The World Bank Multisectoral Early Childhood Development Project (P166800) REPORT NO.: RES50023 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MULTISECTORAL EARLY CHILDHOOD DEVELOPMENT PROJECT APPROVED ON FEBRUARY 28, 2019 TO THE REPUBLIC OF THE MARSHALL ISLANDS HEALTH, NUTRITION & POPULATION EAST ASIA AND PACIFIC Regional Vice President: Manuela V. Ferro Country Director: Stephen N. Ndegwa Regional Director: Daniel Dulitzky Practice Manager/Manager: Aparnaa Somanathan Task Team Leader(s): Anne Marie Provo, Deborah Newitter Mikesell The World Bank Multisectoral Early Childhood Development Project (P166800) ABBREVIATIONS AND ACRONYMS CCT Conditional cash transfer CIU Central implementation unit ECD Early Childhood Development FM Financial management MOCIA Ministry of Culture and Internal Affairs MOF Ministry of Finance MOHHS Ministry of Health and Human Services MOU Memorandum of understanding PDO Project development objective PIU Project implementation unit PSS Public School System RMI Republic of Marshall Islands RMNCH-N Reproductive, maternal, newborn, and child health and nutrition services The World Bank Multisectoral Early Childhood Development Project (P166800) BASIC DATA Product Information Project ID Financing Instrument P166800 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 28-Feb-2019 31-Dec-2024 Organizations Borrower Responsible Agency Ministry of Finance,Ministry of Culture and Internal Affairs,Ministry of Health and Human Services,Ministry The Republic of the Marshall Islands of Education, Sports and Training,Office of Chief Secretary Project Development Objective (PDO) Original PDO To improve coverage of multisectoral early childhood development services OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D4240 28-Feb-2019 15-Mar-2019 30-May-2019 31-Dec-2024 13.00 1.86 11.28 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Multisectoral Early Childhood Development Project (P166800) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This restructuring paper seeks an approval to restructure the Republic of Marshall Islands (RMI) Multisectoral Early Childhood Development Project (ECD-I) to: (i) cancel SDR 7,200,000 (US$9,973,080 equivalent) of the total project amount of SDR 9,400,000 (US$13.0 million equivalent) which will be recommitted to the proposed Multisectoral Early Childhood Development Project – Second Phase (ECD-II) (P177329), and (ii) advance the closing date of ECD-I from December 31, 2024 to December 31, 2022. 2. The proposed restructuring does not change the project development objective (PDO) and results framework. No additional safeguard policies will be triggered. No changes in the implementation and fiduciary arrangements are expected. The financial management arrangements and key internal controls have been implemented as agreed, and there are no outstanding interim unaudited financial reports and audit reports. A. Project Status 3. The ECD-I project in amount of US$13 million equivalent was approved on February 28, 2019 and became effective on May 30, 2019. The PDO is to improve coverage of multisectoral early childhood development services. The project has been rated moderately satisfactory in the implementation status and results reports (ISRs) for both progress towards achievement of the PDO and overall implementation progress since June 2020. After two years and eight months of project implementation, only US$1.86 million, or 14 percent of the total grant amount was disbursed (as of March 7, 2022). 4. The project experienced significant delays in implementation caused by: i) implementation constraints inherent to the multisectoral nature of the project client and implementing agencies; ii) the small island state context, where weak institutions and the situation of urgent capacity constraints was exacerbated by project management challenges, particularly the departure of the project manager and delay in hiring/onboarding/relocation of the new project manager; iii) limited procurement capacity and coordination challenges with the central implementation unit; iv) delays in fiduciary assessments required for implementation of the conditional cash transfers (CCT) delivery system; and v) limited ability to supervise and provide implementation support because of COVID-19 constraints. Despite these issues, the project has been making progress, as per the latest ISR as of September 30, 2021, and effectively having set a strong foundation for the next phase of implementation. Specifically, implementation progress by component has been as follows: 5. Component 1 – Improve coverage of essential reproductive, maternal, newborn, and child health and nutrition (RMNCH-N) services (implemented by the Ministry of Health and Human Services - MOHHS). After several failed rounds of procurement for the International Advisor-Health, the MOHHS has accelerated implementation progress since the hiring of the new Advisor in October, 2022. MOHHS leadership has endorsed the essential package of RMNCH-N services; a primary health care strategic reform committee established to finalize project investments in the infrastructure, human resources, equipment and supplies, and data/IT systems needed to operationalize the package in Majuro/Ebeye. Select project activities, such as the development of an RMI-developmental “milestone passbook”; the upgrade of the Majuro Hospital labor and delivery ward and public health offices; and operational support to the Neighboring Islands outreach teams, have been initiated. The MOHHS is finalizing the scope of work for PIHOA technical assistance. 