PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB3983 Project Name. Kenya Youth Empowerment Program Region

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB3983 Project Name Kenya Youth Empowerment Program Region AFRICA Sector Other social services (100%) Project ID P Borrower(s) Government of the Republic of Kenya Implementing Agency Office of the Prime Minister Environment Category [ ] A [X ] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared August 21, 2009 Estimated Date of February 8, 2010 Appraisal Authorization Estimated Date of Board March 29, 2010 Approval Key development issues and rationale for Bank involvement 1. Kenya has recently experienced a turnaround in its economy showing strong economic growth, but this growth began to slow in The Kenyan economy grew an average of 6 percent a year between 2003 and 2007, after a long period of stagnation. In 2007, the growth of Gross Domestic Product (GDP) reached 6.3 percent, before dropping to 1.7 percent in 2008 and continuing to slow in the first two quarters of This contraction was due to a series of events. In 2008 the country suffered from an outbreak of violence after the disputed presidential elections in December Over 1,000 people were killed and more than 350,000 were internally displaced. In addition to the post-election violence, the recent global financial, food and fuel crisis, in combination with droughts have also had negative impact on the economy. The droughts and high input prices in the agriculture sector led to a contraction and, an increase in maize imports. In addition, remittances decreased and the hardest hit sector has been tourism where hotels and restaurants contracted by 36 percent in The agriculture and tourism sectors are important employers, with the agriculture sector accounting for almost 60 percent of total employment (Kenya Poverty and Inequality Assessment - KPIA, April 2009) and the travel and tourism sector for 7.1 percent (Travel & Tourism Economic Impact, 2009). 2. While poverty has declined since 1997, both poverty and inequality continue to be serious concerns. Youth form a large share of the poor. According to the KPIA there was a decline in poverty from the late 1990s until 2006, from 51 percent in 1997 to 47 percent in Extreme poverty was estimated at 19 percent of the population in Almost one in three of Kenya s poor population was between years of age. Half of these were youth between years of age and who had a poverty rate of 51% - which was larger than the national average. The economic slowdown and the series of different crises have negatively affected the population, and poverty levels are expected to start increasing again. The 2006 data show that inequality in household consumption is high, with the consumption decile ratios of the top 10 percent to the bottom 10 percent stood at 20:1 in urban areas and 12:1 in rural areas 1. 1 This compares to a national average of 5:1 in Tanzania and only 3.3:1 in Ethiopia.

2 3. Youth represent 30 percent of Kenya s population and their unemployment is twice the country s average. Almost one third of Kenyans are between 15 and 29 years, and the total reached almost 11 million people in 2006 (compared to 8.5 million in 1999). According to the KPIA this age cohort is now at a historical high (in absolute and relative terms). Youth in Kenya face serious challenges, including high rates of unemployment and underemployment. The overall unemployment rate for youth is double the adult average, at about 21 percent. Statistics on joblessness suggest that the magnitude of the unemployment problem is larger for youth with 38 percent of youth neither in school nor work (aggregating the rates of reported unemployment and inactivity). 4. The violence in early 2008 highlighted the critical importance of addressing the problem of poverty and inequality, and in particular the increasing problem of idle youth. In addition, the Country Social Analysis (World Bank, 2007) found that youth s unemployment, especially among males, is a major contributor to frustration and tension, in particular in urban areas. Clearly, unemployment among the youth has now become a matter of serious policy concern in the country. Evidence from previous analytical work 2 shows that lack of action on the challenges that affect youth will escalate both the social and economic costs of development in Kenya. This situation became clear during the crisis that erupted after the disputed December 2007 elections. Youth were the main group involved in the unrest and violence and they were recognized by both the Government of Kenya (GoK) and Development Partners as a high priority target group for addressing some of the major challenges facing the country. 