Document of The World Bank FOR OFFICIAL USE ONLY Report No: 111509 INTERNATIONAL DEVELOPMENT ASSOCIATION PROGRAM PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR36.8 MILLION (US$50 MILLION EQUIVALENT) INCLUDING US$35 MILLION IDA CREDIT FROM THE CRISIS RESPONSE WINDOW TO THE REPUBLIC OF KENYA AND A PROPOSED RESTRUCTURING OF THE NATIONAL SAFETY NET PROGRAM FOR RESULTS April 5, 2017 Social Protection and Labor Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2017) Currency Unit = Kenya Shilling (Ksh) 103.90 Ksh = US$1 0. 73592723 SDR = US$1 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS AF Additional Financing BWC Beneficiary Welfare Committee CEO Chief Executive Officer CT-OVC Cash Transfer for Orphans and Vulnerable Children C&G Complaints and Grievance CRW Crisis Response Window DCS Department of Children Services DfID U.K. Department for International Development DLI Disbursement Linked Indicator DLR Disbursement Linked Result DSD Department of Social Development EFC Error, Fraud, and Corruption ESSA Environmental and Social Systems Assessment FM Financial Management G&CM Grievance and Case Management GDP Gross Domestic Product GoK Government of Kenya GRS Grievance Redress Service HSNP Hunger Safety Net Program IAD Internal Audit Department ID Identification IFAR Integrated Fiduciary Assessment Report IFMIS Integrated Financial Management Information System IPRS Integrated Population Registry System IPSAS International Public Sector Accounting Standards KENAO Kenya National Audit Office KIHBS Kenya Integrated Household Budget Survey M&E Monitoring and Evaluation MEACL&SP Ministry of East African Community, Labour, and Social Protection MIS Management Information System MDP Ministry of Devolution and Planning MTEF Medium-Term Expenditure Framework MTEFF Medium-Term Expenditure and Financing Framework (program specific) NCPWD National Council of Persons with Disabilities NDEF National Drought Emergency Fund NDMA National Drought Management Authority NEDI North and Northeastern Development Initiative NRB National Registration Bureau NSNP National Safety Net Program NT National Treasury OM Operations Manual OPCT Older Persons Cash Transfer PAC Principal Accounts Controller PAD Program Appraisal Document PAP Program Action Plan PDO Program Development Objective PforR Program for Results PIBS Project Implementation and Beneficiary Satisfaction Survey PMT Proxy Means Test PPRA Public Procurement Regulatory Authority PS Permanent Secretary PSP Payment Service Provider PWC Program Working Committee PWSD-CT Persons with Severe Disabilities - Cash Transfer RC Rights Committee SAU Social Assistance Unit SPS Social Protection Secretariat SR Single Registry TA Technical Assessment TWG Technical Working Group VMGs Vulnerable and Marginalized Group UNICEF United Nations Children’s Fund WFP World Food Programme Regional Vice President: Makhtar Diop Country Director: Diarietou Gaye Senior Global Practice Director: Michal Rutkowski Practice Manager: Jamele Rigolini Task Team Leaders: Emma Mistiaen and Iftikhar Malik iii KENYA Additional Financing for the National Safety Net Program for Results Table of Contents I. Introduction ....................................................................................................................................... 1 II. Background and Rationale for Additional Financing ...................................................................... 2 III. Proposed Changes .............................................................................................................................. 8 IV. Appraisal Summary ......................................................................................................................... 13 V. World Bank Grievance Redress ....................................................................................................... 17 Annex 1: Revised Results Framework and Monitoring Indicators.................................................... 19 Annex 2: Disbursement Linked Indicators, Disbursement Arrangements, and Verification Protocols................................................................................................................................................... 28 Annex 3: Integrated Risk Assessment ................................................................................................... 49 Annex 4: Technical Assessment - Addendum ...................................................................................... 50 Annex 5: Fiduciary Systems Assessment - Addendum........................................................................ 63 Annex 6: Update on Implementation of ESSA ..................................................................................... 66 Annex 7: Modified Program Action Plan ............................................................................................. 68 Annex 8: Modified Implementation Support Plan .............................................................................. 71 iv KENYA Additional Financing for the National Safety Net Program for Results Additional Financing Data Sheet Basic Information - Additional Financing (AF) Country Director: Diarietou Gaye Sectors: Public administration – other Practice Manager/ Senior GP Director: Jamele social services Rigolini/Michal Rutkowski Themes: Social Safety Nets Team Leader: Emma Mistiaen/Iftikhar Malik Expected Effectiveness Date: June 30, Program ID: P161179 2017 Expected Closing Date: June 30, 2020 Basic Information - Original Program Program ID: P131305 Effectiveness Date: October 31, 2013 Program Name: National Safety Net Program for Expected Closing Date: June 30, 2020 Results Lending Instrument: Program for Results AF Project Financing Data [ ] Loan [ X ] Credit [ ] Grant [ ] Other: Proposed terms: Program Financing Plan Source Total Amount (US$, millions) Total Program Cost: 1,213 Co-financing: Borrower: 913 Total Bank Financing: 300 IBRD New IDA 50 (including 35 from CRW) Recommitted 250 Client Information Recipient: Republic of Kenya Responsible Agency: Ministry of East African Community, Labour, and Social Protection Contact Person: Judy Ndungu, Project Coordinator Telephone No.: +254 710 426 055 Fax No.: Email: judybetsynjoki@yahoo.com AF Estimated Disbursements (Bank FY/US$, millions) FY 17/18 18/19 19/20 Annual 10.7 21.17 18.13 Cumulative 10.7 31.87 50 v Program Development Objective and Description Original Program Development Objective (PDO): “To support the Republic of Kenya to establish an effective national safety net program for poor and vulnerable households.� Revised Program Development Objective: “To support the Republic of Kenya’s efforts to establish an effective national safety net program for poor and vulnerable households.� Program description: The AF will enable the Government to respond to the ongoing drought emergency, build households’ resilience in the long term, and strengthen systems for more efficient implementation. The AF with restructuring builds on progress made in the original National Safety Net Program (NSNP) and continues financing results in three areas: (a) expanding cash transfer programs to promote more comprehensive and equitable coverage; (b) strengthening program systems to ensure good governance; and (c) harmonizing cash transfer programs to increase the coherence of the safety net sector. The AF essentially focuses on improving safety net support to the households living in the most drought affected counties: the North and Northeastern region of Kenya which is already lagging behind in development outcomes. It will increase the coverage of beneficiary households to promote more equitable growth and increase resilience of targeted households in these counties. In addition, the AF would ensure the long-term sustainability of the program by enabling the Government to take over financing of additional households, including the funding for 60,000 households under two cash transfer schemes currently being financed by the U.K. Department for International Development (DfID). Furthermore, the AF will support improvements in the delivery systems, which will strengthen the Government’s capacity to respond to the future shocks in a timely manner, and strengthen the fiduciary controls for improved financial management and oversight. Finally, the AF would support the Government in building the foundation for provision of complementary social and productive services to the beneficiaries in the Single Registry (SR) through linkages and partnerships with other organizations and programs already delivering the relevant services. The Program is also being restructured to enhance overall outcomes with extension of the closing date by two years. The PDO in the original Financing Agreement is being revised to make it consistent with the PDO from the original Program Appraisal Document (PAD) by adding the word “efforts�, which will make it more concrete. Exception to Policies Is approval of any policy waiver sought from the Board (or MD if RETF [ ]Yes [X] No operation is RVP approved)? Has this been endorsed by Bank Management? (Only applies to Board [ ]Yes [ ] No approved operations) Does the Program require any exception to Bank policy? [ ]Yes [X] No Has this been approved by Bank Management? [ ]Yes [ ] No Conditions and Legal Covenants: Financing Agreement Reference Description of Condition/Covenant Date Due vi Section V. A. of Schedule 2 – The Recipient shall ensure that: (a) by not later than July 1 By July Other Undertakings of each FY of the Program, the Program activities and 1 each expenditures for said FY have been reflected in its national year planning and expenditure framework and have been included in the Recipient’s national budget as adopted for said FY, in a manner satisfactory to the Association; (b) adequate funds for carrying out the Program activities have been provided in the adopted national budget; and (c) all funds so provided are made available in a timely manner to ensure proper Program implementation vii 1. This Program Paper seeks the approval of the Executive Directors to an AF in the amount of US$ 50 million (including US$ 35 million from the IDA Crisis Response Window)1 to the Republic of Kenya and a level 1 restructuring of the National Safety Net Program for Results (Program) (P131305: Credit #5287). This operation has been requested by the Government of Kenya in the context of its appeal to the development partners in responding to the drought related crisis that the country is currently suffering from, and the effects of which are particularly being felt acutely by the poorest and most vulnerable communities. This AF is specifically focused on the North and Northeastern counties which are the most drought affected and where some of the most vulnerable Kenyans reside. As such it builds upon the original Program, and enables delivery of social assistance cash transfers in a timely manner to some of the most drought affected households. 2. The recent onset of drought and famine in the country is particularly affecting the North and Northeastern region. President Uhuru Kenyatta declared a National Disaster in Kenya on February 10, 2017.2 Presently, 48 percent of Kenya’s counties are affected by the crisis, with an official drought alarm having been activated in 13 counties, including all 10 counties in the North and Northeastern region. Moreover, an additional 10 counties in the country are under drought alert. The concentration of the affected counties lies in the Arid and Semi-Arid Lands, which have high levels of poverty representing about 30 percent of the Kenyan population. Based on recently released data3, an estimated 2.7 million people are now acutely food insecure; more than triple since February 2016 (640,000) and food prices are on a record high due to food shortages. Since the effects of drought are concentrated in already poor areas, it is pushing poor people deeper into poverty. The Presidential declaration of National Disaster also includes a direct appeal to the development partners to assist and supplement national efforts to address the disaster. On March, 16, 2017, the Government made a specific request to the World Bank to mobilize IDA resources from the CRW to enable further support to the drought response. 3. The Government is making satisfactory progress toward achieving key results under the original Program. These results include, among others, the expansion of the number of beneficiaries according to the agreed Expansion Plan, electronic payments of benefits with two-factor authentication, an improved Management Information System (MIS), a fully operational SR of beneficiaries, and consolidation of three of the four cash transfer programs under the NSNP.4 The progress ratings toward achievement of the PDO, as well as overall implementation progress, are Satisfactory. The original Program was approved in July 2013 in the amount of SDR 166.9 million (US$ 250 million equivalent), and was declared effective in October 2013. The current closing date is March 31, 2018, and disbursements are at 63 percent. Based on the performance of the Program, by the end of FY16/17, disbursements are expected to be at 84 percent, exceeding the originally planned 75 percent disbursement level. The Program Paper also seeks the approval of a proposed restructuring of the original Program, including an extension of the closing date to June 30, 2020 to provide the Government with sufficient time to implement the Program, including the AF. 1 Management informed the Board of Executive Directors its intention to allocate up to US$60 million equivalent from the CRW to support the drought response in Kenya through the NSNP in a briefing on March 16, 2017. See the note entitled “IDA Crisis Response Window Support for a Regional Drought Response in Africa and MNA� to be submitted on April 12, 2017. 2 Executive Order 1/2017. 3 Kenya: Humanitarian Snapshot (UN-OCHA, February 27, 2017). 4 Throughout the Program Document the World Bank financed National Safety Net Program for Results is referred to as “the Program� and the overall Government-led National Safety Net Program is referred to as “the NSNP� or “the program�. 1 4. The proposed additional IDA credit with restructuring continues to support the original result areas of the Program. The PDO in the original Financing Agreement is being slightly adjusted to make it consistent with PDO in the original PAD. The word “efforts� is being added to make the PDO more concrete5, which will read as “to support the Recipient’s efforts to establish an effective national safety net program for poor and vulnerable households�. 5. The proposed AF expands an existing Disbursement Linked Indicator (DLI) and introduces two new DLIs, remaining consistent with the PDO. The existing DLI supports an expansion of the coverage of the NSNP in the North and Northeastern region, which has the highest prevalence of poverty and includes the counties most affected by the ongoing drought emergency in the country. The AF will enable an expansion of 50,000 new households in these drought affected counties, as well as Government taking over financing of 60,000 existing beneficiary households (of which 20,000 are in the North and Northeastern region and currently financed by DfID). Together with the AF, the Program will likely disburse US$ 60 million before the end of the current FY6. The new DLIs also support the Government in building the foundation for provision of complementary social and productive services to NSNP beneficiaries through linkages and partnership with other relevant organizations/programs, as well as in enhancing fiduciary controls for the overall program through improved financial management and oversight. Learning from the implementation experience, modifications in three DLIs are proposed to enhance the overall outcomes of the Program. 6. Kenya continues to experience economic growth and poverty incidence is declining, but inequality remains high. Between 2004 and 2015, economic growth in Kenya averaged about 5.5 percent. Following the rebasing of the gross domestic product (GDP) in September 2014, Kenya was classified as a lower-middle-income country with gross national income per capita of US$1,146. Between 2006 and 2016, poverty incidence (measured against the official national poverty line) is estimated to have dropped from 46 percent to 36 percent. However, inequality remains high with a Gini coefficient of about 0.48, which places Kenya among the 30 most unequal countries in the world.7 7. High rates of poverty and prevalent droughts undermine investments in human capital and limit the potential for the benefits of economic growth to be shared by all Kenyans. Many Kenyans continue to lack access to food security, clean water, good health care, and proper housing, and the maternal mortality rate remains one of the highest in Africa at 488 deaths per 100,000 live births. Children living in households in the poorer quintiles are less likely than their better-off counterparts to attend school, to advance to the next school grade, to benefit from vaccination programs, and to have good health outcomes. In particular, girls in arid and semi-arid regions have significantly lower enrolment rates, while primary-age girls from the poorest 60 percent of households are three times more likely to be 5 The PDO in the original PAD read: “To support the Republic of Kenya to establish an effective national safety net program for poor and vulnerable households.� However, in the original Financing Agreement the PDO read “to establish an effective national safety net program for poor and vulnerable households�. 6 This includes: US$ 20 million for setting up the National Drought Emergency Fund (NDEF), which will enable channeling of emergency funds for cash payments, including in the most drought affected counties; US$ 10 million for improving efficiency of the NSNP implementation by advancing the consolidation of the cash transfer programs; US$ 15 million for Government making timely payments to beneficiaries, including over 230,000 households in the North and Northeastern region; US$ 3 million for NSNP expansion of around 8,000 households nationwide; and US$ 12.5 million as an advance from the AF resources. 7 PovcalNet database, World Bank. 2 out of school as those from the wealthiest households (the same disparities apply even more at secondary level).8 8. Development challenges are particularly severe in the North and Northeastern region of Kenya which is also the most drought prone area in the country. Poverty on average is around 70 percent in this region,9 and all welfare indicators are lower than the national average. The region has historically been underserved in basic services such as education, health, water, sanitation, electricity and roads, and the absence of infrastructure further limits service delivery, including the provision of security and justice. It is also much more affected by dire climatic conditions, such as periodic droughts and famine, as well as high levels of displacement, and internal conflicts over cattle among and across clans. 9. Social protection interventions can play a key role in strengthening the resilience of poor and vulnerable households by protecting them from shocks and by helping them to avoid negative coping mechanisms. Cash transfer programs help to strengthen food security and prevent households from sliding into poverty, as it provides them with necessary funds to purchase food and other critical household items, particularly in times of shocks, such as droughts. It also assists households to refrain from relying on negative coping mechanisms, such as selling off livestock during the time of drought or pulling children out of school due to lack of funds. These programs maintain the households’ ability to invest in regular household expenses such as food, healthcare, and education. Furthermore, it supports households with access to resources to engage in entrepreneurial activities, leading to better savings and credit. Consequently, cash transfer programs have been used across the world to protect the poor from unanticipated shocks and stresses, such as natural disasters. In the long run, cash transfers strengthen the resilience of poor and vulnerable households as it contributes to improved welfare through strengthened food security; enhanced human capital through continued investment in health and education outcomes; and increased engagement in financially productive activities leading to greater savings and access to credit. 10. Social protection has long been an important part of the strategy of the Government to fight poverty and promote equitable economic growth and social inclusion. The Constitution of Kenya (2010) asserts the “right for every person to social security and binds the State to provide appropriate social security to persons who are unable to support themselves and their dependents.� This is further reflected in Kenya Vision 2030 which seeks to build “a just and cohesive society with social equity.� To that end, the Kenya National Social Protection Policy (2011) endeavors to protect the poor and the vulnerable from negative impacts of shocks; promote resilience through investments in human capital and physical assets, including through nutrition investments in early years of life; and strengthen operational systems to improve the efficiency of delivery mechanisms of social protection interventions. 11. The World Bank supports the Government’s efforts in social protection through the NSNP. With support from the World Bank and other development partners, the Government established the NSNP in 2013. The NSNP seeks to improve the welfare of and increase resilience among specific vulnerable groups to reduce poverty and vulnerability in Kenya by creating a framework around which the four main cash transfer programs in the country can be better coordinated and harmonized. These four cash transfer programs are Cash Transfer for Orphans and Vulnerable Children (CT-OVC), Older Persons Cash Transfer (OPCT), Persons with Severe Disability Cash Transfer (PWSD-CT), and Hunger Safety Net Program (HSNP). The first three programs are managed by the MEACL&SP, and the fourth is managed by the NDMA in the Ministry of Devolution and Planning (MDP). 8 World Bank, 2014, Kenya Country Partnership Strategy. 9 World Bank, 2016, Proposal for Support to the North & Northeastern Development Initiative (NEDI) , World Bank internal note. 3 12. The original Program supports the expansion of the NSNP coverage, strengthening of program systems, and harmonization of the cash transfer programs under the NSNP. It focuses on achieving results in three areas: (a) expanding cash transfer programs to promote more comprehensive and equitable coverage, (b) strengthening program systems to ensure good governance, and (c) harmonizing cash transfer programs to increase the coherence of the safety net sector. 13. The Government has made significant progress on the original Program, which was structured around nine DLIs, accompanied by 20 disbursement linked results (DLRs). Eleven out of the total twenty DLRs have been achieved, whereas three more are likely to be achieved by June 2017. The progress in all three results areas is summarized in the following paragraphs. 14. First, the Government has expanded the cash transfer programs under the NSNP at a much larger scale than originally expected, demonstrating its commitment to the program. The NSNP is now reaching close to 765,000 households (over 4 million people), significantly exceeding the originally expected 10 coverage of 530,000 households by 2017. The proportion of program beneficiaries financed by Government has also increased considerably, with 86 percent of program beneficiaries being financed by the Government in 2015/16 (compared to 38 percent in 2012/2013). 15. Second, the program has made decent progress toward strengthening of key systems, though more work is needed to improve the fiduciary controls further. The program has successfully moved to an electronic two-factor authentication payment mechanism, currently operated through two different payment providers. It has also successfully put in place MISs to prepare and reconcile payments, as well as a SR of beneficiaries with links to the Integrated Population Registry System (IPRS). Furthermore, a functional Complaints and Grievance (C&G) mechanism at the national level for all four NSNP programs has been put in place. Finally, the Government has developed a draft framework and action plan to detect, deter, and combat error, fraud, and corruption (EFC) in the NSNP. This framework and implementation of the action plan are expected to further strengthen systems for greater fiduciary controls and ensure good governance. 16. Third, the Government has achieved results related to harmonization of the cash transfer programs, which are expected to increase coherence of the safety net sector. Not only has the Government developed a Consolidation Strategy for the three cash transfer programs under the MEACL&SP, but it has also started the implementation of the same. This includes creation of the Social Assistance Unit (SAU) within the MEACL&SP to lead the three cash transfer programs, effective July 1, 2016. Piloting of a harmonized targeting tool using a common poverty targeting mechanism is also at an advanced stage. This is another critical step in the consolidation of the NSNP, moving away from fragmented targeting approaches to a coherent and consistent approach for all four cash transfer programs supported by the NSNP. Consequently, once the tool has been finalized, it will be used for future targeting for all of the SAU programs and the HSNP, including for the expansion under the AF. 17. The Government has requested World Bank’s support for promoting equitable growth in the North and Northeastern counties in Kenya, including support to drought affected households. The World Bank is currently discussing with the Government how to best support this region (which has the highest prevalence of poverty), through a multi-sectoral integrated response under the North and North Eastern Development Initiative (NEDI). The AF to the NSNP is one of the operations to support 10 It was expected in 2013 that by the end of its first phase (2013–2017), the NSNP would provide support to about 530,000 households, reaching a total population of approximately 2.85 million individuals. 