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Any queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; email: pubrights@worldbank.org. Contact Information World Bank Delta Center, Menengai Road, Upper Hill, P.O. Box 30577-00100, Nairobi, Kenya Tel: +254 20 2936000 Fax: +254 20 2936382 Email: somaliampf@worldbank.org Website: https://www.worldbank.org/en/country/somalia/brief/the-somalia-multi-partner-fund-mpf Twitter: @mpf1somalia Inside photos: Mohamed Abdihakim Ali/The World Bank ABBREVIATIONS AND ACRONYMS AF Additional Financing MSME Micro, Small, and Medium Enterprise AfDB African Development Bank MTR Mid-Term Review ASA Advisory Services and Analytics Norway Norwegian Ministry of Foreign Affairs BRA Benadir Regional Administration PFM Public Financial Management CIP Public Sector Capacity Injection Project PIU Project Implementation Unit CPF Country Partnership Framework PLR Performance and Learning Review CSSP Somaliland Civil Service Strengthening Project RCRF Recurrent Cost and Reform Financing Project Denmark Kingdom of Denmark, acting through the Ministry SBCF Somali Business Catalytic Fund of Foreign Affairs SCALED-UP Somalia Capacity Advancement, Livelihoods and DRM/PFM Domestic Revenue Mobilization and PFM Capacity Entrepreneurship, through Digital Uplift Project Strengthening Project SCORE Somali Core Economic Institutions and ESF Environmental and Social Framework Opportunities Program EU European Union SCRP Somalia Crisis Recovery Project FCV Fragility, Conflict, and Violence SDRF Somalia Development and Reconstruction Facility FGC Financial Governance Committee SEAP Somali Electricity Access Project FGS Federal Government of Somalia SEU Somalia Economic Update FHW Female Health Worker SFF-LD Special Financing Facility for Local Development FMIS Financial Management Information System SIF Somali Infrastructure Fund (AfDB-administered) FMS Federal Member States SMP Staff-Monitored Program FY Financial Year SUIPP Somali Urban Investment Planning Project GBV Gender-Based Violence SURP Somali Urban Resilience Project HIPC Heavily Indebted Poor Countries Initiative Sweden Sweden, represented by the Swedish International Development Cooperation Agency IDA International Development Association United United Kingdom of Great Britain and Northern IDP Internally Displaced Person Kingdom Ireland, acting through the Foreign, Commonwealth IFC International Finance Corporation and Development Office (FCDO) IFI International Financial Institution United States United States Agency for International Development IMF International Monetary Fund WBG World Bank Group MDA Ministries, Departments, and Agencies ii MPF REPORT · JULY — DECEMBER 2021 CONTENTS Introduction........................................................................................................................................................................................................................................................... 1 Portfolio Overview............................................................................................................................................................................................................................................. 7 Effective, Accountable Government: Strengthening Institutions and Financing for Human Capital Delivery.................................... 7 Investment Projects ........................................................................................................................................................................................................................ 9 Policy Dialogue and Analytics.................................................................................................................................................................................................... 10 Knowledge Products ...................................................................................................................................................................................................................... 12 Enabling Economic Growth: Supporting Inclusive Private Sector-Led Growth...................................................................................................... 14 Investment Projects ........................................................................................................................................................................................................................ 14 Policy Dialogue and Analytics.................................................................................................................................................................................................... 16 Urban Infrastructure: Strengthening Resilience......................................................................................................................................................................... 17 Investment Projects ........................................................................................................................................................................................................................ 17 Policy Dialogue and Analytics.................................................................................................................................................................................................... 17 Enhanced Risk Management...................................................................................................................................................................................................................... 19 Financial Management ............................................................................................................................................................................................................................ 20 Background........................................................................................................................................................................................................................................ 20 Strengthening Portfolio Financial Management Integrity ............................................................................................................................................ 21 Risk-Based Approach...................................................................................................................................................................................................................... 21 FM/Fiduciary Engagement Model............................................................................................................................................................................................ 22 Next Steps........................................................................................................................................................................................................................................... 22 Monitoring Agent ....................................................................................................................................................................................................................................... 23 Portfolio Risk Profile............................................................................................................................................................................................................................... 23 Risk Management Role of the Monitoring Agent............................................................................................................................................................... 25 Procurement .................................................................................................................................................................................................................................................. 27 Procurement Capacity Development...................................................................................................................................................................................... 27 Procurement Integrity.................................................................................................................................................................................................................... 28 Procurement Reforms.................................................................................................................................................................................................................... 28 Environmental and Social Risk Management ............................................................................................................................................................................. 28 Women’s Safety and Risk Management ......................................................................................................................................................................................... 30 GBV/SEAH Risk Management in Somalia.............................................................................................................................................................................. 30 The Somalia Women’s Empowerment Platform ................................................................................................................................................................ 32 MPF Financials...................................................................................................................................................................................................................................................... 35 Looking Ahead..................................................................................................................................................................................................................................................... 39 APPENDIXES........................................................................................................................................................................................................................................................... 47 Appendix 1. MPF Monitoring Framework: 2019–2021 ......................................................................................................................................................... 47 (A) MPF Operational Performance............................................................................................................................................................................................ 47 (B) MPF Results.................................................................................................................................................................................................................................. 48 Appendix 2. Status of HIPC Completion Point Triggers ........................................................................................................................................................ 51 Appendix 3. Status of Reform Benchmarks/Disbursement-Linked Indicators......................................................................................................... 53 (A) RCRF II Disbursement Status ............................................................................................................................................................................................... 53 (B) RCRF III Performance-Based Conditions’ Disbursement Status ............................................................................................................................. 57 (C) Matrix of SCALED-UP Performance-Based Conditions.............................................................................................................................................. 59 The MPF is helping to double down on our knowledge work and enhancing risk management for our portfolio, in addition to informing the Bank pipeline and, in some instances, co-financing of IDA operations. iv MPF REPORT · JULY — DECEMBER 2021 INTRODUCTION T he Multi-Partner Fund (MPF) for Somalia has been the primary source of financing for the World Bank Group’s (WBG) early reengagement in Somalia after During the reporting period, the political landscape in Somalia has remained focused on the successful completion of the electoral process and a peaceful more than two decades of disengagement. The MPF transition of power to enable further progress on was established in 2013, and since then has supported development priorities, the debt relief process, and the process for normalizing Somalia’s relations with security sector reform. While the Upper House elections international financial institutions (IFIs), while building have been successfully completed, increasing the and strengthening core government systems at both percentage of women to 26 percent, the elections of federal and state level. the Lower House have progressed slowly, with about 10 percent of seats filled by the end of 2021. Similar to In nonaccrual status since 1991, Somalia has not had the Upper House elections, female representation in the access to regular development financing from IFIs, House of the People is projected to fall short by about 19 including the World Bank’s International Development percent. The electoral process has been accompanied by Association (IDA). Having cleared arrears and reached its discussions over the politicization of armed forces and Heavily Indebted Poor Countries Initiative (HIPC) Decision has been further delayed, missing both the February 25 Point in March 2020, Somalia’s development financing and March 31 deadlines. The international community aims to support an ambitious agenda which is central to remains committed to supporting peaceful elections moving the country towards greater stability and more as well as the security transition process to improve the inclusive development. We are at a strategic moment for volatile security environment. The African Union and the the MPF—the strategic alignment of the MPF and the United Nations progressed on the future reconfigured growing IDA portfolio will help in building back better African Union Mission in Somalia (AMISOM) in support and recover from the impact of the crises facing Somalia. of the Somalia Transition Plan. In October 2021, the The MPF is helping to double down on our knowledge International Court of Justice ruled in the maritime work and enhancing risk management for our portfolio, border dispute between Kenya and Somalia that there in addition to informing the Bank pipeline and, in some was no de facto maritime boundary, rejecting claims by instances, co-financing of IDA operations. Kenya. The court drew a boundary that kept some of the disputed area under Kenyan jurisdiction but still awarded This World Bank MPF Progress Report covers the period significant parts of the disputed area to Somalia. July to December 2021. It provides thematic and project- level updates and identifies the external events of the Somalia remains vulnerable to external shocks, putting period that relate to the operating context of the MPF. recent investments and progress on resilience to The report captures achievements and challenges from a hard test. The 2022 Humanitarian Response Plan the reporting period, including the operationalization was launched on December 20, projecting 7.7 million of the Bank’s Country Partnership Framework (CPF), IDA people—more than half the population—in need of reengagement, and support for Somalia’s sustained humanitarian assistance in 2022. To provide assistance to economic reforms towards Completion Point. The report 5.5 million people targeted, the humanitarian partners also captures ongoing and upcoming learning and appealed for close to US$1.47 billion. The drought is analytical activities. a key driver of the humanitarian need which, by the MPF REPORT · JULY — DECEMBER 2021 1 Introduction end of 2021, had already caused additional internal displacement. Addressing drivers of cyclical need, MPF PORTFOLIO FINANCES including climate change, requires sustainable and 11 4 18 sustained investments in water, livelihoods, and basic social services across humanitarian, development, and peace actors. LENDING PROJECTS UNDER ANALYTICAL/ PROJECTS PREPARATION ADVISORY ACTIVITIES Since the onset of the political impasse, implementation of ongoing Bank-financed operations has continued as FINACING CO FINANCING government officials remain available and engaged. MPF IDA FINANCING RESOURCES The Ministry of Finance and the sectoral ministries have maintained their technical capacity, are functioning, US$489.9M US$980.5M and are able to conduct policy/sectoral dialogue and to implement projects. The Bank’s implementation In the reporting period, additional contributions support teams continue to work with clients on their totaling over US$40 million have been received, based projects, and disbursements continue to finance project on the Administration Agreements signed with donors, activities. Project Implementation Units continue including the European Union (Euro 2 million), Norway to operate normally and remain adequately staffed. (NOK 100 million), Sweden (SEK 150 million), the United Several virtual implementation support, preparation, Kingdom (£7 million), and the United States (US$1 appraisal, and closing missions have been conducted million). since October, during the ongoing pandemic. The international community, led by the United Nations With regard to the call of funds, the reporting period and C6+,1 continues to urge continued dialogue and also saw over US$15 million in additional funds received meetings, and avoiding violence. from Denmark (US$3 million), Norway (US$2 million), Sweden (US$5.5 million), the United Kingdom (US$1.02 The MPF portfolio finances 11 lending projects, four million), and the United States (US$1 million). projects currently under preparation, and 18 analytical/ advisory activities. The MPF provides financing During the reporting period, the MPF Consultative worth US$489.9 million. The portfolio is co-financed Group approved some investment projects to be with US$980.5 million in IDA resources. With IDA financed by the MPF. These include (a) Somalia complementing MPF financing, the portfolio is now Recurrent Cost and Reform Financing Project (Phase demonstrating the advantages of blending multiple III) which received Additional Financing (AF) for US$32 sources of financing to leverage a coordinated and million; (b) Enhancing Public Resource Management pooled financing approach using country systems. The Project for US$25 million; (c) Empowering Women total active Bank portfolio at the end of the reporting through Education and Skills Project (‘Rajo Kaaba’) for period amounted to US$1.64 billion combined IDA and US$25 million; and (d) Urban Resilience Project (Phase II) Trust Fund financing. As of December 2021, donors had which received AF of US$21.58 million. The Somaliland committed a total of US$524.4 million to the MPF, of Civil Service Strengthening Project II is now active and which US$517.1 million had already been paid in. funded under the MPF for US$4.85 million. 1 The C6+, or Copenhagen Group, includes the ambassadors of Ethiopia, Italy, Sweden, the United Kingdom, the United States, the African Union (AU), the European Union (EU), and the Intergovernmental Authority on Development (IGAD). 2 MPF REPORT · JULY — DECEMBER 2021 Introduction Additional knowledge work, enhanced risk The Enabling Economic Growth portfolio financed five management, and policy dialogue was started for: active projects. Three of these are recipient-executed • The Climate Change Program. investment projects, and two are Bank-executed analytical/advisory activities (Table 2). The MPF provides • Capacity Building for Environmental, Social, and financing worth US$52.6 million to this focus area. Security Risk Management in Development The portfolio is co-financed with US$297.5 million in Interventions. IDA resources. This portfolio aligns with the CPF under • Policy Notes for the new government. Focus Area 2: Restoring Economic Resilience and • Financial System Initiative. Opportunities, through which the WBG aims to increase • Somalia Economic Update Edition 7. economic resilience as a basis for long-run poverty reduction and inclusive growth. The Effective, Accountable Government portfolio of the MPF financed 11 projects. Of these, six are recipient- ENABLING ECONOMIC GROWTH executed investment projects and five are analytical/ 3 advisory activities (Table 1). The MPF provides financing RECIPIENT EXECUTED 5 worth US$364.3 million. The portfolio is co-financed PROJECTS with US$633 million in IDA resources. It represents the 2 largest portfolio within the MPF; many of the projects PROJECTS ANALYTICAL/ADVISORY are closely interlinked. The MPF built the platform for a ACTIVITIES key scale up of the portfolio in Human Development, FINACING CO FINANCING approving US$100 million for Health, US$40 million for education, US$175 million for the Baxnaano platform, MPF IDA FINANCING RESOURCES and US$115 million for combating the impact of the locust crisis. Under the CPF, the WBG is strengthening US$52.6M US$297.5M ongoing governance programs with a new focus on fiscal space and improving access to—and the quality The Urban Infrastructure portfolio financed three active of—key social services and resilience. This portfolio projects. Two of these are recipient-executed investment aligns with CPF Focus Area 1: Strengthening Institutions projects, and one is a Bank-executed analytical/advisory to Deliver Services. activity (Table 3). The MPF provides financing worth US$73 million. The portfolio is co-financed with US$50 EFFECTIVE, ACCOUNTABLE GOVERNMENT million in IDA resources. This portfolio aligns with the CPF under Focus Area 1: Strengthening Institutions to 6 RECIPIENT EXECUTED Deliver Services, specifically, Objective 1.4: Build the 11 PROJECTS capacity of Somali municipalities for urban resilience. PROJECTS 5 ANALYTICAL/ADVISORY ACTIVITIES The Bank produces a slew of Knowledge Products that document useful lessons or research. A report on ‘Somalia Public Financial Management (PFM) FINACING CO FINANCING Assessment in Federal Member States’ was produced MPF IDA and used for policy dialogue. The design of future FINANCING RESOURCES operational support to PFM will be largely influenced US$364.3M US$633M by the main findings of this assessment. The ‘Somali MPF REPORT · JULY — DECEMBER 2021 3 Introduction is expected to be ready in January 2022). The Federal URBAN INFRASTRUCTURE Government of Somalia established its first national safety net program, the Baxnaano Program, in 2019 with 2 RECIPIENT EXECUTED support from IDA and, despite institutional challenges, 3 PROJECTS political and economic fragility, the Program is delivering promising results. A discussion paper on Baxnaano PROJECTS 1 ANALYTICAL/ADVISORY ACTIVITY deliberates the design and implementation experience of this Program. FINACING CO FINANCING MPF IDA The WBG commissions the MPF Monitoring Agent to FINANCING RESOURCES provide periodic strategic risk reviews of emerging US$73M US$50M issues of institutional reform and state-building in Somalia. These reviews inform government and WBG Country Economic Memorandum: Towards an Inclusive strategy, portfolio management, and implementation. Jobs Agenda’ report utilizes available quantitative data, The WBG Somalia portfolio risks are rated high, even primary research conducted for the study, and builds when compared to those for portfolios in other fragile on earlier work. The report considers both the structure and conflict-affected settings. There has been a new of today’s economy and the source of jobs, as well as contract in place with the Monitoring Agent since potential future drivers of growth. Wave 2 of the ‘Somalia: September 14, 2021, and has been operational since COVID-19 High Frequency Phone Survey’, reaching October 15, 2021. New focus areas within the ambit 2,811 households, was conducted in January 2021— of the Monitoring Agent include the environmental information about the HFPS is also available on a blog and social framework, procurement, and project and a dashboard (for which a dedicated landing page management, among others. 