44318-025: Housing for Integrated Rural Development Improvement Program - Tranche 2

Project Data Sheet (PDS): Details


Project Rationale and Linkage to Country/Regional Strategy

Uzbekistan s strong macroeconomic fundamentals have helped maintain high rates of economic growth over the last decade and resiliency during the global financial crisis. Gross domestic product growth has averaged 8% since 2004, per capita income has doubled in real terms, and absolute poverty has almost been cut in half, from 27% of households in 2000 to about 15% in 2012. While declining, rural poverty in Uzbekistan remains higher (20.1%) than urban poverty (13.4%). Higher rural population growth and increases in the working age population (from 54% in 2001 to 61% in 2010), along with shifts in the economy from agriculture to industry, means that rural jobs are harder to find. Urban migration and informal and seasonal employment are all rising. Key inputs needed to attract rural investment for job creation, and to retain entrepreneurs and skilled professionals in rural areas, include improvements in: (i) education and health services; (ii) telecommunications and reliable infrastructure; (iii) promotion of regional investment; (iv) access to finance; and (v) housing and living conditions. As part of HIRD, the MFF roadmap and policy framework links ADB investment support to the government's reform program. The overall program will improve the quality of life for rural households by: (i) increasing access to modern rural housing with related infrastructure, (ii) strengthening local government capacity for integrated rural planning and results-based delivery of rural services, and (iii) accelerating rural MSME development to diversify and increase rural jobs and attract regional investment in industry. The MFF supports the program implementation unit (PIU) and capacity development, as well as rural housing finance under the first component. Housing plots, related infrastructure arrangements, and associated commercial and social services are provided by the government. The second and third components, with accompanying reforms, are financed by the government with support from the PIU for monitoring and evaluation.

Impact

Improved rural housing for targeted beneficiaries.

Project Outcome

Description of Outcome

Downstreaming of the rural housing scheme for moderate and lower income beneficiaries, with a focus on women.

Progress Towards Outcome

ongoing

Implementation Progress

Description of Project Outputs

Housing loans provided by PCBs to targeted credit worthy subborrowers in rural areas Improved capacity of local governments to prepare and implement integrated rural development plans and investment promotion strategies Improved enabling environment for entrepreneurs and MSEs to establish or expand new businesses in rural areas

