IDA20 SPECIAL THEME: JOBS AND ECONOMIC TRANSFORMATION Enabling Better Jobs for More People Through a Green, Resilient and Inclusive Recovery June 11, 2021 ACRONYMS AND ABBREVIATIONS Fiscal Year (FY) = July 1 to June 30 All dollar amounts are US dollars AfCFTA Africa Continental Free Trade IDA International Development Area Association BPS Business Pulse Survey IFC International Finance Corporation COVID-19 Coronavirus Disease 2019 ILO International Labour CP Country Platforms Organization CPF Country Partnership Framework IMF International Monetary Fund CPIA Country Policy and Institutional JET Jobs and Economic Assessment Transformation CPSD Country Private Sector LIC Low Income Country Diagnostic MIGA Multilateral Investment D4P Data for Policy Guarantee Agency DPO Development Policy Operation MSME Micro, small and medium-sized FCS Fragile and Conflict-affected enterprise Situations PSW Private Sector Window FCV Fragile, Conflict and Violence REC Regional Economic Community FSAP Financial Sector Assessment SCD Systematic Country Diagnostic Program SDFP Sustainable Development GRID Green, Inclusive and Resilient Finance Policy Development SME Small and medium-sized GVCs Global Value Chains enterprise ICT Information and SOE State-owned enterprise Communications Technology WBG World Bank Group TABLE OF CONTENTS EXECUTIVE SUMMARY ....................................................................................................... i I. INTRODUCTION ...............................................................................................................1 II. PROGRESS UNDER IDA19 AND LESSONS LEARNED ...............................................3 A. Enabling Foundations to Support Private Investment .......................................................3 B. Sector Diversification and Competitiveness .....................................................................5 C. Connectivity and Integration............................................................................................6 D. Upgrading of Skills and Technology ................................................................................7 E. Building in Learning and Partnerships in JET ..................................................................7 F. Overall Lessons for JET’s Effectiveness ..........................................................................8 III. WAY FORWARD AND PROPOSED POLICY ACTIONS .............................................9 IV. ISSUES FOR DISCUSSION .............................................................................................15 REFERENCES ........................................................................................................................16 LIST OF ANNEXES Annex 1. Proposed IDA20 and Status of IDA19 Policy Commitments ......................................17 Annex 2. Links to other Special Themes and Cross-Cutting Issues ............................................20 Annex 3. Framework of IDA19 Policy Commitments and Expected Achievements.................. 22 TABLE OF TABLES AND FIGURES Tables Table ES. 1. Proposed Objectives and Policy Commitments under IDA20 ................................. ii Table A3.1. IDA19 Policy Commitments that have been Achieved or Mainstreamed ................22 Figures Figure 1. 1. Expanding Productivity Channels to Create Better Jobs for More People..................2 Figure 3.1. IDA20 Proposed Policy Commitments Contribute to JET ........................................15 Figure A3. 1. JET IDA19 Policy Commitments: Expanding Productivity Channels to Create Better Jobs for More People .....................................................................................22 Boxes Box 1. 1. IFC and MIGA Engagement in Sub-Saharan Africa and Fragile Countries ...................4 EXECUTIVE SUMMARY i. The Jobs and Economic Transformation (JET) Special Theme continues to support ambitious and impactful reforms, as well as investments and programs that create better jobs for more people. The COVID-19 crisis is underscoring the importance of the JET agenda and the role that the International Development Association (IDA) can play in supporting a green, resilient and inclusive recovery. In the short run, policy makers have focused on stemming the damage from the crisis to growth, jobs and incomes. With lost work hours equivalent to 255 million full time jobs, and over 120 million people at risk of falling back into poverty, the urgency is clear (ILO, 2021; World Bank 2020). Inequality is rising, across sectors and locations, and informal and small firms and women are being disproportionately hurt. Thus, a resilient and inclusive recovery has to address the full range of impacts the crisis is having on segments of the economy. Beyond trying to limit the damage, work is also underway to address key constraints that can unlock opportunities for private sector-led investments, employment and growth. ii. The experience of IDA19 with JET demonstrates what is possible—from supporting more inclusive value chains in Cote d’Ivoire, Haiti and Nepal to providing policy lending in Burkina Faso, Ghana, Senegal and Uzbekistan, to expanding regional power markets in the Sahel. It also reinforces that JET is a journey. No one project can deliver transformation but strengthening the enabling foundations for private investment and expanding the channels for productivity growth make a difference. Which transformation is most relevant for a country varies – whether it is sector diversification or greater integration into larger markets or using technology to upgrade firm performance. Ensuring that sectors are open and competitive is critical to attract private investment and create the dynamics that can deliver better jobs at scale. iii. The set of JET policy commitments proposed for IDA20 build on the experience under IDA19, respond to the critical needs of the COVID-19 crisis, and accelerate a sustainable and inclusive recovery, recognizing the tightening of the fiscal space. iv. The JET Special Theme complements the other Special Themes and Cross-Cutting Issues. Human Capital protects and invests in human capital; JET enables the utilization of human capital. JET contributes to Gender and women’s economic empowerment through labor earnings and control over assets. Multiple policy commitments have targets for Fragile and Conflict- affected Situations (FCS) countries – e.g. financial sector resilience, supporting key sectors with potential for better jobs, agriculture and food security, and expanding access to and usage of Information and Communications Technology . JET is focusing on how greening sectors (including the financial sector), innovation and skills can be sustainable and create more green jobs, contribute to achieving the Climate Change Action Plan and Green, Inclusive and Resilient Development (GRID). Governance and Institutions, Debt and Crisis Preparedness are critical to the sound foundations for private investment. Digital technology is expanding opportunities in key sectors and for a wider set of workers. v. Management welcomes feedback from IDA Participants on the proposed policy commitments for the IDA20 JET Special Theme as set out in this paper. In particular, feedback is welcomed on the reformulations and prioritization of policy commitments aimed at addressing - ii - key issues for supporting a green, resilient and inclusive recovery and the creation of better jobs for more people. Table ES. 1. Proposed Objectives and Policy Commitments under IDA20 Objectives Proposed IDA20 JET Special Theme Policy Commitments Enabling Foundations for Private Investment Supporting resilient financial 1. Strengthen the resilience, inclusion and depth of the financial systems for recovery system in 15 IDA countries, including 5 IDA FCS, based on Financial Sector Assessment Program (FSAP) or similar financial sector analytics to support a robust and inclusive recovery. Leveraging One WBG to 2. In the context of IDA Private Sector Window (PSW) operations increase private investments involving IFC, IFC will aim to increase the share of its commitments in FCS-IDA17 & LIC-IDA17 countries, reaching 12-17 percent commitments on average during the IDA20 cycle, with an intent to reach an annual commitment of 14-17 percent in the last fiscal year of IDA20. Consistent with this aim, targeted platforms and programmatic approaches for IDA PSW-eligible countries will be supported to develop and encourage scalable initiatives across sectors in these countries, including those targeted to support small and medium-sized enterprises (SMEs), for trade finance purposes, in support of gender, and for climate friendly investments focused on mitigation and adaptation. Delivering quality 3. Support at least 20 countries, of which 10 have a score of 3.0 or infrastructure investments in less on Country Policy and Institutional Assessment (CPIA) fragile countries Dimension 16 covering transparency, accountability and corruption, to identify the governance constraints to the development, financing, and delivery of quality infrastructure investments, with particular attention to resilience, climate and environment, social considerations, and regulatory practices, transparency and integrity, to inform the adoption of policies and/or regulations for enhanced infrastructure governance in a majority of these. These will be undertaken through Infrastructure Sector Assessment Programs (InfraSAPs) and standalone governance assessments that support improved competitiveness. Sectoral Diversification & Competitiveness Creating better jobs and 4. Support interventions to address market failures and remove sustainable, inclusive constraints in sectors with high potential for the private sector economic transformation in to drive sustainable and inclusive economic transformation high potential sectors and create better jobs, or where women and youth disproportionately work, in 20 