In the 1990s, Armenia’s local government structure was weak and unable to fund small-scale projects in remote or high-risk areas. The 1988 earthquake and transition from Communism left behind broken networks and damaged or decrepit infrastructure — hitting Armenia’s poorest populations especially hard.
The IDA-financed Armenian Social Investment Fund (ASIF) was created in 1996 to assist the Government in its effort to improve living standards of lower-income Armenians and strengthen local institutions. It worked directly with local communities to select priority micro-projects, then channeled grant money directly to local governments and community organizations to rehabilitate basic infrastructure. The aim was to institutionalize a quick, cost-effective process, as well as to consolidate the Social Investment Fund as an autonomous agency reporting to the ASIF Board headed by the Prime Minister.
The Armenian Social Investment Fund’s 730 micro-infrastructure projects contributed to a drop in the country’s poverty rate and helped bolster Armenia’s decentralization plans.
Highlights:
- Diverse projects improved communities. More than 730 community infrastructure projects — such as heating schools, building community centers, providing potable water, and improving irrigation — achieved Government objectives to improve services for poor communities.
- Schools equipped. Of the 380 schools rehabilitated or newly constructed, 145 were in the earthquake zone. This project represents the single largest contribution to the Government’s earthquake recovery program. Around 1,400 schools received more than 75,000 pieces of school furniture — desks, chairs, blackboards, bookcases, and teacher tables.
- Water service improved. Water supply services were rehabilitated or constructed in more than 150 villages. This helped increase access to improved water source by rural population from 80 percent in 2002 to 96 percent in 2006.
- Community centers rehabilitated. The project rehabilitated 70 community centers; 15 centers received 4,500 armchairs for assembly halls.
- Training provided. Comprehensive municipal training helped both the Government and the public gain a better understanding of the fundamentals of participation, project management, and accountability. Training was provided to more than 1,800 mayors, 900 village council members, 250 school council members, 200 school accountants, and 70 school principals.
- Beneficiary satisfaction reported. Beneficiaries of project reported a high degree of satisfaction with the quality of completed projected, with construction work by contractors, and with service from ASIF staff. The satisfaction level was derived from results of 7 beneficiary assessments, 3 cost-effectiveness studies, 3 quality of works studies, and 2 institutional assessments.
The Armenian Social Investment Fund has provided prolonged support, starting in 1996 and slated to continue through 2011. In all, IDA has contributed US$65 million thus far: ASIF I (1996-2000) in the amount of US$12 million, ASIF II (2000-2006) in the amount of US$20 million, and ASIF III (2006-2011) in the amount of US$33 million (of which US$8 million is additional financing). Innovative project design included a two-stage poverty-targeting strategy and a regional allocation mechanism to mitigate political pressures in funding.
IDA’s convening power was particularly helpful in building partnerships between the Government of Armenia and the donor community, as well as facilitating community participation. For ASIF I, the Government provided US$1 million; private sponsors, US$2 million; local communities, US$2.5 million; and the Netherlands and United Kingdom, a combined US$2.5 million. For ASIF II, the Government provided US$1.4 million; private sponsors, US$2.7 million; local communities, US$2 million, and the Netherlands and United Kingdom, a combined US$2 million. For ASIF III, the Government and local communities provided US$6.7 million and US$1.5 million, respectively.
The second additional financing for ASIF III in the amount of US$7 million is forthcoming. Basic financial management training will be completed at the municipal level, complementing the work of the World Bank Group’s Public Sector Modernization Project. It also aims to continue building the capacity of local government. Micro projects will target infrastructure gaps in rural and remote communities.
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