4 MPF REPORT · JULY — DECEMBER 2021 Introduction The Bank established a Somalia Gender Equality Platform, The regional Horn of Africa RRA will also help inform the with the support of the MPF, to deepen and strengthen forthcoming new RRA for Somalia that will be developed strategic engagement on women’s equal opportunities in FY22–23, for which preparations began during the across operations and analytic initiatives. This platform reporting period. In line with the WBG’s FCV strategy will enable multiyear and multisector nonlending and commitments under IDA19, the new Somalia RRA Technical Assistance using a programmatic platform, will further enhance the WBG’s understanding of the which will assist the WBG’s engagement in Somalia by structural drivers of fragility and sources of resilience, promoting gender equality and inclusion. identify lessons learned and best practices from the portfolio, and propose recommendations to strengthen During the reporting period, the World Bank’s Fragility, the WBG’s strategic and operational engagement in the Conflict, and Violence (FCV) Group has provided country moving forward. The RRA will also be informed support to further strengthen the FCV lens of the WBG’s by a note, currently under finalization, that highlights the engagement in Somalia and across the Horn of Africa, key FCV lessons learned from the WBG’s engagement in moving forward. This has included the delivery of the Somalia over the past decade. The forthcoming Somalia WBG’s first regional risk and resilience assessment (RRA) for RRA process will include a consultative and participatory the Horn of Africa—an internal analysis to strengthen the approach with a broad range of internal and external understanding amongst WBG operational teams of the stakeholders to ensure the analysis benefits from the regional and cross-border drivers and spillover impacts of experiences and perspectives of a diverse group of FCV. The RRA included Somalia within its scope, and aims international, regional, and local actors. to inform the growing number of regional operations in the Bank’s portfolio and as part of the Horn of Africa Work has also commenced on more systematically Initiative. Given the dynamic political economy context rolling out the use of the Geo-Enabling initiative for and FCV developments across the Horn, the World Bank Monitoring and Supervision (GEMS) initiative across is also continuing its partnership with the International the Bank’s growing portfolio in Somalia, as part of the Crisis Group for internal monitoring briefings, and has ongoing efforts to strengthen portfolio monitoring, produced an internal dashboard to better understand project supervision and implementation, M&E, and FCV trends and spatial dynamics across the region. capacity building of government counterparts. MPF REPORT · JULY — DECEMBER 2021 5 6 MPF REPORT · JULY — DECEMBER 2021 PORTFOLIO OVERVIEW T he Multi-Partner Fund (MPF) portfolio finances 11 lending projects, four projects currently under preparation, and 18 analytical/advisory activities. the impact of the Bank’s work (a) Investments projects; (b) Policy Dialogue and Analytical activities; and (c) Risk Management activities. Bank reports or publications The MPF provides financing worth US$489.9 million. prepared during the reporting period are given in the The portfolio is co-financed with US$980.5 million in Knowledge Products subsection. The rest of this chapter International Development Association (IDA) resources. provides an update of progress across these portfolios. With IDA complementing MPF financing, the portfolio is now demonstrating the advantages of blending EFFECTIVE, ACCOUNTABLE multiple sources of financing to leverage a coordinated GOVERNMENT: STRENGTHENING and pooled financing approach using country systems. INSTITUTIONS AND FINANCING FOR The total active Bank portfolio at the end of the reporting HUMAN CAPITAL DELIVERY period amounted to US$1.64 billion combined IDA and The Effective, Accountable Government portfolio of the Trust Fund financing. As of December 2021, donors had MPF financed 11 projects. Of these, six are recipient- committed a total of US$524.4 million to the MPF, of executed investment projects and five are analytical/ which US$517.1 million had already been paid in. advisory activities (Table 1). The MPF provides financing worth US$364.3 million. The portfolio is co-financed with The MPF projects remain organized under three US$633 million in IDA resources. It represents the largest focus areas that target specific pillars of Somalia’s portfolio within the MPF; many of the projects are closely National Development Plan: (a) Effective, Accountable interlinked. The MPF built the platform for a key scale up of Government strengthens institutions and financing for the portfolio in Human Development, approving US$100 human capital delivery; (b) Enabling Economic Growth million for Health, US$40 million for education, US$175 supports economic resilience and opportunities, million for the Baxnaano platform, and US$115 million through which the World Bank Group (WBG) aims for combating the impact of the locust crisis. Under to increase economic resilience as a basis for long- the Country Partnership Framework (CPF), the WBG is run poverty reduction and inclusive growth; and (c) strengthening ongoing governance programs with a Urban Infrastructure, which strengthens institutions new focus on fiscal space and improving access to—and to deliver services, specifically, building the capacity of the quality of—key social services and resilience. This Somali municipalities for urban resilience. In addition, portfolio aligns with CPF Focus Area 1: Strengthening from this edition onwards, the activities have been Institutions to Deliver Services.2 reorganized into three categories to better understand 2 More specifically, it targets the first objectives of Focus Area 1: (1.1) Improve public finance management and institutional effectiveness; (1.2) Enhance domestic revenue mobilization and resource sharing; and (1.3) Establish basic delivery systems for more inclusive social services. MPF REPORT · JULY — DECEMBER 2021 7 Portfolio Overview Table 1. Overview of Projects: Effective, Accountable Government As of December 31, 2021 (in US$ million) MPF IDA Projects Budget Grant Disbursed Grant Disbursed 1. Public Sector Capacity Injection 40.0 36.4 28.7 Project (CIP) 2. Somaliland Civil Service 10.7 10.0 8.6 Strengthening Project (CSSP) 3. Domestic Revenue Mobilization and PFM Capacity Strengthening 50.0 30.0 26.6 20.0 12.6 Project (DRM/PFM) 16.0 14.8 14.8 4. Recurrent Cost and Reform 206.0 118.0 107.1 60.0 52.8 Financing (RCRF) Project3 68.0 22.4 Investment 5. Somali Integrated Statistics and Economic Planning Capacity 25.0 25.0 2.9 Building Project 6. Improving Healthcare Services in Somalia Project (‘Damal 100.0 100.0 2.9 Caafimaad’) 175.0 175.0 57.8 7. Social Protection Engagement4 115.0 115.0 57.8 8. Somalia Financial System Initiative 6.5 9. Somalia: Empowering Women through Education and Skills 50.0 20.0 30.0 Project (‘Rajo Kaaba’) 10. Education in Somalia 40.0 40.0 11. Support to Financial Governance 5.6 5.6 4.3 Policy Dialogue (FGC) 12. Trade 0.6 0.6 0.01 Policy Dialogue and Analytics 13. Enhancing Governance Dialogue 1.9 1.9 1.4 on Somalia 14. Health in Somalia5 374.0 125.0 15. Social Protection Engagement: Somalia Social Protection Support 2.0 2.0 1.3 (ASA) Management 16. Somalia: Capacity-Building for Environmental, Social, and Security Risk 0.5 Risk Management in Development Interventions TOTAL 1,218.8 364.3 192.8 633.0 209.2 3 The financials for the RCRF have been split into three rows because the first phase of the project (first row) is now closed. Phase II of the project was restructured and scaled up with additional financing in 2018. The original grants for Phase II and the additional financing are grouped in the second row. RCRF III (third row), approved as an IDA-only grant of US$68 million, complements RCRF II with an enhanced focus on intergovernmental fiscal federalism, citizen engagement, and service delivery. 4 The financials for Social Protection Engagement have been divided into two rows. The first row is for the Safety Nets for Human Capital Project. The second row is for the Safety Nets for Locust Response Project. 5 Additional Trust Fund resources amount to US$249 million. This includes resources from the following Trust Funds: the Policy and Human Resources Development Fund (PHRD); and the Global Financing Facility (GFF). 8 MPF REPORT · JULY — DECEMBER 2021 Portfolio Overview Investment Projects National Statistical System and key official statistics- producing agencies in the collection, processing, and The Recurrent Cost and Reform Financing (RCRF) dissemination of poverty and selected macroeconomic project has enhanced focus on intergovernmental data, which will help inform development policy and fiscal federalism, citizen engagement, and service poverty reduction activities. delivery, and also introduced reform benchmarks for improved governance and service delivery at Federal Additional financing for the restructured Domestic Member State (FMS) level. RCRF II was approved as Revenue Mobilization and Public Financial an IDA-only grant Additional Financing (AF) of US$51 Management (DRM/PFM) Capacity Strengthening million; it is complemented by RCRF III (US$68 million) project is expected to lead to strengthened capacity which became effective on December 16, 2020. An AF to formulate efficient tax policy, establishment of more of US$68 million is currently under preparation and will efficient inland revenue tax administration organization provide continuity of recurrent cost financing beyond and systems, and strengthened PFM and auditing the lifetime of RCRF II into 2022 and 2023, providing a more predictable recurrent cost financing framework. It systems. The closing date of the original project was was only possible to prepare the new operation because extended by two years—from June 30, 2020, to June of the existing RCRF II project, to which the MPF provides 30, 2022—to allow for the successful implementation critical support. RCRF III will also contribute to COVID-19 of the project’s original and new activities. The changes response and recovery through scaled-up fiscal support will strengthen the overall development impact of the to FMSs through fiscal transfers for education and health original project and better align the Bank assistance with service delivery, scale-up of the ‘Marwo Caafimaad’ the changing government priorities and country context. Female Health Worker Program and retraining for COVID-19 response. The Somalia Shock Responsive and Social Safety Nets programmatic update consolidates the IDA-funded The RCRF complements the Capacity Injection Somalia Shock Responsive Safety Net for Human Project (CIP), supporting the Federal Government of Capital Project (SNHCP) (‘Baxnaano’) and Somalia Somali (FGS) and Puntland State government. The CIP Shock Responsive Safety Net for Locust Response Project develops capacity for key cross-cutting government (SNLRP). (Details about the MPF-funded Advisory functions, thus strengthening policies and procedures Services and Analytics (ASA) component, ‘Somalia Social for civil service management; strengthening policy Protection Support: Building Blocks towards a National management, coordination, and monitoring capabilities Social Protection System’, are given on page 9.) The at the center of government. As a smaller subset but SNHCP is the umbrella project supporting the FGS to distinct element of the Series of Projects (SOP), the Civil operationalize the national Social Protection Policy and Service Strengthening Project (CSSP) is designed to develop a national social protection system in Somalia. address the unique public administration challenges of Specifically, it supports the government-led cash transfer Somaliland. Within the overall SOP financing mechanism, program, known as ‘Baxnaano’, with a focus on enhancing the CSSP complements the CIP (appraised at US$40 cash transfer linkages with the health and education million) supporting the FGS and Puntland in the first sectors for enhanced human development outcomes. phase, and other member states in subsequent phases. The SNLRP—developed in response to the impacts of the recent locust outbreak—operationalizes the shock The Somali Integrated Statistics and Economic responsive aspect of the SNHCP and provides emergency Planning Capacity Building project is also aimed cash transfers to affected households. It is implemented at strengthening, and building the capacity of, the using existing Baxnaano delivery arrangements. MPF REPORT · JULY — DECEMBER 2021 9 Portfolio Overview The FGS has identified the development of a Unified Policy Dialogue and Analytics Social Registry (USR) as a priority and a key instrument for The Somalia Financial System Initiative (FSI), to be advancing social protection support in Somalia, as well as implemented across Somalia, will support the national one of the triggers for the completion point of the HIPC financial sector development agenda benefiting all Initiative. This provides the impetus for engaging UN, of Somalia. The concept note and detailed plans are humanitarian, and donor agencies to share beneficiary under discussion and expected to be finalized in the data to build the social registry. second half of FY22. The World Bank (WB) task team will closely coordinate the implementation of FSI with The US$100 million Improving Healthcare Services activities under other projects (for example, SCALED- in Somalia Project (‘Damal Caafimaad’) is the first UP) as appropriate. The aim of the FSI is to unlock World Bank–financed IDA health project investment international investment and correspondent banking in Somalia’s health sector in 30 years. An additional relationships in Somalia by improving the integrity of US$7 million in project funds have been retained the financial sector and ensuring that high standards to contribute to achievement of the project’s of corporate governance, risk management, and development objective in Somaliland, with specific compliance safeguarding against terrorist financing and activities and arrangements to be determined based illicit financial flows are met by participants (in both the on agreements between Somaliland and the FGS. The public and private sectors). Damal Caafimaad project is expected to reach about 1.84 million beneficiaries and aims to support rapid The Somalia Shock Responsive and Social Safety Nets expansion of essential health and nutrition services as program includes (besides the two investments projects well as intensive government capacity development discussed on page 8) an ASA component as well— in some of Somalia’s most disadvantaged areas. The the MPF-funded Somalia Social Protection Support: project incorporates lessons from the health program Building Blocks towards a National Social Protection experience in the RCRF (Phases II and III) project and the System. The ASA provides technical assistance support Health ASA. to achieve some of the key objectives of the SNHCP around institutional capacity building. ASA activities The Somalia: Empowering Women through Education contributed to the establishment of social protection and Skills Project (Rajo Kaaba) is a new project, as of policy and governance structures; design of Baxnaano now in the pipeline stage. It aims to Improve literacy, and its delivery systems, as well as the development of numeracy, and income-generating skills in targeted the USR as a broad platform to support shock response populations of women and to prepare selected and coordination across social programs. The ASA women for leadership roles. Beneficiaries, though, (with co-funding from the Foreign Commonwealth will include not only girls and women (primarily and Development Office) also supported a Targeting from the most disadvantaged districts in Somalia), Evaluation of the current community-based targeting but disadvantaged boys and men (in some target approach by the SNHCP; and the development of a districts) as well. Districts will be identified based on Discussion Paper on the experience of Baxnaano as a geographic balance across all FMSs. The project has national safety net program operating in the context received strong endorsement and commitment from of fragility and prolonged humanitarian aid. It is also the federal and state ministries of education and other supporting the design of a Productive Safety Net participating and/or implementing entities, including intervention. the establishment of an inclusive federal and state project technical preparation task force. 10 MPF REPORT · JULY — DECEMBER 2021 Portfolio Overview The Enhancing Governance Dialogue on Somalia to more focused efforts and more resources devoted to platform has financed a report on ‘Somalia Public the work in 2022. Financial Management (PFM) Assessment in Federal Member States’, used for policy dialogue with the The Financial Governance Committee (FGC) has FGS and FMSs; the main findings of this assessment provided technical advice and facilitated policy dialogue influenced the design of future operational support to on a variety of financial governance issues and has PFM. The report was recently disseminated to the MPF made tangible progress over the past six months on donors. Another paper has been drafted to propose a number of issues that are important for improving possible options for a revenue-sharing agreement on sound financial governance, including use of country trade-related taxes, the largest source of revenues. systems, tuna licensing, oil and gas licensing, overflight Further, Pension Technical Working Groups (TWGs) fees, and various contracts and concessions. The have been established in Somaliland and Puntland ‘Financial Governance Report’ (FGR), published during State, and significant progress has been made toward this reporting period, identifies financial governance establishing of a pension TWG at the FGS level. The TWGs priorities for 2021–22 and highlights progress are affording venues for detailed discussions about made in protecting fiscal reforms, natural resource implementation requirements with the government management, concessions and contracts, and Central officials who are tasked with implementation, thereby Bank governance and financial sector reforms. The building knowledge and capacity of those who will be FGC’s agenda for 2021–22 will include a strong cross- the first managers and staff of the respective Pension cutting effort to encourage stronger alignment Fund. The scope of the workstreams and other issues between sectors and financial governance reform, and discussed is also showing the government counterparts to promote fiscal sustainability. the complexity of implementing the plan, which will lead MPF REPORT · JULY — DECEMBER 2021 11 Portfolio Overview The Enhancing Governance Dialogue on Somalia Knowledge Products platform has financed a report on ‘Somalia Public Financial Report on ‘Somalia Public Financial Management Management (PFM) Assessment in Federal Member (PFM) Assessment in Federal Member States’ States’, used for policy dialogue with the FGS and FMSs; the This report was produced by the Enhancing Governance main findings of this assessment influenced the design of Dialogue on Somalia project and used for developing future operational support to PFM. The report was recently policy dialogue. A PFM assessment in the FMSs was disseminated to the MPF donors. Another paper has been drafted to propose possible options for a revenue- carried out during FY21. The main objective of the sharing agreement on trade-related taxes, the largest assessment was to obtain a baseline understanding source of revenues. Further, Pension Technical Working of the performance strengths and weaknesses of the Groups (TWGs) have been established in Somaliland and PFM systems and processes that are currently in place Puntland State, and significant progress has been made and formulate a prioritized set of recommendations. toward establishing of a pension TWG at the FGS level. The It was disseminated to donors, including the Foreign TWGs are affording venues for detailed discussions about Commonwealth and Development Office. implementation requirements with the government officials who are tasked with implementation, thereby Somalia: COVID-19 High Frequency Phone Survey Wave 2 building knowledge and capacity of those who will be In January 2021, Wave 2 of the Somalia High Frequency the first managers and staff of the respective Pension Phone Survey was administered, calling 2,811 Fund. The scope of the workstreams and other issues households to see the impact of COVID-19 on people’s discussed is also showing the government counterparts behavior and livelihood. The first Wave was conducted the complexity of implementing the plan, which will lead in June 2020. A high rate of cell phone ownership in to more focused efforts and more resources devoted to Somalia, at 74 percent, improves quality of data from a the work in 2022. survey of this kind, especially since it is a country where little data is available. The Engagement in Somalia’s Health Sector ASA has closely informed the development of the first WB– Blog about the HFPS Wave 2 financed IDA health investment project in Somalia’s This blog about the HFPS Survey Wave 2 breaks down health sector in over 30 years. The US$100 million the results of the survey, explaining its concepts and ‘Improving Healthcare Services in Somalia Project’ findings in easy terms. The blog—whose current article (‘Damal Caafimaad’) became effective as of December is titled ‘What resilient Somali residents are telling us 30, 2021, and will be implemented over four years, about COVID-19 and economic recovery’—aims to talk closing on May 30, 2025. It will deliver essential about the very difficult and tough one-and-a-half years health and nutrition services and improve health that the people of Somalia (the poor, well-to-do, middle- service coverage and quality in some of Somalia’s most class and technocrats, alike) have gone through. disadvantaged areas, as well as strengthen stewardship capacity of Ministries of Health. Around 10 percent of Somali HFPS Dashboard Somalia’s population, as well as internally displaced This dashboard illustrates the findings of the Somali persons (IDPs) and nomads in the target regions, will HFPS. It presents a visual depiction of how people’s lives benefit from the project activities. Project funds have are affected. A dedicated landing page is planned to be also been retained to contribute to achievement of the ready in January 2022. project’s development objective in Somaliland, with specific activities and arrangements to be determined based on agreements between Somaliland and the FGS. 12 MPF REPORT · JULY — DECEMBER 2021 Portfolio Overview Somali Country Economic Memorandum: of today’s economy and the source of jobs, as well as Towards an Inclusive Jobs Agenda potential future drivers of growth. The objective of the Somali Country Economic Memorandum (CEM) is to inform the economic policy Safety Net Program: Discussion Paper dialogue and broader debate in Somalia regarding the In 2019, with support from the International Development types of reforms required to stimulate growth and job Association (IDA), the Federal Government of Somalia creation. The Somalia CEM applies and adapts the Jobs established its first national safety net program, the and Economic Transformation (JET) Framework. The Baxnaano Program. Despite institutional challenges, JET framework has two pillars, one which considers political and economic fragility, the Program is delivering job-creating private investments, and the second that promising results. A discussion paper, titled ‘From concerns building the capabilities of workers. In the Protracted Humanitarian Relief to State-Led Social Safety Somali context, efforts have been made to incorporate Net System: Somalia Baxnaano Program’, discusses the a gender and inclusion lens, given the particularly low design and implementation experience of the Baxnaano levels of female labor force participation. The report has Program to (a) understand the opportunities and two special focus chapters on trade and integration and challenges leading to the establishment of a national entrepreneurship, due to their importance to growth safety net program in a context of high fragility, insecurity, and jobs in the Somali economy. However, a detailed and protracted humanitarian relief interventions; (b) value chain analysis goes beyond the scope of this identify if and how the Program is supporting the vision report. The report utilizes available quantitative data, to transition from protracted humanitarian response to primary research conducted for the study, and builds longer-term safety net system; and (c) examines if and on earlier work. The report considers both the structure how the Program is supporting state building. MPF REPORT · JULY — DECEMBER 2021 13 Portfolio Overview ENABLING ECONOMIC GROWTH: Investment Projects SUPPORTING INCLUSIVE PRIVATE SECTOR-LED GROWTH The Somali Electricity Access Project (SEAP) has strengthened the capacity of the client in terms of The Enabling Economic Growth portfolio financed five project coordination, procurement and financial active projects. Three of these are recipient-executed management, and proactiveness on technical issues. investment projects, and two are Bank-executed The Bank team continues to provide support to manage analytical/advisory activities (Table 2). The MPF provides associated risks. About 64 percent of the project funds financing worth US$52.6 million to this focus area. The have been disbursed (US$3.27 million for the FGS and portfolio is co-financed with US$297.5 million in IDA US$1.29 million for Somaliland), compared with 31 resources. This portfolio aligns with the CPF under Focus percent in the last reporting period. The project is closing Area 2: Restoring Economic Resilience and Opportunities, on June 30, 2022, and would require an extension of six through which the WBG aims to increase economic or 12 months to enable completion of all activities and resilience as a basis for long-run poverty reduction and effective disbursement of funds. inclusive growth.6 Under the CPF, the WBG’s aim is to support activities that increase access to finance and The Somalia Crisis Recovery Project (SCRP) has secured energy, such as new lending for small and medium-sized additional financing (AF) of US$50 million under the enterprises, particularly for women and youth; expanded Bank’s newly established IDA Crisis Response Window access to electricity from renewable sources in targeted to respond to an emerging food security crisis. The rural and peri-urban communities; and greater licensing number of direct overall beneficiaries from the project and supervision capacity of the Central Bank, resulting in as a result of this AF would be close to 2 million people, more secure financial services. with a few more millions of indirect beneficiaries. The project’s current disbursements are at US$34.83 million, representing 18 percent of the total project allocation amount (as of December 2021). Table 2. Overview of Projects: Enabling Economic Growth As of December 31, 2021 (in US$ million) MPF IDA Projects Budget Grant Disbursed Grant Disbursed 1. Somali Electricity Access Project (SEAP) 7.2 7.2 4.2 2. Somali Urban Investment Planning 8.6 8.6 8.6 Project (SUIPP) 3. Somalia Capacity Advancement, Investment Livelihoods and Entrepreneurship 101.0 33.0 5.4 68.0 8.5 through Digital Uplift Program (SCALED-UP) 4. Crisis Recovery and Resilience: Somalia 187.5 187.5 40.1 Crisis Recovery Project (SCRP) 5. Water for Agro-Pastoral Productivity and 42.0 42.0 10.2 Resilience (or ‘Biyoole’) 6. Crisis Recovery and Resilience: Crisis Dialogue and 2.0 2.0 0.8 Analytics Recovery Platform Policy 7. Women Empowerment Platform 1.8 1.8 TOTAL 350.1 52.6 19.0 297.5 58.8 6 More specifically, this portfolio targets the first three objectives of Focus Area 2: (2.1) Improve the business environment and lower barriers to entry; (2.2) Increase access to finance for inclusion and digital development; and (2.3): Increase access to renewable energy. A project on water and resilience is being financed through a PAC Grant under IDA targeting the fourth objective: (2.4) Increase access to water for rural resilience and productivity. 14 MPF REPORT · JULY — DECEMBER 2021 Portfolio Overview Despite the challenging environment, the Water for On November 30, 2021, a US$70 million (of which Agro-Pastoral Productivity and Resilience, or ‘Biyoole’, US$20 million is from the MPF) AF project was declared project has been able to set the foundation for the effective for the Somalia Capacity Advancement, provision of water to agro-pastoral communities in Livelihoods and Entrepreneurship, through Digital Somalia. Several actions have been taken to streamline Uplift Program (SCALED-UP). The AF was combined and speed up the safeguards documents’ clearing with a restructuring and extended the project closing process. However, the Project Implementation Unit’s date by 30 months to December 31, 2025. The AF will aid capacity to prepare safeguards instruments is nascent the FGS in supporting resilient recovery of households and the Biyoole project is the first project of this scale and businesses affected by the COVID-19 pandemic. It undertaking construction in rural Somalia. As such, the will also scale up the parent project’s activities to help time and the support required from WB Environment the FGS provide such support by (a) expanding access to and Safeguards Specialists has been enormous. The finance for viable micro, small, and medium enterprises; length of documents and period for clearance have and (b) accelerating critical capacity-building initiatives delayed implementation. Simplifying the clearing needed to underpin resilient recovery, particularly process will speed up implementation in the remaining among women and women-owned businesses. The AF time of the project. There was a new requirement to project retains the same component structure as the have a Security Risks Assessment (SRA) and SRA plan parent project. in Galmudug and South West states. Since this was unanticipated, an agile approach was taken, and the Activities under the original Somali Urban Investment government was pragmatic in contracting Horn Risk Planning Project (SUIPP) were completed by December Management to do the assessment. There was quick 2018 and the investments are currently being turnaround by the security firm and the report is currently implemented under the Somalia Urban Resilience being reviewed by the client. Project (SURP). The SUIPP AF (US$3 million from the MPF REPORT · JULY — DECEMBER 2021 15 Portfolio Overview German government through the MPF) builds on the In addition, it aims to strengthen the institutional, findings of an urban assessment previously undertaken systems, and policy-related aspects of government-led for Kismayo and Baidoa. The United Nations Office for preparedness and early warning in Somalia, enabling Project Services has provided technical assistance for more informed, coordinated, and transparent decisions the design of priority urban investments. Currently, on disaster risk management. the project is fully disbursed, and all planned activities have been carried out. All feasibility studies, detailed Established in June 2021, the Somalia Women’s engineering designs and bidding documents for Empowerment Platform (also known as the Somalia prioritized road and drainage investments are already Gender Platform) is a multiyear and multisectoral initiative prepared and are ready to be financed under Phase II that aims to assist the WBG’s engagement in Somalia by of SURP. promoting gender equality and inclusion of those left behind more broadly. It aims to deepen and strengthen Policy Dialogue and Analytics strategic engagement on women’s equal opportunities The Crisis Recovery Platform will strengthen core across operations and analytic initiatives. During the priorities on resilience and crisis recovery. This project reporting period, the Platform organized and delivered aims to support the establishment of a new national technical training for WB teams on, among others, Bank coordination agenda across the Somalia government requirements for the integration of gender into Bank- for recovery and resilience activities in response to supported operations, how to meaningfully narrow climactic-driven disasters. It will make recommendations pervasive gender gaps in country, and how to address on more effective ways the government can organize gender-based violence through Development Policy itself to better respond to compounding crises and to Loans. The team also provided targeted technical include more coherent and aligned communication support to key operations such as the AF for the on response requirements with development partners Water for Agro-Pastoral Productivity and Resilience II through the (new) Aid Coordination Architecture. (“Biyoole II”), and is exploring opportunities to deepen 16 MPF REPORT · JULY — DECEMBER 2021 Portfolio Overview integration of innovative training and support for Investment Projects female health workers in partnership with the WB All the civil works have been completed under the Health team. Similarly, the Platform is working with Somali Urban Resilience Project (SURP), which closed the SURP II team to explore opportunities to expand on September 30, 2021. The Project Implementation women’s employment opportunities through training Units of Garowe and Mogadishu are currently working to and skills development under the project. Meanwhile, complete the outstanding disbursements by the end of outside the Bank, the Platform is currently exploring the grace period, which is till January 31, 2022. The five-year modalities to develop or adapt relevant training SURP Phase II builds on the ongoing SUIPP and SURP— for government partners on increasing attention to, and integration of, gender priorities in Bank- both of which are delivered through local governments financed operations as well as mainstreaming further and have proven effective. Since the SUIPP AF has already women empowerment opportunities across the expanded project preparation support to Kismayo and portfolio. (More information on the Somalia Women’s Baidoa, SURP II is scaling up infrastructure support and Empowerment Platform is given on page 32.) investments in Mogadishu, Garowe, Kismayo, and Baidoa, as well as laying the groundwork for expansion to cities in URBAN INFRASTRUCTURE: the states of Galmudug and Hirshabelle. STRENGTHENING RESILIENCE The Urban Infrastructure portfolio financed three active Policy Dialogue and Analytics projects. Two of these are recipient-executed investment The Urbanization Platform is a policy dialogue forum projects, and one is a Bank-executed analytical/advisory which finances the ongoing Somalia Cities Initiative. The activity (Table 3). The MPF provides financing worth discussions/coordination are ongoing; two city profiles US$73 million. The portfolio is co-financed with US$50 (Beledweyne and Bosaso) have been prepared; two city- million in IDA resources. This portfolio aligns with the CPF level coordination platforms for Mogadishu and Baidoa under Focus Area 1: Strengthening Institutions to Deliver have been formed. Services, specifically, Objective 1.4: Build the capacity of Somali municipalities for urban resilience. Table 3. Overview of Projects: Urban Infrastructure As of December 31, 2021 (in US$ million) MPF IDA Projects Budget Grant Disbursed Grant Disbursed 9.0 9.0 9.0 Investment 1. Somalia Urban Resilience and Recovery Project (SURP)7 112.0 62.0 6.2 50.0 3.4 Dialogue Analytics Policy and 2. Urbanization Platform 2.0 2.0 0.4 TOTAL 123.0 73.0 15.6 50.0 3.4 7 The financials for SURP are divided into two rows. The first row has the figures for Phase I and the second row has the figures for Phase II. MPF REPORT · JULY — DECEMBER 2021 17 18 MPF REPORT · JULY — DECEMBER 2021 ENHANCED RISK MANAGEMENT T he World Bank Group (WBG) corporate portfolio analysis continues to indicate a high level of performance of the Somalia portfolio. Much of this strengths to use resources effectively, efficiently and equitably; (b) maximize impact for Somalia’s sustained economic reforms; (c) and offer innovative approaches to success can be attributed to the client in working with institution building and inclusive growth in Somalia. The task teams and the fiduciary teams, adapting WBG WB’s ability to rapidly adapt and tailor the management process to the context, as well as providing ongoing of MPF and core IDA financing is one of its fundamental support to the implementing units. Working through strengths. country systems with recipient-executed investments, the preferred modality for WBG operations globally, bears The complex political dynamics and the worsening challenges in Somalia, especially as the Bank’s portfolio socioeconomic situation—exacerbated by political diversifies and decentralizes. This way of working has instability, renewed violence, rising insecurity, and the required the government to rapidly develop systems combined effects of the COVID-19 pandemic and the and processes in line with WBG requirements. It has also triple crises (locust infestation, flood, and droughts)— required the government to rapidly build its capacities to in Somalia continue to affect MPF operations. execute projects along the fiduciary standards required Implementation challenges, delays due to travel in WBG operations. restrictions on freight operations and services globally, and restrictions on movement and interaction have Somalia remains among the most complex fragility, disrupted operations. conflict, and violence (FCV) contexts in which the World Bank (WB) is engaged. Having cleared arrears The scale-up of the MPF portfolio is being supported and reached its Heavily Indebted Poor Countries through enhanced risk management and development Initiative (HIPC) Decision Point in March 2020, Somalia’s of a comprehensive strategy to manage those risks development financing aims to support an ambitious (fiduciary, Environmental and Social Framework, security agenda which is central to moving the country towards risk management, and so on) across the portfolio, greater stability and more inclusive development— especially due to the pandemic and staff inability to travel underscoring the importance of building resilience and to Somalia. Travel restrictions also reduce the ability of the need for flexible instruments to respond to Somalia’s the client and project beneficiaries to receive and absorb unique operating environment. technical assistance. Security risks need to continue to be carefully managed with enhanced measures. Intensive The strategic alignment of the Multi-Partner Fund (MPF) capacity-building efforts and resource allocation are and the growing International Development Association required at Federal government and Federal Member (IDA) portfolio will help in building back better and State (FMS) level towards development of a risk recover from the impact of the crises facing Somalia. management approach for due diligence, supervision, The MPF and IDA portfolios (a) leverage each other’s and implementation support for all projects. The Bank has MPF REPORT · JULY — DECEMBER 2021 19 Enhanced Risk Management emphasized building client capacity through targeted artificial intelligence for remote supervision or predictive training to improve government understanding of, and analytics, and building up of client digital capacity. Several ability to manage, these risks. innovative pilots across the Bank attest to the efficacy of such technologies in dealing with the ‘new normal’. The COVID-19 pandemic has added to an already Some other options available to the teams are risk-based complex environment with additional uncertainties supervision system; cloud-based data collections and and complexities and introduces additional shocks to monitoring and evaluation systems for tracking results; the WB portfolio in Somalia. The governments have and safe cloud storage for client progress reporting and imposed several restrictions, such as social distancing, review by task teams. movement restrictions, and travel restrictions. The portfolio has, to an extent, been designed with resilience Addressing these challenges has also required the WBG against such factors, that is, most have foreseen difficult to think innovatively and creatively about doing business access, communications, and closures due to security in a unique context—balancing stringent oversight with restrictions. The MPF has also contracted additional flexibility and agility. The portfolio has increased in size, service providers to support risk management for diversified in scope, and become more complex in the portfolio delivery, including enhanced supervision reporting period. New sectors and new geographic support, the Monitoring Agent, and the Professional areas require the MPF to introduce operational support Services contract. to client counterparts. New government counterparts at municipal level, and subnational disbursement Exposure for the WBG is higher in financial terms; the rapid and delivery modalities, require the MPF to adapt its increase in financing comes without commensurate operational approaches. This includes risk management developments in the strength of government systems. approaches, differentiated fund flows, and an increased Government activity has increased significantly: Federal focus on environmental and social safeguards. Scaling Government of Somalia (FGS) expenditures multiplied up projects gradually helps teams to understand risks by a factor of six since 2013, indicating increased activity and enables the teams to build matching capacity on an across government. In addition, there has been a ongoing basis. Operational lessons are being drawn from formalization of FMSs and significant growth there also, the Bank’s portfolio in Somalia, which are potentially albeit from a smaller base. This combined with increased applicable to the wider Bank engagement in contexts government transfers to FMSs that have weaker systems affected by FCV. and certain heightened risks. At the outset, however, this is a portfolio that has proven adept at managing risk and FINANCIAL MANAGEMENT delivering results amidst difficult circumstances. Background The WB Financial Management (FM) function has The COVID-19 pandemic has forced people across the dual objectives that are closely intertwined—support globe to define, sometimes virtually overnight, different recipient countries improve their financial management ways of communicating and doing business. Uncertainty, performance and capacity while encouraging public national and international restrictions, and the need to disclosure and transparency as well as provide ensure safety precautions in the wake of the pandemic reasonable assurance on the use of financing proceeds. have necessitated innovative changes in approach. To Sound public financial management (PFM) remains support teams to maintain real-time and continuous central in ensuring accountability and efficiency in the project implementation monitoring and supervision, management of public resources and is an essential the MPF will explore the options through the innovative underpinning to improve governance and fight use of technology, such as satellite imagery, use of corruption, more importantly in Somalia’s FCV context. 