IDA countries, of which 5 are FCS, including through upstream activities to develop private sector engagements, grounded in data-driven diagnostics such as Country Private Sector Diagnostics (CPSD) and selected in agreement with country authorities. - iii - Table ES.1 continued Objectives Proposed IDA20 JET Special Theme Policy Commitments Boosting agriculture 5. Improve agricultural productivity and strengthen sustainable productivity, value chains and agri-business value chains with high potential for growth and food security better jobs addressing modernization and food and nutrition security in 15 IDA countries, including 5 FCS, in ways that are fully inclusive, and encourage private sector opportunities. Connectivity & Integration Expanding broadband access 6. To close the connectivity gap, IDA will support 17 IDA countries, and usage for jobs of the including those which will benefit from IFC’s support under the future IDA PSW to develop digital infrastructure, to increase inclusive and affordable access to and usage of broadband connectivity, among which are 6 landlocked countries, 4 small states and 9 FCS countries. Upgrading & Technology Positioning more firms for 7. Support programs in 15 IDA countries to strengthen private sector recovery, including through recovery and transformation that are well targeted, inclusive of the adoption of digital SMEs and support the adoption of digital technologies, with technology monitoring to capture distributional impacts and effectiveness. To support this, IFC will increase its digital infrastructure and venture capital work in IDA and FCS countries. Data for Policy Making Boosting institutional capacity 8. Support 34 IDA countries including those with ongoing statistical to improve data for policy operations (i) to strengthen institutions and build capacity to decision-making reduce gaps in the availability of core data for evidence-based policy making, including disaggregation by sex and disability where appropriate; and (ii) to increase resilience of statistical systems, including through investments in digital technology and high-frequency monitoring capabilities. I. INTRODUCTION 1. If the importance of the Jobs and Economic Transformation (JET) agenda was high before COVID-19, it is even higher now. Borrowing countries and donors greatly supported the agenda and called for more ambition under IDA19. The economic impacts of COVID-19 make the need for JET all the greater. The loss of working hours globally is estimated at the equivalent of 255 million full-time jobs – four times the losses during the 2009 global financial crisis (ILO 2021). More than 120 million people risk falling back into poverty and 130 million face food insecurity (World Bank 2020). The World Bank’s Business Pulse Surveys (BPS) carried out in 60 countries capture the extent – and variation – in responses. The majority of respondents suspended or had to cut back their operations; firms report sales falling by 50 percent on average during 2020. Small and medium-sized enterprises (SMEs) and informal businesses have been the hardest hit by lockdowns and by more limited access to government support programs, and many risk falling into arrears (Apedo-Amah et al. 2020, Freund and Pesme 2021). The impact across countries varies; small island states reliant on tourism have faced the deepest declines. Women have been doubly hit; working predominantly in sectors that have been hardest hit (e.g. food and hospitality services, personal services and retail) and shouldering more of the increased care responsibilities. Seventy percent of the jobs lost have led to people dropping out of the labor force, the large majority of them women (ILO 2021). 2. The crisis underscores the important role IDA can play in expanding the prospects for a resilient and inclusive recovery. In the immediate run, the crisis has shifted the focus to mitigating the economic downturn and jobs and incomes lost. The risk of growing inequality across and within countries in term of recovery is real. But policy choices will make a significant difference (IMF, 2021). The crisis opens up a political window of opportunity for tough, but much needed reforms. IDA’s lending and technical advice support how countries can respond. Looking forward, the JET agenda is at the heart of not only reducing poverty, but also achieving a green, resilient, and inclusive recovery. 3. JET recognizes that economic transformation is what is needed to deliver better jobs for more people – sustainably and at scale. “Jobs” was introduced as a special theme under IDA18. Recognizing how jobs are created matters for their dynamics and quality, the theme was changed to “JET” under IDA19, along with a shift in emphasis from analytics to operations. Here, the ‘and’ matters; it is not about growth for its own sake just as it is not about programs that simply create jobs in the short run. With JET, the ambition is economic transformation for more and better jobs, aiming for larger scale impacts with more sustainable dynamics. 4. JET seeks to enable greater shifts of people and resources into more productive sectors and activities (see Figure 1.1). Raising productivity and creating better jobs is relevant across the spectrum of private sector actors, from informal enterprises to large multinationals. As the majority of the poor in IDA countries work in the informal sector, particularly in agriculture, an inclusive recovery must include these activities – while also addressing the development challenges associated with large informal sectors (Ohnsorge and Yu, 2021). The JET approach starts with sound foundations that provide the incentives for private sector actors to invest, hire and grow. It includes macro-financial stability, strong institutions, a business environment that -2- levels the playing field for all enterprises, access to enabling infrastructure services and a stable and inclusive financial sector. It then emphasizes three primary channels for raising productivity: a. First is to encourage reallocation of resources towards more productive activities, and to diversify into new sectors and products with the potential to create more and better jobs and create new markets. The sectors with high potential to contribute to transformation can vary by country context, but higher value-added agriculture and light manufacturing can contribute to transformation in many IDA countries. b. Second is to expand access to larger markets, through trade and urbanization, and to deepen linkages between firms to make such integration inclusive. c. And third is to encourage the upgrading of existing jobs and enterprises to be more productive, with an emphasis on adopting new technologies and strengthening workers’ skills. Raising productivity and earnings is the most important pathway out of poverty; it is how development is achieved. Hence the ambition for the JET agenda. Figure 1. 1. Expanding Productivity Channels to Create Better Jobs for More People Connectivity & Upgrading & Technology Sector Diversification & Integration Competitiveness • Increase scale and access to • Raise quality and efficiency • Expand into new sectors with larger markets through trade with better skills, potential for jobs and higher and foreign direct investment, technology, adoption, value-added activities, move urbanization, firm-linkages innovation, entrepreneurship into more sustainable production Enabling Foundations to Expand Private Investment • Ensure incentives to invest are sound: Marco-financial stability; strong governance; enabling business environment with open and contestable markets; access to infrastructure and financial services • Boost institutional capacity to improve data for policy decision-making and to monitor impacts of crisis and crisis response measures 5. COVID-19 has affected all the productivity channels associated with economic transformation. Macro-fiscal underpinnings have been challenged as revenues have fallen even as demands on fiscal spending have risen to dampen the downturns and to support vulnerable households. Limited fiscal space affects what support is possible. Integration - across firms, rural- urban divides or across borders - has been disrupted. Trade in services remains low even as trade in goods is rebounding in many sectors and locations. Global value chains (GVCs) are still adjusting, some seeking to diversify production locations, opening some opportunities for near- shoring among countries seeking to make themselves competitive locations to attract investors. Upgrading and adopting technology, particularly digital technology, has been an avenue for some firms to not only sustain their activity, but to raise their productivity and access larger markets. -3- However, the ability to access affordable and reliable Information and Communications Technology (ICT) varies. Many do not have the capabilities - the supporting logistical or human capital services - to make digital solutions viable, risking further increases in inequality. The ability to reallocate resources to more productive uses has also been disrupted by the downturn and rise in uncertainty; how well firms and workers are able to reposition and reskill themselves going forward will be critical in achieving a speedy and inclusive recovery. 