Grant Assistance JFICT: OTH 39080

Grant Assistance JFICT: OTH 39080 Grant Assistance for Empowering the Rural Areas through Community e-centers under the South Asia Subregional Economic Cooperation Program (Financed by the Japan Fund for Information and Communication Technology) July 2005

ABBREVIATIONS ADB Asian Development Bank BRAC Bangladesh Rural Advancement Committee CeC community e-center CSPU country strategy and program update G8 Group of Eight ICT information and communication technology IRDC International Research Development Council JBIC Japan Bank for International Cooperation JICA Japan International Cooperation Agency NGO nongovernment organization RCSP regional cooperation strategy and program RETA regional technical assistance SASEC South Asia Subregional Economic Cooperation SME small and medium-sized enterprise TA technical assistance UNDP United Nations Development Programme UNESCAP United Nations Economic and Social Commission for Asia and the Pacific VSAT very small aperture terminal WB World Bank WG working group WSIS World Summit on the Information Society

CURRENCY EQUIVALENTS (as of 21 June 2005) Bangladesh Currency Unit taka (Tk) Tk1.00 = $0.0157 $1.00 = Tk63.55 Bhutan Currency Unit ngultrum (Nu) Nu1.00 = $0.0230 $1.00 = Nu43.50 India Currency Unit Indian rupee/s (Re/Rs) Re1.00 = $0.0230 $1.00 = Rs43.52 Nepal Currency Unit Nepalese rupee/s (NRe/NRs) NRe1.00 = $0.0144 $1.00 = NRs69.25 NOTES (i) (ii) (iii) (iv) (v) The fiscal year of the Government of Bangladesh ends on 30 June. The fiscal year of the Government of Bhutan ends on 30 June. The fiscal year of the Government of India ends on 31 March. The fiscal year of the Government of Nepal ends on 15 July. In this report, $ refers to US dollars.

JAPAN FUND FOR INFORMATION AND COMMUNICATION TECHNOLOGY (JFICT) I. Basic Data Name of Proposed Activity Countries JFICT Grant Proposal Grant Amount Requested $1,000,000 Empowering the Rural Areas through Community e-centers under the South Asia Subregional Economic Cooperation (SASEC) Program Bangladesh, Bhutan, India, and Nepal Regional Grant Yes / No Grant Type Project / Capacity building II. Grant Development Objective(s) and Expected Key Performance Indicators Grant Development Objectives (GDO): The overall objectives of the proposed Project are to reduce poverty, empower communities, and improve the quality of life in rural areas in Bangladesh, Bhutan, India, and Nepal through increased information and communication technology (ICT) connectivity and accessibility. The Project, which will be implemented as part of the South Asia Subregional Economic Cooperation (SASEC) program, aims to create an enabling environment for community e- centers (CeCs). CeCs provide shared facilities for the public to use basic telecommunications services access the internet and use ICT applications for socioeconomic activities. The following activities are planned. (a) Develop a sustainable CeC model according to the type of communities covered by the Project and their needs. Needs-based ICT applications and community-specific local content will be developed to create employment and business opportunities. (b) Establish at least 20 pilot CeCs in rural areas based on the CeC model. The benefits of ICT and the impact of CeCs on the socioeconomic development of the communities will be demonstrated and analyzed using these pilot CeCs. (c) Build capacity and share the knowledge acquired by rural communities and local and national governments in using, applying, and managing ICT. This will be done through training programs and regional workshops. Best practices and experiences of the CeCs will be disseminated through a website. Expected Key Performance Indicators (maximum 5 indicators): (i) Establish at least 20 pilot CeCs (5 in each SASEC countries) whose financial sustainability is ensured after 3 years of operation. (ii) Increase community productivity and profitability by at least 10% by applying various ICT applications to socioeconomic activities. (iii) Improve the capacity of the local government and communities to manage and use ICT by ensuring at least 50% of the ICT-illiterate population is able to use ICT. (iv) Develop at least two ICT applications for farming and government public service, and at least three types of local content for community information, employment information, and social service information, based on the information needs and characteristics of communities. (v) Launch a website to share experiences and lessons learned. III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures Category Amount of Grant Percentage of Allocated in $ Expenditures 1. Consultants 196,000 20% 2. Equipment (hardware and software) 454,000 45% 3. Regional Meetings/Workshops/Training 174,000 17% 4. Travel 80,000 8% 5. Audit 10,000 1% 6. Contingency 21,000 2% 7. Administrative Costs 65,000 7% TOTAL 1,000,000 100% Incremental Cost 1 50,000 5% of total 1 To be financed by the JFICT administrative budget.

