The World Bank Niger Building Capital DPO (P175256) Program Information Document (PID) Concept Stage | Date Prepared/Updated: 01-Oct-2021| Report No: PIDC31482 Page 1 of 6 The World Bank Niger Building Capital DPO (P175256) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Project Name Parent Project ID (if any) Niger P175256 Niger Building Capital DPO (P175256) Region Estimated Board Date Practice Area (Lead) Financing Instrument AFRICA WEST Mar 29, 2022 Macroeconomics, Trade Development Policy and Investment Financing Borrower(s) Implementing Agency Republic of Niger Ministry of Plan Proposed Development Objective(s) The Program Development Objective (PDO) is to (1) Strengthen economic governance ; (2) Develop human capital and reduce gender gaps. Financing (in US$, Millions) FIN_SUMM_PUB_TBL SUMMARY Total Financing 200.00 DETAILS -NewFin3 Total World Bank Group Financing 200.00 World Bank Lending 200.00 Decision The review did authorize the preparation to continue B. Introduction and Context Country Context 1. Recent GDP growth performance has been relatively robust, but it has not been underpinned by the structural changes/transformation in the economy necessary to achieve sustained income growth and poverty reduction. Real GDP growth averaged 5.2 percent in 2000-19 but per capita GDP only increased from US$121 in 2000 (in constant 2010 prices) to US$550 in 2019, well below its peers. This modest change reflects marginal changes to labor productivity coupled with high population growth (Niger has the highest fertility rate in the world). Despite the steady decrease in the percentage of the population living in extreme poverty, the number of people living with less than US$1.9 per day has Page 2 of 6 The World Bank Niger Building Capital DPO (P175256) surpassed 10 million. Moreover, stark differences across genders in accessing social and economic rights limit growth potential by about one quarter of GDP (World Bank 2018).1 2. Despite political stability, institutions remain weak and increasing threats from regional volatility could compromise hard won reforms. For the first time since its independence, the country experienced a constitutional political transition in 2021, with the government formed in April 2021 backed by a strong parliamentary majority. Despite the progress, governance and institutions remain fragile. In 2020, despite improvements, Niger still ranked in the bottom thirty percent on the rule of law and government effectiveness indicators of the World Governance Indicators (WGI). The increasing challenge of a sharp surge in terrorist violence could threaten hard won political and institutional reforms. 3. The DPO is supporting reforms for a sustained and resilient economic recovery while cementing the gains made in recent years. To achieve sustained economic growth and poverty reduction requires strong institutions and economic governance to invest in the physical and human capital needed to increase productivity and incomes. Raising human capital is also crucial for reinforcing citizenship and the social contract. For example, children living in remote areas need increased access to education and better teachers to gain the skills needed to fully participate in social, political and economic life. Improving the management of essential services like water and sanitation will support economic activity, human capital accumulation, greater integration of marginal groups and basic improvements in living conditions. The series also aims to cement the gains made in recent years on gender. Niger introduced a series of reforms to boost women’s empowerment and inclusion in 2019-20. This series will cement the gains in women’s empowerment and inclusion by supporting reforms tackling early childbearing and its consequences on health. 4. Niger’s macroeconomic policy framework is adequate for the proposed operation. The medium-term outlook appears broadly positive with the economy expected to gradually recover. In 2021 growth is expected to recover to above 5 percent, and gain further traction when crude oil production comes on stream in the medium term, providing further boost to growth and exports. The authorities are committed to maintaining a prudent macroeconomic and borrowing policy, and to reverting to the 3 percent fiscal deficit of the West African Economic and Monetary Union (WAEMU) convergence criterion by 2024. Public debt is sustainable, and the risk of overall and external debt distress is moderate. The authorities continue to strengthen debt management and transparency through the proposed Performance and Policy Actions (PPAs) under the Sustainable Development Finance Policy (SDFP). The policies supporting debt sustainability and macroeconomic stability are expected to be anchored in the next Extended Credit Facility (ECF) program under negotiations with the IMF. Monetary and exchange rate policies are anchored in Niger’s membership of the WAEMU. Relationship to CPF 5. The proposed DPO series is well aligned with the World Bank Group (WBG) identified priorities in Niger. The series selectively addresses two binding constraints to economic and productivity growth identified in the 2017 Systematic Country Diagnostic, notably inadequate human capital and gender disparities; and poor governance constraining service delivery.2 The series support two of the three Focus Areas identified the FY18-FY22 Country Partnership Framework:3 (i) improving human capital and social protection; and (ii) better Governance for Jobs, Service Delivery and Growth. It is also aligned with the Prevention and Resilience Action (PRA) Plan’s4 strategic objectives: (i) improving the integration of youth and women into the country’s economic and social dynamics; (ii) scaling-up essential basic services and connectivity in conflict-affected and fragile areas to promote a positive state presence; and (iii) scaling up investments to strengthen natural resources management and slow rapid population growth. 