6. Under IDA20, policy commitments need to tackle long run priorities, while addressing new sources of risks and new types of opportunities COVID-19 has introduced. The next section discusses JET under IDA-19, using the framework to illustrate the contributions of the 13 policy commitments (see Annex 3 for the diagram). It provides examples of how IDA is making a difference, leveraging the whole of the World Bank Group (WBG) and highlighting engagements in Fragile, Conflict and Violence (FCV) contexts. Section III then discusses how COVID-19 has affected the agenda – and what it implies for JET under IDA20 and how policy commitments are responding to the urgency of the situation as well as to the opportunities for a greener, more resilient and inclusive recovery. Annex 1 provides the list of proposed IDA20 policy commitments, including how they build on commitments from IDA19. Links between JET and the other Special Themes and Cross-Cutting Issues are discussed in Annex 2. Annex 3 lists the JET policy commitments in IDA19 and those that are expected to be achieved or mainstreamed by the end of IDA19. II. PROGRESS UNDER IDA19 AND LESSONS LEARNED 7. Under IDA19, there is progress in all four pillars of the JET framework – enabling foundations, diversification, integration, and upgrading of skills and technology - even as COVID-19 raised risks for each of the elements. A. Enabling Foundations to Support Private Investment 8. The Systematic Country Diagnostic (SCD) provides an opportunity to embed a JET lens into the country program that can then be operationalized, and this is being done for all IDA countries (Policy Commitment 9). As a multi-sectoral agenda, it is appropriate to look at the country’s broader development challenges and how the WBG’s various engagements together are expanding the channels for productivity growth and better jobs. SCDs often focus on the drivers of private sector-led growth under a ‘growth pillar’ and job creation under an ‘inclusion’ pillar. The JET lens reinforces the links between the two. Moreover, all the Country Partnership Frameworks (CPF) of IDA countries completed during IDA19 have pillars and components that directly contribute to JET. The emphasis is on operationalizing JET, building on the analytics developed under IDA18. 9. With macro-fiscal stability being a prerequisite for private sector-led growth under IDA19, World Bank teams are addressing how to make fiscal management sustainable in the SCDs of all IDA countries at moderate or high risk of debt distress (Policy Commitment 11). The World Bank teams carry out debt diagnostics on a number countries, including for all IDA countries at moderate or high risk of debt distress. Key findings are incorporated in SCDs to -4- provide an important strategic narrative on how a country can improve its management of its debt and fiscal affairs in its development strategy. This work is very complementary to the approach to fiscal management under the Sustainable Development Finance Policy (SDFP). A number of IDA countries were already facing rising levels of debt pre-COVID-19 and the spending needs and declining revenues are exacerbating the challenge in many countries. Box 1. 1. IFC and MIGA Engagement in Sub-Saharan Africa and Fragile Countries IFC and MIGA have significantly increased their local presence in IDA Fragile and Conflict-affected Situations (FCS). To deliver on IFC 3.0, as of April 30, 2021,150 IFC staff were located in FCS countries, an increase of 21 percent since FY19. Most recently, IFC has increased its presence in Chad, Mali, Niger, Solomon Islands and Sudan. MIGA has dedicated staff working on IDA FCS and recently opened an office in Nairobi, Kenya, a WBG FCV Hub to supplement existing presence in Dakar, Senegal. Local presence and a focused WBG staffing strategy are necessary criteria for delivery in IDA Sub- Saharan Africa countries. Complementing IFC’s staff presence in IDA FCS, the Private Sector Window (PSW) is a critical de-risking tool to convert IFC and MIGA’s growing pipeline in FCS and other PSW- eligible countries into bankable, sustainable, and impactful projects. As of end of April, the PSW pipeline for IFC and MIGA stood at roughly $1.8 billion of post-concept approvals, of which about 40 percent is in FCS. Since January 2020, IFC has also been tracking the type of sponsor for PSW supported transactions, a metric now showing that about 35 percent of the pipeline is with local sponsors. The PSW pipeline growth over recent years resulted from concerted efforts to develop and improve upon the PSW architecture created in IDA18 and further developed in IDA19. Such growth builds a strong foundation for a higher number of impactful PSW-supported projects in IDA20. During IDA18 and IDA19 IFC learned valuable lessons which are benefitting IDA19 PSW implementation and will enable an even more ambitious IDA20. Lessons include the importance of streamlined processes and programmatic approaches to achieve efficiency and scale and that the PSW can be effective in building on joint WBG efforts and enabling innovative projects and products. Under IDA20, IFC expects to continue streamlining processes, supporting private sector opportunities in IDA and FCS markets - particularly to complement Upstream efforts targeting the creation of new markets across sectors, enhancing flexibility in product creation/utilization with an emphasis on leveraging local currency opportunities. IFC will also leverage its strategic approaches and diagnostics, for example the CPSDs, and expanded advisory and programmatic approaches such as the Conflict-affected States in Africa program, currently being transformed into sub-regional platforms focused on fragile states in Africa. MIGA’s strategic priorities will continue to focus on IDA and FCS whereby it plans to increase the share of its investments to 30-33 percent on average over FY21-23 (8 percent higher compared to FY17-19). In the first half of FY21, MIGA signed four guarantees supporting investments in four FCS countries: the Democratic Republic of Congo, Kosovo, Liberia, and Myanmar. MIGA has a current pipeline of 6 projects in FCS countries, representing $288 million in guarantees to be executed during IDA19 which will contribute to private sector mobilization of $732 million. The PSW is complemented by the Conflict Affected and Fragile Economies Facility with both offering important risk mitigation for the Agency. Finally, MIGA’s product innovation agenda is proving an important vehicle for the Agency to do more in IDA FCS, e.g. through trade finance and local currency guarantees. -5- 10. IFC is supporting job creation through private sector-led economic transformation, leveraging the IDA IFC-MIGA PSW and other tools to continue expanding IFC’s own account annual commitment investment in LIC-IDA and FCS countries (Policy Commitment 6) (see Box 1.1). In Afghanistan, IDA PSW, through the Risk Mitigation Facility and MIGA Guarantee Facility, enabled the first private sector power project to use domestically produced natural gas that is expected to boost the country’s power generation by approximately 30 percent and supply electricity to about one million people. IFC’s approach to boosting program growth in IDA and FCS aligns with the WBG Strategy for Fragility, Conflict and Violence 2020- 2025. IFC committed to increasing the share of IDA investment commitments in FCS to 40 percent by fiscal year 2030, with 15-20 percent of own account commitments overall in low-income IDA and IDA FCS countries. B. Sector Diversification and Competitiveness 11. Addressing key bottlenecks in sectors with high potential for growth and job creation has been a central policy commitment under JET (Policy Commitment 1). This relies on new analytics such as the Country Private Sector Diagnostics (CPSDs), a joint IFC-World Bank report, that looks not only at economy-wide constraints, but also at what it would take to leverage the private sector to unlock the potential of key commercial sectors. The focus is on sectors with high potential for growth and job creation, which will – depending on the country context – include traded sectors such as agribusiness and manufacturing, as well as enabling sectors such as finance and transportation whose performance impact so many other sectors. IFC is using the CPSDs to develop its country strategies and assess opportunities around IFC 3.0 and potential upstream opportunities in all sectors to create new or sustain existing markets. CPSDs are also informing Development Policy Operations (DPOs), including COVID-19 emergency DPOs, to strengthen resilience and stimulate recovery, such as in Burkina Faso, Ghana, Senegal, and Uzbekistan. In Cote d’Ivoire, JET projects are improving the competitiveness of supported value chains and increasing access to finance for underserved farmers and firms. In Madagascar, IDA is contributing to the sustainable growth of the tourism and agribusiness sectors by enhancing access to enabling infrastructure and services in targeted areas. In Haiti, the Private Sector Jobs and Economic Transformation project leverages the insights and recommendations of the CPSD to harness the financial sector in the recovery from and restructuring phase post COVID-19. 