2 JAPAN FUND FOR INFORMATION AND COMMUNICATION TECHNOLOGY JFICT Grant Proposal Background Information A. Other Data Date of Submission of Application 2 June 2005 Project Officer (Name, Position) Hyunjung Lee, Economist Project Officer s Division, E-mail, Operations Coordination Division (SAOC); hjlee@adb.org; 632- Phone 6188 Other Staff Who Will Need Access Masaaki Nagata, SAOC to Edit/Review the Report (Enter Dong-Soo Pyo, SATC the names of all staff, e.g., team members, who will need access to this application.) Sectors Transport and communication, Agriculture and natural resources, and Education Theme Sustainable economic growth Name of Associated ADB South Asia Subregional Economic Cooperation Program Financed Operation(s) Executing Agency United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) Ministry of Science and Information Communication Technology, Bangladesh Mr. Md. Lutfar Rahman Talukder Secretary Tel: (880) 2 7166144 Fax: (880) 2 7169606 E-mail: most@bangla.net Grant Implementing Agency(ies) (Names, Exact Address, Contact Persons, e-mail, Phone, Fax) Ministry of Information and Communication, Bhutan Mr. Dasho Tashi Phuntshog Secretary Tel: (975) 2 329223 Fax: (975) 2 329208 E-mail: tp@druknet.bt Department of Information and Technology, India Mr. Shri K.K. Jaswal Secretary Tel: (91 11) 2 436 4041 Fax: (91 11) 2 436 3134 E-mail: secretary@mit.gov.in Ministry of Information and Communication Technology, Nepal Mr. M.S. Poudyal Secretary Tel: (977 1) 422 0150 Fax: (977 1) 422 1729 E-mail: moichmg@ntc.net.np

B. Details of the Proposed Grant 3 1. Description of the Components, Monitorable Deliverables/Outcomes, and Implementation Timetable Component A Component Name Cost ($) Component Description Designing Sustainable CeC Model $163,000 (including audit, contingency, and administrative cost) This component includes: (i) selecting the pilot communities at national stakeholder meetings, (ii) determining the locations and operators of CeCs at community stakeholder meetings, and (iii) defining the scope of the activities and services of CeCs by identifying information needs and analyzing the socioeconomic activities being carried out in the rural communities. Economic activities in the communities can be divided into farming and nonfarming. Nonfarming activities include services, trade, and household manufacturing not included in farming activities. These activities depend to a large extent on local and regional demand and tend to grow rapidly if the agriculture sector is experiencing growth. Social activities include community meetings, and community events or festivals. The CeC's stakeholders include national and local governments, the private sector, nongovernment organizations (NGOs), and other international and regional organizations at national or community levels. To enhance the long-term sustainability of the CeCs, the pilot communities will be selected according to national plans. Priority will be given to communities with high ratios of youth and literacy, sufficient population size, active farming and nonfarming economic activities, closeness to the market, strong commitment to and interest in ICT among the residents, and a secured area for the CeC. More detailed criteria governing selection of the pilot communities will be developed at national stakeholder meetings. The location of the CeCs within the pilot communities will also be discussed at community stakeholder meetings. Potential sites will include government-owned facilities such as local community organizations, schools, public libraries, and health clinics. Sites will be selected depending on whether they can create synergy. For example, if CeCs are located within schools, students can use the CeC for ICT training and e-education and help members of the community, especially seniors, to learn how to use ICT. Potential candidates for the CeC operator will be identified from among local government, local entrepreneurs, and NGOs at the community stakeholder meetings. The operator should be able to participate in project implementation at the earliest stage. Stakeholder meetings will also cover operating models, sustainability, public private partnership, and community ownership. Defining the scope of CeCs services requires: (i) an assessment of rural communities needs; (ii) identification of available national information resources and applications; (iii) modification of global

4 content to meet local needs, coupled with the development of local content based on community needs; and (iv) determination of appropriate ICT applications (such as e-government, e-education, e- health, e-agriculture, and e-business) according to local economic activities. For example, in a farming area, the appropriate ICT application could be an information system offering market access to agricultural products. In a nonfarming area, e-commerce or e- business may be more appropriate, especially for small and mediumsized enterprises (SMEs). Public and social service applications can be developed in the areas of e-government, e-education and e- health depending on the availability of national resources and the needs of the communities. These ICT applications will be pooled and shared across the four SASEC countries. Monitorable Deliverables/Outputs Implementation of Major Activities: Number of months for grant activities Component B Component Name Cost ($) Component Description Pilot communities selected in collaboration with national and local governments. Report produced on developing CeC models specific to each pilot community, including the result of community needs analysis, recommendations on operating structures, and suggestions of appropriate types of ICT applications and contents. Report produced on national CeC initiatives with existing information resources and services for each country. ICT applications and local contents developed for each pilot community. Organize stakeholder meetings at national and community levels to discuss detailed project design, select pilot communities, and make an implementation plan (months 1-3). Organize community needs assessment meetings at the community level (months 4-6). Conduct research on existing national initiatives and ICT national resources and services (months 7-8). Develop local content and applications (months 9-12). Establishing CeCs (pilot) $541,000 (including audit, contingency, and administrative cost) The benefits of ICT and the impact of CeCs on the socioeconomic development of the communities will be demonstrated and analyzed through pilot CeCs established in rural areas of the SASEC countries. The hardware and software to be deployed in each CeC will depend on the services it provides. However all CeCs must adhere to minimum standards for hardware and software (which must be adaptable and extendable). The basic infrastructure required for a CeC includes a building, furniture, computers, printers, fax, television, scanner, and digital camera. The proposed Project does not include civil works for new buildings. Only existing governmentowned facilities and land will be used for the pilot CeCs. The lack of an existing telecommunications infrastructure poses a great challenge to establishing internet connectivity in sparsely populated rural communities. New low-cost technologies will therefore be fundamental to the CeCs sustainability, especially in

