The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) REPORT NO: RES31411 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF BD: LEVERAGING ICT GROWTH, EMPLOYMENT AND GOVERNANCE PROJECT APPROVED ON SEPTEMBER 20, 2012 TO PEOPLE'S REPUBLIC OF BANGLADESH TRANSPORT & DIGITAL DEVELOPMENT SOUTH ASIA Regional Vice President (Acting): Ethel Sennhauser Country Director: Qimiao Fan Senior Global Practice Director: Jose Luis Irigoyen Practice Manager/Manager: Jane Lesley Treadwell Task Team Leader: Siou Chew Kuek, Shah Nur Quayyum, T. M. Asaduzzaman The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) ABBREVIATIONS AND ACRONYMS AF Additional Financing BCC Bangladesh Computer Council CCGP Cabinet Committee on Government Purchase CEO Chief Executive Officer DDO Drawing and Disbursement Officer EGDI E-Government Development Index GoB Government of Bangladesh HCI Human Capital Index IDA International Development Association IP Implementation Progress IUFR Interim Unaudited Financial Report IT Information Technology IT/ITES IT/IT-Enabled Services ITU International Telecommunication Union KPI Key Performance Indicator LICT Leveraging ICT, Growth and Governance Project NEA National Enterprise Architecture NRI Network Readiness Index OSI Online Service Index PCU Project Coordination Unit PDO Project Development Objective PIC Project Implementation Committee SDR Special Drawing Right The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) TII Telecommunications Infrastructure Index UNESCO United Nations Educational, Scientific and Cultural Organization BASIC DATA Product Information Project ID Financing Instrument P122201 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 20-Sep-2012 30-Jun-2019 Organizations Borrower Responsible Agency PEOPLE'S REPUBLIC OF BANGLADESH Bangladesh Computer Council Project Development Objective (PDO) Original PDO The PDO is to (i) catalyze the growth of Bangladesh’s IT/ITES industry for employment creation and export diversification; and(ii)establish basic e-Government foundations to support public sector modernization. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-59110 24-Oct-2016 18-Apr-2017 01-Jun-2017 30-Jun-2019 39.00 13.49 27.11 IDA-50250 20-Sep-2012 26-Nov-2012 24-Jan-2013 30-Jun-2019 63.52 42.81 14.11 The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status Context: The Government of Bangladesh (GoB) has been implementing the Leveraging ICT, Growth and Governance Project (LICT) since 2013, with IDA Credit financing of $109 million ($70 million for the original project, and $39 million in Additional Financing (AF)). The project has two main technical components: (i) Information Technology/IT-Enabled Services (IT/ITES) industry development to increase the competitiveness of Bangladesh’s IT/ITES industry; and (ii) an e-Government component to provide critical technological foundations for public sector modernization, including building human capacity to leverage technology within government PDO Status: The current Project Development Objective (PDO) rating is Moderately Satisfactory. The project is expected to achieve three out of the four PDOs by the revised closing date of June 30, 2019. The IT/ITES component’s PDO level indicator on IT/ITES industry revenue and employment was initially delayed, but has made steady progress in the last year. The second indicator on IT/ITES industry revenue target has already been met before the project closing date. Regarding the e- Government component’s two PDO level indicators, the first on the percentage of public sector officials that have undertaken one or more e-Government skills courses at the Bangladesh Computer Council (BCC) is close to its target. The second indicator on the World Economic Forum’s Networked Readiness Index (NRI) has been moving in and out of target, because of its erratic ranking for Bangladesh. This indicator will be replaced under this restructuring paper (RP). Implementation Progress (IP): IP of LICT Project is currently rated Satisfactory.  The project’s results, disbursements, and commitments indicate that implementation is generally on track  The pace of implementation has increased because of the additional financing for the project  The IP of the e-Government and Project Management Support components have been rated as Satisfactory. The IT/ITES industry development component has been rated Moderately Satisfactory  Official disbursements for the combined project have moved from 64 percent for the original project to an average of 56 percent for the combined project because of the credits from additional financing  The project has submitted 18 interim unaudited financial reports (IUFRs) relating to the period between September 2013 and December 2017 under original credit, requesting reclassification of certain expenditures in appropriate categories. The Bank project team is currently working together to make necessary amendments to address this issue. The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201)  FY 16/17 audit report was received by the Bank on January 2018. Currently there are four audit observations pending, two of which are material to the Bank. The Bank team expects to conduct a rapid financial management review by July 2018. Key Achievements in the Past Year include:  Effectiveness of $39 million additional financing provided in June 2017  Chief Executive Officer (CEO) outreach activity to increase IT/ITES investments and employment has started