in the nine geographical departments covering the 67 targeted municipalities. MINED through PINE would also supervise and monitor the implementation of activities financed through this proposed-grant. Section 2.2 Incremental Bank Costs The costs of normal supervision are expected to be covered through the administrative budget and fee provision. Under exceptional circumstances, if additional resources are needed to facilitate community participation or NGO collaboration under particularly difficult conditions, incremental Bank costs can be requested up to 9 percent of the total grant amount. Amount requested in USD 29,613 Additional resources may be required to hire a senior nutrition spelicalist to ensure the supervision of the proposed grant activity for the Bank. In addition, they may also be required for the Bank supervision, because the ongoing WB Emergency Food Price Response Project will close in June 2010 and no more supervision budget will be available beyond that closing date. Section 3 - Coordination Section 3.1 Donor Coordination: Briefly describe consultations with the Embassy of Japan and JICA (date, location and substance of consultations, and persons contacted). On January 7, 2010, the World Bank office in Nicaragua met with the representative of JICA, Takeo Ishikawa as well as with two of their program officials: Humberto Picado and Omar Bonilla. JICA indicated their full support for the grant-proposal. They made the following suggestions: 1. That the implementing agency closely coordinates with WFP so that there is no duplication with a previous Japanese donation to WFP. 2. That if possible, the implementing agency coordinates with MINED to also give some food support to the normal schools which prepare primary school teachers in the municipalities where we work (if there is a normal school). MINED may have to close these schools to new students since it does not have the budget to maintain the food budget. I told them we would do this if we could. 3. They would like a list of municipalities in which the program will be implemented and asked us to make sure the primary schools they have financed are included if they are in prioritized municipalities. Regarding the suggestion 1, since WFP's in-kind support will discontinue in April 2010, there will be no duplication. As for the suggestion 2, the Bank team, together with MINED, will look into the possibility to provide food support for normal schools. In relation to the suggestion 3, the Bank team will share the list of beneficiary municipalities with JICA. The list is attached to this GFR. On February 9th, 2010 at the Embassy of Japan, the Country Manager of the World Bank Office in Nicaragua, Mr. Joseph Owen, and Mrs. Miriam Montenegro, Operation Officer, met with the Ambassador of Japan in Nicaragua, Mr.Shinichi Saito, and the Second Secretary Mr. Masamori Kobayashi for the consultation process of the grant-proposal. The World Bank explained the objective, the rationale and the implementation arrangements of the grant proposal. The team also shared the comments received from the consultation with JICA in January 2010. The Ambassador indicated his 4

full support for the grant proposal and expressed his agreement that school feeding is one of the key programs that aims to lessen the negative impact of the economic crisis in school children given the budget constraints the country is facing. Additionally, he indicated that they would be open in the future to give their assessment on the grant proposal if contacted by the Ministry in Tokyo. He indicated that Mr. Yuichiro Shindo, the Second Secretary, would be in charge of following up the implementation of the grant and that the World Bank office should inform them on progress in the project. Likewise, he requested to keep the Embassy informed on the achievements of important milestones of the project such as the timely delivery of the food to the schools. The World Bank team agreed with the request and handed in the draft proposal, a detailed list of costs, and beneficiaries (municipalities). Section 3.2 Stakeholder Consultations: Briefly describe the consultations with stakeholders (e.g. NGOs, targeted beneficiaries) which led to the request for emergency funds. The proposed-grant will expand the outreach of PINE, which is supported by many donors in Nicaragua. WFP and more recently World Bank through the Global Food Crisis Response Program are providing funding and/or in-kind support for PINE. The request to provide additional resources for PINE was relayed by the Government, WFP and many international and national NGOs currently supporting activities to reduce chronic malnutrition amongst children in the poorest municipalities of Nicaragua. NGOs such as Save the Children and Care were consulted. The World Bank carried out technical discussions with the administration team of PINE to review the list of targeted municipalities. In addition, Bank staff have visited some targeted municipalities and beneficiary communities. These visits served to assess the current functioning of PINE, the involvement of the communities, and needs to be covered in terms of food provision to maintain the school feeding program. The grant support an innovative mechanism to enforce accountability in the distribution of food and delivery of school feeding. First, each beneficiary community is responsible to pick up the food directly at the distribution point. The community will mobilize the resources required. Second, each community and schools must ensure that the