The World Bank Kenya Youth Employment and Opportunities (P151831) REPORT NO.: RES52171 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF KENYA YOUTH EMPLOYMENT AND OPPORTUNITIES APPROVED ON MAY 20, 2016 TO THE REPUBLIC OF KENYA SOCIAL PROTECTION & JOBS EASTERN AND SOUTHERN AFRICA REGION Regional Vice President: Victoria Kwakwa Country Director: Keith E. Hansen Regional Director: Amit Dar Practice Manager/Manager: Paolo Belli Task Team Leader(s): Kevin Sanya Heraniah The World Bank Kenya Youth Employment and Opportunities (P151831) ABBREVIATIONS AND ACRONYMS AGPO Access to Government Procurement Opportunities BDS Business Development Services BPC Business Plan Competition EBSS Enterprise Based Skills Survey FY Fiscal Year GRM Grievance Redress Mechanism IA Implementing Agencies IDA International Development Association IP Implementation Progress ISR Implementation Status Results Report ISSOS Informal Service Sector Occupational Survey JSST Job Specific Skills Training KLMIS Kenya Labor Market Information System KeSIC Kenya Standard Industrial Classification KNOCS Kenyan National Occupational Classification KYEOP Kenya Youth Employment and Opportunities Project LMI Labor market information LMO Labor Market Observatory MTR Mid-Term Review MU Moderately Unsatisfactory MS Moderately Satisfactory M&E Monitoring and Evaluation PCU Project Coordination Unit PDO Project Development Objective PITC Project Implementation Technical Committee SDL State Department for Labour SDY State Department for Youth SDR Special Drawing Rights The World Bank Kenya Youth Employment and Opportunities (P151831) BASIC DATA Product Information Project ID Financing Instrument P151831 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 20-May-2016 31-Dec-2022 Organizations Borrower Responsible Agency The Republic of Kenya Project Development Objective (PDO) Original PDO The proposed Project Development Objective (PDO) is to increase employment and earnings opportunities for targeted youths. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-58120 20-May-2016 04-Jul-2016 15-Dec-2016 31-Dec-2022 150.00 132.02 15.97 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Kenya Youth Employment and Opportunities (P151831) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Overall Project Status 1. The Kenya Youth Employment and Opportunities Project (KYEOP) is an IDA credit for an equivalent of US$150 million that was approved by the World Bank Board of Executive Directors on May 20, 2016, becoming effective on December 15, 2016. The Project closing date is December 31, 2022. As of July 2022, the disbursement ratio is 89 percent, below the projected disbursement of 100 percent at Quarter 4 of fiscal year (FY) 2022. The Project Development Objective (PDO) rating was recorded in the latest Implementation Status Results Report (ISR) from May 2022 as Moderately Satisfactory (MS), with the Implementation Progress (IP) rating recorded as MS as well. The Financial Management is rated Moderately Unsatisfactory (MU) due to unresolved audit issues in two implementing agencies (IAs). The IAs are following up with the office of the Auditor General (OAG) for the final resolution. Out of the four PDO-level results indicators that can be measured at this stage (the fifth one will be measured with an impact evaluation for which results will only be available in FY 2023), all are achieved. A total of eleven of the thirteen intermediate results indicators have been achieved while two are under implementation. KYEOP is a Category C Project and does not trigger any safeguards policies, and the overall safeguards rating is Satisfactory. The fiduciary risk is rated High while the overall risk rating is Substantial. Project Status by Component 2. Component 1 on ”Improving youth employability” is rated MS and has progressed well surpassing target numbers of beneficiaries (63,500 out of 55,000 in year 6 of the Project) and posting good employment results, with a recent tracer study showing 81 percent of youth in Cycles 2 to 4 finding paid employment. The final cohort of youth in Cycle 7 are in the last stages of completing their training, after which they will be supported in the certification process and in finding employment. 3. Component 2 on ”Support to self-employment and job creation” is rated MS. It continues to show high employment results; with recipients in Cycles 2, 3 and 4 having a 93 percent employment rate (mostly in self-employment) as shown in a recent tracer study conducted on beneficiaries. The MbeleNaBiz business plan competition (BPC) is almost concluded with all three tranches of business awards disbursed to 667 awardees representing 90 percent of the beneficiaries. The Future Bora Initiative, which aims to identify interventions for hard-to-serve youth, is experiencing delays in the disbursement of the tranches. Only two firms have received the second tranche payment out of four. These delays make it harder for the target number of youths to be reached within the required time frame. The digital learning for Access to Government Procurement Opportunities (AGPO) and catalytic funds, which target over 180,000 individuals, has concluded and has surpassed its target reaching over 217,000 youth, representing an over achievement of 120 percent. 