Status of Operation/Construction or Implementation Progress

The second project loan of $200 million was approved on 1 October 2013 for Tranche 2. Project 2 loan and project agreements were signed on 11 October 2013. Following confirmation of the loan effectiveness conditions, Project 2 loan was declared effective on 24 October 2013. Project 2 is targeted for completion within 30 months with a loan closing date of 31 March 2016. Under Tranche 2 as of 24 August 2014 (credit component) contract awards stood at $78,413,450 (39%) against projected amount of $198,560,000. Disbursement was at $162,674,887 against project amount of $198,560,000. Component 1 targets delivery of DMF Output 1, i.e., 40,800 new rural houses, with access to infrastructure, social and commercial services, through loans extended by PCBs to targeted homebuyers. A total of 36,900 rural housing loans or 90% of the five year HIRD 2011 - 2015 target are expected to be delivered by end HIRD 2014. Including the tentative target for HIRD 2015 of 12,000 new rural houses, upon completion of HIRD 2015 the MFF DMF target will be exceeded by almost 20%.Under HIRD 2011- 2013, 25,910 new rural houses have been constructed: 7,400 houses under HIRD 2011; 8,510 houses under HIRD 2012; and 10,000 houses under HIRD 2013. For HIRD 2014, 11,000 houses are currently under construction. The government has informed that with ADB support under Project 1 and Project 2, Component 1 implementation is improving governance nationwide through greater transparency and accountability of HIRD processes. The government reports: (i) a transparent evaluation process has been adopted to socially prioritize HIRD beneficiaries and approve 8,500 to 11,000 rural housing loans annually (29,500 rural housing loans evaluated to date); (ii) ADB procurement approaches have been adopted nationwide to tender 850 to 1,100 bid packages each year and an estimated total of $1,950 million in civil works; and (iii) capacity building has been annually delivered on HIRD safeguard due diligence, beneficiary selection and procurement processes to more than 6,500 HIRD participating partners and stakeholders - government officials (from participating regional and district local governments and infrastructure and social agencies), small contractors, participating commercial bank officials and staff of technical agencies. Component 2 targets delivery of rural job creation and capacity building and training delivered under parallel government programs. The government reports in total 7.93 million participants, or 97% of the total 2011, 2012 and 2013 target, have benefited from national job creation programs (2.45 million), technical skill development programs (0.88 million) and vocational training programs (4.60 million). Component 2 also targets delivery of DMF Output 2, i.e., capacity building of local government officials to strengthen the capacity of local governments to prepare and better implement integrated rural development plans and investment promotion strategies. Local government training is delivered by the State Academy of Public Administration. In 2013, with ADB support, an intern program linked to the Academy s Master of Public Administration (MPA) Program was launched. The Academy reports over 50 MPA students - mid-level government officials from across the country, participated in a 3 month intern program. Using streamlined UNDP templates developed in coordination with the Institute of Forecasting and Macroeconomic Research, development reports for over 100 (of more than 150) rural districts across 13 regions were produced. Component 3 targets delivery of DMF Output 3, i.e., an improved enabling environment for rural micro and small enterprise (MSE) to encourage and accelerate rural MSE development. Component 3 is implemented under the government s strategies for Small and Medium-size Enterprise (SME) Development and Financial Sector Development. The government reports: (i) about 25,000 to 35,000 new SMEs have been established annually (2011 to 2013) that are creating almost 500,000 new jobs each year; and (ii) total microcredit lending has increased by over 50% annually (from SUM485 billion in 2010 to SUM752 billion in 2011, and to SUM1,172 billion in 2012) with total microcredit lending reported for 2012 equal to 86% of the 2015 target of SUM1,361 billion. To achieve these developments the government reports 30 to 40 policies, regulations or laws have been revised or introduced. Main actions and achievements to date under the government s strategy for SME development are: (i) streamlining and reduction of registration and reporting requirements; (ii) launching of online registration and reporting; (i) increased access to finance; and (iv) reduction of SME revenue tax from 7% to 6%. The HIRD Gender Action Plan (GAP) is structured to ensure each of the three HIRD components and outputs has an integral gender focus. The GAP focuses on improving gender access to finance and assets through: (i) targeting and inclusion of women in the homebuyer selection, purchase, and home ownership process; and (ii) inclusion of gender issues in the HIRD public awareness campaign and HIRD capacity building activities. GAP implementation updates are reviewed regularly and based on status updates: women applicants constitute 25% of all HIRD 2012 applicants, and 26% of all HIRD 2013 applicants (over 80% of MFF and Project 1 and 2 DMF target of 30%). Of total applicants approved, 21% and 23% are women in HIRD 2012 and HIRD 2013 respectively. Of total women applicants approved, a significant proportion have jobs in the education and health sectors: 44% in HIRD 2012, and 46% in HIRD 2013.

Safeguard Categories

Environment: FI
Involuntary Resettlement: FI-C
Indigenous Peoples: FI

Summary of Environmental and Social Aspects

Environmental Aspect
Environmental impacts are anticipated to be insignificant. Each PCB will adopt an environmental and social management system (ESMS) with screening criteria and monitoring procedures to ensure that the subprojects have minimal or no adverse environmental or social risks.

Involuntary Resettlement
Only land sites with no involuntary resettlement impacts will be considered. The ESMS will also monitor this.

Indigenous Peoples
Only land sites with no indigenous peoples' impacts will be selected. The ESMS will also monitor this.

Stakeholder Participation and Consultation

During Project Design
The Housing for Integrated Rural Development Investment Program cuts across a number of development themes. Donor coordination focuses on three key themes: rural development, financial sector development, and local government capacity building. Close ADB donor coordination is maintained in these three themes and in cross-cutting areas, specifically governance, environment, and gender. With the World Bank, collaboration is supported in the financial sector, micro and small enterprises, local government, and cross-cutting governance issues including public procurement. Cooperation with the UNDP is achieving synergy on local government capacity building efforts and environmentally sustainable approaches for rural housing and community development. The Islamic Development Bank is evaluating cofinancing as part of its country programming process. Possibilities linked to plans to diversify small to medium enterprise programs have also been explored with Kreditanstalt fur Wiederaufbau (KfW).

During Project Implementation
The Housing for Integrated Rural Development Investment Program continues to work with a number of stakeholders to help achieve the objectives of the program. This includes working with district hokimiyats, mahallas, branch offices of the women's committee, and local youth groups around beneficiary selection, site selection and other local issues. To ensure efficient implementation of HIRD, four review missions were undertaken (December 2013, Apri-May 2014, August 2014, and September 2014) and a mid-term review mission is planned for November 2014. Extensive discussions are held with the government agencies and stakeholders and missions teams undertake field visits to meet beneficiaries, contractors, mohalla representatives, and regional government officers to assess first hand some of the positive impacts of the program.



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Project Data Sheets (PDS)

Timetable

Management Review Meeting
18 Jul 2013

Approval
01 Oct 2013

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