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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 Web: www.somaliampf.org Twitter: @mpfsomalia Cover photograph: Photo courtesy: UNDP Somalia. CONTENTS Abbreviations and Acronyms............................................................................................. 4 Introduction....................................................................................................................... 6 Operating Environment ..................................................................................................... 9 COVID-19 Response Efforts: Prioritizing Relief and Recovery.................................................................... 10 Livelihoods and Health ...................................................................................................................................... 12 Budget Support—A Two-Phased Approach ...................................................................................................... 12 Safety Nets ........................................................................................................................................................ 13 MSMEs and Remittances .................................................................................................................................. 13 Pandemic Emergency Fund .............................................................................................................................. 14 Preparation for Roll-out of COVID-19 Vaccines Global Access (COVAX) ......................................................... 14 Portfolio Overview ........................................................................................................... 15 Effective, Accountable Government ............................................................................................................. 16 Enabling Economic Growth .......................................................................................................................... 32 Urban Infrastructure ..................................................................................................................................... 39 SPOTLIGHT: IDA and MPF: Strategic Alignment for Inclusive Service Delivery and Strengthening Reforms ................................................................................................... 43 Improving Healthcare Services in Somalia Project (‘Damal Caafimaad’) .................................................... 43 Somalia Education for Human Capital Development Project....................................................................... 45 Somalia Capacity Advancement, Livelihoods and Entrepreneurship through Digital Uplift Project Gets Additional Financing ..................................................................................................................................... 47 Additional Financing for Somalia Crisis Recovery Project Food Insecurity Response ................................ 48 Shock Responsive Safety Net Projects Get Additional Financing ............................................................... 50 MPF Operations ............................................................................................................... 52 Strategic Reviews and Portfolio-Level Monitoring........................................................................................ 54 Portfolio Risk Profile ..................................................................................................................................... 55 Improving Financial Integrity ........................................................................................................................ 57 A. Background ................................................................................................................................................... 57 B. Risk-Based Approach ................................................................................................................................... 58 C. PFM/Fiduciary Engagement Model ............................................................................................................... 58 D. Next Steps..................................................................................................................................................... 59 Environmental and Social Risk Management .............................................................................................. 60 Financial Update .......................................................................................................................................... 64 Looking Ahead ................................................................................................................ 68 Appendix 1. MPF Monitoring Framework: 2019–2021 ....................................................... 73 MPF Operational Performance..................................................................................................................... 73 MPF Results ................................................................................................................................................. 75 Appendix 2. Status of Reform Benchmarks/Disbursement-Linked Indicators ................... 81 Appendix 3. Status of HIPC Completion Point Triggers .................................................... 85 Somalia Multi-Partner Fund Progress Report Abbreviations and Acronyms AF Additional Financing AfDB African Development Bank ASA Advisory Services and Analytics BRA Benadir Regional Administration CBS Central Bank of Somalia CIP Public Sector Capacity Injection Project COVID-19 Coronavirus Disease CPF Country Partnership Framework CSO Civil Society Organization CSSP Somaliland Civil Service Strengthening Project CY Calendar Year DECC Directorate of Environment and Climate Change DFID Department for International Development DLI Disbursement-Linked Indicator DLR Disbursement-Linked Result DP Development Partner DRM/PFM Domestic Revenue Mobilization and PFM Capacity Strengthening Project ESF Environmental and Social Framework EU European Union FCV Fragility, Conflict, and Violence FGC Financial Governance Committee FGS Federal Government of Somalia FHW Female Health Worker FM Financial Management FMIS Financial Management Information System FMoH Federal Ministry of Health FMS Federal Member States GAVI Global Alliance for Vaccines and Immunisation GBV Gender-Based Violence GDP Gross Domestic Product GFF Global Financing Facility GRM Grievance Redressal Mechanism HIPC Heavily Indebted Poor Countries Initiative IDA International Development Association IDP Internally Displaced Person IFC International Finance Corporation IFI International Financial Institution IMF International Monetary Fund INGO International Nongovernmental Organization IPRSP Interim Poverty Reduction Strategy Paper MDA Ministries, Departments, and Agencies MoAI Ministry of Agriculture and Irrigation MoCI Ministry of Commerce and Industry MoECHE Ministry of Education, Culture, and Higher Education MoF Ministry of Finance January–June 2021 Page 4 of 87 Somalia Multi-Partner Fund Progress Report MoHADM Ministry of Humanitarian Affairs and Disaster Management MoLSA Ministry of Labor and Social Affairs MoPIED Ministry of Planning, Investment, and Economic Development MPF Multi-Partner Fund MSME Micro, Small, and Medium Enterprise MTR Mid-Term Review NDP National Development Plan NGO Nongovernmental Organization NPS New Partnership for Somalia OPM Office of the Prime Minister PAC Pre-Arrears Clearance PFM Public Financial Management PIU Project Implementation Unit PLR Performance and Learning Review POM Project Operations Manual PSS Puntland State of Somalia RCRF Recurrent Cost and Reform Financing Project SBCF Somali Business Catalytic Fund SCALED-UP Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project SCORE Somali Core Economic Institutions and Opportunities Program SCRP Somalia Crisis Recovery Project SDRF Somalia Development and Reconstruction Facility SEAP Somali Electricity Access Project SEU Somalia Economic Update SFF-LD Special Financing Facility for Local Development SIF Somali Infrastructure Fund (AfDB-administered) SME Small and Medium-Sized Enterprise SMEF Small and Medium Enterprise Facility SMP Staff-Monitored Program SUIPP Somali Urban Investment Planning Project SURP Somali Urban Resilience Project TA Technical Assistance TAR Turn Around Regime ToR Terms of Reference UCS Use of Country Systems UNDP United Nations Development Programme UNICEF United Nations Children’s Fund UNIDO United Nations Industrial Development Organization UNOPS United Nations Office for Project Services WB World Bank WBG World Bank Group WFP World Food Programme January–June 2021 Page 5 of 87 Somalia Multi-Partner Fund Progress Report Introduction The 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 more than two decades of disengagement. The MPF was established in 2013, and since then has supported the process for normalizing Somalia’s relations with international financial institutions (IFIs), while building and strengthening core government systems at both federal and state level. In nonaccrual status since 1991, Somalia has not had access to regular development financing from IFIs, including the World Bank’s International Development Association (IDA). Having cleared arrears and reached its Heavily Indebted Poor Countries Initiative (HIPC) Decision Point in March 2020, Somalia’s development financing aims to support an ambitious agenda which is central to moving the country towards greater stability and more inclusive development. We are at a strategic moment for the MPF—the strategic alignment of the MPF and the growing IDA portfolio will help in building back better and recover from the impact of the crises facing Somalia. 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. This World Bank MPF Progress Report covers the period January to June 2021. It provides thematic and project-level updates and identifies the external events of the period that relate to the operating context of the MPF. The report captures achievements and challenges from the reporting period, including the operationalization of the Bank’s Country Partnership Framework (CPF), IDA reengagement, and HIPC Decision Point, and support for Somalia’s sustained economic reforms towards Completion Point. The report also captures ongoing and upcoming learning and analytical activities. During the previous reporting period, the political landscape in Somalia was dominated by efforts to prepare for, and find agreement on, the modalities and timelines for conducting elections. The international community, led by the United Nations and C6+, has urged the actors to come to a political agreement on the impasse.1 The international community, including the African Union and Intergovernmental Authority on Development (IGAD), continues to urge continued dialogue and meetings and stepping up pressures on both sides to continue dialogue and avoid violence. They have appealed to both sides to adhere to the implementation plans for the September 17 agreement. At the midpoint of 2021, though a tentative timeline to ease the prolonged impasse has been declared, no concrete way forward has been identified, risking the sustaining of the development gains made over the last years. Since the onset of the political impasse, implementation of ongoing Bank-financed operations has continued as government officials remain available and engaged. The Ministry of Finance and the sectoral ministries have maintained their technical capacity, are functioning, and are able to conduct 1The 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). January–June 2021 Page 6 of 87 Somalia Multi-Partner Fund Progress Report policy/sectoral dialogue and to implement projects. The Bank’s implementation support teams continue to work with clients on their portfolios, and disbursements continue to finance project activities. Project Implementation Units (PIUs) continue to operate normally and remain adequately staffed. Several virtual implementation support, preparation, appraisal, and closing missions have been conducted in the past months during the ongoing pandemic. The MPF portfolio finances 16 active projects. Of these, nine are recipient-executed investment projects and seven are analytical/advisory projects. The MPF provides financing worth US$324.5 million. The portfolio is co-financed with US$950.5 million in IDA resources. With IDA complementing MPF financing, the portfolio is now demonstrating the advantages of blending multiple sources of financing to leverage a coordinated and pooled financing approach using country systems. The total active Bank portfolio at the end of the reporting period amounted to US$1.16 billion combined IDA and Trust Fund financing. As of June 30, 2021, donors had committed a total of US$524.4 million to the MPF, of which US$517.1 million had already been paid in. The Effective, Accountable Government portfolio of the MPF financed eight active projects. Of these, four are recipient-executed investment projects and four are analytical/advisory projects. The MPF provides financing worth US$216.9 million. The portfolio is co-financed with US$603 million in IDA resources. It represents the largest portfolio within the MPF; many of the projects are closely interlinked. The MPF built the platform for a key scale up of our portfolio in Human Development, approving US$100 million for Health, US$40 million for education, US$110 million for the Baxnaano platform, and US$75 million for combating the impact of the locust crisis. Under the CPF, the WBG is strengthening ongoing governance programs with a new focus on fiscal space and improving access to—and the quality of—key social services and resilience. This portfolio aligns with CPF Focus Area 1: Strengthening Institutions to Deliver Services. The Enabling Economic Growth portfolio financed four active projects, of which two are recipient- executed, and two Bank-executed, investment projects. The MPF provides financing worth US$44 million to this focus area. The portfolio is co-financed with US$297.5 million in IDA resources. This portfolio aligns with the CPF under Focus Area 2: Restoring Economic Resilience and Opportunities, through which the WBG aims to increase economic resilience as a basis for long-run poverty reduction and inclusive growth. The Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) received Additional Financing (AF) of US$70 million, of which US$20 million is from the MPF. AF of US$50 million was approved for the Somalia Crisis Recovery Project (SCRP) for combating food insecurity. The World Bank approved the crisis recovery platform and the women empowerment platform to strengthen core priorities on resilience and crisis recovery as well as mainstreaming further women empowerment across the portfolio. The Urban Infrastructure portfolio financed four active projects, of which three are recipient-executed, and one Bank-executed, investment projects. The MPF provides financing worth US$81.6 million. The portfolio is co-financed with US$50 million in IDA resources. This portfolio aligns with the CPF January–June 2021 Page 7 of 87 Somalia Multi-Partner Fund Progress Report under Focus Area 1: Strengthening Institutions to Deliver Services, specifically, Objective 1.4: Build the capacity of Somali municipalities for urban resilience. Implementation of the World Bank’s new Environmental and Social Framework (ESF) for managing project risks, applicable to all projects starting after October 1, 2018, is well under way. To facilitate the IDA’s scale up of the portfolio, the Bank has reviewed the environmental and social risks in Somalia and is developing systems to meet the country’s unique requirements. Government ministries and PIUs with World Bank–funded projects have received both initial ESF training as well as one-on-one support on ESF from Bank technical staff, as needed. In this edition of the Progress Report, the section ‘Spotlight’ focuses on how the MPF and IDA portfolios complement each other or development partners’ activities. This section explores how they leverage each other’s strengths through their financing or work and offer innovative approaches to institution building and inclusive growth. The MPF is weathering through Somalia’s crises with strong analytical work supporting inclusive recovery and managing dynamic risks. By March 2020, Somalia joined the long list of countries affected by the global COVID-19 pandemic: the country’s first case was confirmed on March 16 and, by the end of July 2021, there were over 15,000 cases with over 800 deaths. Timely relief and recovery aid is critical to help mitigate and alleviate the social and economic impacts of the crisis on the Somali people, especially the poor and most vulnerable. The WBG commissions the MPF Monitoring Agent to provide periodic strategic risk reviews of emerging issues of institutional reform and state-building in Somalia. These reviews inform government and WBG strategy, portfolio management, and implementation. The WBG Somalia portfolio risks are rated high, even when compared to those for portfolios in other fragile and conflict- affected settings. To support the government to improve its public financial management and projects’ fiduciary systems, the Bank engaged with the government on several trainings and workshops targeting both active and pipeline operations and conduction strategic knowledge work on the intergovernmental institution building agenda around Public Financial Management. In the coming years, the MPF will continue to look at enabling platforms and instruments to make sure that it is fit for purpose as a funding vehicle in the dynamic Fragile, Conflict and Violence (FCV) context in Somalia. January–June 2021 Page 8 of 87 Somalia Multi-Partner Fund Progress Report Operating Environment Several key events have shaped the management of the Multi-Partner Fund (MPF) and the implementation of the projects in the reporting period of January to June 2021. By March 2020, Somalia joined the long list of countries affected by the global COVID-19 pandemic: the country’s first case was confirmed on March 16 and, by the end of July 2021 , there were over 15,000 cases with over 800 deaths. The pandemic has placed Somalia’s limited public health system under extreme stress. The combined effects of the triple crisis of COVID-19, locust infestation, and floods have contributed to a contraction of the economy to the tune of 1.5 percent, compared with earlier projected growth rates of 3.2 percent. Movement-related restrictions reduced demand for goods and services, and exports have fallen substantially. The triple crisis continues to push more people into poverty and is adding to the challenges the country faces in emerging from conflict and fragility. In addition, the triple crisis is contributing to ongoing fiscal pressures. The overlapping triple crises demonstrate (a) the country’s extreme vulnerability to climate-related events; (b) the importance of building resilience to avoid reversing development gains; and (c) the need for flexible instruments that can respond to this unique characteristic of Somalia’s operating environment—that is, trying to do development in a context of protracted and repeated humanitarian crisis. The World Bank’s (WB) International Development Association’s (IDA) re-engagement and MPF resources have been essential to supporting Somalia mitigate the impacts of these shocks; strengthen resilience; preserve the development gains made so far; and continue to make gains towards greater stability and inclusive development. To manage the risks stemming from Somalia’s humanitarian crisis, the Bank responded quickly to focus on risk management and adapting its project pipeline. Lending was redirected towards supporting Somalia’s crisis response and supporting its resilient and inclusive recovery, for instance: prioritizing projects with a clear focus on human capital (health services, safety nets, food insecurity, and education), including the Bank’s first clean energy project for Somalia. In addition, in response to the expiration of the government’s mandate, the Bank postponed the planned budget support operation as well as a currency reform project. Given the scale of the needs and the impacts of these crises amongst the most vulnerable communities and recognizing the acute risks of a withdrawal of international support at this critical juncture, World Bank Group (WBG) shareholders approved US$445 million in new operations towards the end of FY21. Bank resources have been used to build and scale foundational systems for inclusive service delivery, governance, and rapid response, leveraging the strategic positioning of MPF investments, Pre-Arrears Clearance Grants (PACG), and IDA financing. For example, the Somalia Crisis Recovery Project, the ‘Baxnaano’ Shock Responsive Safety Net for Human Capital Project (through which over 132,000 households have been verified, enrolled, and received four quarterly payments of US$60 per household, with women being the direct recipients), and the Shock Responsive Safety Net for Locust Response Project (whereby 100,000 poor and vulnerable locust- January–June 2021 Page 9 of 87 Somalia Multi-Partner Fund Progress Report impacted households in 45 districts have already received emergency cash transfers) were approved for additional financing in June 2021. The World Bank’s ability to rapidly adapt and tailor the management of MPF and core IDA financing is one of its fundamental strengths. The World Bank has tapped its comparative advantage in working with government counterparts to build national systems and capacity in critical areas (social protection, basic service delivery, public financial management, and intergovernmental fiscal transfers, for instance), and to establish a knowledge base to further drive the reform agenda. At a Technical Briefing to the Board on Somalia (on June 8, 2021), several shareholders with active representation in the field commended the Bank for its highly collaborative approach throughout this challenging period. The MPF will continue to look at the various instruments and enabling platforms that it has developed to make sure that it is fit for purpose as a funding vehicle. The World Bank’s scaled-up support to Somalia aims to complement the efforts of partners working across the humanitarian-development- peace nexus, and to contribute to the international community’s broader objectives of setting the foundations for long-term peace, stability, and prosperity in the country. COVID-19 Response Efforts: Prioritizing Relief and Recovery The WBG’s Somalia program is being adjusted in line with the selective WBG crisis response to mitigate the impacts of COVID-19 and to alleviate the health, social, and economic impacts of the pandemic. The Bank’s COVID-19 response plan focuses on helping scale government health and livelihoods’ financing in the short- and medium-term, accompanied by proposed budgetary support. Aligning with specific needs in the Federal Government of Somalia’s response plans,2 it has been designed to be complementary to the efforts of other international partners, notably the African Development Bank (AfDB), European Commission (EC), United Nations (UN),3 and the broader donor community at country level (see Box 1). The WBG has reprioritized the FY20 and FY21 pipelines to bring forward high priority relief and recovery efforts. In FY20, the WB committed over US$300 million of relief-focused IDA grants. The priority in FY21 shifts to recovery through restructuring of programs and new activities to build back better. The WBG may consider additional budget support supporting fiscal stability and protection of basic services; this would, however, require intensive client-facing policy dialogue based on the FGS/FMS MoU on data-sharing. The WB will deepen assistance to building Somalia’s foundations for a resilient recovery from COVID-19, including investments in electricity supply and regional economic integration through the transport, health, and SME sectors; additional financing to the Gargaara micro, small, and medium enterprises (MSME) Financing Facility to support critical 2 The Socioeconomic Impact and Required Response for COVID-19 (March 27, 2020), and the National contingency plan for preparedness and response to the coronavirus disease 2019 (March 26, 2020). 3 The Somalia COVID-19 Country Preparedness and Response Plan (CPRP) is a joint effort by UN agencies and cluster partners to respond to the direct public health and indirect humanitarian and socioeconomic consequences of COVID- 19. January–June 2021 Page 10 of 87 Somalia Multi-Partner Fund Progress Report productive sectors of the economy; and through the FY21 ‘Improving Healthcare Services in Somalia Project’ (‘Damal Caafimaad’), a substantial new health sector investment. The WBG’s pipeline of investments for the pandemic aligns to the WBG’s corporate priorities for COVID-19, moving from relief to resilient recovery.4 Box 1. Support for COVID Response from International Partners Somalia received approximately US$2 billion in official development assistance (ODA) in 2020. Total aid was consistent with levels seen in recent years, despite the increased needs on the ground. As in past years, ODA to Somalia comprised roughly equal volumes of humanitarian (US$1.07 billion)5 and development aid (US$ 981.8 million).6 The largest providers of development aid in 2020 were the World Bank (US$370.5 million), Germany (US$137 million), and the United Kingdom (US$115.5 million).7 The largest providers of humanitarian aid in 2020 were the United States (US$524.8 million), Germany (US$104.1 million), and the United Kingdom (US$72.7 million).8 The World Bank has used the Multi-Partner Fund Consultative Group for regular coordination and updates on the economic and poverty impacts of COVID-19 in Somalia, and continues to discuss recovery efforts with key stakeholders. Roughly 20 percent of ODA in 2020 was reported to specifically target COVID-19 or its socioeconomic impact (US$404 million).9 Much of this support targeted the health sector as well as food security and nutrition initiatives.10 An additional 40 percent (US$839 million) was reported to have relevance for the COVID-19 response. With multiple, concurrent crises—desert locusts, floods and COVID-19—much of the humanitarian support provided was not limited to COVID-19 response alone. Levels of support, however, still did not meet estimated need. Just 38 percent of the humanitarian component of the UN’s Somalia Country Preparedness and Response Plan for COVID -19 was funded as of December 2020.11 Total estimated needs for the humanitarian component for 2020 were US$255.6 million.12 The socioeconomic component of the plan fared better, as it was largely designed to reprogram and adapt existing activities to better target needs in light of COVID-19. 4 See the “WBG Approach Paper on COVID-19” presented to the Executive Directors in June 2020. 5 https://fts.unocha.org/countries/206/summary/2020 (extracted: January 27, 2021). 