5 rural areas. Broadband satellite communication and very small aperture terminals (VSAT) are common ways of establishing connectivity in remote rural areas. Wireless local loop is a potentially compelling option for narrowband connectivity. Power line communication can provide broadband internet by using electrical wiring to send high-speed digital signals to homes and businesses. These technical options will be reviewed and the most innovative and cost-effective selected. Partnerships with the private sector will be explored, particularly with regard to the provision of free software, hardware and ICT training, and for specially negotiated internet connection rates with service providers. The use of open source software will be considered. Monitorable Deliverables/Outputs At least 20 CeCs (5 in each SASEC country) will be equipped with hardware and software to meet the needs of the local communities. Implementation of Major Activities: Number of months for grant activities Study hardware/software options (months 13-14). Install hardware/software (months 15-16) Component C Component Name Cost ($) Component Description Building Capacity and Sharing Knowledge $296,000 (including audit, contingency, and administrative cost) This component aims to (i) enhance the capacity of national and local governments in designing and operating CeCs, (ii) improve communities' knowledge and skills in using and applying ICT, (iii) share best practices on CeCs within and beyond the SASEC countries, and (iv) disseminate the outcomes of the Project within ADB and to the other development partners. Activities include (i) conducting training programs for rural communities, (ii) carrying out evaluation studies, (iii) establishing a website, and (iv) organizing regional workshops. To maximize the benefits of the CeCs, members of the community need to be trained in basic ICT skills; (including conducting internet searches), and business marketing skills. Training is also needed in managing CeCs and maintaining equipment for CeC s operators. As this is a pilot project, an evaluation study will be designed from the beginning of project implementation. An evaluation framework will be circulated to members of the community so they are aware of the expected benefits. Randomized evaluation methods will be used, including surveys and econometric analysis. Evaluations will be conducted at the beginning, midterm (after 6 months of operation), and at the end of the project. A website will be developed to share experiences, challenges, ICT applications, and website content. While it is under construction, access will be limited to SASEC member countries but it will eventually be a public website. To ensure the website is maintained after the project, it may be combined with the existing development gateways specifically addressing the issues about ICT for development. The details will be discussed during project implementation. The different languages and cultures in the

6 subregion will need to be reflected. Best practices on establishing and managing CeCs will be shared at two regional workshops, one at the beginning and one at the end of project implementation. At the first workshop, existing best practices from India and from other regions and research on CeC models will be presented. An overall project implementation plan, including information on the selected pilot sites for the CeCs, monitoring, evaluation, and dissemination, will also be presented. At the second workshop, the experiences and an evaluation of the pilot CeCs will be presented. Monitorable Deliverables/Outputs Implementation of Major Activities: Number of months for grant activities Materials produced for the workshops will be translated into local languages. Visual media will be used to record the most successful CeC. The UNESCAP network will be used to disseminate project outcomes. Two regional workshops organized for capacity building and knowledge sharing. At least 10 training sessions for each community. Website developed. Evaluation report on best practices, experiences, lessons learned of CeCs. Organize a regional workshop (month 3). Develop training modules (months 13-16). Monitor the CeCs' operations (months 17-30). Organize community training courses (months 17-19). Develop the business plan for each CeC (months 20-22). Develop a website (months 23-25). Evaluate pilot CeCs and identify best practices to be shared at the workshop (months 17-29). Organize a regional workshop (month 30). 2. Financing Plan for Proposed Grant to be Supported by JFICT Financier Amount ($) JFICT 1,000,000 Government - UNESCAP 200,000 Total 1,200,000