4 this endeavour, assisting the Government in increasing the coverage of the NSNP in the ten NEDI counties, which are the ones worst affected by the ongoing drought and famine.11 18. The NEDI counties however face unique operational challenges that make implementation more difficult compared to the rest of the country. These counties suffer from weak institutional capacity and limited human resources. Poor infrastructure, lack of adequate physical assets such as vehicles, and remoteness of vast areas, further hinder implementation efforts. Moreover, high levels of poverty and low levels of development can translate into lower community capacity to engage effectively in key implementation processes such as targeting exercises. A large nomadic pastoralist population also makes it difficult to target and monitor beneficiaries. Lastly, a significant number of people do not have national Identification card (IDs), which is a prerequisite for NSNP beneficiaries to set up bank accounts and receive cash transfers. 19. Despite these challenges, all four cash transfer programs under the NSNP are currently operating in the NEDI counties and are increasing the resilience of targeted households. More specifically, the Hunger Safety Net Program (HSNP) has been operating in four of the ten NEDI counties for almost a decade, initially fully funded by the DfID. Government ownership has however increased gradually, and all operational processes for the HSNP are now led by NDMA, with continued technical assistance from the DfID (including through a Project Implementation and Learning Unit). The SAU led programs have also expanded operations in all ten NEDI counties since the start of the NSNP, although they have faced challenges in implementation. 20. One of the features of the HSNP is a unique mechanism in its design, which enables expansion of coverage through disbursement of cash transfers to additional households during the time of drought. For a number of years, the HSNP has been making payments to these additional households once the pre-agreed triggers for drought response have been met. To systematically address such needs as they arise, the Government is setting up a National Drought Emergency Fund (NDEF). The NDEF among others, will enable channelling of funds for a variety of support, including a scalability mechanism for the NSNP cash transfers to be paid out in times of emergency (including droughts). The Fund will also provide a platform to other development partners for a coordinated financing of the government led program. As the NSNP supports setting up of NDEF as one of the DLIs, it will go a long way in protecting those households affected by droughts, assist in their recovery efforts, and build their resilience to disasters. The proposed AF goes a step further by strengthening the delivery systems and implementation capacity in the NEDI counties being critical for program expansion to drought affected households as they need such support. 21. Given the need to continue efforts to invest in implementation capacity of the government, particularly in the NEDI counties a rapid institutional assessment was commissioned by the World Bank in November 201612. The assessment highlights various gaps that need to be filled to enable successful expansion of the program in this region. The key gaps include: (i) lack of sufficient awareness among beneficiaries; (ii) lack of sufficient staff for implementation; (iii) challenges of the physical terrain in which the officers operate; and (iv) inadequate budget for equipping the respective offices for effective implementation. The assessment further provides recommendations on how to address these gaps (see paragraph 25 in annex 4). Continued support for additional technical assistance needed to increase capacity for NSNP implementation will be provided through an existing recipient-executed trust fund. Support will be provided to improve the quality of the Program including strategic investments to 11 The ten NEDI counties include Garissa, Isiolo, Lamu, Mandera, Marsabit, Samburu, Tana River, Turkana, Wajir, and West Pokot. 12 Sonia Rasugu, Institutional Capacity Assessment Report in NEDI Counties for the Additional Financing of the National Safety Net Program. Draft report, January 6, 2017. 5 increase the Government’s technical, fiduciary and monitoring and evaluation capacity. The World Food Program (WFP) and the United Nations Children’s Fund (UNICEF) will also continue to provide complementary technical assistance to the NSNP. 22. Going forward, the Government recognizes the importance of balancing the aim of increasing coverage with the need to ensure the long-term sustainability of the NSNP. While good progress has already been made, the proposed AF would enable the Government to continue to increase coverage in the NEDI counties, which are the ones most affected by the ongoing drought emergency, by reaching 50,000 new beneficiary households and taking over the financing of 20,000 existing households under the HSNP, currently being financed by DfID in the NEDI counties. In addition, the AF supports the Government to take over the funding for 40,000 existing households under the CT-OVC, currently being financed by DfID. This would ultimately result in a total increase of an additional 110,000 households paid for by the Government of Kenya (GoK). 23. Increased Government financing of the cash transfer programs contributes to the institutionalization and longer-term sustainability of the program. Government financing of NSNP households would come from its general revenue and, as such, would be presented in the national budget going forward. It is expected that this trend would continue beyond the life of the operation given that the program has broad political support and the Government has already demonstrated its commitment to the program through increased financing beyond expected targets. 24. Strengthening the fiduciary systems for the NSNP to further ensure long-term sustainability of the program remains a priority. While the Government has undertaken various fiduciary risk mitigation measures, additional efforts are needed to strengthen fiduciary systems of the NSNP. A number of previous audits highlight areas that need to be addressed to reduce fiduciary risks. These include the governance and management of information technology functions, and strengthening of oversight on beneficiaries’/caregivers’ enrollment and payments. The audits also highlight risks related to the two Payment Service Providers (PSPs), and provide recommendations for moving forward. While the Government has been addressing some of the actions agreed from previous audits, weaknesses are recurring due to the evolving nature of the program. One such recurring weakness has been the movement to the electronic payment system, which has introduced a new set of challenges related to, for example, lack of regular oversight of the payment process and lack of automated reconciliation of payrolls. To address these risks systematically, the proposed AF is introducing a new DLI to strengthen the fiduciary systems for the program. This is expected to contribute to the second results area, that is, to strengthen systems to ensure good governance of the program. 25. In addition to providing cash transfers to NSNP beneficiaries, the Government is exploring the potential of linking beneficiaries with complementary services. A technical working group (TWG) has been constituted to advance discussions around how to support activities that can be complementary to existing beneficiaries, as well as target new beneficiaries that are currently not being covered. To support the Government in this agenda, while remaining within the scope of the Program and the key results areas, a new DLI is being introduced to build the foundation for the provision of complementary services to the NSNP beneficiaries through linkages and partnerships with other relevant organizations/programs. This DLI will contribute to the third result area to increase coherence of the safety net sector and is also expected to contribute to increased resilience of targeted households in the long term. It will do so by helping Government to diversify provision of broader social protection interventions, leading to improved access of existing cash transfer beneficiaries to complementary services being delivered by other partner organizations/programs. This will entail better use of SR data and formal linkages with relevant service providers. 6 26. The proposed AF is consistent with the existing Program and the Country Partnership Strategy and enhances the Program’s contribution to poverty reduction. The PDO remains unchanged13 and the AF remains within the Program boundaries but intensifies the coverage in a subset of the 47 counties that are already covered by the Program. It also directly contributes to the World Bank Group’s twin goals of ending extreme poverty and boosting shared prosperity, by continuing to focus on improving the welfare of and increasing resilience among specific vulnerable groups. 27. The Government has made good progress in implementing the Program Action Plan (PAP), and additional actions are proposed to be included as part of the AF. The original PAP included 13 actions based on findings and recommendations from the original Technical Assessment (TA), the Environmental and Social Systems Assessment (ESSA), and the Integrated Fiduciary Assessment Report (IFAR). Six of these actions have been completed, and a further two have been removed, as they have been subsumed into one of the new actions. One action has also been removed since the Program is not expected to contribute further to that action. The remaining actions are underway. As part of the AF, five additional actions are being introduced to address emerging issues as a result of this AF and restructuring, as well as the updated assessments. These actions would be closely monitored by the Government and the World Bank. 28. Progress has been made on compliance with other legal covenants, all of which are expected to be completed by December 2017. The Government has complied with the first legal covenant to develop and adopt the NSNP Expansion Plan. The Government has also made important progress toward achieving the second legal covenant to put in place a system for scaling up the NSNP, which is expected to be finalized by June 2017. The third legal covenant has been partly achieved through the finalization and adoption of the consolidation strategy, and progress is being made on the implementation of the strategy, expected to be finalized by December 2017. These covenants are however being removed, as part of the restructuring, since they are monitored under DLI 7 and 8. One new covenant is also being introduced to ensure preparation of a Financial Management (FM) action plan (see paragraph 40). 29. Based on the recent implementation review, the ratings for progress toward achievement of the PDO and overall implementation are Satisfactory, which will be updated in the upcoming Implementation Status and Results Report (ISR) due in April 2017. The ratings for technical soundness, social safeguards compliance, and DLIs are rated Satisfactory, and Fiduciary as Moderately Unsatisfactory. Table 1 presents summary actions and next steps related to the ratings, as appropriate. Table 1. Summary of Implementation Status and Results Report Ratings, Summary Actions, and Next Steps Rating Summary Action(s) Responsibility Date Progress since Concept/Next Steps PDO S Revisions to the Results MEACL&SP January Agreement reached on Framework to reflect the 2017 changes to the Results AF and update target values Framework and end dates Implementa S Continue strengthening MEACL&SP n.a. Ongoing. Stronger leadership tion capacity and systems to at the Ministry level to Progress enable effective oversee program implementation of the implementation, has already NSNP, including AF resulted in, among others, completion of payments to beneficiaries for the first half of the FY. 13 The PDO in the original Financing Agreement is however being slightly revised to correct the inconsistency with the original PAD (see paragraph 4). 7 Rating Summary Action(s) Responsibility Date Progress since Concept/Next Steps Technical S Institutional capacity MEACL&SP February Ongoing. Field work has assessment of the NEDI and the World 2017 been completed. Draft report counties to identify gaps Bank received in January 2017. and recommend measures Government will prepare necessary for proposed implementation plan as part expansion of the modified PAP. Fiduciary MU Implementation of new DLI MEACL&SP Ongoing, Agreement reached on the to strengthen fiduciary June new DLI and protocols. systems, including 2020 addressing recommendations of previous audits Environme S Confirmation that the MEACL&SP n.a. Confirmed. Update on ntal and original ESSA remains implementation included as Social valid for the AF annex 6. DLI S Continue effort to achieve MEACL&SP Ongoing, New and modified the remaining DLIs and June DLIs/DLRs and protocols new and modified 2020 agreed. DLIs/DLRs. Note: S = Satisfactory; MS = Moderately Satisfactory; n.a. = Not applicable. 30. To enhance Program outcomes, there is a need to restructure some of the existing DLIs under the Program. The Government is facing challenges around measuring improvements in the DLIs related to targeting conformity (DLI 2) and timeliness of payments (DLI 5), due to a number of reasons explained below. Making the Complaints and Grievance mechanism functional at all levels (DLI 6a) and improving beneficiary awareness of entitlements and complaints procedures have also been challenging and proposed modifications to enhance outcomes under that DLI are discussed below. 31. As mentioned above, the PDO of the original Financing Agreement is being adjusted to be consistent with the PDO in the original PAD. A few other adjustments in the Results Framework are being introduced due to the introduction of two new DLIs, the expansion of one DLI, and modifications to three existing DLIs, based on learning from NSNP implementation experience, and due to the proposed extension of the closing date. Annex 1 presents the revised Results Framework. Annex 2 presents a table summarizing the DLIs that form part of the AF (Table 2.1), includes a table summarizing the proposed changes to existing DLIs (Table 2.2), and a table summarizing achieved DLIs to date (Table 2.3). 32. Scaling up of existing DLI 1: The number of additional households enrolled in the NSNP (previously “number of new households enrolled in the NSNP according to agreed NSNP Expansion Plan and paid for by Government�). US$38 million (76 percent of the AF and 13 percent of the total Program) is being allocated to the scaling up of this DLI. Three new DLRs are being introduced, as follows: (a) DLR 1c (i) and (ii): Government takes over the financing of 40,000 CT-OVC beneficiary households, which completes the transition from DfID financing to full Government financing; (b) DLR 1d: modification of the existing NSNP Expansion Plan to reflect the Government’s commitment to increase the expansion of the NSNP in the NEDI counties. The modified NSNP Expansion Plan would continue to be based on poverty criteria, and be informed by most recent poverty data, such as the Kenya Integrated Household Budget Survey (KIHBS) once it is accessible; and, (c) DLR 1e: implementation of the modified NSNP Expansion Plan, including enrollment of 50,000 new beneficiary households from the 8 NEDI counties, and the Government’s taking over financing of an additional 20,000 HSNP beneficiary households in the NEDI counties, currently being financed by DfID. 33. Introduction of new DLI 10: NSNP beneficiaries’ access to complementary social and productive services promoted. US$3 million (six percent of the AF and one percent of the overall Program) is being allocated to this DLI. During recent years, the Government has made good progress on implementation of various aspects of the Kenya National Social Protection Policy, particularly in strengthening and scaling up the NSNP as the main national social assistance program. There are also some existing linkages with other service providers, including the National Hospital Insurance Fund (NHIF), providing support to a sub-set of the NSNP beneficiaries, and the Food-for-Assets Program, funded by the WFP. Efforts are now being made to explore the ways in which such linkages with other social protection interventions (i.e., social security, health insurance, and productive inclusion) could be strengthened. This entails, among others, coordination and partnerships with different service providers for delivery of broader social protection services to NSNP beneficiaries for improved welfare, economic self-sufficiency and household resilience to crisis (including droughts). The first DLR10a would add a module in the SR to analyse the characteristics of beneficiary data, which could be shared with potential service delivery partners through formal data sharing protocols. This would build the foundation for wider use of SR data as a common platform for poverty and vulnerability based social protection programs in the country. The second DLR10b would formalize partnerships through signing of agreements with at least two partners providing relevant complementary services to one or more members of NSNP beneficiary households.14 34. Introduction of new DLI 11: Fiduciary systems for NSNP have been strengthened. US$9 million (18 percent of the AF and six percent of the overall Program) is being allocated to this DLI. The fiduciary risk rating for the program remains High, and a number of audits have consistently highlighted systemic weaknesses and provided recommendations to address them. While the Government is making efforts to address these issues, a number of actions remain to resolve them. During the recent months, the senior management of the MEACL&SP has demonstrated strong leadership by engaging in discussions with the World Bank and development partners to seek support to address these fiduciary weaknesses. The Government has agreed to prepare a comprehensive time-bound FM action plan and ensure its implementation. It is expected that this would bring improvements in all three cash transfer programs led by the SAU. To support this endeavor, a new DLI 11 is being introduced as part of the AF, which would support the implementation of the most critical actions in the FM action plan. The formulation of the FM action plan is included in the PAP, and three DLRs would have been deemed met once 30, 70 and 100 percent of the agreed critical actions have been achieved respectively. The FM action plan will include, but not be limited to: (i) improved reconciliation process of the payroll; (ii) strengthened payroll verification and approval workflows; (iii) better segregation of duties; and (iv) compliance of MISs with Operational Manuals. 35. Modification in existing DLI 2: System for recertification of NSNP beneficiaries is in place (previously “percentage of program beneficiaries who conform to the targeting criteria for the program in which they are enrolled�). Ensuring that the right people are benefiting from the NSNP continues to be a high priority. However, this indicator in its current form has limitations of measurement, and hence is being modified to support the Government in putting in place a system for recertification of the NSNP beneficiaries. The main rationale for proposing this change is because it is difficult under this DLI to capture the desired outcomes due to three key reasons: (i) the massive expansion of the NSNP took place before the baseline survey of the Program Implementation and Beneficiary Satisfaction Survey (PIBS) (an arrangement to measure achievement of the DLI) was conducted; and (ii) the conformity to targeting 14 Complementary services may include social services such as health, basic education and nutrition; or productive services such as micro-finance, skills training and links to employment opportunities. 9 criteria measured by the PIBS baseline proved much higher than contemplated originally and significant improvements are therefore not expected since Government has not confirmed funding for any other massive nationwide expansion during the life of the Program. Therefore, the main opportunity for reducing inclusion and exclusion errors lies with having a system in place for regularly recertifying beneficiaries to ensure that the NSNP maintains an up-to-date beneficiary registry that includes only eligible households.15 Accordingly, the modified DLI has two DLRs, that is, development and adoption of a recertification plan (DLR 2b) and completion of the roll out of the recertification plan in at least 20 sub- counties (DLR 2c).16 36. Recertification will be undertaken using the harmonized targeting methodology, reinforcing NSNP consolidation efforts. The piloting of the tool will inform the formulation of the recertification plan. The Government is committed to commence the recertification in a number of sub-counties, however given the significant level of effort required to complete recertification and its measurement, the DLI aims to incentivize the completion of the roll of out of the recertification plan in at least 20 sub- counties17 (out of approximately 290 sub-counties). The Government plans to start recertification processes in a larger number of sub-counties. However, for the purpose of this DLR, the number of sub- counties where the roll out of the recertification plan is completed to the satisfaction of the protocol is kept modest in order to ensure that the achievement of the result is feasible during the Program period. The frequency and scale of recertification will depend on program needs and related costs, and will be spelled out in the recertification plan (DLR 2b).18 37. Modification in existing DLI 5: Percentage of payments made on time to Payment Service Providers for transfer to Program beneficiaries. This DLI remains the same, but minor modifications to the DLI protocol are being introduced. The main challenge with achieving this DLI relates to delays in submitting funding requests from the MEACL&SP to the National Treasury (NT), and subsequent delays in the release of funds from NT, which then delays the overall payment cycle. Various analyses suggest that to address this issue sustainably, the NT and MEACL&SP have to work together to develop and implement a solution that ensures timeliness of payments in the future. Discussion and agreement on such a solution has been included in the modified PAP (annex 7: action A2). That same action also includes monitoring of timeliness of payments throughout the life of the Program. DLR 5 continues to measure timeliness of payments. However, a modification is being made for the target (which is increased from the original target of 65 percent to 75 percent, with a new baseline of 12 percent).19 In addition, based on analysis and lessons learned from implementation, the period for considering a ‘payment on time’ is also 15 Any households identified as no-longer eligible as a result of the recertification process will be exited and replaced by households that do meet eligibility requirements. 16 It should also be noted that any significant improvement in measurement of the previous indicator on targeting conformity is not expected during the life of the Program, since recertification plan implementation will only commence. 17 In the event that a sub-county covers part of a constituency, the entire constituency will be covered under the recertification. 18 The recertification plan will provide: (i) clear principles of when recertification will be used to update the registry of beneficiaries, (ii) principles for establishing a proposed frequency with which recertification of beneficiaries will take place, (iii) a three-year implementation schedule for the roll-out of these principles in line with available budget and human resources for recertification, (iv) measures to be taken for households no longer eligible under the program, and (v) explanation for how recertification will be financed. 19 Since 2013, the respective share of the four cash transfer programs within the NSNP has changed, such that the percentage of payments on time has also changed. The PWSD-CT tends to be on time as the cash transfers are provided out of the Government’s recurrent budget, and the HSNP also tends to make payments on time. In contrast, making timely payment for the OPCT and CT-OVC is more of a challenge. Recent analysis has found that once the data on percentage of payments on time are disaggregated by the four cash transfer programs, increasing the target to 75 percent is more relevant and appropriate for the current context. 10 being adjusted. A payment will be considered “on time� if funds and payroll documentation are sent to the PSPs within 15 days of the due date, which is defined as the five working days before the start of the payment window.20 This DLI will be considered to have been achieved if the transfers to PSPs have been made ‘on time’ for three consecutive cycles. 38. Modification in existing DLI 6: Grievance and Case Management Mechanisms for the Cash Transfer programs are functional (G&CM) (previously “functional Complaints and Grievance mechanism�). The Government recognizes the importance of ensuring that a functional C&G system is in place for the NSNP. It however also recognizes the importance of including case management (such as updates to beneficiary status), as part of this function – the evidence from HSNP suggests that over 80 percent of ‘complaints’ are actually beneficiary updates. Therefore, this DLI is being rephrased to measure a functional G&CM mechanism. DLR 6a (ii) has accordingly been modified to include ‘case management’, and the DLI protocol has also been modified to enable decentralized recording of G&CM updates through the MISs. In addition, the previous DLR 6b intended to measure the percentage of beneficiaries who can name two means of making a complaint has also been modified. The PIBS baseline clearly shows that beneficiary awareness is low (only 8.8 percent of beneficiaries can name two means of making a complaint). To ensure a more comprehensive approach to increasing beneficiary awareness, three new DLRs are being introduced, replacing the previous one. The new DLR 6b (i) is ‘development of beneficiary outreach strategy’, DLR 6b (ii) relates to ‘implementation of this strategy’, and DLR 6b (iii) focuses on ‘beneficiary awareness above an agreed cutoff for at least three of the four programs’.21 DLR 6b (iii) can be achieved independently of 6b (i) and (ii). 