5. The recent financial and economic crisis has prompted the GoK to renew its commitment to addressing youth issues and youth unemployment has emerged as a top priority. The GoK developed a Marshal Plan for youth unemployment in 2007, emphasizing the importance of a coordinated and multi-sectoral approach to addressing the problem of youth unemployment and youth idleness. In April 2009 the Kazi Kwa Vijana (KKV) 3 program was launched, aiming to employ youth in rural and urban areas in labor intensive public works projects implemented by different line ministries. The KKV program is implemented under the overall supervision and guidance of a National Steering Committee chaired by the Prime Minister and comprising Ministers and Permanent Secretaries of Ministries with KKV sub-projects. The Office of the Prime Minister (OPM) is in charge of the overall coordination and monitoring. Priority is given to sub-projects that can be implemented rapidly using labor-intensive techniques such as road maintenance sub-projects, small-scale water supply and sanitation sub-projects, water harvesting sub-projects, afforestation sub-projects and waste collection. In addition to the KKV, the GoK continues to support the Youth Enterprise Development Fund (YEDF), established in 2006, providing young with access to finance for self employment activities and entrepreneurial skills development. 6. Increased attention is being given to the poor and most vulnerable groups in the society, through the development of a Social Protection (SP) policy framework. This work has mainly been supported by the U.K. Department for International Development (DfID) with some support from the Bank. There are several ongoing programs in Kenya trying to support different vulnerable groups, but the interventions are fragmented and poorly coordinated. The GoK is in the process of developing a policy framework for SP, with the Ministry of Gender, Children and Social Development leading this effort. The process is well under way and consultations have been held at national, provincial and district levels. Additional efforts are, however, needed to complete the process successfully. In addition to the policy framework, the GoK, with support from the Bank, has initiated a review of targeting methodologies in existing programs in an effort to increase the efficiency of these programs. 2 Youth and Development in Kenya [World bank 2005]; Inside informality; Poverty, Jobs, Housing and Services in Nairobi Slums [World Bank 2006] 3 Kazi kwa Vijana means Work for Youth in Kiswahili.

3 7. The GoK s priority public policy focus on addressing youth unemployment and building their human capital is consistent with findings from the 2007 World Development Report (WDR) that focuses on development and the next generation, and the priorities set in the World Bank s Kenya Country Assistance Strategy (CAS) for , giving important attention to equity and investing in people. The Bank is now in the process of developing a new CAS and it is expected that social protection concerns, including unemployed youth, will be of increased priority. The inclusion of young people in mainstream society is further defined as a priority in the Social Development Strategy of the Bank s Africa Region, and the Bank-wide Social Development Strategy highlights youth development as an important part of its thematic portfolio (World Bank, 2003a). Kenya s own Vision 2030 strives to: reduce the number of people living in poverty and guarantee equality of opportunities; increase the opportunities for youth, women and disadvantaged groups; and improve delivery of social services (including water, education etc) among others. The National Youth Policy, launched in 2006, further seeks to guide and mainstream youth related interventions in the country. 8. The GoK has successfully launched the KKV, but as the program approaches the second phase there is need to improve its effectiveness and efficiency. The Bank is well positioned to help the GoK do this. The Bank has world wide experience of best practice operational features of public works program and will, together with the ILO, provide important technical skills to improve the efficiency of the KKV. The support will strengthen the institutional arrangements for the program and further development of some key operational features. This includes improved targeting mechanisms, optimization of employment content of sub-projects, the inclusion of services and effective monitoring and evaluation. Given that employment programs, particularly labor intensive public work programs for youth, are likely to be needed in the medium term, there is a need for the GoK to master the management of these program and to develop a design that allows for flexibility based on demand, with possible scaling-up and down as necessary. The Bank support will ensure increased community participation in the sub-project selection which will lead to greater ownership and stronger sustainability. The GoK allocated Ksh. 6.6 billion to the KKV for FY10 (around 84 million USD). 