food is properly stored at the school and that meals are prepared during school days. Third, the community will complement the food intake by providing vegetables and some meat products as needed. The school with the support from the community must keep a registry of the children benefiting from school feeding and report on the consumption of the food. This co-responsibility shared between the communities and the PINE that manage the program at the national level is a guarantee that the program is properly executed and a cost-effective way. Section 4 - Linkages Section 4.1 Linkage to Vulnerability Financing Facility: Describe the linkage of the grant objectives and activities to GFRP and RSR program objectives and eligibility criteria, and to those of the JSDF Emergency Window. Nicaragua has been severely hit by the increase in food prices since 2008. Food inflation is amongst the highest in the region, reaching an annual inflation rate of 28.8 percent in October 2008 after reaching of 34.2 percent in August. Since then, inflation has leveled off somehow; however the poor municipalities with lack of communication (poor roads) continue to experience high food prices comparable to the 2008 level. Food prices are expected to increase in early 2010. The vast majority of households in Nicaragua are net food consumers even in rural areas. This combined with the large share of expenditures devoted to food in poor households' expenditures suggests that the impact of the crisis on poverty will be dire. For instance, estimates from 2008 place the decrease in real consumption for poor urban households at around 16 percent. Furthermore, this negative impact is exacerbated by the global economic downturn, which started in late 2008. The rate of economic growth was negative in 2009 and will remain depressed for the following four years, probably pushing a higher share of the population into poverty. Government fiscal resources have since then been reduced, limiting the capacity to finance much need social programs, like the national school feeding program. Past experiences in Nicaragua suggest external shocks can have a significant impact on nutrition and enrollments in schools, as well as on productive capacity. This happens when households engage in depletive coping strategies, such as, the sale of their productive assets (land, cattle, machinery, transportation means, etc.), the withdrawal of children from school (either because of lack of cash for transportation, books and uniforms or to increase the labor supply of the household, with children helping in more production or working outside home), the deferred utilization of preventive and curative health services, or drastically reducing food intake. This type of risk management mechanism can push households deeper into chronic poverty through long-term loses in productivity and an increased likelihood of intergenerational transmission of poverty. The proposed-grant would not eliminate all these risks, but it would at least protect the most vulnerable among the school children who would continue to receive school lunches and get their education. Section 4.2 Linkage to Bank Strategy: Give any additional background information (country, sector) which may support funding this 5

proposal, in particular, if the grant is for a standalone project. The proposed grant is fully aligned with the National Human Development Plan 2009-2011 and the Country Partnership Strategy (CPS) 2008-2012 for Nicaragua. The school feeding program is one of the food security programs under the national food strategy laid out in the Human Development Plan which are designed to tackle the problem of malnutrition among small farmer families and the urban poor. Also, it is on the Government's pro-poor investment agenda under the Pillar Two of the CPS. The agenda places emphasis on the delivery of basic social services and infrastructure, particularly in rural areas. Section 4.3 Linkage to IBRD/IDA, or GFRP/RSR Operation: Describe the Project Development Objectives and Components of the associated operation. If it is a new standalone project, insert - N/A. The proposed grant will be an expansion of the ongoing WB Emergency Food Price Response Project (P114441 in the amount of US$7 million, effective in January 2009) whose closing date is expected to be 30 June, 2010. The first component of this project is financing the Integral School Nutrition Program (PINE). Its objectives are: (i) increase school fortified food amongst children of pre-primary and primary school age; (ii) increase school attendance, and decrease dropouts in pre-primary and primary schools; and (iii) strengthen community participation and the adoption of good feeding and sanitary practices in public and commnity pre-primary and primary schools. Section 4.4 Rationale for Grant Funding: Briefly describe why the proposed JSDF activities could not be financed under a Bank-financed operation or by other sources. The Grant Funding would cover the financing gap for the PINE after the closing of WFP's in-kind support in April and the IDA financed on-going Emergency Food Price Response Project in June, 2010. The financing for the PINE in 2010 will consist the Treasury resources (35%), IDA (18%), and other external resources of which 34% is still in the process of negotiation with PAPSEN. EU will provide general budget support but it is still uncertain that the resources will be allocated to the PINE. Therefore, the Grant Funding would be important to narrow the gap. Section 5 - Implementation