6. Component 2 – Improve coverage of stimulation and early learning activities (implemented by the Ministry of Education, Public School System - PSS). Significant progress has been made on initiating the early learning activities. Three pre-school classrooms in Majuro have been established including the recruitment of the three teachers and three teacher aides. Two additional classes are being established in Ebeye after recently identifying a church facility for use. Daily The World Bank Multisectoral Early Childhood Development Project (P166800) routine and learning standards have been developed and the plans for continued bottom-up curriculum development during the first year are laid out. Furniture, toys, kits, books, ukuleles, and other learning materials have been procured. The book supply analysis was completed, and seven quality and age-appropriate titles have been shipped to the RMI. Distribution of these and other caregiver engagement materials is ongoing. Training of 218 kindergarten to grade 3 teachers and PSS staff, including teachers that will be transferred to preschool classes, on ECD-relevant topics were completed in 2021. The Women United Together Marshall Islands (WUTMI) contracting process for expansion of their parenting home visiting program from 85 families to 250 families is being finalized and provide a critical entry point for linking households with the social assistance interventions and healthy behaviors. 7. Component 3 – Social assistance for early years’ families (implemented by the Ministry of Culture and Internal Affairs - MOCIA). The MOCIA’s progress on developing the CCT delivery system has been notable, despite some implementation and fiduciary challenges. Achievements include remarkable progress on the development of the modules of the management information system; in-depth technical discussions on developing and deploying a grievance redress mechanism; initial discussions on conditionalities and outreach campaign; and progressing preparation of the MOU with implementing partners. However, some critical implementation details for the CCT Operational Manual and implementation plan are still in development. Discussions with the Bank of Marshall Islands on the MOU are in an advanced stage, yet critical areas of fiduciary oversight and control are still missing. Notably, the hiring of a dedicated financial management (FM) expert to support the CCT and establish internal audit procedures has been delayed 8. Component 4 - Strengthening the multisectoral ECD system and Project management. The project has benefitted from sustained support of the ECD Cabinet Committee, the Chief Secretary, and the project’s steering committee. With the recruitment of the replacement project manager and the International Advisor-Health, the full complement of the project implementation unit (PIU) staff has improved implementation over the past six months. Second project manager started working remotely on March 1, 2021, and arrived in Majuro in mid-August, 2021.The consultant has been working on pending critical issues, such as: (a) the preparation and submission of annual workplans and budgets covering the 2021/22 period (including counterpart financing and Ebeye needs); (b) updating the project operational manual to incorporate adequate roles and responsibilities of the PIU and central implementation unit (CIU) and governance arrangements; (c) regular sector-wide coordination of government entities and local and international development partners; and (d) coordination between the PIU and the procurement, financial management, and safeguards teams of the CIU to address operational challenges. 9. Legal covenants. All of the dated legal covenants, that have been due by the time of the preparation of this restructuring, are met. 10. Safeguards Policies. The overall safeguards rating of the project has been satisfactory, as well as the performance of the Environmental Assessment (OP) (BP 4.01). B. Rationale for restructuring 11. The proposed restructuring is in response to the request received from the Government of RMI on March 4, 2022 to cancel SDR 7.2 million (about US$10 million equivalent) from ECD-I and to recommit this cancelled amount to the ECD- II. On May 24, 2021, the Bank received a request from the MOF for additional financing of US$10 million from IDA19 to the original ECD-I project. However, the ECD-I project was prepared under the World Bank’s Safeguard Polices and is ineligible for additional financing for scale up, according to the World Bank guidance.1 Accordingly, a new ECD-II project is under preparation in order to comply with the new operational policies and the Environmental and Social Framework (ESF). The GRMI have expressed a preference for a single project, as was intended in the additional financing request. In 1https://worldbankgroup.sharepoint.com/sites/news/announcement/pages/use-of-additional-financing-for-scaleup-of-ongoing- operations-governed-by-safeguard-policies-20122018-145013.aspx The World Bank Multisectoral Early Childhood Development Project (P166800) light of the limited capacity of the implementation agencies and ongoing delays, implementation of two projects with similar PDO, separate fiduciary management, and different environmental and social policies could result in unnecessary complexity and increase risks for successful achievement of PDOs for both operations. 