12. With many poor people still working primarily in agriculture, helping raise productivity, modernize production, and expand opportunities for agribusiness to link itself to larger value chains has been an important area of WBG activity (Policy Commitment 2). While growing food insecurity and COVID-19-related responses have shifted a large portion of the World Bank portfolio to meet immediate food needs (away from longer-term development), continual efforts are nonetheless being made to support the development of competitive and inclusive agricultural value chains with high potential for growth and job creation. For example, in Guinea, the work is improving logistics to connect targeted producing areas to markets, supporting resilient recovery of SMEs in the agriculture sector, strengthening coordination along domestic agricultural value chains, and establishing a food safety control system. This is complemented by an IFC financing and technical assistance program with the aim to facilitate private sector investment in agricultural value chains. In Nepal, the Rural Economic Development Project is helping to strengthen rural market linkages and the entrepreneurship ecosystem and -6- create job opportunities via restoration of COVID-19-disrupted food and nutrition security, agriculture value chains and the local economy. C. Connectivity and Integration 13. The IDA19 commitment to expand broadband access and coverage (Policy Commitment 5) is even more important as a result of the COVID-19 crisis. Digital connectivity in the time of COVID-19 has become a lifeline for individuals, governments and businesses to ensure continuity of economic and social activities in light of social distancing and lockdowns. IFC is supporting digital connectivity through the COVID-19 Real Sector Envelope to one of the largest connectivity providers in sub-Saharan Africa, as well as to Senegal and Zambia subsidiaries of two leading pan-African independent tower operators. More than half of IFC’s commitments in the sector are in IDA countries, an increase of 94 percent in the last three years. IFC aims to increase its share of Telecoms, Media, and Technology business in IDA and FCS to 40 percent of transactions by FY30. In Malawi, IDA is providing financing to increase broadband penetration and access to affordable, high quality internet services for government, businesses and citizens, thereby the strengthening the government's capacity to deliver digital public services. IDA19 is also supporting ambitious digital inclusion and acceleration initiatives in Cabo Verde, Haiti, and Niger. There are 97 active IDA operations ongoing under the Digital Economy for Africa initiative to undertake key reforms and public investments in areas such as digital infrastructure, public digital platforms, digital financial services, and digital entrepreneurship. 14. Infrastructure more broadly provides critical enabling services for enterprises to produce and get goods to markets, and for workers to access their jobs (Policy Commitment 4). Under IDA19, projects to expand access to power and transportation have been continuing, even under the challenging conditions of the pandemic. For example, the West Africa Regional Energy Trade Development Policy Financing aims to sustainably increase regional electricity trade in the participating countries – Burkina Faso, Guinea, Liberia, Mali, and Sierra Leone. Taking a regional approach, the project is innovative, supporting the implementation of a common set of policies and reforms that the participating countries have determined to be key for increasing and sustaining trade in electricity. In addition, transportation projects have continued as a critical means to improve access to larger markets. In some cases, these projects have been designed to support direct job creation as well. For example, in Lesotho, the Transport Infrastructure and Connectivity Project is a labor-intensive routine maintenance program which creates employment opportunities for rural communities. 15. The World Bank is also working to deepen spatial linkages, and to support inclusive, productive urbanization (Policy Commitment 3). In Mauritania, the Decentralization and Productive Intermediate Cities Support Project is establishing local investment coordination mechanisms and monitoring implementation at the municipal level. All sub-projects are selected based on their potential for business development opportunities and job creation. In Mozambique in response to COVID-19, the Maputo Urban Transformation Project supports the City of Maputo in preparing a Municipal COVID-19 Response Plan and finances the implementation of measures to reduce the risk of community transmission in overcrowded neighborhoods. The project also supports larger interventions to build back better including the upgrading of the poorest informal settlements to support 20 percent of the city population. -7- 16. IDA 19 is contributing to greater integration through its collaboration with Regional Economic Communities (RECs) (Policy Commitment 13). The WBG is supporting capacity building and the regional agenda of strengthening and recognizing skills across member countries. The World Bank is also working with RECs to expand regional markets and trade. Implementing the Africa Continental Free Trade Area (AfCFTA) offers additional ways to deepen trade, links more firms into value chains, and spurs further investments and job creation. The IFC’s support for expanding trade finance will also facilitate trade, particularly as supply chains adjust to the disruptions of the COVID-19 crisis. To support economic recovery, IFC aims to commit $20 billion in trade finance between FY23-25, of which about 65 percent ($13 billion) would target IDA countries. D. Upgrading of Skills and Technology 17. As demand for digital solutions has expanded, the commitment to have fifty percent of all entrepreneurship and SME programs that have a digital component has been exceeded (Policy Commitment 7). SME programs are being implemented to ensure that more people can adopt and use digital tools to improve their businesses and to increase income earning opportunities. The large majority of such programs address the particular constraints facing women. Addressing the constraints of people with disabilities is a new dimension of this agenda, with World Bank teams looking to add digital tools beneficial to people with disabilities and expand outreach efforts to them as program participants. For example, the Ethiopia Digital Foundations Project incentivizes digital businesses to provide training and digital devices to suppliers (e.g., enable farmers to sell products on e-Commerce platforms). Outreach efforts seek to expand the participation of women and people with disabilities. 18. Improving workers’ skills is critical to ensure that the benefits of economic transformation are more widely spread (Policy Commitment 8). Efforts to strengthen people’s capabilities and helping connect them to jobs are critical complements to the work above that focuses on creating jobs. The focus for IDA19 has been on countries in the bottom 30 of the Human Capital Index. While COVID-19 has made it more challenging to find potential employers to participate in programs given layoffs and reduced hours, demand is expected to rise significantly as recovery gets underway. In the meantime, the last year has reinforced the need to upgrade skills and prepare for ways in which consumer demands may be shifting. The Ethiopia Urban Productive Safety Net and Jobs Project shows how programs can prepare more people for the labor market. E. Building in Learning and Partnerships in JET 19. Measuring the impact of projects on direct and indirect job creation (Policy Commitment 12) offers the opportunity to learn more about effective design, but also complementary enabling conditions that can raise overall jobs outcomes. Recognizing the challenges of attribution, these measurement exercises are pilots. Some are able to use secondary data to monitor impacts, some use modeling exercises to simulate the broader distributional impacts. Lessons from these pilots should help future project teams. In addition, IFC tracks direct jobs and estimates of indirect jobs associated with IFC PSW investments, and, where feasible, disaggregates jobs reporting by the poorest quintile, gender, FCS, disability and youth. -8- 20. Finally, IDA supports country platforms (CP) to bring together the wider group of stakeholders contributing to the JET agenda (Policy Commitment 10). Led by the country, these are serving to share information and priorities, and underscore the importance of partnerships in effective engagement. With the crisis, some have shifted attention to issues of health given the urgency of combatting the pandemic. Nonetheless, coordination through CPs has helped advance the JET agenda and mobilization of private finance. In Afghanistan, the CP, organized around the 2021-2024 Afghanistan Reconstruction Trust Fund, is key for coordinating, defining, implementing, and monitoring a broad country reform program. The World Bank supports this reform program through a series of Incentive Program Development Policy Grants, in partnership with other donors. The CP prioritizes a number of JET-related issues, including improved human capital, a stronger business environment, and enhanced women’s economic empowerment. In Pakistan, three of the four main priorities of the emerging CP are related to JET and focus on sustainable power, education and learning outcomes, and digital financial inclusion. F. Overall Lessons for JET’s Effectiveness 21. JET is a journey. There are many “JET projects”, but no single project can deliver transformation. Expectations must be realistic about the efforts needed, the time it will take to achieve change and the importance of continued political support to move the agenda forward. 22. There is no one destination for JET journeys. Countries differ in which type of transformation is most relevant for them. For commodity dependent countries the priority may be to diversify. For those in manufacturing, participating in more global value chains or strengthening inter-firm linkages can be the priority. Upgrading technology and taking greater advantage of digital opportunities is gaining momentum across many locations. 23. “Jumbo JETs” and “Commuter JETs” both have roles to play. The ambition of JET projects needs to reflect the level of political commitment domestically. Some engagements can be considered “Jumbo JETs”, tackling deep structural reforms, making more markets contestable, and orienting towards a low-carbon development pathway – including in key enabling sectors such as finance or infrastructure. Other countries are deepening the JET elements of engagements, pushing further to raise productivity and to pay more attention to the impacts on jobs. As jobs are a priority for policy makers, JET is an effective entry point for encouraging countries to accelerate their journeys. 