1 Economic Impacts of Gender Inequality in Niger (World Bank, 2018). 2 Report No. 115661-NE 3 Report No. 123736-NE 4 Niger Prevention and Resilience Allocation Analytical and Advisory Support (P175947) Page 3 of 6 The World Bank Niger Building Capital DPO (P175256) C. Proposed Development Objective(s) The Program Development Objective (PDO) is to (1) strengthen economic governance ; (2) develop human capital and reduce gender gaps. Key Results 6. By the end of the operation in 2023 it is expected that the oversight of SOEs and the public investment management will improve. Human capital should improve as well because of the higher quality through more consistent deployment of primary school teachers, for example. Usage of adolescent contraceptive should increase which will help reduce the fertility rate, the highest in the world, and by doing so support women’s agency and productive capacity. D. Concept Description 7. The operation is structured around two pillars as follows: - Pillar 1. Strengthen economic governance through the following measures: (i) improving public investment efficiency and effectiveness through Public Investment Management (PIM); (ii) strengthening the oversight and management of state-owned enterprises (SOEs); and (iii) establishing the regulatory framework to manage the water and sanitation sector. Selection of public investment projects is opaque, despite the large amount of domestic and external resources devoted to infrastructures . SOEs play a central role for the economy and service delivery in Niger but they are inefficient, opaque and represent significant fiscal risks. The adoption of a specific regulation of the sanitation sector and the adoption of the rules for the taxation of use of clean water in industrial activities are essential to expand access to water and sanitation, where Niger is lagging compared to its peers in sub-Saharan Africa (SSA), particularly in Niger’s rural areas. - Pillar 2. Develop human capital and reduce gender gaps. The second pillar aims to build human capital by improving the efficiency of the education system and outcomes, and reduce gender gaps by expanding access to sexual and reproductive health for adolescent girls and boys. Building human capital remains the main challenge for a country where the productivity of the next generation will only be 30 percent as productive as they could have been if they had access to full quality education and health (Human Capital Index 2020). E. Poverty and Social Impacts, and Environmental, Forests, and Other Natural Resource Aspects Poverty and Social Impacts 8. The poverty and social impacts are expected to be positive. The DPO is expected to promote public service delivery and access to water and sanitation. Expanding sanitation coverage and protect water quality is likely to have positive impacts on poverty reduction and human capital. Supporting human capital and reducing gender gaps is particularly important for the country, which was ranked 155th out of 157 countries in the global ranking of the HCI in 2020. Enhancing the recruitment, the training and the deployment on the territory of the teachers will increase education supply and reduce regional disparities in access to education. Environmental, Forests, and Other Natural Resource Aspects Page 4 of 6 The World Bank Niger Building Capital DPO (P175256) 9. The water sector reforms entail some environmental risks but the instruments are in place to mitigate against the risks. Environmental adverse impacts that could arise from an increased exploitation of water resources might increase risks related to destruction of some protected tree species and Niger River’s riparian countries conflict linked to international water intake and pollution. Screening of subprojects has taken place and will continue to ensure proper identification and mitigation of any adverse impacts. For every subproject, an Environmental and Social Impact Assessment (ESIA) is conducted. Niger can notify the riparian countries of the Niger River through the Niger River Basin Authority (NBA). 10. Niger has institutions dealing with adverse environmental impacts in the water sector. The Ministry of Water also oversees the management of water resources per the recently approved National Project for Integrated Water Management (Projet d'Action National de Gestion Intégrée des Ressources en Eau, PANGIRE) adopted at the end of 2017. This plan defines the appropriate national framework for water resources management which is inspired by the principles of water management internationally recognized, while adapting them to national conditions (art. 31 to 33, Water Code). The key documents have envisioned a reciprocal articulation for Knowledge, Monitoring and Protection of Water Resources. . CONTACT POINT World Bank Paolo Di Lorenzo, Nathalie Picarelli Senior Economist Borrower/Client/Recipient Republic of Niger Implementing Agencies Ministry of Plan Dogari Bassirou Directeur General dbassirou2002@yahoo.fr Page 5 of 6 The World Bank Niger Building Capital DPO (P175256) FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Task Team Leader(s): Paolo Di Lorenzo, Nathalie Picarelli Approved By APPROVALTBL Country Director: Joelle Beatrice Dehasse 22-Oct-2021 Page 6 of 6