6 https://aims.mop.gov.so/envelope-report/?load=true&syear=2019&eyear=2021&ctype=1 7 https://aims.mop.gov.so/envelope-report/?load=true&envelopeTypes=2&ctype=1 8 https://fts.unocha.org/countries/206/donors/2020 9https://aims.mop.gov.so/sectors-report/?load=true&syear=2020&eyear=2020&level=1&ctype=4&mid=10&mvalue= Targeted 10 https://aims.mop.gov.so/sectors-report/?load=true&syear=2020&eyear=2020&level=2&ctype=4&mid=10& mvalue=Targeted 11 https://reliefweb.int/sites/reliefweb.int/files/resources/Covid%20Impact%20report_15.pdf 12 https://somalia.un.org/sites/default/files/2020-08/CPRP%20Final%20Subow%2C%20August.pdf January–June 2021 Page 11 of 87 Somalia Multi-Partner Fund Progress Report ‘Damal Caafimaad’ is under development for longer term support, with potential links with COVID-19 under discussion. The project was approved by the World Bank Board of Directors on June 30, 2021, and will be implemented over four years, closing on May 30, 2025. The Bank is currently in the process of preparing a US$45-million emergency project to support the roll-out of the COVID-19 vaccines and potentially purchase additional vaccines should the need arise. The project will also support the government’s pandemic response capacity. COVID-19 is expected to exact a heavy humanitarian and economic toll in Somalia, adding a public health emergency to a situation in which people are already dealing with multiple climate-related crises (cyclical droughts and floods, desert locusts) and prolonged armed conflict. These crises are inextricably linked with poverty, fragility, and severe food insecurity. As such, while some of the interventions in the response plan have been specifically prompted by the COVID-19 crisis, others take a broader view at supporting Somalia’s most vulnerable populations, who are currently confronting crises on multiple fronts. To further support crisis response to the food insecurity situation in Somalia, US$50 million of additional resources have become available under the WB’s newly established IDA Crisis Response Window’s Early Response Financing mechanism. This is part of the global Famine Action Mechanism utilized by the WB, UN, and other global partners, which is dedicated to supporting upstream interventions in famine prevention, preparedness, and early action. This facility provides anticipatory financing to countries at imminent risk of food insecurity or pandemics. Livelihoods and Health The ‘Somalia Crisis Recovery Project’ (SCRP, 2020–2024) approved by the IDA Board of Executive Directors on May 15, 2020, promotes a ‘whole-of-government’ approach to incentivizing cooperation and enhancing state-citizen trust through state-led responses to the multiple crises confronting the country (not only COVID-19 and climate-related but also political instability and food insecurity). The most vulnerable populations, farming communities, internally displaced persons (IDPs), rural and urban communities, and host communities will be supported through multiple interventions. The project has a budget of US$137.5 million of IDA financing, of which US$20.5 million has already been allocated to the project’s Contingency Emergency Response Component (CERC) for health interventions related to COVID-19. SCRP CERC financing includes support for COVID-19 coordination and monitoring, surveillance, contact tracing, risk communication, laboratory support, infection prevention and control, and case management, as well as essential health services to complement the government’s and other partners’ emergency response efforts. In the medium term, the project will strengthen health preparedness capacity, such as critical care units, in a few major hospitals nationwide, as well as surveillance and laboratory capacity for pathogen detection (including COVID-19). The total allocation for health under the SCRP project is US$37.5 million. Budget Support—A Two-Phased Approach There was a need for immediate budget support to cushion the potential, significant revenue shortfalls at FGS and FMS levels, which could have undermined basic government operations and functionality, the delivery of essential services, and the continuation of reforms. The Bank is ready to contribute IDA budget support as part of a wider multilateral effort to enable Somalia to cover revenue shortfalls January–June 2021 Page 12 of 87 Somalia Multi-Partner Fund Progress Report in 2020. The Bank financed an initial Supplemental Development Policy Operation (DPO) of US$55 million, which enlarged fiscal space and enabled the FGS to increase intergovernmental grants to the FMS to support the crisis. Government authorities continue to implement reforms at the federal and state levels, which could be supported by Development Policy Financing, and which contribute to the wider reform agenda under the HIPC initiative. Discussions on potential Development Policy Financing are advancing in line with broader dialogue on strengthening state stability by the international community. Safety Nets The government-led ‘Somalia Shock Responsive Safety Net for Human Capital Project’ (SNHCP, 2019–2022) provides cash transfers to targeted poor and vulnerable households, while establishing the key building blocks of a national shock-responsive safety net system. The US$65-million project is managed by the Ministry of Labor and Social Affairs, with support from the World Food Programme and United Nations Children’s Fund to implement significant activities. An additional US$40 million in IDA funds has been approved to target locust-affected households, scaling up the existing project. Given the far-reaching implications of COVID-19 and the multiple, ongoing crises in Somalia, cash transfer initiatives will provide critical lifelines for the most vulnerable. MSMEs and Remittances To mitigate the economic impact of the pandemic on Somali businesses, and to bolster and safeguard government’s digital capabilities, in May 2020 the government requested Additional Financing (AF) for the ‘Somalia Capacity Advancement, Livelihoods, and Entrepreneurship through Digital Uplift Project’ (SCALED-UP) which aims to support progress toward increased access to basic digital financial and government services targeting entrepreneurship and employment, particularly for women. The US$70-million operation (approved by the Board of Executive Directors’ in FY2021) will (a) scale-up and expand the MSME financing through the newly established MSME Financing Facility, ‘Gargaara’ (especially in light of COVID-19 concerns, and with the objective of supporting economic relief and recovery of MSMEs, including via enhancing liquidity and supporting de-risking); (b) scale up financing to deliver the digital identification (ID) infrastructure and other enabling interventions that support the new foundational digital ID system; and (c) scale up digital government services and remote working capabilities, including through support for additional internet capacity, IT equipment and infrastructure, as well as technical assistance to support process reengineering and change management. In addition, the Central Bank of Somalia has reportedly dedicated US$2.9 million to fund microfinance facilities through commercial banks. The ‘Recurrent Cost and Reform Financing (RCRF) Projects II and III’ include health components in support of Female Health Workers (FHWs). To respond to the rapid spread of COVID-19 in the country, the project was reprogrammed to include training of FHWs and other cadres of community health workers for COVID-19 response, including case detection, supporting containment measures, and contact tracing. RCRF III expands FHW engagement in COVID-19 response, including accelerated expansion of the FHW program to support the core role of FHWs in prevention, case detection, and contact tracing. RCRF III will also support the government in improving transparency and citizens’ engagement in use of funds, including COVID-19 funds, and is supporting the government in absorbing and recovering from COVID-19’s economic shocks. January–June 2021 Page 13 of 87 Somalia Multi-Partner Fund Progress Report Pandemic Emergency Fund Payout from this Fund provided US$3.1 million to Somalia to aid with the emergency response. The government used US$200,000 to pay for normal vaccines as part of the maintenance of essential services while the rest was channeled to the World Health Organization to provide the government with the just-in-time technical assistance for emergency response. Preparation for Roll-out of COVID-19 Vaccines Global Access (COVAX) Somalia applied to the COVAX13 Global facility on December 7, 2020, for support to inoculate the most-at-risk 20 percent of the population. Initially the vaccines were expected in the country after June 2021. Somalia received the first batch of the AstraZeneca COVID-19 vaccine in March 2021. A total of 300,000 doses were received in March 2021 from the total allocation of 6 million doses. The second batch of 700,000 doses was expected in May 2021. However, the delivery of this batch has been significantly delayed because of the recent surge of COVID-19 in India, where the vaccine is made by the Serum institute. To address domestic needs, the Government of India has halted the exportation of COVID-19 vaccines—affecting many countries that were relying on the AstraZeneca vaccine through the COVAX facility. The estimated cost for the roll-out is between US$29–31 million. The Government of Somalia is in the process of sending a request to the WB for support towards this cost. 13COVID-19 Vaccines Global Access, abbreviated as COVAX, is a worldwide initiative aimed at equitable access to COVID-19 vaccines directed by GAVI, the Vaccine Alliance, the Coalition for Epidemic Preparedness Innovations, and the World Health Organization. January–June 2021 Page 14 of 87 Somalia Multi-Partner Fund Progress Report Portfolio Overview The 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 more than two decades of disengagement. In nonaccrual status since 1991, Somalia has not had access to regular development support from international financial institutions (IFIs), including the World Bank’s (WB) International Development Association (IDA). Established in 2013, the MPF has catalyzed the normalization of relations with IFIs, while building and testing core government systems at both federal and state level. After reaching HIPC Decision Point in March, IDA grants amounting to US$485.5 million have been programmed for Somalia, of which US$118 million scaled up existing MPF projects, US$100 million were delivered as budget support, and US$177.5 million supported the response to the various crises Somalia faces in 2020. The MPF enabled, coordinated, and integrated the delivery of these IDA funds among key partners and the government. The MPF remains the primary channel through which international donors are building and using country systems in Somalia. By building and using Somalia’s country systems, the MPF has strengthened government ownership of the fund, capacity to manage development funds, as well as government accountability for results. This approach has yielded a deeper understanding of how systems in Somalia work, how they can be improved, and how international partners can better target their support. It has also started to yield a better understanding of the evolving role of the state at different levels in Somalia. Most importantly, the MPF, and the donors that have contributed to it, have brought the Somali authorities back to the forefront of the development of the country. The Somalia Development Reconstruction Facility (SDRF) serves as the governance structure for the MPF. The SDRF was established as the central platform for development partnership between the government and the international community, through which the Federal Government of Somalia (FGS), the Federal Member States (FMS), and Benadir Regional Administration (BRA) can engage with partners. The use of the SDRF as the Fund’s governance structure is designed to strengthen country ownership of decision making, improve alignment with national priorities, and enhance coordination with other partners, notably the two other funds administered by the United Nations (UN) and African Development Bank (AfDB) under the same arrangement. The ongoing aid coordination discussions will be critical to ensuring that MPF funds are effectively coordinated with other sources of funding, including bilateral programming and the government’s own increasing revenue. The MPF portfolio finances 16 active projects. Of these, nine are recipient-executed investment projects and seven are analytical/advisory projects. The MPF provides financing worth US$324.5 million. The portfolio is co-financed with US$950.5 million in IDA resources.14 With IDA complementing MPF financing, the portfolio is now demonstrating the advantages of blending multiple sources of financing to leverage a coordinated and pooled financing approach using country systems. 14The US$112-million SURP II was endorsed by the SDRF Steering Committee on July 10, 2019, approved by the IDA Board of Directors on December 9, 2019, and declared effective on February 24, 2020. It has been included in this edition of the Progress Report. January–June 2021 Page 15 of 87 Somalia Multi-Partner Fund Progress Report The total active Bank portfolio at the end of the reporting period amounted to US$1.16 billion combined IDA and Trust Fund financing. The MPF projects remain organized under three portfolios that target specific pillars of Somalia’s National Development Plan (NDP): (a) Effective, Accountable Government; (b) Enabling Economic Growth; and (c) Urban Infrastructure. The rest of this chapter provides an update of progress across these three portfolios. Effective, Accountable Government The Effective, Accountable Government portfolio financed eight active projects. Of these, four are recipient-executed investment projects and four are analytical/advisory projects. The MPF provides financing worth US$216.9 million. The portfolio is co-financed with US$603 million in IDA resources. It represents the largest portfolio within the MPF; many of the projects are closely interlinked (Table 1). The MPF built the platform for a key scale up of our portfolio in Human Development, approving US$100 million for Health, US$40 million for education, US$110 million for the Baxnaano platform, and US$75 million for combating the impact of the locust crisis. Under the Country Partnership Framework (CPF), the WBG is strengthening ongoing governance programs with a new focus on fiscal space and improving access to—and the quality of—key social services and resilience. This portfolio aligns with CPF Focus Area 1: Strengthening Institutions to Deliver Services.15 The MPF has invested in key Public Financial Management (PFM) systems, bringing about systems for revenue mobilization to ensure increased revenue collection and increased capacity, transparency, and sustained reforms as well as a strong technical collaboration between the Federal Ministry of Finance and the Ministries of Finance in the FMS. These investments are providing the foundations for WBG engagement in other sectors, which rely on strengthened country systems for recipient execution, while catalyzing Somalia’s progress towards IFI norma lization and debt relief through the Heavily Indebted Poor Countries (HIPC) Initiative. Working through country systems is improving federal and subnational governance and intergovernmental relations, as illustrated in the quality and ambition of the policy environment and fiduciary control. The shift towards greater transparency and accountability was demonstrated by the Federal Ministry of Finance’s website, which includes information on all government revenue and expenditure data reported under the Financial Management Information System (FMIS). The Effective, Accountable Government portfolio demonstrates that constructive intergovernmental relations are possible in the midst of an evolving political climate when framed around a solid technical agenda. 15 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. January–June 2021 Page 16 of 87 Somalia Multi-Partner Fund Progress Report The Recurrent Cost and Reform Financing (RCRF) project is a national program which supports the FGS and, through intergovernmental transfers, all FMS. It does not include Somaliland for now. The first phase of RCRF is closed. Phase II of the project (RCRF II) was restructured and scaled up with additional financing in 2018. RCRF III, approved as an IDA-only grant of US$68 million and effective as of December 16, 2020, complements RCRF II with an enhanced focus on intergovernmental fiscal federalism, citizen engagement, and service delivery. RCRF III will provide continuity of recurrent cost financing beyond the lifetime of RCRF II into 2022 and 2023, providing a more predictable recurrent cost financing framework. It was only possible to prepare the new operation in such a short time because of the existing RCRF II operation, to which the MPF provides critical support. The overall approach to RCRF III is one of continuity with RCRF II, but with additional measures.16 RCRF III will also contribute to COVID-19 response and recovery through scaled-up fiscal support to FMS through fiscal transfers for education and health service delivery, scale-up of the Marwo Caafimaad Female Health Worker (FHW) Program and retraining for COVID-19 response. RCRF continues to provide a ‘baseline’ level of input-based financing of the FGS civil service wage bill. During 2021 there is US$7 million of baseline financing available to the FGS, at the same level as in 2020 and 2019, and down from US$8 million in 2018. Progress in timely payments of FGS civil service salaries has been made, and any late payments are limited to a few days. A category funding issue created a liquidity squeeze in early 2021. This was, however, resolved by the replenishment of US$10 million from the MPF to project funds. Financing for the FGS’ Capacity Injection Mechanism (CIM) recruits (recruited through the support provided by the World Bank’s Capacity Injection Project [CIP]) will continue. Financing totaled US$17.4 million since the start of the program in 2016. This financing, though, is set to decline. Over the remaining project period, the FGS will, therefore, be taking responsibility for either co-financing an increasing share of the CIM payroll or scaling back expenditure on the program. The CIM has now been onboarded to the SFMIS payroll module. New performance benchmarks added as part of project restructuring will support reforms to improve Human Resource Management (HRM) and wage bill management; enhance the transparency, coverage, and quality of the fiscal reporting; and strengthen service delivery. The first tranche of US$7 million was subsequently disbursed upon satisfactory completion of the first set of newly added disbursement-linked indicators (DLIs). 16 These measures include: (a) introducing reform benchmarks to incentivize reforms and associated funding within the FMS for improved governance and education and health service delivery; (b) reducing the number of FGS reform benchmarks from seven (RCRF II) to five, creating a smaller and better focused set of reform incentives for the FGS; (c) providing expanded resources for intergovernmental system strengthening, including support for improved intergovernmental fiscal reporting; (d) supporting a change of approach to recurrent cost financing in the education sector, moving gradually from the existing RCRF II teacher payroll financing to introduce performance-based school grants; and (e) a new Citizen Engagement component for improved accountability and service delivery. January–June 2021 Page 17 of 87 Somalia Multi-Partner Fund Progress Report Progress on intergovernmental fiscal relations has been moderately satisfactory—the Intergovernmental Fiscal Reform Unit has been set up; high-level political and technical meetings have been convened; and support has been provided to FMS for fiscal reporting. The mechanism of the participation eligibility criteria has been useful to incentivize transparency of fiscal reporting. RCRF III has introduced new reform benchmarks for improved governance and service delivery at FMS level. The first round of service delivery transfer agreements in the health sector between the FGS and five FMS were prepared and signed. The agreements are accompanied by Annual Community Health Service Delivery Plans, including costed COVID-19 and infectious diseases measures, as well as reporting formats and associated reporting procedures in the health sector. During the implementation of RCRF II, it has become apparent that further investments are required in FMS capabilities to strengthen PFM and service delivery. A new subcomponent will, therefore, strengthen resource management systems. Fiscal transfers to FMS continued to be consolidated (under a subcomponent previously under Component 2 which has now been moved to Component 3). During January-June 2021, this subcomponent continued the financing of FMS recurrent costs. The RCRF education component made mixed progress in the second half of 2020, due to COVID-19 related restrictions, political tensions between the FGS and FMS Ministries of Education, and changes in the management of the Ministry of Education, Culture, and Higher Education (MoECHE). After several delays in 2020 teacher salary payments, the underlying reasons for delays were successfully resolved, and teacher salaries in all FMS were paid. As reported in the previous MPF report, the FGS and FMS have adopted an agreement clarifying roles and responsibilities in the administration of harmonized national exams, as well as common curriculum framework and syllabus for basic education. In June 2021, an Intergovernmental Education Coordination Forum Committee was established, and the first intergovernmental meeting focused on the creation of a National Examination Board and a National Curriculum Board. The RCRF health subcomponent aims to establish the foundations necessary to improve health service delivery and health outcomes through the development of Female Health Workers’ (FHW) cadres and strengthening of the government’s stewardship and management capacities. Substantive progress has been made in the roll-out of the FHW program. A long-delayed Health Technical Partner (HTP) contract was signed on March 31, 2021—it will provide support to the FHW program roll-out in the three states of the BRA, PSS, and GSS. The FHW program in the other three states (HSS, JSS, and SWSS) is being launched in parallel, with technical support from the World Bank team and HTP experts based at the FGS MoH. All eligible FMS proceeded with the selection process of new FHWs, which is now completed and pending the finalization of the process of the verification of credentials of about 500 FHW/FHS. Quarterly health coordination meetings at FMS level further advanced the intergovernmental coordination agenda, and a National Intergovernmental Health Coordination meeting was held in Mogadishu to discuss overall health issues in the state and progress made on the FHW program. January–June 2021 Page 18 of 87 Somalia Multi-Partner Fund Progress Report A new RCRF III component—Citizen engagement and feedback—supports the designing and use of tools to advance transparency and generate citizen feedback mechanisms up to the facilities level (for selected locations). It also will support the learning and evaluation of the possible most impactful tools. Mechanisms are being developed (a) in support of the improved budget transparency through public participation in the budget process; and (b) to support citizen engagement in education and health. Relevant draft Terms of Reference (ToRs) have been developed. The PIU will finalize them in consultations with FMS and ensure deeper integration with the Environmental and Social Framework. Contracting for these ToRs is expected to be completed in September 2021. The Capacity Injection Project (CIP), supporting the FGS and Puntland State government, develops capacity for key cross-cutting government functions, thus strengthening policies and procedures for civil service management; strengthening policy management, coordination, and monitoring capabilities at the center of government; and project management and coordination. Capacity injection (of core staffing capacity into key government Ministries, Departments, and Agencies [MDAs] through the government’s CIM) in this program focuses on advisory, managerial, and techni cal staff to fill urgent capacity gaps identified by the government. Discussions are ongoing within government on the transitioning of the Capacity Injection Mechanism (CIM) staff into the mainstream civil service. The Bank has advised the FGS to bring together all relevant stakeholders to conclude discussions on the plans for this transition. The Puntland State of Somalia (PSS) has confirmed that the CIM staff will be transitioned into the mainstream civil service once the pay and grading policy and bill are in place. The ongoing technical assistance (TA) to the FGS School of Management and Public Administration (SOMPA) has slowed down due to the COVID-19 pandemic. Plans are under way to commence the training of trainers. The PSS is in the process of concluding the procurement of TA from the Kenya School of Government (KSG) to partner with the Institute of Public Administration and Management (IPAM) in Somalia. In addition, progress is ongoing in the areas of civil service management subsidiary legislation, pay and grading policy and system, pension reform, Human Resources Management Information System (HRMIS) design and implementation, biometric attendance system, and public sector reform strategy. Some approval processes may be delayed in the Federal Parliament due to upcoming elections. The PSS has amended the Pension Law and Pension Policy and will be submitting these to the Cabinet for endorsement during July 2021, and thereafter to Parliament for approval. The HRMIS Phase I activities are under way in both the FGS and PSS. The TA firms are expected to complete the assessment and prepare the detailed functional and technical requirements for the HRMIS solution. Phase II will entail the development of HRMIS modules in line with the approved roadmap; quality assurance of modules from development to live environment; training and change management; postimplementation support and exit; and postimplementation review. January–June 2021 Page 19 of 87 Somalia Multi-Partner Fund Progress Report The FGS is developing a National Public Sector Reform Strategy for the FGS and FMS to provide the framework for long-term capacity development programming and systematic implementation of interventions by both government and development partners. An Executive Leadership Program has been included in training programs, in both the FGS and PSS, to be delivered through the twinning program with the KSG. The Civil Service Strengthening Project (CSSP) aims to roll-out targeted capacity and organizational reforms in specific MDAs of Somaliland; it also supports opening regional offices of the Civil Service Commission. As a smaller subset but distinct element of the Series of Projects (SOP), this project is designed to address the unique public administration challenges of Somaliland. Within the overall SOP financing mechanism, this project complements the CIP (appraised at US$40 million) supporting the FGS and Puntland in the first phase, and other member states in subsequent phases. Periodic payroll audits are being conducted by the Government of Somaliland (GoSL) and new active employee lists from payroll cleaning continue to be uploaded in the activated SLFMIS payroll module. Technical Assistance (TA) to develop payroll management guidelines, integrate, and reconcile payroll and personnel records of civil servants has been completed. Follow-on HR audit, biometric registration, and subsequent payroll cleaning for ~8,500 public sector workers that were not under the purview of the Civil Service Commission during the first HR audit will be conducted and supported under the CSSP II.17 Support to strengthen policies, procedures, and systems for civil service management are ongoing: (a) The HRMIS Phase I activities on assessments are under way; (b) the procurement of TA for the Pay and Grading policy and system is in the final stages; and (c) the civil service pension policy and the draft Bill have been finalized and submitted to the Cabinet for review and endorsement, and a communication plan for pension reforms is under preparation. Implementation support and capacity building (including further strengthening digital governance capabilities), deployment of new systems (including consultations and public awareness campaigns) and transitioning of staff into the new systems will be supported under the CSSP II. In addition to the 18 MDAs that have undergone review, a further eight are currently being reviewed to support improvements in the organization structure, redistribute mandates, provide vision and mission of the organizations as well as the staffing structures, numbers, and personnel mix. New staffing plans from the reorganization will provide efficient control over institutions and optimize usage of resources. In the Civil Service Talent Management Program (TMP), 46 TMP positions (28 percent female) have been filled and staff members have undergone induction training. However, there have been two resignations and these positions will be filled during the year. The Somaliland Civil Service Institute (CSI) has requested for additional support from the Bank in expanding the distance and online learning for civil servants, as a coping mechanism for the COVID-19 situation. This support has been 17 Grant amount: US$4.9 million. Expected effectiveness: October 2021. January–June 2021 Page 20 of 87 Somalia Multi-Partner Fund Progress Report included in the proposed CSSP II. Policy management units in 18 MDAs have been established, establishment lists developed and approved, and these units staffed. Unit staff members have also undergone short-term and intermediate training in Policy Management. Support to the improvement of policy oversight and management capabilities of the Office of the President (OoP) remains pending due to the delayed recruitment of policy and legal staff in this office, due to security concerns and related OoP hiring policies. The Civil Service Commission is working closely with the OoP to see if these positions can be filled under the WB/TMP procedures. An assessment of the existing policy management capacities of the OoP has been conducted and an action plan for strengthening this function developed. The status of Disbursement-Linked Indicators (DLIs) is: DLI 5 (Development and endorsement of a TMP manual) has been achieved, verified, and funds disbursed against its achievement. The Bank has received documentary