20 MPF REPORT · JULY — DECEMBER 2021 Enhanced Risk Management In Somalia, the FM function is fully aligned to country FM team, jointly with government counterparts, has systems across all the operations; it continues to be identified the pertinent FM/fiduciary risks and attendant an integral part of the development process and the mitigation measures (Table 4). country’s institutional strengthening efforts. At the FGS and FMS level, the FM staff collaborate with the Risk-Based Approach External Assistance Fiduciary Section (EAFS) under the Risk-based approaches are adopted in identifying and respective Offices of the Accountant General/Treasury, assessing country, implementing entities, and project- Budget Directorates, Offices of the Auditor General and specific FM risks. To effectively identify and manage Civil Service Commissions to help strengthen their FM potential risks that may affect the implementation of capacities. In accordance with the Bank’s operational effective PFM/Fiduciary arrangements, country PFM policies and procedures, the FM team continues to work assessments (country, implementing entities, sector with counterpart partner institutions to design financial specific, and project level) are undertaken in good time management and disbursement arrangements, supervise to inform the design of implementation arrangements. and support the performance of the operations at FGS, The PFM assessments contribute to key decisions Somaliland and FMSs. The FM support spans across on the intensity of preparation and implementation the current portfolio consisting of 17 active projects support and inform the development of PFM systems with commitments of over US$1.17 billion, 11 pipeline development and mitigation strategies to address key projects with estimated commitments of US$0.427 weaknesses and risks. In conducting the assessments, key billion implemented through country systems by consideration is given to the need to design sustainable government institutions, private sector vendors, United fiduciary oversight and PFM capacity development. Nations agencies, and international nongovernmental This is done by gathering principal information to organizations. facilitate design of appropriate contextual frameworks and design, scalable response, speed, and effective Strengthening Portfolio Financial monitoring of operations and risks. The PFM/Fiduciary Management Integrity risks are assessed at the beginning of each project and During the period, the team participated in the Country progressively monitored and updated throughout the Management Unit–led Country Portfolio Performance project cycle as part of the projects’ implementation Review (CPPR) to which key action points were agreed. support. The FM risk model has a qualitative focus The team continues to focus on helping counterpart and takes into consideration principles embodied in PFM institutions develop sound financial systems and internationally recognized ‘best fit’ practices. Specific practices across the portfolio. Efforts are dedicated project implementation support missions for each of the towards strengthening PFM systems with emphasis on projects are undertaken at least once every six months, (a) legal framework; (b) planning and budgeting; (c) to which the findings and risk ratings contribute to PFM banking and funds’ flow arrangements; (d) systems risk– implementation support reports, aides-memoire, and based internal controls frameworks; (e) accountability Implementation Status Reports (ISRs)—all of which are processes and procedures; (f ) fiscal and financial shared with the client and development partners. The reporting; (g) external audit and oversight; and (h) projects’ financial management arrangements and risks PFM/FM staffing. From the various FM reviews during are periodically updated and monitored through the the period—financial management implementation WB FM system through which IFRs and annual audited support review missions, quarterly Interim unaudited financial statements are electronically submitted. Key Financial Management Reports (IFRs), external audit innovative FM/fiduciary interventions integrated into by the Office of the Auditor General, CPPR—the WB the project designs are summarized in Box 1. MPF REPORT · JULY — DECEMBER 2021 21 Enhanced Risk Management Table 4. OFM/Fiduciary Risks and Proposed Mitigation Measures FM/Fiduciary Risks Proposed Mitigation Measures • Use of third-party monitoring agents and corporate procured platforms to facilitate file- based supervision beyond areas of corporate security limitations. • Elevated implementation support supervision, collaboration with the internal audit function to mitigate limited travels in the wake of COVID-19 travel restrictions. High potential implementation fraud risks • Multilayered controls at the country, portfolio, and project levels to help ensure funds are used for the purposes intended, and to build country systems through a learning-by-doing approach appropriate to the country context. • Further consolidating and extending the External Assistance Fiduciary Section (EAFS) fiduciary financial management (FM) role to the Project Implementation Units (PIUs). • The bulk of the payments are processed through direct payments modality to mitigate risks of holding excessive funds in Designated Accounts (DA) held in-country. • Disbursements from the Designated Accounts to FMSs’ Projects Accounts disbursed on imprest/replenishment modalities. Banking arrangements, • Frequent monitoring and revision of DA ceiling. AML/CTF and funds flow • World Bank (WB) continues to invest in PFM and financial sector reforms to accelerate normalization of international financial institutions’ relations and facilitate commercial banking correspondent relations. • IDA, with the support of the multidonor Trust Fund, continue to apply a robust, layered approach to project oversight, including funds flow. • Centralized financial management function (within the Office of the Accountant General). • PFM education and training with priority to FM staff working in the centralized FM fiduciary Weak FM/PFM capacities units (EAFS). (Supreme Audit Institutions [SAIs], Accountant General) • On-the-job capacity building arrangements for the Office of the Auditor General (SAIs) through twinning arrangements with other SAIs and regional audit firms in the public sector space. • Joint fiduciary training sessions for the PIUs and EAFS units. • 100 percent prior review—operational costs by FM team, progressively strengthening the FM Emerging government policies: controls frameworks—Project Operations Manuals, and Governmentwide Comprehensive Operation expenses, travel policy Operations and Accounting Procedures Manual (COPAM). • Integration of fixed assets as part of quarterly Interim unaudited Financial Reports. Assets management and traceability • Joint periodic physical verification between the WB FM teams, Office of the Accountant General and Auditor General. FM/Fiduciary Engagement Model which reviews from the financial performance are comprehensively reconciled with the findings of the A pragmatic approach combining a Short-Term Financial monitoring agent. Joint Bank/government/Monitoring Management Consultant (STC) providing support to Agent forums will be strengthened to ensure provision the PFM/Fiduciary team in the Bank has been deployed. of timely implementation support/monitoring feedback The team is further supported through a team of STCs to the government teams. deployed through a third-party platform to facilitate effective ‘on the ground’ PFM/Fiduciary support to Next Steps the client teams beyond areas of Bank corporate security limitations. In the wake of the COVID-19 In the next six months, the FM team will be focusing on pandemic, the third-party platform has shifted to hybrid the following key activities: implementation support leveraging on technology, with • Finalization and transmission to government of the the recent virtual review concluded early December November-December 2021 FM implementation 2021. The next review is planned for March/April 2022. support review mission reports as well as The team interfaces with the third-party Monitoring implementation of FM-related recommendations Agent majorly, focusing on verification of outputs to emerging from the recently concluded CPPR. 22 MPF REPORT · JULY — DECEMBER 2021 Enhanced Risk Management Box 1. Key Interventions Integrated into Project Designs • Performance-based conditions integrated in the CBS component under the Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) additional financing aimed at (a) fostering CBS financial independence and transparency; (b) strengthening the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CTF) operational framework including e-KYC; (c) extending CBS corresponding banking arrangements to mitigate overdependence on single channels; and (d) extension of CBS services and operational systems to FMSs. • Govetech initiative supported by SCALED-UP to automate documents’ management within the Office of the Accountant General and External Assistance Fiduciary Section (EAFS) units. The Electronic Documents Management System (E-DMS) is supporting full automation and controls of essential security documents, planning, and cash management as well as IFMIS data analytics business intelligence to support management decision making. • Under the Domestic Revenue Mobilization and PFM Capacity Strengthening Project (DRM/PFM) and in line with the International Monetary Fund program, integration of WB projects’ FM function into the governmentwide PFM systems (IFMIS) and controls including integrated fiscal reporting (government and projects). The WB quarterly Interim unaudited Financial Management Reports are generated from the government IFMIS at FGS, Puntland, and Somaliland. • Collaboration between the financial management team and the newly established internal audit function under the DRM/PFM project. This approach provides hands-on training opportunities to integrate the government internal audit function (risk-based systems audit) as part of the project risk management. This approach has successfully been piloted in Puntland with quality internal audit reports prepared for three projects with agreement to scale-up and replicate the arrangement in the other regions. • Mainstreaming the critical PFM/ICT (IFMIS) staffing with the Capacity Injection Modality (CIM) implemented under the Capacity Injection Project. The CIM-aligned salaries for the EAFS staff in Puntland and FGS are co-financed by government revenue/RCRF project. • FM assessments and design of FM arrangements for MONITORING AGENT the 11 pipelines’ operations under preparation and Portfolio Risk Profile delivery to the Board within the financial year. Portfolio exposure and residual risks of engagement in • Accelerate the consolidation and extension of the Somalia have increased year-on-year. WB risk ratings for EAFS FM role and reorganization of PFM/FM technical Somalia projects are high, particularly so for fiduciary assistance to the PIUs at FGS, FMSs, and Somaliland. risks. Managing the Somalia portfolio risk requires • Provide technical FM review contributions to the deliberate and sustained efforts, both on behalf of the pay and grading outputs currently in preparation WB teams and of governments. through the Somaliland Civil Service Strengthening Project and Capacity Injection Project to be approved Financial exposure is higher with rapid increases in through a cabinet ordinance.8 financing. Portfolio commitments have increased quickly, • Support government review and update the EAFS and substantial investments are expected to continue. Manual and COPAM to address gaps on operations WBG financing implemented by Somali governments expenditures and travel policies at FGS, FMSs, and is expanding and foreseen to expand further, with new Somaliland. commitments of US$921 million have been made since • Initiate consultation and discussions on the delivery January 2020, which accounts for more than 70 percent of ‘Use of Country Systems’ paper9 based on the of the total commitments since WB reengagement with Somalia experience. Somalia in 2013. 8 Provides clarity on mandates, vision, mission, functions, accountabilities, structures, staff complements, and establishment ceilings of each MDA including EAFS units. 9 The paper is proposed for delivery before the end of June 2023. MPF REPORT · JULY — DECEMBER 2021 23 Enhanced Risk Management The growth in financing outpaces developments of and economic displacement through land acquisition or the strength of government systems. In addition, there temporary use, labor and working conditions including is increased complexity: federal transfers to member health and safety, child labor, labor influx, and gender- states, that have weaker systems, are increasing and the based violence (GBV) and sexual exploitation and portfolio continues significant expansion beyond the abuse (SEA), exclusion of disadvantaged and vulnerable administrative sector. groups, increased social tension, and security risks for stakeholders including project workers and the Different fiduciary risks are becoming more prevalent community. Management of environmental and social with the expansion of the portfolio. The procurement, risks is complicated by a lack of functioning regulatory contracting, and contract management processes for environment and limited awareness of stakeholders. works and for service delivery are becoming increasingly Governments’ capabilities to manage these risks are complex. being built in parallel with capital investments. Procurement challenges are heightened as projects grow The ongoing COVID-19 pandemic has heightened larger and more complex, complicated by difficulties in certain risks and continues to warrant extra caution. verifying business information, track records, financial While government- and WB-led fiduciary risk mitigation assets, and ownership. This includes foreseen contracting measures continue through COVID-sensitive approaches, for service delivery in the health sector, decentralized ongoing travel restrictions may slow or negatively impact delivery and financing models in the education sector, the quality of policy dialogue and restrict technical and investments in infrastructure scale-up. support modalities, impacting the quality of project implementation. Environmental and social risks are becoming more proximate, as investments in infrastructure and service The political impasse continued throughout the delivery expand. Increased environmental risks go reporting period. At the outset, projects are designed beyond those related to infrastructure investments, with to compensate for many institutional challenges such investments in health service delivery presenting issues as lack of predictable policy, regulatory frameworks, of pollution prevention and management for medical bureaucratic capacities, as well as codified knowledge, waste, for example. Increasing social risks include physical data and reliable information. Some program objectives Figure 1. Somalia Portfolio—Government Implemented New Commitments (US$ million) 550 371 44 44 179 14 20 84 5 2013 2014 2015 2016 2017 2018 2019 2020 to June '21 Source: World Bank Project Papers, website. 24 MPF REPORT · JULY — DECEMBER 2021 Enhanced Risk Management Medical waste at Benadir Regional Hospital. (Photo courtesy: Abyrint) nevertheless require political decision-making capability. Risk Management Role of the Monitoring Agent Variations of political impasse have, over the years, The WB continues to engage Abyrint as the Third-party delayed important actions, for example, law making and Monitoring Agent to provide an additional and third- setting new directions. party layer of monitoring and assurance ensuring that funds executed by Somali authorities are utilized for Yet much of program activity continues unaffected by the purposes specified. Abyrint is also responsible for political impasse. Day-to-day collegial efforts continue monitoring the development of capacity within recipient within government, even in potentially politically organizations and agencies and advising on capacity- sensitive areas such as fiscal federalism. A challenge building needs. Risk management activities include: is that response options for the WB can be more • Review strategic developments and identify and constrained than for other types of risk. The default anticipate key institutional capacity gaps. risk management option for the WB in Somalia is often to strengthen capabilities to enable governments to • Monitor recurrent costs managed fully on-country manage mitigation measures and emerging risks. PFM systems and to assess governments’ adherence to RCRF Project participation requirements. Experience to-date demonstrates that the portfolio is • Undertake project specific performance reviews adept at managing risk and delivering results amidst directed at emerging issues and provide practical difficult circumstances. Continued deliberate risk recommendations. management efforts are necessary to maintain this • Provide advisory support for WB-led capacity-building track record. activities. MPF REPORT · JULY — DECEMBER 2021 25 Enhanced Risk Management Strategic risk reviews of emerging issues of institutional through insight into the performance of country PFM reform and state building in Somalia are performed systems, gained through the monitoring. by the Third-party Monitoring Agent. These inform government and WB strategy, contribute to the WB’s Project implementation reviews are undertaken to capability to adapt and tailor approaches, and inform the target emerging risks and to contribute to enhanced WB and governments on project performance. Reviews project implementation. These reviews identify risks include assessment of progress of government actions and inform change actions, including the identification, to achieve targeted reforms. articulation, and dissemination of best practices across the portfolio. Work is undertaken on-site with government Transaction level financial monitoring is employed for officials and includes engagement with stakeholders. 100 percent of WBG financing to recurrent costs of the Insight gained is consolidated to produce fact-based federal and state governments that are executed fully analyses and recommended actions, including targeted through the use of country systems. These costs include capacity-building support to governments. over 10,000 monthly salary payments for civil servants, and health and education sector workforces across the Select advisory support to WB-led capacity building country. The monitoring of these flows enables both activities have been undertaken by Abyrint to assist preventative and detective risk management to lower governments in the design and implementation of fiduciary risks and enable the safe and reliable salary approaches to better facilitate delivery of WB-financed support that enables government operations as well as project activities, while laying foundations for sustainable social sector service delivery. WBG support to government on-country systems management. The support spanned to rebuild and strengthen core state functions is bolstered topics such as environmental and social risks to PFM risks. The Abyrint team engaging with Project-Affected Persons in Mogadishu. (Photo courtesy: Abyrint) 26 MPF REPORT · JULY — DECEMBER 2021 Enhanced Risk Management It also took the form of practical shoulder-to-shoulder advisory services directed at assuring the quality of work to improve the governments’ capacity to plan and procurement processes, reducing contestability, and implement development projects on-country systems. building on government team capabilities through The effectiveness of governments’ implementation of working shoulder-to-shoulder with government officials the WBG Environmental and Social Framework (ESF) is and Project Implementation Units. integrated across the risk management activities. The ESF presents substantial challenges to implementing PROCUREMENT agencies, typified by legal frameworks that remain weak Procurement Capacity Development and very limited regulatory capabilities, which leaves The Bank has continued providing procurement training much to be compensated through project-specific to build the capacity of the local staff. Due to the COVID-19 arrangements. There is growing experience in the pandemic, the training delivery has been conducted application of the ESF across the portfolio. Monitoring virtually. During the period, the Bank conducted Contract Agent activities inform the WBG and governments on Management training for the Somalia Urban Resilience the quality of environmental and social risk management Project Phase II (SURP II). The Bank has continued to and on how to meet the challenges ahead, both under support the projects procurement staff in the country to WBG projects as well as more broadly. build their capacity through informal guidance/reviews, telephone calls, WhatsApp, WebEx, and other online During the period covered by this progress report, Abyrint exchanges. The Bank is finalizing a Concept Note that supported the joint public financial management (PFM) is aimed at addressing existing procurement capacity assessment of administrations of the FMSs by leveraging challenges under the Somalia portfolio. The draft concept detailed understanding of systems and performance is now under discussion with the Country Management data collected and curated through monitoring. Unit for implementation. In the proposed project for Transaction monitoring expanded to incorporate review Enhancing Public Resource Management (SERP) which is of all payments to newly launched personnel cadres under preparation, a subcomponent is being proposed in the social sector, which are now activated across all to support capacity building of (PFM) staff. FMSs. Continuous feedback from detailed transaction level monitoring informs on performance and identifies Also, the WB is in the process of establishing a universal targets for system reforms. A project-specific review Hands-On Expanded Implementation Support (HEIS) was undertaken of the operations of the micro, small, arrangement for all Bank-funded projects in Somalia. and medium enterprise financing facility that is being HEIS will allow the task team to provide procurement supported through the Somalia Capacity Advancement, assistance beyond the normal implementation support, Livelihoods and Entrepreneurship, through Digital Uplift thus helping the Borrower carry out project procurement Project. The review focused on the integrity of the facility, more effectively and efficiently. HEIS will mitigate the effectiveness of its operations, including approaches the inherent procurement risks caused by capacity to environmental and social risk management, and limitations. HEIS will assist in the following areas: looked to inform decision making on further developing the facility. Advisory support to WB-led capacity • Drafting procurement documents. building was undertaken through the development of • Identifying strengths and weaknesses of bids/ Human Resources performance management policies proposals. and practices for project implementation teams and • Observing dialogues and negotiations with bidders/ the approach is now being piloted. The WB has also consultants. engaged the Monitoring Agent to provide probity • Drafting contract documents as may be required. MPF REPORT · JULY — DECEMBER 2021 27 Enhanced Risk Management Procurement Integrity scaffold Environmental and Social Framework (ESF) and wider ESRM capacity building that allows focus on local To sustain improvement in financial integrity in WB- capacity. The secondment of environmental and social funded projects, the Bank has continued creating specialists across 18 projects in the Somalia portfolio has awareness among the government, private sector, and meant the evolution of a nascent corps of sustainability other stakeholders on key issues regarding integrity, experts dispersed in various sectors across different procurement and financial management. The awareness parts of the country. In addition, expanding country is being emphasized during the virtual project knowledge is not only relevant for ESF management but Implementation Support Missions. The Bank has started instrumental to inform project design choices in general. Involving ‘Probity Advisors’ where appropriate during the The WB has conducted a successful five-day training client procurement process. This has already been piloted for 50 environmental and social specialists from across in the on-going recruitment under SURP II where the Somalia, who have been trained on the precepts and probity advisor was involved in the shortlisting process practices of the ESF. of the consultant firms. The involvement of probity advisors will ensure that the appropriate procedures and A recently-approved task, the ‘Somalia: Capacity- scrutiny are in place to maintain the client integrity of Building for Environmental, Social, and Security Risk the procurement process. Management in Development Interventions in Somalia’ aims to develop ESF/ESRM country capacity through Procurement Reforms multipronged efforts. The task will support analytics on The Bank assisted the FGS in developing guidelines on select thematic areas to fill in the knowledge gaps in emergency procurement. The next support required the existing policy, legal, and institutional framework for is supporting the FGS in the dissemination of the addressing environmental and social risks and impacts guidelines to make the officers in the procuring entities and related implementation capacity, as well as the understand the procedures to facilitate management application of ESF standards in the Somalia context. The of emergency procurement. In the proposed SERP, outcome will be individual background papers which this support has been included. Other procurement may also include template tools which can be adjusted reforms proposed under the SERP include support to for project purposes. the FGS in the establishment of the Public Procurement Authority, support to the National Tender Board in Given that ESF challenges in Somalia are as much Somaliland, support to Somaliland and FGS in the environmental as they are social in terms of their finalization and dissemination of Procurement Manual genesis, and thus need diagnosis for further support and and Procurement Bidding Documents, and support development, the output of these analytical pieces to the development of procurement portals (including will be integrated social and environment documents provision of recurrent subscription fee). covering approaches to manage land, labor, and grievance redress mechanisms. For labor, this would ENVIRONMENTAL AND SOCIAL RISK be occupational health and safety. For land, this MANAGEMENT might include land tenure, land use types, sensitive The long-term goal for Environmental and Social Risk ecological areas, and so on. Other focus areas will Management (ESRM) is to (a) slowly transition from be climate change, security risk assessment and traditional reliance on United Nations agencies and management, labor standards, and intrahousehold third-party implementation partners, to government management of natural resource-based assets, structures and local consultants and experts; and (b) among others. 