3. Genesis 7 1. Most people living in rural areas have much lower levels of income, health, education, and general well-being than their urban counterparts. This is in part because of a lack of connectivity and accessibility to services and markets, which is in turn usually the result of poor transport and communication networks and deficient financial institutions. The ultimate objective of rural development is an improvement in the quality of life by removing the impediments to the rural economy and providing a basic infrastructure. ICT can be one of the most effective and innovative parts of that infrastructure. 2. The critical role of ICT in socioeconomic development was emphasized at the Group of Eight (G8) summit in mid-2000, 2 at which the G8 leaders committed, in the Okinawa Charter, to the principle of inclusion: everyone, everywhere should be enabled to participate in and no one should be excluded from the benefits of the global information society. This was further stressed at the World Summit on the Information Society (WSIS) held in Geneva in December 2003. The action plan of the WSIS stated that all villages should be connected through the internet by 2015. 3. Recognizing the importance of ICT for development and the potential benefits of regional cooperation in ICT, an ICT working group was established in 2002 by Bangladesh, Bhutan, India, and Nepal, the members of the South Asia Subregional Economic Cooperation (SASEC) program. The program has been supported by ADB since 2001. The first meeting of the SASEC ICT working group (WG) was held in Delhi on 15-16 March 2004 and was attended by senior officials from the ICT ministries of the SASEC countries. At the meeting, the SASEC countries identified the following five major areas for ICT regional cooperation: (i) enhancement of regional connectivity via high-bandwidth connections among SASEC countries; (ii) establishment of community e-centers (CeCs); (iii) promotion of information sharing and human resources development in the ICT sector; (iv) strengthening and harmonization of regulations in the ICT sector; and (v) development of common software tools to enhance digital content available over the internet, regardless of language. 4. To follow up the meeting and upon the request of the SASEC ICTWG, ADB approved technical assistance (TA) for the SASEC ICT Development Master Plan 3 in February 2005 to formulate ICT sector development strategy to promote broadband interconnectivity, shared ICT applications, harmonized ICT regulatory framework, and human resource development for ICT, among SASEC countries. The current Project also builds on the meeting by focusing on one of the identified areas, establishment of CeCs. 5. In SASEC countries, more than two thirds of the population lives in rural areas and most people work in agriculture. Rural development through ICT would have an enormous impact. For example, if prices of farm products and marketing information were available through ICT, rural populations would be better able to negotiate with middlemen and customers. Information on improved farming techniques would help to integrate rural communities into the mainstream economy and enable them to deliver better quality products and services. 6. Given the limited resources available and the small number of people in rural areas who can afford individual home connections, the most cost-effective way of providing public access 2 The leaders of seven major industrialized countries Canada, France, Germany, Italy, Japan, United Kingdom, and United States plus the President of the Russian Federation and the President of the European Commission attended the meeting. 3 ADB. 2005. South Asia Subregional Economic Cooperation (SASEC) Information and Communications Technology (ICT) Development Master Plan. Manila (TA6232).

8 to ICT-based services and applications is at a shared facility. The private sector is increasingly providing such connectivity to low-income urban communities, through so-called cyber cafés. These proliferate in crowded neighbourhoods of cities, providing ICT connectivity at affordable prices. In rural areas, however, there is no private sector interest or incentive to build such facilities because of low population densities and high infrastructure costs. Therefore, governments, development agencies, and/or NGOs need to intervene to address this need. 7. In order to ensure a universal telecommunications service, the public sector has supported community telecenters in rural areas. Such centers typically have one or more personal computers, and some access to the international telecommunications network. If such facilities are to be developed into more comprehensive CeCs, there is a need to change the mindsets of policy makers and CeC operators; from the provision of universal telecommunications services to the application of ICT to multifaceted socioeconomic development, which will be supported by the Project. 8. There is no universal model for CeCs. However, experience shows that demand-driven models are far more effective than supply-driven models. A participatory approach to developing CeC models is essential to ensure the most appropriate model is selected for each community. This includes assessing the needs of community, identifying the ideal location of the CeC, and discussing its functions and appropriate ICT services. 9. The Project covers the SASEC countries. It is in line with the ADB-assisted SASEC Program and the ADB South Asia Regional Cooperation Strategy and Program (RCSP). The regional approach will enable experience (especially from India) on establishing, managing, and operating CeCs to be shared. In due course SASEC countries will be in a position to expand the concept nationwide. The simultaneous establishment of pilot CeCs across the region will enable economies of scale for buying equipment, negotiating the internet connection fees for VSAT, and sharing ICT applications, content and training modules. Finally, pilot CeCs across the SASEC region will allow a rich mix of country- and community-specific conditions. The implementation results will be evaluated so the lessons learned can be shared across and beyond the region. 4. Sustainability 10. Previous experience from pilot CeC projects suggests that there are four main sustainability issues: (i) sustaining financial viability; (ii) sustaining staff capability; (iii) sustaining community acceptance; and (iv) sustaining service delivery. The proposed Project is designed to ensure these by introducing public private partnerships; enhancing the capacity of local and national government through workshops; and providing technical training to CeC operators and local communities. 11. Financial viability refers to the CeCs capacity to generate enough income to cover its operational costs. To sustain financial viability, the services of CeCs should be designed according to communities willingness to pay. Needs assessment meetings will be organized with local communities, local governments, and other stakeholders. Public private partnerships will be also considered at these meetings. For example, local entrepreneurs will have a strong incentive to maximize financial returns from the CeCs and to generate revenue from various services. In such public private partnerships, the local governments or NGOs can take responsibility for the social development role of CeCs, including establishing the infrastructure to launch the CeCs and the arranging basic training packages. To minimize the impact of the discontinuation of financial support for the pilot CeCs after the end of the Project, financial