evidence on the achievement of (a) DLI 2—Payroll audits to identify control weaknesses and ghost workers; (b) DLI 3—Number of improved HR procedures approved by the Public Sector Reform Steering Committee and submitted to the Cabinet; and (c) DLI 4 —Newly established or reorganized HR units in targeted MDAs adequately staffed. Due to the pending attainment of the required eligible expenditure program (EEP), reimbursements cannot be made yet against the achievement of the DLIs. Documentary evidence on the achievement of DLI 1 (Share of civil servants with verified and completed personnel records in central HR personnel database of satisfactory quality) is yet to be submitted to the Bank. The Domestic Revenue Mobilization and Public Financial Management (DRM/PFM) Capacity Strengthening project aims at strengthening systems of DRM/PFM domestic revenue mobilization, expenditure control, and accountability in the FGS, PSS, and Somaliland. Though there was a modification to the Project Development Objective to explicitly include the DRM support, and activities are consistent with the original project activities overall, the components were realigned and reduced from six to four. The closing date of the original project has been extended by two years —from June 30, 2020, to June 30, 2022—to allow for the successful implementation of the project’s original and new activities. The changes will strengthen the overall development impact of the original project and better align the Bank assistance with the changing government priorities and country context. The project restructuring and AF is expected to achieve results which include strengthened capacity to formulate efficient tax policy, establishment of more efficient inland revenue tax administration organization and systems, and strengthened PFM and auditing systems. The project is also expected to contribute to the higher-level development objectives of enhanced revenues and more efficient and accountable government spending. The FGS and PSS combined team has successfully concluded the award of a contract for the integrated inland revenue tax administration automation system (ITAS). This major reform activity takes a ‘whole of Somalia’ needs assessment approach across customs and inland revenue and includes the design and implementation of the FGS and PSS ITAS, to enable automated processing. Also, the FGS has prepared a tax audit strategy, established a tax audit function in the large and medium tax-payers office (LMTO), trained five tax auditors that resulted in the implementation of a January–June 2021 Page 21 of 87 Somalia Multi-Partner Fund Progress Report pioneering tax audit in Somalia, initially covering 35 companies and 100 tax returns spanning personal and corporate income, and sales tax. Furthermore, data analytics trainings have been conducted including the tax policy unit (TPU) staff for 15 potential trainers (with four women) identified by the FGS (seven), PSS (four), and Jubbaland State of Somalia (JSS, four) to contribute to evidence-based tax policy and administration decision making. In Somaliland, ITAS needs’ assessment and data analytics training is ongoing. The citizen (taxpayer) engagement activities continue as part of the FGS Revenue Act 2019 operationalization. The FGS engaged 295 taxpayers (30 percent women). Similarly, the PSS engaged 200 taxpayers (11 percent women). Also, due to COVID-19, taxpayer consultations planned for May– June 2020 could not be held. Consequently, more reliance has been made on other media including, television, radio, billboards, and ICT. Also, the taxpayer Helpdesk is functional in the PSS and gave feedback to 242 taxpayers with 61 (or about 25 percent) being women, during January to April 2020. In Somaliland, a Taxpayer Education Awareness and Communication Unit concluded a survey of more than 265 taxpayers supported by the DFID Prosperity from Revenue (or PROFR) program. The TPUs in the FGS and PSS, and the Fiscal Policy Section in Somaliland, have been established, staff deployed, and enabled to prepare revenue performance analysis reports and revenue forecasts, and to also assess COVID-19 impact on revenues. Similarly, the three states have made good progress in business process mapping, modernization, and automation. The FGS and PSS have successfully contracted one service provider to design the Somalia Fit-for-Purpose ITAS. In Somaliland, the government has made good progress in procuring the services of a consulting firm to carry out a needs’ assessment for the development and implementation of ITAS. About 430 Somalia Financial Management Information System (SFMIS) generated taxpayer identification numbers (TINs) have been issued in the FGS, 1,600 in the PSS, and about 5,000 in Somaliland. Training and capacity building is also progressing. In the FGS, 74 officials (or about 30 percent women), and in the PSS 124 officials (or about 16 percent women), have been trained. Work in the FGS, Puntland, and Somaliland to strengthen budget execution, accounting, and reporting and auditing systems is progressing well, but at varying degrees. However, in the FGS, the annual audit of the government financial statements for the year ended December 2019 as well as the projects’ audits was delayed due to a late start as a result of the COVID pandemic and late selection of a TA firm. These have, however, now been successfully completed, and published in the OAG’s website. Despite its approval by both houses of Parliament, the Audit Bill is yet to be signed by the President. Most of the planned activities are progressing well in Puntland also, with support from embedded TAs, and all previous agreed actions have been actioned. In Somaliland, the project continues to support the OAG with TAs who have ensured that the office is able to perform its function adequately. January–June 2021 Page 22 of 87 Somalia Multi-Partner Fund Progress Report The number of candidates that have passed the certificate level from the start of the PFM Staff Professionalization Certificate Program now number over 166, including women. Most of these candidates have been successfully deployed in various PFM institutions in the FGS, Puntland, and Somaliland governments. The COVID-19 pandemic has affected implementation of some project activities, and adjustments will need to be made to minimize the impact of the pandemic on the smooth implementation of the project. To address these challenges, the Bank team has been guiding the client on the need for the project to adopt and increase reliance on online technologies to support project implementation. Engagement in Somalia’s health sector, through an advisory services and analytics (ASA) was successful in achieving its objectives and a series of deliverables have been completed. The ASA took a ‘menu of options’ approach and explored health service delivery models and demand side factors impacting health service utilization. This flexible ‘menu of options’ approach, adjusting to needs during implementation, has been extremely useful for the task team as the World Bank is reengaging in the health sector—that is, the first IDA health project in Somalia, the ‘Damal Caafimaad’ project—for the first time in 30 years, with a high level of uncertainty. The ASA’s roll-out coincided with the timing of the preparation of the Damal Caafimaad project and allowed the task team to strengthen its technical basis of new investments by using the ASA to directly inform project design. The project was approved by the World Bank Board of Directors on June 30, 2021, and will be implemented over four years, closing on May 30, 2025. The Damal Caafimaad project is co-financed by US$75 million from IDA and US$25 million from the Global Financing Facility. Damal Caafimaad’s project development objective (PDO) is to improve the coverage of essential health and nutrition services in project areas and strengthen stewardship capacity of Ministries of Health (MoHs). In addition, US$7 million in project funds have been retained to contribute to achievement of the PDO in Somaliland, with specific activities and arrangements to be determined based on agreements between Somaliland and the FGS. In addition to adjustments in deliverables, several changes were made to the ASA during implementation: (a) the preparatory work for Somalia’s Investment Case (IC), which will develop a prioritized plan for Somalia’s health sector, is supported by GFF under another ASA. The team has adjusted the activities to be financed under this ASA to maintain complementarities with the IC ASA; and (b) following the governance challenges in the Federal Ministry of Health (FMoH) and based on a direct request from the Minister of Health, the ASA was used to provide immediate fiduciary support without waiting for the approval of the IDA health project. Technical assistance was provided to the FMoH to develop fiduciary capacity and strengthen PFM procedures. The Health ASA closely informs the Damal Caafimaad Project. Learning from lessons of fragile contexts where health sector contracting has been used, roles and structures have been developed for contract management to inform Damal Caafimaad design and implementation. A standardized health service quality tool is currently under development by a consultant with expertise in reducing maternal and neonatal mortality through health service quality improvements. This will be used to improve health service quality through the Damal Caafimaad project. The work is anticipated to be January–June 2021 Page 23 of 87 Somalia Multi-Partner Fund Progress Report completed in September 2021. A regulatory landscape assessment for health professions, health facilities, and the pharmaceutical sector is also being finalized—this will form the basis of regulatory capacity development in the Damal Caafimaad project. The COVID-19 pandemic has disrupted operations with most of the planned consultations on the ground in Somalia canceled. The focus of the counterpart has also shifted away from what was planned under this program towards COVID-19. In addition, the April 2020 governance challenges in the FMoH revealed the ministry’s weak internal controls and systems and highlighted the immediate need to resolve underlying issues to regain trust in the FMoH’s fiduciary system. The Enhancing Governance Dialogue on Somalia project aims to improve policy dialogue and coordination necessary for reform progress, achievement of governance projects’ objectives and governance integration in sectoral operations. As an important input to the Performance Learning Review (PLR) of the WB, and upon the request of the Country Management Unit (CMU), the paper on the role of the state was finalized and disseminated to various donors. It was published in Development Policy Review, a peer-reviewed journal. The paper presents the current problems in Somalia and what a possible way forward could be. The paper also outlines the affordability of the future Somalia state, its implications, and the role of development partners in supporting it. A subsequent paper on the role of the state in the education sector is being drafted—its main objective is to examine the limits and opportunities of public finance as the principal means to expand educational provision. Building on a regional study in Africa aiming at measuring social contracts’ concepts and within the framework of reflecting on future donor interventions, a paper was developed to apply social contracts’ measurement and complements with qualitative assessments in Somalia. It was presented and discussed with MPF donors in April 2021. Key just-in-time inputs and papers undertaken during the reporting period include: • A report on Somalia Public Financial Management Assessment in FMS was produced and used for policy dialogue. • Support was provided on intergovernmental fiscal relations, including the recruitment of a senior intergovernmental fiscal advisor. • Technical inputs on intergovernmental transfer system, to propose for the reform of the intergovernmental transfer system between the FGS and FMS. • Support on pension reforms in Somalia: Significant progress toward establishing a pension system for nonuniformed public servants for three Somalia jurisdictions—the FGS, Puntland State of Somalia (PSS) and Government of Somaliland (GoSL)—has been made. • Support to the Somalia government to improve on its performance on confronting corruption. • Legal analysis of award of Production Sharing Agreements (PSAs) regarding procurement legislation. January–June 2021 Page 24 of 87 Somalia Multi-Partner Fund Progress Report A WB team, together with technical experts, has advanced the efforts and process for civil society organizations’ (CSO) engagement in Somalia. A stocktaking note has been prepared on CSOs/think tanks in Somalia. There is a strong case for the WBG to engage CSOs in operational and analytical work in Somalia, which includes incorporating the views and feedback of beneficiaries and aligning with broader WBG strategy. Sharing information with CSOs through an ASA has the potential to build consensus around policy, raise awareness, and influence public debate in the country. Since the beginning of the fiscal year, 20 minuted internal governance meetings have been held— more than 15 key team members meet on a regular basis. Key milestones, deliverables, and missions are shared with the team to have a more coordinated approach vis-à-vis the Somali authorities. As in the previous edition of the MPF Progress report, an integrated Somalia Shock Responsive and Social Safety Nets programmatic update is presented in this reporting period as well. It consolidates the IDA-funded Somalia Shock Responsive Safety Net for Human Capital Project (SNHCP) (‘Baxnaano’) and Somalia Shock Responsive Safety Net for Locust Response Project (SNLRP), as well as the MPF-funded Somalia Social Protection Support: Building Blocks towards a National Social Protection System (which is an ASA). This will enable a comprehensive view of the portfolio, as the projects reinforce and mutually support each other: the SNHCP is the parent project, with the ASA providing TA support to achieve some of its key objectives around institutional capacity building, and the SNLRP operationalizing its shock- responsive feature. There has been greater than anticipated infestation of locusts, requiring additional financing to respond to the threat to food security and livelihoods. The World Bank’s Board of Executive Directors approved the SNHCP and SNLRP Additional Financing (AF) on June 17, 2021. Cabinet’s endorsement of the Somali Social Protection Policy and the five-year roadmap, ‘Social Protection Policy Implementation Framework’, provides the policy and strategic framework necessary for the activities of the ASA, SNHCP, and SNLRP. The Somalia Shock Responsive Safety Net for Human Capital Project (SNHCP) (‘Baxnaano’) serves as the umbrella project supporting the FGS to operationalize the national Social Protection Policy and develop a national social protection system in Somalia. Specifically, it supports the government-led cash transfer (CT) program, known as ‘Baxnaano’, with a focus on enhancing CT linkages with the health and education sectors for enhanced human development outcomes. The formal launch of the Baxnaano program by the President of the FGS on April 18, 2020 (as reported in the previous edition of the MPF Progress Report), raised the profile of, and support for, CTs, with the government identifying this as the key instrument for addressing chronic poverty and shocks, as demonstrated by the development of the SNLRP. The Somalia Shock Responsive Safety Net for Locust Response Project (SNLRP) operationalizes the shock responsive aspect of the SNHCP and was developed in response to the impacts of the recent locust outbreak. It provides emergency CTs (ECTs) to locust-affected January–June 2021 Page 25 of 87 Somalia Multi-Partner Fund Progress Report households (HHs) for six months, while strengthening the preparedness of SP systems to respond to the impacts of future locust outbreaks and other shocks. The SNLRP is implemented using existing Baxnaano delivery arrangements, through a standard Output Agreement between the MoLSA and World Food Programme (WFP) to deliver the ECTs, which is also being amended to include household registration in the Unified Social Registry (USR) for enhanced functionality shock response. The FGS has identified the development of the social registry as a priority and a key instrument for advancing social protection support in Somalia, as well as one of the triggers for the completion point of the HIPC Initiative. This provides the impetus for engaging UN, humanitarian, and donor agencies to share beneficiary data to build the social registry. The MPF-funded ASA, Somalia Social Protection Support: Building Blocks towards a National Social Protection System, supported the development of the SNHCP/Baxnaano and now supports its implementation by providing TA. The COVID-19 pandemic has caused implementation challenges and delays due to travel restrictions and the need to shift to mobile money payments. Under the ASA, the WB will continue to closely monitor and provide TA to expedite payment delivery. As of June 10, 2021, nearly 179,836 HHs (out of the full caseload of 200,000, nearly 90 percent of the total targeted caseload) have been verified and enrolled in the program in 880 villages from 21 districts across Somalia. Of these, 132,547 HHs have received four quarterly payments of US$60 per HH per quarter, while registration and enrolment of the remaining HHs continues. Development of the USR and the CT delivery systems are progressing well. The PIU within the MoLSA is fully established, with liaison officers at the FMS level. M&E arrangements are also well established with third-party monitoring (TPM), as well as a targeting evaluation, which is jointly funded by the Multi-Partner Fund (MPF) and the Foreign Commonwealth and Development Office (FCDO), under way. Challenges to the provision of the SNHCP CTs have included complex political dynamics and challenging relationships between the FGS, FMS, and Somaliland; shift to mobile money payments modality in response to COVID-19 risks requiring rigorous and time intensive beneficiary validation processes to ensure fiduciary accountability; and slow distribution of SIM cards to beneficiaries due to COVID-19 related travel restrictions. Nonetheless, a beneficiary survey conducted after the first and second quarterly payments found that for 96 percent of the respondents, Baxnaano was the only cash support in the previous two months at the time of the survey, with 98.8 percent having spent ‘most or all’ money on food. This demonstrated that the CTs are reaching HHs underserved by social assistance and have an immediate impact on food insecurity. In addition to the CTs provided under the SNHCP, the SNLRP provides emergency CTs to poor and vulnerable HHs. As of June 10, 2021, nearly 94,171 HHs (out of the full caseload of 100,000 under the original project) in 735 villages have been enrolled. Of these, 69,174 HHs have received their full entitlement, with the remaining caseload being progressively registered and enrolled for payment. An January–June 2021 Page 26 of 87 Somalia Multi-Partner Fund Progress Report additional 150,000 households will be targeted under the AF approved on July 17. The objective is to build national capacity of the FGS/MoLSA and FMS to gradually take over direct implementation of Baxnaano and lay the foundations for a more comprehensive SP system in Somalia. As such, ASA activities contribute to the SP policy and governance structures; TA contributes to the design of the Baxnaano program and its delivery systems (for example, targeting methodology/systems, payment, and so on), as well as the USR as a broad platform to support coordination across social programs and inform targeting and inclusion policies and programs. The ASA is also supporting a Targeting Evaluation of the current Baxnaano approach, and the production of a Discussion Paper on the experience of Baxnaano as a national Safety Net (SN) program operating in the context of fragility and prolonged humanitarian aid. The Somali Integrated Statistics and Economic Planning Capacity Building project is aimed at strengthening the National Statistical System (NSS) and key official statistics-producing agencies in the collection, processing, and dissemination of poverty and selected macroeconomic data (for instance, national accounts, GDP/sector growth, inflation, and key administrative data) to inform development policy and poverty reduction activities. By supporting ICT infrastructure, the project will help improve the administrative data compilation and dissemination process, enhance information access to the public, and make best use of information technology channels and storage systems. By the end of June 2021, the client had started the selection process for an institution development consultant to review the Somalia National Bureau of Statistics’ (SNBS) organizational structure an d assist in reforms for it. The SNBS has also completed several steps for the preparation of the Somali Integrated Household Budget Survey (SIHBS, including starting the procurement process for the SIHBS consulting firm, drafting the questionnaire, and organizing a consultation meeting with statistics departments from the FMS). The selection of a consultant—to prepare a compendium of statistical concepts and definitions, data access and information dissemination policy —is under way. Moreover, the FGS has established Statistics Sector Working Groups, which are expected to provide forums where technical and other issues common to statistics in that sector will be discussed and where specific solutions to problems and issues will be identified. COVID-19 has affected the client’s ability to implement project activities according to plan. Activities such as preparation of institutional development plans are facing delays. Travel restrictions also reduce the ability of the client and project beneficiaries to receive and absorb technical assistance. For instance, according to participant feedback, online workshops to build capacity on the SIHBS were not as effective as face-to-face workshops. The Financial Governance Committee (FGC) plays an important role in assisting the FGS and the international community to strengthen governance within public financial institutions in Somalia. It January–June 2021 Page 27 of 87 Somalia Multi-Partner Fund Progress Report offers a forum for frank and confidential discussions and provides independent nonbinding advice in certain areas as required and where expertise is available. The FGS has made tangible progress over the past year on a number of issues that are important for improving sound financial governance, including security sector registration and rations, domestic revenue mobilization, contract renegotiation (with significant support provided to the port renegotiation), tuna licensing, oil and gas licensing, overflight fees, and the development of various aspects of the PFM framework. It has proved pivotal in informing the development of the IMF’s Staff Monitored Programs (SMP). Key results include: • Successful restoration of overflight fees (US$15–18 million/year) to government: After 25 years, the FGS took over responsibility of collection of overflight revenue from the UN. The FGC was instrumental in catalyzing and advising the FGS on the process. • Bringing donor aid on-budget and on-treasury. • Drafting of the PFM chapter of the Constitution. • Reviewing, by the FGC, of 49 government concessions, including for the port and airport. • Reduction of ration costs by 50 percent (approximately US$6.7 million/year). • Renegotiation of port concession, a key source of domestic revenue. • Renegotiation of airport concession. The FGC also supports oversight and transparency of asset recovery. The Central Bank of Somalia (CBS) continues to pursue accounts in the United Kingdom and Italy. Progress at the beginning of the reporting period was made regarding recovery of GBP 2.5 million; however, discussions had stalled by the end. The CBS has been briefing the FGC on the impact COVID-19 has had on the Money Transfer Businesses (MTB), financial sector, and mitigating measures. The FGC was also briefed on progress towards implementation of mobile money regulations. The CBS has started the process of issuing licenses to mobile money service providers now that the National Communications Agency (NCA) has also started issuing licenses to telecom companies. Finally, the FGC also followed up on financial sector issues arising from the UN Panel of Experts’ Report on Somalia and Global Initiative Against Transnational Organized Crime Report. To improve communications with the broader FGS, the FGC has also translated key advisory notes and presentations into Somali, including the Executive Summary of the Financial Governance Report 2020. Of particular note among these is the Advisory Note on Guidance to development partners on how to bring their aid to FGS institutions on-budget and on-treasury in accordance with the 2019 PFM Act. As a result of its development, the World Bank and Donor delegates to the FGC were invited to present the note to the United Nations Country Team (UNCT). This resulted in a commitment by the UNCT to shift support to FGS institutions on-budget and on-treasury for 2021. The FGC has also kept abreast of fiscal federalism discussions held between the MoF and the Finance Ministries of the FMS. During this reporting period, the MoF has commenced holding regular January–June 2021 Page 28 of 87 Somalia Multi-Partner Fund Progress Report monthly meetings with the FMS MoFs to discuss fiscal performance and share all external support received through the FGS with the FMS. Table 1. Overview of Projects: Effective, Accountable Government Portfolio As of June 30, 2021 (in US$ million) Disbursements Disbursements MPF Grants IDA Grants Projects Objectives Budget MPF IDA 1. Recurrent Support the FGS and 16 14.8 14.8 Cost and eligible FMS to strengthen Reform resource management Financing systems, the inter- 206 118 103.8 60 52.2 (RCRF) governmental fiscal Project18 framework, and service delivery systems in health 68 9.2 and education. 2. Domestic Strengthen systems of 50 30 25.3 20 8.5 Revenue domestic revenue INVESTMENT PROJECTS Mobilization and mobilization, expenditure PFM Capacity control and accountability Strengthening in the FGS, Puntland Project State of Somalia, and (DRM/PFM) Somaliland. 3. Public Sector Enable the government to 40 34.4 26.6 Capacity fill critical capacity gaps in Injection Project the civil service and (CIP) strengthen the capacity of key ministries and agencies to perform core government functions. 4. Somaliland Strengthen the human 10.7 10.7 7.5 Civil Service resource and policy Strengthening management functions of Project (CSSP) selected line ministries and central agencies. 18 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. January–June 2021 Page 29 of 87 Somalia Multi-Partner Fund Progress Report Disbursements Disbursements MPF Grants IDA Grants Projects Objectives Budget MPF IDA 5. Somali Strengthen the national 25 25 0.9 Integrated statistical system in the Statistics and collection, processing, Economic and dissemination of Planning poverty and selected Capacity macroeconomic data to Building Project inform development policy and poverty reduction activities. 6. Support to Provide technical advice 4.1 4.1 4.1 Financial and facilitate policy Governance dialogue to strengthen Policy Dialogue transparency and (FGC) accountability in the areas ANALYTICS/ADVISORY PROJECTS of strategic public procurement and concessions, asset recovery, and other selected areas of financial governance. 7. Health in Engagement in Somalia's 1.5 1.5 1 Somalia Health Sector: Identify opportunities for the World Bank to catalyze improved health and nutrition outcomes in conflict-impacted Somalia through strengthened government institutions and mobilization of private sector actors. Improving Healthcare 100 Services in Somalia Project (‘Damal Caafimaad’) 8. Education in Somalia Education for 40 Somalia Human Capital Development Project January–June 2021 Page 30 of 87 Somalia Multi-Partner Fund Progress Report Disbursements Disbursements MPF Grants IDA Grants Projects Objectives Budget MPF IDA 9. Social (i) Somalia Social 2 2 1.2 Protection Protection Support Engagement (ASA)—Building Blocks towards a National Social Protection System: Support the Government of Somalia to develop key building blocks of a national Social Protection System and support the design of a scalable social safety net program. (ii) Safety Nets for Human 175 51.2 Capital: Provide cash transfers to targeted poor and vulnerable households and establish the key building blocks of a national shock- responsive safety net system. (iii) Safety Nets for Locust 115 39 Response Project: Protect food security and livelihoods of poor and vulnerable households affected by the locust outbreak. 