of Proposed Grant Section 5.1 Grant Implementation Arrangements: If the implementing agency is not a government entity, provide rationale for its selection. NicaSalud is selected because of its more than 10 years experience in emergency, health and nutrition operations, wide network in the social sector in Nicaragua, and well established technical, organizational and financial management practices. NicaSalud's creation dated back to 1998 in response to the Hurricane Mitch hit in Central America when health conditions in devastated communities were seriously affected. These first operations benefited more than 730 communities in 34 municipalities (of 9 affected departments). Its current interventions include the implementation of community health and nutrition program of the Ministry of Health which involves various actors at the central, municipal, and health facilities levels as well as health education programs at primary schools through a nationwide network of 24 national and international NGOs. Thus, NicaSalud possesses proven capacities to carry out a large scale purchase and distribution of food staples while ensuring the health and nutritional aspects of the proposed grant activity. In addition, NicaSalud has experience in research on health and nutrition in NIcaragua. For instance, it participated in the Central America Regional Study of Community Nutrition Indicators for Early Alert System. It is expected, therefore, that qualified and trained personnel available at NicaSalud could recruit, train and supervise local consultants to ensure close and effective monitoring and evaluation of the proposed grant activities. The government's letter of authorization for NicaSaludo to act as the Grant implementing agency is being requested. Section 5.2 Grant Implementing Agency: Describe its mission, country/sector experience, work program, financing sources, evidence of financial probity and arrangements to assure appropriate use of JSDF. NicaSalud is a federation of national and international NGOs which has a nationwide network in the social sector in Nicaragua. Currently 24 NGOs join NicaSalud. It is officially registered as an NGO. Its mission is to contribute to the improved health of the vulnerable groups through a network dedicated to implementing high quality health related actions. More specifically, its actions cover the following seven areas: (i) maternal and infant health and nutrition; (ii) sexual and reproductive health; (iii) environmental health; (iv) epidemic and disaster prevention and mitigation; (v) school health; (vi) food and nutrition security; (vii) emergency disease prevention and control. The funding sources include the US government, USAID, Bill and Melinda Gates Foundation, among others. NicaSalud is managed by the General Assembly represented by member NGOs and the Executive Office (operations). The Executive Office has the operational autonomy in terms of financial, technical, and administrative matters and is divided into two units: administrative and financial unit and technical unit. Its personnel has diverse expertise such as medical sciences, public health, social sciences, finance and adminstration and ample experience in management, development, monitoring and evaluation of social and health projects at the national and international levels. 6

In recent years, with the funding from USAID, NicaSalud modernized its integrated management information systems consisted of the following subsystems: finance, procurement, human resources, monitoring and evaluation, general services, and resource management and allocation. Those subsystems are accompanied by nine operational manuals, notably, organizational manual, budget manual, accounting manual, general service manual, contract and procurement manual, human resource management manual, resource management and allocation manual, financial and program monitoring and evaluation guidebook, and audit manual. NicaSalud is subject to external audits on a regular basis. Section 6 - Financing Plan The grant-proposal will be 100% financed by the JSDF. However, in addition to JSDF, Government and communities will contribute both financing and in-kind resources for the transportation of the food rations to the schools from the distribution points as well the mobilization of beneficiary-communities and preparation of school lunches. The estimated costs to be borne by beneficiary communities for the transportation of food rations from distribution points to schools and the preparation of school lunches including additional local food contributions are US$0.16 per capita and per day. Beneficiary communities will also contribute investment costs in the amount of US$0.05 per capita and per day. Section 7 - Cost Table See attached Cost Table Section 8 - Disbursment Schedule From Date To Date Projected Amt Amt in USD 07/01/2010 07/01/2010 2500000.00 2500000.00 01/01/2011 01/01/2011 470387.00 470387.00 07/01/2011 07/01/2011 0.00 0.00 12/31/2011 12/31/2011 0.00 0.00 Section 9 - Clearances Team Member Ms Bermet Sydygalieva CHANGED Team Leader Mr Michael Drabble SUBMITTED Sector Manager Ms Chingboon Lee CLEARED Country Director Ms Laura Frigenti CLEARED FM Specialist Mr Enrique Antonio Roman CLEARED Procurement Specialist Ms Anemarie Guth Proite CLEARED Team Leader Mr Michael Drabble SUBMITTED TF Coordinator Ms Nicolette L. CLEARED Bowyer-Walker Team Leader Mr Michael Drabble SUBMITTED Manager Ms Chingboon Lee CLEARED Window Manager Ms Yolaine E. Joseph APPROVED Program Manager Mr Roberto Tarallo TACT 7