24. “Private jets” rarely deliver JET outcomes. Of the 19 Country Private Sector Diagnostics, the top constraint identified is the lack of competition or contestability in key sectors. There is an uneven playing field when some firms have preferential access to finance, procurement contracts or regulatory or tax treatment. Such a position favors the owners of such firms, but it rarely serves the public interest of having dynamic, innovative, productivity-raising firms that can create better jobs. The role of state-owned enterprises (SOEs) is worthy of particular attention. In many IDA countries SOEs continue to operate in many sectors where private firms could compete. Indeed, the Independent Evaluation Group recommendations call for selectivity and a cascade approach on SOE reforms. With private sector support programs expanding in response to COVID-19, the role of the state in the real sector is expanding. The need to address the role of -9- SOEs and how best to unwind some of this state support is growing, with an emphasis on introducing or regaining momentum around the activities of the private sector. 25. The JET agenda has kept “flying”, despite the challenges of operating under lockdowns and with many working remotely. WBG teams have responded to the urgency of the crisis and the need to protect the gains to growth, jobs and incomes of the most vulnerable, and the majority of policy commitments are on track. And several will be achieved in IDA19, making room for new commitments under IDA20 (see Annex 3). III. WAY FORWARD AND PROPOSED POLICY ACTIONS 26. The ambition for JET must remain high – tackling potential new risks raised by the crisis and expanding opportunities in ways that are green, resilient and inclusive. There is both a short run agenda that must remain focused on minimizing the costs of the crisis and addressing new risks to the foundational pillars of JET posed by the crisis, and the recovery agenda focused on reforms, public investments and programs that can really stimulate green, resilient and inclusive private sector investments, hiring and growth. FCS countries remain a special focus as the need for economic transformation and better jobs are especially pressing. 27. The economic crisis is raising the risk of further macro-instability and thus the importance of sound fiscal management. As the Governance and Institutions paper emphasizes, the need to keep debt situations transparent and well managed is central to maintaining stability and providing confidence for investors to invest. The expanded role for government services – for health, but also for education, social protection and to support viable firms – will remain for a while. Raising domestic resource mobilization will be central to meeting these needs, combined with sound fiscal management on the expenditure side. Due to growing inequality in many countries, the question of how to make both revenue raising and expenditures more progressive will also be important. Ensuring government programs are well targeted is also critical; the evidence from firm surveys of 60 countries show that only a small percentage of firms are able to access government support programs, but the share that have not suffered downturns in sales are almost equal to those that have. The Governance and Institutions policy commitments and the SDFP address these risks and serve to strengthen the macro-foundations of the JET framework too. 28. A second risk is to the financial sector that could jeopardize the recovery. Continued Policy Commitment 1: Strengthen the downturns can put more stress on the financial resilience, inclusion, and depth of the sector as non-performing loans mount (Freund and financial system in 15 IDA countries, Pesme, 2021). Regulatory forbearance measures at including 5 IDA FCS, based on Financial some time will need to get rolled back. Ensuring Sector Assessment Program (FSAP) or resilience of the financial sector remains critical, similar financial sector analytics to support not just in avoiding further rounds of crisis and risks a robust and inclusive recovery. for a larger fiscal crisis, but also in making sure that the financial sector can serve as an intermediary that can finance new opportunities during the recovery. A new commitment is being proposed to support 15 IDA countries, of which 5 are FCS, - 10 - in strengthening the resilience, inclusion and depth of their financial sectors (Policy Commitment 1) – in addressing the current context but also future types of crises. This will include such activities as strengthening the capacity to conduct early supervisory analysis and actions, private debt workouts, orderly bank resolution; manage climate change risk and provide sustainable finance; develop crisis risk finance policies/strategies; and finance the real economy. The resilience dimension thus includes both responding to potential shocks within the financial sector as well as external shocks including natural hazards, health, FCV, etc. This commitment will also contribute to multiple IDA commitments (e.g., inclusive finance helps poor households with safer and more climate resistant forms of saving assets compared to using livestock or similar assets) or enables more enterprises access digital solutions to expand their businesses. 29. The IFC can support financial resilience and leverage more private capital for recovery. Through IFC’s Fast Track COVID-19 Facility, IFC – with IDA PSW’s support – is also providing liquidity support to address financing gaps in the area of trade finance, especially for Micro, small and medium-sized enterprises (MSMEs), and to the expansion of digital financial services. Leveraging PSW resources, IFC will contribute across multiple goals of JET (Policy Commitment 2; with supporting links to Policy Commitments 4, 6, and 7 below), mobilizing private sector finance and engaging in upstream work to make sectors more competitive and resilient. 30. A third risk regards the forgone, or delayed, reforms and public investments needed Policy Commitment 2: In the context of IDA for economic transformation and jobs – or policy PSW operations involving IFC, IFC will aim responses that distort incentives for private to increase the share of its commitments in investment. With government capacity stretched FCS-IDA17 & LIC-IDA17 countries, by the immediate demands of the crisis, the risk is reaching 12-17 percent commitments on that reforms that could help with restructuring, average during the IDA20 cycle, with an opening markets or supporting upgrading do not get intent to reach an annual commitment of 14- made – and worse, some reforms and programs are 17 percent in the last fiscal year of IDA20. put in place that serve to close markets, make the Consistent with this aim, targeted platforms playing field less even, and expand the role of the and programmatic approaches for IDA PSW- state in the real sector. The policy agenda will need eligible countries will be supported to develop and encourage scalable initiatives to address how to unwind support programs across sectors in these countries, including meeting immediate needs that may have those targeted to support small and medium- distortionary impacts in the medium term. sized enterprises (SMEs), for trade finance Similarly, some critical investments in public purposes, in support of gender, and for infrastructure may get delayed as funds are diverted climate friendly investments focused on to current health and social assistance needs and mitigation and adaptation. potentially slowdown future growth opportunities. - 11 - 31. Recognizing the long run importance of scaling up quality infrastructure services in Policy Commitment 3: Support at least 20 power and transportation, and the potential size countries, of which 10 have a score of 3.0 or of their fiscal commitments, IDA20 will support less on Country Policy and Institutional Assessment (CPIA) Dimension 16 covering establishing efficient and effective governance in transparency, accountability and corruption delivering and managing quality infrastructure. to identify the governance constraints to the This will contribute to sound fiscal management development, financing, and delivery of and ensure expanded affordable access to enabling quality infrastructure investments, with infrastructure services (Policy Commitment 3). particular attention to resilience, climate and environment, social considerations, and 32. IDA20 can support reforms and regulatory practices, transparency and investments to expand productivity channels: integrity, to inform the adoption of policies and/or regulations for enhanced a. Diversification and integration: IDA20 infrastructure governance in a majority of will address constraints to sectors with these. These will be undertaken through InfraSAPs and standalone governance high potential for growth and job assessments that support improved creation, including by addressing competitiveness. regulatory barriers, tackling restrictions on competition, encouraging greater innovation and expanding participation in trade and global value chains. In Policy Commitment 4: Support interventions Africa, this is likely to include helping to address market failures and remove implement the AfCFTA that offers constraints in sectors with high potential for opportunities to raise productivity through the private sector to drive sustainable and greater integration and access to larger inclusive economic transformation and markets. Enabling sectors with high create better jobs, or where women and potential for green growth will be of youth disproportionately work, in 20 IDA particular interest, as will sectors where countries, of which 5 are FCS, including through upstream activities to develop many women and youth work given they private sector engagements, grounded in have been particularly hard hit by the crisis data-driven diagnostics such as Country (Policy Commitment 4). Synergies with the Private Sector Diagnostics (CPSD) and Gender Special Theme are very important selected in agreement with country here, since making these opportunities authorities. inclusive is central to