39. Extension of the closing date. It is proposed that the closing date is extended by two years to June 30, 2020 to enable adequate time for implementation and achievement of results. This is especially necessary to ensure a well-designed, supervised, and monitored expansion of the program in the NEDI counties, as well as to ensure quality of implementation of modified DLIs. 40. Modification in the legal covenants: Two of the legal covenants that have not yet been achieved (System for Scaling-up the NSNP and Consolidation Strategy) have been removed, since they are already monitored through DLI 7 and 8. The legal covenants for the original Program related to: (i) Program Institutions; (ii) Operations Manuals (OMs): (iii) the PAP; and (iv) Budget for Program Implementation will also apply for the AF. In addition, a new legal covenant has been introduced for the development of the FM action plan. 41. Financing to the NSNP. The Government’s financing to the NSNP has increased more rapidly than the initial projections made during the design phase of the original Program, primarily due to a rapid expansion of the program. As Table 2 shows, actual financing to date is 26 percent higher than the original commitment. These higher financing levels will be maintained and increased over the remaining years of the operation, with further takeover of the financing of existing beneficiaries and all newly enrolled beneficiaries being financed by the Government. With the AF and restructuring, the Government commitment would reach US$1,213 million (US$913 million once the Program for Results – PforR – is excluded). The following is the updated financing table. 20 By increasing the payment ‘window’, the Government will be incentivized to continue efforts to make payments as soon as possible after the intended date. This will then reduce both the length and the frequency of the delays. 21 The proposed cut-offs are as follows: 60 percent for awareness of the amount of cash transfer and 30 percent for being able to name two means of making a complaint or program updates, an increase from the current level of 8.8 percent. 11 Table 2 – Program Financing (US$ Millions) Original Original Actual AF and Total Actual Commitment Commitment to Financing to Restructuring and AF/ for life of date date (July 2016 – Restructuring Financing Source operation (July 2013 - (July 2013 - June 2020) *** (July 2013 - June 2016) * June 2016) ** June 2018) * Government 623.65 257.99 324.69 888.56 1,213.25 # Of which Original 250 123.40 157.50ǂ 92.50 250.00 PforR AF - 50.00 50.00 TOTAL 623.65 257.99 324.69 888.56 1,213.25 * Table 2.3 Program Appraisal Document for the original Program ** Government financing according to annual financial statements, and data on DLI disbursements *** Estimates from GoK Social Protection, Culture, and Recreation Sector Report (2016) ǂ Current disbursement rate of 63 percent of original PforR # Remaining disbursement of 37 percent of original PforR 42. Other Development Partner Support. A number of other development partners are also supporting the Government’s program with parallel financing. These include DfID’s support to the government on implementation of HSNP (including both regular cash transfer to beneficiaries and emergency payouts to targeted households in the time of crises) and CT-OVC, DfID financed Recipient- executed trust fund and various technical assistance supported by UNICEF and the WFP. In addition, the CT-OVC program was supported by an IDA Credit (CR-4533), which has fully disbursed, but continues to administer the DfID-financed trust fund (mentioned above). While this assists the broader Government program and enhances the overall quality of operation, the achievement of the DLIs under the AF is not dependent on any development partner support, and therefore donor funding is not considered co- financing to the AF. 12 A. Technical 43. Strategic relevance. The NSNP clearly remains a key priority for the Government. Cash transfer programs continue to serve as an appropriate instrument to target direct support to the poor and vulnerable, thereby contributing to the goal of reducing poverty and inequality in the country and increasing resilience of vulnerable households. Recognizing the positive impacts of the NSNP, the Government is showing stronger commitment to the program, as evidenced by an increased investment in the sector. Besides expanding the NSNP beyond the originally envisioned targets, the Government has also demonstrated its commitment to set up the NDEF to enable the NSNP to make payments to households in time of crisis and to improve coordination and harmonization by adopting a consolidation strategy for the NSNP and creating the SAU with the mandate of coordinating implementation of three of the four NSNP programs. Moving beyond cash transfer programs, the Government is now keen to develop a more comprehensive social protection program, and has established a technical working group to work on this issue, which enjoys high level political backing. 44. Technical soundness. The overall objective and boundaries of the Program remain the same as the AF intensifies coverage in a specific geographic area where the Program is already operational. In addition, the two new DLIs that have been introduced support existing results areas. As highlighted in the addendum to the TA (annex 4), the Program continues to be technically sound. A number of important results have been achieved in areas that were identified in the original TA (2013). These achievements are detailed in the addendum to the TA. 45. The addendum to the TA highlights that the targeting conformity of the NSNP is relatively higher than the original estimates, but confirms that there is still an important need to continue efforts to further improve the program targeting. To achieve this goal, the Government is in the process of developing a harmonized targeting tool, which would also be used for expansion of the coverage under the AF. There is no current confirmed funding for further expanding the NSNP (beyond the AF expansion) and it is of great importance to put in place a system for recertification of existing NSNP beneficiaries to ensure that the right beneficiaries are enrolled in the program. It is also of increased importance to support the Government in strengthening implementation capacity, particularly in the NEDI counties, which are the ones where it is most difficult to implement the program and where the most households are affected by crisis such as droughts. 46. While a national-level G&CM system for the NSNP is fully in place, further work is needed to make the system functional at all levels. Some progress has been made as detailed in the addendum to the TA. Nonetheless, significant challenges exist in information flow and regular complaints and grievance reporting from the county to the national level, particularly for the MEACL&SP programs. The current system also does not adequately reflect the high volume of information received and actions taken regarding case management updates. To address these issues, the AF aims to expand the “C&G� mechanism to include case management information, as well as support strengthening of systems to better capture complaints and updates on the ground through the decentralization of the MIS; and improve information flow and feedback to service providers, implementation officers, and beneficiaries. Furthermore, efforts would focus on improving beneficiary awareness of entitlements and making complaints and updates by promoting the development and implementation of a beneficiary outreach strategy. 47. Institutional arrangements and implementing capacity. The institutional arrangements have been adjusted according to the recent restructuring of the MEACL&SP and the creation of the SAU. To reduce fragmentation and overlap, and benefit from increased coordination and synergy, the MEACL&SP 13 adopted a consolidation strategy. Accordingly, the three cash transfer programs managed by the MEACL&SP (CT-OVC, OPCT, PWSD-CT) are now being managed by the SAU. The mandate of the Social Protection Secretariat (SPS), guided by the Social Protection Policy, continues to be in policy formulation, setting standards, maintaining the SR, and performing all other roles related to the coordination of social protection activities in the country. The new implementing arrangements are expected to improve coordination between the two departments implementing the NSNP at the lower level (the Department of Children Services (DCS) and the Department of Social Development (DSD)) and enable the NSNP to benefit from officers from the two departments working jointly on NSNP activities, as needed. The new arrangements however also represent a risk, since the officers do not report directly to SAU. This risk is mitigated by having NSNP implementation included in the performance contracts of the county and sub-county officers. 48. Implementation capacity is, however, generally lower in the NEDI counties than elsewhere in Kenya, and additional support to ensure sufficient capacity will be needed. A rapid institutional capacity assessment has been undertaken, highlighting the main gaps and providing recommendations for necessary actions and investments to enable expansion in NEDI counties. Continued support for additional technical assistance needed will be provided through the existing recipient-executed trust fund. In addition to this specific focus on capacity in the NEDI counties, on-going support to enhance nationwide implementation capacity for the overall program will continue. 49. Even with the expanded coverage as a result of the AF, the program is still considered affordable and sustainable. Expanding to another 50,000 new beneficiary households represents an increase in NSNP coverage of 7 percent nationally and an increase of 25 percent in the coverage of the NEDI counties. At the end of this expansion, the program would cost about Ksh 26 billion, of which Government would finance about Ksh 25 billion (assuming that no other expansion takes place) but still only represents 0.32 percent of GDP. 50. Program budgets, as presented in printed estimates,22 are sufficient for expenditure needs, but bottlenecks in the flow of funds can result in delayed transfers. The annual printed estimates, including estimates for government financing, are sufficient to meet program needs. Although budgeted amounts and government financing are adequate, disbursements of funds from the NT throughout the year have not always met the cash flow needs of the four programs (see paragraph 37). 51. The program has already demonstrated its economic impact, and this impact would be further enhanced as the AF expands coverage. To date, cash transfers have a proven record of reducing poverty internationally and in Kenya. Previous evaluations of NSNP cash transfers have found that participation in cash transfer programs have led to a 13 percent reduction in the share of CT-OVC households living on less than US$1 a day, and a 10 percent reduction in extremely poor households under the HSNP. Further studies have shown that cash transfers have resulted in a broad range of positive development impacts on beneficiary households, including increased food consumption and dietary diversity, improved school attendance and use of health care, and improved psycho-social outcomes. 52. Gender. Gender considerations have been effectively incorporated into the design of the four cash transfer programs, which have been demonstrating positive impact on gender outcomes as a result. For example, vulnerability of female-headed households is recognized in the program targeting of both the CT-OVC and HSNP, resulting in the majority of the recipients being women, although women are not explicitly targeted as the main beneficiaries. This has enabled women to take more control of the household budgets and participate more in income-generating activities, as reported in the NSNP Progress 22 “Printed estimates� means budget estimates that are approved by the parliament before the start of the financial year. 14 Report.23 The HSNP in particular, indicated that there may also be small spillover effects into household decision making in general. Evaluations have also found that the cash transfer programs resulted in young women being less likely to become pregnant (5 percentage points lower) and enjoying better mental health outcomes, such as lower rates of depression, greater belief in their self-agency and self-efficacy, and more positive views of the future. The NSNP collects gender-disaggregated data on key indicators, which the AF would continue. Likewise, the programs MISs and the SR will continue to be utilized to collate and analyze data and facilitate monitoring and reporting. 53. Citizen engagement. The NSNP has in place a citizen engagement mechanism through the G&CM system, and work is ongoing to strengthen it further. A fully functional G&CM system has been established at the national level with adequate staff, with established procedures for receiving, recording, and acting on complaints. It also includes service charters to guide program engagement with beneficiaries, as well as functioning MIS modules for tracking complaints and working hotlines for receiving them. Constituency Social Assistance Committees (CSACs) play a key role in raising awareness of the NSNP among community members and have responsibilities to oversee, support and monitor program activities at the sub-county level including targeting and payment processes. In addition, at the local level, Beneficiary Welfare Committees (BWCs) and Rights Committees (RCs) have been established and provided with G&CM guidance materials to complement program officers and serve as an additional conduit for engaging with the beneficiaries and stakeholders. Progress has also been made in one of the programs (HSNP) in decentralizing the MIS related to case management to facilitate two-way information flow. Further, the HSNP has increased access points from which beneficiaries can register updates and complaints - currently being rolled out. The program has also established protocols for case resolution with the PSPs to ensure timely resolution of cases. Beneficiary awareness and feedback mechanisms have been established, and a communication campaign to inform beneficiaries of the multiple accessibility options is under preparation. Lastly, work is also under way to link the HSNP G&CM mechanism with national-level G&CM mechanisms through referrals. 54. Efforts to ensure that the G&CM mechanism is further strengthened and fully effective at all levels for the three cash transfer programs managed by the SAU would continue through the AF. These efforts would be informed by lessons from the HSNP experience. Specifically, support would include the decentralization of the programs MIS, allowing local-level staff to record and update complaints and/or beneficiary information. In addition, a communication strategy is being finalized to improve beneficiary understanding of the program objectives, design, and components, among others, which would be rolled out in 2017. This would be complemented by the beneficiary outreach strategy, which would be developed and implemented through the AF, with the purpose of improving program engagement with beneficiaries to ensure that they are more aware of their rights and entitlements and are empowered to participate more effectively in the decision-making process of the program, as appropriate. 55. Climate and disaster risk management. The North and Northeastern region of Kenya has historically been exposed to drought, which has been a leading cause of food insecurity in the area. This program is focused on transferring cash grants to poor eligible households that will support them in coping with shocks and stresses of drought, among others. In addition, strengthening of delivery systems and investments in institutional capacity will enable the government to support the affected households with social assistance as and whenneeded. As the main activity planned under the AF is the provision of cash transfers, no potential impact is expected on an overall basis on any climate and geophysical hazards present in the program area at the sector or subsector level. It is, however, expected that the cash transfers will lead beneficiary households to make better economic choices and improve their welfare. Moreover, given that the region is drought prone, the NDMA is part of the program implementation in the four 23 Republic of Kenya, 2016, Inua Jamii: Towards a More Effective National Safety Net in Kenya. Progress Report. 15 NEDI counties where the HSNP is operating. They have capacity and long-standing experience in dealing with drought and climate risk-related issues, including mitigating climate change-related risks in the area. B. Fiduciary 56. As part of the addendum to the IFAR, an assessment was undertaken that reviewed the fiduciary aspects of the program in a manner consistent with the World Bank Policy and World Bank Directive on PforR Financing. The assessment revealed that the MEACL&SP has adequate fiduciary capacity to manage the minimum requirements of the AF. For instance, budgeting and planning, funds flows and treasury, accounting and financial reporting, internal controls and internal audit, and external audit are deemed to be adequate. The overall risk rating of the program is however High, due to (i) continued fiduciary weaknesses as highlighted in a number of program audits (see paragraph 24); and (ii) as the cash transfers require strong controls to prevent, detect and deter inherent systemic financial risks. Consequently there is a need to systematically address fiduciary risks of the program. 57. The Program would assist the Government to formulate the financial management procedures and invest in the capacity of the MEACL&SP Internal Audit Department (IAD) for carrying out periodic internal audit for the MEACL&SP to enforce corrective actions (see PAP). The program accounting system is managed by the Ministry Head of the Accounting Unit/Principal Accounts Controller (PAC), who is a qualified certified public accountant, and is supported by a program accountant. The program FY16 external audit report was received by the World Bank after the stipulated six months of submission deadline, and was qualified. However, the MEACL&SP is in the process of addressing the audit report qualification issues. 58. MEACL&SP has shown strong leadership and willingness to address fiduciary risks and is committed to develop and implement a comprehensive FM action plan, which will be monitored by the World Bank as part of the PAP. The conclusion of the assessment is that the fiduciary arrangements are adequate to support the AF. In addition, DLI 11 has been introduced under the AF, supporting the implementation of the FM action plan through three DLRs. A priority sub-set of the critical FM actions would be mutually agreed between the World Bank and Government for the purposes of this DLI, with DLRs linked to Government implementation of 30 percent, 70 percent and 100 percent, respectively, of the agreed critical FM actions. C. Safeguards 59. The ESSA for the NSNP was approved and disclosed in May, 2013. It was carried out for the NSNP which covers all 47 counties in Kenya. Since the AF remains within the existing scope of the program and will be expanded in 10 of the 47 counties where the program is already operating, the original ESSA remains relevant to the AF, and accordingly was re-disclosed as part of the appraisal on January 19, 2017. It should be noted that the ESSA is complemented by the Government initiative under the Kenya Devolution Support Project PforR operation, where all the 47 counties are in the process of developing an environment and social risk management system. In addition, the restructured DLI 6 further emphasizes the importance of a G&CM system functional at all levels, as well as a beneficiary outreach strategy and its implementation, promoting increased beneficiary awareness. 60. The original ESSA is adequate as it takes into account the existing Government NSNP systems including the capacity to plan and implement measures for environmental and social impact management. The assessment focused on the social effects of the NSNP cash transfer programs, and confirmed that they are not considered to have any direct environmental effects. The assessment also evaluated whether there is equitable access to the existing cash transfers and whether the program is meeting the needs of vulnerable and marginalized groups. It paid attention to how poor, vulnerable and marginalized groups 16 are included in, and therefore benefit from, the NSNP cash transfer programs. It also examined the measures put in place to ensure that vulnerable and marginalized groups have a say in the program, through a robust consultative process and grievance and appeals mechanism and paid due attention to targeting, power imbalance at the community level, the role of local administrators in controlling access to the program, existing public complaints and grievance structures, social conflicts and gender (an update on the implementation of the ESSA is included in annex 6). D. Summary of Modifications to the Program Action Plan 61. The PAP has been modified to include key actions to ensure efficient program implementation (see annex 7). Some of the existing actions have been modified to better reflect the current situation and needs. The action related to updating OMs is revised to include recommendations of the addendums to the IFAR and TA. The action related to timeliness of payments has been adjusted to include the critical action for the MEACL&SP to discuss and agree with NT on a solution to ensure timely payments, as well as the development of a long-term strategy for PSPs. Five new actions have also been introduced to ensure that key critical actions are taken to improve overall program outcomes. The new actions introduced include; (i) development and implementation of an FM action plan; (ii) the finalization and implementation of the EFC framework to improve program governance and accountability; (ii) the finalization of the harmonized targeting tool and updating of Proxy Means Test (PMT) when new KIHBS data becomes available, (iii) collaboration with the National Registration Bureau (NRB) to facilitate issuance of IDs for beneficiaries; and (iv) adequate implementation capacity in the NEDI counties through the development and implementation of a capacity development plan. E. Implementation Support 62. The World Bank task team will continue to provide the necessary support to facilitate the achievement of the PDO during implementation of the Program. Implementation support will place an emphasis on (a) reviewing implementation progress (including that of the PAP) and achievement of Program results and DLIs; (b) providing support to resolve emerging program implementation issues; (c) monitoring the adequacy and performance of systems, and compliance with the Financing Agreement; and (d) supporting MEACL&SP in key areas of technical assistance. Implementation support will be provided through regular engagement with the SAU, SPS, and the NDMA. 63. Technical assistance will also be provided to support strategic investments such as increasing the Government’s technical, fiduciary and monitoring and evaluation capacity through the existing recipient- executed trust fund. The objective of this trust fund is to strengthen the NSNP implementation capacity, including to deliver and monitor and evaluate the activities needed to achieve the Program objectives. In addition, other development partners, such as WFP and UNICEF, will continue to provide complementary technical assistance to the Government. 64. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate GRS, please visit http://www.worldbank.org/GRS. For 17 information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. 18 Program Development Objective: To support the Republic of Kenya’s efforts to establish an effective National Safety Net Program for poor and vulnerable households. Target Values PDO-Level Results Unit of Baselin December 2017 December 2018 December 2019 Core DLI Rationale for Change Indicators Measure e Net change in beneficiary household monthly per 1 □ □ Ksh n.a. 150 150 Original. adult equivalent consumption expenditure Original. The indicator is unchanged, but target values Number of NSNP Million updated based on the current 4.04 2 25 × □ beneficiari 1.65 4.13 4.28 status of the program. The targets beneficiaries, by sex (2.5) es for 2018 and 2019 reflect the proposed expansion in the NEDI counties. Removed. The massive expansion of the NSNP took place before the PIBS baseline % of Program and no massive expansion is Beneficiaries who conform □ □ Indicator Removed envisioned to take place in the to the Targeting Criteria next few years. As a result, it is difficult to record improvement in targeting conformity. Plan adopted for New. This indicator replaces the how all four Completion of the previous indicator on targeting System for recertification NSNP programs rollout of the conformity. Recertification is a 3 of NSNP beneficiaries is in □ × n.a. n.a. will maintain an recertification plan more important focus, since no place up-to-date in at least 20 sub- new massive expansion is registry of counties envisioned at this stage. It is beneficiaries important for the NSNP to ensure 24 Targets in parenthesis reflect the baseline and target values for the original Program. These targets only exist for some of the indicators and only for FY17/18 since the original Program was expected to close in March, 2018. 