implementation  Achieved target on PDO-level indicator for IT/ITES industry revenue based on latest industry estimates  Increased rate of employment growth in the IT/ITES industry, which suggests this PDO indicator is likely to be met by project closing  At least 35 percent of public sector officials from different ministries/divisions participated in one or more e-Government skills course  The Project Coordination Unit (PCU) has started implementation of the largest AF item on datacenter expansion, which is costed at $7.7 million, and issued the notification of award for a cybersecurity sensor activity costed at $1.5 million  Identified and started procurement preparation for new activities to leverage the project’s savings, including a $12 million activity to cloud enable the project’s national datacenter B. Rationale for Restructuring and Extension: The PDO-level indicator (KPI 3) using the World Economic Forum’s Networked Readiness Index (NRI) has evolved over time and currently assesses the state of networked readiness using 53 individual indicators. The majority of these indicators, such as the quality of education system and quality of mathematics and science education, are deemed unrelated to this project. In light of this, a more e-Government centric index would be appropriate to reflect the project component’s achievements. Instead of the NRI, it would be more accurate to monitor the e-Government component through the United Nations E- Government Development Index (EGDI). The EGDI, which assesses e-Government development at the national level, is a more reflective and accurate indicator for the LICT project because of its composition. The EGDI is also a composite index and is based on the weighted average of three normalized indices. One third is derived from a Telecommunications Infrastructure Index (TII), based on data provided by the International Telecommunication Union (ITU), one third from a Human Capital Index (HCI), based on data provided by the United Nations Educational Scientific and Cultural Organization (UNESCO), and one third from the Online Service Index (OSI), based on data collected from an independent survey questionnaire that assesses the national online presence. Bangladesh achieved large gains in e-Government development in the past few decades as observed through the survey. The survey is conducted biennially and the ranking of Bangladesh was 148th in 2014, and 124th in 2016. The NRI was initially chosen over the EGDI as a PDO-level indicator during the project’s initiation, because of the NRI’s annual ranking compared to the EGDI’s biennial index. However, the NRI’s usage and its evolving composition along with erratic ranking performance for Bangladesh has shown this index to be unreflective of the project’s outputs and outcomes. The project has also saved about SDR 3.27 million (Special Drawing Right) under the original credit (Credit no. 5025-BD), and an estimated SDR 3 million under additional financing (Credit no. 5911), owing to competitive bidding of activities under The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) different packages. The project is also canceling its key IT/ITES activity for online outsourcing, estimated at SDR 4.17 million, because of process-related issues. The project has decided to implement new activities within the existing scope of the project and the PDO. The detailed list of proposed activities is set down in the official request letter, dated 16 April 2018, which was submitted to the Bank. It was noted that reallocation of funds within categories will be required to implement these activities. In accordance with the decision of the Project Implementation Committee (PIC), the project proposes to reallocate SDR 4,814,768.98 from Category 1 to Category 2 and 3 (Category 2 – SDR 2,751,296.56; Category 3 – SDR 2,063,472.42) under Credit no. 5025-BD; and SDR 650,000.00 from Category 1 to Category 2 under Credit no. 5911-BD. This reallocation will allow for all the envisioned activities to be completed, funding to be fully utilized, and project results to be satisfactorily met. The restructuring will allow for the project to reach maximum beneficiaries and discharge all its commitments without jeopardizing existing results and targets. This makes the proposed restructuring both efficient and relevant. The Intermediate Indicator on “Number of Manpower Trained under the Project (number of people)” had been increased from 30,000 to 40,000 during the previous restructuring, as the additional financing supported a new online outsourcing activity to train 10,000 young people and women for the online freelancing industry. However, this $6 million activity has been canceled and replaced with other activities estimated at $3.5 million. The online outsourcing activity is to create 10,000 jobs in online freelancing, but the previous procurement attempt for this activity had not been successful, as the only qualified technical bidder was not able to meet the financial requirements. It is risky to lower the financial requirement for a subsequent bid attempt, as it is expected that various smaller companies with unreliable track records will bid. II. DESCRIPTION OF PROPOSED CHANGES This restructuring paper seeks authorization for three changes in the design of the Leveraging ICT Growth, Employment and Governance Project (LICT). These are: i. Replace the current PDO-level indicator (KPI 3) on the World Economic Forum’s Networked Readiness