10. Enhancing Improve policy dialogue 1.4 1.4 1 Governance and coordination Dialogue on necessary for reform Somalia progress, achievement of governance projects’ objectives and governance integration in sectoral operations. Total 356.7 216.9 185.3 603 161 January–June 2021 Page 31 of 87 Somalia Multi-Partner Fund Progress Report Enabling Economic Growth The Enabling Economic Growth portfolio financed four active projects: two of these are recipient- executed, and two are Bank-executed, investment projects. The MPF provides financing worth US$44 million to this focus area. The portfolio is co-financed with US$297.5 million in IDA resources (Table 2). This portfolio aligns with the CPF under Focus Area 2: Restoring Economic Resilience and Opportunities, through which the WBG aims to increase economic resilience as a basis for long-run poverty reduction and inclusive growth.19 The Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) received Additional Financing (AF) of US$70 million, of which US$20 million is from the MPF. AF of US$50 million was approved for the Somalia Crisis Recovery Project (SCRP) for combating food insecurity. The World Bank approved the crisis recovery platform and the women empowerment platform to strengthen core priorities on resilience and crisis recovery as well as mainstreaming further women empowerment across the portfolio. Under the CPF, the WBG’s aim is to support activities that increase access to finance and energy, such as new lending for Small and Medium-sized Enterprises (SMEs), particularly for women and youth; expanded access to electricity from renewable sources in targeted rural and peri-urban communities; and greater licensing and supervision capacity of the Central Bank, resulting in more secure financial services. The Somali Electricity Access Project (SEAP) aims to expand access to electricity in targeted urban, peri-urban, and rural communities. In the reporting period, the Bank team: • Secured US$1.45 million in additional financing from the Somalia MPF, increasing the recipient-executed project budget from US$5.75 million. • Secured US$0.55 million in additional financing from the Somalia MPF, increasing the bank- executed project budget by US$0.55 million. In the FGS, 11 (out of 36) solar service providers have qualified to receive Results-Based Grants (RBFs) that are being administered by International Bank of Somalia (IBS) and grant agreements signed between the government and solar service providers for total of US$709,000. The 11 selected companies would be expected to supply 21,094 solar home systems by June 30, 2022, thereby reaching 84,376 people. In Somaliland, 26 solar service providers (firms) have expressed interest in receiving RBFs to expand their operations to underserved areas, out of which 21 were shortlisted to submit business plans that are currently under review. It is expected that awarding will be concluded by mid-August 2021. 19 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. January–June 2021 Page 32 of 87 Somalia Multi-Partner Fund Progress Report To limit the availability of, and demand for, poor quality and/or counterfeit products, discussions have been held with the governments in the FGS and Somaliland on the support of the Bureau of Standards. Analytic work for enabling electrification through solar powered/hybrid mini grids have been consolidated under one consultancy work. An ‘Indicative Least Cost Geospatial Electrification Plan to Achieve Universal Access for Somalia’ has been completed for the FGS. The final report was formally submitted to the government on April 27, 2021. It is still ongoing in Somaliland—the consultants, which had been finalized in October 2020, opted out of the consultancy. Somaliland continues to get support from the Bank team, including the Energy Sector Management Assistance Program (ESMAP) team; a smaller contract is being issued for the development of the spatial data infrastructure (SDI), including an interactive online platform for the visualization of results. With the support of the African Gender and Energy Team, gender and energy capacity building training sessions were held in the FGS and Somaliland on April 6, 2021, and April 10, 2021, respectively. Additional such training for Ministry of Energy staff have been planned for August 2021. The progress of capacity building activities has been moderately satisfactory, affected by COVID-19 measures put in place limiting travel and physical activities. The Bank supported the clients to prepare a capacity building plan that outlines training sessions for the period between December 2020 and end of June 2021. In response to the COVID-19 situation, the project has: • Worked with the government and fund manager to support a call for grant applications and awards process that is responsive to the solar companies’ needs and limitations in the COVID- 19 context. • Delayed implementation of the MTF Electricity Access baseline survey to establish households’ access to electricity. The project will, instead, use available information, including high frequency surveys. • Increased task team’s support to the government and consultants to ensure effective delivery of activities and studies. On June 9, 2021, the World Bank Executive Board of Directors approved a US$70 million additional financing (AF) project, combined with a restructuring, for the Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP). The AF will aid the FGS in supporting resilient recovery of households and businesses affected by the COVID-19 pandemic and scale up the parent project’s activities to help the FGS provide such support. The AF project retains the same component structure as the parent project. The project closing date has been extended by 30 months to December 31, 2025. Under the AF, the project’s management and coordination arrangements will be enhanced to ensure appropriate implementation. The AF will support the scale-up of gender-sensitive programming; strengthened M&E systems, promoting of compliance with good safeguards practices; improved stakeholder engagement (especially targeting women); and strengthening of GRM and citizen January–June 2021 Page 33 of 87 Somalia Multi-Partner Fund Progress Report engagement mechanisms to enhance feedback loops to shore up early learning, adaptive, and iterative approaches to implementation. Strengthened project management mechanisms will be particularly needed in the constrained COVID-19 environment. Strong progress was made by the CBS to go live with the Somalia Transaction and Reporting System (STARS) and Somalia Payment Switch (SPS) systems that are installed on the cloud and accessed as a service. Piloting of the STARS ecosystem is currently ongoing in readiness for going live, and preparations are under way for a full launch during July 2021. Work on the governance instruments, National Payment Systems (NPS) Law, Financial Institutions Law (FIL), and Insurance Law is in the final stages, but delayed due to the political impasse in Somalia. In the context of effective analysis and investigation of suspected cases of money laundering or financing of terrorism (AML/CTF), the FRC (Somalia’s financial intelligence unit) had earlier committed to December 2020 as an internal deadline to deliver the NRA, which has since been missed. After initial delays, the first draft of the report has been completed. The final report is expected by September 2021. The installation of GoAML, a fully integrated software solution developed for use by financial intelligence units, and which is one of the strategic responses to financial crime by the United Nations Office on Drugs and Crime, has been delayed due to COVID-19. The FRC is planning to launch the system in June 2021. The Gargaara Board and management have exerted significant efforts to strengthen Gar gaara’s internal systems to build it into a strong Somali apex institution. The Early Lending Review was undertaken between December 2020 and March 2021, with support from the independent monitoring agent hired by the WB, to provide conformance/operational insights. Over the reporting period, strong progress has been made by the MoCI team to launch the online Business Registration and Licensing System (BRLS) in Mogadishu. This includes the adoption of the Company Law Regulations in March 2021, and the launch of the registration pilot, rolled out incrementally during the pilot phase during January–May 2021. The full launch of the system is planned in July/August 2021. The Somalia Crisis Recovery Project (SCRP) responds to multiple ongoing and overlapping crises. It will provide immediate recovery support to the 17 districts in the three FMS of Jubbaland, South West, and Hirshabelle hit by flooding in late 2019, by supporting livelihoods and infrastructure rehabilitation. It will also respond to the country’s desert locust infestation and public health crisis, aligned with the FGS’s COVID-19 strategy, as well as strengthen governmental systems and capacity for disaster preparedness. For the locust and COVID-19 response and preparedness elements, activities will extend across other FMS, and the self-declared independent territory of Somaliland. The project commenced locust control and livelihood support activities through a US$10 million component being implemented by the Food and Agriculture Organization (FAO) of the United Nations under a service agreement signed in July 2020 with the FGS. January–June 2021 Page 34 of 87 Somalia Multi-Partner Fund Progress Report As of March 2021, the FAO treated 40,548 hectares in Puntland, Somaliland, and Galmudug. Ground control also recently commenced in vulnerable farming communities in 30 districts in which personal protective equipment, sprayers, and malathion are distributed to farmers by the respective FMS’ Ministry of Agriculture and Irrigation (MoAIs). Together with the MoAI, the FAO completed the delivery of livelihood support, including quality farming inputs, to 7,050 vulnerable agro-pastoral and farming households in the three southern districts affected by the locust infestation, and this activity was operationally closed on December 31, 2020. However, about 4,000–8,000 vulnerable households were yet to be reached. For this purpose, three NGO consortia, currently delivering similar services in Somalia, have been identified. The PIU is finalizing the contract with BRCiS20 for these consortia, and similar arrangements being negotiated with SoMReP/NEXUS. Good progress has been made on the groundwork to enable implementation of medium-term flood recovery, though works have yet to start. Subprojects have been identified through the completed prioritization process and will be implemented using MDAs through competitive tendering in the local market. Two strategies for flood risk management have also been developed. These are the short-term strategy of fixing breakages, and the medium/longer term strategy, which focuses on a holistic study on rivers, older river infrastructure rehabilitation, sustainability study, and so on. The PIU recently validated/assessed prioritized breakages and is finalizing procurement of firms to complete the infrastructure works and to provide support on design and construction supervision of flood management infrastructure. The project has taken steps to strengthen long-term disaster risk preparedness. To strengthen flood risk management, the PIU facilitated setting up a partner group on flood-risk management to ensure coordination and alignment of investments. The SCRP will support a government-led framework for collaboration with donors/partners and for coordination among FMS and provide resources to plug key gaps where it can, but the needs far exceed project resources. The MoF signed MoUs with the three participating FMS for project implementation of the flood recovery related project components—a significant step forward for cross-government collaboration and project ownership. The technical team has been using trust fund resources from the Global Facility for Disaster Reduction and Recovery (GFDRR) to support hydromet (weather, climate, and water) and early warning services. This support included capacity building and the development of a strategic investment strategy. 20The Building Resilient Communities in Somalia consortium (BRCiS) is a humanitarian consortium that takes a holistic approach to supporting Somali communities in developing their capacity to resist and absorb minor shocks without undermining their ability to move out of poverty. January–June 2021 Page 35 of 87 Somalia Multi-Partner Fund Progress Report The project team is further supporting the activities of the hydromet working group, an interministerial technical group, which is seeking to strengthen coordination and build capabilities for hydromet services. Strengthening coordination on hydromet services will be the focus of a forthcoming thematic discussion under the Food Security and Resilience Sub-Working Group (FSRSWG) initiative. The Bank, along with the PIU, OPM, and Ministry of Humanitarian Affairs, have together undertaken a number of dialogues which have extended to other donors intending to, or currently providing finance to, the National Emergency Operation Center (NEOC) to ensure its operationalization. The SCRP will consider early stage ‘transitional’ capacity building activities to breathe life into the NEOC until its new physical headquarters is complete, and upon receipt of a costed and time-bound plan. Support to operationalize the NEOC will also take into account other initiatives that include the recently established Multi-Hazard Early Warning Centre under the auspices of the Ministry of Humanitarian Affairs and Disaster Management. The SCRP will also contribute to supporting the transition of two key initiatives: the Food Security and Nutrition Analysis Unit (FSNAU), which provides analysis and forewarning of threats to food security; and the Somalia Water and Land Information System (SWALIM), which has provided infrastructure and technical support for collecting and managing information related to the weather, climate, water resources, and land resources. A concept note by the MoAI, with inputs from the FAO and World Bank Agriculture GP, was submitted in June 2020 to the PIU for establishing a locust early warning system. The proposed scope, outputs, and budget of this activity has not advanced further, though the PIU may include this activity under a second phase of contracting with the FAO. The PIU contracted the Ipsos Group to develop an integrated system for disease response and COVID-19 related decision making. The Bank cleared the FGS’ request for the activation of the SCRP Contingency Emergency Response Component (CERC) in September 2020 for an initial amount of US$4 million in response to the COVID-19 pandemic. Progress on CERC activation was significantly delayed, but the PIU has finalized the recruitment of a health consultant, and service agreements now need to be urgently put in place for the agreed CERC implementing partners. To this end, a US$1.4 million contract with UNICEF and a US$8.1 million contract with the World Health Organization have been finalized; the contract with the International Organization for Migration (IOM) is yet to be finalized. Additional Financing (US$50 million)—pending Board approval: Based on severe and worsening food insecurity and activation of the IDA Crisis Response Window Early Response Financing mechanism for Somalia, additional financing of US$50 million was processed in June 2021. The SCRP offers the closest possible design elements, implementation arrangements, and partnerships across partners to enable a quick and effective Bank response. The AF entails the inclusion of a food insecurity–specific project component that includes both anticipatory action and immediate response activities to address the food insecurity crisis, as well as medium term recovery and resilience building activities. January–June 2021 Page 36 of 87 Somalia Multi-Partner Fund Progress Report The Water for Agro-Pastoral Productivity and Resilience (or Biyoole21) project was declared effective in December 2019. Its primary project beneficiaries are estimated to be more than 250,000 (of which 140,000 are women) agro-pastoralists. The project currently operates in Galmudug, Puntland, and South West State; it aims to ultimately cover 100 rural communities across all six states and Somaliland. The Backstopping Engineering Firm procurement process has been completed for all the participating FMS and consultants are on board. Hydro Nova was awarded the contract to make site selections in all the three FMS; it is currently providing support for new water point site selection and in identifying rehabilitation opportunities of existing water points. Infrastructure development, rehabilitation and construction of new office blocks, and other essential facilities are well under way in the three states. The completion of all infrastructure developments, as well as monitoring the effective deployment of the mobile vet clinics, in Puntland will be fast-tracked in the next two months to determine whether a similar investment should be replicated in Galmudug and South West States. All the federal line ministries involved in the implementation of the project have identified key policy and regulatory areas requiring support within the allocated budget under the project. The ToRs for these technical support areas have been cleared and the recruitment process is under way. Progress is at a similar stage for other federal line ministries. The completion of the recruitment process of technical service providers for all identified areas will be fast-tracked by July 31, 2021. A key milestone regarding training and capacity building was achieved with the completion of a Capacity Needs Assessment for all project implementing entities, which will form the basis for targeted training and capacity building for all implementing agencies. The National Project Coordination Unit (NPCU) has also organized various capacity building trainings and exchange visits for state PIUs. Two additional milestones achieved so far include the finalization of the Community Engagement Operational Guidelines (which have now been translated into Somali language in readiness to use) and the engagement of a Technical Assistance Contractor in Puntland to support community mobilization and preparation of CIPs for 10 sites. In addition, various community sensitization field visits and meetings have been made to WALP and selected sites by the federal NPCU and state project implementation unit teams. The Biyoole NPCU undertook recurring meetings with federal line institutions including the MoF, MoP, MoEWR, MoAI, MoLFR, and DECC-OPM, Office of Accountant General, Central Bank of Somalia (CBS), and Office of Auditor General. These meetings relate to project coordination and provide 21 ‘Biyoole’ means ‘water fetcher’ in Somalia—a person who collects water from shallow wells or other sources to distribute for household consumption, livestock, and agriculture. The biyoole is a staple of Somali agricultural and pastoral life. January–June 2021 Page 37 of 87 Somalia Multi-Partner Fund Progress Report guidance to line ministries regarding using their limited budget allocations as “trigger” funding for future standalone projects. Table 2. Overview of Projects: Enabling Economic Growth As of June 30, 2021 (in US$ million) Disbursements Disbursements MPF Grants IDA Grants Projects Objectives Budget MPF IDA 1. Somali Expand access to 7.2 7.2 2.5 Electricity electricity in targeted Access Project rural and peri-urban (SEAP) communities in Somalia, including Somaliland. 2. Somalia Support progress 101 33 3 68 6.7 Capacity towards increased Advancement, access to basic digital Livelihoods and financial and government Entrepreneurship services supporting through Digital entrepreneurship and Uplift Program employment, particularly INVESTMENT PROJECTS (SCALED-UP) for women. 3. Crisis (a) Somalia Crisis 187.5 187.5 31.5 Recovery and Recovery Project Resilience (SCRP): Support the recovery of livelihoods and infrastructure in flood- and drought- affected areas and strengthen capacity for disaster preparedness nationwide. (b) Crisis Recovery 2 0.6 Platform: Anticipatory action and immediate response activities to address the food insecurity crisis, as well as medium term recovery and resilience building activities. January–June 2021 Page 38 of 87 Somalia Multi-Partner Fund Progress Report Disbursements Disbursements MPF Grants IDA Grants Projects Objectives Budget MPF IDA 4. Women Provide strategic 1.8 1.8 Empowerment support on gender issues Platform to help define key operational, technical, and analytical priorities for engagement under the CPF. 5. Water for Develop water and 42 42 6.2 Agro-Pastoral agricultural services Productivity and among agro-pastoralist Resilience (or communities in dryland ‘Biyoole’) areas of Somalia. Total 339.5 44 6.1 297.5 44.4 Urban Infrastructure The Urban Infrastructure portfolio financed four active investment projects. Of these, three are recipient-executed, and one is a Bank-executed project. The MPF provides financing worth US$81.6 million. The portfolio is co-financed with US$50 million in IDA resources (Table 3). This portfolio aligns with the CPF under Focus Area 1: Strengthening Institutions to Deliver Services, specifically, Objective 1.4: Build the capacity of Somali municipalities for urban resilience. Poor rains, water scarcity, widespread crop failure, a locust infestation, accelerated decline in livestock productivity, and the COVID-19 pandemic have seen communities slide into acute food insecurity, which often leads to increased displacement into urban centers. Approximately 2.8 million people are internally displaced in Somalia, of which 80 percent live in urban areas. The urban portfolio seeks to support Somali authorities at multiple levels to get ahead of these urban challenges. In such a context, the World Bank and partners, such as German Development Cooperation (through KfW), EU, FCDO, and others, have a significant role to play in strengthening government institutions. Under the original Somali Urban Investment Planning Project (SUIPP), feasibility studies, preliminary engineering designs, and safeguards instruments were prepared for the rehabilitation of urban secondary and tertiary roads in Mogadishu and Garowe to improve people’s access to basic services. Activities were completed by December 2018 and the investments are currently being January–June 2021 Page 39 of 87 Somalia Multi-Partner Fund Progress Report implemented under the Somalia Urban Resilience Project (SURP). Investments for Hargeisa were unfortunately not followed through due to budget constraints. The additional financing for SUIPP (SUIPP AF) builds on the findings of an urban assessment previously undertaken for Kismayo and Baidoa. The United Nations Office for Project Services (UNOPS) has provided technical assistance for the design of priority urban investments. Currently, the project is almost fully disbursed. All feasibility studies, detailed engineering designs and bidding documents for prioritized road and drainage investments are already prepared and are ready to be financed under the second phase of the SURP (SURP II). Assessments of Kismayo and Baidoa's municipality/district government’s technical, financial, and administrative capacity—to provide an informational and analytic foundation for the detailed preparation and execution of institutional strengthening activities (to be undertaken under SURP II) —was completed last year. Based on preliminary consultations, UNOPS completed the safeguards assessments, feasibility studies, detailed engineering designs, and bidding documents for (a) 18 priority roads (31.1 km) in Kismayo; and (b) nine priority roads (22.1 km) and a laboratory building in Baidoa. A program coordinator has been assigned in Mogadishu to help the two new cities liaise with the federal government, and also to foster peer-to-peer learning across the four cities supported under the SUIPP. The Somali Urban Resilience Project (SURP) is the national urban resilience project that aims to pilot the use of country systems at the subnational level and strengthen municipal governments’ capacity. In Mogadishu, the scope of works involves the construction of 11 community roads (7.96 km) in six districts, which is a variation from the original scope. The changes were made following community consultations conducted by the BRA. As of end-June 2021, overall works progress is estimated to be 92 percent with 10 roads (7.244 km) and 200 streetlights completed, while two roads (2.34 km) were in progress at 98 percent and 88 percent, respectively. The contract period has been extended to August 31, 2021, to complete all outstanding works before the project closing date on September 30, 2021. As of June 2, 2021, around 58,589 labor days have been created in the overall project. As reported in the previous edition of the MPF Progress Report, all civil works in Garowe were completed by June 30, 2020. The final inspection during the defects liability period was jointly carried out by the PIU and UNOPS on May 30, 2021, with only minor defects reported, which the contractor has rectified. The defects liability certificate was issued on June 22, 2021. An estimated 42,512 labor days have been created in the overall project—more than 10 percent of those employed were women. The same firm which carried out the baseline survey has been contracted to carry out an end line survey in both cities. The survey has been completed in Garowe. In Mogadishu, the end line survey commenced in early June and field survey has started along the nine roads that have been completed. The survey is expected to be completed by August 31, 2021. January–June 2021 Page 40 of 87 Somalia Multi-Partner Fund Progress Report Security risks continue to be a significant challenge for the implementation of SURP, particularly in Mogadishu. One candidate road was dropped due to high security risks. Tightened security measures in the city (such as new checkpoints) also led to the delay of ongoing civil work. To address worsened security risks, security personnel have been deployed to strengthen the protection of SURP staff. The project is expected to close on September 30, 2021. UNOPS is working closely with both BRA management and the PIU to ensure that all outstanding works are completed on time. The five-year Somali Urban Resilience Project II (SURP II) was approved by the IDA Board on December 9, 2019, and declared effective on February 24, 2020. It has an overall financing envelope of US$112 million from the Somalia MPF (US$62 million) and IDA (US$50 million). SURP II builds on the ongoing SUIPP and SURP—both of which are delivered through local governments and have proven effective. The original SUIPP (US$6 million) supported municipalities in the preparation of feasibility studies and preliminary design studies for prioritized infrastructure investments, while the SURP financed these investments in Mogadishu and Garowe. Additional Financing from the German government through the MPF in the amount of US$3 million (SUIPP AF) expanded project preparation support to Kismayo and Baidoa. SURP II will, therefore, scale up investments in Mogadishu, Garowe, Kismayo, and Baidoa, and lay the groundwork for expansion to cities in the states of Galmudug and Hirshabelle. The four PIUs (Kismayo, Baidoa, Mogadishu, and Garowe) have agreed to engage UNOPS to provide technical assistance for the supervision of civil engineering works and monitoring of the contractors’ adherence to the ESF instruments. TA services are expected to commence between June and September 2021 based on cities’ readiness to start construction. In Mogadishu, the designs for priority urban investments are delayed, while investments were previously split into two packages. Mogadishu requires a strategic rethinking on priority investments. The city continues to experience delays due to technical, resettlement, and security challenges. Subprojects under SURP II—particularly in Mogadishu—will include areas with high security risks. There is a need for BRA management to reconsider priority investments to be financed under SURP II. Discussions within BRA management are under way and they are expected to inform the Bank of their priority investments for tranche 1 and those for possible funding under tranche 2 of SURP II. Priority urban investments in Garowe are organized into two packages. Civil works on Package 1 commenced on July 1, 2021, for a period of 15 months. For Package 2, the PIU intends to complete the detailed designs and bidding documents shortly thereafter to commence works before August 2021. Priority urban investments in Kismayo are organized into two packages. Construction on Package 1 will commence by September 1, 2021, for a period of 12 months. For Package 2, UNOPS is currently January–June 2021 Page 41 of 87 Somalia Multi-Partner Fund Progress Report revising the bidding documents to reduce the scope to accommodate the budget shortfall under tranche 1. The procurement of works is progressing well in Baidoa. Priority urban investments are organized into three packages. Civil works in Package 1 are expected to commence in July for a period of 15 months. Meanwhile, bids for the combined Packages 2 and 3 were opened on June 15, 2021. Works are expected to commence in November 2021 for a period of 18 months. The PCU mobilized core staff of the Dhusamareb and Beledweyne PIUs in early June and an initial induction training was held for the newly established PIUs. The PCU is supporting the municipalities to fast-track work plan preparation, budget planning, and the establishment of PIU offices. Table 3. Overview of Projects: Urban Infrastructure As of June 30, 2021 (in US$ million) Disbursements Disbursements MPF Grants IDA Grants Projects Objectives Budget MPF IDA 1. Urbanization Apply a spatial lens to help 2 2 0.2 Platform develop a suite of policy, ASA advisory, and program solutions for sustainable urbanization. 