1. From Social Funds to Local Governance and Social Inclusion Programs A Prospective Review from the ECA Region Anush Bezhanyan Budapest World Bank September 26, 2007 Social Inclusion in Eastern Europe and Central Asia Towards Mainstreaming and Results The Role of Community in Implementation of National Social Inclusion Programs and Delivery of Service to Excluded Groups

2. ECA SF Study: Why? • SF in ECA (i) started in 1993 as emergency interventions (ii) by 2005 grew into a portfolio with about 30 projects in 14 countries with a budget of about US$ 800 million, out of which US$550 million Bank loans and credits • ECA SF study (2006/07) - after more than 10 years needed to take stock and answer two questions: (i) Is this instrument still relevant in the ECA region and under what conditions? (ii) What is the guidance for future development of this instrument and the WB/government partnership in this area, including the use of the instrument for channeling the EU and other funds?

3. ECA SF Study: Findings Short Answer isyes - in most ECA countries there is potential demand for this type of instrument, but existing funds need to be: • better integrated with government policy and systems • better align their design with their comparative advantage as a flexible instrument that can provide incentives: (a) for innovation and reform of local service provision (b) compensation for shortcomings in regular system of public service provision, including equity and social inclusion

4. ECA SF Study Findings: Objectives Provide flexible instrument with two objectives: 1. Local investment programming and financing facility: • Pool of discretionary funds (a “Fund”) managed by an organization (often semi-autonomous agency) with authority to approve and disburse grants for local capital investments • Multisectoral investments (typically local public goods), usually small scale infrastructure, but also social care services and other social programs 2. Community development and local governance facility: • Aims to increase influence of poor people over decision-making processes: increasing responsiveness and downward accountability of local investments to citizens and communities, promoting partnerships between local actors for coproduction of services, etc • Facilitates the development of local capacities (LGU, CBOs, NGOs) • Concerned about targeting, including poor and vulnerable people

5. ECA SF Study Findings: Mapping ECA SFs into Policy Typology and Evolution Over Time

6. ECA SF Study: Future Options

7. ECA SF Study: Conclusion ECA SF have potential for: • Involving communities in implementations of social inclusion programs (e.g. Slovakia, Romania experiences) • Improving the program design to become vehicle for channeling EU funds (e.g. Romania SDF, Bulgaria SIEP and learning from other experiences - the REF and Spain)