Index (NRI), with the UN E-Government Development Index (EGDI); ii. Reallocate SDR 4,814,768.98 from Category 1 to Category 2 and 3 under Credit no. 5025-BD, and SDR 650,000.00 from Category 1 to Category 2 under Credit no. 5911-BD. The project’s closing date, component costs, and share of financing will remain unchanged; and iii. Adjust the target for the intermediate result indicator on “Number of Manpower Trained under the Project”. The Results Framework will change as follows: - The World Economic Forum’s Networked Readiness Index (NRI) replaced by UN E-Government Development Index (EGDI). The project will use EGDI’s ranking of 150th for Bangladesh in 2012 for the project’s baseline of 2013, as there is no 2013 EGDI report. The project will also maintain the same target to improve Bangladesh’s ranking by five places (i.e. targeted EGDI ranking of 145th by project’s ending), as both are global ranking indices. - The intermediate result indicator on “Number of Manpower Trained under the project (number of persons)’’ will be reduced from 40,000 to 30,000, which was the original target before the last restructuring and additional financing. Financing Agreement Credit no. 5025-BD The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) - Category 1: Goods, works and non-consulting services and consulting services, will be reduced by SDR 4,814,768.98 - Category 2: Training, will be increased by SDR 2,751,296.56 - Category 3: Grants, will be increased by SDR 2,063,472.42 Financing Agreement Credit no. 5911-BD - Category 1: Goods, works and non-consulting services and consulting services, will be reduced by SDR 650,000 - Category 2: Operating cost for the project, will be increased by SDR 650,000 III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Reallocation between Disbursement Categories ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ Change in Disbursements Arrangements ✔ Change in Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Change in Implementation Schedule ✔ The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE IT/ITES Employment (number of people) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 12000.00 37000.00 42000.00 No Change Date 24-Jan-2013 21-May-2018 30-Jun-2019 Increase in IT/ITES Revenue Unit of Measure: Amount(USD) Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 200000000.00 200000000.00 No Change Date 24-Jan-2013 21-May-2018 30-Jun-2019 World Economic Forum's Network Readiness Index Ranking for Bangladesh Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 115.00 112.00 110.00 Marked for Deletion Date 24-Jan-2013 21-May-2018 30-Jun-2019 Percentage of public sector (Ministries/Divisions and Departments) officials undertaken 1 or more e-Government skills course at BCC Unit of Measure: Percentage Indicator Type: Custom The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) Baseline Actual (Current) End Target Action Value 0.00 35.00 40.00 No Change Date 24-Jan-2013 21-May-2018 30-Jun-2019 E-Government Development Index (EGDI) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 150.00 145.00 New Date 02-Jan-2012 30-Jun-2019 Intermediate Indicators IO_IND_TABLE Percentage of ministries using 2 or more e-Government technology foundations established under the project Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 60.00 50.00 No Change Date 24-Jan-2013 21-May-2018 30-Jun-2019 Number of e-Government skill courses available in BCC Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 20.00 6.00 No Change Date 24-Jan-2013 21-May-2018 30-Jun-2019 Percentage savings in government IT spending Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 19.00 20.00 No Change Date 24-Jan-2018 21-May-2018 30-Jun-2019 Number of Manpower Trained under the Project (number of people) Unit of Measure: Number The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 31977.00 30000.00 Revised Date 24-Jan-2013 21-May-2018 30-Jun-2019 Number of international consulting firms provided statistical data for their ranking indices Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 5.00 5.00 No Change Date 24-Jan-2013 21-May-2018 30-Jun-2019 Number of women who have been trained and gained marketable ICT skills Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 10450.00 9000.00 No Change Date 30-Nov-2016 21-May-2018 30-Jun-2019 Trainees satisfied with the training provided by BCC Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 96.00 50.00 No Change Date 30-Nov-2016 21-May-2018 30-Jun-2019 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-50250-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: Gds, Wks, Non CS & CS The World Bank BD: Leveraging ICT Growth, Employment and Governance Project (P122201) 32,257,500.00 19,858,601.02 27,442,731.02 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: DISB - TRAINING 4,040,000.00 3,879,683.89 6,791,296.56 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: Grants 3,160,000.00 1,517,253.12 5,223,472.42 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: DISB - OPERATING COSTS 540,000.00 422,564.96 540,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: UNALLOCATED 0.00 0.00 0.00 Total 39,997,500.00 25,678,102.99 39,997,500.00 IDA-59110-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: Gds, Non CS & CS 27,650,000.00 4,281,873.26 27,000,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: DISB - OPERATING COSTS 350,000.00 0.00 1,000,000.00 100.00 100.00 Total 28,000,000.00 4,281,873.26 28,000,000.00