4. There has been considerable progress under Component 3, “Improving labour market information” with increased pace of implementation over the past 6 months. Under this component, the following has been achieved: (a) completion of the Informal Service Sector Occupational Survey (ISSOS); (b) establishment of the Labor Market Observatory (LMO); (c) preparation of a road map for the Kenya Labor Market Information System (KLMIS); and (d) completion of the Kenya Standard Industrial Classification (KeSIC). There has been progress in updating the Kenya National Occupational Classification (KNOCS), and the Enterprise Based Skills Survey (EBSS) has commenced. Concrete outputs to be showcased on the KLMIS website are now completed and will be launched in an enhanced portal with public access. The World Bank Kenya Youth Employment and Opportunities (P151831) 5. Component 4 provides support for strengthening youth policy development, monitoring and evaluation (M&E), and management of the Project. Under this Component, the National Youth Policy has been revised and disseminated, the two impact evaluations are currently at midline, and project coordination has improved. State Department for Youth (SDY) has embarked on a process evaluation for the Government catalytic funds and stepped up its monitoring of Job Specific Skills Training (JSST). The agencies continue working together to consolidate the Grievance Redress Mechanism (GRM) for KYEOP at the Project Coordination Unit (PCU) level. There has been notable improvement in addressing complaints within stipulated timelines. Rationale for Restructuring 6. Delays in achieving targets exacerbated by COVID-19 restrictions. The PDO to increase employment and earnings opportunities for targeted youths continues to remain relevant in the current country context and the project has become even more important in supporting economic recovery among the youth following the COVID-19 pandemic. The project is in year 6 of implementation following a slow start in the initial years. This was exacerbated by a halt in implementation for 6 months from March 2020 when COVID-19 restrictions were in effect in Kenya. Given the slow start and the halt due to COVID-19, when the two largest cohorts of JSST, with a total target of more than 36,000 beneficiaries, were to be trained, there is some lag in the measurement of two key results framework targets related to increase in average earnings among workers at least 6 months after receiving a startup grant, Business Development Services (BDS), or a business competition award and completing process and beneficiary assessment for at least one of the government funded programs for youth. The project also agreed during the Implementation Support Mission held in May 2021 to serve an additional 30,000 beneficiaries to support economic recovery following the pandemic. As a consequence, the project disbursement currently stands at 89 percent (89%). To allow the conclusion of the future Bora Initiative intervention targeting hard to serve youth that delayed in starting, the completion of the process evaluation of the government catalytic funds and attainment of 1 outcome and 2 intermediate indicators contributing to the achievement of the PDO, there is need for extension of the project closing date by an additional 8 months to August 31, 2023. Minor related adjustments to the Results Framework are also envisaged related to the target of beneficiary youths obtaining a skill certification. 7. The proposed Project restructuring is in response to the request of the Government of Kenya letter dated June 3, 2022. This is the second restructuring for the project that seeks to extend the closing date by 8 months from December 31, 2022 to August 31, 2023 to allow conclusion of activities. The initial restructuring extended the closing date from December 31, 2021, to December 2022 and re-allocated funds between categories to increase beneficiaries in response to COVID-19 economic recovery efforts. II. DESCRIPTION OF PROPOSED CHANGES 8. This Restructuring Paper proposes one key modification and other smaller modifications. The key modification relates to extension of the project closing date by an additional 8 months. Other smaller modifications will be undertaken in the Results Framework including revision of the beneficiary targets of one result indicator (“Number of beneficiary youth obtaining a skill certification) from 35,000 to 27,500 beneficiaries to reflect 50 percent of the beneficiaries undertaking skills training. The extension will allow the on-going Project activities adequate time for completion and help with smooth closure of the project, including completion of critical payments to beneficiaries and vendors. In addition, The World Bank Kenya Youth Employment and Opportunities (P151831) the impact evaluations and tracer studies also need to be concluded by June 2023 to be able to provide key information and data on the PDO level impact indicators. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ The World Bank Kenya Youth Employment and Opportunities (P151831) Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) 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-58120 Effective 31-Dec-2021 31-Dec-2022 31-Aug-2023 31-Dec-2023 . The World Bank Kenya Youth Employment and Opportunities (P151831) . Results framework COUNTRY: Kenya Kenya Youth Employment and Opportunities Project Development Objectives(s) The proposed Project Development Objective (PDO) is to increase employment and earnings opportunities for targeted youths. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 To increase employment and earning opportunities for targeted youths Direct Project Beneficiries 0.00 280,500.00 (Number) Female Beneficiaries 0.00 50.00 (Percentage) Percentage of youth receiving training and an internship who find a job or are self-employed 55.00 70.00 70.00 70.00 70.00 70.00 after at least six months (Percentage) Percentage of youth employed, including self-employed, at least 6 months after receiving a 55.00 70.00 startup grant and/or BDS (Percentage) ►Percentage increase in average earnings among 0.00 0.00 0.00 10.00 10.00 10.00 workers (self-employed or wage) at least 6 months after The World Bank Kenya Youth Employment and Opportunities (P151831) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 receiving a startup grant, BDS, or a business competition award (Percentage, Custom) (Percentage) Beneficiaries of job-focused 0.00 280,500.00 interventions (CRI, Number) Beneficiaries of job-focused interventions - Female (CRI, 0.00 140,250.00 Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Improving youth employability Number of beneficiary youths receiving life skills, technical, 0.00 10,000.00 30,000.00 50,000.00 70,000.00 55,000.00 and entrepreneurship training and internships (Number) Number of beneficiary youths obtaining a skill certification 0.00 5,000.00 15,000.00 25,000.00 27,500.00 27,500.00 (Number) Rationale: Action: This indicator has been The end target number is being revised to reflect 50% of youth participating in skills training as per design of the project. Revised The World Bank Kenya Youth Employment and Opportunities (P151831) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Number of craftsmen who participate in upgrading and 0.00 200.00 450.00 700.00 1,000.00 1,000.00 obtain master craftsman certification (Number) Number of new trade standards and testing instruments developed or 0.00 10.00 20.00 30.00 50.00 50.00 revised for traditional (Number, Custom) (Number) Percentage of beneficiary youths satisfied with the life skills, technical, and 0.00 0.00 65.00 70.00 75.00 55.00 entrepreneurship training and internships (Percentage) Support for job creation Number of beneficiary youth receiving a startup grant 0.00 0.00 3,000.00 9,000.00 22,000.00 54,000.00 and/or BDS (Number) Number of applicants to the 0.00 0.00 3,000.00 3,000.00 3,000.00 3,000.00 business competition (Number) Percentage of beneficiary youth satisfied with the start- up grants and the business 0.00 0.00 65.00 70.00 75.00 80.00 development services (Percentage, Custom) (Percentage) Number of youth who 0.00 23,500.00 55,000.00 133,500.00 188,500.00 188,500.00 participate in the awareness The World Bank Kenya Youth Employment and Opportunities (P151831) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 sessions on government opportunities (AGPO and government funding) ) (Number, Custom) (Number) Improving labor market information 1) Revised KNOCS Fully functional LMIS Number of and types of LMIS 1) Localized ISIC Rev 4 2) Skills and 1) National Manpower National Occupational generating and reports published by the LMIS 0.00 2) Updated Skill Occupational outlook for Profile Report Outlook Report disseminating various LMI unit (Text) inventory the informal sector reports Number of visitors of the LMIS 0.00 0.00 1,000.00 4,000.00 7,000.00 10,000.00 website (Number) Strengthening youth policy development and project management Implementation plan for new NYES submitted to the National Implementation plan Implementation plan n.a. n.a. n.a. n/a Cabinet Office (Text, Custom) submitted submitted (Text) Complete process and Process evaluation and Consultant(s) to conduct beneficiary assessment for at No process and beneficiary assessments One or more process and process evaluation and Process evaluation Beneficiary assessment least one of the government beneficiary assessments published online and beneficiary assessments beneficiary assessments completed completed funding programs for youth conducted disseminated to relevant completed hired (Text, Custom) (Text) stakeholders IO Table SPACE The World Bank Kenya Youth Employment and Opportunities (P151831)