25 This will report on the total number of people benefitting from the four programs that constitute the NSNP. If this figure cannot be generated from the MIS, it will be calculated by multiplying the total number of households enrolled in the three programs managed by SAU x 5 members per household and x 7 members per household for households enrolled in the HSNP. The sex distribution for those households for which the MIS has complete information will be used to impute a figure for the entire caseload. 19 through that the right people are in the recertification program, making recertification of existing beneficiaries necessary. Original. The indicator remains the same, but targets have been included for additional years due to the proposed extension of the % of all payments are closing of the Program. The made on time to Payment targets for 2017 and 2018 are in 12 75 4 Service Providers for □ × % 75 90 line with modified DLR 5. The (26) (70) transfer to Program target for 2019 builds upon the Beneficiaries achievements made in the previous years. The baseline has also changed to reflect the current status of payment timeliness. Intermediate Results Area 1: Expanding cash transfer programs to promote more comprehensive and equitable coverage Revised. This indicator has been modified to account for the massive expansion of the program and increased Government financing of the cash transfers, rather than only reporting on additional households enrolled and financed by the Government as per the Number of households NSNP Expansion Plan. The Househol 5 paid for by the □ □ 114,384 702,000 754,000 792,000 target for December 2017 has 26 ds Government been revised to reflect the current overachievement of enrolling and financing new households. New target values for additional years have been introduced based on the proposed AF expansion as well as on projected Government take-over of financing of households in HSNP and CT- OVC. The baseline has also 26 This indicator previously read ‘Number of new households enrolled in the NSNP according to agreed expansion plan and paid for by GoK’. 20 changed due to the revision of the indicator. Removed. This indicator has been removed to streamline the Number of households on Results Framework. This □ □ Indicator Removed the NSNP payroll indicator is already captured in another indicator “Number of NSNP beneficiaries, by sex.� Intermediate Results Area 2: Strengthening program systems to ensure good governance Revised. The original indicator % of beneficiaries who included both objectives and know correct program entitlements, which are distinct 56.3 60 6 transfer amount for the □ □ % 65 70 elements and difficult to measure (37) (70) program in which they are together. This revised indicator is enrolled27 in line with the modified DLR on G&CM systems (DLR 6b). Original. Achieved. However, given the importance of this indicator in ensuring a robust and % of beneficiaries for accountable payment whom payments are made 7 □ × % 40 90 90 90 mechanism, it will continue to be electronically using Two- monitored, with updated values Factor Authentication to be consistent with assumption on % of beneficiaries on the payroll. Beneficiary New. This indicator has been outreach introduced to emphasize the strategy importance of beneficiary implemented in outreach and functional G&CM 10 counties28 systems at the local level. The Grievance and Case Beneficiary Beneficiary targets are informed by the Management mechanisms outreach strategy outreach strategy 8 □ × n.a n.a. Design and achievement of the different for the Cash Transfer developed and implemented in at implementation DLRs in DLI 6. The Results Programs are functional adopted least 20 counties of a G&CM Framework, however, has set system through targets higher than the DLR for the MIS at the implementation of the county and sub- beneficiary outreach strategy, county levels in reflecting ambition of the 27 The indicator previously read “% beneficiaries who know program objectives and entitlements.� 28 Within these 10 counties, the beneficiary outreach strategy must be implemented in at least 20 sub-counties as per the related DLR. 21 at least 20 sub- Government. counties Original. This has been a difficult target to achieve as the % of Program G&CM mechanism has not been Beneficiaries who can 8.8 30 effectively established at all 9 □ □ % 30 40 name two means of making (15) (65) levels. The targets have therefore a complaint been readjusted to more realistic values based on the real baseline value (lower than expected). Removed. This indicator has been removed to streamline the Results Framework. This 29 % complaints actioned □ □ Indicator Removed indicator is already captured in another indicator “Functional Grievance and Case Management mechanisms.� Single Registry is operational and program 10 □ × Yes n.a. Achieved Original. MISs use the Standards for Internal Payroll Controls Intermediate Results Area 3: Harmonizing cash transfer programs to increase the coherence of the safety net sector Revised. The indicator has been revised to reflect the measurements reported on the annual financial reports (funding vs. spending). Targets have been % of NSNP funding introduced based on the current 11 financed by the □ □ % 41 91 94 96 trend in Government financing of Government NSNP for additional years included under the extension of the AF. The baseline value has also been changed to reflect the baseline of NSNP funding financed by the Government. Removed. This indicator has Amount spent on the been removed to streamline the NSNP by the Government □ □ Indicator Removed Results Framework. This as % of GDP indicator is already captured in 29 This is defined as a complaint for which action is taken and feedback given to the complainant. 22 another indicator “% of NSNP funding financed by the Government.� Number of households per Househol No targets as this indicator will only be measured when 12 year paid through the □ □ n.a. Original. ds the early warning system triggers a response. NSNP out of NDEF30 New. New indicator being Agreements introduced to support the signed with at Complementary Government in building the least two Services module foundation for provision of partners NSNP beneficiaries’ access in SR is ready complementary social and providing to complementary social and formal data productive services to the NSNP 13 □ × n.a. N/A relevant and productive services is sharing protocols beneficiaries through linkages complementary promoted are available for and partnership with other services to use of potential organizations/programs NSNP partners delivering the relevant services. beneficiary The targets are in line with the households DLRs under DLI 10. New. New indicator being introduced to ensure that the fiduciary systems for the NSNP Implementation Implementation Implementation of Fiduciary systems for are strengthened to address the of 30 percent of of 70 percent of 100 percent of 14 NSNP has been □ × n.a. N/A high-risk rating and systemic agreed critical agreed critical agreed critical FM strengthened weaknesses, as highlighted in FM actions FM actions actions repeated audits. The targets are in line with the DLRs under DLI 11. 30 NDEF stands for National Drought Emergency Fund. 23 Description of Results Framework Indicators Indicator Description Responsibility Data Source / Indicator Name Description Frequency for Data Methodology Collection Net change in beneficiary household Household monthly per adult equivalent consumption expenditure is monthly per adult being calculated at both baseline and end line surveys for the CT-OVC 2017, 2018, Evaluations of CT- Independent 1 equivalent and HSNP impact evaluations, which will provide net change estimates. 2019 OVC and HSNP firm consumption As there are no impact evaluations for the OPCT or PWSD-CT, it is expenditure assumed that these figures can be extrapolated to the NSNP as a whole. This is calculated as total number of people benefiting from the four programs, disaggregated by sex. It is assumed that the average household size for a beneficiary household is 5 for the SAU programs and 7 for the HSNP. The NSNP also aims to have 95 percent of the target number of households on the payroll and benefiting from the Number of NSNP program, assuming some loss resulting in issues around identification 2 beneficiaries, by sex Annual MIS SAU (ID) card expiration, bank card challenges, and so on. The target for December 2017 reflects the current target values for the SAU and HSNP programs (with the aim of having 95 percent of these households on the payroll). The targets for December 2018 and 2019 reflect the proposed expansion of the SAU in the NEDI counties (an additional 20,000 households in 2018 and a further 30,000 households in 2019) This indicator aims to strengthen the application of the eligibility Target 1: criteria for each of the programs through putting in place a system to Recertification and re- System for effectively and accurately recertify NSNP beneficiaries. This system registration report recertification of includes establishing and implementing a plan on maintaining an up-to- 3 2018, 2019 Target 2: Report on the SAU NSNP beneficiaries is date registry of beneficiaries. The first target will be deemed to have completion of the roll- in place been met when a recertification/re-registration plan is adopted. The out in at least 20 sub- second target will be met when the roll out of the recertification plan is counties completed in at least 20 sub-counties. % of all payment are The indicator aims to improve the flow of funds for cash transfers and made on time to to ensure that an increasing proportion of payments are made within the Timeliness of transfers SAU and 4 Payment Service scheduled window. The first and second targets for December 2017 and Annual report NDMA Providers for transfer 2018 aim to increase the percent of timely payments to PSPs to 75 to Program percent in line with the DLI 5. For payments to be made on time, funds 24 Beneficiaries and payroll documentation need to be sent to the PSPs at least five working days before the start of the window. For the purposes of reporting on this indicator, payments will be considered to be on time, if the funds and payroll documentation are sent to the PSPs within 15 calendar days of this deadline. The percentage of ‘on time’ payments is calculated as the number of NSNP payments sent to the PSPs within 15 days of the due date divided by the total number of NSNP payments made for each payment cycle. The target for December 2019 increases the percent of timely payments to PSPs to 90 percent. This indicator reflects the expansion and Government financing of the NSNP. It is important to note that the NSNP aims to have 95 percent of households enrolled in the program on the payroll and thus, the target values reflect 95 percent of the projected enrolment. It is assumed not all enrolled households are on the payroll as there may be some losses from issues around identification (ID) card expiration, bank card issues, and so on. Target 1: The first target has been adjusted to reflect the projected number of households in the program that are funded by the Government, including the projected take-over of financing of Number of households in the CT-OVC and HSNP in the 2017 year (15,000 CT-OVC payroll/ GoK households paid for SAU and 5 households in CT-OVC and 54,000 households in HSNP). Annual Budget; Program MISs by the Government NDMA Target 2: By December 2018, the Government plans to take over the and financial reports financing of an additional 25,000 CT-OVC households, previously financed by the DfID. Further, after the adoption of a modified NSNP Expansion Plan detailing planned expansion in the NEDI counties, it is expected that an additional 20,000 households will be enrolled as per this modified plan. By December 2018, the Government is also expected to take over the financing of 10,000 households under the HSNP. Target 3: The December 2019 target includes an additional expansion of 30,000 households in the NEDI counties, as per the modified plan, and the take-over of financing of a further 10,000 households in HSNP. % of beneficiaries Independent who know correct Knowledge of transfer value is of utmost importance for cash transfer agency program transfer programs to allow households to plan for the future. This indicator 6 2017, 2018 PIBS contracted to amount for the measures beneficiary knowledge of payment values in each of the 4 carry-out the program in which programs from the PIBS. PIBS survey they are enrolled 25 % of beneficiaries for Cash transfers should be made in a manner that provides confidence that whom payments are payments are reaching intended recipients. The indicator aims to Payment Contract with PSPs 7 made electronically progressively increase the use of PSPs that make payments SAU cycle and payment report using Two-Factor electronically and using two-factor authentication to increase the authentication security of payments. A well-functioning G&CM mechanism is necessary for promoting demand-side accountability in cash transfer programs. Beneficiaries December 2017 must have an understanding of their rights and the means by which they Target: Beneficiary may lodge a grievance or an update. The first target for December 2017 outreach strategy; involves the SAU programs developing a strategy detailing outreach December 2018/2019 Grievance and Case strategies, key communication messages, and a 3-year implementation Outreach Management schedule. One of the December 2018 targets is to implement the implementation mechanisms for the strategy in at least 10 counties (in which at least 20 sub-counties must targets: Report of 8 Cash Transfer be reached as per the related DLR 6b (ii)). The December 2019 target 2017, 2018 SAU implementation of Programs are aims to have the strategy implemented in at least 25 counties. These outreach; functional targets will be deemed to have been met when an agreed sub-set of December 2018 Local activities from the implementation plan of the beneficiary outreach G&CM mechanism strategy have been implemented in at least 10 counties (and 25 counties target: Description31 of for 2019). The second target for December 2018 aims to have a county the local-level G&CM and sub-county G&CM system designed and implemented through the system programs MISs. This target will be deemed to have been met when the system has been implemented in at least 20 sub-counties. This indicator assesses resulting improvements in beneficiary awareness of G&CM systems. This indicator target will be deemed to have been An met when beneficiary awareness of G&CM procedures is above the % of Program independent agreed cut-offs, 30% of beneficiary households by December 2018 and Beneficiaries who can agency 9 40% of beneficiary households by December 2019. This will be 2017, 2018 PIBS name two means of contracted to measured through the PIBS survey and will be assessed based on making a complaint carry-out the whether households in the sampled locations have a member present PIBS survey during the survey who can name two means of contacting the program for the purposes of submitting a grievance or updating their information. This indicator aims to strengthen the verification of beneficiary eligibility by adopting an SR and improve the internal controls on the Single Registry is program payrolls. The MISs are deemed to be fully operational if operational and related procedures and standards for internal payroll controls are 10 program MISs use Annual MIS SPS documented in the OMs, the MISs have up-to-date information, and the Standard for Internal MISs are being used to carry out the checks on enrolment and Payroll Controls beneficiary lists. The SR will be deemed to be fully operational if the SR is housed on servers in the SPS with up-to-date information; the SR 31 This description could, for example, form part of a revised OM or could be a standalone set of guidelines for county and sub-county level staff. 26 is being used to analyze the list of existing non-beneficiary households to identify households not complying to targeting criteria; the SR is linked with the IPRS; and the SR is being used to produce reports on the M&E) framework. Safety nets are long-term interventions that require multi-annual % of NSNP funding commitments from the Government. To be sustainable, they need Printed estimates and 11 financed by the Government financing and must be reflected in the Government budget Annual SAU subsequent analysis Government document. This indicator tracks the Government commitment to financing the NSNP. This indicator is in response to the need to create a crisis response Number of capacity within the NSNP. The NDEF requires that the Government households per year 12 allocate resources to scale up the NSNP. Once the NDEF is operational Annual MIS HSNP paid through the and funded, this indicator will track the number of households paid out NSNP and of NDEF by this fund. This indicator tracks the foundation building for provision of Target 1: SR module complementary social and productive services to NSNP beneficiaries. assessment, and a letter NSNP beneficiaries’ This indicator will be deemed to have been met when (i) a signed by PS access to complementary services module in the SR and formal data sharing MEACL&SP adopting 13 complementary social protocols are ready and (ii) agreements have been signed with at least 2017, 2018 the data sharing SPS and productive two complementary service providers. Specific actions and number of protocol, with the services is promoted beneficiary households to be included under the agreements will be protocol attached. based on identified complementary services, existing capacities, and Target 2: Signed conditions on the ground, and will be detailed in the agreements. agreements The MEACL&SP will develop a comprehensive time-bound FM action plan to systematically address the fiduciary risks to the program. The FM action plan will include concrete measures with clear deadlines, and the achievement of the indicator target will be measured against actions A report detailing the Fiduciary systems for related to four areas related to: (i) improved reconciliation process of ways in which the Independent 14 NSNP have been the payroll; (ii) strengthened payroll verification and approval Annual agreed priority short Consultant strengthened workflows; (iii) better segregation of duties; and (iv) compliance of term actions have been program MISs with Operational Manuals. achieved. The three targets will be deemed to have been met once the MEACL&SP implements cumulatively 30 percent, 70 percent, and 100 percent of the agreed critical actions listed in the FM action plan. 27 Table 2.1. Disbursement Linked Indicator Matrix - Additional Financing (US$50 million) % of Indicative Time Line for DLI Achievement Rationale for Change US$ DLI DLI Description Total December December December million Baseline July 2017 US$ 2017 2018 2019 1c (i) 1d Modified 1c (ii) 1e (ii) 40,000 This indicator remains the same, Government NSNP Government additional but four new DLRs are takes over Expansion takes over the households in introduced. The DLRs proposed the Plan, including financing of the the NEDI focus on (a) Government taking financing of NEDI remaining counties over financing of additional 15,000 CT- expansion, 25,000 CT- enrolled in the beneficiary households to ensure OVC adopted OVC NSNP and paid sustainability and (b) expansion beneficiary beneficiary for through the in the NEDI counties. households households Government’s Expansion will be targeting poor (US$5) budget households (not categorical DLI 1 - Additional groups). households are enrolled 0 1e (i) 30,000 in the NSNP additional households in the NEDI counties enrolled in the NSNP and paid for through the Government’s budget (US$11.57) Allocated amount: 38 76% 3 3 16.57 15.43 10a 10b This indicator has been Complementary Agreements introduced to support the DLI 10 NSNP services signed with at Government in building the beneficiaries’ access to module in SR is least two foundation for provision of complementary social n.a. ready and partners complementary social and and productive services formal data providing productive services to the NSNP is promoted. sharing relevant beneficiaries through linkages protocols are complementary and partnership with other available for services to organizations/programs 28 use of potential NSNP delivering the relevant services. partners beneficiary households Allocated amount: 3 6% 2 1 11a 11b 11c This indicator is being Implementation Implementation Implementation introduced to ensure that the DLI 11 - Fiduciary of 30 percent of of 70 percent of 100 percent fiduciary systems for the NSNP systems for NSNP have n.a. agreed critical of agreed of agreed are strengthened to address the been strengthened FM actions critical FM critical FM high-risk rating and the mention actions actions of systemic weaknesses in repeated audits. Allocated amount: 9 18% 2.7 3.6 2.7 Total AF 50 3 7.7 21.17 18.13 % of Total AF 6% 15.4% 42.3% 36.3% Table 2.2. Disbursement Linked Indicator Matrix - Modifications of Existing DLIs % of Indicative timeline for DLI Achievement Rationale for Change DLI Description US$ Total DLI July December December million December 2019 US$ Baseline 2017 2017 2018 This indicator has been removed, since the massive expansion of the NSNP happened before the  DLI 2 - Percentage of baseline was undertaken and there Program Beneficiaries Indicator removed is no new massive expansion who conform to the envisioned currently to enable Targeting Criteria significant improvements. Recertification needs to be the focus moving forward. 2b Plan The important focus for the adopted for Program to ensure that the right how all four people are in the Program should 2c Completion NSNP be on recertifying existing of the rollout of  DLI 2 - System for programs will beneficiaries. The new DLI Not in the recertification of NSNP maintain an therefore focuses on putting in place recertification beneficiaries is in place up-to-date place a functioning recertification plan in at least registry of system, including the plan and it 20 sub-counties beneficiaries implementation. Protocols will through include re-registration for the recertification HSNP. 29 % of Indicative timeline for DLI Achievement Rationale for Change DLI Description US$ Total DLI July December December million December 2019 US$ Baseline 2017 2017 2018 Allocated amount: 15 19% 5 10 Reallocation from original DLI 2 The DLI remains the same, but the DLR is modified. The main challenge with achieving this DLI relates to delays in submitting funding requests from the MEACL&SP to the NT, and the subsequent delayed release of 5. 75% of all funds. The DLI 5 continues to DLI 5 - Percentage of payments measure timeliness of payments, payments made on time disbursed to but it is proposed that the target for to Payment Service 12% Payment the DLI is increased from the Providers for transfer to Service original target of 65 percent to 75 Program Beneficiaries Providers on percent (with a new baseline of 12 time percent). Further, the ‘window’ for considering a payment on time is increased and payments will still be considered to be on time, if the funds and payroll documentation are sent to the PSP within 15 calendar days of the deadline. Allocated amount: 15 19% 15 6a (ii) DLR 6a (ii) has been modified to Grievance and include ‘case management’ and the Case protocol has been modified, Management including the following: mechanism is ‘implementation of a system to functional at 6b (iii) enable decentralized recording of DLI 6 - Grievance and 6b (i) all levels for Beneficiary grievances and case management Case Management Beneficiary Not all four cash awareness of updates through the MIS and its mechanisms for the outreach functional transfer transfer amount implementation in at least 20 Cash Transfer strategy programs and G&CM constituencies’. The new 6b is Programs are functional developed (US$10) system introduced to replace the previous indicator measuring beneficiary 6b (ii) awareness. It is proposed that the Beneficiary indicator focuses on the outreach beneficiary outreach strategy and strategy its implementation, as well as 30 % of Indicative timeline for DLI Achievement Rationale for Change DLI Description US$ Total DLI July December December million December 2019 US$ Baseline 2017 2017 2018 implemented measures beneficiary awareness in at least 20 above an agreed cut-off for at least sub-counties three of the four programs (US$10) (proposed cut-offs: 60% for awareness of amount of transfer and 30% for being able to name two means of making a complaint or program updates—current baseline for G&CM awareness is 8.8%). DLR 6b (iii) will be binary. Allocated amount: 30 37% 3 20 7 Reallocation from original DLI 6b DLI 6.2 Percentage of This indicator will be removed and Program Beneficiaries included under 6b (iii) (see above). who can name two Indicator Removed It is important to widen the scope means of making a of C&G to include program complaint updates. Total undisbursed amount from original 60 3 40 17 Program Table 2.3. Results Achieved as of December 2017 DLI DLR Disbursed SDR millions a. Expansion plan for the NSNP, informed by poverty and vulnerability criteria adopted 6.80 b (i) 65,000 additional households enrolled in the NSNP according to the agreed expansion 16.60 plan and paid for by the GoK in comparison with the July 2013 baseline DLI 1 - Additional households are enrolled in the NSNP b (ii) 130,000 additional households enrolled in the NSNP according to the agreed expansion 16.60 plan and paid for by the GoK in comparison with the July 2013 baseline b (iii) 235,000 new households enrolled in the NSNP according to the agreed expansion plan 24.20 and paid for by the GoK in comparison with the July 2013 baseline* DLI 2 – Percentage of Program Beneficiaries who a. Establishment of baseline 3.50 conform to the Targeting Criteria DLI 3 - Single Registry is operational and program a. Program MISs fully operational using agreed standards for internal payroll controls 10.00 MISs use Standards for Internal Payroll Controls 31 DLI DLR Disbursed SDR millions b. Single registry is fully operational with links to the IPRS 6.70 DLI 4 - Percentage of NSNP payments made a. 60% of NSNP payments made electronically using two-factor authentication 4.00 electronically using Two-Factor Authentication b. 90% of NSNP payments made electronically using two-factor authentication 6.00 DLI 6 - Grievance and Case Management mechanisms for the Cash Transfer Programs are a (i) C&G mechanism is functional at the national level for all four cash transfer programs 3.34 functional DLI 8 - Recipient has adopted consolidation a. Strategy for consolidating the CT-OVC, OPCT, PWSD-CT, and UFS-CT adopted 3.34 strategy DLI 9 - HSNP is financed a. The GoK finances the HSNP in line with budget and policy commitments 3.34 104.42 * DLI 1d has been fully achieved, but the Government is yet to submit the evidence for an outstanding SDR 2.6 million for an expansion that happened in October 2016. 