9 support will be phased out toward the end of the Project. Business models will be put in place in the CeCs to ensure their financial sustainability. The objective is for CeCs to become selfsustaining by generating enough revenue from user fees to cover operational costs. However, the Project does not preclude the possibility of other external sources of revenue, for instance, from the government. This has been the traditional approach to ensuring the financial sustainability of the CeCs, especially in rural and remote areas. 12. Sustaining staff capability can only be achieved if trained people, or their trained replacements, continue to work in the same area and if their skills are maintained and used. The Project will build up an institutional support system with local governments and/or NGOs to provide continuous support for training of CeC staff. 13. Sustaining community acceptance will depend on the impact that the introduction of CeCs has on communities cultural, economic, and social development. Experience suggests that a CeC should be a social community center allowing the public to apply ICT to their socioeconomic activities, rather than as technological provider of ICT appliances. The Project will therefore involve local communities from the beginning in designing CeC models to reflect their characteristics and needs. 14. Sustaining service deliveries means continuing the flows of information that communities find useful and usable. The operator and staff of CeCs need to adapt to evolving community needs, to seek new sources of useful information, and to alert the community to the value of information. The Project will emphasize these roles and provide training to operators and staff of CeCs. A CeC operator needs to raise awareness of information and ICT as a valuable resource for individuals, families, organizations and communities, and to focus on ICT applications rather than on access to telecommunication services. CeCs can provide community-based ICT application services for: ICT training, agricultural information dissemination, e-learning, information for health care, e-government services, promotion of services and support to small and medium-sized enterprises (SMEs) through e-commerce or e-business. 5. Participatory Approach 15. The participation and commitment of local communities will be the key to establishing demand-driven CeCs. For each CeC, one or two representatives from local government, the community, the private sector and NGOs will be consulted at stakeholder meetings or community needs assessment meetings to decide on the location and functions of CeCs, and on the appropriate applications for the community. To expedite this process, the local community council (or a similar body) will be approached for support in arranging the stakeholder and community meetings. The stakeholders represented at community meetings will be linked to the CeC s main services. For example, in the case of CeCs intending to carry out e-business, there will be significant representation from the business community. In selecting stakeholder and community representatives, women and disadvantaged groups will be favourably considered. 16. The primary beneficiaries will be 20 communities from the four SASEC countries participating in the Project. Other stakeholders will include local governments, government ICT ministries, the private sector, NGOs, and other international organizations. ICT ministries will act as implementing agencies in each country and will select the pilot communities, in cooperation with local governments. They will be in charge of national coordination of the Project. Local governments and NGOs will initially be asked to identify rural communities that could benefit from CeCs. They will help the implementing agencies to carry out community

10 needs assessments, identify ICT resources and services to be provided through CeCs, and coordinate other activities at the local level. Private companies, such as Microsoft, IBM, or Hewlett Packard, will be invited to help develop ICT applications and content; provide ICT experts for community training; and supply hardware and software for the Project. The CeC operators, who will be identified through stakeholder meetings among local entrepreneurs, NGOs and local governments, will assess the need for CeCs and the services they should offer. In the selection of CeC operators and staff, women and disadvantaged groups will be favourably considered. Primary Beneficiaries At least 20 communities will have CeCs established by the Project. The services provided by these CeCs will benefit a total of at least 10,000 people. About 60 people will be trained to manage the CeCs. At least one-third of them will be women or members of disadvantaged groups. Other Key Stakeholders National NGOs with experience in similar community development projects. They will be involved in several activities of the Project, including community needs assessment and training. Officials in implementing agencies and local governments who are familiar with local communities and the government s policy on ICT for community development. They will help to identify the pilot communities to be included in the Project, to coordinate project activities, and to provide information on outcomes of the Project at the policy level. Private companies and consultants who may be involved in the Project in various roles, including local applications and contents development, and provision of hardware and software. 6. Coordination 17. International organizations, including the Japan International Cooperation Agency (JICA) and the Japan Bank for International Cooperation (JBIC), have been invited to share their experience of community development in each of the four countries. Their possible collaboration has also been sought. The JBIC office in Delhi has confirmed it will collaborate in the Project. 18. Cooperation with other key rural development organizations in ICT will be sought, including the World Bank (WB), the United Nations Development Programme (UNDP), the International Research Development Council (IRDC), the International Centre for Integrated Mountain Development, First Voice International, Grameen Telecom (Bangladesh), Bangladesh Rural Advancement Committee (BRAC), Bangladesh Institute of Development Studies, Rural Reconstruction Nepal (Nepal), MS Swaminathan Research Foundation (India), and One World South Asia (India). Microsoft has been providing support services and networking for community-based learning centers by offering free software and training to non-commercial centers over the world including Bangladesh and India among the SASEC countries. For the Project, the discussions are underway for the collaboration between ADB and Microsoft, especially for the CeCs that will be run by local government or NGOs. 19. In Bhutan, there are several similar projects, such as "Pilot access to government information and services" supported by UNDP, and "Improving rural livelihoods in Bhutan through addressing identified information needs" supported by IRDC. With support from the International Telecommunication Union, Bhutan Post has established 17 pilot public e-post kiosks, providing internet facilities, facsimile services, e-mail, and electronic access to government documents and public forms. The Bhutan Department of Information Technology is

