19 PHN 1991 Sector Review

# 2. _InovadveCa2dM et f gOadojt_

# _a. Sector Fuds_

3.33 One-quarter of PHN operations approved<sup>this</sup> year were designed as social funds (see lTxt<sup>Table 2),</sup> which finance subprojects prepared and implemented by decentralized institutions and agencies<sup>represent-</sup> ing local populations and sometimes by the<sup>local</sup> populations themselves. Of the seven projects, three are in Africa, two in LAC, and one each in Asia<sup>and</sup> EMENA. The design of these projects draws<sup>heavily</sup> on the successful experience of the Bolivia Emergency Social Fund, one of the first funds of this<sup>type</sup> to be designed and implemented as a Bank operation, and on guidelines prepared by AFMSP'<sup>2</sup> , derived from Bank xperience with this relatively<sup>new ap-</sup> proach to socal sector lending.

3.34 Sector hfnds were found to be quite responsive to the lessons presented in Section B of<sup>this</sup> chapter. These funds are intended to support<sup>grass-</sup> roots activities for social seor developmen4<sup>particu-</sup> larly those benefiting poor and vulnerable<sup>groups.</sup> These projects foster institutional pluralism,<sup>decen-</sup> taliztion, and community participation by giving local- level entities--local govermnents, private sector groups, NGOs, community organizations-responsibility for assessing and articulating the social<sup>sector</sup> needs of poor local populations and for designing and implementing projects and ensuring their sustainability.

_3.35_ Sector funds increase the probability<sup>that</sup> subprojects are socally and culturally appropriate, provide opportunities for experimentation<sup>and learn-</sup> ing (with a view to extending successful initiatives nationally), promote community participation, support intersectoral coordination, and favor simplicity in subproject design. All but one of these projects include significant support for improving national capacity in the collection, analysis, and use of information for sector policy analysis, including operational research, surveys, beneficiary assessment, targeting methodologies, and monitoring and evaluation. Furthermore, subproject proposals are likely<sup>to</sup> provide government with rich information and insight on the social sector needs of various groups, which may influence social sector strategy.

3.36 Not all seven projes are allke. Only<sup>two of</sup> them (Nigeria ! icalth Fund and Nigeria Population) focus solely on the PHN sectors, and<sup>are imple-</sup> mented by line ministries. The remaining Eve<sup>are</sup> multisectoral and coordinated through oental (primarily finance) ministries. Five projects finance subprojects on a grant basis; one (Nigeria<sup>Health</sup> fund) onlends funds to states with the involvement<sup>of</sup> financial intermediaries for the purpose<sup>of whole-</sup> saling Bank health asslstance; and the Sri Lanka<sup>fund</sup> provides for both onlending for small credit opcrations and grants for the financing of subprojects.<sup>By</sup> combining immediate and direct assistance<sup>to the</sup> poor with efforts to build information and capacity for policy analyis, these projects are able to focus<sup>on</sup> both discrete short-term needs and equally important longer-term needL 3.37 Most of these projects support an agency<sup>--</sup> usually also created under the project - to manage and administer activities. lhese agencies are<sup>usually</sup> semi-autonomous and report to central ministries; their coordination with line ministries<sup>varies 'y</sup> project. With the exption of the Honduras<sup>project,</sup> whose fund agency has an explicitly defined<sup>three-</sup> year life, it is not clear whether or when other<sup>fund</sup> agencies might be disbanded and, if so, how activities would be sustained institutionally. Tb attract<sup>high-</sup> quality staff, many of these agencies are<sup>exempted</sup> from civil service rules and regulations,<sup>and their</sup> salaries are competitive That means that an eventual transfer of their responsibilities to the government would pose a dilemma that would be difficult<sup>to re-</sup> solve.

# b. _Social Sector Operatons_

3.38 The ten social sector projects, which<sup>comprise</sup> one-third of this year's portfolio of operations (see text Mbble 2) and which, incidentally, include a few sector fund operations, descrbed above, are more comprehensive in their approach to poverty alieviation and institution building than projects focusing exclusively on **thi** PHN sector. These projects support the refinement and implementation<sup>of</sup> integrated social sector policy. Because the; are multisectoral, they are coordinated through<sup>a central</sup> ministry (usually finance, or planning) that is strengthened to enable it to collect, use and analyze integrated and appropriate social sector information;