9. In addition to improved operational features, the Bank will support the expansion of the KKV into youth training and internship with the private sector to ensure more sustainability for this support. Training available to youth often lacks a close link with the competencies sought by employers. Engaging the private sector in providing employment and training will improve the relevance of the training offered to youth and promote their future employability. Employers will need to be closely involved in the design of this activity and the targeting of youth participants. This expansion will hopefully result in increasing the employability of youth and will provide a basis for a possible nationwide program. Proposed objective(s) 10. The proposed Project Development Objective (PDO) is to enhance the effectiveness and impact of youth employment and training programs in Kenya. Although the ultimate target group of the Project is unemployed youth, an intermediary target group is the different government and non government entities who implement youth employment activities. Preliminary description 11. The proposed Project builds on, and tries to enhance, already existing efforts of the GoK. The implementation of the KKV has already started in many parts of Kenya. It was allocated KSh 3.4 billion (around US$43 million) in FY09 and KSh 6.6 billion (around US$84 million) in FY10 (July, 2009 June 2010). The program is fully owned by the GoK, and was impressively quickly launched and

4 disseminated across the GoK at all levels. Program awareness has been created across the country. KKV is politically supported at the highest levels and, already has a considerable allocation in the FY10 GoK budget and is likely to continue beyond this. Extensive interviews with youth conducted by the Bank s identification mission (in both rural and urban areas) indicate that youth like it, appreciate the income, and wish it to continue. 12. A Bank supported intervention was considered in 2008 and was not favored because it was felt it would have too limited an impact, and would have too narrow a geographical focus on slum areas in Nairobi. Although the programmatic tools to be used were not much different (i.e. labor intensive public works programs, training, and collaboration with the private sector), the earlier proposal had a focus on slum areas in large cities, and did not mainstream the labor intensive learning experience in the GoK systems. This proposal deals with these two areas by anchoring the Project in the KKV and expanding the geographical coverage to rural and urban areas. 13. An alternative intervention that was considered was for the Bank to help Kenya consolidate its Social Protection (SP) system taking advantage of the crisis. A SP programmatic support could help the consolidation of the many programs running (with some level of fragmentation and overlap), increasing both efficiency and effectiveness while enhancing fiscal sustainability. This option, although very important and worthy of further medium-term consideration, was not selected for the immediate proposal because of the need for further analytical work and then preparation which would take more time than could currently be afforded. In addition it would not have immediately been able to support the GoK s current initiative. There is an on-going process to develop a comprehensive SP policy framework, as well as enhance the targeting of the existing interventions, to which the Bank would be well-placed to provide support in a parallel process. 14. The proposed Project will be financed using a Specific Investment Loan (SIL), for a total loan amount of US$50 million over an implementation period of four years. The indicative costs for the different components have not been agreed with the GoK yet. The PDO is proposed to be achieved through three components: (i) (ii) (iii) Youth employment through labor intensive works and social services, Enhancing employability of youth through training and work internships with the private sector; and Improved governance, policy development, institutional strengthening, and program coordination. 15. The first component will enhance the performance of the KKV, by providing technical assistance and extra funds for the implementation of innovative projects. This technical assistance will aim to introduce systemic improvements to the program, including enhancement of community participation in the identification of projects, the use of clearer criteria for project selection, optimization of the labor intensity, enhancement of program targeting, and the development of a strong M&E system. The overall objective of this component will be to enhance the performance of the KKV and make it more flexible to enable expansion and contraction as necessary. 16. The second component will develop a pilot tripartite partnership model, including: youth, training providers, and the private sector. This partnership will aim to increase youth s employability by providing them with training and opportunities for internships and employment with private sector entities. The internships will be limited to a certain period with the provision of some subsidy from the Project. Vocational, life skills and entrepreneurship training will be supported under this component. The objective is for youth to either be employed by these enterprises or to increase their employability with other enterprises or through self employment. This component will be linked to a number of Government