11 currently carrying out pilot implementation of telecenters in three rural locations through the Democratic Governance Thematic Trust Fund Project. 20. In Nepal, in partnership with UNDP, 15 multipurpose community telecenters (MCTs, similar to CeCs) have been piloted since 2002. The MCT sites were selected according to their geographical locations and their accessibility to power and telephone connectivity. Management is by trained local people. 21. In Bangladesh, WB plans to provide a learning and innovation loan for around $5 million to the Ministry of Science and ICT to expand its program of computers for secondary schools in rural areas. At the same time, UNDP is finalizing a TA for setting up community ICT centers in 200 of BRAC's community resource centers for $1 million. Grameen Telecom has launched a pilot project for internet village kiosks in rural areas using the Grameen telephone model. Grameen Bank provides its members with a set-up loan to purchase computers and organize internet connections. Grameen Telecom provides the borrower with technical assistance. Two pilot sites have been selected. Another rural ICT initiative is a pilot project run by the Bangladesh Institute of Development Studies to disseminate agricultural information by providing free access to production and market databases. 22. In India, over 10,000 rural PC-kiosks have been deployed and run by a mix of large enterprises, entrepreneurs, universities, government, and NGOs. 4 Especially, Government of India has piloted a project to establish about 590 CeCs in northeastern states. The pilot has been implemented in 30 blocks at a cost of $3.3 million. By 2007, Government of India has planned to bring 100,000 more PC-kiosks in different parts of country. This project will support the establishment of a database of information on topics including drinking water, education, health, population statistics, and court decisions. 23. There are, therefore, related activities already being carried out in each country, although the extent of these initiatives varies. Existing projects are usually limited to providing universal telecommunications services and ICT appliances (PCs, telephones, fax machines, telecommunication services, and, more recently, internet access). They are therefore not specifically designed to apply ICT to socioeconomic development. Therefore the current Project will strengthen the capacity to use and apply ICT for the socioeconomic development of rural areas, building on the achievements and lessons learned from previous initiatives. It will work closely with ongoing projects in each country and make full use of best practices established by other initiatives. 4 In spite of the various initiatives by the public and private sectors, only 5% of the rural population of 700 million, has access to ICT.

12 7. Detailed Cost Table 24. Please refer to Appendix 1 for the detailed cost estimates. C. Linkage to ADB Strategy and ADB-Financed Operations Document Document Number Date of Last Discussion June 2001 Objective(s) ADB ICT Strategy This aims to show how ICT can be harnessed as an enabling tool to enhance the impact of ADB s overarching goal of reducing poverty in the Asia and Pacific region. The strategic approach for ICT recognizes that ADB s financial and human resources are limited. Thus ADB ICT development assistance must be selective, and encourage regional cooperation and networking to enhance local efforts at development and promote private sector participation. Three strategic thrusts are proposed: (i) Create an enabling environment by fostering (a) the development of innovative sector policies, (b) the strengthening of public institutions; and (c) the development of ICT facilities and related infrastructure, and networks. (ii) Build human resources to improve knowledge and skills, and to promote ICT-literacy and lifelong learning of citizens through e-learning and awareness programs. (iii) Develop ICT applications and information content for ADB-supported projects/activities, e.g., poverty reduction and good governance. SARD RCSP (Draft) Recognizing the importance of ICT, the SASEC member countries decided to include ICT as an additional priority sector under SASEC Phase II. Technical assistance for "A SASEC ICT Development Master Plan" was approved in February 2005. The objectives of this study are to assist SASEC countries to explore potential areas for cooperation in the ICT sector; and to recommend regional ICT sector strategies, investment programs, and technical assistance activities. This will help promote an integrated ICT network and trade and development of ICT services in the subregion.

