The World Bank Board of Executive Directors today approved a US$30 million loan for the Social Investment and Local Development (SILD) Project in Armenia. This project will further assist the Government of Armenia to improve the quality, use of and access to community infrastructure for the poor and vulnerable groups.
Local populations throughout Armenia will benefit from renovated and rehabilitated social infrastructure such as schools, kindergartens, health and social service facilities, community centers, water supply, waste management, as well as economic infrastructure such as irrigation systems, agro-processing and storage facilities, markets, etc. Priority needs will be identified through assessments of economic development potential and prioritization by the communities.
“The new project will directly benefit about 150 communities, mostly rural, and enable them to identify their own investment needs,” said Laura Bailey, World Bank Country Manager for Armenia. “I am particularly happy that this project will create much-needed jobs, thus contributing to income generation in participating communities. We estimate that approximately 300 permanent and 1,100 temporary jobs will be created, with more than US$8 million in wage income generated in vulnerable communities.”
SILD has grown out of one of the oldest WB-supported projects, Armenian Social Investment Fund (ASIF), which has been addressing territorial imbalances in the country for almost 20 years. ASIF has proven to be an effective tool in responding to the needs of the poor and promoting economic growth in remote and isolated villages. As in the past, the success of the program will depend on how well local communities would be able to sustain the new investments.
The project has three components. The first component supports socio-economic development at the local level following the model of ASIF and will implement micro-projects covering 120 communities. SILD will target rehabilitation and development of public, social, economic, and environmental community infrastructure and services. It will also build institutional and financial capacity at the local level for implementation of these activities.
The second component – inter-community social and economic development initiatives – will finance socioeconomic initiatives with the potential for longer-term development impacts by bringing together two or more communities. This new collaborative development approach will provide additional incentives for communities to explore development synergies and opportunities in line with the concept of the territorial development reform. Overall, SILD will fund the design, selection and implementation of abound 30 inter-community sub-projects.
The third component will support ASIF’s transition to Armenian Territorial Development Fund (ATDF) to evolve ASIF’s work from small, discrete projects to larger, sustainable development projects, in line with the objectives of the Armenian Development Strategy 2012-2025 of reducing socio-economic disparities and promoting harmonic regional development. Key dimensions of the transition will include development of new tools and approaches for appraisal, promotion and selection of inter-community projects; organizational development; and staff capacity building.
“These initiatives have both social and economic impact and can catalyze future economic growth and human capital development for a region or group of communities,” said Erkin Mamadaliev, World Bank Task Team Leader of the Project. “We are expecting that the project will also strengthen inter-community dialogue across the country, priority-setting and development planning and management. The project will be specifically focused on vulnerable and lagging regions.”
Total financing of the project is US$42.85 million, of which the Government of Armenia will finance US$11 million and US$1.85 million will be provided by beneficiary communities. The US$30 million is an IBRD flexible loan with variable spread with a 14.5-year grace period and repayment of 25 years.
Since joining the World Bank in 1992 and IDA in 1993, the total IDA and IBRD commitments to Armenia amount to US$2,066.730 million.