28 MPF REPORT · JULY — DECEMBER 2021 Enhanced Risk Management Box 2. GEMS: Enhancing Remote Monitoring and Supervision The Geo-Enabling initiative for Monitoring and Supervision (GEMS) was launched by the World Bank’s Fragility, Conflict, and Violence (FCV) Group to systematically enhance monitoring and evaluation (M&E) as well as supervision and third-party monitoring (TPM) in FCV settings. This is achieved by building capacity among clients, partners, and Bank teams on the ground, to leverage field-appropriate, low-cost and open-source technology for digital real-time data collection and analysis. Using GEMS allows operations to create customized digital M&E systems to enhance the transparency and accountability of implementation across the project cycle. At the same time, GEMS provides platforms for remote supervision, real-time risk monitoring, and portfolio mapping for coordination across projects and partners. By November 2021, GEMS had been deployed in over 85 countries, supporting close to 700 lending projects and training more than 5,000 government staff. GEMS is also being adopted by the African Development Bank and other donors. Somalia is a priority country for GEMS implementation, in alignment with the FCV Strategy (Implementation Measure 2) and the GEMS-based IDA-19 Policy Commitment, which will continue to be tracked during IDA-20. To date, the team has built the capacity of 86 Project Implementation Unit (PIU) staff from seven projects in using the GEMS method for customized project M&E, including Environmental and Social Framework (ESF) aspects (training in 2019 in Garowe, Hargeisa, and Mogadishu). It has since been used by the Somalia Water for Agro-Pastoral Project, and the Somalia Urban Resilience Project (SURP). Specifically, the SURP team used GEMS to monitor road construction progress and map all the roads in Garowe. In 2020, the project team also used the tools to assess the damage caused by floods in Mogadishu (see image excerpts below), out of which a costed concept note was developed and shared with the WBG. Lessons learned from GEMS deployment include a high demand for real-time monitoring and remote supervision solutions by clients and Bank teams (including enhancing TPM) and the need for local ownership in the Country Team and, particularly, by the government. In this regard, GEMS aims to provide a public good for enhanced digital monitoring, based on local skills and the use of cost-free open-source tools, which can be scaled beyond WBG-funded projects. The GEMS tool was used to assess the damage caused by floods in Mogadishu in 2020. (Photo collage courtesy: BenardMitto/World Bank) Going forward, the team will focus on (a) training project teams, government agencies PIUs, and Bank staff in the GEMS method for flexible use; (b) deploying a portfoliowide project mapping and supervision tool, with ESF/ESS components; and (c) supporting operations and the ESF teams with customized real-time monitoring and spatial analysis solutions. The GEMS team has a local Focal Point for the AECE2 Country Management Unit in Nairobi and is available to onboard a technical specialist for Somalia if funding can be provided. The aim of the GEMS initiative in Somalia is to ensure that all relevant development interventions, including E&S issues, can be systematically monitored remotely and in real-time, via locally-owned and sustainable digital platforms. MPF REPORT · JULY — DECEMBER 2021 29 Enhanced Risk Management This activity will build on the capacity building visioning projects in Somalia (as elsewhere) may exacerbate paper for how capacity should be built for ESF/ESRM with the risks of sexual exploitation and abuse (SEA), the FGS and FMSs, with the Office of the Prime Minister workplace sexual harassment (SH), and other forms of and sectoral ministries, for both ESF implementation GBV such as intimate partner violence. Since 2017, the capacity building as well as more general ESRM capacity Somalia portfolio has been intensifying its attention to leading to sustainable development interventions. addressing these risks and expanding prevention and response measures across the portfolio to manage There will be close collaboration with projects where them. Key measures include improved assessment there is strong focus and budget allocation to capacity and identification of risks of sexual exploitation and building and existing works from other partners—the abuse, sexual harassment (SEAH) and other forms of aim is to identify the appropriate institutional seating for GBV during project preparation, to better understand developing ESF capacity in the sectoral ministries. The the key risks Bank-supported projects present, and also initial concept is to have four ESF-supporting units to to integrate into projects the appropriate prevention, be domiciled at the ministries of Economy and National mitigation, and response measures to address them. Planning; Social Development; Infrastructure; and Assessment of client capacity to manage those risks, Production. and development of more comprehensive Prevention and Response Action Plans for how risks will be managed Security risks internal to projects require analysis and throughout the project’s life cycle, are also critical management under the FCV strategy, the ESF, and elements of this approach. other operational policies. There is therefore a need for a coherent security due diligence approach for Critical mitigation measures include, among others, Somalia. The longer-term aim is to build security risk development of Codes of Conduct (COC) for all project management capacity. workers, development of grievance mechanisms that have specific reporting and response protocols for Academic and private sector institutions/firms in survivors of GBV/SEAH, identification of GBV services Somalia (for general ESF/ESRM training) and in the providers to enable referral and timely, confidential, and region (for special topics) that might be critical for survivor-centered care for survivors of project-induced inclusion in building local capacity for delivering GBV/SEAH, and hiring of GBV specialists by Project capacity building workshops will also be identified. Implementation Teams to provide technical expertise The goal is to create a learning hub in Somalia to clients for the implementation and monitoring of all through a partnership or contract with a local service GBV/SEAH prevention and mitigation measures. provider. This core learning hub will play a key role in supporting the government with project preparation Progress to date includes: and implementation, as well as fostering longer-term • Nine projects assessed with moderate to high risks institutional learning and systems development for of SEAH have developed comprehensive GBV/SEAH the project. Prevention and Response Action Plans. • Government-led Project Implementation Teams WOMEN’S SAFETY AND RISK have hired a pool of six GBV specialists (five in total MANAGEMENT and one nominated Focal point) supporting the risk GBV/SEAH Risk Management in Somalia mitigation works for projects under different line Gender-based violence (GBV) is one of the most ministries, including for health, education, water, civil common forms of violence globally, and thus a critical service, urban and crisis recovery projects. development challenge. As such, Bank-supported 30 MPF REPORT · JULY — DECEMBER 2021 Enhanced Risk Management • CoCs with specific prohibitions against SEAH, in the project locations as well printed posters with including sexual misconduct against anyone under information on where to report incidents, translated the age of 18, have been approved under the into Somali. Recurrent Cost Reform Financing (RCRF) Project, to • The Somalia GBV subcluster in 2021 shared the be signed by all civil servants supported under the updated GBV referral pathway for five regions in project. This CoC has since been shared with other Somalia, which was disseminated to all GBV specialists projects for adoption. supported under Bank-financed operations. • Thus far, 125 project workers have been trained • The SCRP has resulted in direct engagement and on the COCs and GBV/SEAH risk management training of project-supported contractors: out of 20 measures more generally across the RCRF, Somalia contractors trained on the CoC, 13 have already signed Crisis Recovery Project (SCRP), and SURP II projects. it. All 13 contractors have subsequently trained their As other projects are in their initial implementation workers, totaling 195 project workers trained under and preparation phases, training on GBV/SEAH risk the project. management measures will be conducted once • GBV specialists across line ministries have formed project workers have been hired. a WhatsApp group for Somalia GBV/SEAH risk • Communications materials that highlight key management, where specialists can share their provisions of the CoC and reporting options for any progress, challenges, troubleshoot issues, as well survivors have been developed and displayed, for as share experiences on breaking barriers and buy- example, stand-up banners on the CoC for the RCRF in within their projects. The group is in its initial project at each FMS and FGS Ministry of Finance stages, hoping to lead to a strong Somalia GBV office with contact details to report grievances. SURP risk management team across Bank-supported II has placed billboards with GBV/SEAH messages operations. MPF REPORT · JULY — DECEMBER 2021 31 Enhanced Risk Management The Somalia Women’s Empowerment Platform Deepening the integration of gender into WB operations in Somalia: During the reporting period, The WB established the Somalia Women’s Empowerment the Somalia Gender Platform organized and delivered Platform (also known as the Somalia Gender Platform) in technical training for WB teams on Bank requirements June 2021 in an effort to deepen and strengthen strategic for the integration of gender into Bank-supported engagement on women’s equal opportunities across operations and analytic initiatives. The Gender Platform operations and how to meaningfully narrow pervasive is a multiyear and multisectoral initiative that aims to gender gaps in the country. The Somalia Platform also assist the WBG’s engagement in Somalia by promoting co-organized a regional session in December 2021 on gender equality and inclusion of those left behind more how to address GBV through Development Policy Loans. broadly. It does so by increasing technical support to The team has also provided targeted technical support operations, conducting frontier research, identifying to key operations, such as the Additional Financing for innovative interventions, expanding policy dialogue, the Water for Agro-Pastoral Productivity and Resilience and sharing knowledge across government and relevant II (‘Biyoole II’), and is exploring opportunities to deepen development partners. integration of innovative training and support for female health workers in partnership with the WB Health Team. For the first six months of the engagement, the platform The Platform is similarly working with the SURP II team to has conducted grounding analytical work for the WB’s explore opportunities to expand women’s employment engagement on gender, as well as provided targeted opportunities through training and skills development technical support to Bank-supported operations. As under the project. aligned across the three main pillars of the Platform, work achieved in the first six months of the Platform includes Additional technical training for Bank teams are currently the following. under preparation. Meanwhile, outside the Bank, the 32 MPF REPORT · JULY — DECEMBER 2021 Enhanced Risk Management Platform is currently exploring modalities to develop The Platform also finalized a Gender Portfolio Review or adapt relevant training for government partners intended to review WB performance in addressing on increasing attention to, and integration of, gender and advancing gender priorities in Bank-supported priorities in Bank-financed operations. investments. Key findings highlight generally strong performance of Bank operations in the integration of Analytical work: In partnership with the Gender attention to gender across analytics, gender-targeted Innovation Lab, the Gender Platform organized actions, and inclusion of dedicated gender-related and led innovative qualitative research on women’s indicators in project design. At the same time, the entrepreneurship to inform the ‘Somalia Country Review noted a need for additional support in advancing Economic Memorandum: Towards an Inclusive Agenda’, attention to gender beyond the provision of practical launched in June 2021. Using a gender and inclusion gender needs (for example, access to resources, services lens, this research collected stories from entrepreneurs or institutions) to include, as well as attention to and working in the livestock and dairy, fisheries, and retail investment in interventions that address more strategic and trade sectors in Hobyo, Bosaso, Burao, Hargeisa, and gender interests, that is, those that challenge gender Mogadishu about the challenges women entrepreneurs divisions and men’s and women’s position in Somali face. Across sectors, critical factors holding women back society more broadly. include lack of networks, cultural perceptions, a restrictive legal framework, and lack of access to land and finance. Stakeholder Roundtable on ‘Women’s Socioeconomic The Bank is now leveraging findings from the Country Empowerment’: In June 2021, the Platform hosted a Economic Memorandum as a platform for engagement consultative workshop on women’s socioeconomic with government and civil society on how to address empowerment, convening key Somali stakeholders from these constraints to foster growth and to create more government—including regional administrations— inclusive and higher quality jobs. civil society organizations, local and international nongovernmental organizations, youth groups, In anticipation of the formation of a new government and women in the private sector including female following the current electoral period, the Gender entrepreneurs. Building on these efforts and informed Platform also supported the preparation of a dedicated by the workshop, the Platform will work to establish an Gender Policy Note for inclusion in a series of Policy advisory board with external partners and stakeholders Notes developed by the Bank to highlight critical issues to enable a platform for regular policy dialogue and that the incoming government will need to address. engagement with critical actors and to strengthen This Gender Policy outlines critical gender interventions collaboration and coordination across relevant needed to address the stark and persistent gender gaps partners. that impede human capital development, peacebuilding, and sustainable and inclusive growth. MPF REPORT · JULY — DECEMBER 2021 33 34 MPF REPORT · JULY — DECEMBER 2021 MPF FINANCIALS A s of December 31, 2021, donors had committed a total of US$574.8 million to the MPF, of which US$542.9 million had been paid in. US$476.6 million The MPF has disbursed a total of US$365.6 million, representing 67 percent of paid-in contributions. A majority of the disbursements have been for project has been committed for (a) signed project grants grants (US$309.8 million, 84 percent). Of these grants, (US$407.1 million); (b) preparation, supervision, and most have been recipient-executed (US$265.4 million, monitoring of endorsed MPF pipeline and active projects 86 percent) and implemented by Somali authorities. (US$45.8 million); and (c) trust fund management and In addition to grants, funds have been disbursed for administration (US$23.7 million). This financial overview management and administration (US$21.6 million, 6 does not include funds from IDA. percent) and preparation, supervision, and monitoring by WBG teams (US$34.2 million, 9 percent). MPF REPORT · JULY — DECEMBER 2021 35 Enhanced Risk Management Table 5. MPF Financial Overview As of December 31, 2021 (in US$ million) Contributions 574.8 Paid in 542.9 Unpaid 21.6 Investment income 10.4 Commitments 476.6 Management and administration 23.7 MPF administration 11.7 HQ central fee 12.0 Preparation, supervision, monitoring 45.8 Project preparation and supervision 19.8 Monitoring agent 26.0 Project grants 407.1 BE grants 31.0 BE on behalf grants 22.5 RE grants 353.6 Appraised but not signed 28.5 Disbursements 365.6 Management and administration 21.6 MPF administration 9.6 HQ central fee 12.0 Preparation, supervision, monitoring 34.2 Project preparation and supervision 18.5 Monitoring agent 15.7 Project grants 309.8 BE grants 21.9 BE on behalf grants 22.5 RE grants 265.4 Unallocated cash balance (Paid in—Commitments) 66.3 36 MPF REPORT · JULY — DECEMBER 2021 Enhanced Risk Management Figure 2. Total and Average Monthly Disbursements (MPF and IDA) (US$ million) $180 $14 $160 $12 $140 $10 $120 $100 $8 $80 $6 $60 $4 $40 $20 $2 $0 $0 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 IDA Net $30 $111 $109 MPF Disbursement $10 $24 $38 $62 $75 $38 $32 $50 Average Monthly Disbursement $2 $2 $3 $5 $6 $6 $12 $13 Figure 3. Pledged vs. Paid-In Contributions to the MPF (US$ million) European Union United Kingdom Norway Sweden Germany Denmark Switzerland Finland USA SPF Italy $0 $20 $40 $60 $80 $100 $120 $140 United European Italy SPF USA Finland Switzerland Denmark Germany Sweden Norway Kingdom Union Pledged (US$, m) $3 $8 $13 $14 $19 $35 $74 $81 $90 $106 $120 Paid in (US$, m) $3 $8 $13 $12 $19 $35 $74 $70 $90 $98 $120 Figure 4. MPF and IDA Disbursements (by Type and Month) (US$ million)10 $50.0 $8.0 $45.0 $7.0 $40.0 $6.0 $35.0 $30.0 $5.0 $25.0 $4.0 $20.0 $3.0 $15.0 $2.0 $10.0 $5.0 $1.0 $0.0 $0.0 Aug14 Dec14 Mar15 June15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 RE BE BEoB MPF Admin IDA 3-Month Average (MPF only) 10 This figure excludes DPO disbursements. MPF REPORT · JULY — DECEMBER 2021 37 38 MPF REPORT · JULY — DECEMBER 2021 LOOKING AHEAD S omalia’s turnaround, though fraught with challenges, has made considerable progress over the last eight years. International experience highlights that through the Somalia MPF, the exceptional IDA Pre- Arrears Clearance Grants (PACGs) and, over the last year, full reengagement under IDA19. Early foundational ‘turnarounds’ in fragility, conflict, and violence (FCV) investments under the MPF and PACG have been crucial contexts are nonlinear, cyclical, and may be prolonged to promoting institutional reforms, strengthening over an extended period. Somalia is no exception. The governance and accountability, building government 2020/21 political impasse is following the breakthrough capacity, and beginning to address the structural agreement on the Provisional Constitution that ushered drivers of fragility in Somalia. Reengagement under in a new Federal Parliament and the establishment of IDA19, including through the Turn Around Allocation the Federal Government of Somalia (FGS) in 2012. The (TAA), builds on the progress made and seeks to FGS and Federal Parliament have seen two transitions of employ a ‘people-centered approach’ by investing in power since 2012 as well as the emergence of four new human capital development and strengthening service Federal Member States (FMS). delivery to reach the most vulnerable communities, while continuing essential governance and institution- Continued, albeit slower, progress has been made, building support. which illustrates the capacity of Somalia’s nascent federal arrangement to manage political confrontation; This has been significant to address barriers to nonetheless, important challenges and fragility remain. opportunity and development in Somalia, strengthen Though progress has been made on key fronts, it has not trust between citizens and the state, and contribute to been linear and still faces significant challenges. Until the broader goal of fostering peace and stability. This arrangements are embedded in a final Constitution which support has led to a significant growth in the World Bank enjoys the political support of all Somalis, including in (WB’s) portfolio, which now stands at US$1.19 billion, Somaliland, and the ratification of Parliament, Somalia’s including an IDA19 allocation of US$885 million. The political institutions will remain contested. WB is updating the Turnaround Regime to continue supporting the positive trajectory of Somalia despite On the other hand, Somali authorities continue to reach recent setbacks and the political impasse. major milestones with the support of the Multi-Partner Fund (MPF) and its development partners. The MPF will Progress during this reporting period illustrates growing continue to support the integration of the MPF portfolio confidence in Somalia’s ability to absorb increasing into the wider International Development Association levels of development financing, on budget, and using (IDA) engagement, and find complementarities as well country systems. The integration of the WB MPF and IDA as scale up opportunities. portfolios, and continuing to build on lessons from the MPF, remain as important as the continuous strategic Support towards the implementation of the Bank’s alignment of the various instruments for economic Somalia program has been based on engagement development and inclusive growth in Somalia. MPF REPORT · JULY — DECEMBER 2021 39 Looking Ahead Over the past year, Somalia has had a protracted and will focus on a second phase of the Bank support to the tenuous election period. Despite progress towards entire Somalia PFM system. elections, the political crisis continues with tensions between Federal Government of Somalia (FGS) and The pipeline for FY22 will push for greater regional Federal Member States (FMSs) as well as persistent integration, and focus on drought response to build influence of clan relationships. economic and social resilience. Additional Financing will be important to strengthen the systems at the core, and The Upper House elections restarted in early August build the capacity of government. 