32 Table 2.4. Consolidated DLI Table including AF and Original Program Allocation per DLR (US$, millions) DLR FY17/18 FY17/18 FY18/19 FY19/20 DLI Assessment: July Assessment: December Assessment: December 2018 Assessment: December 2017 2017 2019 Results Area 1: Expanding cash transfer programs to promote more comprehensive and equitable coverage 1c (ii) Government takes over the financing of the remaining 25,000 CT-OVC beneficiary households 1e (ii) 40,000 additional 1c (i) Government 1d Modified NSNP (US$5) households in the NEDI takes over the 1. Additional households are Expansion Plan, including counties enrolled in the financing of 15,000 enrolled in the NSNP NEDI expansion, adopted 1e (i) 30,000 additional NSNP and paid for through CT-OVC beneficiary (US$3) households in the NEDI counties the Government’s budget households (US$3) enrolled in the NSNP and paid for (US$15.43) through the Government’s budget (US$11.57) Results Area 2: Strengthening program systems to ensure good governance 2b Plan adopted for how all four 2c Completion of the rollout 2. System for recertification of NSNP programs will maintain an of the recertification plan in NSNP beneficiaries is in place up-to-date registry of beneficiaries at least 20 sub-counties through recertification (US$5) (US$10) 3. Single Registry is operational and program MISs use Standards for Achieved Internal Payroll Controls 4. Percentage of NSNP payments made electronically using Two- Achieved Factor Authentication 5. Percentage of payments made on 5 75% of all payments disbursed time to Payment Service to Payment Service Providers on Providers for transfer to Program time (US$15) Beneficiaries 6a (ii) Grievance and Case Management mechanism is 6b (iii) Beneficiary 6. Grievance and Case Management 6b (i) Beneficiary outreach functional at all levels for all four awareness of transfer mechanisms for the Cash Transfer strategy developed and cash transfer programs (US$10) amount and the G&CM Programs are functional adopted (US$3) system (US$7) 6b (ii) Beneficiary outreach strategy implemented in at least 20 33 DLR FY17/18 FY17/18 FY18/19 FY19/20 DLI Assessment: July Assessment: December Assessment: December 2018 Assessment: December 2017 2017 2019 sub-counties (US$10) Results Area 3: Harmonizing cash transfer program to increase coherence of the safety net sector 7 System for scaling up the NSNP as part of the national drought risk 7. System for scaling up the NSNP management system has been adopted has been created with agreed levels of Government contingency financing (US$20) 8b Strategy for consolidating the CT- 8. The Government has adopted the OVC, OPCT, and PWSD- consolidation strategy CT implemented (US$10) 9. HSNP is financed Achieved 10. NSNP beneficiaries’ access to 10a Complementary 10b Agreements signed with at complementary social and Services module in SR is least two partners providing productive services is promoted ready and formal data relevant complementary services sharing protocols are to NSNP beneficiary households. available for use of (US$1) potential partners (US$2) 11a Implementation of 30 11b Implementation of 70 percent 11c Implementation of 100 11. Fiduciary systems for the NSNP percent of agreed critical of agreed critical FM actions percent of agreed critical FM have been strengthened FM actions (US$2.7) (US$3.6) actions (US$2.7) Number of DLRs per assessment 2 5 8 4 Total disbursement per assessment US$23 million US$20.7 million US$61.17 million US$35.13 million Total = US$140 million 16% 15% 44% 25% 34 DLI Verification Protocol # DLI DLR Definition/ Scalability of Protocol to evaluate achievement of the Rationale for any Description of Disbursement DLI and data/result verification Changes achievement (Yes/No) Data Verifica Procedure source/ tion agency Entity 1 Additional Remaining 40,000 At December 2016, 40,000 Yes, and time CT-OVC SPS SAU will prepare This is a new households are CT-OVC CT-OVC beneficiary bound. The payroll a report that DLR to support enrolled in the beneficiary households were financed amount and confirms: (i) the the Government NSNP households financed by DfID financing. 15,000 disbursed is 2017/18 number of CT- in taking over by the Government of these are expected to be proportional to Governme OVC financing of from July 2018 financed by Government the additional nt of beneficiaries beneficiary from its general revenue number of Kenya previously paid households to from the July/August 2017 households Budget for by DfID that ensure payment cycle and the financed by are now financed sustainability. remaining 25,000 from the Government by Government July/August 2018 payment from its general from its general cycle. For a household to revenue from revenue (and be financed by any payment have been paid Government, they must cycle prior to for at least one have received at least one and including cycle); and (ii) payment in which the the July/August the date at which payment has been financed 2018 payment Government from the Government from cycle.32 By financing started. its general revenue. July/August The SPS will 2018, submit this report Government by December take-over of the 2018 to the total 40,000 CT- World Bank. OVC beneficiary households has to be achieved for full disbursement, with evidence 32 The July/August payment cycle in any given year is due to be paid in September of that year. Even if this payment is delayed, as long as it is financed by Government it will count as contributing to the achievement of the DLI. 35 submitted by December 2018. For this DLR, US$200 will be disbursed for each additional household paid for by the Government. Modified NSNP The Government adopts a No Letter SPS The SAU and This DLR Expansion Plan, modified NSNP Expansion signed by NDMA together establishes the which includes Plan detailing (i) any MEACL& will amend the framework under NEDI expansion planned expansion SP and existing NSNP which expansion and adopted including, at a minimum, MODP Expansion Plan targeted the planned expansion in adopting to (i) update specifically at the the NEDI counties; (ii) the the NSNP current coverage NEDI counties criteria used to inform the Expansion by each of the can take place. geographic expansion of Plan with four programs on Further, changes SAU programs, should be the plan a location by in Government informed by the most and location basis; organizational recent poverty data, such Printed (ii) include any structures and as the KIHBS 2016/17; Estimates planned consolidation of (iii) the policy decisions on attached. expansion for the the three cash expansion of the three period up to the transfer programs SAU programs will work end of December which established alongside the ongoing 2019 including, the SAU, results operation of the HSNP at a minimum, in changes to program in the four the planned data/source / counties where HSNP expansion in the agency and operates; (iv) evidence NEDI counties; procedures. that the Government’s (iii) any Printed Estimates for the adjustments to relevant Sector(s) reflects, the vulnerability at a minimum, the and poverty resources required to analysis; and (iv) finance the expansion and any adjustments maintain existing coverage. to the policy decisions. The SPS will submit the modified 36 NSNP Expansion Plan to the PS MEACL&SP and the Chief Executive Officer (CEO) NDMA for approval. Once approved, the SPS will submit this plan to the World Bank. Should the NSNP Expansion Plan need to be modified, this will be done in consultation with the World Bank, include the same information as detailed in the original plan, and be approved by the relevant authorities. Number of This DLR is concerned Yes. The Program SPS SAU will prepare This DLR additional specifically with (i) amount MISs and a report that represents the households, in the expansion by the SAU disbursed is Financial details: (i) data importance of NEDI counties, programs in the NEDI proportional to Reports from the SAU expanding enrolled in the counties according to the the additional programs MISs assistance to new NSNP and paid for modified NSNP Expansion number of on the number of households and through the Plan (DLI 1c) and (ii) households. households ensure Government’s increased financing of the This is (existing and sustainability budget HSNP by the Government calculated as the new) enrolled through of Kenya. Expansion by net change from and paid by the Government the SAU programs in the the baseline NSNP, by take-over of NEDI counties would from the program and sub- financing target poor households modified NSNP county for one assistance. (and not use the existing preceding Further, changes 37 categorical targeting by Expansion Plan. payment cycle as in Government SAU programs) and is compared to organizational expected to reach 50,000 For this DLR, December 2017 structures and additional households. US$385.72 will baseline and consolidation of Increased financing of the be disbursed for confirmation that the three cash HSNP by the Government each additional all of the transfer programs of Kenya builds on already household beneficiaries of which established confirmed commitments to enrolled. the SAU the SAU, results finance at least 54,000 programs are in changes to households and seeks to financed by the data/source/ increase financing beyond Government agency and this figure by 20,000 from its general procedures. (reaching 74,000 revenue; (ii) households). Therefore, analysis additional households confirming that include: these households were selected in (i) 50,000 households accordance with newly targeted by the SAU the modified in the NEDI counties that NSNP Expansion have been selected in Plan and (iii) accordance with the changes in the modified NSNP Expansion amount of Plan (see DLR 1c) Government financing to (ii) An increase of 20,000 HSNP from its in the number of HSNP general revenue beneficiary households and the number financed by the of additional Government from its households general revenue beyond the supported by this current confirmed change. The SPS commitment of 54,000 will submit this households report to the World Bank. The targets are cumulative figures against a December 2017 baseline (established by the modified NSNP Expansion Plan) with a total of 70,000 additional households paid for by 38 Government by June 2020. 2 System for Plan adopted for The Government adopts a No Letter to SPS The SAU and The original recertification of how all four NSNP plan for recertification be co- NDMA will indicator was NSNP programs will which details: (i) clear signed by prepare the plan replaced as it was beneficiaries is in maintain an up-to- principles of when the PS that details the difficult under the place date registry of recertification33 will be MEACL& vision for original DLI to beneficiaries used to update the registry SP and recertification for capture the through of beneficiaries; (ii) CEO the SAU desired outcomes recertification principles for establishing NDMA programs and re- due to three main a proposed frequency with adopting registration for reasons: (i) the which recertification of the plan the HSNP; and massive beneficiaries will take (and the expansion of the place; (iii) a three year associated implementation NSNP took place implementation schedule Implement schedule before the for the roll-out of these ation detailing steps to baseline survey principles in line with Schedule) rolling this out in of the PIBS (an available budget and with the the subsequent arrangement to human resources for relevant three years. The measure recertification; (iv) plan MEACL&SP achievement of Measures to be taken for attached will submit the the DLI) was households no longer adopted decision conducted; (ii) eligible under the program; and related plan the PIBS reported and (v) explanation for to the World a baseline much how recertification will be Bank. higher than the financed. one originally estimated; and The DLR will be deemed (iii) the to have been met once the Government has plan is finalized and not confirmed adopted. funding for any massive Completion of the The DLR will be deemed Yes, after the A report SPS The SAU will expansion during rollout of the to have been met once the first ten sub- on the develop a report the Program’s recertification plan roll out of the counties. For completio on the lifetime. Given in at least 20 sub- recertification plan has this DLR, US$5 n of the completion of the the current 33 For the purposes of this protocol recertification is deemed to be a process in which registered beneficiaries are reassessed to ensure that they remain eligible for the program in which they are enrolled. The plan will specify HSNP plans for re-registration and MEACL&SP plans for recertification of the SAU programs. 39 counties been completed in at least million will be roll out of roll out of the reality, these two 20 sub-counties.34 This disbursed for the recertification DLRs will thus roll-out will not include the total of the recertificat plan in at least 20 help to develop counties where the HSNP first ten sub- ion plan in sub-counties, and implement is operating. counties, and at least 20 including the the recertification US$500,000 sub- evidence of the plan, which is will be counties achievement and more appropriate disbursed for analysis of the at this stage of each sub- new data as a the Program. county, result of thereafter. recertification, and measures taken35 in accordance with the recertification plan. The SPS will submit this report to the World Bank. 5 Percentage of 75% of all For payments to be made Yes. The Timeliness SPS The SAU will The DLI remains payments made on payments disbursed on time, funds and payroll amount of prepare a the same, but the time to Payment to Payment Service documentation need to be disbursed is transfers timeliness of DLR is modified. Service Providers Providers on time sent to the Payment proportional to report transfers report The main for transfer to Service Providers (PSPs) the performance based on challenge with Program at least five working days improvement as information achieving this Beneficiaries before the start of the defined by the provided by the DLI relates to payment window. For the lowest result38 four cash transfer delays in purposes of this DLR, achieved over programs. The submitting payments will still be the three prior report will funding requests considered to be on time, if payment cycles. indicate for each from the the funds and payroll This is program and by MEACL&SP to documentation are sent to calculated as the each payroll39 (i) the NT, and the the PSP within 15 calendar net change from the date the subsequent days of this deadline. The the baseline disbursement and delayed release of percentage of on time divided by the payroll were due funds. The DLI 5 payments is calculated as percentage to the Payment continues to 34 In the event that a sub-county covers part of a constituency, the entire constituency will be covered under the recertification to ensure effective involvement and oversight by the relevant CSAC (Constituency Social Assistance Committee). 35 The measures described in this report will include actions and communications (to beneficiaries) regarding program exits and suspensions; but will not include the completion of the necessary actions to identify and enroll replacements. 40 the number of NSNP improvement Service measure payments sent to the required by the Provider;40 (ii) timeliness of Payment Service Provider DLR. The the date the payments, but it within 15 calendar days of baseline is 12 payroll was is proposed that the due date36 divided by percent based provided to the the target for the the total number of NSNP on a recent Payment Service DLI is increased payments made for each assessment of Provider; (iii) the from the original payment cycle. An NSNP timeliness of date the funds target of 65 payment is defined as a per transfers. were transferred percent to 75 beneficiary transaction for to the Payment percent (with a which both funds and For this DLI, Service provider; new baseline of payroll documentation US$238,096 and (iv) the 12 percent). have been sent to the PSP. will be number of Further, the First payments (including disbursed for beneficiaries ‘window’ for any lump-sum payments each percentage covered by the considering a which make-up the first point increase payroll. The SPS payment on time payment) to beneficiaries from the will submit one is increased and newly enrolled as part of baseline of 12 report for this payments will program expansion will percent up to a DLI following still be not be included in this maximum of 75 assessment of considered to be calculation,37 but all percent. DLI 5 to the on time, if the subsequent payments to World Bank. funds and payroll such households will be documentation considered. DLI 5 will are sent to the have been deemed to be PSPs within 15 met if the percentage calendar days of achieved meets the the deadline. required level for three consecutive payment cycles. 38 For example, the percentage of payments disbursed to Payment Service Providers on time for three consecutive cycles could be 50 percent, 27 percent, and 35 percent, respectively, with the lowest achieved result being 27 percent. Then, the disbursement would be proportional to 27 percent, with US$238,096 being disbursed for each percentage point increase from the baseline of 12 percent (i.e. 15 percentage point). 39 Most programs have one payroll, but the CT-OVC program currently has five payrolls. This is because it has contracts with two Payment Service Providers and because it is supported by multiple financing sources. 36 The due date being 5 days before the transfer window is opened. 37 Such payments may constitute a special payroll which may be generated at any point during a payroll cycle. 40 Five days before the start of the transfer window. 41 6 Grievance and Grievance and Case This DLR is concerned No (i) SPS The SAU and The previous Case Management Management with the existence of Program NDMA will indicator was Mechanisms for mechanism is G&CM mechanisms. DLR OMs collate the above changed due to the Cash Transfer functional at all 6a (ii) incorporates detailing (i) – (vii) data challenges in Programs are levels for all four structures at local level and the sources from the measuring functional cash transfer is defined as (i) the G&CM program and improvement of programs continued functioning of for each of consolidate them. knowledge of the G&CM mechanism at the The sampling for beneficiaries on the national level,41 (ii) the programs; the PIBS survey the complaint and establishment of (ii) will be as defined grievance BWCs/RCs, according to program in the survey mechanisms and the program OMs42 in at MISs; (iii) ToR and as it did not least 70 percent of (PIBS) letter subsequent include case sampled locations; and (iii) documenti modifications. In management the design and ng staff each location updates. This implementation43 of a assignmen visited, the modified DLR system to enable recording ts and survey will verify includes case of G&CM through the existence the presence of management programs MIS at county of the BWCs/RCs.45 updates, and also and sub-county levels in at hotlines; The SPS will stresses the need least 20 sub-counties. (iv) submit to the to improve service World Bank a information flow charters; letter confirming and regular (v) the achievement of reporting from annual the DLR, with county to national PIBS the consolidated level through Survey, report on the program MISs at (vi) functionality of local levels. descriptio the G&CM n44 of the system and a 41 Functional Grievance and Case Management Mechanism at the national level is made up of the following: (i) the Operations Manual for each of the four programs detailing the Operations Manual for each of the four programs detailing the procedures for making, receiving, recording and responding to grievances and case management updates; (ii) the programs’ MISs have a functional module to record the grievances and case management re ceived and the actions taken; (iii) assigned staff at national level for managing complaints according to Operational Manuals; (iv) Service Charters; and (v) working hotlines in place for all of the programs, as specified in the Operations Manuals. 42 The Program Operational Manuals detail the composition of the BWCs/Rights Committees and whether there is one committee per program, or one committee covering several programs. 43 The system can be considered implemented when the sub-counties have the necessary equipment (i.e. computers), with the G&CM MIS modules installed and functioning, data entered, and the ability to generate reports using this data 44 This description could, for example, form part of a revised Operations Manual or could be a standalone set of guidelines for county and sub-county level staff 42 system to copy of the PIBS enable attached. recording of G&CM at the county and sub- county levels through the programs MISs, and (vii) report detailing its implement ation in at least 20 sub- counties. Beneficiary This set of DLRs assesses No Copy of SPS The SAU will This new outreach strategy efforts to improve the prepare the indicator focuses for SAU programs beneficiary awareness of beneficiar beneficiary on the beneficiary implemented in at key program parameters y outreach outreach strategy. outreach strategy least 20 sub- including awareness of the strategy in The SPS will to improve counties and transfer amount and how to form and submit it to the awareness, and beneficiary communicate with the substance World Bank. measures awareness improved program regarding acceptable beneficiary across NSNP grievances and updates. to the awareness in at World least 3 out of 4 DLR 6b (i) assesses the Bank programs above development and adoption agreed cut-off of a beneficiary outreach levels for strategy for the SAU grievance programs. This DLR will mechanisms and be deemed to have been 45 The survey will comprise of both a beneficiary survey and a process component focused on program implementation which will involve key informant interviews. 43 met when a beneficiary awareness of outreach strategy for the program transfer SAU programs has been values. developed detailing, at a minimum: (i) the outreach strategies to be used; (ii) the key communication messages; and (iii) a three year implementation schedule. DLR 6b (ii) assesses the No A report SPS The SAU will implementation of the detailing prepare a report beneficiary outreach implement detailing strategy. This will be ation of implementation deemed to have been met the in at least 20 sub- when an agreed sub-set of beneficiar counties. The activities from the y outreach SPS will submit implementation plan of the strategy in this report to the beneficiary outreach at least 20 World Bank. strategy has been sub- implemented in at least 20 counties sub-counties. DLR 6b (iii) assesses Yes. Half of the The PIBS SPS The SAU will resulting improvements in DLR can be coordinate the beneficiary awareness. disbursed if 60 PIBS undertaken This DLR will be deemed percent of by an external to have been met when beneficiaries or firm. The beneficiary awareness of any member of sampling for the the amount of the transfer the PIBS will be as and grievance and case beneficiaries’ defined in the management procedures household survey ToR and are above the agreed cut- present during subsequent offs for at least three of the the PIBS survey modifications. four programs, with are aware of the The survey will proxies for awareness and correct amount include questions cut-offs defined as follows: of the transfer assessing (1) 60 percent of for the program beneficiary beneficiaries or primary in which they awareness of caregivers in the PIBS are enrolled. core program 44 sampled locations are Another half of parameters, aware of the correct the DLR can be including amount amount of the transfer for disbursed if 30 of the transfer, the program in which they percent of and how to are enrolled; (2) 30 percent beneficiary communicate of beneficiary households households in with the program in the sampled locations the sampled for the purposes have a member present locations have a of submitting a during the survey who can member present grievance or name two means of during the updating their contacting the program for survey who can information. The the purposes of submitting name two SPS will submit a grievance or updating means of a letter their information. contacting the confirming program for the achievement of purposes of the DLR, with submitting a copy of the PIBS grievance or attached, to the updating their World Bank. information. 