JET. Occupational and sector segregation remains constraints still that need to be addressed. This work will also contribute to raising the productivity of informal enterprises and enabling more firms to operate in the formal sector. This will be complemented by IFC’s upstream activities (advisory services) which remains focused on creating both the enabling environment for the private sector in these markets as well as in supporting the development and implementation of projects in viable and potentially transformative sectors and markets (see Policy Commitment 2 above). - 12 - b. Diversification and competitiveness: The Policy Commitment on agriculture is being widened to address structural issues which are at the root of food and nutrition security as well as the modernization of agribusiness value chains (Policy Commitment 5). The aim is to raise agricultural productivity that will reinforce food and nutrition security, raise farmers’ incomes and enable economic transformations as incomes rise. As the commitment to modernize, upgrade and deepen value chains in agriculture continues, ensuring the markets are open and competitive will be key to their sustainability. This will be accomplished through connecting producers to competitive and international markets; technical assistance for meeting international standards and regulations; assisting with the adoption of modern technology; supporting logistics and reducing trade costs. The World Food Programme estimates that 96 million people in 54 IDA countries are being pushed into a position of acute food insecurity as a result of the intersecting supply and demand shocks, with FCS countries disproportionately vulnerable (World Bank, 2020). Several countries closed their borders, with governments seeking to ensure adequate food supplies domestically but with costs to Policy Commitment 5: Improve agricultural productivity and strengthen sustainable agri- their trading partners. This will have business value chains with high potential for complementary impacts with the policy growth and better jobs addressing commitments on finance to enable more modernization and food and nutrition farmers to access insurance products and to security in 15 IDA countries, including 5 invest in sustainable agricultural practices. FCS, in ways that are fully inclusive, and Policy Commitment 3 on infrastructure will encourage private sector opportunities. help improve connectivity to markets. c. Connectivity and integration: There are also areas where JET can open up new Policy Commitment 6: To close the economic opportunities in an inclusive connectivity gap, IDA will support 17 IDA manner; the first such area is the digital countries, including those which will benefit economy. The evidence shows that adopting from IFC’s support under the IDA PSW to digital solutions can raise efficiency, open a develop digital infrastructure, to increase inclusive and affordable access to and usage new range of activities, and enable more of broadband connectivity, among which are activities to be done safely. Closing gaps in 6 landlocked countries, 4 small states and 9 access to affordable broadband is FCS countries. particularly pressing in FCS countries. In many cases, government responses to COVID-19 have expanded the use of digital identification and digital payments. The opportunity is to use this to expand the dynamism in the digital economy more broadly. Expanding e-payments systems and getting more enterprises of all sizes to accept digital payments are crucial steps, supporting the analog complements to e-commerce, such as logistics, is another – and ensuring workers and consumers have the skills and access to internet devices and data plans are others. Here is where bridging the digital divide is critical to avoid worsening inequality. Expanding access to affordable ICT is even more urgent (Policy Commitment 6), with attention need to ensure access is equitable and gender inclusive (see Gender Policy Commitment 4); supporting digital entrepreneurship and the adoption of technology can ensure digital technologies are then used and serve to access - 13 - larger markets, raise productivity and contribute to new jobs (Policy Commitment 7). This is an expected growth area for the IFC too (Policy Commitments 2 and 7). d. Upgrading and competitiveness: The WBG will work with IDA countries in Policy Commitment 7: Support programs in the design and implementation of 15 IDA countries to strengthen private sector programs to support inclusive private recovery and transformation that are well sector recovery, ensuring they are well targeted, inclusive of SMEs and support the designed, well targeted through adoption of digital technologies, with transparent criteria, inclusive of the monitoring to capture distributional impacts most disadvantaged, and focused on and effectiveness. To support this, IFC will constraints to adopting new technologies increase its digital infrastructure and venture capital work in IDA and FCS countries. (Policy Commitment 7). The Bank’s BPS show that on average smaller and informal enterprises, women-owned enterprises and those in hard hit sectors have had a harder time receiving support, even as some large firms have received a great deal of public support. Given the pressures on fiscal space, support programs will be monitored to determine their distributional impacts and effectiveness. This should strengthen fiscal management and ensure programs support viable and competitive firms with the potential for inclusive and sustainable growth and job creation. 33. In addition to expanding the digital economy, an area of expanding opportunities is greening growth and jobs – from building sustainable infrastructure to ensuring sectors and locations with high potential for growth and jobs -- are themselves resilient and contributing to the WBG’s Green, Inclusive and Resilient Development (GRID) approach. The experience of the COVID-19 pandemic underscores the need to address other risks, including climate change. For JET, this includes ensuring investments in quality infrastructure for energy and transportation that expand the use of renewable energy with wide access at affordable rates, leveraging the private sector as much as possible (Policy Commitment 3). IFC and the Bank are supporting the Scaling Mini-Grid initiative in Sub-Saharan Africa to expand low-cost renewables and the commercialization of battery storage. IFC is also actively pursuing innovations in energy storage, offshore wind, floating solar and green hydrogen, through its upstream initiatives, to deepen the renewables reach in the energy mix (contributions through Policy Commitment 2). Policy Commitment 4 focuses on addressing market failures in sectors with high potential for green growth and green jobs. This will include promoting the circular economy, strengthening the entrepreneurship ecosystem for clean technology jobs, greening industrial zones and safeguarding national resources for eco-tourism. Given the prominence of agriculture in many IDA countries, the commitment on food and nutrition security and agricultural modernization (Policy Commitment 5) needs to be linked with climate smart agriculture (see discussion in the paper on Climate Change Special Theme). Deepening skills, digital skills and those needed to access green jobs or jobs in green sectors, will be important both to ensure these sectors can grow and that more workers can access these opportunities (Policy Commitments 4, 6 and 7, and complementarities with the Human Capital Special Theme). Work begun under IDA18 on inclusive, productive cities will continue, with the resilience dimension of these projects strengthened. Investments in urban areas have long lasting impacts; ensuring they are made with an eye to how they can contribute to - 14 - greener growth will have enormous spillover effects to the economic activities they encourage and enable. 34. Finally, core statistical systems that collect data to inform policy making are critical Policy Commitment 8: Support 34 IDA for the overall success of the JET agenda – and countries including those with ongoing for other Special Themes and Cross-Cutting statistical operations (i) to strengthen Issues too. Despite the ongoing data revolution, a institutions and build capacity to reduce multiplicity of challenges including lack of gaps in the availability of core data for financing, limited technical capacity and uncertain evidence-based policy making, including data governance prevent the world’s poorest and disaggregation by sex and disability where appropriate; and (ii) to increase resilience most conflict-affected countries from fully of statistical systems, including through harnessing the benefits of data and its contributions investments in digital technology and high- to sustained economic development. Data can frequency monitoring capabilities. improve people’s lives, promote economic and social development, and inform multiple stakeholders to design, implement, monitor, and evaluate evidence-based policies and to enhance service delivery. Data can also enable citizens’ oversight of government policies and programs. The policy commitment on Data for Policy (D4P) launched under IDA19 aims to improve the availability, timeliness, quality, and relevance of a core set of data for evidence-based decision making across IDA countries. Where appropriate, data will not just be disaggregated by gender, but also by various vulnerable individuals and groups, including those with disabilities. Under IDA20, D4P is aligned with the recommendation of the 2021 World Development Report: Data for Better Lives related to building institutional capacity of National Statistical Systems, which is a policy priority to maximize the productive allocation of limited resources by IDA countries, particularly in the context of the COVID-19 recovery (Policy Commitment 8). The BPS and Household Phone Surveys have provided much needed insights into the extent and distributional effects of the shocks and of crisis response measures. Under IDA20, the ability to collect data and monitor impacts during a crisis will be part of the crisis preparedness package. 