2021 and concluded in October with all 54 slots filled. The elections to the Lower House (which has 275 Members of The International Monetary Fund (IMF) has commenced Parliament) restarted in November, with a new deadline the second and third review of the Extended Credit of December 24, 2021. The Presidential elections are not Facility (ECF). A two-stage approach is being adopted. likely to take place before early 2022, almost a whole year The first stage of the ECF review will take place in after President Mohamed Farmaajo’s mandate expired in February and March 2022, and will focus on program February 2021. The FGS has been urged to accelerate the reforms and conditionalities. The second stage of the country’s elections to avoid further delays and to ensure review will require having a newly elected government electoral support from the international community. in place to confirm commitment to the program as well The WB has concerns over delays which affect project as financing assurances from development partners. pipelines, implementation, and disbursements. Staying on track with an IMF program is one of the requirements of the Heavily Indebted Poor Countries The Performance and Learning Review (PLR) has been (HIPC) initiative, which Somalia is participating in, to discussed with Bank Management. It is expected that it address high levels of indebtedness. will be circulated to the Board in early Q4, along with the Additional Financing operations for the Somalia drought Commendable progress has been made in completing response. a substantive number of HIPC Completion Point (CP) triggers. Examples of HIPC CP triggers that can be The MPF will continue to support and strengthen considered complete include the publication of audited institutions for service delivery and build resilience and financial accounts; the ratification of the United Nations opportunities in the economic space. The PLR will help Convention Against Corruption; the publication of guide the delivery of more resources in MPF focus areas, debt bulletins; an agreement reached in the education set the stage for, or enable, larger investments through sector concerning the roles and responsibilities of the IDA, and manage risks—fiduciary, environmental, and FGS and the FMS; the agreement of a framework for a social—and government capacity to manage risks. joint national health strategy; and the publication of the Discussions during a planned MPF retreat with the Somalia Annual Fact Book. Consultative Group will further advance the integration of IDA and MPF resources and approaches. The remainder of the HIPC CP triggers focus on the enactment of critical laws. Laws that require enactment Building in the MPF-supported joint public financial include the Extractive Industry Income Tax Law, the management (PFM) assessment, the Bank team will Data Privacy Law (needed to establish a national engage MPF donors on a strategic discussion around social registry as a functional platform that supports longer term PFM support to the FGS and FMS. The MPF registration and determination of potential eligibility has been a critical partner in supporting this important for social programs), and the Electricity Act. Following agenda, and discussion during the next reporting period the enactment of the Company Act in 2019, regulations 40 MPF REPORT · JULY — DECEMBER 2021 Looking Ahead Table 6. Lending Projects’ Details Commitments S. No. Project ID Project Name (US$ million) National 1 P174889 Somalia Inclusive Growth DPO Series 50.0 2 P176679 Additional Financing: Somalia Urban Resilience Project (Phase II) 41.5 3 P176898 Somalia Empowering Women through Education and Skills Project ('Rajo Kaaba’) 30.0 4 P177298 Somalia Enhancing Public Resource Management Project 25.0 5 P177900 Additional Financing: Somalia Recurrent Cost and Reform Financing Project (Phase III) 60.0 6 P178886 Additional Financing: Somalia COVID-19 Emergency Vaccination Project 103.2 7 P178730 Additional Financing: Shock Responsive Safety Net for Human Capital Project 100.0 Regional 1 P173119 Somalia: Horn of Africa Infrastructure Integration Project 63.0 2 P174867 Horn of Africa: Groundwater for Resilience 30.0 3 P176517 De-risking, Inclusion, and Value Enhancement of Pastoral Economies in the Horn of Africa 70.0 4 P174175 Horn of Africa Regional Integration for Sustainable Energy Supply* 60.0 Note: * The regional IDA grant of US$50 million and a Trust Fund from a clean cooking fund of US$10 million are expected to serve four countries on a ‘first-come, first-served’ basis. should be issued to allow for minority shareholder mobilization strategy for 2022–25 in consultation protection. Appendix 2 shows the progress in reaching with stakeholders, and revision of the Fund’s Terms of all HIPC CP triggers. Reference (ToR). Notable changes include rebranding of the fund to the UN Somalia Joint Fund (SJF), extension Somalia remains vulnerable to external shocks, putting of the Fund by one year to December 31, 2025, to align recent investments and progress on resilience to a hard with the UN Cooperation Framework (UNCF), a new test. The 2022 Humanitarian Response Plan was launched earmarking policy, and changes to the decision-making on December 20, projecting 7.7 million people—more process for program approval and fund allocation. than half the population—in need of humanitarian Pending approval of the revised ToR, these changes will assistance in 2022. To provide assistance to 5.5 million come into effect. people targeted, the humanitarian partners appealed for close to US$1.47 billion. The drought is a key driver The SJF’s overarching mission is to provide critical of the humanitarian need which, by the end of 2021, investments to support the implementation of Somalia’s had already caused additional internal displacement. National Development Plan, through the UNCF. The SJF Addressing drivers of cyclical need, including climate will leverage pooled funding to promote integrated change, requires sustainable and sustained investments UN approaches and joint programming across the in water, livelihoods, and basic social services across strategic priorities of the UNCF. The SJF will develop a humanitarian, development, and peace actors. new programmatic pipeline in 2022 and will prioritize (a) high priority, high quality joint programs that make In 2021, the United Nations (UN) in Somalia initiated specific and concrete contributions to UNCF outcomes reforms of the Somalia Multi-Partner Trust Fund, drawing and One UN approaches; (b) facilitate evidence-based on lessons learned since the establishment of the Somalia strategic dialogue with stakeholders that informs new Development and Reconstruction Facility (SDRF) in 2014. programming and alignment between development The reforms include a strengthened Fund Secretariat, actors; and (c) increase flexibility of, and interlinkages development of a new investment and resource between, UN programs. In its programmatic focus, MPF REPORT · JULY — DECEMBER 2021 41 Looking Ahead the SJF will strengthen analyses, approaches, and The SJF will continue to rely on the government-led results fostering impact on gender equality and women aid architecture of the SDRF for coordination and empowerment, leaving no-one behind, social contract information-sharing purposes. As an interim measure, and legitimacy, capacity sharing and exit strategies, aimed at increasing the operational efficiency of the prevention of corruption, and environment and climate Fund as the new strategy is operationalized, decisions on security. program approval and fund allocation will not require formal approval through the aid architecture. The UN The SJF seeks to reinvigorate its collaboration with other will revisit this arrangement in the second half of 2022 in financing instruments in Somalia, including the funds consultation with stakeholders. managed by the WB and the African Development Bank as envisioned at their inception. The new strategy aims Christoph Oberlack has recently taken up the United to strengthen the strategic portfolio dialogue on areas Nations–World Bank (UN–WB) Liaison position for of complementarity and collaboration with the MPF and Somalia, previously held by Sarah Cramer. He will provide the Somalia Infrastructure Fund as well as analysis and technical and strategic liaison support across the UN learning across the SDRF funding windows to enhance and WB. Christoph will support the implementation of reach and impact. use of country systems, platforms, and frameworks and will support the analytical and operational partnership between the UN and WB. 42 MPF REPORT · JULY — DECEMBER 2021 Looking Ahead The Theory of Change, Results Framework, and of growth. Somalia has been confronted by several key Communications and Visibility Plan (2022–24) are challenges, mostly its narrow economic base marked currently being finalized after initial discussions with by poor economic diversification and vulnerability donor technical teams in late 2021. They will be adopted to external shocks. Identifying the constraints that once they have been reviewed and endorsed by the MPF are hampering the integration of Somalia into the Consultative Group. multilateral trading system and the identification of concrete policy actions to be implemented for the The WBG commissions periodic strategic risk reviews of mainstreaming of trade issues will lead to diversification emerging issues of institutional reform and state-building and economic development strategies. This objective in Somalia. These reviews by Abyrint, the MPF Monitoring can be summarized into three broader objectives: (a) Agent (whose contract has been renewed), inform promoting economic diversification and broadening government and WBG strategy, portfolio management, the export base; (b) supporting the World Trade and implementation. The Monitoring Agent also Organization’s accession and regional integration; and provides risk management support on the MPF’s main (c) enhancing the institutional capacity of the Ministry areas of risk, including transaction level monitoring and of Commerce and Industry, and other ministries and advisory support to project implementation. agencies associated with trade. Insight gained is consolidated to produce fact-based In support of efforts to deepen and strengthen strategic analyses and recommended actions to the WBG, as well engagement on women’s equal opportunities across as targeted capacity-building support to government. operations and analytic initiatives, the Bank established a Experience to-date demonstrates that the portfolio is Somalia Gender Equality Platform with the support of the adept at managing elevated risks and delivering results MPF. The objective of this Platform is to provide strategic amidst difficult and dynamic circumstances. Continued support on gender issues to help define key operational, deliberate risk management is necessary to maintain this technical, and analytical priorities for engagement under track record. the Country Partnership Framework. This platform will enable multiyear and multisector nonlending Technical The MPF-financed Somali Electricity Access Project Assistance using a programmatic platform, which will (SEAP) will be supported by a new US$150 million project assist the WBG’s engagement in Somalia by promoting from IDA, approved by the WB Board on December gender equality and inclusion of those left behind 8, 2021 (Somali Electricity Sector Recovery Project, more broadly. Grant financing will support improving P173088). SEAP has strengthened the capacity of the technical support on gender to operations, conducting client in terms of project coordination, procurement and frontier research, identifying and financing innovative financial management, and proactiveness on technical interventions, and expanding policy dialogues and issues. The Bank team continues to provide support to knowledge sharing across government and relevant manage associated risks. About 64 percent of the project development partners. funds have been disbursed (US$3.27 million for the FGS and US$1.29 million for Somaliland), compared with 31 The MPF will continue to support inclusive and robust percent in the last reporting period. economic recovery from the major impacts of COVID-19, the triple crises, and climate-related shocks, alongside Trade in Somalia—which could be a strong positive force the IDA portfolio. The MPF will support efforts to (a) for economic growth—is not serving its full potential as deepen the understanding of COVID-19 impacts; and an engine of growth. In the past few decades, Somalia’s (b) deliver TA/capacity building to design effective trade has been weak and played a limited role as a source COVID-19 responses for Somalia. The incidence of MPF REPORT · JULY — DECEMBER 2021 43 Looking Ahead COVID-19 in Somalia has hastened the need to introduce Under the COVID Vaccines Access (COVAX) Facility, technologies and tools to support remote supervision, 300,000 doses of AstraZeneca were received in March as well as to put into place alternative ways to gather 2021 and additional doses were donated from China stakeholder input and feedback. These concerns were (200,000 doses of Sinopharm), Russia (2,500 doses of already present with the inability to travel to insecure Sputnik), and France (108,000 of AstraZeneca). Under regions in Somalia. However, the COVID-19 pandemic the COVAX facility, Somalia expects to receive additional has elevated the discussion and provided additional doses of vaccines to cover 20 percent of the population resources to test new approaches. by mid-2022, as per the global commitment of COVAX. This 20 percent coverage under COVAX will cover the first As of March 2, 2022, there have been 26,351 confirmed and second stage priority population to be vaccinated cases of COVID-19, with 1,348 deaths reported in the which, for phase 1, includes healthcare workers, border country since the pandemic began, and a case fatality patrol staff, police, municipal workers, and teachers; ratio of 5.12 percent. The districts reporting the highest phase 2 includes people with co-morbidities and elderly incidence of COVID-19 cases are Hargeisa and Medina, people over 50 years of age. According to the states; with a weekly incidence rate of 0.1 percent and 0.4 micro plan, at least 20–30 percent of internally displaced percent per 100,000 population, respectively. Preventive persons—9,976 nomads and 3,159 registered refugees— measures in place in the country include physical or have been targeted for vaccination. social distancing, quarantining, temperature checks upon entering public buildings, ventilation of indoor Current Bank support to Somalia for the COVID-19 spaces, covering coughs and sneezes, handwashing, response efforts centers around the Somalia COVID-19 and keeping unwashed hands away from the face. The Emergency Vaccination Project (P176956) for US$45 use of face masks or coverings has been recommended million approved on September 28, 2021, and expected in public settings to minimize the risk of transmissions. to be declared effective by March 26, 2022. The project Travel in/out of the country is permitted if vaccinated. aims to support the Federal Republic of Somalia to acquire and deploy COVID-19 vaccines and to strengthen The Government of Somalia aims to vaccinate 70 percent national immunization capacity. The project will also of its population free of cost. There are 2,947,338 million play a central role in financing the country’s vaccination doses of vaccines available for utilization in Somalia. campaign with other partners, WHO, and UNICEF, To date, 1,871,867 COVID-19 vaccine doses have been providing primarily technical support and funding. administered in Somalia. In the last weeks, COVID vaccine The project expects to process additional financing of uptake slowed due to routine immunization of polio and potentially US$58.2 million. This amount consists of measles, and electoral processes, taking place at the financing resources of US$5.2 million from IDA made same time, resulting in shortage of human resources in available in late 2021 and US$3 million from the Health some states. A total of 948,933 individuals have been fully Emergency Response Preparedness Trust Fund. The latest vaccinated—which are individuals who have received developments from February 2022 indicate additional the second doses of AstraZeneca and Sinopharm and resources being made available to priority countries to one dose of the Johnson and Johnson vaccine. A total of further support COVID response and vaccination efforts, 922,934 individuals have been partially vaccinated, those which includes Somalia, with an indicative envelope of who have received their first dose of the AstraZeneca US$50 million. The continued gaps/needs areas that and Sinopharm vaccine. In terms of gender, of those can be further supported with this additional financing vaccinated, 40 percent are female, 60 percent are male. include strengthening the health system cooling 44 MPF REPORT · JULY — DECEMBER 2021 Looking Ahead capacity to receive, store, and deploy vaccines; properly enabled harmonization of policy dialogue. However, equipping points of entry with more equipment such areas for improvement remain. Some among these are: as PPE [personal protective equipment] testing kits; responding with more flexibility to the dynamic and social mobilization efforts to educate health workers difficult operating context; having a more collaborative and community members about COVID-19, including approach, for instance, in expectation management and the benefits of the vaccination program to address donor involvement; linking more explicitly to the political concerns over vaccine hesitancy and improve vaccine processes—supporting broader macro dialogues uptake; and setting up more mobile clinics and with financing; better portfolio risk management and outreach campaigns. knowledge management; and aggregating monitoring and evaluation of project level outputs to outcome level The team has been actively engaged in monitoring results across portfolios. and analyzing the impacts of COVID-19 on the Somali economy at a macro, enterprise, and household level. In Going forward, the MPF will continue to aim to support parallel, the WB is actively supporting the FGS to help and deliver an integrated IDA-MPF portfolio, with a design and implement COVID response and recovery focus on: operations. MPF-financed COVID support to understand • Enhanced policy dialogue platforms to link the the situation better in Somalia includes many initiatives analytical work closely to the investment pipeline such as: COVID-19 economic monitoring to facilitate an beyond the Bank and inform client decision making. understanding of the transmission channels of COVID on • Robust knowledge work to catch up on 30 years’ the Somali economy; COVID-19 High-Frequency Phone absence of core Bank analytical products and inform Survey to monitor the socioeconomic impacts of the investments and sector reforms. pandemic and improve the understanding of the effects • Integrated risk sensitive portfolio delivery in a high- of, and household responses to, the pandemic in near- risk context with professional services, enhanced real time which would, in turn, inform policy responses fiduciary risk management/Monitoring Agent, a and interventions; COVID-19 Enterprise Survey to better security platform for client engagement, enhanced understand the economic impacts of the pandemic ESF capacity, and so on. on Somali businesses and inform the design of the interventions to counter the effects of the pandemic on • Pooling funds for greater impact and testing the private sector.11 concepts to take to scale: co-mingle donor and IDA resources for greater aid coordination and influencing Providing enhanced implementation support and the IDA portfolio. supervision will be important to ensure high quality delivery of the operations for the beneficiaries in this The end of this reporting period has seen the MPF high-risk context. Due to the COVID-19 restrictions, continue to provide a platform for expanding the teams will continue to rely on enhanced supervision and government’s ability to engage in the development monitoring arrangements. of the country. As the portfolio moves beyond core economic institutions and further into service delivery, The MPF has helped bring government systems the MPF continues to lay the foundations for sustainable back into play, increase government ownership, and poverty reduction and economic development. 11 Please refer to the MPF Progress Report, July–December 2020 edition, for a detailed coverage of these initiatives. MPF REPORT · JULY — DECEMBER 2021 45 APPENDIXES Appendix 1. MPF Monitoring Framework: 2019–2021 (A) MPF Operational Performance (As of December 31, 2021) Quality of Operations Target Status Total MPF disbursements to date (US$ million) – 365.6 MPF IDA 2014 10.3 – 2015 24.4 – 2016 38.1 – Total disbursements by calendar year (US$ million) – 2017 62.5 – Disbursements 2018 75.5 – 2019 37.8 29.9 2020 32.0 111.012 2021 50.4 109.0 Commitment ratio of paid-in donor contributions – 88% Disbursement ratio of signed project grants 13 a. Including RCRF – a. 76% b. Excluding RCRF b. 64% Average # of months from SDRF endorsement to first Timeliness <4 months 5.9 disbursement % of active operations rated moderately satisfactory Portfolio quality 90% 100% or higher World Bank Management Target Status % of MPF projects that have been consulted with relevant Working 100% 100% Consultation Groups during design # of total MPF Consultative Group meetings 6 8 Donor Engagement Target Status Limited % of MPF contributions preferenced by donors <30% 26% preferencing Pledge Donor payments on schedule (% of total funds paid according to 100% 100% predictability Administration Agreement schedule) Cross-Cutting Issues Target Status Gender Gender considerations integrated into MPF portfolio (% of MPF projects NA 75% mainstreaming with World Bank gender flag)14 Capacity building % of active projects with a capacity development component 100% 100% % of MPF projects that utilize conflict analysis to inform project Conflict sensitivity management, going beyond basic World Bank requirements for project 50% 100% preparations 12 This excludes the DPO in CY20. 13 This is only for the MPF. 14 MPF projects and analytic activities are reviewed and assessed by the World Bank to systematically consider and address gender inequalities in (a) the underlying analysis; (b) the actions proposed; and/or (c) monitoring and evaluation arrangements. If a positive response is recorded in at least one of these three dimensions, the operation is flagged as gender-informed. MPF REPORT · JULY — DECEMBER 2021 47 Appendix (B) MPF Results (As of December 31, 2021) CPF Objectives Focus Area 1: Strengthening Baseline 2019 2020 2021 Data Source Institutions to Deliver Services Cross-cutting 1. Government demonstrates – Target 7 8 12 RCRF reporting progress on key reforms and after March and benchmarks, as demonstrated byw August reviews of achievement of RCRF disbursement- – DLIs. In addition linked indicators (DLIs) (cumulative) Actual 5 of 7 DLIs Cumulative Cumulative to #s, narrative to met by total: 10 total: be provided about deadlines 5 of 10 DLIs 13 DLIs for specific DLIs for 2020 2021 met met by with some deadlines delays15 Objective 2. FGS demonstrates improved i) 25% Target i) 30% i) 40% i) 50% DRM/PFM 1.1: Improve PFM control and accountability, as ii) 25% ii) 30% ii) 40% ii) 50% reporting public finance evidenced by: management i) Increased % of appropriated and Actual i) 73.83% i) 100%17 Not yet expenditures processed through the reported institutional commitment system ii) 48.83% 16 ii) 75% 18 effectiveness ii) Increased % of payments made directly to vendors Objective 1.2: 3. Revenue ‘instruments’19 (both tax 0 Target 1 2 4 DRM/PFM Enhance and nontax) with basic ‘processes’20 Actual 0 0 221 reporting using domestic automated (cumulative) FGS MoF Tax revenue codes and Tax mobilization administration and resource system in place sharing 15 The FGS has met 13 disbursement-linked results (DLRs) out of 21 DLRs that were cumulatively scheduled for 2021. An intergovernmental technical committee adopted customs modernization roadmap and action plan and agreed on common goods classification; the FGS MoF approved functional specifications for the new customs IT system; tax identification number (TIN) and TCC are mandatory when bidding for government contracts and valid TIN required to have invoice paid; Somalia financial management information system (SFMIS) incorporates: (a) End-of-day balances of all treasury single account (TSA) accounts, and (b) monthly balances of all MDA accounts held at the Central Bank of Somalia (CBS); all government payments for salaries, transfers, and capital expenditures are executed as payments to Bank accounts directly to vendors, with the exception of: petty cash, travel advances, security sector, and contingency; FGS and FMS Finance Ministers agreed on principles to guide FGS transfer allocations to FMS/BRA, which were reflected in draft 2022 FGS budget; FGS fiscal transfers execution rate to FMS was greater than the outturn rate for domestic revenues in FY2020; proficiency testing of teachers was conducted in all eligible FMS/BRA establishing minimum competency level of teachers. Two more DLRs are likely met and are pending independent verification: FGS MoF approved new business processes for key revenue streams; fiscal transfer allocations in draft 2022 FGS budget reflect policy paper principles. 