Document Document Number Date of Last Discussion August 2004 Objective(s) 13 CSPU (Bangladesh) The country strategy and program update (CSPU) noted that diversification and intensification of the crop subsector will be essential to boost agricultural productivity and foster rural nonfarm enterprise development. Transforming agriculture from subsistence to commercial farming, and promoting agribusiness development through private and public partnerships, will help to improve the livelihood of 76% of the country s population (and 85% of the poor). The Government's interim poverty reduction strategy also highlights accelerated rural infrastructure and local governance improvement as an integrated way of encouraging rural industrialization. The 2004 2006 pipelines contain both loans and TA to support crop diversification, agribusiness development, key rural infrastructure improvement, and water resources management. CSPU (Bhutan) July 2004 ADB's program has aimed at reducing rural poverty through rural electrification, road network expansion, basic skills development, and integrated rural development, consistent with the country's Ninth Five- Year Plan and Vision 2020. CSPU (India) September 2004 ADB s operations in agriculture and rural development and the shift in focus of state-level operations to poorer states and less-developed regions, especially the north-eastern states, were emphasized. Since 75% of India s poorest citizens live in rural areas, the impact of agriculture and rural development on poverty reduction can be immediate. The new Government has given this highest priority. ADB is stepping up and consolidating its assistance for rural areas. CSP (Nepal) Sep 2004 ADB s strategy for development assistance to Nepal will focus on bringing excluded regions and social groups into the economic mainstream by fostering connectivity between all parts of the country. ADB will help the government to develop connectivity by improving accessibility and reducing isolation within the country and by promoting subregional connectivity through the development of roads, airports, and ICT. The CSP noted that Nepal has low telephone density and many parts of the country have almost no access to modern sources of information. ICT would provide rural and remote areas with access to information and basic government services, especially in conflictaffected regions where options for physical mobility are increasingly limited. Telecommunications support

14 Document Document Number Date of Last Discussion Objective(s) will broaden access to communications in underserved parts of rural Nepal and develop more efficient links between Nepal and its neighbors. Better access to ICT will also facilitate access to basic public services by enabling use of e-government technologies. The CSP includes a project called ICT for Public Service Delivery at $30 million for 2006. The expected results of the project include (i) provision of better government and public services, (ii) better access to government and public services in rural areas, and (iii) economic growth in rural areas. The proposed Project will complement this ICT project, particularly with regard to public services such as e-government. 2. Linkage to Specific ADB-Financed Operations Project Name South Asia Subregional Economic Cooperation II (SASEC Phase II) Project Number RETA 6010 Date of Board Approval December 2002 TA Amount ($ million) $500,000 3. State the above-mentioned project s development objective 25. RETA 5936: Identification and Prioritization of Subregional Projects in South Asia (SASEC Phase I), implemented from March 2001 to October 2002, established five sector working groups. It aimed to identify and prioritize subregional projects; prepare project profiles; and develop action programs for subregional cooperation in priority sectors. 26. SASEC Phase II, RETA 6010: SASEC II, aims to strengthen the sector working groups of the SASEC program and support implementation of the projects identified during Phase I. ICT was added as a sixth priority sector.

4. List the project s main components 15 RETA 6010: South Asia Subregional Economic Cooperation II No. Component Name Brief Description 1. Assisting each sector working group identify, discuss, and implement subregional projects 1.1. Transport: A review of corridors, both existing and potential, was conducted to develop a framework within which future projects/programs could be developed in the SASEC region. Six corridors are being examined for their operational efficiency. 1.2. Trade, Investment, and Private Sector Cooperation: At the working group meeting and the South Asia Business Forum, the results of the following studies were reviewed: nontariff and nontrade barriers; management development and institution building; and information and communications technology. 1.3. Energy/Power: Concept papers for energy/power projects were prepared. ADB assisted in the rural electrification of Assam and in the distribution of compressed natural gas for cars in Dhaka. Initial discussions were held to assess the potential for cooperation between India and Bangladesh in joint importation and marketing of petroleum. 1.4. Tourism: The working group prepard a tourism development plan (TDP) for 2004 2014 based on ecotourism and Buddhism. TA for human resource development and capacity building in the tourism sector was approved in 2004. 1.5. Environment: RETA for a regional air quality management study was approved. Its initial progress was discussed at a working group meeting. The other projects were reassessed and new projects were proposed in the light of regional environment concerns. 1.6. ICT: ICT was added as an additional priority sector. A working group was formed to develop common agenda for regional ICT cooperation. The TA paper for the ICT development master plan has been processed and will be approved in 2005. 2. Facilitating cooperative dialogue among the stakeholders To support the activities of each sector working group, the TA facilitates cooperative dialogue among the stakeholders, including government officials, the private sector, civil society and other development partners. 5. Rationale for Grant Funding versus ADB Lending 27. This proposed Project is intended to reduce poverty, empower communities, and improve the quality of life in rural areas through increased ICT connectivity and accessibility by establishing and operating CeCs. By establishing 20 pilot CeCs, the Project will increase accessibility to ICT, enhance education and skills, and promote agribusiness, all of which are part of each country's CSPU for rural development. Grant-funded assistance can be justified because of the need to: (i) build capacity and share experience of implementing CeCs in rural communities through regional cooperation; (ii) pilot untested ICT initiatives; and (iii) lay the