2. Somali Provide feasibility assessments 8.6 8.6 8.6 Urban and preliminary plans for Investment selected urban investment and Planning institutional strengthening Project (SUIPP) activities. INVESTMENT PROJECTS 3. Somalia SURP Phase I: Strengthen 9 9 8.2 Urban municipal planning and Resilience and implementation capacity to Recovery improve access to basic Project (SURP) infrastructure in targeted areas. SURP Phase II: Strengthen 112 62 2.1 50 1.8 public service delivery capacity at the municipal level and increase access to urban infrastructure in selected areas. Total 131.6 81.6 19.1 50 1.8 January–June 2021 Page 42 of 87 Somalia Multi-Partner Fund Progress Report SPOTLIGHT IDA and MPF: Strategic Alignment for Inclusive Service Delivery and Strengthening Reforms The combined effects of the triple crisis of COVID-19, locust infestation, and floods have exacerbated the country’s extreme vulnerability and underscores the importance of building resilience to avoid reversing development gains and the need for flexible instruments to sustain reforms. The strategic alignment of the MPF and the growing IDA portfolio will help in building back better and maximizing impact to recover from the effect of the crises facing Somalia. This edition of Spotlight highlights how the MPF and IDA portfolios leverage each other’s strengths to use resources effectively, efficiently , and equitably, and offer innovative approaches to institution building and inclusive growth in Somalia. Improving Healthcare Services in Somalia Project (‘Damal Caafimaad’) The US$100 million ‘Improving Healthcare Services in Somalia Project’ (‘Damal Caafimaad’) is the first World Bank (WB)–financed IDA health project investment in Somalia’s health sector in 30 years. Granted under the International Development Association (IDA) and the Global Financing Facility (GFF) for Women, Children and Adolescents, this project was approved by the WB Executive Board of Directors on June 28, 2021, and will be implemented over four years, closing on May 30, 2025. Somalia’s progress on human capital remains limited and suffers from high levels of mortality (especially among children), stunting, high fertility, low school enrolment, and limited public and private sector social protection mechanisms. The country’s lagging health outcomes reflect the country’s insecurity, vulnerability, and poverty, limiting opportunities for people to access basic social services, including health and education. The average life expectancy is 57 years.22 The fertility rate, at 6.9 children per woman, is among the highest in the world; poor health outcomes are underlined by weak health service delivery—only 11 percent of children in Somalia, for example, are fully immunized.23 The ongoing global COVID-19 pandemic has further exposed Somalia’s weak health system, underlining the need for increased investment to the nascent health sector and its institutions. The Damal Caafimaad project is expected to reach about 1.84 million beneficiaries and aims to support rapid expansion of essential health and nutrition services as well as intensive government capacity development. Around 10 percent of Somalia’s population, as well as internally displaced persons (IDPs) and nomads in the target regions, will benefit from the project activities. It will deliver essential health and nutrition services and improve health service coverage and quality in some of 22 https://data.worldbank.org/indicator/SP.DYN.LE00.FE.IN?locations=SO 23Somali Demographic and Health Survey: https://somalia.unfpa.org/en/publications/somali-health-and-demographic- survey-2020 January–June 2021 Page 43 of 87 Somalia Multi-Partner Fund Progress Report Somalia’s most disadvantaged areas, including Nugaal (Puntland), Bakool and Bay (South West), and Hiraan and Middle Shabelle (Hirshabelle). In addition, US$7 million in project funds have been retained to contribute to achievement of the project’s development objective in Somaliland, with specific activities and arrangements to be determined based on agreements between Somaliland and the FGS. The project focuses on expanding the coverage of high-impact health and nutrition services by financing the delivery of select, high-impact health and nutrition services. To build effective institutions for stability and economic growth, the project will support the development of the government’s stewardship capacities at both the Federal and Federal Member State (FMS) levels in the areas of health management information systems and data use, public financial management and health financing, private sector development and regulatory reforms, and organizational development. In addition, it focuses on project management, knowledge management, and learning. A Contingent Emergency Response Component (CERC) will provide immediate surge funding in the event of any public health emergencies or disasters. A health sector regulatory assessment—which will form the basis of regulatory capacity development in the Damal Caafimaad project—is also being finalized. The work is anticipated to be completed in August 2021. Given the increased donor fragmentation in the Somali health sector, there is substantial momentum among partners to support the government to reestablish effective health sector coordination. The WB’s engagement in Somalia’s health sector supports the government to address core challenges in the country’s health system. The GFF’s experience and focus on government-led coordination and alignment of resources around government priorities, along with the Bank’s experience in supporting governments to coordinate partners, position the WB and GFF to effectively support the government in these areas. The Bank’s global experience in supporting health systems by strengthening and enhancing the use of government systems is well-placed to support the government’s efforts in institutional capacity development. To support the Federal Ministry of Health’s (FMoH) governance challenges, the WB supports governmentwide Public Financial Management (PFM) in Somalia through the second PFM Capacity Strengthening Project, and has substantial experience supporting PFM in the health sector within other countries as well, demonstrating a clear comparative advantage for World Bank PFM support. The project incorporates lessons learned from other health projects supported by the WB in fragility, conflict, and violence (FCV) contexts, such as in Afghanistan and South Sudan, as well as other Bank- financed projects in Somalia. The project also incorporates lessons from partner implementation of the Somalia Essential Package of Health Services (EPHS), where one core challenge has been the lack of coordination between partners. To address this, the WB, with GFF support for coordination, is working closely with partners and the government to harmonize EPHS planning and implementation. Damal Caafimaad’s focus on the development of the country’s Demographic and Health Information System (DHIS2) system, coupled with Third Party Monitoring (TPM), will support annual household and health facility surveys with the aim of increasing the availability and use of data for decision January–June 2021 Page 44 of 87 Somalia Multi-Partner Fund Progress Report making. The project incorporates lessons from the health program experience in the Recurrent Cost and Reform Financing Project (RCRF II/III) and the Health ASA. Somalia Education for Human Capital Development Project The first World Bank–financed investment in Somalia’s education sector in 30 years, the US$40 million Somalia Education for Human Capital Development project, financed by the International Development Association (IDA), was approved by the World Bank Executive Board of Directors on June 16, 2021. Somalia’s education system has been destroyed over years of conflict and approximately 3 million primary-aged children (aged five to 14 years) are out of school.24 With 75 percent of the population under the age of 30,25 low educational attainment constrains future economic growth and poverty reduction and puts youth at risk. Girls have been especially disadvantaged, according to the 2020 Somali Health and Demographic Survey, with 72 percent of women in rural areas of Somalia having never attended formal schooling.26 With its national coverage, this IDA-funded education project will benefit more than 100,000 children residing in Somalia’s most educationally disadvantaged areas. The project aims to increase access to primary education in underserved areas, particularly for girls, and support Somalia rebuild its education system and get its children back to learning. The project will directly address constraints to girls’ enrolment by reducing distance to school, providing safe and conducive learning environments, recruiting female teachers, and building a mindset of inclusion in the school and community. The project focuses on four main pillars: (a) building core Federal Government of Somalia (FGS) and FMS systems to sustainably deliver, measure, and improve education outcomes; (b) increasing the supply of schools with a focus on promoting gender and geographic equity and quality; (c) fostering effective teaching and assessment practices through training, coaching, and technology- based solutions; and (d) ensuring inputs are learning-focused, especially in terms of making the schooling environment and learning materials more learner friendly and aligned with teaching needs. The WB will provide support to Somalia within the framework of overall human capital development of the country with the potential to provide coordinated support for human capital formation in Somalia. Support in improving governance and public financial management of the sector also places the WB in a unique position to further fortify the education sector. The Bank has been providing support to Somalia through the RCRF project to introduce reforms to help the FGS and FMS education ministries strengthen their core systems for the delivery and management of education services. In June 2021, under Component 3 of the RCRF project, an Intergovernmental Education Coordination Forum 24 Based on UNFPA population data and latest EMIS data from MoECHE. 25https://www.facebook.com/EuDelSomalia/videos/75-of-somalias-population-is-below-the-age-of-30-but-the- unemployment-rate-for-y/152307750176954/ 26 https://somalia.unfpa.org/en/publications/somali-health-and-demographic-survey-2020 January–June 2021 Page 45 of 87 Somalia Multi-Partner Fund Progress Report Committee was established, and the first intergovernmental meeting focused on the creation of a National Examination Board and a National Curriculum Board. Extensive analytical work on system building of the education sector in Somalia, including a research study on the nonstate sector and assessment of monitoring and evaluation systems and a policy paper on the division of roles and responsibilities in federal education systems elsewhere in the world, have provided a solid knowledge base to provide needed technical assistance and guidance for the design and implementation of the Education project. Global knowledge and technical expertise in the relevant thematic areas of education, including learning assessments, teacher training and management, education technology and innovation, and public-private partnerships enable improved education services’ delivery. Noting that less than 40 percent of the country’s teachers are qualified to teach, the project will ensure high quality instruction takes place in Somalia’s classrooms, by developing a Teacher Professional Development Program to support 6,000 teachers improve instruction using digital technology. The initiative will take advantage of high connectivity in the country to provide digital devices and content to ensure that teachers can continue to teach and build their capacity, and that children can continue to learn even during times of pandemics and other shocks in the future. Development partners (DPs) play a significant role in Somalia’s education landscape; nearly all funding for education in Somalia today is provided by external partners, including bilateral and multilateral partners, international nongovernment organizations (INGOs), philanthropies, and the Somali diaspora. Bilateral partners and United Nations’ constituent agencies provide financial support, capacity building, and strategic direction. INGOs often serve as implementing partners for grants to the education sector with direct execution of activities. Partner support also takes other forms such as training of Ministry of Education, Culture, and Higher Education (MoECHE) staff and support for important meetings such as Annual Joint Reviews. Technical support is also provided to key ministry functions through the financing of Technical Advisors, to reinforce efforts to strengthen Somalia’s evolving federal education system structure and align efficiently with the objectives of increasing access, equity, and quality of schooling across the country. The project proposes to build the MoECHE’s capacity to play a stronger role in coordinating and aligning DP support to its educa tion goals through Component 1 of the project.27 The proposed project is aligned with, and incorporates, lessons learned from various DP interventions in Somalia. The project also draws on lessons from the United Kingdom’s Foreign Commonwealth and Development Office’s (FCDO) Somalia Girls Education Challenge (GEC) project to promote girls’ inclusion in schooling and complements Global Partnerships for Education (GPE) efforts in the sector, including establishment of schools in partnership with communities and with a focus on teacher capacity development. 27This component will provide support to the government for developing and operationalizing key elements of a strategic policy framework for an education system in which both public and non-state education providers address the challenges of access, equity and quality in a coherent and sustainable manner. January–June 2021 Page 46 of 87 Somalia Multi-Partner Fund Progress Report Somalia Capacity Advancement, Livelihoods and Entrepreneurship through Digital Uplift Project Gets Additional Financing Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift (SCALED- UP) is a US$31-million project, approved on March 7, 2019, to support progress toward increased access to basic digital financial and government services targeting entrepreneurship and employment, particularly for women. It is playing a central role in strengthening the FGS’s capacity to respond to the challenges of the COVID-19 pandemic. Additional Financing (AF) of US$70 million (IDA US$50 million, MPF US$20 million) for SCALED-UP was approved by the WB Executive Board of Directors on June 9, 2021. This will scale up the parent project activities to aid the FGS in supporting resilient recovery of households and businesses affected by the pandemic. Specifically, the AF aims to leverage the parent project’s platform for institution strengthening and enhancing service delivery to enable over 5,000 micro, small, and medium enterprises (MSMEs) to access finance to build back better; formalize another 5,000 firms through the business registry; support over 250,000 women to access financial transaction accounts; and support 3 million Somali residents to obtain unique identification (ID) numbers. While the government’s reform agenda supported by SCALED-UP and other IDA/MPF development projects has made considerable progress, COVID-19 has deepened the challenges to be addressed. The pandemic comes at a time when the country is navigating a narrow path away from fragility. Since 2012, the country has managed to make sustained progress and demonstrated a strong track record of implementing wide-ranging institutional and economic reforms, as evidenced by Somalia reaching the Decision Point under the enhanced Heavily Indebted Poor Countries (HIPC) initiative in March 2020. However, the pandemic has severely affected the Somali economy that was already shaken by an infestation of desert locusts, and reoccurring climate change–related shocks (floods and droughts). The private sector, which has been a major driver of economic growth and employment generation in Somalia, is being adversely affected by the pandemic. The AF will leverage two financing windows of the MSME financing facility established under the parent project, which have already proven to be effective in the expansion of access to finance for MSMEs, to mitigate vulnerable but viable firms’ liquidity shortages caused by the pandemic. Somali firms’ already low access to finance has been exacerbated by the pandemic, leaving a large unmet market demand in the real economy. In effect, about 63 percent of firms currently find it difficult to access credit.28 The AF will help mitigate the liquidity shortages of viable firms by scaling up the windows of financing, introducing business development services, strengthening capacity of the participating financial institutions, and potentially also launching a risk sharing mechanism. This will, in turn, play a crucial role in preserving jobs and enabling a faster path to resilient recovery of communities and businesses. 28World Bank Group (WBG) and United Nations Industrial Development Organization (UNIDO). March 2021. Coronavirus and the Private Sector in Somalia: Results from the COVID-19–focused Enterprise Survey—Round 2. January–June 2021 Page 47 of 87 Somalia Multi-Partner Fund Progress Report The AF will also deepen the parent project’s reforms to accelerate outcomes and the transformational results needed to sharpen the FGS’ response to the pandemic , and other structural challenges, to support business continuity and a resilient recovery. Now more than ever, COVID-19 has underscored the importance of driving the reform benefits related to integrity and proper functioning of financial markets and digital systems. These are essential to the government’s mitigation of COVID-19 impacts on communities and businesses, but the FGS’ ability to finance the additional investment needed to accelerate reforms and operationalize digital infrastructure and platforms is constrained because of reduced fiscal revenues during the pandemic. To this end, the AF will finance reforms needed to roll out digital IDs in Somalia, support the Central Bank of Somalia to implement its Strategic Plan (2020– 2024) to become a policy-oriented central bank, expand the government’s digital capabilities, and scale up the provision of digital services to individuals and businesses, such as online business registration. Through scaling up of the parent project, the AF attempts to ensure business continuity and remote service delivery, thus underpinning a resilient recovery and safeguarding sustainable livelihoods. As the project components and implementation arrangements are materially the same as those under the parent project, this AF will enable a swifter response than preparing a new project and help accelerate the government’s COVID-19 response activities, ensuring continuity, timeliness, and effectiveness of the response. The project captures the themes of Maximizing Finance for Development, Private Capital Mobilization, Digital Economy and Fragile and Conflict Situations, and has been developed with contributions from the International Finance Corporation. In the context of COVID-19, a waiver to process the AF activities under the safeguards policies rather than the Environmental and Social Framework (ESF) has been secured. Additional Financing for Somalia Crisis Recovery Project Food Insecurity Response The WB’s Executive Board of Directors approved AF of US$50 million to the ongoing Somalia Crisis Recovery Project (SCRP) on June 24, 2021. The project falls under the Bank’s newly established IDA Crisis Response Window (CRW)’s Early Response Financing (ERF) Mechanism, part of the global Famine Action Mechanism (FAM) utilized by the World Bank, United Nations (UN), and other global partners, which is dedicated to supporting upstream interventions in famine prevention, preparedness, and early action. It is projected that a minimum of 2 to 3 million people in Somalia are in acute need of food security and sustainable recovery support in Somalia.29 With repeated cycles of flooding and drought over many years, swarms of desert locusts threatening food security, as well as the COVID-19 pandemic, Somalia is in the grip of a climate—and now public health—emergency, which has been compounded by two decades of armed conflict, all of which are having a devastating effect on the lives and livelihoods of the Somali people, 69 percent of whom are poor.30 29 Additional Financing to the Somalia Crisis Recovery Project for Food Insecurity Response (P176343) Project Information Document: https://ewsdata.rightsindevelopment.org/files/documents/43/WB-P176343.pdf 30https://reliefweb.int/sites/reliefweb.int/files/resources/Somalia%20Interim%20Livelihoods%20Strategy%202021- 2022.pdf January–June 2021 Page 48 of 87 Somalia Multi-Partner Fund Progress Report The SCRP’s main aim is to support the recovery of livelihoods and infrastructure in flood- and drought- affected areas and strengthen capacity for disaster preparedness nationwide. The project will benefit up to 1.7 million Somalis—particularly the most vulnerable populations, farming communities, IDPs, rural and urban communities, and host communities with a strong focus on female-headed households—affected by locusts and flooding. The project will provide basic services and livelihood support, including: • establishing a cash-for-work scheme for vulnerable households; • controlling the desert locust population through ground and aerial spraying operations and surveillance; • restoring and protecting farmers’ capacity for agricultural production; and • promoting household hygiene and methods of treatment. In addressing medium-term flood recovery, the SCRP will rehabilitate water and sanitation systems, broken or nonfunctioning flood control systems (such as embankments, drainage, and irrigation canals), health facilities, bridges, and smaller roads. The project will also support national capacity for severe case management, enhanced laboratory testing capacity, and an Integrated Disease Surveillance and Response System. This adds up to a holistic multiministerial government-led approach to prevention and treatment. The key proposed changes in the SCRP AF project entail the inclusion of a food insecurity–specific project component, which includes both anticipatory action and immediate response activities to address the food insecurity crisis, as well as medium term recovery and resilience-building activities. Proposed activities entail both a scaling up of existing project activities such as livelihoods support through the provision of agricultural inputs (but also include fishing inputs) and strengthening and rehabilitating small to medium scale water and fisheries infrastructure while maximizing the use of labor-intensive methods. While the FGS does not yet have a fully developed response plan specific to this crisis, the proposed SCRP AF activities are in support of the government’s National Development Plan (NDP9, 2020–24), which builds on the Somalia Recovery and Resilience Framework and serves as an overarching framework for development priorities in Somalia. The AF activities also align with IDA ’s 19 core priorities, the WBG’s twin goals of ending extreme poverty and boosting shared prosperity by addressing the food security needs of the most vulnerable and poorest segments of society, and its fragility, conflict and violence (FCV) strategy. Furthermore, the AF activities also align with the WBG’s Country Partnership Framework for Somalia (FY19–22) with its strong focus on poverty alleviation and resilience building, and with the World Bank’s climate change and resilience agenda. The project incorporates lessons learned from the parent project, such as increasing sensitization amongst key government ministries towards greater project implementing unit (PIU) empowerment. Initial delays in project implementation have been attributed to the lack of adequate empowerment and functional delegation to PIUs to make timely operational and procurement decisions. Another important lesson is institutionalizing communities of practice, where they don’t already exist, to maintain complementarity and synergies with other development and humanitarian partners. The January–June 2021 Page 49 of 87 Somalia Multi-Partner Fund Progress Report government has been able to quickly prioritize investments under the SCRP using a bottom-up, systematic, and criteria-based sectoral and geographic prioritization and investment planning process; this project will continue to facilitate bottom-up planning and accountability. Regular dialogue between senior leadership of the PIU and UN agencies will support and facilitate compliance with the WB’s Environmental and Social Framework (ESF) requirements. Shock Responsive Safety Net Projects Get Additional Financing The AF of the IDA-funded Somalia Shock Responsive Safety Net for Human Capital Project (SNHCP), also known as Baxnaano, was approved by the Bank’s Executive Board on June 17, 2021, and will add US$110 million to the current project envelope of US$65 million approved on August 8, 2019. This will continue Somalia’s efforts to invest in improving the human capital of its most vulnerable groups. The proposed AF will help to preserve the gains made by Baxnaano and will help counteract some of the effects of major flooding between 2018 and 2020, which displaced some 650,000 people in 2020 alone, and conflict- and climate-related disasters, which have internally displaced a total of 3 million people as of October 2020. Nearly 200,000 chronically poor households with children under five years of age will continue receiving cash transfers of US$20 a month to help them access food, healthcare, and education. An additional 150,000 vulnerable households that are directly impacted by the locust infestation will receive emergency cash transfers of US$60 a month for six months to help sustain their livelihoods. The support will cushion these households from the negative impacts of COVID-19, drought, climate- induced floods, and locust infestations. In addition, current projections of food insecurity for April-June 2021 estimate that 5.2 million people across Somalia will face acute or stressed levels of food insecurity in the absence of urgent assistance.31 The slower pace of growth in 2019 and contraction in 2020, resulting from multiple crisis—including an upsurge in locusts in recent months—have pushed more people into poverty, such that 71 percent of people were living on US$1.90/person/day in 2020, which is 2 percentage points higher than in 2017. The locust invasion has gravely impacted the livelihoods of nearly 2.6 million living in 43 districts of Somalia. The agriculture sector remains the backbone of the economy and accounts for about 75 percent of the gross domestic product. On June 17, 2021, the WB Board approved an IDA US$75 million AF grant to support Somalia in scaling-up the coverage of its locust response through the Shock Responsive Safety Net for Locust Response (SNLRP). This is in addition to the original US$40 million approved on June 29, 2020. The SNLRP will focus on addressing the immediate impact of the locust infestation on poor and vulnerable households; meeting short-term food security and consumption needs; protecting livelihoods and human capital assets through emergency cash transfers; and strengthening social protection systems. 