16 Increased % of appropriated expenditures processed through the commitment system (81.68 percent) less baseline of 25 percent, over the previous year. 17 Based on last assessment on June 30, 2020, provided in project implementation status report on Feb 9, 2021. 18 Based on last assessment on December 31, 2020, provided in project implementation status report on Feb 9, 2021. 19 For purposes of this indicator, the instruments include: corporate income tax; personal income tax; excise tax; simple broad-based consumption tax; simple GST or VAT based consumption tax; registration tax; property tax; stamp duty; tax on remittances; telecommunications taxes; road tax (including vehicle licenses and drivers’ permits); business licenses; telecom licenses; and off-shore fishing licenses. 20 For purposes of this indicator, the processes to be included in computing the indicator include: (a) registration; (b) declaration/filing and assessment; (c) taxpayer payment and accounting; and (d) debt collection. 21 The FGS and PSS are working on the design for a ‘fit-for-purpose’ ITAS and are preparing the joint request for bidding for development and implementation, with significant delays in completing the design of the ITAS and related procurement of a vendor to implement ITAS. In the meantime, the FGS has used the Financial Management Information System for automating two (registration and payment) revenue related key processes. The PSS has also adopted the same strategy and automated registration and partly payment. Such registration and payment is across the customs and inland revenue instruments. 48 MPF REPORT · JULY — DECEMBER 2021 Appendix CPF Objectives Focus Area 1: Strengthening Baseline 2019 2020 2021 Data Source Institutions to Deliver Services Objective 1.2: 4. Improved fiscal relations between i) Yes Target i) Yes i) Yes i) Yes (i) Qualitative Enhance the FGS and FMS, as evidenced by: ii) ii) 15% ii) 30% ii) 45% reporting from domestic i) Intergovernmental meetings22 US$29.9 RCRF, K4R, FGC, Actual i) Yes23 i) Yes24 i) Yes25 revenue and knowledge products lead to million Oil and Gas, mobilization (2018) ii) 81% ii) 118% ii) -47% Education, Health; concrete decisions being made on and resource (US$27.3 (US$59.7 (US$31.6 and (ii) RCRF fiscal federalism issues (yes/no) sharing million) million) million) reporting using ii) Annual increase of MoF records intergovernmental transfers from FGS to FMS and BRA Objective 5. Expanded access to healthcare in i) 0 Target i) 400 i) 400 i) 400 Health ASA/RCRF 1.3: Improve Benadir, Galmudug, and Puntland, as ii) 0 ii) 100,000 ii) 150,000 ii) 150,000 delivery of evidenced by: systems for i) # of female healthcare workers in Actual Delayed i) 354 i) 88626 inclusive social place with MPF support ii) Reporting ii) services ii) # of women and children visited delayed Reporting by female healthcare workers delayed annually with MPF support 6. Improved supervision in i) 0 Target i) 300 i) 1,200 i) 1,500 Education ASA education sector, as demonstrated ii) 0 teachers in teachers in teachers by: BRA tested at least 2 in at least i) # of teachers who have undergone ii) 100 (PSS eligible FMS 2 eligible proficiency testing on numeracy and BRA) tested FMS tested and classroom pedagogy in selected ii) 300 in 2 ii) 300 in FMS eligible FMS 2 eligible ii) # of school supervision visits by FMS education authorities from FGS and Actual i) 897 i) 1,816 i) 1,816 FMS Ministries of Education ii) 300 teachers in teachers in BRA, HSS, BRA, HSS, JSS, SWS, JSS, SWS, GSS GSS27 ii) 1,554 in ii) 1,554 in BRA, HSS, BRA, HSS, JSS, SWS, JSS, SWS, GSS, PSS GSS, PSS 22 Only intergovernmental meetings supported through MPF projects will be tracked. 23 In 2019, a meeting of finance ministers was held in Addis Ababa in September; an Inter-Governmental Fiscal Federalism Committee (IGFCC) meeting together with a full Finance Ministers’ Fiscal Forum (FMFF) meeting was held in Kampala in November; a follow-on IGFFC/FMFF was held in Kismayo in December. Joint commitments made from finance ministers to reinvigorate regular intergovernmental fiscal forum meetings, approval of the Inter-Governmental Fiscal Transfers Policy Paper (an RCRF reform benchmark or ‘DLI’); and advances on the fiscal inputs to the Constitutional drafting process. 24 In 2020, Finance Ministers’ Fiscal Forum (FMFF) held online on April 25, May 2, June 7, and July 6; and in a face-to-face meeting in Mogadishu on August 12, where a policy note on the fiscal transfer formula was endorsed. 25 The Intergovernmental Fiscal Secretariat has visited all FMS to hold technical discussions on a draft fiscal transfer formula with a detailed review of pros and cons of the formula implementation for each state, which were discussed at the Inter-Governmental Fiscal Federalism Technical Committee (IGFF-TC) meeting in Nairobi on October 3-6, 2021. The FGS and the FMS Ministries of Education, through an intergovernmental coordination meeting, signed a Memorandum of Understanding on a collaboration framework and agreed to form a National Examination and Curriculum Board, a key HIPC milestone related to social sectors. The Financial Reporting Unit (FRU) and the Technical Working Group (TWG) of FGS and FMS budget and treasury units supported by the WB held a workshop in Garowe between June 5 and 15, 2021. The objective was to finalize the harmonization of budget classification/chart of accounts and standardization of reporting formats to allow the FGS to produce a consolidated budget document and aggregated fiscal outturns in FY2022. The Garowe workshop was successful in terms of harmonizing the CoA to six-digit level. The FRU and the TWG completed harmonization of the unified economic classification (up to six-digit coding for revenues and expenses) aligned with the GFS 2014, as well as other budget classification segments (organization, fund, location, program, function). The work was based on a policy document signed by the Minister for Finance on Feb 28, 2021. The next step is the adjustment of existing FMIS solutions to use new unified BC/CoA and reporting formats, so that the 2022 budget can be executed accordingly. 26 340 female health workers (FHWs) and 19 FHSs were recruited in Puntland, Galmudug, and BRA in 2020. An additional 546 FHWs and 39 FHSs have been recruited and trained in all eligible FMS and BRA in 2021. The FHWs have supported COVID-19 response by visiting households to provide education and contact tracing. 27 The program is moving from a paper-based system to a digital-based collection system primarily through the ODK platforms, where mobile phones will be mainstreamed for data collection, decision making, and capacity building. Integration of such data, wherever needed, will be done with the Health Management MPF REPORT · JULY — DECEMBER 2021 49 Appendix CPF Objectives Focus Area 1: Strengthening Baseline 2019 2020 2021 Data Source Institutions to Deliver Services Objective 1.4: 7. Municipalities demonstrate i) 0 Target i) 0 i) 4.9 km i) 12.1 km SURP Build the improved capacity for urban ii) 0 ii) 0 ii) 0 ii) 2,000 Narrative will also capacity resilience, as evidenced by: include qualitative of Somali i) Kilometers of road rehabilitated reporting municipalities (cumulative) gathered towards for urban the end of ii) People with access to improved Actual i) 0 i) 10.96 km i) 12.3 km29 resilience the project on roads28 within a 500-meter range ii) 0 ii) 0 ii) 148,80030 improved access (number, % female, % IDPs) to services CPF Focus Area 2: Restoring Economic Baseline 2019 2020 2021 Data Source Objectives Resilience and Opportunities Objective 2.1: 8. Access to inclusive finance i) 0 Target i) 0 i) 2 (30%) i) 8 (30%) SCALED-UP Improve improved and used to generate job ii) 0 ii) 0 ii) 200 (30%) ii) 650 business growth as demonstrated by: (30%) environment i) Value of loans from the MSME Actual To be i) 2.4 i) 3.3 (15% and lower Financing Facility (US$ million)31 (% assessed in (6.5%)33 # / 5% barriers to women-owned) 202032 ii) Not yet value) entry assessed ii) Indicator ii) Jobs created by firms that access the MSME Financing Facility (% dropped34 women) Objective 9. Supervisory capacity of i) No Target No Yes Yes SCALED-UP 2.2: Access the Central Bank of Somalia ii) No to finance strengthened as demonstrated by to increase publication of reports on financial Actual No No No35 inclusion institution examinations and cases and digital of supervisory actions on the CBS development website opportunities 10. Digital ID Authority established No Target No No Yes SCALED-UP and operational Targets on digital ID enrollment will Actual No No Yes36 be included later Objective 2.3: 11. Access to renewable energy i) 0 Target i) 11,390 i) 30,753 i) 71,757 SEAP Increase access enabled, as demonstrated by: ii) 0 (30%) (30%) (30%) Narrative to renewable i) Number of people provided with iii) 0 ii) 0 ii) 1 ii) 3 reporting will also energy new or improved energy service (at iii) 0 iii) 0.10 iii) 0.15 include qualitative least 30% female) data gathered Actual To be i) 6,430 i) 6,430 towards the end ii) Number of energy sector studies assessed (50%) (50%) of the project on completed from 2020 ii) 0 ii) 4 improved access iii) Renewable energy generation iii) 0 iii) 0.00637 to energy services capacity deployed (MW) 28 Only referring to rehabilitated roads financed by a WBG-assisted project. 29 In Mogadishu, 11 roads were constructed covering 7.4 km. In Garowe, four roads were rehabilitated covering a total distance of 4.93 km. 30 Breakdown by location: 140,800 in Mogadishu (50 percent female, 19 percent IDP, 81 percent host communities); 8,000 in Garowe (50 percent female, 25 percent IDP, 75 percent host communities). The actual number of people benefitting from the improved roads far exceeds the original target, which was overly conservative. A greater understanding of the scope for beneficiaries was gained over the course of the project. 31 The MSME Financing Facility is designed to provide financial intermediary financing (FIF) to private financial institutions to issue subloans to micro, small, and medium enterprises (MSMEs) in underserved economic segments, with an emphasis on female-owned businesses. Once a track record is established, the MSME Financing Facility should be able to crowd-in investment capital from private sector sources. 32 The inclusive finance indicators will not be assessed until 2020 as this was the start-up year for the MSME Financing Facility. For a detailed update on the recently approved SCALED-UP project, please see the associated project brief. 33 First disbursement issued at the end of June 2020. Of the total 120 loans made, 20 (or 17 percent), were for women-owned enterprises. Women beneficiaries participated mainly in the micro window with lower amounts. 34 Indicator dropped during restructuring due to attribution challenges and the need to streamline the total number of project-level indicators. However, Gargaara is planning to develop a more comprehensive framework that would go beyond that of SCALED-UP, which would likely include a jobs’ indicator. 35 Indicator replaced with new indicators linked to performance-based conditions at the project level. MPF-level framework will be revised in the next iteration of the progress report. 36 Legal framework governing the implementation of the digital ID body/system has been passed by the Parliament, assented to by the President, and effective. 37 About 1,286 systems have been installed, averaging 5W each (total of 6,430 Watts). 50 MPF REPORT · JULY — DECEMBER 2021 Appendix Appendix 2. Status of HIPC Completion Point Triggers HIPC Completion Point Trigger Progress At least one year of implementation of Implementation of the National Development Plan 9 (NDP9) is under way, although it has NDP9—Somalia’s Poverty Reduction been affected by multiple challenges. Some progress has been made across the four NDP9 Strategy (PRS). pillars, including social, economic, security, and governance policies. However, the COVID-19 pandemic and lower-than-expected funding have slowed its implementation in 2021. The 2022 budget has allocated funding to continue implementing the activities that received funding in the 2021 budget. Public Financial and Expenditure Management Publish at least two years of the audited The Office of the Auditor General published the 2019 accounts in December 2020. The audit financial accounts of the Federal of 2020 FGS financial statements was published in November 2021. Government of Somalia.  Issue regulations to implement the Public Regulations covering debt and natural resource revenue management have been drafted and Financial Management Act’s provisions are currently under review. Regulations on public investment management are planned to be on debt, public investment, and natural drafted and incorporated into the PFM regulations by June 2022. resource revenue management. Domestic Revenue Mobilization Adopt and apply a single import duty FGS and FMSs reached agreement on the single tariff and the need to use a common valuation tariff schedule at all ports in the Federal approach. The development of a minimum book value schedule to be used across the main Republic of Somalia (to also foster greater ports is under way with its implementation anticipated to start in 2022 at key ports. trade integration). Governance, Anticorruption, and Natural Resource Management Enact the Extractive Industry Income Tax Cabinet approved the EIIT Bill in December 2020 and submitted it to Parliament. As soon as the (EIIT) Law.  new Parliament is elected, Cabinet will resubmit the bill. Ratify the ‘United Nations Convention The UNCAC was ratified by the Somali Parliament and assented by the President in December Against Corruption’ (UNCAC). 2020. UNODC reports that it received instruments of ratification on August 11, 2021. Debt Management Publish at least four consecutive quarterly The Ministry of Finance is making progress to improve debt reporting. Debt bulletins were reports outlining the outstanding stock of published covering Q4 2020, as well as Q1 and Q2 of 2021. Information has been included on general government debt; monthly debt- the outstanding stock and composition of debt liabilities and financial assets and, where they service projections for 12 months ahead; exist, loan guarantees and other contingent liabilities, including their currency denomination, annual principal payment projections maturity, and interest rate structure. (for at least the next five years); and key portfolio risk indicators (including proportion of debt falling due in the next 12 months; proportion of variable rate debt; and projected debt service-to- revenues and debt service-to-exports for the next five years). MPF REPORT · JULY — DECEMBER 2021 51 Appendix HIPC Completion Point Trigger Progress Social Sectors Establish a national unified social registry The authorities are establishing a USR with support from the World Bank, the World (USR) as a functional platform that Food Program (WFP) and UNICEF. The USR design and development of the platform and supports registration and determination infrastructure are progressing well. However, the development of the data protection and data of potential eligibility for social privacy Law and operational guidelines are lagging and need to advance before the WFP can programs. transfer its data on cash transfer recipients to the government and enable the USR to become fully operational. FGS and FMS Ministers of Education adopt On July 14, 2021, the FGS and FMS MoEs including Puntland finalized and officially signed an agreement defining their respective the revised draft education cooperation MoU at the intergovernmental meeting held in roles and responsibilities on curriculum Garowe. A permanent intergovernmental forum for education has been formalized. Key and examinations. agreements reached include the formation of national examination, certification, and curriculum boards. An interim committee to develop the criteria for selection of the board members was also established. FGS and FMS Ministers of Health adopt a FGS and FMS ministers have agreed on a framework for a joint national health strategy. joint national health sector strategy. Growth/structural Enact the Electricity Act and issue The draft Somalia Electricity Bill was subject to consultations and was endorsed by Cabinet supporting regulations to facilitate private and submitted to the Parliament in December 2020. As soon as the new Parliament is elected, sector investment in the energy sector. Cabinet will resubmit the Bill. Issue Company Act implementing The Minister of Commerce and Industries (MoCI) issued regulations under the Company Act in regulations on minority shareholder January 2021 that establish the Office of the Registrar of Companies, govern the formation of protection to encourage private sector new companies, and set standards for transparency of companies’ operations. investment. However, these regulations do not contain provisions on protecting minority interests as the MoCI had received legal guidance that this would require an update on the Company Act itself and cannot be covered through the issuance of new regulations. Statistical Capacity Publish at least two editions of the The first edition of the fact book, Facts and Figures 2018, was published in July 2020. The 2019 Somalia Annual Fact Book. edition was published in December 2020. 52 MPF REPORT · JULY — DECEMBER 2021 Appendix Appendix 3. Status of Reform Benchmarks/Disbursement-Linked Indicators (A) RCRF II Disbursement Status (As of December 31, 2021) Disbursement-Linked Indicators Status Disbursement DLI 1: Strengthen customs administration as per the customs reform action plan DLR 1.1. Customs modernization roadmap and action plan Met, disbursed. SDR 1,025,000 tabled, discussed and adopted at intergovernmental technical (US$1,410,994) committee, including agreement on common goods classification (by August 2019). DLR 1.2. Implementation of interim IT system at Mogadishu, Bosaso Not likely to be met on time before RCRF II SDR 1,025,000 and Kismayo ports, including common goods classification, closes. The MoF requested the reallocation customs practices and procedures and valuation of goods (by of the DLR amount to other components. August 2020). DLR 1.3. Functional specifications for the new customs IT system Met, disbursed on June 16, 2021. SDR 1,023,850 developed and approved by FGS MoF (by February 2021). (US$1,474,026) DLI 2: Strengthen tax administration systems and staffing DLR 2.1. TIN and TCC mandatory when bidding for government Met, disbursed. SDR 1,025,000 contracts and valid TIN required to have invoice paid (by March (US$1,410,994) 2019). DLR 2.2. Review existing business processes ‘as–is’ and new Met and claimed in December 2021, but SDR 1,025,000 business processes developed and approved by FGS for the not yet disbursed. following revenue streams (sales tax, excise duty, road tax, stamp duty, registration tax (fees and levies) (by February 2020). DLR 2.3. Targeted automation for collection of sales tax, excise Not likely to be met on time before RCRF II SDR 1,025,000 duty, road tax, stamp duty, and registration tax deployed (by closes. The MoF requested the reallocation August 2020). of the DLR amount to other components. DLI 3: Strengthen cash management and treasury single account (TSA) DLR 3.1. Somalia financial management information system Met, disbursed. SDR 1,025,000 (SFMIS) incorporates: (a) End-of-day balances of all TSA accounts; (US$1,410,994) and (b) monthly balances of all MDA accounts held at the CBS (by March 2019). DLR 3.2. SFMIS incorporates: (a) end-of-day reconciled balances of Expected in February 2022—90 percent of SDR 1,025,000 all government accounts for revenue and expenditure; and (b) all transactions are made automatically; the outstanding commitments made (by February 2020). rest 10 percent completed manually. Full automation expected by end-February 2022. DLR 3.3. SFMIS incorporates cash forecasting model, to inform Expected in February 2022 SDR 1,025,000 management about commitments, available balances and (to be verified in March 2022). expected revenues with regular monthly management reports produced by the Accountant General through SFMIS (by February 2021). DLI 4: Strengthen payment process for operational expenditures DLR 4.1. Reduce cash advances to MDAs for nonsalary recurrent Met, disbursed. SDR 1,025,000 costs from 56.4 percent baseline at end-March 2018 to 26.4 (US$1,410,994) percent [value-based] (by March 2019). DLR 4.2. Reduce cash advances to MDAs for nonsalary recurrent Met, disbursed SDR 1,025,000 costs from 56.4 percent baseline at end-March 2018 to 16.4 (US$1,409,918) percent [value-based] (by February 2020). MPF REPORT · JULY — DECEMBER 2021 53 Appendix Disbursement-Linked Indicators Status Disbursement DLR 4.3. All government payments for salaries, transfers and capital Met, disbursed on June 16, 2022 SDR 1,025,000 expenditures to be executed as payments to Bank accounts (US$1,475,590) directly to vendors, with the exception of: petty cash, travel advances, security sector, and contingency (per Appropriation Act) (by February 2021). DLI 5: Strengthen intergovernmental fiscal policy framework DLR 5.1. Policy paper outlining policy framework for Met, disbursed. SDR 1,025,000 intergovernmental fiscal transfers agreed at Finance Ministers (US$1,409,918) Fiscal Forum covering: Budget timetable, reporting, accountability and disbursement conditions (by March 2019). DLR 5.2. Draft Policy paper including: (a) principles to guide Met, disbursed on March 5, 2021 SDR 1,025,000 FGS transfer allocations to FMS/BRA; (b) comparative analysis, (US$1,464,581) reflecting regional context; and (c) long-term views, tabled at Finance Ministers Fiscal Forum (by August 2020). DLR 5.3. Fiscal transfer allocations in draft 2021 FGS budget reflect Met, and claimed in December 2021, SDR 1,025,000 policy paper principles (by August 2021). but not yet disbursed DLI 6: Strengthen FGS transfers to FMS DLR 6.1. FGS fiscal transfers execution rate to FMS equal to or Missed. 0 greater than the outturn rate for domestic revenues (Year 1) (by August 2019). DLR 6.2. FGS fiscal transfers execution rate to FMS equal to or Met, disbursed on March 5, 2021. SDR 1,025,000 greater than the outturn rate for domestic revenues (Year 2) (by (US$1,464,581) August 2020). DLR 6.3. FGS fiscal transfers execution rate to FMS equal to or Missed. 