10 NSNP Complementary The SPS will coordinate No SR Indepen The SPS will The Government beneficiaries’ Services module in the development of a module dent develop the SR is keen to move access to the SR is ready and module in the SR to assessmen consulta module beyond cash complementary formal data sharing analyse the characteristics t, and a nt assessment and transfer programs social and protocols are of the NSNP beneficiaries letter data sharing to more productive services available for the use who may be eligible for signed by protocols. comprehensive is promoted of potential partners complementary services PS social protection provided by other service MEACL& programs. The providers. This module SP Government has will complement the on- adopting already started going efforts by the the data mapping of the Government to map sharing relevant complementary services protocol, complementary relevant for beneficiaries in with the services. This the SR, and will build the protocol new DLI would foundation for wider use of attached. complement this SR data as a common effort and support platform for poverty and the Government vulnerability based social in their efforts to protection programs in the develop a more 45 country. The development comprehensive of the module will be sub- social protection contracted to an program. independent agency. Protocols for sharing the data on beneficiaries for the use by other service providers as potential partners will also be finalized. Agreements signed This DLR will formalize No At least Indepen The SPS will with at least two partnerships through two new dent enter into formal partners providing signing of new agreements agreement Verifica agreements with relevant with at least two partners s signed tion at least wo complementary providing relevant with two Agency partners services to NSNP complementary services to partners providing beneficiary relevant members of providing relevant households NSNP beneficiary relevant complementary households. Specific compleme services. These actions and number of ntary will be verified beneficiary NSNP services. by an households to be included independent under the agreements will verification be based on identified agency, engaged complementary services, by the existing capacities, and Government or conditions on the ground, one of its and will be detailed in the partners. Once agreements. verified, the SPS will submit to the World Bank the module assessment, along with the signed letter by the PS MEACL&SP adopting the data sharing protocol, with the protocol 46 attached, as well as the two new signed agreements. 47 11 Fiduciary systems Implementation of The MEACL&SP will DLI 11a is not Three SPS The SAU will The fiduciary risk for NSNP have agreed critical FM develop a comprehensive scalable. Once separate prepare three rating for the been strengthened actions time-bound FM action plan DLI 11a has reports, separate reports Program remains to systematically address been achieved prepared detailing how 30, High, and a the fiduciary risks to the DLR 11b is by an 70 and 100 number of audits program, which has been scalable and independe percent of the have consistently included in the PAP. The US$90,000 will nt agreed critical highlighted FM action plan will be disbursed for consultant, FM actions, systemic include concrete measures each percentage detailing cumulatively, weaknesses and with clear deadlines, and point above 30 the ways have been provided the achievement of the percent of the in which implemented. recommendations DLR will be measured agreed critical 30, 70 and SPS will submit to address them. against critical agreed FM FM actions 100 each of the three This DLI will actions related, but not implemented, percent of reports to the support the limited to, four areas, up to a the agreed World Bank. Government to which are: (i) improved maximum of critical strengthen the reconciliation process of US$3,600,000. FM fiduciary systems the payroll; (ii) DLR 11c is actions, for the Program. strengthened payroll scalable and cumulativ verification and approval US$90,000 will ely, have workflows; (iii) better be disbursed for been segregation of duties; and each percentage achieved. (iv) compliance of point above 70 programs MISs with OMs. percent A priority sub-set of the achieved of the critical FM actions will be agreed critical mutually agreed between FM actions the World Bank and implemented, Government for the up to a purpose of this DLI.46 maximum of The three DLRs will be US$2,700,000. deemed to have been met Funds can only once the MEACL&SP be claimed for implements 30, 70, and actions that 100 percent of the agreed have been fully critical FM actions, completed. cumulatively. 46 It is expected that the total number the priority sub-set of the critical FM actions will not exceed 10. 48 . Systematic Operations Risk-Rating Tool (SORT) Risk Category Original Rating* Revised Rating Rationale for Change (H, S, M, L) (H, S, M, L) 1. Political and Governance* H H — 2. Macroeconomic — M — 3. Sector Strategies and H S Social Protection Policy has been developed, providing a vision and strategy for the Policies sector. Steps are also under way to draft a new Social Assistance Bill to provide a framework for cash transfer programs. 4. Technical Design of M M — Project or Program 5. Institutional Capacity for — S The implementation capacity in the NEDI counties is lower than other parts of the Implementation and country. A rapid assessment will guide how to mitigate against this risk. Creation of Sustainability SAU and new implementing arrangement also constitute a risk of disruption in implementation and lack of accountability of field officers. 6. Fiduciary S H The fiduciary risk has been increased to High due to the reoccurrence of similar weaknesses in a number of different audits and the need to systematically address these risks in the Program. 7. Environment and Social M M — 8. Stakeholders S L The Government has shown strong commitment to the NSNP, including significant expansion and restructuring of the MEACL&SP to consolidate three of the four cash transfer programs and enhance coordination and efficiency. 9. Lack of ID cards in NEDI — S This challenge is particularly large in the NEDI counties and this poses a risk to the counties Program since a national ID card is required to enable payments to be made to beneficiaries or caregivers of the NSNP. OVERALL H S The overall risk of the AF is considered to be Substantial. It is supporting an existing functioning and well-performing program. Note: H = High; S = Substantial; M = Moderate; L: Low. * Political and Governance, Macroeconomic, and Institutional Capacity were not included in the risk rating for the original project. Instead Country (H) and DLI (M) risks were included. In this table, the original ‘Country’ risk rating (H) has been inserted under Political and Governance. 49 Introduction 1. As part of the preparation of the original NSNP, a comprehensive TA was completed in 2013. Since this AF is only supporting the expansion of the coverage of the existing Program in 10 of the 47 counties where the Program is already operating, the main parts of the original TA remain valid. The NSNP, including the AF, seeks to improve the welfare of and increase resilience among specific vulnerable groups to reduce poverty and vulnerability in Kenya by creating a framework around which the four main cash transfer programs in the country can be better coordinated and harmonized. These four cash transfer programs are as follows: CT-OVC; OPCT; PWSD-CT; and HSNP.47 The first three programs are currently being managed by the MEACL&SP, while the last is managed by the NDMA in the MDP. This addendum (a) summarizes key results achieved since 2013 that are relevant for the assessment of technical soundness; (b) provides additional relevant information related to the AF; and (c) provides an analysis of how the AF remains relevant to the original TA. Strategic Relevance 2. The NSNP clearly remains a key priority for the Government. Cash transfer programs continue to serve as an appropriate instrument to target direct support to the poor and vulnerable, thereby contributing to the goal of reducing poverty and inequality in the country. The recent PIBS 48 found that 94 percent of the beneficiaries reported positive results on household consumption, and 88 percent agreed that the cash transfer programs have led to positive impact on health. Recognizing these positive impacts, the Government is demonstrating strong commitment to the NSNP, as evidenced by an increased investment in the sector. First, it has expanded the NSNP beyond the originally envisioned targets (see paragraph 5 of this annex). Second, to improve coordination and harmonization for more effective delivery of services, the Government has adopted a consolidation strategy and created the SAU under the MEACL&SP with the mandate of implementation of the CT-OVC, OPCT, and PWSD-CT programs supported through the NSNP (see paragraph 22 for more details). Lastly, a harmonized targeting tool has been developed, which will be applied to all four cash transfer programs to further strengthen their targeting efficiency (see paragraph 8). Technical Soundness 3. The Program continues to be technically sound. A number of important results have been achieved in areas highlighted in the original TA (2013). The following section summarizes key achievements relevant for the technical soundness of the Program, a few challenges that still exist, and how they relate to the AF. Program Boundaries, Scope, and Target Group 4. The overall objective and boundaries of the Program remain the same as the AF intensifies coverage in a specific geographic area, where the Program is already operational. The existing Program currently covers all 47 counties in the country and the AF will support an increased coverage in 10 of these counties located in the North and North Eastern region of Kenya. The rationale to expand in these specific counties is underpinned by the need to fast-track development in the region that is experiencing high levels of poverty and development deficit. The exact locations where the AF will 47 The fifth cash transfer program - the Urban Food Subsidy Cash Transfer (UFS-CT), which was part of the original NSNP design in 2013 was discontinued in 2014, and therefore no longer forms part of the NSNP. 48 Phase I of the PIBS was carried out between April and September 2015. 50 increase coverage within these 10 counties will be spelled out in a modified NSNP expansion plan to be informed by poverty criteria. 5. The scope of the Program has expanded since 2013 with enhanced Government ownership and commitment. It was expected in 2013 that by the end of its first phase (2013 –2017), the NSNP will provide support to about 530,000 households, reaching a total population of close to 3 million individuals, constituting approximately 15 percent of the absolute poor. As of now, the NSNP coverage has increased to about 765,000 households, reaching over 4 million people, an increase of almost 43 percent of the expected coverage of households, or about 35 percent increase in coverage of individuals.49 The proportion of program beneficiaries financed by the Government has also increased considerably, with Government financing representing 86 percent in 2016 (compared to 38 percent in 2013).50 Despite these efforts, a large number of eligible poor households however remain uncovered, particularly in the North and Northeastern region where poverty levels are highest in the country. The AF will contribute to this objective. As the Government gradually increases the financing for the NSNP, it will be particularly important to also pay attention to a gradual takeover of the implementation of the HSNP to ensure sustainability of its implementation. Targeting, Change Management, and Recertification 6. To ensure that the expansion of cash transfer programs is guided by need and follows a coherent approach, the Government developed and adopted an NSNP Expansion Plan in October 2014 (with further revisions in October 2015). The NSNP Expansion Plan, supported by the original Program, outlines how each of the cash transfer programs will be expanded between FY14/15 and FY16/17. This was based on ranking locations according to the poverty level and estimating the total number of potentially eligible households under each program in each part of the country.51 The pace of expansion was determined by the budget allocated to the NSNP each year. 7. The targeting conformity of the NSNP is relatively higher than the original estimates. However, as evident from the PIBS baseline (2016), there is still a need to continue efforts to further improve the Program targeting. The PIBS indicates that 76.5 percent of beneficiaries conform to the respective program poverty targeting criteria (proxy means test [PMT]/poverty score) and 75.2 percent of beneficiaries conform to the program categorical targeting criteria (although the categorical conformity is low mainly due to a categorical requirement that the per household equivalence must be less than Ksh 2,000 for urban households and less than Ksh 1,500 for rural households for the OPCT and PWSD-CT).52 8. To further improve targeting of the NSNP, the Government has developed a harmonized targeting tool, which will be used for expansion of the coverage and recertification under the AF.53 The harmonized targeting tool, which is currently being piloted, is using a PMT formula that was 49 These calculations are based on the same average number of households used for the original TA: 5.56 people per household. 50 Note that the percent of total program expenditures paid for by Government is less than 86 percent. Data is from a report on evidence of achievements of DLR 1.2 (January 2017). 51 Using a combination of data from the 2009 Census and from the 2005/06 KIHBS. 52 Although 96.9 percent of OPCT beneficiary households were found to have at least a household member aged 65 years or over, and 99.3 percent of the PWSD-CT households were found to have at least a household member who is disabled, categorical conformity for these two programs is negatively affected by the following: (a) 38.8 percent of OPCT and 25.4 percent of PWSD-CT households have a higher per household equivalence (more than Ksh 1,500 and Ksh 2,000 for rural and urban households, respectively) and 2.5 percent of OPCT and 3.5 percent of PWSD-CT beneficiaries are beneficiaries of other CT programs. 53 Previously, the programs used different targeting tools and undertook targeting processes at different times without any coordination on the ground. 51 developed using the 2005/06 KIHBS. It will be important for the program to revise this formula once the new KIHBS data become available – expected in September 2017. For the expansion planned under the AF, the Government has agreed that the target group will no longer focus only on the categorical groups, but will also consider the poverty profile of the relevant households. This is a key decision given the higher level of poverty in the NEDI counties, and to ensure that some of the poorest households are not left out by simply applying the categorical targeting criteria. 9. There is also a need to strengthen community awareness and a validation process to ensure effective targeting. Recognizing the need for effective engagement with communities and beneficiaries in improving program delivery, the Government is finalizing a communications strategy to raise awareness of program objective, design, and entitlements, among others. In addition, the AF will also support the development and implementation of a beneficiary outreach strategy to build ownership and increase participation in program implementation. It is expected that these efforts will complement the harmonized targeting process by strengthening community capacity for targeting validation. 10. Since there are no current plans for further expanding the NSNP (beyond the AF expansion), it is of great importance to put in place a system for recertification of existing NSNP beneficiaries. To support this objective, DLI 2 in the original Program (percentage of program beneficiaries who conform to the targeting criteria for the program in which they are enrolled), which is no longer as important as recertification, is being revised to ensure that a recertification system is in place for the NSNP. The Government is already in the process of finalizing a pilot for recertification of the CT- OVC beneficiaries, using the harmonized targeting tool, and the revised DLI should help in accelerating the process for the entire Program. 11. The Government is also making increased efforts to put in place procedures to ensure that beneficiary information is kept updated. It is evident from previous audits that more work is needed to strengthen the MIS for the SAU-led cash transfer programs to ensure that beneficiary information is kept updated, beneficiary eligibility conditions are regularly assessed, and where needed, rules on exit from the Program are enforced. Efforts are already under way to strengthen the MIS through a technical assistance financed by the WFP and UNICEF. In addition, a modification is proposed to a DLI in the original Program (DLI 6a (ii)) to support a decentralized use of the MIS and expand its scope from complaints and grievances54 to updates55 as well (see paragraph 16 for further details). Notwithstanding these procedural and systematic improvements, double-dipping by households that are benefitting from multiple programs is expected to remain a challenge. While it could be partly addressed through an enhanced MIS, a policy decision is nonetheless needed on how to handle cases where households are receiving multiple benefits from various programs due to diverse eligibility criteria. MIS and Single Registry (SR) 12. The Government has developed an SR of beneficiaries and is embarking upon an effort to link the SR with other complementary services. As noted in the TA in 2013, over the years, the NSNP has successfully supported the development of MISs for all four cash transfer programs, as well as an SR. This SR is fully operational with links to the Integrated Population Registration Service (IPRS) and individual program MISs, using agreed standards for internal payroll controls (DLI 3). As part of the consolidation of the SAU programs, efforts are now under way to develop a strategy to merge the SAU programs MISs. Attention is also being given to creating linkages with the SR to other existing databases, 54 A grievance could be regarding eligibility, quality of service by the program and/or its partners such as payment providers, issues related to payment amount, and so on. 55 An update could be, for example, reporting a life event (birth, marriage, or death) and change of address. 52 as relevant, and to promote NSNP beneficiaries’ access to complementary social and productive services through the new DLI 10 introduced under the AF (see paragraph 18 for further details). Payments 13. Improvements have been made to the payment system, but challenges still remain and there is a need to improve timeliness of payments. Despite considerable efforts by the Government to streamline the payment process, the Program has not managed to successfully transfer payments on time, particularly for the SAU programs. The inability to make regular and predictable payments to beneficiary households compromises the welfare objectives of the Program. The AF will therefore continue to assist the Government in its efforts to transfer payments on time. The modified Program Action Plan (annex 7) includes an action to encourage collaboration between the NT and MEACL&SP to find a solution to allow for timely flow of funds. The same action also includes monitoring of timeliness of payments throughout the life of the Program. DLI 5 also continues to measure the percentage of payments disbursed to Payment Service Providers (PSPs) on time. However, a minor modification is being made to the result (DLR 5) whereby the original target of 65 percent of payments provided to the PSPs is being increased to 75 percent,56 with a new baseline of 12 percent. It is expected that these measures will allow the Government to address the procedural and operational loopholes in addressing this important area of the Program. 14. Going forward, efforts will also be needed to develop a long-term strategy for the NSNP payment mechanism, as well as to assess adjustments to payment amounts, as needed. The NSNP has put in place a payment system ensuring that all payments to beneficiaries are done electronically, using two-factor authentication (DLI 4). While this has reduced the financial management (FM) risk, further work is needed to develop automated links with the programs MISs and the PSPs in the medium term, including encryption and reconciliation of the payroll. This can, however, not be done until the SAU has finalized the harmonized MIS for the SAU programs, as indicated earlier (see paragraph 12). A number of challenges also remain with the PSPs, and the Government needs to strengthen PSPs contract management in the short term to ensure that they comply with the service standards spelled out in the respective contracts. In the long term, there is a need to develop a payment strategy to guide the future direction on how to move forward with PSPs, and put in place a new and comprehensive solution for payment services. The Government has already requested support from the Financial Sector Deepening Trust to develop such a strategy. Moreover, there is a need to introduce a system to regularly review and adjust transfer amounts to ensure that their value is maintained regardless of inflation. Consideration is also needed to decide whether it is possible to vary the transfer amount by the size of the beneficiary household.57 Accountability and Grievance Procedure 15. While a national-level C&G system for the NSNP is fully in place, further work is needed to make the system functional at all levels. Complaints and appeals procedures are crucial for ensuring the transparency and accountability of cash transfer programs. The Program has been successful in 56 Since 2013, the respective share of the four cash transfer programs within the NSNP has changed, such that the percentage of payments on time has also changed. The PWSD-CT tends to be almost always on time as the cash transfers are provided out of the Government’s recurrent budget, and the HSNP also tends to make payments on time. In contrast, making timely payment for the OPCT and CT-OVC is more of a challenge. Recent analysis has found that once the data on percentage of payments on time are disaggregated by the four cash transfer programs, increasing the target to 75 percent is more relevant and appropriate for the current context. 57 There are several ways of doing this, including (a) full family targeting; (b) per eligible member targeting; and (c) per family member or eligible member supplement to a household level transfer. See Technical Assessment in 2013 (p. 24) for further details. 53 establishing a national-level mechanism (DLI 6a (i)) with adequate staff, setting forth procedures for receiving, recording, and acting on complaints. It also includes service charters to guide program engagement with beneficiaries, as well as functioning MIS modules for tracking complaints and working hotlines for receiving them. Some progress has been made in operationalizing the system further at the local level by establishing CSACs and BWCs in all counties, as well as merging HSNP RCs with BWCs in the four HSNP counties.58 Nonetheless, significant challenges exist in information flow and regular C&G reporting from the county to national level, particularly for the MEACL&SP programs. 16. The current system does not adequately reflect the high volume of information received and actions taken regarding beneficiary household updates. Beneficiary awareness of ways to register complaints has been found to be especially low, such that only 8.8 percent of beneficiaries are aware of two means of making complaints, according to the PIBS baseline (2016). To address these issues, the AF has expanded the C&G mechanism to also include case management information, as well as support strengthening of systems to better capture complaints and updates on the ground through the decentralization of the MIS (modifying DLI 6a (ii): Complaints and Grievance mechanism functional at all levels). The revised DLI is now called G&CM system, accordingly. Efforts will also be made to improve beneficiary awareness of entitlements and make complaints and updates by promoting the development and implementation of beneficiary outreach (this replaces DLI 6.2: Percentage of program beneficiaries that can name two means of making a complaint), complementing the communication strategy that is being finalized. Complementary Actions and Conditions 17. Lack of access to national ID cards by potential beneficiaries continues to be an impediment for households to benefit from the NSNP. The TA in 2013 noted that having a national ID card can enable individuals to access critical social services. It is also a requirement in Kenya under the Anti- Money Laundering Act for beneficiaries to receive cash transfers from a PSP. The lack of ID cards is a particular challenge in the 10 counties where the AF intends to expand NSNP coverage, as it may exclude the most deserving people from benefiting from the Program. Currently, the Program allows alternate caregivers or any other family member with an ID to receive payments on behalf of the beneficiary. Moreover, the NDMA has had some experience in addressing this challenge through the HSNP, and has established a relationship with the NRB, including a Memorandum of Understanding on how to address this issue in the four counties where the HSNP is operating. The MEACL&SP is committed to learn lessons from the NDMA experience and commence collaboration with the NRB to (a) better understand the extent of the problem with regard to the number of people who lack ID cards in the target counties; (b) better understand the procedures and related constraints around issuing a national ID card; and (c) initiate discussions around collaboration needed to ensure a successful expansion in the 10 counties under the AF. 18. The Government has demonstrated its commitment to move beyond cash transfer programs under the NSNP toward a more comprehensive social protection program. The Government has recently created a TWG tasked with preparing a Comprehensive and Integrated Social Protection Program. The working group enjoys high-level political backing, as its mandate is a top priority of the Permanent Secretary (PS) as well as the Cabinet Secretary for the MEACL&SP. It consists of members from key line ministries and development partners who are responsible for conceptualizing what the Government should support moving forward. MEACL&SP is already collaborating with some service providers providing complementary services, but more needs to be done to formalize and systematize such collaboration. For example, the NHIF is already using the SR to identify beneficiaries to whom they 58 These community level structures play a key role in raising awareness of the NSNP among community members and have responsibilities to oversee, support and monitor program activities at the sub-county level including targeting and payment processes. 