12. Furthermore, given that initial GRMI’s request for additional financing was focused on the increase in scope of the original project, with additional expansion of activities to neighboring islands and increased benefit level of the CCT pilot program, the new ECD-II is being prepared building upon the original activities and current achievements of the ECD-I. Specifically, ECD-I helped establish a foundation for the RMI’s multisectoral ECD system, including: (a) establishing the PIU and mobilizing international and national technical assistance to support project implementation; and (b) establishing and ensuring regular convening of the Cabinet Committee on ECD and Program Steering Committee in their governance functions. Technical assistance under ECD-I has supported the development of (a) a new, basic essential RMNCH-N service package and neighboring islands health service delivery standards; (b) preschool renovation, curriculum and standards development, teacher, and teacher assistant training; (c) design and contracting of a home visit provider to expand parent education to more households; (d) the design of a comprehensive CCT pilot program, including a locally relevant targeting mechanism and management information system; and (e) a multisectoral ECD household survey. The ECD-II, as agreed with the GRMI, will continue supporting activities in Majuro and Ebeye, while adding new activities for the neighboring islands. Should the ECD-I remains as originally designed, the proper sequencing of activities under two parallel projects with the same objective of supporting the country’s ECD system may be jeopardized by the increased complexity. 13. The preparation of the new ECD-II project is underway, with expected approval date of May 26, 2022; therefore, the restructuring of the ECD-I project is proposed to cancel the undisbursed, uncommitted funds to ensure timely reallocation to the new ECD-II project prior to negotiations. Early closure of the ECD-I is also proposed to align with the objective of implementing one consolidated operation going forward. II. DESCRIPTION OF PROPOSED CHANGES C. Proposed Changes 14. Partial cancellation of the IDA Grant D424-MH in an amount of SDR 7.2 million (US$9,973,080 equivalent), as of March 4, 2022 (the date of receipt of the government request by the Bank). 15. Components and costs. The revised cost for each component and the proposed budget allocation is provided in Section IV “Detailed Changes.” Proposed allocation after the restructuring includes disbursed and committed amounts, as well as expected costs to cover implementation of remaining activities until the proposed closing date of December 31, 2022. 16. Disbursement categories. The withdrawal table set forth in Section III.A of Schedule 2 to the Financing Agreement will be revised to reflect the cancelled amount under each category. 17. Change in Grant Closing Date. Section III.B.2 of Schedule 2 to the Financing Agreement will be amended to advance the closing date of the grant from December 31, 2024 to December 31, 2022. 18. Disbursement Estimates are revised to align with the proposed grant closing date of December 31, 2022 and to reflect the financing envelope after cancellation. The World Bank Multisectoral Early Childhood Development Project (P166800) III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank Multisectoral Early Childhood Development Project (P166800) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1. Improve Component 1. Improve coverage 3.66 Revised coverage of essential RMNCH- 0.81 of essential RMNCH-N services N services Component 2. Improve coverage Component 2. Improve of stimulation and early learning 3.16 Revised coverage of stimulation and 0.90 activities early learning activities Component 3. Social assistance Component 3. Social assistance 2.91 Revised 0.70 for early years families for early years families Component 4. Strengthening the Component 4. Strengthening multisectoral ECD system and 3.27 Revised the multisectoral ECD system 0.64 Project management and Project management TOTAL 13.00 3.05 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-D4240 Effective 31-Dec-2024 31-Dec-2022 30-Apr-2023 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' S REQUEST IDA-D4240- Disburs XDR 9,400,000.00 7,200,000.00 04-Mar-2022 2,200,000.00 FOR 001 ing COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) The World Bank Multisectoral Early Childhood Development Project (P166800) Current Proposed IDA-D4240-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GD, WK, NCS, CS, IOC & TRN 7,610,000.00 874,889.81 2,167,419.93 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: CASH TRANSFER PT 3.2 1,120,000.00 0.00 10,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: REFUND OF PPA 670,000.00 22,580.07 22,580.07 Total 9,400,000.00 897,469.88 2,200,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2019 300,000.00 300,000.00 2020 505,785.44 505,785.44 2021 457,682.03 457,682.03 2022 2,000,000.00 800,000.00 2023 4,000,000.00 983,862.53 2024 4,000,000.00 0.00 2025 1,736,532.53 0.00 .