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The World Bank and the
Palestinian NGO Project


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The Palestinian NGO Project is groundbreaking. For the first time in its history, the World Bank established a project to support NGOs directly, without going through "normal" channels - i.e., representatives of a State. Another unique feature of this first-ever Project is that the Bank financed most of the costs itself as a grant of US$10 million derived from its net income. Additional funding (US$5.3 million) was raised for this Project from the Saudi and Italian Governments, as well as local contributors. All of this was done for a "people without a State," the people of Palestine. Bank officials administering the Palestinian NGO Project consider it to be "pioneering project funding" that has "enabled the Bank to better balance its client focus by including Palestinian NGOs as partners in project design and implementation."1

Concerned with a deteriorating socio-economic situation for Palestinians in the West Bank and Gaza coupled with the Palestinian Authority's unwillingness or inability to take on most social service delivery, the Bank established the Palestinian NGO Project in 1997 to address poverty reduction. Palestinian NGOs became both a mechanism to deliver services to the poor and marginalized and a beneficiary of capacity building and institutional strengthening as a result of this Project.

For decades, Palestinian non-governmental organizations (PNGOs) have performed a critical role in delivering economic and social services to the poor and marginalized in the West Bank and Gaza Strip and in developing democratic institutions in Palestinian society. PNGOs are thus capable of serving as full partners in the overall Palestinian development effort, along with the Palestinian Authority (PA2) and the international donor community, including the World Bank. Together, these three partners lead the effort to alleviate poverty, develop infrastructure, and provide social and economic services to Palestinians in the West Bank, Gaza Strip, and East Jerusalem.

With the signing of the Israel-PLO Declaration of Principles in September 1993, World Bank officials recognized that the peace process would have greater chance of success if internal Palestinian economic, social, and political development were advanced. Yet, because of the establishment of the PA, PNGOs began to lose funding from international donors, both bilateral and multilateral. And this at a time when Palestinian unemployment was nearly 30% (higher in Gaza), per capita consumption fell 15% (1992-96), and there was a 76% decline in Palestinian employment in Israel.

In designing this project, in 1995-97, World Bank officials determined that: (1) PNGOs were uniquely qualified and positioned to provide help to the Palestinian people suffering in poverty; (2) PNGOs needed continuing financial and technical assistance; (3) PNGO-PA relations had become acrimonious and in need of improvement. Out of this reality, the Palestinian NGO Project was born. Its primary objectives became:

  1. To deliver services to the poor and marginalized in Palestinian society, using NGOs as the delivery mechanism;

  2. To improve the institutional capacities of NGOs receiving grants under the project; and

  3. To support efforts by the Palestinian Authority and the Palestinian NGO sector to strengthen their working relationship, including support for the development of a positive legal framework for the sector.

The Bank selected a project management organization (PMO), the Welfare Association Consortium, through an international bidding process in 1997. In close consultation with local communities and actors (e.g., NGOs, academics, donors), the PMO assesses needs for the PNGO sector and impoverished communities of the West Bank, Gaza Strip, and East Jerusalem. It solicits applications for projects and provides outreach to PNGOs in need of technical assistance and capacity building. The Bank is the Project Administrator and holds a right to object to projects and policies recommended by the PMO. The no objection procedure allows the Bank "to ensure that due process and impartiality had been observed in" the decision making process. The Palestinian Authority also is allowed a "right of objection" to projects the PMO recommends if the PA considers these projects to be redundant with their own efforts or outside their own national development plan. Other than this consultative role, the PA has no role in running this project. Project work in East Jerusalem is a special situation with the Bank providing no role to the PA in Project oversight.

The Palestinian NGO Project is not a Social Fund (SF) per se, with SFs serving as important mechanisms to reach the poor using community-based strategies - community participation, demand orientation, and investment in local organizational capacity to achieve sustainability at the grass-roots level. While PNGO Project is not an SF, the similarities between it and SFs elsewhere are an indication that Bank officials should look more closely at both in order to share lessons. Indeed, some officials and NGOs in the region are in fact coming to Palestine for these purposes. The SF experiences also highlight the importance of funding NGO pre-investment activities in order to promote local participation and community mobilization efforts, and the need for careful targeting to ensure projects are responsive to the priorities of the poor and marginalized.

With initial funding provided by the World Bank and the Governments of Saudi Arabia and Italy, the Palestinian NGO Project became effective on July 11, 1997. The total project allocation is $17 million, $14.55 million of which has been committed and $4.1 million disbursed (as of August 1999). The first year of this project (July 1997-July 1998) experienced considerable delay in project implementation. The World Bank determined in February 1998 that implementation progress was "satisfactory" but that problems existed in project management during the start-up phase. The project was back on track by the beginning of 1999.

The first Development Grants were approved and distributed in summer 1998. In that cycle, 365 applications were submitted and 39 projects received funding totaling $1.8 million. The second cycle, in spring 1999, yielded 235 proposals. Of these, 35 projects were approved for a total of $3.2 million in support. Another funding mechanism - Block Grants - was established at the same time as the second cycle of development grants. Through the Block Grant mechanism, the PMO funds large, experienced NGOs that in turn manage sub-projects aimed at poverty alleviation and reaching the marginalized, especially by working with smaller PNGOs who lack the experience and capacity to write grants successfully. Seven Block Grants, totaling $3.55 million, were awarded in summer 1999. In the third cycle of Development Grants, 255 proposals were received in January 2000. About $2.5 million was available to fund successful projects. Recovery Grants, a feature of the Project as originally designed, were dropped due to considerable difficulties in managing and financing such a specialized mechanism.

A third objective of the NGO Project, and one that initially seemed as daunting as the goal of poverty alleviation, is to improve relations between the PA and the PNGO sector. While those relations were strained in the first two years of this project (1997-98), they improved by mid-term (1999-2000). The Palestinian Legislative Council approved a law, developed with the input and support of the PNGO community, to regulate the NGO sector. The Executive Branch of the PA amended this draft law and insisted that NGOs register with the Ministry of Interior rather than the Ministry of Justice, as proposed by the PLC. Neither the PLC nor the PNGO leadership sought to prolong the struggle and the law was ratified in January 2000. Beyond the important legislation, the development of which received some technical assistance through this project, the PMO of the Project devoted considerable energies on improving PA-NGO relations. In 1999-2000, it organized workshops and an international conference aimed at promoting sectoral communication and cooperation between local NGOs and PA ministries.

In January 2000, an independent team of consultants conducted a Mid-Term Review (MTR) of the Project. The Bank followed this MTR Team with a mission of its own staff to receive the recommendations of the MTR and assess the future of the project. While there were differences of opinion on specifics between the Review Team and the Bank Mission, both agreed on the need to extend the PNGO Project at least three years and to move in a new direction. That direction as originally recommended is aimed at strengthening the professional credentials of the Palestinian NGO movement through "NGO Sector Support." Phase II of the Project would provide both an "exit strategy" for the Bank as well as a valid approach to the question of sustaining the impact of the project on the NGO sector in the West Bank and Gaza.

[1]: "Palestinian NGO Project," mimeo, no date.
[2]: Also known as PNA for Palestinian National Authority



The World Bank and the Palestinian NGO Project, by Denis J.Sullivan

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