54 provide health insurance, through which a sub-set of the NSNP beneficiaries is currently receiving such support. However, there is no formal agreement or systematized collaboration between the MEACL&SP and the Ministry of Health. An improved system will consist of better coordination with existing complementary interventions such as livelihood activities, as well as creating stronger linkages among such activities to ensure that they are adequately accessible by currently eligible beneficiaries. To support Government efforts in this area, the AF has therefore introduced a new indicator on enhancing the NSNP beneficiaries’ access to complementary services, focused on adding a module in the MIS for SR along with finalization of data sharing protocols to govern the use of data by relevant partners, and partnership agreements with the relevant service providers (DLI 10). Gender and Citizen Engagement 19. Gender considerations have been effectively incorporated into the design of the four cash transfer programs, which have been demonstrating positive impact on gender outcomes as a result. For example, vulnerability of female-headed households is recognized in the program targeting of both the CT-OVC and HSNP, resulting in majority of the recipients being women, although women are not explicitly targeted as the main beneficiaries. This has enabled women to take more control of the household budgets and participate more in income-generating activities. The HSNP, in particular, has indicated that there may also be small spillover effects into household decision making in general. Evaluations have also found that the cash transfer programs resulted in young women being less likely to become pregnant (5 percentage points lower) and more likely to enjoy better mental health outcomes, such as lower rates of depression, greater belief in their self-agency and self-efficacy, and more positive view of the future. The NSNP collects gender-disaggregated data on key indicators, which the AF will continue. Likewise, the program MISs and the SR will continue to be utilized to collate and analyze data and facilitate monitoring and reporting. 20. The NSNP has in place a citizen engagement mechanism through the G&CM system, and work is on-going to strengthen it further. As previously mentioned, a fully functional G&CM mechanism has been established at the national level, and progress is being made to operationalize it at the local level also (see paragraph 15 for further details). The HSNP, in particular, has come the furthest by decentralizing the MIS related to case management, increasing access points from which beneficiaries can register updates and complaints—currently being rolled out—and establishing protocols for case resolution with the PSP to ensure timely resolution of cases. Beneficiary awareness and feedback mechanisms have also been established, and a communication campaign to inform beneficiaries of the multiple accessibility options is under preparation. Lastly, work is also under way to link the HSNP C&G mechanism with national-level C&G mechanisms through referrals. 21. Continued support will be given through the AF to ensure that the G&CM system is fully effective at all levels for the SAU management cash transfer programs, such that beneficiaries are able to successfully lodge complaints and/or make updates, as well as receive satisfactory action and resolution of the same (see paragraph 16 for further details). In addition, a communication strategy is being finalized to improve beneficiary understanding of the program objectives, design, and components, among others. This will be complemented by the beneficiary outreach strategy, which will be developed and implemented through the AF, to improve engagement with beneficiaries such that they are more aware of their rights and entitlements and are empowered to participate more effectively in the decision-making process of the program, as appropriate. Institutional Arrangement New Institutional Architecture 55 22. The Government recently consolidated three of the four cash transfer programs under a newly established SAU, to reduce fragmentation and overlap and benefit from increased coordination and synergy. As mentioned previously, these three cash transfer programs include the CT- OVC, OPCT, and PWSD-CT managed by the MEACL&SP with the aim of coordinating the delivery of cash transfers while increasing efficiency in the implementation of social assistance interventions within the ministry. The HSNP continues to operate under the NDMA, and the PWSD-CT continues to be implemented in collaboration with the National Council for Persons with Disabilities (NCPWD). The SAU has dedicated staff, headed by a Unit Head and Deputy Head, and operates at the same level with the Department of Children Services (DCS) and the Department of Social Development (DSD). County and sub-county officers from the DCS and DSD will continue to spearhead implementation at the local levels for the CT-OVC and OPCT and PWSD-CT, respectively. These officers will however not report directly to the SAU, but will report to their respective Directors. Implementation of the NSNP has nonetheless been included in their performance contract to ensure accountability against program implementation. The role of the SPS continues to be in policy formulation, setting standards, maintaining the SR, and performing all other roles related to the coordination of social protection activities in the country. 23. Governance and oversight structures have also been established to support the transition process and address any challenges that may arise. A transitional Ministerial Committee will support the transition process, and a Program Working Committee (PWC) will be formed comprising the SAU, DCS, DSD, SPS, HSNP, and development partners to review progress and address challenges. The NSNP Steering Committee, convened by the PS for social protection (MEACL&SP) and co-chaired by the PS for special programs (MDP), as a high-level forum will be retained to discuss policy issues and resolve any issues that cannot be addressed by the Ministerial Committee or the PWC. Previous specific thematic TWGs will also continue, as needed, and will be guided by the PWC. Figure 4.1 presents the new institutional structure. Figure 4.1. Institutional Structure for the SAU in the MEACL&SP 59 59 NSPS: National Social Protection Secretariat; NCPWD: National Council for People with Severe Disabilities; TER: Targeting, Enrollment and Recertification; MEL&R: Monitoring, Evaluation, Learning and Research; CSAC: Cconstituency Social Assistance Committee. 56 24. The Government’s capacity to implement the NSNP has been gradually built, but capacity in the 10 NEDI counties where the AF will be expanding needs further strengthening. A rapid institutional capacity assessment was undertaken in the North and Northeastern region between November and December 2016. The report summarizing the findings of the assessment and key recommendations is currently being finalized and will be used to agree with the Government specific measures needed to enhance implementation and supervision capacity in the NEDI counties. The assessment highlights key capacity gaps and provides recommendations for how to fill those gaps in the short, medium and long term. It recognizes that the consolidation strategy will enable the program to utilize officer from both DCS and DSD for program implementation. This harmonized approach is expected to increase efficiency in deployment of resources to the counties (human resources, equipment and facilities), reporting and key project processes such as targeting and payments. The report highlights the following key challenges: (i) lack of sufficient awareness among beneficiaries; (ii) lack of sufficient staff for implementation; (iii) challenges of the physical terrain in which the officers operate; (iv) budgetary limitation in adequately equipping the respective offices for effective implementation. 25. To address the key challenges identified in the assessment the following are the key recommendations: (i) develop a beneficiary outreach strategy; (ii) review and revise as needed the terms of reference, and guidelines for community-level committees to ensure that their oversight role is in tandem with the consolidation strategy and Harmonized Targeting Methodology; (iii) deploy technical officers to those counties in the NEDI that have insufficient staffing;60 (iv) replace NSNP officers that formed part of the 210 officers recruited last year to support NSNP implementation in stations where they either did not report or have since left;61 (v) ensure minimum required vehicles for program implementation; and (vi) ensure adequate budget allocation for program implementation. Finalization of an implementation plan, including actions and resources necessary to implement these recommendations has been included in the modified PAP (see annex 6). Based on these recommendations, an Implementation Support Plan will be developed which will focus on addressing implementation capacity gaps in the overall program nationwide, with specific focus on capacity in the NEDI counties. Continued support for additional technical assistance needed will also be provided through the existing World Bank- managed trust fund (both through a recipient-executed). Management of EFC 26. The Government recognizes that it is critical to put in place systems, processes, and procedures to detect, deter, and prevent EFC. There is a need to build systems to prevent, detect, and deter EFC in the NSNP to ensure that funds are used for the purposes intended to maintain the integrity of the program. Recognizing the need to better understand measures to mitigate EFC risks, the ministry has drawn on acknowledged international EFC expertise to learn how EFC is controlled in other countries, including where social protection programs and EFC controls are at differing levels of development and maturity. An assessment of the controls for tackling EFC in the NSNP was prepared, focusing on analyzing existing EFC controls against the international best practice and recommending ways to strengthen capacity and improve controls in Kenya over time. Based on the assessment, a draft EFC framework has been prepared. The finalization of the EFC framework and accompanying action plan was delayed due to a number of reasons, including the restructuring of the implementation arrangements for 60 The respective departments should ensure that all sub-counties in the NEDI counties have at least one technical officer, an NSNP recruit, and adequate clerical support. 61 It is important to ensure that the replacements have ICT skills, knowledge and interest in working in the NEDI counties to increase the changes of containing them in the program. Several earlier recruits left the program since they had found another job or due to the challenging NEDI environment. 57 the NSNP. Going forward, it will be important that the framework and action plan are finalized (and aligned with the FM action plan) and that implementation of the same commences. Budget Process and Expenditure Framework Program Financial Sustainability 27. Even with the expanded coverage as a result of the AF, the Program is still considered affordable. In 2013, the total budget allocated to the NSNP was Ksh 8 billion, reaching an estimated 1.6 million people (almost 280,000 households). Since then, the Program has expanded to a total budget of about Ksh 23.5 billion (of which Government budget is Ksh 21.4 billion),62 paying an estimated 4 million people (over 760,00063 households). This represents an expansion of almost 43 percent in terms of coverage of households, or about 35 percent increase in terms of coverage of individuals, compared to what was envisioned in 2013 and included in the original TA, where the Government was expected to reach close to 3 million people (534,000 households) in 2016/17.64 Through the AF, the Program will expand with another 70,000 households in the target counties over a period of three years.65 At the end of this expansion, the program will cost about Ksh 26 billion (of which Government will fund Ksh 25 billion, assuming that no other expansion takes place), but still only represents 0.32 percent of GDP (see table 4.1). It is therefore important to ensure that financial allocations to the NSNP as per the program Medium Term Expenditure and Financial Framework (MTEFF) are included in the sectoral Medium Term Expenditure Framework (MTEF) and annual budgets, such that adequate resources required for the expansion through the AF is assured. Table 4.1. Affordability of Government Financing of the NSNP (Ksh, millions) FY16/17 FY17/18 FY18/19 FY19/20 GoK financing 21,428.35 21,956.50 23,944.98 24,946.67 DP financing66 2,080.00 2,050.00 1,565.22 1,130.43 Total financing 23,508.35 24,006.50 25,510.20 26,077.10 GoK financing as % of GDP 0.31% Total Financing as % of GDP 0.32% Source: Estimates based on the Social Protection, Culture, and Recreation Sector Report (2016), and proposed AF expansion. Funding predictability 28. Program budgets as presented in printed estimates are sufficient for expenditure needs but bottlenecks in the flow of funds can lead to delays in transfers. The annual printed estimates, 62 GoK Social Protection, Culture, and Recreation Report (2016) and further analysis. Actual Government financing has typically fallen short of budget figures as stated in the annual printed estimates but remain above program projections. 63 Households enrolled exceed 850,000, but not all enrolled households are included in the payroll because of delays in issuing bank cards and due to pre-payroll checks. 64 Kenya National Safety Net Program for Results Technical Assessment (2013). 65 It should be noted that the expansion under the AF through DLI 1 will include (a) new households targeted according to the modified NSNP expansion plan in the NEDI counties and (b) any increase in the number of HSNP beneficiary households financed by the GoK (beyond the current confirmed commitment of 54,000). 66 Note that this is considered as parallel financing to the Program, as it does not utilize World Bank systems and the achievement of DLIs under the AF is not dependent on this funding. 58 including estimates for Government financing, are sufficient to meet program needs. Actual disbursements have historically fallen short of the budgeted amounts, but this, in part, reflects the fact that expenditure is less than budgeted (see table 4.2 below). Although budgeted amounts and Government financing have been adequate to date, disbursements of funds from NT throughout the year have not always met the cash flow needs of the four programs. Delays are particularly serious in the first disbursement of each new financial year. However, delays can also happen in any payment cycle because of delays in submitting funding requests from MEACL&SP or delays in responding to these requests by the NT. Table 4.2 Expenditure Review of NSNP (Ksh Million) FY 2013/14 FY 2014/15 FY 2015/16 Program Approved Approved Approved Expenditure Expenditure Expenditure estimates estimates estimates CT-OVC 6,736 4,043 7,756 5,592 9,003 5,835 OPCT 2,857 2,560 5,931 3,233 7,785 4,302 PWSD-CT 770 352 770 715 1,120 1,676 UFS-CT 289 372 - - - - HSNP 2,164 1,216 4,262 4,077 5,492 5,455 SPS 19 15 578 329 849 176 TOTAL 12,835 8,558 19,297 13,946 24,249 17,444 Economic Justification 29. The Program’s economic impact will be further enhanced as the AF expands NSNP coverage. To date, cash transfers have had a proven record of reducing poverty internationally and in Kenya. Previous evaluations have found that participation in cash transfer programs have led to a 13 percent reduction in the share of CT-OVC households living on less than US$1 a day, and a 10 percent reduction in extremely poor households (those in the lowest national consumption decile) under the HSNP. Moreover, by increasing the coverage of the Program in under-served areas of the country, the AF is expected to result in a 7 percent increase in coverage nationally and 25 percent in the North and Northeastern counties, thereby enhancing further the Program’s economic impact. 30. Significant development benefits are likely to accrue to the beneficiaries that will be targeted under the AF expansion, similar to the original program. Various studies have shown that cash transfers have resulted in a broad range of positive development impacts on beneficiary households, including increased food consumption and dietary diversity, advanced school attendance and use of health care, and improved psycho-social outcomes. For example, the PIBS baseline (2016) found that almost 95 percent of the beneficiaries reported positive impacts on both household consumption and dietary diversity. The percentage of beneficiaries reporting positive impact on school attendance and performance was 85.7 percent and household health outcomes was 88.2 percent. Adolescents benefiting under the program also demonstrated safer sexual and social behavior, such that they were found to be less likely to have unprotected sex and multiple partners, and young women were 5 percentage point less likely to become pregnant compared to their counterparts not enrolled in the program. 31. Participation in the NSNP under the AF is expected to lead to strengthened engagement in income generating activities by beneficiaries, as well as positive externalities on local economies. Participation in the NSNP was found to have resulted in greater involvement in economic activities by beneficiaries. These were more pronounced for female headed households, as receiving transfers was 59 associated with an increase in female participation in household-run, non-farm business enterprises, as well as engagement in casual and non-agricultural wage labor activities. For HSNP female beneficiaries specifically, cash transfers enabled them to take more control of the household budget and increase savings and uptake of credit. A CT-OVC evaluation also found income multipliers in the West and the East regions, in which every Ksh transferred to poor households raised local income by Ksh 1.81 in the East region and Ksh 1.34 in the West region. It is therefore expected that a cash injection focused on targeting poor households in a high poverty region with low access to finance will have similar impacts in increasing uptake of credit and savings, as well as improve local income through greater economic activities. Results Framework (RF) 32. The NSNP RF will remain largely unchanged for the AF, although some indicators and targets will be updated to reflect modified and new DLIs/DLRs, as well as the new closing date. The NSNP Results Framework links inputs, activities, outputs, outcomes, and impact and specifies indicators, baselines and targets, frequency, means of verification (data sources), and responsibility. Indicators continue to be largely Specific, Measurable, Attainable, Relevant, and Timely (SMART), and procedures for routine monitoring will be as already established under the NSNP. The revised Results Framework is in annex 1. 33. Capacity for regular monitoring of the NSNP indicators under the Results Framework has been growing but requires further strengthening. Considerable work has been undertaken by the NSNP to build capacity in the programs related to Monitoring and Evaluation (M&E), but the Program is still experiencing challenges in producing regular M&E reports. This is expected to improve going forward as the SAU now has dedicated M&E officers. Monitoring of Results Framework indicators are on-going. In addition, monitoring of safeguards measures to protect Vulnerable and Marginalized Groups (VMGs) is being reviewed such that relevant indicators can be integrated within the wider M&E framework and M&E annual report. It should also be noted that there are two ongoing impact evaluations (one for the CT-OVC and one for the HSNP) which are both expected to provide further evidence of the program impact, but capacity has been constrained particularly to oversee and manage the CT-OVC impact evaluation. Several trainings have been held for program staff and managers on M&E activities to raise awareness of the importance of M&E and how to best utilize M&E information in program design and operations. An M&E learning workshop is now being planned to train other SAU officers and a subset of field officers on issues related to the M&E framework and indicators, DLIs, and ongoing external M&E activities. Technical Risk Rating 34. The technical risk rating for the AF is considered Low as it will be building on systems and procedures already established and functioning under the NSNP. The technical risk for the AF is considered to be Low as it builds on the design of the original NSNP, which has progressively put in place systems and procedures to strengthen program delivery, including cash transfer mechanism, EFC, G&CM, MIS, and so on. The following table provides further details on possible risks and mitigation measures. 60 Table 4.2: Program Risks and Mitigation Measures Program Risks Mitigation Measures The upcoming 2017 elections may lead to a politicization The AF does not plan large-scale expansion before elections. Rather, a clear modified NSNP of the Program as candidates vie to gain popular support by Expansion Plan will be developed, which will guide the moderate expansion in only 10 of the 47 catering to specific constituents through the cash transfers. counties, informed through poverty targeting. Moreover, management of the MEACL&SP and the It could also lead to slower pace of implementation due to NT are also committed as it is financed through the PforR instrument. potential shifting in priorities within the Government, reshuffling of staff, and so on. A significant number of people in the North and The Program currently allows alternate caregivers, which could be any member of the family or Northeastern counties do not have a national ID card, which another person close to the beneficiary, who has an ID to receive payments on behalf of the is a prerequisite for beneficiaries to set up bank accounts beneficiary. Moreover, the NDMA has several years of experience trying to deal with this and receive cash transfers. As such, a lack of access to ID challenge through the HSNP, and has established a relationship with the NRB, including a cards could impede large segments of otherwise eligible Memorandum of Understanding, on how to address this issue in the four counties where HSNP is poor households from benefiting from the Program. operating. The AF will support the MEACL&SP to incorporate lessons from the NDMA experience and commence collaboration with the NRB (see paragraph 17 in this annex) While some degree of error, fraud, and corruption is A number of initiatives are ongoing that will help strengthen the system against EFC. For one, a expected, capacity weakness in collecting, recording, and draft EFC framework and accompanying work plan has been developed. The NSNP AF will updating of beneficiary data could lead to challenges in provide support to finalize and implement the framework, which will provide a systematic and Program management and beneficiary tracking, as well as consistent way to address EFC. Second, a harmonized targeting methodology is being piloted to lead to allegations of discrimination, corruption, and biased ensure that all programs apply poverty criteria in the same manner, ensuring less opportunities for behaviour. error, as well as fragmentation in the way in which beneficiaries are selected. Third, investments are ongoing in programs MISs and the SR to update beneficiary information to improve payroll controls and identify double dipping. Lastly, the AF will support the decentralization of the MIS not only to strengthen case updates in the system but also to address grievances and case updates more effectively. The North and Northeastern counties face unique The World Bank has undertaken a rapid institutional capacity assessment in the AF target counties operational challenges, including inadequate human to assess current capacities, identify gaps and areas for improvement, as well as identify the resources and limited mobility due to lack of physical minimum investments required to ensure a successful expansion of the NSNP in the proposed 10 assets (that is, vehicles) and remoteness of vast areas, counties. The findings and recommendations will be used to inform the design and implementation among others. process. The North and Northeastern counties are characterized by To empower communities and engage beneficiaries more strongly in the Program, one of the high levels of poverty and low levels of development results of the AF will focus on the development and effective implementation of a beneficiary indicators, leading to low community capacity for engaging outreach strategy. This will be complemented by the overall communication strategy that has been in their own development processes. This is especially developed to raise awareness of the program by the beneficiaries. relevant for the targeting exercise, which is strongly community based. In addition, a large segment of the population is nomadic pastoralists who will be difficult to 61 reach and monitor. The SAU does not have direct implementation control at MEACL&SP is aware of this challenge and is addressing it by including the NSNP the local levels as they lack the necessary officers on the implementation in the performance contracts of the Directors of DCS and DSD, as well all the ground. Rather, the Children Officers and Social field level staff. Development Officers from the DCS and DSD continue to implement the program at the county and sub-county levels, without reporting back to the SAU. This may lead to lack of accountability by the local level officers to the SAU. 62 Background 1. The World Bank conducted an integrated fiduciary assessment of the existing arrangements of the NSNP for purposes of the AF of US$50 million. The program is implemented by the MEACL&SP. This assessment was conducted on the basis of the Guidance Notes on PforR Operations prepared by the Operations Policy and Country Services Department of the World Bank. The assessment reviewed the fiduciary aspects of the MEACL&SP in a manner consistent with the World Bank Policy and World Bank Directive on Program-for-Results Financing. The assessment revealed that the MEACL&SP has adequate fiduciary capacity to manage the minimum requirements for the AF. For instance, the capacity, budgeting and planning, funds flows and treasury, accounting and financial reporting, internal controls and internal audit, and external audit are deemed to be adequate for the minimum requirements. However, as the cash transfers require strong controls to prevent, detect and deter inherent systemic financial risks, the overall risk rating is High (see table 5.1). The Program will assist the Government to formulate the financial management procedures, and invest in the capacity of the MEACL&SP IAD for carrying out periodic internal audit for the management to enforce corrective actions (see the PAP in annex 7). The program accounting system is managed by the Ministry Head of the Accounting Unit/ Principal Accounts Controller (PAC), who is a qualified certified public accountant, and is supported by a program accountant. The Program FY16 audit report was received by the World Bank after the stipulated 6 months’ submission deadline and was qualified. However, the MEACL&SP is in the process of addressing the audit report qualification issues. To minimize the fiduciary risks of the program, the AF will support the preparation and implementation of a time-bound FM action plan. The preparation of the plan and the regular monitoring of this action plan has also been included as a new action in the PAP (annex 7). The FM action plan will include, but not be limited to: (i) improved reconciliation process of the payroll; (ii) strengthened payroll verification and approval workflows; (iii) better segregation of duties; and (iv) compliance of programs MISs with Operational Manuals. 