The World Bank Implementation Status & Results Report Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) SOUTH ASIA | Afghanistan | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2019 | Seq No: 4 | ARCHIVED on 27-Sep-2021 | ISR46666 | Implementing Agencies: Ministry of Finance, Da Afghanistan Bank Key Dates Key Project Dates Bank Approval Date: 25-Apr-2019 Effectiveness Date: 25-Sep-2019 Planned Mid Term Review Date: 01-Feb-2022 Actual Mid-Term Review Date: Original Closing Date: 31-Oct-2024 Revised Closing Date: 31-Oct-2024 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The PDO is to support the development of digital government-to-person payments in Afghanistan. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1: Biometric identification system for civil servants and pensioners:(Cost $5.00 M) Component 2: Integration of the Identification, Verification and Payment Systems:(Cost $9.60 M) Component 3: Expansion of financial services and access points:(Cost $8.40 M) Component 4: Project management:(Cost $2.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Unsatisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Unsatisfactory Overall Risk Rating High High Implementation Status and Key Decisions This ISR presents project status as of August 15 and incorporates findings of the implementation support mission in January as well as formal monthly project meetings with Ministry of Finance (MOF) and Da Afghanistan Bank (DAB) teams. The Payments Automation and Integration of Salaries in Afghanistan (PAISA) project was designed to leverage achievements in the payment infrastructure and systemically address operational challenges uncovered during previous mobile payment initiatives. PAISA’s approach was expected to lay the foundations for digital government-to-person payments, consisting of: i. [component 1] supporting the unique identification of recipients of government transfers, through the establishment of a dedicated biometric registry. Considering controversies at the time around references to ethnicity on the digital national ID (e-Tazkira or e-NID), PAISA only intended to strengthen the back-end infrastructure and establish a data protection legislation. ii. [component 2] integrating the identification, verification, and payment systems to achieve straight-through processing of government payment instructions; and 9/27/2021 Page 1 of 8 The World Bank Implementation Status & Results Report Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) iii. [component 3] providing technical assistance and funding (incentives) for the expansion of financial access points: cash-out points to move away from costly exclusivity arrangements and cashless payment opportunities, to drive more usage by the usual early adopters. The Government’s high commitment to the e-money agenda, reinforced with the COVID-19 pandemic, has not translated into accelerated implementation of project activities. The project was restructured in December 2020 to reduce the project amount from US$45 million to $25 million, following the COVID-19 Afghanistan portfolio restructuring. Government commitment on the proposed way forward has been subsequently recorded in a time-bound project action plan to bring the project to satisfactory status which had been agreed upon during the January 2021 ISM. At the time of the ISR, only three (3) out of eight (8) key actions have been completed. Despite intensive implementation support, execution of the project action plan has been significantly delayed by MoF, NSIA and DAB. Overall Implementation Progress (IP) and Progress towards achievement of PDO are Moderately Unsatisfactory, reflecting the overall implementation lag and the impact of prolonged uncertainty of government policies (on ID and financial access points) on project outcomes. The project has disbursed U$5 million (20 percent disbursement ratio) in advances. However, actual expenditures as of August 12 stood at below US$75,000. Ongoing commitments are below US$1 million. Despite the low execution rate, the project’s IP rating has not been downgraded in light of the implementation progress in the recent months.  Component 1: Biometric identification system for civil servants and pensioners. There are no activities are under implementation. Component 1 inaction is due to NSIA’s request to use the digital national ID (e-NID or e-Tazkera) for biometric registration of civil servants and pensioners, in a substantial departure from the originally planned dedicated biometric registry supported by the project. The WB (including ID4D) and NSIA teams agreed to carry out a rapid diagnostic assessment in March 2021 (infrastructure, inclusivity, and utility) to inform decisions on the project design. The Diagnostic report is not yet available.  Component 2: Integration of the Identification, Verification and Payment Systems. The only substantive progress in the project has been achieved through this component and relates to the integration of financial institutions with the national payment switch (Afghanistan Payment System, APS). After protracted procurement delays until February 2021 for the integration of mobile money operators with the APS, the project’s support to interoperability in the financial sector in Afghanistan has progressed well. As per DAB reports as of August 14, all targeted financial institutions (12 banks, 4 mobile money providers, 4 payment institutions and 3 microfinance institutions) have been onboarded onto the APS. In addition, DAB systems have been successfully connected with DABS utility company and major MoF systems, such as the AFMIS, SIGTAS, ASYCUDA to support the digitization of government payments. The procurement of goods, consultancy and other services to maintain or upgrade the APS infrastructure at DAB was however still ongoing (U$2.7 million). Through this component, a consultant was recruited to advise DAB on payments issues. On Ministry of finance side, the procurement of servers and licenses to strengthen the system’s capacity to integrate with other government systems has been initiated.  