35. Together, the JET policy commitments respond to the new challenges the crisis poses and support a green, resilient and inclusive recovery. The ambition for JET remains strong; IDA can make a critical difference in creating better jobs for more people when they are most needed. - 15 - Figure 3.1. IDA20 Proposed Policy Commitments Contribute to JET Sector Diversification & Connectivity & Integration Upgrading & Technology Competitiveness Policy Commitment 4: Address market failures and remove constraints Policy Commitment 7: Ensure to allow transformation in sectors with high potential for green growth programs to support private and jobs or where more women and youth work sector recovery and transformation are effective, well-targeted, inclusive of SMEs Policy Commitment 5: Strengthen sustainable agri-business value and support the adoption of chains addressing modernization and food and nutrition security digital technologies (NEW) Policy Commitment 6: Expand broadband access, affordability, and usage Enabling Foundations to Expand Private Investment Policy Commitment 1: Financial sector resilience, inclusion, and depth to enable GRID and dynamic recovery (NEW) Policy Commitment 2: IFC targets on FCV and IDA countries Policy Commitment 3: Strengthen governance and procurement of quality infrastructure Policy Commitment 8: Strengthen core statistical capabilities, including of monitoring impacts of crisis on firms and households Note: Two are new; the others are updated to address COVID-19 crisis and opportunities for GRID. IV. ISSUES FOR DISCUSSION 36. Management welcomes feedback from IDA Participants on the proposed policy commitments for the IDA20 Jobs and Economic Transformation Special Theme as set out in this paper. In particular, feedback is welcomed on the reformulations and prioritization of policy commitments aimed at addressing key issues for supporting a green, resilient and inclusive recovery and the creation of better jobs for more people. - 16 - REFERENCES Apedo-Amah, Marie Christine; Avdiu, Besart; Cirera, Xavier; Cruz, Marcio; Davies, Elwyn; Grover, Arti; Iacovone, Leonardo; Kilinc, Umut; Medvedev, Denis; Maduko, Franklin Okechukwu; Poupakis, Stavros; Torres, Jesica; Tran, Trang Thu. 2020. “Unmasking the Impact of COVID-19 on Businesses: Firm Level Evidence from Across the World”. Policy Research Working Paper; No. 9434. World Bank, Washington, DC. © World Bank. Ohnsorge, Franziska and Shu Yu (editors). 2021. The Long Shadow of Informality: Challenges and Policies. Washington D.C.: The World Bank Group. Freund, Caroline and Alfonso Mora. 2020. “Supporting Firm Resilience.” World Bank mimeo. Freund, Caroline and Jean Pesme. 2021. “Supporting Firms in Restructuring and Recovery.” World Bank mimeo. International Labor Organization, 2021. “ILO Monitor: COVID-19 and the World of work” Seventh edition. Geneva: ILO. International Monetary Fund, 2021. The World Economic Outlook, April 2021. Washington, DC, The International Monetary Fund. World Bank, 2020. “Responding to the Emerging Food Security Crisis” prepared for the International Development Association (IDA). Washington, DC: The World Bank Group World Bank, 2020. Reversals of Fortune. Washington DC, The World Bank Group. - 17 - Annex 1. Proposed IDA20 and Status of IDA19 Policy Commitments Objective IDA19 Policy Commitments Status IDA20 Policy Commitments Enabling Foundations NEW – Policy Commitment 1: Strengthen the for Private Investment: resilience, inclusion and depth of the Supporting resilient financial system in 15 IDA countries, financial systems for including 5 FCS based on FSAP or similar recovery financial sector analytics to support a robust and inclusive recovery. Enabling Foundations Policy Commitment 6: The International On track to meet the REVISED – Policy Commitment 2: In the for Private Investment: Finance Corporation (IFC) will aim to lower end of the target context of IDA PSW operations involving IFC, Leveraging One WBG to increase the share of its commitments in given the challenges IFC will aim to increase the share of its increase private FCS-IDA17 & LIC-IDA17 countries, with the pandemic and commitments in FCS-IDA17 & LIC-IDA17 investments reaching 10-15 percent of its own- crisis countries, reaching 12-17 percent of its own- account commitments on average during account commitments on average during the the IDA19 cycle. IDA20 cycle, with an intent to reach an annual commitment of 14 -17 percent in the last fiscal year of IDA20. Consistent with this aim, targeted platforms and programmatic approaches for IDA PSW- eligible countries will be supported to develop and encourage scalable initiatives across sectors in these countries, including those targeted to support SMEs, for trade finance purposes, in support of gender, and for climate friendly investments, focused on mitigation and adaptation. Enabling Foundations Governance and Institutions Policy On track. REVISED – Policy Commitment 3: Support at for Private Investment: Commitment 4: Support 10 IDA least 20 countries, of which 10 have a score of Delivering quality countries in the identification of key 3.0 or less on CPIA Dimension 16 covering infrastructure governance constraints to the transparency, accountability and corruption, to investments in fragile development, financing, and delivery of identify the governance constraints to the countries quality infrastructure investments to development, financing, and delivery of inform the adoption of policies and/or quality infrastructure investments, with regulations for enhanced infrastructure particular attention to resilience, climate and - 18 - Objective IDA19 Policy Commitments Status IDA20 Policy Commitments governance in a majority of these (five environment, social considerations, and countries). regulatory practices, transparency and integrity, to inform the adoption of policies and/or regulations for enhanced infrastructure governance in a majority of these. These will be undertaken through InfraSAPs and standalone governance assessments that support improved competitiveness. Sectoral Diversification Policy Commitment 1: WBG will On track to deliver the REVISED – Policy Commitment 4: Support & Competitiveness: undertake interventions in 10-15 15 even as the sectors interventions to address market failures and Creating better jobs and countries to help them address with high potential have remove constraints in sectors with high sustainable, inclusive bottlenecks in sectors with high potential been shifting in light of potential for the private sector to drive economic transformation for private-sector led job creation and the crisis sustainable and inclusive economic in high potential sectors economic transformation, which will be transformation and create better jobs, or country specific and could include where women and youth disproportionately sectors such as agribusiness, work, in 20 IDA countries, of which 5 are FCS, manufacturing and others. Proposed including through upstream activities to WBG actions will be grounded in develop private sector engagements, grounded diagnostics, such as the Country Private in data-driven diagnostics such as Country Sector Diagnostics (CPSD) findings and Private Sector Diagnostics (CPSD) and jobs diagnostics, and selected in selected in agreement with country authorities. agreement with country authorities. Sectoral Diversification Policy Commitment 2: At least 66 On track to meet the REVISED – Policy Commitment 5: Improve & Competitiveness: percent of agriculture and agribusiness revised target of 58 agricultural productivity and strengthen Boosting agriculture projects in IDA countries include support percent reflecting the sustainable agri-business value chains with productivity, value chains for participation in value chains with increased share of high potential for growth and better jobs and food security high potential for growth and jobs projects addressing addressing modernization and food and creation, through connecting producers urgent food crisis needs nutrition security in 15 IDA countries, of to markets, technical assistance for which 5 are FCS, in ways that are fully meeting international standards and inclusive. regulations, adoption of modern technology, supporting logistics and reducing trade costs. - 19 - Objective IDA19 Policy Commitments Status IDA20 Policy Commitments Connectivity & Policy Commitment 5: To help close the On track to meet the REVISED – Policy Commitment 6: To close Integration: digital infrastructure gap, IDA will revised target of 18 the connectivity gap, IDA will support 17 IDA Expanding broadband support 25 IDA countries to double their countries countries, including those which will benefit access and usage for jobs broadband penetration (16 on the African from IFC’s support under the IDA PSW to of the future continent), including eight in landlocked develop digital infrastructure, to increase countries, by 2023. inclusive and affordable access to and usage of broadband connectivity, among which are 6 landlocked countries, 4 small states and 9 FCS countries. Upgrading & Policy Commitment 7: 50 percent of On track SIGNIFICANTLY REVISED/NEW – Policy Technology: entrepreneurship and Micro, Small and Commitment 7: Support programs in 15 IDA Positioning more firms Medium Enterprises (MSME) projects countries to strengthen private sector for recovery, including will incorporate digital financial services recovery and transformation that are well through the adoption of and/or digital entrepreneurship elements targeted, inclusive of SMEs and support the digital technology – and ensure they address particular adoption of digital technologies, with constraints