5 and non government organizations in Kenya like the Youth Enterprise Development Fund (YEDF), and the Kenya National Federation of Jua Kali Associations (KNFJA). If successful, such an approach could be scaled up with GoK resources. 17. The third component will provide analytical support to government in key areas relevant to youth and support capacity building of key institutions at both central and decentralized levels. Resources will finance studies in critical youth policy issues, analysis to some labor market issues, and support the institutional capacity of key institutions, like the MoYAS. Training will be provided to youth officers on the ground especially in areas with high community participation. 18. T For the labor intensive public works activities, the current approach of the KKV is to target provinces most affected by the droughts. Within these provinces, the main criterion used for targeting is age (15-29). The wage rate used, which is at minimum wage depending on rural and urban areas, is functioning well as a targeting mechanism. During project preparation, the Bank team will agree with the GoK representatives on which geographical areas the proposed Project will target. For the training and internship activities with the private sector, the kind of youth groups to be targeted (i.e. in terms of education attainment) will determine the features of the support package to be financed. These activities are also likely to have a specific geographical focus given its pilot nature. This will be subject to discussion and agreement during preparation. 19. Gender issues will be given a particular attention in project design. Public works activities will be chosen to ensure adequate female participation. In addition, the provision of social services (such as elderly and children care) is expected to enhance female participation. The Project will also support life skills training for girls to ensure their effective participation in the Project. 20. The Project is being prepared in close partnership with a number of development partners. The ILO will be a main partner during the preparation of the Project and will focus on supporting the labor intensive public works area. The UNDP has already financed a study to identify potential training providers for the Project and will continue to keep an active dialogue with the GoK and World Bank project teams. A UNDP developed training curriculum on Business Skills and Entrepreneurship Development will be considered for use under the Project. The USAID is launching a comprehensive assessment on youth, whose outcome will inform the project design. Active discussion is on-going with other possible partners, including the International Youth Foundation (IYF). During preparation, the GoK and Bank teams will discuss co-financing possibilities with other donors. 21. Institutional Arrangements for the Project will mainly build on existing structures and will seek to strengthen those rather than create new ones. The Project will support the Office of the Prime Minister (OPM) which hosts the secretariat for the KKV. It will strengthen this secretariat and ensure highly dedicated and appropriately skilled staffs are retained. During preparation, the Bank team and GoK representatives will discuss how to best ensure positive civil society participation in project implementation.

6 Safeguard policies that might apply 22. The safeguard policies that may apply to the project are as follows: Environmental Assessment (OP/BP 4.01). The project is not expected to have adverse environmental impacts on human populations or environmentally important areas. Measures required to prevent, minimize, mitigate, or compensate for adverse impacts and improve environmental performance will be incorporated into the operations manual for the KKV. An Environmental and Social Management Framework (ESMF) will be prepared prior to appraisal. Provisions will be inserted into the ESMF requiring that project-specific EIAs be prepared by the Borrower prior to commencement of any activity with significant adverse environmental impacts. Sub-Project Environmental Management Plans will be developed to ensure the mitigation of identified adverse impacts, enhancement of positive ones, and as tools for ongoing community engagement and ownership, along with recommended institutional measures. Indigenous Peoples (OP/BP 4.10). This policy is triggered because of the likelihood that Indigenous Peoples are present in (or have collective attachment to) project lands and an IPPF will therefore be prepared. Once the presence of indigenous peoples in sub-project areas is confirmed, the project will carry out a social assessment of indigenous communities, a process of free, prior informed consultation leading to broad community support and an IPP, following policy requirements. Tentative financing Source: ($m.) BORROWER/RECIPIENT 85 International Development Association (IDA) 50 Total Contact point Contact: Yasser El-Gammal Title: Sr. Operations Officer Tel: Fax: Yelgammal@worldbank.org Location: Oakville, Canada wb C:\Users\wb292079\Documents\Documents\KE - YEP\PID\PID-Concept Stage Aug doc 8/21/ :21:00 AM