16 foundation for future ICT initiatives, especially in rural development, in other developing member countries. D. Implementation of the Proposed Grant 1. Provide the Name of the Implementing Agency (If there is more than one implementing agency, list in order of importance) There will be one implementing agency in each country: Ministry of Science and Information Communication Technology, Bangladesh Ministry of Information and Communication, Bhutan, Bhutan Department of Information and Technology, India Ministry of Information and Communication Technology, Nepal 28. The proposed Project will be implemented over a 30-month period following approval of the Project, tentatively from August 2005. 29. The executing agency will be United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the implementing agencies will be the standing members of the SASEC ICT Working Group, Secretaries of the Ministry of Science and Information Communication Technology, the Government of the People s Republic of Bangladesh; the Ministry of Information and Communication, the Royal Government of Bhutan; the Department of Information Technology, the Ministry of Communications and Information Technology, the Government of India; and the Ministry of Information and Communication, His Majesty s Government of Nepal. The implementing agencies will establish a project implementation unit within each ministry. 30. UNESCAP, the executing agency of the Project, is the regional headquarters of the United Nations Secretariat in Asia and the Pacific, dedicated to promoting economic and social development in the region. Serving 62 Member and Associate Member States, the focus of UNESCAP s work is on three key areas: poverty reduction, managing globalization, and emerging social issues. To help bridge the digital divide in the Asia and the Pacific region, UNESCAP established an Information, Communication and Space Technology Division in 2002. Before it established this new division, UNESCAP had worked on various ICT issues, including ICT policies and applications for rural communities, SME business, gender equality, and people with disability. UNESCAP is currently assisting the Malaysian Government to document the Malaysian experience of applying ICT services to rural communities. It is conducting a project to develop e-business services for SMEs in selected Association of Southeast Asian Nations (ASEAN) countries and in the southern part of the People s Republic of China. With the Asian Development Bank Institute (ADBI), UNESCAP organized regional workshops on Building e- Community Centers for Rural Development, 8-14 December 2004; Designing E-Government for the Poor, 28 March 1 April 2005; and Managing Sustainable E-Community Centers, 4-10 May 2005. 31. As a regional arm of the United Nations, UNESCAP has a mandate to follow-up the outcomes of global conferences such as the Millennium Development Goals and the action plans of the WSIS. It is the largest UN organization in Asia with the longest history and is equipped with a range of disciplines and professional backgrounds that enable it to coordinate

17 multisectoral support for rural development issues, such as applying ICT to rural development through CeCs. In addition, UNESCAP is in a unique position to facilitate the adoption of regional approaches to cross-boundary or multicountry issues. 32. ADB and UNESCAP signed a memorandum of understanding in May 2004 highlighting the ICT sector as an area of cooperation between the two institutions, including ICT applications development for poverty reduction, following up the WSIS. 33. As the executing agency for Project, UNESCAP will work with the key partners in the four SASEC countries to: (i) develop sustainable models of CeCs based on local needs; (ii) establish pilot CeCs to provide ICT applications and products to local communities; (iii) translate global information into local languages and develop local content; (vi) build ICT capacity in communities through developing and delivering training courses; (v) ensure that the needs of rural communities are identified and matched to the ICT applications and services of the pilot CeCs; (vi) organize regional workshops to share experiences and knowledge of establishing and managing CeCs; and (vii) make maximum use of the UNESCAP network to disseminate the outcomes of the Project, including the lessons learned and best practice. The administrative cost of the Project is budgeted at 7% 5 of the project cost. 34. The implementing agencies in the respective countries will identify and coordinating with the local governments that will be involved in the Project. In particular, they will (i) select the communities and locations of the CeCs; (ii) organize stakeholder meetings and communityneeds assessment meetings; (iii) select operators for the CeCs; (iv) develop ICT applications and local content; (v) provide training to communities and operators; and (vi) support local government follow-up activities to support CeCs after the completion of the Project. 35. Detailed implementation arrangements will be outlined in the project implementation manual, which will be prepared by UNESCAP. 36. To support project implementation, approximately 187 person-months of consultants (35 person-months international and 152 person-months domestic) will be required, covering four countries. Consulting services are required to: assist in organizing national meetings of stakeholders and needs assessment (24 person-months; domestic [6 person-months per country]); research national CeC-related initiatives (8 person-months; domestic [2 personmonths per country]); develop local content (20 person-months; 4 person-months international, 16 personmonths domestic [4 person-months per country]); develop ICT applications (20 person-months; 4 person-months international, 16 person-months domestic [4 person-months per country]); research hardware and software options (2 person-months; international); develop an operations manual for the CeC operators (5 person-months; 1 personmonth international, 4 person-months domestic [1 person-month per country]); 5 Although UNESCAP generally charges an overhead fee of 13% of project cost as an administrative cost, in this case an overhead charge of 7% of project costs has been budgeted based on the arrangement recently agreed between ADB s Regional and Ssustainable Development Department and UNESCAP for a separate project. ADB. 2002. Supporting the Achievement of the Millennium Development Goals in the Asia-Pacific Region. Manila (RETA6197).