31https://www.worldbank.org/en/news/press-release/2021/06/17/somalia-s-most-vulnerable-households-and-locust- response-efforts-to-receive-185-million-boost January–June 2021 Page 50 of 87 Somalia Multi-Partner Fund Progress Report The SNLRP benefits from the SNHCP Baxnaano delivery platform, which enables rapid reach to impacted households. Since the start of the ongoing locust invasion, 64 districts across Somalia have been identified as being seriously impacted between the first and second waves. The main component of the SNLRP is the emergency cash transfers to over 100,000 poor and vulnerable locust-affected households in rural areas, equivalent to approximately 600,000 persons. The AF for the SNLRP is part of the regional Emergency Locust Response Program (ELRP) using the Multiphase Programmatic Approach (MPA) approved by the Board on May 20, 2020, with an overall financing envelope of US$500 million. The MPA’s goal is to respond to th e threat posed by the locust outbreak and to strengthen systems for preparedness. In addition to Somalia, the MPA covers Kenya, Uganda, Ethiopia, Djibouti, and South Sudan. The SNLRP AF contributes to the FGS strategy to fight poverty and promote resilience through Pillar 4 of the National Development Plan (2020–2024), which focuses on human development. This project also aligns with the WBG’s strategic priorities and mission to end extreme poverty and boost shared prosperity and the WBG’s FY19–22 Country Partnership Framework for Somalia. The synergies between the IDA-funded SNHCP (‘Baxnaano’) and SNLRP, and the MPF-funded ASA (that is, Building Blocks towards a National Social Protection System ASA)—delivered via the Somalia Shock Responsive and Social Safety Nets Project—will strengthen the humanitarian-development nexus in Somalia.32 32The SNHCP/Baxnaano is the parent project, with the ASA providing TA support to achieve some of its key objectives around institutional capacity building, and the SNLRP operationalizing its shock-responsive feature. The ASA supported the development of the SNHCP project and now supports its implementation. January–June 2021 Page 51 of 87 Somalia Multi-Partner Fund Progress Report MPF Operations The World Bank Group (WBG) corporate portfolio analysis continues to indicate a high level of performance of the Somalia portfolio. Much of this success can be attributed to the work of the client in working with task teams and the fiduciary teams, adapting WBG process to the context, as well as providing ongoing support to the implementing units. Working through country systems with recipient- executed investments, the preferred modality for WBG operations globally, bears challenges in Somalia, especially as the Bank’s portfolio diversifies and decentralizes. This way of working has required the government to rapidly develop systems and processes in line with WBG requirements. It has also required the government to rapidly build its capacities to execute projects along the fiduciary standards required in WBG operations. Despite progress towards elections, the political crisis continues with tensions between the Federal Government of Somalia (FGS) and Federal Member States (FMS), as well as persistent influence of clan relationships. Presidential elections are not likely to take place before December/January, almost a whole year after the current President’s mandate expired. Tensions between the Prime Minister (PM) and the President are playing out in public. For now, the PM has support from some FMS, the opposition, and the international community. National elections’ planning restarted in early August with some delays and the Federal Electoral Commission released a revised elections schedule for the Upper House (September 18) and Lower House (October 1–November 20). Somalia remains among the most complex fragility, conflict, and violence contexts in which the World Bank is engaged. Having cleared arrears and reached its Heavily Indebted Poor Countries Initiative (HIPC) Decision Point in March 2020, Somalia’s development financing aims to support an ambitious agenda which is central to moving the country towards greater stability and more inclusive development—underscoring the importance of building resilience and the need for flexible instruments to respond to Somalia’s unique operating environment. WBG shareholders approved US$445 million in new operations towards the end of FY21. Bank resources have been used to build and scale foundational systems for inclusive service delivery, governance, and rapid response, leveraging the strategic positioning of MPF investments, Pre- Arrears Clearance Grants (PACG), and International Development Association (IDA) financing. The MPF portfolio finances 16 active projects. The MPF provides financing worth US$324.5 million. The portfolio is co-financed with US$950.5 million in IDA resources. With IDA complementing MPF financing, the portfolio is now demonstrating the advantages of blending multiple sources of financing to leverage a coordinated and pooled financing approach using country systems. The total active Bank portfolio at the end of the reporting period amounted to US$1.16 billion combined IDA and Trust Fund financing. The strategic alignment of the MPF and the growing IDA portfolio will help in building back better and recover from the impact of the crises facing Somalia. The MPF and IDA portfolios (a) leverage each other’s strengths to use resources effectively, efficiently and equitably; (b) maximize impact for January–June 2021 Page 52 of 87 Somalia Multi-Partner Fund Progress Report Somalia’s sustained economic reforms; (c) and offer innovative approaches to institution building and inclusive growth in Somalia. The World Bank’s ability to rapidly adapt and tailor the mana gement of MPF and core IDA financing is one of its fundamental strengths. The complex political dynamics and the worsening socioeconomic situation—exacerbated by political instability, renewed violence, rising insecurity, and the combined effects of the COVID pandemic and the triple crises (locust infestation, flood, and droughts)—in Somalia continue to affect MPF operations. Implementation challenges, delays due to travel restrictions on freight operations and services globally, and restrictions on movement and interaction has disrupted operations. The scale up of the MPF portfolio is being supported through enhanced risk management and development of a comprehensive strategy to manage those risks (fiduciary, environmental and social framework [ESF], security, and so on) across the portfolio, especially due to the pandemic and staff inability to travel to Somalia. Travel restrictions also reduce the ability of the client and project beneficiaries to receive and absorb technical assistance. Security risks need to continue to be carefully managed with enhanced measures. Intensive capacity building efforts and resource allocation are required at Federal and FMS level towards development of a risk management approach for due diligence, supervision, and implementation support for all projects. The Bank has emphasized building client capacity through targeted trainings to improve government understanding of, and ability to manage, these risks. The COVID-19 pandemic has added to an already complex environment with additional uncertainties and complexities and introduces additional shocks to the World Bank portfolio in Somalia. The governments have imposed several restrictions, such as social distancing, movement restrictions, and travel restrictions. The portfolio has, to an extent, been designed with resilience against such factors, that is, most have foreseen difficult access, communications, and closures due to security restrictions. The MPF has also contracted additional service providers to support risk management for portfolio delivery, including enhanced supervision support, the Monitoring Agent, and the Professional Services contract. Exposure for the WBG is higher in financial terms; the rapid increase in financing comes without major developments in the strength of government systems. Government activity has increased significantly: FGS expenditures multiplied by a factor of six since 2013, indicating increased activity across government. In addition, there has been a formalization of FMS and significant growth there also, albeit from a smaller base. This combined with increased government transfers to FMS that have weaker systems and certain heightened risks due to COVID-19. At the outset, however, this is a portfolio that has proven adept at managing risk and delivering results amidst difficult circumstances. The COVID-19 pandemic has forced people across the globe to define, sometimes virtually overnight, different ways of communicating and doing business. Uncertainty, national and international restrictions, and the need to ensure safety precautions in the wake of the pandemic have necessitated innovative changes in approach. To support teams to maintain real-time and continuous project implementation monitoring and supervision, the MPF will explore the options through the innovative use of technology, such as satellite imagery, use of artificial intelligence for remote supervision or January–June 2021 Page 53 of 87 Somalia Multi-Partner Fund Progress Report predictive analytics, and building up of client digital capacity. Several innovative pilots across the Bank attest to the efficacy of such technologies in dealing with the ‘new normal’. Some other options available to the teams are risk-based supervision system; cloud-based data collections and M&E systems for tracking results; and safe cloud storage for client progress reporting and review by task teams. Addressing these challenges has also required the WBG to think innovatively and creatively about doing business in a unique context—balancing stringent oversight with flexibility and agility. The portfolio has increased in size, diversified in scope, and become more complex in the reporting period. New sectors and new geographic areas require the MPF to introduce operational support to client counterparts. New government counterparts at municipal level, and subnational disbursement and delivery modalities, require the MPF to adapt its operational approaches. This includes risk management approaches, differentiated fund flows, and an increased focus on environmental and social safeguards. Scaling up projects gradually helps teams to understand risks and enables the teams to build matching capacity on an ongoing basis. Operational lessons are being drawn from the Bank’s portfolio in Somalia, which are potentially applicable to the wider Bank engagement in contexts affected by Fragility, Conflict, and Violence (FCV). Strategic Reviews and Portfolio-Level Monitoring The WBG commissions periodic strategic risk reviews of emerging issues of institutional reform and state-building in Somalia. These reviews by Abyrint, the MPF Monitoring Agent, inform government and WBG strategy, portfolio management, and implementation. The Monitoring Agent also provides risk management support on the MPF’s main areas of risk including transaction level monitoring and advisory support to project implementation. Insight gained is consolidated to produce fact-based analyses and recommended actions to the WBG, as well as targeted capacity-building support to government. Transaction level financial monitoring is employed for 100 percent of WBG financing to recurrent costs of the federal and state governments that are executed fully through use-of-country-systems. These costs include salaries for civil servants and social sector workers on payrolls across the country, which enable government operations and, increasingly, service delivery. WBG support to government to rebuild and strengthen core state functions are bolstered through insight into the performance of Somali institutions responsible for financial governance. Strategic reviews and portfolio level monitoring integrate assessment of adherence of project activities with the WBG Environmental and Social Framework (ESF), which presents substantial challenges to implementing agencies. Country legal frameworks are weak or absent and there are very limited regulatory capabilities, leaving much to be compensated through project-specific arrangements. There is now growing experience in the application of the ESF, and reviews inform the WBG and governments on how to meet the challenges ahead, both under WBG projects as well as more broadly. January–June 2021 Page 54 of 87 Somalia Multi-Partner Fund Progress Report During 2021, a review was undertaken of the operations of the MSME financing facility that has been established and is being supported through the Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP). The review focused on the integrity of the facility, the effectiveness of its management, including approaches to environmental and social risk management, and looked to inform decision making on further developing the facility. An assessment was also carried out on HR performance management policies and practices for project implementation teams. An approach was developed to enhance the effectiveness of implementation through structured team performance management, which is now being piloted. Portfolio Risk Profile The WBG Somalia portfolio risks are high, even when compared with those for portfolios in other fragile and conflict-affected settings. Figure 1. Risks Ratings for the Global, Fragile, and Somali Portfolio Note: Global n = 2101, Fragile n = 403, Somalia n = 13. Source: World Bank Project Appraisal Documents, Project Papers, and ISRs, Abyrint Analysis. © abyrint 2021 Ratings are higher in areas where the WBG has low influence, for example, ‘Political and governance’, ‘Macroeconomic’, ‘Fiduciary’, ‘Environmental and social’, and ‘Stakeholders’. Risk ratings for the Somalia portfolio have increased over time, as experience in Somalia has developed and as the portfolio has expanded. Financing to the WBG Somalia portfolio is growing rapidly and is foreseen to further expand. About one-third of the total WBG Somalia commitments to date have been made during 2020, and another third in the first half of 2021. While much of this is WBG IDA financing, these investments are January–June 2021 Page 55 of 87 Somalia Multi-Partner Fund Progress Report leveraging MPF-financed investments and cannot be seen as fully independent of the MPF-financed portion of the portfolio. Figure 2. World Bank Financial Exposure On-Government-Systems Somalia Portfolio: Government-Implemented New Commitments (US$ million) Note: MPF recipient-executed (RE) grants + IDA. Source: MPF Progress Reports; IDA; Abyrint Analysis. © abyrint 2021 Over many years, the MPF investments have helped build systems and drive reforms in key institutions, which are being leveraged to enable the increase in financing. There is reliance on the PFM systems of the FGS and the FMS and, as the portfolio grows, exposure and residual unmitigated risk of engagement in Somalia is increasing. Exposure is higher in purely financial terms, with the rapid increases in financing outpacing major developments in the strength of government systems and the enabling environment. The nature of the investments is becoming more complex. Different risks, as well as environmental and social risks, have become more prominent and significant amidst scope expansion to more infrastructure, more decentralization, and also higher exposure to decentralized government service delivery in education and health. Financing is also increasingly transferred from the federal level to Federal Member States, which have weaker systems. The ongoing COVID-19 pandemic has heightened certain risks and continues to warrant extra caution. While government- and Bank-led fiduciary risk mitigation measures continue through COVID- 19 sensitive approaches, ongoing travel restrictions may slow or negatively impact the quality of policy dialogue and restrict technical support modalities, impacting the quality of project implementation. The political impasse and related uncertainty during the first half of 2021 has stress-tested project implementation. At the outset, projects are designed to compensate for many institutional weaknesses, that is, lack of policies or predictable policy development, lack of regulatory frameworks, lack of fundamental bureaucratic capacities, as well as a lack of codified knowledge, data, and reliable information. January–June 2021 Page 56 of 87 Somalia Multi-Partner Fund Progress Report Some program objectives nevertheless require political decision-making capability. Variations of political impasse have, over the years, shown to delay important actions, that is, lawmaking and setting new directions. Yet so much of program activity continues unaffected by the political impasse. Day-by-day collegial efforts continue within government, even across potentially politically sensitive areas such as fiscal federalism. Experience to-date demonstrates that the portfolio is adept at managing elevated risks and delivering results amidst difficult and dynamic circumstances. Continued deliberate risk A Monitoring Agent team inspecting an infrastructure contractor’s management is necessary to emergency medical readiness in Mogadishu, in December 2020. maintain this track record. (Photo courtesy: Abyrint) Improving Financial Integrity To support the government to improve its public financial management and projects’ fiduciar y systems, the Bank engaged with the government on several trainings and workshops targeting both active and pipeline operations. Joint virtual financial management (FM) implementation support reviews were held for the all the projects implemented in Somaliland, FGS, and FMS from March 29 to April 10, 2021. The review was further extended to June 20, 2021, focusing on specific areas of emerging risks. The overall objective was to hold technical consultations with the relevant government staff involved in project management to enhance project financial and procurement management performance, develop an action plan for resolving fiduciary gaps identified in the financial management implementation reviews, quarterly Interim Project Financial Reports (IFRs), and the end- of-the-year project external audit reports and recommendations therefrom. The participants shared their common understanding on the level of risks for each project, associated negative impact on the Project Development Objectives (PDOs) if the identified fiduciary risks are not addressed in a timely manner, Public Financial Management (PFM) strengthening measures, and the eventual negative effects on the entire portfolio. The FM implementation support report with time-bound recommendations and related action plans was transmitted to the government. A. Background FM arrangements for all recipient-executed operations are fully mainstreamed with the country PFM systems. The PFM systems are assessed and progressively monitored at three levels: (a) PFM systems and supporting legal framework at FGS and FMS; (b) implementing entities; and (c) project- specific FM arrangements. In Somalia, lack of unified PFM architecture is compounded by constraints recognizable in FCV countries, including limited access to the client (particularly Federal level — January–June 2021 Page 57 of 87 Somalia Multi-Partner Fund Progress Report Mogadishu and some of the FMS), which continues to present challenges in the provision of effective implementation support. The Somalia Bank PFM/Fiduciary function has dual twin roles: (a) providing assurance that projects’ resources are used for the intended purposes with due consideration to the principles of economy, efficiency, effectiveness, transparency, and accountability; and (b) developing institutional and PFM systems and capacities with specific focus to the Office of the Accountant General and Auditor General in the FGS and FMS. B. Risk-Based Approach Risk-based approaches are adopted in identifying and assessing country, implementing entities, and project-specific FM risks. To effectively identify and manage potential risks that may affect the implementation of effective PFM/Fiduciary arrangements, country PFM assessments (country, implementing entities, sector specific, and project level) are undertaken in good time to inform the design of implementation arrangements. The PFM assessments contribute to key decisions on the intensity of preparation and implementation support and inform the development of PFM systems development and mitigation strategies to address key weaknesses and risks. In conducting the assessments, key consideration is given to the need to design sustainable fiduciary oversight and PFM capacity development. This is done by gathering principal information to facilitate design of appropriate contextual frameworks and design, scalable response, speed, and effective monitoring of operations and risks. The PFM/Fiduciary risks are assessed at the beginning of each project and are monitored and updated continuously throughout the project cycle management as part of the projects’ implementation support. The FM risk model has a qualitative focus and takes into consideration principles embodied in internationally recognized good practices. Specific project implementation support missions for each of the projects are undertaken at least once every six months, to which the findings and risk ratings contribute to PFM implementation support reports, aides-memoire, and Implementation Status Reports (ISRs)—all of which are shared with the client and donors. The projects’ financial management arrangements and risks are periodically updated and monitored through the World Bank FM system through which IFRs and annual audited financial statements are electronically submitted. C. PFM/Fiduciary Engagement Model The projects’ FM arrangements are designed to facilitate and promote sustainable development of the capacity of the country’s PFM institutions and implementing entities. The offices of the Accountant General, Auditor General, and Budget Directorate are central counterparts in the PFM/Fiduciary workstreams. All the project PFM/Fiduciary arrangements are fully aligned to the country PFM systems, including alignment to the outlined government priorities in the National Development Plans (NDPs). Project-specific Interim Unaudited Financial Reports and governmentwide fiscal progress reports are generated through a single integrated window using the Government Public Financial Management Systems (Integrated Financial Management Information Systems—IFMs) at Federal, Puntland, and Somaliland. IFRs for the projects implemented in the other FMS (Hirshabelle, Galmudug, South West, and Jubbaland) are generated through Bisan IFMIS system and consolidated into the FGS generated IFRs. The projects’ PFM/Fiduciary arrangements in the FGS and across the January–June 2021 Page 58 of 87 Somalia Multi-Partner Fund Progress Report FMS33 are managed directly by the Office of the Accountant General—centralized External Assistance Section (EAFS) units through collaboration with PREMIS34 team. The projects’ external audit reports for FY2020 for the Government of Somaliland were submitted to the Bank within the set deadline of June 30, 2021, reviewed, and feedback provided to the government with an action plan to strengthen internal control weakness identified during the audit. The audit reports from the FGS and FMS (excluding Somaliland) are expected to be submitted to the World Bank before July 31 (timeline: June 30). The late submission of these reports was due to delays in the recruitment of Technical Assistance to the Office of the Auditor General. The FM team will provide detailed reviews to the audit reports and provide formal feedback to the government. A pragmatic approach combining a Short-Term Financial Management Consultant (STC) providing support to the PFM/Fiduciary team in the Bank has been deployed. The team is further supported through a team of STCs deployed through a third-party platform to facilitate effective ‘on the ground’ PFM/Fiduciary support to the client teams beyond areas of Bank corporate security limitations. In the wake of the COVID-19 pandemic, the third-party platform has shifted to virtual implementation support leveraging on technology, with the recent virtual review concluded on June 20, 2021. The next review is planned for September/October 2021. The team interfaces with the third-party Monitoring Agent (MA) majorly, focusing on verification of outputs to which reviews from the financial performance are comprehensively reconciled with the findings of the monitoring agent. Joint Bank/government/MA forums will be strengthened to ensure provision of timely implementation support/monitoring feedback to the government teams. D. Next Steps Follow up progress in the implementation of the joint action plan identified in the various reviews, including agreements from the joint fiduciary forum, are the next steps. The team will be focusing towards use of technology in the wake of the COVID-19 pandemic as well as deepening collaboration with the Offices of the Auditor General, Accountant General, Internal Audit function, and EAFS units as key institutions charged with operational fiduciary managements and oversight. Through collaboration with the SCALED-UP operation, the team continues to support full automation of activities in the FGS Office of the Accountant General towards a paperless office. The team will focus efforts towards areas of high systemic risks and on decentralized financial management arrangements of projects in the FMS. The Bank FM team is also working closely with the Office of the Auditor General and the Accountant General to provide reviews of the projects’ audit reports for the financial year ended December 31, 2020, currently under way. Despite the adverse impacts of COVID-19, it is expected that the FGS and FMS will submit to the Bank project audits and management letters by July 31, 2021. 33 Puntland, Somaliland, Jubbaland, South West, Galmudug, and Hirshabelle. 