Component 3: Expansion of financial services and access points. The implementation of this component has not started, pending the finalization by DAB of the strategy for the expansion of financial access points. The implementation of the strategy, in particular the incentives to market participants, for the adoption of digital payments was planned to be financed by the project.  Component 4: Project management: While DAB’s project team is complete with the appointment of DAB staff to serve in the PIU, staffing at MoF remains incomplete. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance High High High Macroeconomic High Substantial High Sector Strategies and Policies High High High Technical Design of Project or Program High High High Institutional Capacity for Implementation and High High High Sustainability Fiduciary Substantial Substantial Substantial Environment and Social Low Low Low Stakeholders High Substantial Substantial Other Substantial Substantial Substantial 9/27/2021 Page 2 of 8 The World Bank Implementation Status & Results Report Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) Overall High High High Results PDO Indicators by Objectives / Outcomes Unique identification of civil servants and pensioners for G2P payment purpose IN00991809 ►Percentage of civil servants and pensioners biometrically-registered and issued a unique identifier for payment purposes (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 70.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 This is the percentage of civil servants and pensioners who are biometrically-registered and received a unique identification number issued through NSIA and to be used for payment purposes. Comments: No change in value - relevant activities have not started. IN00991877 Percentage of female civil servants and pensioners biometrically registered (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 70.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 Increased efficiency in government payments IN00991810 ►Percentage of civil servants and pensioners who received government payments through electronic channels (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 60.00 60.00 60.00 80.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 This is indicator will calculate the percentage of civil servants and pensioners receiving payments through electronic means including banks accounts as well as mobile wallets. This indicator will be disaggregated by gender. Comments: No change in value - relevant activities have not started, IN00991878 Percentage of female civil servants and pensioners who receive government payments through electronic channels (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 60.00 0.00 0.00 80.00 9/27/2021 Page 3 of 8 The World Bank Implementation Status & Results Report Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 Increased capacity for digital payments IN00991808 ►Number of financial access points (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2,890.00 2,890.00 2,890.00 3,250.00 Date 30-Sep-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 The term " financial access points" is meant as the sum of: (1) the number of branches of commercial banks and licensed Electronic Money Institutions; (2) the number of active agents of licensed financial institutions; (3) the number of in-service ATMs of commercial banks; and (4) the number of POS terminals Comments: accepting electronic payments. Once MFIs connect to APS, their branches will be included. No change in value - Updated data on active number of agents not available with DAB. Related project activities have also not started. IN00991876 ►Percentage of financial institutions connected to the APS (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 14.00 68.00 68.00 100.00 Date 31-Dec-2018 16-Dec-2020 12-Aug-2021 31-Oct-2024 No change in value: the onboarding of additional financial institutions is ongoing. Certificates of Comments: completion are pending for 4 financial instiutions. Intermediate Results Indicators by Components 1. Biometric identification system for civil servants and pensioners IN00991879 ►Unified biometric identification system for civil servants and pensioners is implemented (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 This indicator is meant to follow up on the progress towards setting up a national unified platform for biometric identification. Comments: No change in value - relevant activities have not started. IN00991882 ►Legal and regulatory framework established, including for data protection (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 9/27/2021 Page 4 of 8 The World Bank Implementation Status & Results Report Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) A comprehensive legal