2. Procurement of goods and services under the AF is considered to be minimal given that it is a cash transfer program. Any necessary procurement will be carried out in accordance with the provisions of the Public Procurement and Asset Disposal Act of 2015 and the associated regulations that are under preparation. The law came into effect in January 2016 with a transitional provision for using the existing regulations for one year within which the new regulations should be enacted. The new procurement law vests the function of policy formulation with the NT and that of regulation and oversight with the Public Procurement Regulatory Authority (PPRA). The law also provides additional methods and flexibility in the procurement of goods, works, and non-consulting services and selection of consultant services. The MEACL&SP has established the relevant administrative structures and the procedures for undertaking procurement in accordance with the law and has set up appropriate mechanisms for handling procurement-related complaints. The new changes will increase efficiency and transparency in the procurement process and will bring about accountability in decision-making processes, which is a positive development in the implementation of the program. 3. The assessment of the existing procurement arrangements reveals that the MEACL&SP has (a) staff capacity with the requisite qualifications and experience to manage the AF; (b) made significant improvements in the preparation and consolidation of procurement plans consistent with the budget; and (c) made significant steps toward setting up a structured records filing and management system. There is however need to fast-track training of procurement staff on the new law and regulations, as this is likely to affect the implementation of the program going forward. The actions highlighted in the original IFAR related to procurement will continue to be monitored and two new actions have been included (see Table 5.2 below). 4. In view of the inherent fiduciary risks of cash transfer programs, the combined overall fiduciary risk for the program has been assessed as High. The MEACL&SP has shown strong leadership in addressing these risks and is committed to develop a comprehensive FM action plan that will be monitored by the World Bank as part of the Program implementation support (and the new DLI 11). The conclusion of the assessment is that the fiduciary arrangements are adequate to support the AF. Table 5.1. FM Risk Rating Type of Initial Brief Explanation Risk Mitigation Measures Residual Risk Rating Incorporated in Existing Project Risk Implementation Rating Inherent Risk Country S Takes into account overall history of A more robust public financial S level the country governance environment, management law has been enacted, corruption concerns, weak public ongoing public financial management financial management law, and a reforms including the relaunch of the weak judiciary Integrated Financial Management Information System (IFMIS), introduction of electronic funds transfer payments through G-Pay and T24 Entity level H The implementing agencies have Ministry to address these weaknesses H adequate capacity but unresolved as spelled out in the PAP agreed with systemic weaknesses and governance the Government and accountability issues have been noted. Project H Program design involves numerous Program has partly addressed this H level decentralized payment of grants to through two-factor authentication of beneficiaries at the community level payments to beneficiaries and the SR through PSPs. Weaknesses noted linked to the IPRS with regard to enrolment and payment of beneficiaries through PSPs. OVERALL H H Control Risk Budgeting M Budgeting for the Program is fully — M mainstreamed into country systems. Accounting H The NSNP supported by the PAC and Enhancing the MIS in the medium S program accountant. However, term through establishing automatic challenges remain in records links between the MIS and the PSPs to management, getting documents from enable automatic reconciliation reports some PSPs, and reconciliation of cash transfers Internal H Significant weaknesses noted from The FM action plan will include H controls and general payroll ICT audit with actions to address these weaknesses oversight potential risk of double/irregular registration and payment of beneficiaries. Weaknesses noted in some oversight bodies. 64 Type of Initial Brief Explanation Risk Mitigation Measures Residual Risk Rating Incorporated in Existing Project Risk Implementation Rating Funds flow H Significant delays in release of funds The ministry is discussing how to H from the NT resulting in delayed address fund flow delays with the NT. payment to beneficiaries Auditing S Qualified audit opinion Audit queries being addressed S Note: L=Low; M = Moderate; S= Substantial; H = High. Table 5.2. New Procurement Recommendations Issue Recommendation Possible delays in procurement of necessary technical The team should first carefully consider procurement assistance that could potentially delay achievement of activities for each DLI that will be necessary to results. These include (a) firm to conduct the Program achieve the result. It should then prioritize the Implementation and Beneficiary Satisfaction Survey; (b) activities deemed to be time sensitive and urgent. firm to undertake the CT-OVC impact evaluation; (c) amendment to Equity Bank contract (d) firm to undertake Operations Monitoring; (e) consultant to promote awareness of the cash transfer programs; (f) consultant to develop the beneficiary outreach strategy. Enactment of Public Procurement and Asset Disposal Act Delays are expected while new systems are put in (2015), as well as the regulations for the same place and relevant officials are trained. The World Bank has supported the NT in the preparation of the regulations and dissemination and development of related training modules. Trainings are ongoing and the World Bank will explore ways in which the NSNP team can participate in future. 65 1. A social safeguards review of NSNP was carried out between April and July 2016 to identify whether the Program is implementing the recommendations from the ESSA and whether the inclusion of vulnerable and marginalized groups as per the Government’s policies need further strengthening. The review was not intended to be a comprehensive evaluation, but to identify any key issues in the implementation of the ESSA action plan and provide recommendations for moving forward. 2. The program targets particularly vulnerable groups: older persons; orphans and vulnerable children; persons with severe disabilities; and those who are food insecure. In addition, the program is poverty targeted, both at geographical level through expansion of the program by locations with the highest poverty incidence and through poverty targeting at the household level, using PMT and poverty score cards, combined with a community validation process. Despite this categorical and poverty targeting, the ESSA (which was prepared during the preparation of the original Program) highlighted that certain groups, particularly minorities and hard to reach communities, who fit the eligibility criteria of the programs might still be excluded. This could occur due to the fact that they are remotely located, or otherwise hard to reach, have particular cultures which limit their participation in standard development activities, lack political representation or voice etc. 3. The review found no strong evidence that minority groups are being regularly or systematically excluded, although low coverage in remote areas continue to be a challenge for the program. The review did find, however, that more could be done to implement the recommendations of the ESSA, particularly increasing the understanding and documentation of these groups and where they are located. There is a need to make sure that communication and outreach activities, including awareness creation during the targeting process and around the grievance and case management mechanism, are appropriate. There is also a need to monitor the inclusion of vulnerable and marginalized groups and the impact of the program on their livelihoods and relationships with other communities. The following actions were recommended: (a) Better understanding of which locations of the expansion plan include minority groups and how best to ensure their inclusion; (b) Promoting and monitoring implementation of the sections on marginalized groups in the OMs; (c) Mentioning inclusion of minority groups as a principle in future charters for the program; (d) Including measures to reach minority groups in the communication strategy; (e) Ensuring inclusion of eligible groups in all monitoring instruments; (f) Carrying out periodic reviews of beneficiary and grievance data to ensure targeted locations where minorities are present are reached; and (g) Ensuring that barriers to inclusion (particularly the difficulty securing IDs) are addressed for eligible populations, including minority groups, through close collaboration with the NRB. 4. Since the review was undertaken, the Government has prepared and shared with county officers a one-page brief to explain the importance of inclusion and clarify the role and responsibilities of county officers to promote inclusion. County teams have also been asked to identify vulnerable and marginalized groups in their counties, explain where they are located and their unique characteristics and how they can best be reached. Many county teams fed into this table from the North and Northeastern counties, however, further work is needed to complete this table and share lessons learnt on how best to reach these groups. Specific questions to be included as part of the internal monitoring of the program have also been prepared to monitor inclusion and other social impacts and the Government will explore the possibility of including additional questions in the PIBS for further monitoring. The Government will also (i) ensure that discussions on social inclusion and impact are carried out as part of regular staff training; (ii) the 66 implementation of the sections of the OM on marginalized communities will be strengthened and better monitored and (iii) measures to reach minority and hard to reach groups will be included in the communication material of the program. 67 Table 7.1. Modified PAP No. Results Area/Action Source Responsible Date Due Original or Revised (and Rationale) Party A To create more robust systems for targeting, registering beneficiaries, making payments, and monitoring performance to strengthen the overall governance of these programs A1 Revise OMs to respond to findings of the addendums to the ESSA and MEACL&SP Recurrent Revised. This action is needed to ensure Technical, and Integrated Fiduciary Assessments and the addendums to and NDMA (at least adjustments of OMs based on original ESSA. TA, and IFAR once a recommendations in the TA and IFAR year) addendums and the original ESSA. A2 Improve the delivery of payments to beneficiaries by (i) IFAR 13; 5; 3.5 MEACL&SP Recurrent Revised. A payment architecture for the reach agreement with Treasury on improving the timeliness TA: 3.4.2; and NDMA NSNP and procurement of PSPs has already and flow of funds to manage timely disbursements to 3.4.3; and 5.3 been undertaken – previous (iv), which has beneficiaries; (ii) regularly monitoring transfer steps against TA addendum: been removed. The new (i) has been schedule; (iii) strengthening internal controls on the payroll, III D introduced to ensure agreement with including review by the senior ministry-level officer; and Treasury on how to improve timeliness of (iv) developing a long-term strategy for PSPs and flow of funds. More work is also needed on commencing its implementation (ii) and (iii) so they are kept as is. Lastly, a new action (iv) has been added, since the Government needs to think about the longer-term strategy for PSPs. A3 Implement IFAR recommendations with respect to IFAR and IFAR MEACL&SP Recurrent Original. Two new recommendations procurement addendum introduced as part of IFAR addendum A4 Development and implementation of a time-bound FM IFAR MEACL&SP Recurrent New action. The action plan will be action plan to comprehensively strengthen the fiduciary addendum informed by various program audits past controls in the NSNP and future, and will be updated yearly. Implementation of 30, 70, and 100 percent, cumulatively, of agreed critical FM actions will be assessed as part of the DLI11. A5 Finalize the EFC framework and action plan to prevent, TA addendum: MEACL&SP December New action. The Government has prepared detect, and deter EFC and ensure alignment with the FM IV B 2017 a draft EFC framework and action plan and action plan. it is important to finalize it and commence its implementation. B Harmonizing Cash Transfer Programs to Increase the Coherence of the Safety Net Sector B6 Finalization of a harmonized targeting tool and update of TA addendum: MEACL&SP New action. The harmonized targeting the PMT, as and when new KIHBS data become available. III B and NDMA mechanism is currently being piloted and it No. Results Area/Action Source Responsible Date Due Original or Revised (and Rationale) Party is crucial that the tool is finalized and the PMT updated as and when new KIHBS data become available. C To expand coverage of the five programs in a coordinated manner that will progressively realize the right to safety net support C7 Ensure financial allocations to the NSNP according to the ESSA: 3.4 and MEACL&SP Recurrent Original. The current MTEF is for 2013– program MTEF are included in the sectoral MTEF and 3.5 and NDMA 2017, so this is highly relevant to ensure annual budgets. TA: 3.2.1.1 NSNP allocations are included in the future MTEF. C8 Ensure collaboration with the NRB to enable issuance of ID TA addendum: MEACL&SP December New action. This action will be particularly cards to eligible beneficiaries who do not have ID cards. VII 2017 important for the NEDI expansion, since a large number of the population in these counties do not have ID cards, but also relevant to existing and new child-headed households. C9 Ensure adequate implementation capacity nationwide, and TA addendum: MEACL&SP March, New action. The rapid institutional capacity more specifically in the NEDI counties, by (i) developing IV A 2018 assessment highlights key gaps and provides an implementation plan, including necessary actions and recommendations to address these gaps. resources needed to fill key gaps identified in the rapid This action is being introduced to ensure institutional capacity assessment and (ii) implementing the that an implementation plan is prepared, plan. which will nation-wide with a specific focus on the North and Northeastern counties, and will include necessary actions and resources needed to fill those gaps and ensure its implementation. Completion Measurement 5. Progress toward Program actions will be monitored during the Joint Review and Implementation Support (JRIS) Missions. Following the completion of each action, the JRIS missions will continue to monitor the enforcement and/or application of relevant actions. Actions that are recurring (annual/quarterly) will be monitored during the regular JRIS and technical missions. 69 Table 7.2: PAP Actions Achieved and/or Removed 67 A2 Retarget the OPCT, USF-CT , and PWSD-CT according to Action achieved programs OM procedures in areas where reviews have identified anomalies A3 Regularly review transfer levels including options for varying Achieved. Two reviews have been undertaken, the most recent in 2016. No transfer amount according to the household size additional reviews are considered necessary in the short term but continued discussions will be held on the basis of existing evidence. A5 Establish national, county, and community-level structures to Action removed. This action is already covered under A1 and the grievance manage grievance and case management in real time, ensuring that and case management mechanisms is supported under DLI 6. they adequately address marginalized groups and implement the communication strategy to enhance awareness of programs A6 Strengthen the audit function for the NSNP by building the capacity Action removed. This action has been subsumed under new action A4 of the IAD and Kenya National Audit Office (KENAO) to carry out annual information systems audits, establishing the required audit committees, applying the International Standards of Supreme Audit Institutions, and, publishing Treasury Memorandum on response to audit queries by the implementing agencies. B9 Functional Assessment to review the overall program organogram; Action achieved national, county, and district staffing; and technical assistance requirements B8 Update the IFAR of the NSNP upon completion of the ministerial Action has been achieved through the IFAR addendum restructuring and agree on any mitigating measures B10 Adopt International Public Sector Accounting Standards (IPSAS) to Action removed. This action is proposed to be removed since progress has improve the quality of financial reports and stabilize the IFMIS to been made and support provided under a separate grant and this Program is not ensure it is fully operational to produce the required financial reports expected to contribute to any further action. For adoption of IPSAS, the Government Public Sector Accounting Standards Board of the NT has prescribed use of IPSAS cash basis of accounting for public sector accounting. In addition, the financial statements of the NSNP (and all World Bank projects) are prepared on this basis. Support has been provided under a separate Institutional Development Fund grant to the NT for the setting up and institutional strengthening of the Government Public Sector Accounting Standards Board. B11 Adopt the NSNP M&E framework and implement the M&E plan Achieved. A common NSNP framework has been adopted and monitoring including simplification of monitoring systems and formats, staffing, systems and formats developed with staff trained accordingly development of manuals, and training. C10 Targeting and enrolment of beneficiaries according to annual targets Targets to date achieved. Future targets will be monitored as part of DLI 1. 67 The Urban Food Subsidy Cash Transfer Program (UFS-CT) formed part of the NSNP when the original Program was prepared, but was discontinued in 2015 which is why it no longer forms part of the NSNP and is not mentioned in this Program Paper. 70 Strategy and Approach for Implementation Support 1. The World Bank’s task team will continue to provide the necessary support to facilitate achievement of the PDO during implementation of the Program. Implementation support will place emphasis on (a) reviewing implementation progress (including that of the PAP) and achievement of Program results and DLIs; (b) providing support to resolve emerging Program implementation issues; (c) monitoring the adequacy and performance of systems, and compliance with the Financing Agreement; and (d) supporting MEACL&SP in key areas of technical assistance. Implementation Support Plan 2. The AF will focus on the North and Northeastern counties and is expected to be fully implemented by June 2020. During the program implementation, support will focus on further strengthening systems and procedures to improve delivery mechanisms, particularly within the context of the recently approved Consolidation Strategy, in an effort to enhance coordination, collaboration, and synergy among the four cash transfer programs. Additional support will be included to provide necessary technical assistance to new DLIs introduced as part of the AF and the restructuring. Main areas of support will include (a) improved payment delivery mechanism, including long-term strategy for PSPs; (b) increased transparency and accountability through implementation of the G&CM mechanism and EFC mitigation measures; (c) effective management of beneficiaries through recertification and harmonized targeting mechanism; (d) strengthened fiduciary controls, including through implementation of audit recommendations; (e) improved beneficiary awareness, including the development of a beneficiary outreach strategy and its implementation; (f) increased Government preparedness for complementary services, including support as needed for the analysis of existing complementary activities and beneficiary characteristics; and (g) sustainability of efforts through building of adequate Government capacity, including through implementation of proposed actions from the institutional capacity assessment for expansion in the North and Northeastern counties. Required specific actions and the relevant technical assistance needed are detailed in the Modified Program Action Plan (annex 7) and the Technical Assessment - Addendum (annex 4). 3. Implementation support will be provided through regular engagement with the SAU, SPS, and the NDMA. The task team located in Kenya will continue to provide guidance and implementation support, as needed, to the relevant actors, in collaboration with development partners. Joint review and implementation support missions will also continue to take place twice a year to assess progress toward the DLIs and the modified PAP, as well as to identify bottlenecks and agree on solutions and ways forward. The task team will continue to be led by the task team leaders and consist of experts/specialists in relevant technical areas, fiduciary management, social and environmental aspects, and general operations management. The World Bank team will emphasize that the SAU and NDMA prepare progress reports and work plans as a basis for Program implementation review. Technical missions will be organized between the regular implementation support missions, as needed. Table 8.1. Task Team Skills Mix Requirements for Implementation Support Skills Needed No. of No. of Trips Comments Staff/Consultant Weeks International consultant to support Payments 18 6 development of long-term PSP strategy International consultant to support analysis of the KIHBS once it is Poverty data analysis 10 2 available to inform the expansion plan International consultant to provide Beneficiary outreach 12 3 support to modified DLI 6 Individual consultant for regular M&E 18 M&E support Complementary services 12 2 International consultant MIS/SR 12 2 International consultant Impact evaluation 18 2 International firm FM 18 In-country specialist Fiduciary systems expert for cash International consultant to provide — 4 transfers support to newly added DLI 11 Procurement 9 In-country specialist EFC 8 2 International consultant G&CM system 12 4 International consultant Social safeguards 9 In-country specialist In-country specialists and staff based Social protection 72 6 in Washington, D.C. 4. A number of development partners currently support the NSNP, namely DfID, UNICEF, and the WFP. DfID will continue to channel resources for technical assistance to the NSNP AF through the recipient-executed trust fund, while UNICEF and the WFP provide discrete technical assistance to the SPS, including for establishing comprehensive social protection programs and the MIS/SR, respectively. The World Bank’s task team will work closely with all the partners to provide harmonized implementation support to the program. 72