34 Third party PFM vehicle established and funded by a group of donors to lead PFM reforms across the newly formed states. January–June 2021 Page 59 of 87 Somalia Multi-Partner Fund Progress Report Box 2. World Bank Procurement Support in Somalia Procurement capacity development: Due to limited public procurement capacity, the framework adopted is to carry out 100 percent prior review of all procurement transactions. That provides assurance for compliance as well as capacity building initiatives. Where possible, United Nations’ agencies with proven capacity in specific areas are being used to support implementation of the projects, especially under emergency situations. The World Bank (WB) has continued providing procurement trainings to build the capacity of the local staff. Due to the COVID-19 pandemic, the trainings are being conducted virtually. Support is also being provided to procurement staff in the country to build their capacity through informal guidance/reviews, telephone calls, WhatsApp, Webex, and so on. The Bank is also working on a Concept Note that is aimed at addressing existing procurement capacity challenges under the Somalia portfolio. The draft concept is now under discussion. Procurement integrity: To sustain improvement in financial integrity in WB-funded projects, the Bank has continued creating awareness among the government, private sector, and other stakeholders on the key issues regarding integrity, procurement, and financial management. The awareness is being emphasized during the virtual project Implementation Support Missions. Before COVID-19, the WB used to conduct yearly Business Outreach Seminars facilitated by INT/Procurement/FM. As soon as the COVID-19 situation improves, these physical meetings will resume to the extent reasonable. Procurement reforms: The Bank has supported procurement reforms in Somalia. Procurement Law and draft Regulations are now in place. The areas of assistance will now be organizing stakeholders’ consultative workshops to discuss and obtain feedback to finalize the Procurement Regulations. The WB has also recently assisted the Federal Government of Somalia in developing guidelines on emergency procurement. The next step is dissemination of the guidelines to make the officers in the procuring entities understand the procedures to facilitate management of emergency procurement. Between October 2020 and January 2021, the Bank conducted procurement assessment in the Federal Member States (FMS)—Galmudug State, Hirshabelle State, South West State, and Jubbaland State—whose objective was to assess the procurement performance in FMS. The draft report for each state has been prepared with recommendations. Environmental and Social Risk Management Implementation of the World Bank’s Environmental and Social Framework (ESF) for managing project risks and impacts, applicable to all projects with concept notes on or after October 1, 2018, is well under way. On the environmental side, the ESF provides for expanded guidance on occupational health and safety (OHS), resource (energy, water, and raw materials) efficiency, as well as pollution prevention and management. Key social aspects of the ESF include: ensuring fair treatment and nondiscrimination of project workers; preventing forced and child labor; avoiding and mitigating displacement impacts, including sustainable management of land acquisition and involuntary resettlement; avoiding adverse impacts on health and safety for project affected communities, January–June 2021 Page 60 of 87 Somalia Multi-Partner Fund Progress Report including prevention of Gender-Based Violence/Sexual Exploitation, Abuse, and Sexual Harassment (GBV/SEAH) and security incidents; and ensuring meaningful stakeholder engagement and grievance redress throughout the project cycle. Government ministries and PIUs with Bank–funded projects have received both initial ESF training as well as one-on-one support on ESF from Bank technical staff, as needed. Currently, eight projects are under implementation, with four having prepared and obtained approvals for additional financing to the existing operations. These projects have prepared various project- specific assessments and mitigation plans that align with the ESF requirements. These ESF instruments include Labor Management Procedures, GBV Prevention and Response Plans, Security Management Plans, Resettlement Policy Frameworks, Environmental and Social Management Frameworks, Environmental and Social Impact Assessments, and Environmental and Social Management Plans. All projects also prepare a Stakeholder Engagement Plan for the entire project duration that includes Grievance Redressal Mechanisms. All projects are also expected to pay specific attention to identification and inclusion of disadvantaged or vulnerable individuals or groups. These instruments/mitigation plans are expected to respond to both contextual risks in Somalia as well as project-induced risks. An additional seven projects are in various stages of preparation. The Bank has completed a country level assessment on Social Risk Management. The recommendations emanating from this assessment direct the Social Risk Management Approach in the four major areas of (a) enhancing ESF readiness of the fast-growing portfolio; (b) building project level capacity; (c) strengthening national capacity in key social risk aspects; and (d) strengthening Environmental and Social Systems. This study is being complemented by a rigorous social assessment of Somalia. To facilitate the International Development Association’s scale up of the portfolio, the Bank has reviewed the environmental and social risks in Somalia and is helping the Somali government to put in place necessary systems to meet the country’s unique requirements. Some of this support is project-based. Under the new health project which has just been approved for implementation, an ESF Capacity Action Plan has been developed for enhancing capacity for environmental and social risk management in the Ministry of Health. This will go a long way in enabling the ministry to improve its overall capacity for responding to the environmental and social impacts of the COVID-19 pandemic, including spinoffs from the emergency vaccination nationwide. To scale up support to the ministries in the FGS, and to meet the requirements of the ESF, the Bank has begun preparatory activities under the Somalia ESF and Security Management Capacity Building Project. Preparation and implementation capacity of the government not only needs to be built in a targeted manner in the medium term (three to five years), but also needs immediate intensive support in the short term. This is a multiyear project that will significantly improve the FGS’ capacity for environmental governance and management of social risks. Based on experience thus far, additional capacity and resources will be dedicated to the mitigation of social and environmental risks and towards improved stakeholder engagement to aid task teams in project design and implementation. In addition to the above-mentioned project, the World Bank is January–June 2021 Page 61 of 87 Somalia Multi-Partner Fund Progress Report exploring ways in which to pool ESF client capacity to support multiple projects through the RCRF project. This pooling would create sufficient funding to hire some senior advisors to lead capacity building at the FGS level, while also being able to hire full-time staff at the FMS level for environmental and social standards as well as GBV engagement. Significant efforts will be required to enhance the capacities of government and communities in the management of environment and social risks on the portfolio; the Bank is continuing efforts to train counterparts in the ESF. Innovative solutions to the complex operational context of Somalia (such as enhanced consultation to facilitate land and resource transactions and multiproject GRMs) are being developed. The incidence of COVID-19 in Somalia has hastened the need to introduce technologies and tools to support remote supervision, as well as to put into place alternative ways to gather stakeholder input and feedback. These concerns were already present with the inability to travel to insecure regions in Somalia. However, the COVID-19 pandemic has elevated the discussion and provided additional resources to test new approaches. The Somalia Country Environmental Analysis, completed in June 2020, encapsulates an extensive baseline of Somalia’s natural resource assets (including biodiversity, soil, water, forests) as well as issues associated with degradation of those asset streams. This should aid individual development institutions as they each conduct their environmental baselines as well as identify potential negative environmental impacts and accompanying mitigation measures. It is also worth noting that the analysis has provided the authorities in Somalia with both strategic and operational recommendations for improving governance and management of natural resources. The Bank is also preparing a Bank-executed Advisory Services and Analytics (ASA) to support the Government of Somalia to strengthen country systems to meet and sustain the requirements of the ESF. This is expected to identify, quantify, and buttress the capacity of the government counterparts to meet the requirements of a fast-growing portfolio in a targeted manner in the medium term (three to five years) and needs immediate intensive support in the short term. In the short term, the Bank will support the immediate hiring of E&S specialists, and their training and capacity building as well, within the government PIUs to support preparation and implementation of ESF instruments and other commitments. This may involve enlisting the support of more experienced implementing partners, such as UN agencies and other third-party implementation partners. In the medium term, the ASA will focus on identifying select thematic areas to in fill the knowledge gaps on Borrower’s existing policy, legal and institutional frameworks for addressing E&S risks and impacts and related implementation capacity. The medium to long term will entail the development of environmental and social systems to strengthen country E&S capabilities at both federal government and member state levels. The Bank is supporting economic and livelihood sectors in Somalia with information of climate exposure and resilience. The ongoing Somalia Climate Risk Assessment will provide technical resources to assist the Bank’s Somalia portfolio and the Somali government in managing climate - related risks and vulnerability throughout the project cycle. The assessment will also result in the development of climate risk screening tools, technical guidelines for climate-proofing investments in January–June 2021 Page 62 of 87 Somalia Multi-Partner Fund Progress Report critical development sectors, and knowledge products that will assist in establishing the costs associated with this outcome. The Somali national government has been supported in developing basic legislation for environmental governance and resource management. Key among this is the Somalia National Environment Policy, which was approved at Cabinet level on February 13, 2020. This policy will be the foundation for sustainable management of natural resources both at the Federal and member state levels. The Bank also technically supported the Somali government in the preparation of the National Environment Management Bill of 2020, which was passed by a Cabinet resolution on November 26, 2020. The Bill, based on Article 25 and Article 45 of the Provisional Constitution, will be moved to the two houses of Parliament for approval. The Bill has 18 sections and will aid in improving environmental governance in Somalia. In addition, the Directorate of Environment and Climate Change has also begun negotiations with departments in charge of the environment from the various FMS. A four-day interdepartmental meeting was organized in Mogadishu on November 24, 2020, aimed at strengthening coordination and collaboration between Federal and state level environmental Institutions. With the Bank’s technical support, the Somali government has also published draft Environmental and Social Impact Assessment (ESIA) regulations. The Bank has provided direct input into the draft regulations and has counseled the FGS to conduct further stakeholder consultations. The Bank will continue to play a prominent role in strengthening the capacity of the Directorate to implement the new policy and legislation framework for environmental management. To aid in this, the Bank has prepared a long- term capacity visioning plan for state-led environmental governance. The Bank continues to strengthen attention to GBV, both as a critical development challenge in Somalia, as well as a key risk that may emerge in Bank-supported operations. The WBG has provided technical GBV expertise to ensure that new operations effectively address and manage risks of GBV. The WBG has also conducted a portfolio review of GBV that may emerge in Bank-supported operations. This review highlights contextual, portfolio-level, and project-specific dynamics that may exacerbate or create new risks of GBV in operations, recommends key interventions and risk management tools for projects to be able to address these risks more effectively, and identifies opportunities for proactive GBV prevention and response programming within the larger development context (thereby reducing GBV risks within the Bank’s operating areas, writ large). Box 3. Security Risk Management The Bank’s developing operational engagement with the Federal Government of Somali (FGS) continues within a framework of unabated security challenges. An enduring Al-Shabaab–led insurgency combines with deep tensions involving the Federal Government, selected Federal Member States, and Somaliland. Timely response to the COVID-19 crisis is complicated by these realities which isolate many vulnerable communities, particularly in conflict-affected rural areas. January–June 2021 Page 63 of 87 Somalia Multi-Partner Fund Progress Report Somalia remains among the most complex fragility, conflict, and violence (FCV) contexts in which the Bank is engaged. The historical dimensions of prolonged conflict and clan-based violence present strong cultural challenges to humanitarian and development engagement in Somalia. Within a framework of broader risk management, the security environment across much of the territory challenges access to project target populations and geography. Ensuring adequate security risk management across the project portfolio has necessitated continued innovation in partnership with the FGS. Success in addressing Environmental and Social Framework–compliant security risk management has been based on a strategy to capacitate the FGS under an evolving safeguards approach that simultaneously seeks to accommodate good international industry practice (GIIP). However, challenges remain in terms of capacitating the FGS through its project implementation units to assess the threat environment and offer acceptable mitigation through security management plans. Particular measures have been developed in partnership with the FGS and its line ministries to address these challenges. A key initiative, first launched under the Somalia Crisis Recovery Project (SCRP), was the embedding of an internationally accredited security risk management company (SRMC) to support project implementation units (PIUs) in their security management approach. This integration has occurred within a formal security management framework, another innovative measure that assists PIUs in structural coherence across their security management planning. Both initiatives ensure security management skills and capacity transfer to the PIUs. Based on positive outcomes under the SCRP across a challenging operational geography, project security management frameworks, complimented by specialist support, continue to be drafted for emerging Bank-funded operational engagement. Looking forward, two key objectives underpin the Bank’s contextual engagement in security risk management: firstly, continued skills transfer to ensure government autonomy for its operational approach; and secondly, strengthening the Bank’s security due diligence assessment processes which are challenged by access realities. Investment strategies to facilitate these outcomes are being developed in collaboration with the FGS, complemented by internal Bank dialogue and experiential learning with teams in similar FCV operational environments. Financial Update As of June 30, 2021, donors had committed a total of US$524.4 million to the MPF, of which US$517.1 million had been paid in. US$460.4 million has been committed for (a) signed project grants (US$401.6 million); (b) preparation, supervision, and monitoring of endorsed MPF pipeline and active projects (US$36.1 million); and (c) trust fund management and administration (US$22.8 million). This financial overview does not include funds from IDA. The MPF has disbursed a total of US$298.9 million, representing 57 percent of paid-in contributions. A majority of the disbursements have been for project grants (US$251.8 million, 84 percent). Of these grants, most have been recipient-executed (US$212 million, 84 percent) and implemented by Somali January–June 2021 Page 64 of 87 Somalia Multi-Partner Fund Progress Report authorities. In addition to grants, funds have been disbursed for management and administration (US$19.3 million, 6 percent) and preparation, supervision, and monitoring by WBG teams (US$27.7 million, 9 percent). Table 4. MPF Financial Overview As of June 30, 2021 (in US$ million) Contributions $541.8 Paid in $524.4 Unpaid $7.3 Investment income $10.1 Commitments $460.4 Management and administration $22.8 MPF administration $11.7 HQ Central Fee $11.1 Preparation, supervision, monitoring $36.1 Project preparation and supervision $18.7 Monitoring Agent $17.3 Project grants $401.6 BE grants $27.5 BE on behalf grants $22.5 RE grants $351.6 Appraised but not signed $28.5 Disbursements $298.9 Management and administration $19.3 MPF administration $9.2 HQ Central Fee $10.1 Preparation, supervision, monitoring $27.7 Project preparation and supervision $15.1 Monitoring Agent $12.7 Project grants $251.8 BE grants $17.4 BE on behalf grants $22.5 RE grants $212.0 Unallocated cash balance (Paid-in—Commitments) $64.0 January–June 2021 Page 65 of 87 Somalia Multi-Partner Fund Progress Report Figure 3. Total and Average Monthly Disbursements (MPF and IDA) (US$ million) Total and average monthly disbursements MPF & IDA $160 $18 $140 $16 $14 $120 $12 $100 $10 $80 $8 $60 $6 $40 $4 $20 $2 $0 $0 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 IDA net $30 $111 $66 MPF Disbursement $10 $24 $38 $62 $75 $38 $32 $30 Average monthly Disbursement $2 $2 $3 $5 $6 $6 $12 $16 Figure 4. Pledged vs. Paid-In Contributions to the MPF (US$ million) European Union United Kingdom Norway Germany Sweden Denmark Switzerland Finland USA SPF Italy $0 $20 $40 $60 $80 $100 $120 $140 Switzerla United European Italy SPF USA Finland Denmark Sweden Germany Norway nd Kingdom Union Pledged (USD, m) $3 $8 $12 $14 $19 $35 $65 $74 $79 $97 $118 Paid in (USD, m) $3 $8 $12 $12 $17 $32 $65 $74 $79 $97 $118 January–June 2021 Page 66 of 87 35 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 August 2014 November 2014 January 2015 March 2015 RE May 2015 July 2015 January–June 2021 September 2015 November 2015 BE January 2016 March 2016 May 2016 July 2016 September 2016 November 2016 BEoB January 2017 This figure excludes DPO disbursements. March 2017 May 2017 July 2017 September 2017 November 2017 January 2018 MPF Admin March 2018 May 2018 July 2018 September 2018 November 2018 IDA January 2019 March 2019 May 2019 July 2019 September 2019 November 2019 MPF & IDA Disbursement, by type, by month January 2020 March 2020 Figure 5. MPF and IDA Disbursements (by Type and Month) (US$ million)35 May 2020 July 2020 September 2020 November 2020 January 2021 3-month average (MPF only) March 2021 May 2021 Page 67 of 87 Somalia Multi-Partner Fund Progress Report $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 Somalia Multi-Partner Fund Progress Report Looking Ahead Somalia’s turnaround, though fraught with challenges, has made considerable progress over the last eight years. International experience highlights that “turnarounds” in fragility, conflict, and violence (FCV) contexts are nonlinear, cyclical, and may be prolonged over an extended period. Somalia is no exception. The 2020/21 political impasse is following the breakthrough agreement on the Provisional Constitution that ushered in a new Federal Parliament and the establishment of the Federal Government of Somalia (FGS) in 2012. The FGS and Federal Parliament have seen two transitions of power since 2012 as well as the emergence of four new Federal Member States (FMS). Continued, albeit slower, progress has been made, which illustrates the capacity of Somalia’s nascent federal arrangement to manage political confrontation; nonetheless, important challenges and fragility remain. Though progress has been made on key fronts, it has not been linear and still faces significant challenges. Until arrangements are embedded in a final Constitution which enjoys the political support of all Somalis, including in Somaliland, and the ratification of Parliament, Somalia’s political institutions will remain contested. On the other hand, Somali authorities continue to reach major milestones with the support of the Multi- Partner Fund (MPF) and its development partners. The MPF will continue to support the integration of the MPF portfolio into the wider International Development Association (IDA) engagement, and find complementarities as well as scale up opportunities. Support towards the implementation of the Bank’s Somalia program has been based on engagement through the Somalia MPF, the exceptional IDA Pre-Arrears Clearance Grants (PACGs) and, over the last year, full reengagement under IDA19. Early foundational investments under the MPF and PACG have been crucial to promoting institutional reforms, strengthening governance and accountability, building government capacity, and beginning to address the structural drivers of fragility in Somalia. Reengagement under IDA19, including through the Turn Around Allocation (TAA), builds on the progress made and seeks to employ a ‘people-centered approach’ by investing in human capital development and strengthening service delivery to reach the most vulnerable communities, while continuing essential governance and institution-building support. This has been significant to address barriers to opportunity and development in Somalia, strengthen trust between citizens and the state, and contribute to the broader goal of fostering peace and stability. This support has led to a significant growth in the World Bank’s portfolio, which now stands at US$1.19 billion, including an IDA19 allocation of US$885 million. The World Bank is updating the Turnaround Regime to continue supporting the positive trajectory of Somalia despite recent setbacks and the political impasse. Progress during this reporting period illustrates growing confidence in Somalia’s ability to absorb increasing levels of development financing, on budget, and using country systems. The integration of the World Bank MPF and IDA portfolios, and continuing to build on lessons from the MPF, remain as January–June 2021 Page 68 of 87 Somalia Multi-Partner Fund Progress Report important as the continuous strategic alignment of the various instruments for economic development and inclusive growth in Somalia. A strategic review and discussion with development partners continues in Calendar Year ’21 (CY21). The MPF will continue to support and strengthen institutions for service delivery and build resilience and opportunities in the economic space. The Performance and Learning Review that the Bank is discussing and finalizing during CY21 will help guide the delivery of more resources in MPF focus areas; the MPF can help set the stage or enable larger investments through IDA by building capacity of government, testing concepts, and managing risks—fiduciary, environmental, and social—and government capacity to manage risks. Building in the MPF-supported joint public financial management (PFM) assessment, the Bank team will engage MPF donors on a strategic discussion around longer term PFM support to the FGS and FMS. The MPF has been a critical partner in supporting this important agenda and discussion during the next reporting period will focus on a second phase of the Bank support to the entire Somalia PFM system. The World Bank is fast tracking the preparation of a US$45 million COVID-19 Vaccine Emergency Project (P176956) for Somalia to support the government’s COVID-19 vaccination campaign. The Project will complement efforts by other funders, including the current support coming from the COVAX36 facility. It will build on the government’s COVID-19 response through the World Bank– financed Somalia Crisis and Recovery Project for the initial emergency response and for strengthening hospital systems for care of COVID-19 patients. The Project will support the deployment of vaccines from COVAX and other sources that follow the Bank’s Vaccine Acquisition Criteria (VAC) that are estimated to cover roughly 30 percent of the population (that is, COVAX: 20 percent; and donations: 10 percent) as well as procurement of additional vaccines through the COVAX and/or African Vaccine Acquisition Task Team (AVATT) mechanisms to reach up to an additional 10 percent of the targeted population. The WBG commissions periodic strategic risk reviews of emerging issues of institutional reform and state-building in Somalia. These reviews by Abyrint, the MPF Monitoring Agent (whose contract has been renewed), inform government and WBG strategy, portfolio management, and implementation. The Monitoring Agent also provides risk management support on the MPF’s main areas of risk including transaction level monitoring and advisory support to project implementation. Insight gained is consolidated to produce fact-based analyses and recommended actions to the WBG, as well as targeted capacity-building support to government. Experience to-date demonstrates that the portfolio is adept at managing elevated risks and delivering results amidst difficult and dynamic circumstances. Continued deliberate risk management is necessary to maintain this track record. 36COVID-19 Vaccines Global Access, abbreviated as COVAX, is a worldwide initiative aimed at equitable access to COVID-19 vaccines directed by GAVI, the Vaccine Alliance, the Coalition for Epidemic Preparedness Innovations, and the World Health Organization. January–June 2021 Page 69 of 87 Somalia Multi-Partner Fund Progress Report The MPF-financed Somali Electricity Access Project (SEAP) will be supported by US$150 million from IDA, to be approved by WB Board in early FY22. The objective is to increase access to lower costs and cleaner electricity supply in the project areas and to reestablish the electricity supply industry. The first phase will focus on (a) subtransmission and distribution network reconstruction and reinforcement in the major load centers of Mogadishu and Hargeisa; (b) renewable energy generation through the hybridization (through solar photovoltaic [PV] and Battery Energy Storage Solutions [BESS]) of selected High Speed Diesel Generation, or HSDGs-based, generation so as to optimize and scale-up existing Electricity Service Providers’ (ESP) generation infrastructure; (c) electricity access to existing public facilities (Health and Education) in rural areas to enhance public social services delivery; and (d) strengthen the capacity of sector institutions (both public and private) so as to set up an enabling institutional and regulatory environment for the sector. Trade in Somalia—which could be a strong positive force for economic growth—is not serving its full potential as an engine of growth. In the past few decades, Somalia’s trade has been weak and played a limited role as a source of growth. Somalia has been confronted by several key challenges, mostly its narrow economic base marked by poor economic diversification and vulnerability to external shocks. Identifying the constraints that are hampering the integration of Somalia into the multilateral trading system and the identification of concrete policy actions to be implemented for the mainstreaming of trade issues will lead to diversification and economic development strategies. This objective can be summarized into three broader objectives: (a) promoting economic diversification and broadening export base; (b) supporting the World Trade Organization’s accession and regional integration; and (c) enhancing the institutional capacity of the Ministry of Commerce and Industry, and other ministries and agencies associated with trade. The aim of the Financial Sector Initiative (FSI) is to unlock international investment and correspondent banking relationships (CBRs) in Somalia by improving the integrity of the financial sector and ensuring that high standards of corporate governance, risk management, and compliance safeguarding against terrorist financing and illicit financial flows are met by participants (in both the public and private sectors). It is expected that this operation would be effective during the next reporting period. In support of efforts to deepen and strengthen strategic engagement on women’s equal opportunities across operations and analytic initiatives, the Bank established a Somalia Gender Equality Platform with the support of the MPF. The objective of this Platform is to provide strategic support on gender issues to help define key operational, technical, and analytical priorities for engagement under the Country Partnership Framework. This platform will enable multiyear and multisector nonlending Technical Assistance using a programmatic platform, which will assist the WBG’s engagement in Somalia by promoting gender equality and inclusion of those left behind more broadly. Grant financing will support improving technical support on gender to operations, conducting frontier research, identifying and financing innovative interventions, and expanding policy dialogues and knowledge sharing across government and relevant development partners. The MPF will continue to support inclusive and robust economic recovery from the major impacts of COVID-19, the triple crises, and climate-related shocks, alongside the IDA portfolio. The MPF will January–June 2021 Page 70 of 87 Somalia Multi-Partner Fund Progress Report support efforts to (a) deepen the understanding of COVID-19 impacts; and (b) deliver TA/capacity building to design effective COVID-19 responses for Somalia. The incidence of COVID-19 in Somalia has hastened the need to introduce technologies and tools to support remote supervision, as well as to put into place alternative ways to gather stakeholder input and feedback. These concerns were already present with the inability to travel to insecure regions in Somalia. However, the COVID-19 pandemic has elevated the discussion and provided additional resources to test new approaches. The team has been actively engaged in monitoring and analyzing the impacts of COVID-19 on the Somali economy at a macro, enterprise, and household level. In parallel, the WB is actively supporting the FGS to help design and implement COVID-19 response and recovery operations. MPF-financed COVID-19 support to understand the situation better in Somalia includes many initiatives including: COVID-19 economic monitoring to facilitate an understanding of the transmission channels of COVID- 19 on the Somali economy; COVID-19 High-Frequency Phone Survey to monitor the socioeconomic impacts of the COVID-19 pandemic and improve the understanding of the effects of, and household responses to, the pandemic in near-real time which would, in turn, inform policy responses and interventions; COVID-19 Enterprise Survey to better understand the economic impacts of the pandemic on Somali businesses and inform the design of the interventions to counter the effects of the pandemic on the private sector.37 Providing enhanced implementation support and supervision will be important to ensure high quality delivery of the operations for the beneficiaries in this high-risk context. Due to the COVID-19 restrictions, teams will continue to rely on enhanced supervision and monitoring arrangements. The MPF has helped bring government systems back into play, increase government ownership, and enabled harmonization of policy dialogue. However, areas for improvement remain. Some among these are: responding with more flexibility to the dynamic and difficult operating context; having a more collaborative approach, for instance, in expectation management and donor involvement; linking more explicitly to the political processes—supporting broader macro dialogues with financing; better portfolio risk management and knowledge management; and aggregating monitoring and evaluation of project level outputs to outcome level results across portfolios. Going forward, the MPF will continue to aim to support and deliver an integrated IDA-MPF portfolio, with a focus on: • Enhanced policy dialogue platforms to link the analytical work closely to the investment pipeline beyond the Bank and inform client decision making. • Robust knowledge work to catch up on 30 years’ absence of core Bank analytical products and inform investments and sector reforms. • Integrated risk sensitive portfolio delivery in a high-risk context with professional services, enhanced fiduciary risk management/Monitoring Agent, a security platform for client engagement, enhanced ESF capacity, and so on. 37 These initiatives have been covered in greater detail in the MPF Progress Report, July–December 2020. January–June 2021 Page 71 of 87 Somalia Multi-Partner Fund Progress Report • Pooling funds for greater impact and testing concepts to take to scale: co-mingle donor and IDA resources for greater aid coordination and influencing the IDA portfolio. The Somalia Country Team, based in the Nairobi Office, has further strengthened its teams to support and deliver the expanding portfolio and critical role of the MPF. Shamis Salah Musingo will be the new Operations Officer, joined by Fatuma Hirsi Mohamed and Qali Musse Hussein Id, as Communications Consultants. Ms. Musingo brings close to 20 years of operations and program experience gained at the World Bank in various roles across several countries. Ms. Mohamed has had an extensive career in integrated communication management and public relations in the government and private sectors. Ms Hussein Id, a short-term consultant supporting the Somalia MPF, has experience working on communications, advocacy and research in the areas of child protection, gender, and global health. The end of this reporting period has seen the MPF continue to provide a platform for expanding the government’s ability to engage in the development of the country. As the portfolio moves beyond core economic institutions and further into service delivery, the MPF continues to lay the foundations for sustainable poverty reduction and economic development. January–June 2021 Page 72 of 87 Somalia Multi-Partner Fund Progress Report Appendix 1. MPF Monitoring Framework: 2019–2021 MPF OPERATIONAL PERFORMANCE As of June 30, 2021 QUALITY OF OPERATIONS Target Status Total MPF disbursements to date (US$ million) – 298.9 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 32.0 111.038 2021 18.3 66 Commitment ratio of paid-in donor contributions – 88% 39 Disbursement ratio of signed project grants a: Including RCRF – a. 62.7% b: Excluding RCRF b. 55% Timeliness Average # of months from SDRF endorsement to first disbursement < 4 months 5.9 Portfolio quality % of active operations rated moderately satisfactory or higher 90% 100% 38 This excludes the DPO in CY20. 