facing women and people monitoring to capture distributional impacts with disabilities. and effectiveness. To support this, IFC will increase its digital infrastructure and venture capital work in IDA and FCS countries. Enabling Foundations Governance and Institutions Policy On track REVISED – Policy Commitment 8: Support for Private Investment: Commitment 12: Support 30 IDA 34 IDA countries including those with ongoing Boosting institutional countries, including those with ongoing statistical operations (i) to strengthen capacity to improve data statistical operations, to support institutions and build capacity to reduce gaps for policy decision- institutions and build capacity to reduce in the availability of core data for evidence- making gaps in the availability of core data for based policy making, including evidence-based policy making, including disaggregation by sex and disability where disaggregation by sex and disability. appropriate; and (ii) to increase resilience of statistical systems, including through investments in digital technology and high- frequency monitoring capabilities. - 20 - Annex 2. Links to other Special Themes and Cross-Cutting Issues 1. The JET agenda has clear links to all the Special Themes and Cross-Cutting Issues. The agenda also benefits from multiple Umbrella Trust Funds that support global, regional and country strategic engagements – including Competitiveness for Jobs and Economic Transformation, the Jobs Umbrella, DEC’s Global Data Facility and several sector specific umbrella trust funds. 2. Human Capital: Human Capital’s focus is on protecting and investing in human capital; JET’s is on the utilization of human capital. Sex disaggregated data on health, education and social protection will be important for monitoring the Human Capital agenda (Policy Commitment 8). Expanding data collection of people with disabilities will enable more monitoring of vulnerable groups. Policy commitments such as Policy Commitments 4, 5, 6 and 7 would also have elements including strengthening skills. 3. FCV: Achieving economic transformation and catalyzing private sector-led growth is all the more impactful in FCV contexts, even as the challenges may also be greater. Several JET policy commitments have sub-targets for operating in FCV contexts to ensure widespread operationalization, Policy Commitment 1 on a resilient, deep and inclusive financial sector; Policy Commitment 2 on IFC’s engagements in FCS; Policy Commitment 3 has a focus on fragile countries, those with CPIAs below 3 on key measures of institutions; Policy Commitment 5 on agriculture and food security; Policy Commitment 6 on access to affordable broadband. The D4P (Policy Commitment 8) can contribute to robust data systems in FCV settings, including through collection of data leveraging new technologies, where traditional approaches are complex or expensive due to lack of geographic proximity or high insecurity. This includes the use of big data to monitor and predict movements of internally displaced people and to estimate local economic activity. The FCV policy commitment on addressing the drivers of fragility will also contribute to the enabling foundations of the JET agenda. 4. Gender: JETs better jobs for more people is aligned with Gender’s focus on women’s economic empowerment and control over assets. JET projects that have defined beneficiaries (e.g. skills and SME support projects), will address differential constraints facing women. In supporting high potential sectors, one consideration is the extent to which women can and do participate in them (Policy Commitment 4). In raising opportunities in agriculture, the commitment too is to make them inclusive (Policy Commitment 5). The policy commitment on statistical capacity will continue to emphasis gender disaggregated data collection (Policy Commitment 8). The Gender policy commitment on women’s use of digital technologies is aligned with both the digital and government support policy commitments under JET (Policy Commitments 6 and 7). 5. Climate Change: The quality infrastructure commitments are aligned with sustainability goals, as are the commitments to expand opportunities in agriculture and in other sectors with potential for green growth and the creation of better jobs (Policy Commitment 3). The Climate Change Commitment on greening the financial sector complements the JET Commitment on a resilient financial sector (Policy Commitment 1) and IFC will supporting green investments (Policy Commitment 2). The potential for green transformation and jobs is a key criterion for supporting sectors with high potential (Policy Commitment 4). And Climate Change’s - 21 - commitment on addressing mitigation and adaptation in agriculture will complement the JET commitment on food and nutrition security with climate changes making incidents of food, and thus nutrition, insecurity that much more common (JET Policy Commitment 5). 6. The commitments under the Governance & Institutions and Debt, as well as the SDFP, are ones that are critical to ensuring the foundations for JET are strong. The resilience of fiscal management, DRM and illicit financial flows under Governance and Institutions are critical contributions to JET too. And JET has taken on commitments that had formerly been under Governance and Institutions, on the governance of quality infrastructure and on strengthening core statistical capabilities (Policy Commitments 3 and 8). 7. Digital technologies are contributing to all sectors of the economy. JET directly contributes both to the investment in ICT infrastructure and usage of broadband (Policy Commitment 6) but also to the adoption and usage of digital technologies for growth and jobs (Policy Commitment 7), both of which will need to include a dimension of raising skills of workers. Ensuring this is achieved in a gender inclusive manner is stressed under the Gender commitments. Digital technologies also contribute indirectly through its contributions facilitating financial inclusion under Policy Commitment 1; e-procurement approaches under Policy Commitment 3; raising the potential for growth and jobs under Policy Commitment 4, the modernization of agriculture under Policy Commitment 5; and data collection and data systems under Policy Commitment 8. 8. Finally, crisis preparedness contributes to strengthening the foundational pillars of JET, and the inclusion of a new commitment on financial sector resilience (Policy Commitment 1). - 22 - Annex 3. Framework of IDA19 Policy Commitments and Expected Achievements Figure A3. 1. JET IDA19 Policy Commitments: Expanding Productivity Channels to Create Better Jobs for More People Sector Diversification & Connectivity & Integration Upgrading & Technology Competitiveness • Productive, inclusive cities (JET #3) • Support digital entrepreneurship, • Address market failures and • Expand investment and trade in addressing constraints to women and remove constraints in sectors with regional infrastructure services people with disabilities (JET #7) high potential for growth and jobs (power, transportation) (JET #4) • Expand inclusive skills and (JET #1) • Expand broadband access (JET#5) employability programs, esp. for women, youth, and people with • Modernize agri-business value • REC capacity and regional trade (JET disabilities (JET #8) chains (JET #2) #13) Enabling Foundations to Expand Private Investment • IFC targets on FCV and IDA countries (JET#6) • A JET-lens embedded in all country programs, e.g. reflected in SCDs and CPFs (JET #9) • Support 10 country-led JET Country Platforms (JET #10) • Sustainable fiscal management is discussed in all SCDs at risk of debt distress (JET #11) • 20 pilots measuring impacts on indirect jobs; IFC conduct on all PSW projects (JET #12) Table A3.1. IDA19 Policy Commitments that will have been Achieved or Mainstreamed by the end of IDA19 IDA19 Policy Commitments Comments 9. IDA will embed a JET focus in all IDA country programs and the Achieved in all SCDs and design of operations as appropriate, informed by diagnostics such as CPFs SCDs and CPSDs, and reflected in all new IDACPFs and Performance and Learning Reviews , including enhanced use of JET results indicators. Where relevant, IDA country programs and design of operations will be informed by migration diagnostics. 10. Under country government leadership, IDA will actively participate Will be achieved by end of in country platforms to collaborate and coordinate with partners and IDA19 stakeholders (including Multilateral Development Banks, Development Finance Institutions, bilaterals, and the private sector, etc.) in at least 10 IDA countries toward developing a coherent vision, and a set of actions for JET, and mobilization of private finance. 11. All SCDs of IDA countries at moderate or high risk of debt distress Achieved in all SCDs will address the country’s approach for sustainably financing its development. 12. IDA will conduct 20 pilots in ‘economic transformation IDA These are being included projects’ to estimate indirect and/or induced jobs. The IFC will track in Supporting Effective direct jobs and estimates of indirect jobs associated with all IFC Jobs Lending at Scale led - 23 - IDA19 Policy Commitments Comments PSW investments. Where feasible, jobs reporting will be by the Jobs Group and disaggregated by the poorest quintile, gender, FCS, disability and supporting operations youth. across the WBG. The monitoring of the impact of the crisis and crisis response measures is included in the IDA20 Policy Commitment 3 on statistical capacity building. 13. IDA will work with regional institutions on capacity building and The trade agenda remains skills in addition to establishing strategic partnerships with at least very important and is three RECs to promote regional markets and develop regional value included in the IDA20 chains. Policy Commitments 4 and 5 on high potential sectors and on agriculture.