0 greater than the outturn rate for domestic revenues (Year 3) (by August 2021). DLI 7: Strengthen teacher proficiency testing DLR 7.1. Teacher proficiency test piloted in at least one eligible Met, disbursed. SDR 1,025,000 FMS/BRA, establishing minimum competency level of teachers (US$1,410,994) (Year 1) (by August 2019). DLR 7.2. Proficiency testing of teachers conducted in at least two Met, disbursed on March 5, 2021. SDR 1,025,000 eligible FMS/BRA as an annual exercise, establishing minimum (US$1,464,581) competency level of teachers (Year 2) (by August 2020). DLR 7.3. Proficiency testing of teachers conducted in at least three Met, disbursed on June 16, 2021. SDR 1,000,000 eligible FMS/BRA as an annual exercise, establishing minimum (US$1,439,690) competency level of teachers (Year 3) (by August 2021). Disbursement-Linked Indicators added in March 2022 DLI 8: Reforming civil service legislation DLR 8.1: The Cabinet has endorsed the First Set of Administrative Met, disbursed US$2,000,000 Regulations for the Civil Service Bill. DLR 8.2.1: The Federal Parliament has enacted a civil service law. Not likely till March 2022. Depends on US$1,000,000 Parliament elections. DLR 8.2.2: The Cabinet has endorsed the Second Set of Met, verified and confirmed by WB, not yet US$500,000 Administrative Regulations for the Civil Service Bill. disbursed. DLR 8.3.1: The MoLSA has issued two quarterly reports covering Due in December 2021. Reports on US$500,000 all Non-Security MDAs on status and applicability of the new Civil Administrative Regulations are expected Service Law and its Administrative Regulations. by March 2022. Reports on Civil service Law will not be available. 54 MPF REPORT · JULY — DECEMBER 2021 Appendix Disbursement-Linked Indicators Status Disbursement DLR 8.3.2: The Cabinet has endorsed the Organizational Due in December 2021. Update is US$500,000 Ordinance. expected in March 2022. Dependent on Pay and Grading. DLI 9: Monitoring staff attendance with biometrics DLR 9.1: One Non-Security Ministry has implemented biometric Met, verified and confirmed by WB, not yet US$500,000 attendance monitoring systems. disbursed. DLR 9.2.1: Fifteen Non-Security Ministries have implemented Due in December 2021. Expected in March US$1,000,000 biometric attendance monitoring systems (implementation 2022. Integration with the payroll is a will include links with the payroll, performance, and disciplinary challenge, but can still be addressed. systems). DLR 9.2.2: The NCSC has adopted an action plan based on the Due in December 2021. Expected in March US$500,000 lessons learned during the year for implementation of the 2022. system and its integration with the payroll, performance, and disciplinary system across all Non-Security Ministries of the Recipient. DLI 10: Promoting opportunities for women in the recipient’s civil service and leadership DLR 10.1: The NCSC has issued guidelines: (a) documenting the Met, disbursed US$1,000,000 number of women in various grade levels in the Recipient’s civil service; (b) detailing measures to attain 30 percent ratio of women in senior leadership positions; and (c) prescribing annual progress reporting requirements on gender representation in the Recipient’s civil service. DLR 10.2: The NCSC has published an annual report covering, inter Due in December 2021. The draft report US$500,000 alia: (a) the number of women in various grade levels, including has been submitted. The final report is senior leadership positions, in the Recipient’s civil service; (b) the expected in March 2022. progress achieved as per the measures prescribed and goals set forth in NCSC gender-related guidelines; and (c) an action plan for the next reporting period to eventually achieve the 30 percent ratio of women in senior leadership positions by December 2024. DLI 11: Reforming civil service pay and grading DLR 11.1: The Cabinet has approved a pay and grade reform as per Due in December 2021. Expected in March US$500,000 the technical analysis carried out under the Project. 2022. DLR 11.2: The Cabinet has approved a plan for transitioning Due in December 2021. Expected in March US$500,000 Capacity Injection Modality staff and other donor-financed 2022. positions into the new pay and grading system. DLI 12: Reforming pensions policy and administration DLR 12.1: The Cabinet has (a) approved a pension policy; and (b) Met, disbursed. US$2,000,000 submitted a draft pension law to the Parliament. DLR 12.2: The Recipient has adopted pension regulations. Due in April 2021. Not likely. Requires US$1,000,000 Parliament approval. DLR 12.3.1: The Recipient has retired, granted pensions, and Due in December 2021. Not likely to be US$500,000 started paying them as of January 1, 2022, to all civil servants at, met by June 2022, the project closing date. or above, the mandatory pension age. DLR 12.3.2: The MoF has established a pension fund department. Due in December 2021. Not likely to be US$500,000 met by June 2022, the project closing date. DLI 13: Improving wage bill management and transparency DLR 13.1: The Cabinet has approved an action plan to improve the Due in December 2021. Expected in March US$1,500,000 transparency and management of a reduced nonformal wage bill. 2022. MPF REPORT · JULY — DECEMBER 2021 55 Appendix Disbursement-Linked Indicators Status Disbursement DLI 14: Harmonizing CoA and reliable and timely consolidated fiscal reports DLR 14.1: The MoF has: (a) issued a policy prescribing: (i) the Met, disbursed. US$1,000,000 harmonization of the budget codes and chart of accounts; (ii) the standardization of reporting formats, collection and consolidation of budget data; and (iii) generation of financial/budget reports; as well as (b) established a dedicated financial reporting unit to implement the foregoing policy. DLR 14.2: The MoF’s newly established financial reporting unit Met, verified and confirmed by WB, not yet US$1,000,000 has developed and adopted: (a) a harmonized/unified budget disbursed. classification/chart of accounts; (b) control mechanisms to manage the expansion of the unified chart of accounts in line with the requirements of the MDAs at federal, state and local government-levels; and (c) standard reporting formats to collect and consolidate budget results from the SFMIS platforms and/or other financial management information systems at federal and state levels. DLR 14.3.1: The Recipient has (a) prepared the budget for Fiscal Due in December 2021. Not likely to be US$250,000 Year 2022 using the new unified chart of accounts (“CoA”); and (b) met by June 2022, the project closing date. has issued instructions for the use of the new CoA in the SFMIS as well as other financial management information platforms at federal and state levels for the planned budget execution of Fiscal Year 2022. DLR 14.3.2: The MoF has published monthly fiscal reports using Due in December 2021. Not likely to be US$250,000 the new CoA and reporting formats in the financial management met by June 2022, the project closing date. information system platforms of the Recipient and FMSs starting from January 1, 2022. DLI 15: Enhancing health service delivery systems DLR 15.1: The MoH has issued instructions to use the mobile Met, disbursed. US$1,000,000 phone infrastructure for improved delivery and performance management of the Marwo Caafimaad Program. DLR 15.2: The MoH has piloted data gathering from, and training Met, verified and confirmed US$1,000,000 of, female health workers (“FHW”) and female health supervisors by WB, not yet disbursed. (“FHS”) in at least two (2) FMSs or one FMS and BRA. DLR 15.3.1: The MoH and the FMoHs have recruited, trained, and Due in December 2021. Likely met. Report US$250,000 deployed at least 700 FHW/FHS. expected in March 2022. DLR 15.3.2: (a) At least 300 FHW/FHS have reported their Due in December 2021. Likely met. Report US$250,000 activities, on at least fortnightly basis for the last one month, expected in March 2022. using mobiles/tablets; and (b) an additional 300 FHW/FHS have reported their activity on a daily basis for the last one month using mobiles/tablets. DLR 15.3.3: The MoH has reached out to at least 500 pregnant Due in December 2021. Likely met. Report US$250,000 women using mobile phones. expected in March 2022. DLR 15.3.4: The MoH has: (a) conducted a stocktaking exercise Due in December 2021. Report expected US$250,000 on the lessons learned from the roll-out of the ICT-based data in March 2022. gathering, beneficiary engagement and training of FHW/FHS; and (b) approved an action plan for calendar year 2022 to further strengthen and broaden the ICT-based data gathering, beneficiary engagement and training of FHW and FHS. KEY: DLR either cannot be achieved, or the delay in achievement is impacting negatively on achievement of future results under the DLI. DLR is likely to be achieved, but with delay. DLR on track for being achieved on time. DLR has been substantively achieved (subject to verification). Note: DLI = Disbursement-Linked Indicator; DLR = Disbursement-Linked Result; PBC: Performance-Based Conditions. 56 MPF REPORT · JULY — DECEMBER 2021 Appendix (B) RCRF III Performance-Based Conditions’ Disbursement Status (As of September 14, 2021) Performance-Based Conditions Timeline/Status Amount PBC 1: Strengthen customs administration as per the customs reform action plan US$1,250,000 PBC 1.1: The MoF has developed and operationalized the new IT system, as well as By end of June 2022 . US$1,000,000 its manuals of procedures. PBC 1.2: The MoF has completed a simplified functional review of FGS customs to By end of June 2023. US$250,000 better allocate human resources in customs. PBC 2: Strengthen payment process for operational expenditures US$1,250,000 PBC 2.1: The MoF has: (a) completed a business process review for FGS’ payment; By end of November 2022. US$1,000,000 and (b) prepared/issued a business process review report including the processing of fiscal transfers and education and health sector payments. PBC 2.2: The MoF has approved comprehensive procedures aligned with the By end of November 2023. US$250,000 business process review for following areas: (i) planning and budgeting; (ii) internal controls; and (iii) accounting procedures. PBC 3: Strengthen intergovernmental fiscal policy framework US$1,250,000 PBC 3.1: The FGS’ FY 2022 budget provides for appropriations for FGS’ fiscal transfers By end of June 2022. US$1,000,000 to FMS/BRA as per an intergovernmentally agreed formula. PBC 3.2: The FGS’ FY 2023 budget provides for appropriations for FGS’ fiscal transfers By end of June 2023. US$250,000 to FMS/BRA as per an inter-governmentally agreed formula. PBC 4: Strengthen FGS transfers to FMS US$1,250,000 PBC 4.1: The FGS’ fiscal transfers execution rate for the first half of FY 2022 to FMS/ By end of US$1,000,000 BRA is equal to, or greater than, the outturn rate for FGS’ domestic revenues. November 2022. PBC 4.2: The FGS’ fiscal transfers execution rate for the first half of FY 2023 to FMS/ By end of US$250,000 BRA is equal to, or greater than, the outturn rate for FGS’ domestic revenues. November 2023. Performance-Based Conditions Timeline/Status Amount PBC 5.1: The FGS has: (a) enacted a pension law; (b) adopted regulations on By end of June 2022. US$1,000,000 pensions for civil servants (including those guiding collection); and (c) established a pension secretariat with the participation of tall relevant MDAs. PBC 5.2: The FGS has established, staffed, and operationalized a pension unit By end of November 2023. US$250,000 within six months from the commencement of pension collections. PBC 6: Strengthen FMS resource management systems for service delivery US$5,580,000 PBC 6.1: The FMSs have: (a) signed Service Delivery Transfer Agreements with Met, disbursed. US$2,500,000 the FGS, including costed COVID-19 measures, for an aggregate amount equal to the Allocated Amount of this PBC equivalent; and (b) approved budgetary appropriations for FY 2020 allocating a net budgetary increase for their respective MoH equal to the amount of the respective Service Delivery Transfer Agreements. PBC 6.2: The FMSs have: (a) signed with the FGS an updated Service Delivery By end of June US$600,000 Transfer Agreements (2021); and (b) approved budgetary appropriations for FY 2021 2021. Likely to be allocating a net aggregate budgetary increase for education and health sectors equal claimed in March to the aggregated Allocated Amounts for PBCs #6.2.; #6.3; #8.1; and #8.2. 2022. PBC 6.3: The FMSs have: (a) issued their respective implementation and financial By end of November 2021. US$600,000 reports on the use of federal (service) transfers covering FY 2020 and the first half of Likely to be claimed in FY 2021 in line with provisions Service Delivery Transfer Agreements demonstrating March 2022. release of funds to MoHs and MoEs; and (b) submitted the same to the MoF. PBC 6.4: The FMSs have: (a) signed with the FGS an updated Service Delivery By end of June 2022. US$750,000 Transfer Agreements (2022); and (b) approved budgetary appropriations for FY 2022 allocating a net aggregate budgetary increase for education and health sectors equal to the aggregated Allocated Amounts for PBCs #6.4.; #6.5; and #7.2. MPF REPORT · JULY — DECEMBER 2021 57 Appendix Performance-Based Conditions Timeline/Status Amount PBC 6.5: The FMSs have: (a) issued their respective implementation and financial By end of November 2022. US$750,000 reports on the use of federal (service) transfers covering FY 2021 and the first half of FY 2022 in line with provisions Service Delivery Transfer Agreements demonstrating release of funds to MoHs and MoEs; and (b) submitted the same to the MoF. PBC 6.6: The FMS have: (a) signed with FGS an updated Service Delivery Transfer By end of June 2023. US$380,000 Agreements (2023); and (b) approved budgetary appropriations for FY 2023 allocating a net aggregate budgetary increase for education and health sectors equal to the aggregated Allocated Amounts for PBCs #6.6.; #7.4 and #8.5. PBC 7: Strengthen education service delivery US$3,080,000 PBC 7.1: Each FMS has adopted a Performance-Based School Grants policy. By end of November 2021. US$600,000 Likely to be claimed in March 2022. PBC 7.2: Each FMS has: (a) maintained a Performance- Based School Grants policy By end of June 2022. US$950,000 for the financing of recurrent costs; and (b) approved aggregate FY 2022 budgetary appropriations for MoEs’ Performance-Based School Grants equal to half the aggregated Allocated Amounts for PBCs #6.4.; #6.5; #7.2; #7.3; #8.3; and #8.4. PBC 7.3: All payroll supported schools in the FMS with signed Performance-Based By end of November 2022. US$950,000 School Grants Agreements have received annual Performance-Based School Grants in a timely manner, as per the signed agreements. PBC 7.4: Each FMS has (a) maintained a Performance-Based School Grant policy for By end of June 2023 . US$580,000 the financing of recurrent costs; and (b) approved aggregate FY 2023 budgetary appropriations for MoEs’ Performance-Based School Grants equal to half the aggregated Allocated Amounts for PBCs #6.6.; #7.4 and #8.5. PBC 8: Strengthen health service delivery US$3,080,000 PBC 8.1: The FMSs have: (a) adopted annual community health service delivery By end of June 2021. Likely US$600,000 plans, including infectious disease measures for FY 2021; and (b) approved MoHs’ to be claimed in March FY 2021 budgetary appropriations for community health service delivery for an 2022. amount equal to half the aggregated Allocated Amounts for PBCs #6.2; #6.3; #8.1 and #8.2. PBC 8.2: The FMSs have executed the community health service delivery plans By end of November 2021. US$600,000 for FY 2021 in a timely manner, as per the signed Service Delivery Transfer Likely to be claimed in June Agreements. 2022. PBC 8.3: The FMSs have: (a) adopted annual community health service delivery By end of June 2022. US$750,000 plans, including infectious disease measures for FY 2022; and (b) approved MoHs’ FY 2022 budgetary appropriations for community health service delivery for an amount equal to half the aggregated Allocated Amounts for PBCs #6.4; #6.5; #7.2; #7.3; #8.3 and #8.4. PBC 8.4: The FMSs have executed the community health service delivery plans By end of November 2022. US$750,000 for FY 2022 in a timely manner, as per the signed Service Deliver Transfer Agreements. PBC 8.5: The FMSs have (a) adopted annual community health service delivery By end of June 2023. US$380,000 plans, including infectious disease measures for FY 2023; and (b) approved MoHs’ FY 2023 budgetary appropriations for community health service delivery for an amount equal to half the aggregated Allocated Amounts for PBCs #6.6.; #7.4 and #8.5. KEY: DLR either cannot be achieved, or the delay in achievement is impacting negatively on achievement of future results under the DLI. DLR is likely to be achieved, but with delay. DLR on track for being achieved on time. DLR has been substantively achieved (subject to verification). Note: DLI = Disbursement-Linked Indicator; DLR = Disbursement-Linked Result; PBC: Performance-Based Conditions. 58 MPF REPORT · JULY — DECEMBER 2021 Appendix (C) Matrix of SCALED-UP Performance-Based Conditions Performance- Results Results 39 Based Conditions (PBCs)38 June 2021 December 2021 June 2022 December 2022 June 2023 PBC 1: PBC 1.1: PBC 1.2: PBC 1.3: PBC 1.4: PBC 1.5: Strengthened (a) The CBS Board (a) The CBS Board (a) The CBS Board has approved, The Minister (a) The CBS governance has (i) established has: (i) resolved and the recipient’s Cabinet has of Finance has Amendment and financial an Audit Committee outstanding endorsed, the draft CBS Act submitted the Act has been reporting of the of the CBS Board; recommendations Amendment Bill to (i) remove draft CBS Act published CBS to enable and (ii) formulated (those contributing the requirement for the MoF Amendment Bill in the capitalization. a plan, with the to financial to issue directives to the CBS to the Parliament Government external auditors, statements in exceptional circumstances; for approval. Gazette and setting out actions qualification) (ii) specify the CBS’ authorized enacted into to resolve the and completed capital share, (iii) include law. recurring audit all outstanding provisions on the authority (b) The qualification for external audits and functions of the Audit FGS MoF FY19 and beyond. from prior years; Committee; and (iv) strengthen has made and (ii) established the provisions on external and an initial (b) The CBS quarterly reporting internal audit procedures. capitalization Governor has to the Audit (b) The CBS Board, FGS MoF, payment approved and Committee on the and the recipient’s Cabinet have (nominal caused to be execution of its approved a credible CIP. capital) to audited and audit plan, status of the CBS (in published the FY19 (c) The CBS Governor has recommendations line with the financial statements approved and caused to be (including approved on the CBS website. audited and published the FY21 external audit CIP). financial statements on the CBS recommendations), website. and key activities. (b) The CBS Governor has approved and caused to be audited and published the FY20 financial statements on the CBS website. 38 The timeframes indicated in this table are indicative and the achievement of Performance-Based Conditions is not time-bound. 39 As the FGS is still in the process of hiring an independent verification agent, progress has not yet been verified against these indicators. MPF REPORT · JULY — DECEMBER 2021 59 Appendix Performance- Results Based Conditions (PBCs) June 2021 December 2021 June 2022 December 2022 June 2023 PBC 2: PBC 2.1: PBC 2.2: PBC 2.3: PBC 2.4: Activation of The CBS ICT The CBS ICT (a) The CBS ICT Directorate (a) The CBS ICT critical institutional Directorate in Directorate in in consultation with Directorate has systems within consultation with consultation with user departments has (i) (i) implemented CBS to enable user departments user departments implemented 75 percent 100 percent of corresponding has issued a report, has implemented of the validated scope and the validated banking approved by the 50 percent of the corresponding system scope, with the arrangements. CBS Governor, the validated functionalities (modules) corresponding setting out the scope and the have been fully activated system proof of concept, corresponding and operationalized; and (ii) functionalities implementation system extended CBS operations to 2 (modules) roadmap, and functionalities out of the 5 FMS. having been fully timelines outlining (modules) (b) The CBS Governor has (i) activated and all the scoped CBS have been fully established 2 additional active operationalized; systems (modules) activated and corresponding arrangements and (ii) extended earmarked for operationalized. for the CBS; and (ii) extended CBS operations implementation at CBS operations to 3 out of the to more than 50 the FGS and FMS. 5 FMS. percent of the FMS. (b) The CBS Governor has established 3 additional active corresponding banking arrangements and CBS operations are sustained across 4 out of the 5 FMS. 60 MPF REPORT · JULY — DECEMBER 2021 Appendix Performance- Results Based Conditions (PBCs) June 2021 December 2021 June 2022 December 2022 June 2023 PBC 3: PBC 3.1: PBC 3.2: PBC 3.3: PBC 3.4: Improved CBS The CBS Board (a) The CBS has (a) The CBS has fully (a) 100 percent supervisory has approved initiated its staffing implemented the staffing of all the CBS oversight, capacity the staffing reorganization reorganization scheme and staff positions building, and staff reorganization scheme in 50 percent of the CBS staff outlined in reorganization into scheme. accordance with positions outlined in the the staffing a more effective HR guidelines. staffing reorganization scheme reorganization structure to tackle (b) The CBS Board have been recruited on merit scheme have financial integrity has approved and and, in accordance with HR been recruited and de-risking. operationalized guidelines, are trained and on merit in the e-KYC draft actively providing services. accordance with regulations HR guidelines, (b) The CBS ICT Directorate and risk-based trained, and in consultation with user supervision (RBS) actively departments and PFIs has methodology of providing operationalized CVS enabling ML/FT risks in FIs. services. e-KYC protocols and 2 licensed FIs have been connected by (b) The CBS ICT the CBS. Directorate in consultation (c) The CBS senior with user management has approved departments and examination reports PFIs has verified completed by staff for 40 50 percent of percent of the FIs examined customers with using RBS approaches transaction covering ML/FT risks, matters accounts using requiring immediate action CVS/e-KYC. have been communicated to FIs for implementation, and (c) The CBS senior the CBS has published in the management Financial Stability Report the has approved nonconfidential aggregate examination information on the nature and reports number of matters requiring completed immediate action issued to by staff for 50 all FIs. percent of the FIs examined using RBS approaches covering ML/ FT risks, and matters requiring immediate action have been communicated to FIs for implementation. Note: The CBS staffing reorganization scheme including the CIP will have due regard to rightsizing of personnel and nonpersonnel expenses to ensure consolidation of the CBS fiscal position and sustainability of reorganization intervention. MPF REPORT · JULY — DECEMBER 2021 61 62 MPF REPORT · JULY — DECEMBER 2021