Value Inadequate Inadequate Inadequate framework has been enacted Date 01-Mar-2019 15-Oct-2020 12-Aug-2021 31-Oct-2021 A comprehensive legal framework - that sets out the purposes of the ID system, defines the role, duties, governance and independence of the NSIA, sets out the scope of personal data to be collected, establishes appropriate data protection and privacy rights (assuming no general data protection and privacy framework is enacted), creates a mandate for technology and vendor neutrality, and is Comments: harmonized with existing legal instruments will be developed. No change in value - the procurement for the related consultancy assignment to develop a comprehensive legal and regulatory framework has not yet stated (Terms of reference have been finalized) 2. Integration of the Identification, Verification and Payment Systems IN00991885 ►Number of government systems integrated with AFMIS (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 2.00 1.00 Date 31-Dec-2018 15-Dec-2020 12-Aug-2021 31-Oct-2024 Integration between AFMIS - APS and ATS completed Comments: IN00991888 ►Number of digital transactions facilitated through APS for the year (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 37,811.00 106,239.00 239,601.00 419,063.00 Date 31-Dec-2018 31-Dec-2019 15-Dec-2020 31-Oct-2024 As more financial institutions are connected , the volume of digital transactions routed through APS Comments: increases. 3. Expansion of financial services and access points IN00991880 ►Percentage of civil servants that are active users of digital payments (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 5.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 No change in value - relevant activities have not started This indicator measures the percentage of civil servants that have used digital payments at least once over a 12-month period. Digital payments will include but not be limited to: transactions via card, mobile Comments: and other digital platforms. Through a series of surveys, this indicator will monitor usage of digital payments. This indicator tracks the adoption of digital payments, and monitors digital transactions. IN00991883 Percentage of female civil servants that use digital payments (Percentage, Custom Breakdown) 9/27/2021 Page 5 of 8 The World Bank Implementation Status & Results Report Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 5.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 IN00991886 ►Number of agents of licensed financial institutions (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1,879.00 1,879.00 1,879.00 2,250.00 Date 30-Sep-2018 15-Oct-2020 09-May-2021 31-Oct-2024 The number of active agents of licensed financial institutions offering, at the minimum, cash-in and cash- out services Comments: No change in value - updated data not yet available ; and relevant activities have not started IN00991889 Number of female agents (Number, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 180.00 180.00 180.00 225.00 Date 30-Sep-2018 15-Oct-2020 09-May-2021 31-Oct-2024 4. Project Management IN00991881 ►Percentage of civil servants and beneficiaries that are satisfied with the level of service (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 75.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 No change in value - the GRM is not yet in place. Progress is behind schedule, partly due to COVID-19 and uncertainty over project activities. Establishment of GRM is pending recruitment of a Comments: safeguard specialist . IN00991884 Women only - Satisfaction with level of service (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 75.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 IN00991887 ►Grievances addressed within stipulated time (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target 9/27/2021 Page 6 of 8 The World Bank Implementation Status & Results Report Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) Value 0.00 0.00 0.00 80.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 This indicator measures effectiveness of citizen feedback mechanisms established under the Project. It measures the percentage of cases (including complaints and inquiries) that are addressed as per the standards agreed upon in the GRM procedures. No change in value - the GRM is not yet in place. Progress is behind schedule, partly due to COVID-19 Comments: and uncertainty over project activities. Establishment of GRM is pending recruitment of a safeguard specialist . IN00991890 Women only - Grievances addressed within stipulated time (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 80.00 Date 01-Dec-2018 15-Oct-2020 12-Aug-2021 31-Oct-2024 Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P168266 IDA-D4530 Effective USD 10.00 5.60 4.40 1.10 4.58 19% P168266 TF-B0027 Effective USD 35.00 19.40 15.60 3.91 15.49 20% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P168266 IDA-D4530 Effective 25-Apr-2019 01-Jul-2019 25-Sep-2019 31-Oct-2024 31-Oct-2024 P168266 TF-B0027 Effective 25-Apr-2019 01-Jul-2019 25-Sep-2019 31-Oct-2024 31-Oct-2024 Cumulative Disbursements 9/27/2021 Page 7 of 8 The World Bank Implementation Status & Results Report Payments Automation and Integration of Salaries in Afghanistan (PAISA) (P168266) PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC Restructuring History Level 2 Approved on 24-Dec-2020 Related Project(s) There are no related projects. 9/27/2021 Page 8 of 8