39 This is only for the MPF. January–June 2021 Page 73 of 87 Somalia Multi-Partner Fund Progress Report WORLD BANK MANAGEMENT Target Status % of MPF projects that have been consulted with relevant Working Groups during design 100% 100% Consultation # of total MPF Consultative Group meetings 6 8 DONOR ENGAGEMENT Target Status Limited preferencing % of MPF contributions preferenced by donors < 30% 27% Donor payments on schedule (% of total funds paid according to Administration Pledge predictability 100% 100% Agreement schedule) CROSS-CUTTING ISSUES Target Status Gender considerations integrated into MPF portfolio (% of MPF projects with World Bank Gender mainstreaming NA 75% gender flag)40 Capacity building % of active projects with a capacity development component 100% 100% % of MPF projects that utilize conflict analysis to inform project management, going Conflict sensitivity 50% 100% beyond basic World Bank requirements for project preparations 40MPF 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. January–June 2021 Page 74 of 87 Somalia Multi-Partner Fund Progress Report MPF RESULTS As of June 30, 2021 CPF Focus Area 1: Strengthening Institutions Baseline 2019 2020 2021 Data Source Objectives to Deliver Services Cross-cutting 1. Government demonstrates progress on key – Target 7 8 12 RCRF reporting reforms and benchmarks, as demonstrated by after March and achievement of RCRF disbursement-linked August reviews of indicators (DLIs) (cumulative) Actual 5 of 7 DLIs met Cumulative Cumulative DLIs. In addition to – by deadlines total: 10 total: 12 #s, narrative to be 5 of 10 DLIs 2 of 3 DLIs for provided about for 2020 met 2021 met by specific DLIs by deadlines deadlines Objective 1.1: 2. FGS demonstrates improved PFM control and i) 25% Target i) 30% i) 40% i) 50% DRM/PFM Improve public accountability, as evidenced by: ii) 25% ii) 30% ii) 40% ii) 50% reporting finance i) Increased % of appropriated expenditures management Actual i) 73.83% i) 100%42 To be reported processed through the commitment system and ii) 48.83% 41 ii) 75% 43 in next ii) Increased % of payments made directly to progress institutional vendors report effectiveness 0 Target 1 2 4 41 Increased % of appropriated expenditures processed through the commitment system (81.68 percent) less baseline of 25 percent, over the previous year. 42 Based on last assessment on June 30, 2020, provided in project implementation status report on February 9, 2021. 43Based on last assessment on December 31, 2020, provided in project implementation status report on February 9, 2021. January–June 2021 Page 75 of 87 Somalia Multi-Partner Fund Progress Report CPF Focus Area 1: Strengthening Institutions Baseline 2019 2020 2021 Data Source Objectives to Deliver Services Objective 1.2: 3. Revenue ‘instruments’44 (both tax and nontax) Actual 0 0 046 DRM/PFM Enhance with basic ‘processes’45 automated (cumulative) reporting using domestic FGS MoF Tax revenue codes and Tax mobilization administration and resource system in place sharing 4. Improved fiscal relations between the FGS and i) Yes Target i) Yes i) Yes i) Yes (i) Qualitative FMS, as evidenced by: ii) US$29.9 ii) 15% ii) 30% ii) 45% reporting from 47 i) Intergovernmental meetings and knowledge million RCRF, K4R, FGC, Actual i) Yes48 i) Yes49 i) Yes50 products lead to concrete decisions being made (2018) Oil and Gas, on fiscal federalism issues (yes/no) Education, Health; 44For 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. 45For 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. 46 As an interim arrangement, the FGS and PSS are using respective Integrated Financial Management Information Systems to handle tax registration and payment processes. A joint FGS and PSS contract has been awarded to design the ITAS, support procurement of third party, and provide quality assurance of implementation to ensure it is fit for purpose. 47 Only intergovernmental meetings supported through MPF projects will be tracked. 48In 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. 49 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. 50 No formal FMFF meetings convened either face to face or virtually. 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 5–15, 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 digits’ 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, January–June 2021 Page 76 of 87 Somalia Multi-Partner Fund Progress Report CPF Focus Area 1: Strengthening Institutions Baseline 2019 2020 2021 Data Source Objectives to Deliver Services ii) Annual increase of intergovernmental transfers ii) 41% (US$42.2 ii) 167% ii) Will be and (ii) RCRF from FGS to FMS and BRA (%, cumulative million) (US$79.9 measured at reporting using increase compared to baseline) million) the end of the MoF records year Objective 1.3: 5. Expanded access to health care in Benadir, i) 0 Target i) 400 i) 400 i) 400 Health ASA/RCRF Improve Galmudug, and Puntland, as evidenced by: ii) 0 ii) 100,000 ii) 150,000 ii) 150,000 Target aggregated, delivery of i) # of female health care workers in place with but narrative Actual Delayed i) 354 i) 35452 systems for MPF support reporting will ii) Reporting ii) Reporting inclusive ii) # of women and children visited by female provide breakdown delayed delayed social services health care workers annually with MPF support by FMS51 6. Improved supervision in education sector, as i) 0 Target i) 300 teachers i) 1,200 i) 1,500 Education ASA demonstrated by: ii) 0 in BRA tested teachers in at teachers in at Target aggregated, ii) 100 (PSS and least 2 eligible least 2 eligible but narrative BRA) FMS tested FMS tested reporting will 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 February 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. 51 Overall implementation of activities has been delayed due to the COVID-19 pandemic and lack of progress on the procurement of HTP that significantly disrupted the planned implementation of activities. A total of 360 FHWs and Female Health Supervisors (FHSs) have been vetted and placed on payroll by the government. In the PSS there are a total of 180 FHWs and 10 FHS. In the BRA, there are 129 FHWs and 9 FHS, and in the GSS, 30 FHWs and 2 FHSs. The government is currently in the process of recruiting an additional 530 FHWs and 40 FHS. The deployment of these additional cohorts which will be spread to all the other FMS will be contingent upon the recruitment of the HTP. All the FMS are planning to recruit and train additional FHWs. All the FMS that previously did not have FHWs including the JSS, SWSS, HSS, and GSS will each recruit 100 FHWs and 7 FHSs, while the PSS and BRA will each recruit an additional 65 FHWs and 7 and 5 FHSs, respectively. In total, 530 new FHWs and 40 FHS will be recruited by the end of December 2020. According to the original roll-out plan documented in the POM, the HTP was meant to support the government in the selection of FHWs by validating the work done by the government. The government has made plans to continue with the recruitment even as the HTP recruitment process is being finalized. The HTP recruitment is expected to be finalized by October 15, 2020, and deployment expected in November. The government will lead the process of recruitment and deployment of the FHWs. The HTP’s role is to validate the selection undertaken by the government. After the selection of the limited number of FHWs during FY 2020, the next steps will be put on hold until the HTP comes onboard. 52 354 FHWs deployed and an additional 529 selected, undergoing training, and expected to be deployed in September. The FHWs have supported COVID-19 response by visiting households to provide education and contact tracing. January–June 2021 Page 77 of 87 Somalia Multi-Partner Fund Progress Report CPF Focus Area 1: Strengthening Institutions Baseline 2019 2020 2021 Data Source Objectives to Deliver Services i) # of teachers who have undergone proficiency ii) 300 in 2 ii) 300 in 2 provide breakdown testing on numeracy and classroom pedagogy in eligible FMS eligible FMS by FMS selected FMS Actual i) 897 i) 1,816 i) 1,816 ii) # of school supervision visits by education teachers in ii) 300 teachers in authorities from FGS and FMS Ministries of BRA, HSS, BRA, HSS, Education JSS, SWS, JSS, SWS, GSS GSS53 ii) 1,554 in ii) 1,554 in PSS, BRA, PSS, BRA, GSS, JSS, GSS, JSS, HSS, SWS HSS, SWS Objective 1.4: 7. Municipalities demonstrate improved capacity i) 0 Target i) 0 i) 4.9 km i) 12.1 km SURP Build the for urban resilience, as evidenced by: ii) 0 ii) 0 ii) 0 ii) 2,000 Narrative will also capacity of i) Kilometers of road rehabilitated (cumulative) include qualitative Somali ii) People with access to improved roads54 within reporting gathered municipalities a 500-meter range (number, % female, % IDPs) towards the end of Actual i) 0 i) 10.96 km i) 17 km55 for urban the project on ii) 0 ii) 0 ii) 8,00056 resilience improved access to services 53 No additional teacher testing planned for 2021. 54 Only referring to rehabilitated roads financed by a WBG-assisted project. 55 In Mogadishu, 10 subprojects were completed in Hamar Weyne and Hamar Jajab and Warta Nabada Districts. Community engagement was done, and concrete O&M plans and Training and Maintenance Manual are still being developed in collaboration with the United Nations Office for Project Services (UNOPS). In Garowe, subprojects include: (a) construction of 2 km road; (b) rehabilitation of one bridge; (c) construction of new Irish bridges; (d) construction of sidewalk along the main road; (e) clean-up campaign; and (f) regular and periodic maintenance of existing roads. 56 Results for Garowe only. Data for Mogadishu will be available once civil works are completed and after the end line survey is completed in August 2021. January–June 2021 Page 78 of 87 Somalia Multi-Partner Fund Progress Report CPF Focus Area 2: Restoring Economic Baseline 2019 2020 2021 Data Source Objectives Resilience and Opportunities Objective 2.1: 8. Access to inclusive finance improved and i) 0 Target i) 0 i) 2 (30%) i) 8 (30%) SCALED-UP Improve business used to generate job growth as demonstrated ii) 0 ii) 0 ii) 200 (30%) ii) 650 (30%) Narrative reporting environment and by: for 2019 includes Actual To be assessed i) 2.4 (6.5%)59 i) 3.1 (15% # lower barriers to i) Value of loans from the MSME Financing results of the in 202058 ii) Not yet / 5% value) entry Facility (US$ million)57 (% women-owned) catalytic fund assessed ii) Not yet ii) Jobs created by firms that access the MSME (SCORE), which assessed60 Financing Facility (% women) applies similar targets for grants and jobs Objective 2.2: 9. Supervisory capacity of the Central Bank of i) No Target No Yes Yes SCALED-UP Access to finance Somalia strengthened as demonstrated by ii) No to increase publication of reports on financial institution Actual No No No61 inclusion and examinations and cases of supervisory actions digital on CBS website development 10. Digital ID Authority established and No Target No No Yes SCALED-UP opportunities operational 57 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. 58The 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. 59First 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. 60 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. 61 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. January–June 2021 Page 79 of 87 Somalia Multi-Partner Fund Progress Report CPF Focus Area 2: Restoring Economic Baseline 2019 2020 2021 Data Source Objectives Resilience and Opportunities Actual No No Yes62 Targets on digital ID enrollment will be included later Objective 2.3: 11. Access to renewable energy enabled, as i) 0 Target i) 11,390 (30%) i) 30,753 i) 71,757 SEAP Increase access demonstrated by: ii) 0 ii) 0 (30%) (30%) Narrative reporting to renewable i) Number of people provided with new or iii) 0 iii) 0 ii) 1 ii) 3 will also include energy improved energy service (at least 30% female) iii) 0.10 iii) 0.15 qualitative data ii) Number of energy sector studies completed gathered towards Actual To be assessed i) 6,430 (50%) i) 6,430 the end of the iii) Renewable energy generation capacity from 2020 ii) 0 (50%) project on improved deployed (MW) iii) 0 ii) 1 access to energy complete, 2 services ongoing iii) 0 62 Legal framework governing the implementation of the digital ID body/system has been passed by the Parliament, assented to by the President, and effective. January–June 2021 Page 80 of 87 Somalia Multi-Partner Fund Progress Report Appendix 2. Status of Reform Benchmarks/Disbursement-Linked Indicators Disbursement-Linked Disbursement-Linked Disbursement-Linked Disbursement-Linked Notes Indicators Results to be Achieved Results to be Achieved Results to be Achieved by End-February 2020 by End-August 2020 by End-February 2021 DLI 1: Strengthen customs NA DLR 1.2: Implementation of DLR 1.3: Functional Progress towards achievement of DLR administration: Poor systems interim IT system in specifications for the new 1.2 remained the same, as Kismayo capacity: organizational, Mogadishu, Bossaso, and customs IT system port has not implemented the interim IT technology, and workflows to Kismayo ports, including developed and approved by system. DLR 1.3 was met. Functional support effective and efficient common goods classification, FGS MoF. specifications have been approved and customs management and customs practices and a consultant firm is contracted to collection. procedures, and valuation of implement the Customs Automated goods. System (CAS). The system design as per the functional specifications adequately addresses the port customs value-chain including data input, processes, and output (reporting), as well as systemssecurity. DLI 2: Strengthen tax DLR 2.2: Review existing DLR 2.3: Targeted automation Both DLRs were not met due to delays administration systems and business processes ‘as-is’ for collection of sales tax, in contracting the ITAS consultant, who staffing: Poor systems capacity: and new business processes excise duty, road tax, stamp will prepare the specifications and organizational, technology, and developed and approved by duty, and registration tax tender for the launch of the ITAS. The workflows to support effective and FGS for the following deployed. contract was signed in September 2020. efficient tax collection of both revenue streams (sales tax, COVID-19 impact on personnel large and smaller taxpayers. excise duty, road tax, stamp engagement should be considered as duty, registration tax (fees well. and levies). DLI 3: Strengthen cash DLR 3.2: The SFMIS DLR 3.3: The SFMIS Both DLRs were not met. There are still management and Treasury incorporates: (a) end-of-day incorporates a cash issues to be resolved with the auto Single Account (TSA): Limited reconciled balances of all forecasting model, to inform reconciliation functionality of the SFMIS January–June 2021 Page 81 of 87 Somalia Multi-Partner Fund Progress Report Disbursement-Linked Disbursement-Linked Disbursement-Linked Disbursement-Linked Notes Indicators Results to be Achieved Results to be Achieved Results to be Achieved by End-February 2020 by End-August 2020 by End-February 2021 ability for Treasury to effectively government accounts for management about and T24 integration. The Accountant manage cash; limited view of all revenue and expenditure, commitments, available General has been following up with the liquid assets, limited view of and (b) all outstanding balances, and expected SFMIS team and they anticipate having commitments, and of revenue commitments made. revenues with regular all issues fixed by August 2021. accrued but not booked. monthly management reports produced by the Accountant General through SFMIS. DLI 4: Payment process for DLR 4.2: Reduce cash DLR 4.3: All government Met by end-February 2021. As part of operational expenditures: advances to MDAs for payments for salaries, the requirement on the target of this Extensive use of cash advances nonsalary recurrent costs transfers, and capital indicator, all government payments are to finance MDA operational costs, from 56.4 percent baseline at expenditures to be executed made directly to vendors’ accounts, with with lack of associated financial end-March 2018 to 16.4 as payments to Bank the exception of expenses of petty cash, controls and unrequited percent [value based]. accounts directly to vendors, travel advances, security sector, and expenditures. with the exception of: petty contingency. cash, travel advances, security sector, and contingency (per Appropriation Act). DLI 5: Strengthen DLR 5.1: Policy paper NA Met by end-February 2020. From the intergovernmental fiscal policy outlining policy framework for Minutes obtained we confirmed that the framework: Lack of a rule-based intergovernmental fiscal meeting agenda revolved around approach to the distribution of transfers agreed at Finance discussion and development of Interim funds between FGS and Ministers’ Fiscal Forum Governmental Transfer Procedures FMS/BRA, with limited assurance covering: Budget timetable, between the FGS and FMS’ and that all that Article 50 (e) of the reporting, accountability, and the FMS were duly represented at the disbursement conditions. meeting. Our assessment of the Intergovernmental Fiscal Transfers January–June 2021 Page 82 of 87 Somalia Multi-Partner Fund Progress Report Disbursement-Linked Disbursement-Linked Disbursement-Linked Disbursement-Linked Notes Indicators Results to be Achieved Results to be Achieved Results to be Achieved by End-February 2020 by End-August 2020 by End-February 2021 Constitution (‘fair distribution of (N.B.: originally planned for Policy Paper shows agreement on resources’) is being adhered to. achievement in 2019). budget timetable, reporting, accountability, and disbursement conditions. DLR 5.2: Draft Policy paper Met by August 2020. The paper was including (a) principles to guide developed with TA input from World FGS transfer allocations to Bank economic team and presented to FMS/BRA; (b) comparative the meeting of FMFF on August 10–11, analysis, reflecting regional 2020. The adoption of the paper is context; and (c) long-term reflected in the FMFF communiqué as views, tabled at Finance well as in the meeting minutes. The Ministers’ Fiscal Forum. policy paper and meeting minutes include the discussion of the reform options in the short term and the long term, as well the comparative analysis reflecting the regional context. DLI 6: Strengthen FGS transfers NA DLR 6.2: Execution rate for This indicator, measured for January to FMS: Select FMS have minimal transfers to FMS equal to or through June 2020 as per the sources of revenue in their local greater than the outturn rate for verification protocol in the PAD, is met. economy, and therefore difficulty domestic revenues (Year 2). The execution rate for fiscal transfers in sustaining their operations, was 76 percent of the annual budget while FGS collects tax and and domestic revenue realization was customs, partly from goods and 45 percent. services that are destined for delivery in FMS. Historically, FGS transfers to FMS have been made on an ad hoc and unpredictable basis. January–June 2021 Page 83 of 87 Somalia Multi-Partner Fund Progress Report Disbursement-Linked Disbursement-Linked Disbursement-Linked Disbursement-Linked Notes Indicators Results to be Achieved Results to be Achieved Results to be Achieved by End-February 2020 by End-August 2020 by End-February 2021 DLI 7: Strengthen teacher NA DLI 7.2: Proficiency testing of Proficiency testing of teachers was proficiency testing: Lack of an teachers conducted in at least conducted in four states: Galmudug, established system for teacher two eligible FMS/BRA as an Hirshabelle, South West, and proficiency testing hampers merit- annual exercise, establishing Jubbaland. The report has been drafted, based recruitment and promotion, minimum competency level of calculated, validated, and issued. and undermines the effective teachers (Year 2). development and targeting of pre- and in-service teacher training. 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. January–June 2021 Page 84 of 87 Somalia Multi-Partner Fund Progress Report Appendix 3. Status of HIPC Completion Point Triggers HIPC Completion Point Trigger Progress Public financial and expenditure management Publish at least two years of the audited financial accounts of the The 2018 audited financial accounts were published in October 2019. The Office of the Auditor Federal Government of Somalia. General published the 2019 accounts in December 2020. Issue regulations to implement the Public Financial Management Act’s PFM regulations covering debt and natural resource revenue management have been issued. provisions on debt, public investment, and natural resource revenue management. Domestic revenue mobilization Adopt and apply a single import duty tariff schedule at all ports in the The FGS and the FMS have reached agreement on the single tariff, and this has been published Federal Republic of Somalia (to also foster greater trade integration). on the MoF website. Technical support is being provided by the World Bank and the UK’s FCDO. Governance, anticorruption, and natural resource management Enact the Extractive Industry Income Tax (EIIT) Law. Cabinet approved the EIIT Bill in December for submission to Parliament. However, there may be some alterations to the draft following further discussions between the MoF and MPMR on the proposed royalty regime set out in the Bill. Ratify the ‘United Nations Convention Against Corruption’ (UNCAC) The UNCAC was ratified by the Somali Parliament and assented by the President in December 2020. Debt management Publish at least four consecutive quarterly reports outlining the The Ministry of Finance is making progress to improve debt reporting. A joint IMF-WB technical outstanding stock of general government debt; monthly debt-service assistance mission was concluded in February 2020, which concluded that some supporting projections for 12 months ahead; annual principal payment projections technical assistance debt reporting requirements can be met. (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). January–June 2021 Page 85 of 87 Somalia Multi-Partner Fund Progress Report HIPC Completion Point Trigger Progress Social sectors Establish a national unified social registry (USR) as a functional platform The authorities are establishing a USR with support from the World Bank, the World Food Program that supports registration and determination of potential eligibility for (WFP) and UNICEF. The common registration forms for the USR and data protection policy need social programs to advance for this trigger to be back on track. FGS and FMS Ministers of Education adopt an agreement defining their FGS and FMSs (except Puntland) adopted an agreement clarifying roles and responsibilities in the respective roles and responsibilities on curriculum and examinations administration of harmonized national exams. Also, FGS and FMS education authorities formalized and adopted a common curriculum framework and syllabus for primary and secondary education. These achievements took place by middle of 2020. A new agreement on national examinations was reached between the FGS and Puntland, which would allow Puntland secondary school students to receive national certificates. The FGS Minister of Education plans to establish and formalize a functioning intergovernmental forum for education which will play an important role in the harmonization of roles and responsibilities on the different aspects of the education system in Somalia. FGS and FMS Ministers of Health adopt a joint national health sector The FGS and FMS continue to develop the “Investment Case (IC)” for health, a prioritized, costed strategy strategy that maps actions to available resources. The IC builds on the second national Health Sector Strategic Plan (HSSP; 2017–2021). The Somali Country Coordination Platform, inclusive of health sector stakeholders, continues to meet regularly to support IC development. Analytics on health information systems, supply chain, and the private sector are currently being finalized. Analytics of the health workforce are under way. Due to competing priorities, completion of the investment case has been delayed. The IC is being developed as part of the Global Financing Facility (GFF) process in Somalia. Currently, a draft of the IC is expected in late April 2021. January–June 2021 Page 86 of 87 Somalia Multi-Partner Fund Progress Report HIPC Completion Point Trigger Progress Growth/structural Enact the Electricity Act and issue supporting regulations to facilitate The draft Somalia Electricity Bill was subject to consultations and was endorsed by Cabinet and private sector investment in the energy sector. submitted to the Parliament in December 2020. The bill is being deliberated by Parliament. Issue Company Act implementing regulations on minority shareholder The Company Act regulations were issued in December 2020. The Company Act Regulations need protection to encourage private sector investment to be published in the Gazette, as well as being published in Somali and English. Statistical capacity Publish at least two editions of the Somalia Annual Fact Book. The first edition of the fact book, Facts and Figures 2018 was published in [July] 2020. The 2019 edition was published in December 2020. Note: Progress in completing the HIPC Completion Point Triggers is monitored on a quarterly basis. However, since there has been no change in the status of the Completion Point Triggers during this reporting period, this table remains unchanged from the MPF Progress Report, July–December 2020 edition. January–June 2021 Page 87 of 87