FOR OFFICIAL USE ONLY Report No: PAD2668 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF SDR 36.5 MILLION (US$50.0 MILLION EQUIVALENT) AND A PROPOSED CREDIT IN THE AMOUNT OF EUR 45.0 MILLION (US$50.0 MILLION EQUIVALENT) TO THE REPUBLIC OF NIGER FOR A GOVERNANCE OF EXTRACTIVES FOR LOCAL DEVELOPMENT AND COVID-19 RESPONSE PROJECT July 13, 2020 Governance 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 May 31, 2020 Currency Unit = Euro (EUR) EUR 0.8984= US$1 SDR 0.7288 = US$1 FISCAL YEAR January 1 - December 31 Regional Vice President: Ousmane Diagana Country Director: Soukeyna Kane Global Practice Director: Edward Olowo-Okere Regional Director: Elisabeth Huybens Practice Manager: Alexandre Arrobbio Task Team Leaders: Abel Bove, Kirsten Lori Hund, Ragnvald Michel Maellberg ABBREVIATIONS AND ACRONYMS AFSIEN Association des Femmes du Secteur des Industries Extractives du Niger, Women in extractive sector network ANFICT Agence Nationale de Financement des Collectivités Territoriales, National Agency for Financing Territorial Communities ASM Artisanal and Small-scale Mining BCEAO Banque Centrale des États de l'Afrique de l'Ouest, West Africa Central Bank CE Citizen Engagement CFGCT Centre de Formation en Gestion des Collectivités Territoriales, LG training center COMINAK Compagnie minière d'Akokan, State-Owned Mining Company of Akokan COVID-19 Coronavirus Disease 2019 CNESS Centrale Nationale des Etudes Stratégiques et Sécurité, National Center for Strategic Security Studies CNPC China National Petroleum Corporation CRGM Centre de Recherche Géologique et Minière, Geological and Mining Research Center CPF Country Partnership Framework CY Calendar Year DEP Direction des Etudes et Programmes, Direction of Studies and Programming DFIL Disbursement and Financial Information Letter DGATD Direction Générale de l’Administration du Territoire et de la Deconcentration, General Direction of Territorial Administration and Deconcentration DGDCT Direction Générale de la Décentralisation et des Collectivités Territoriales, General Direction of Decentralization and Local Government DGTCP Direction General du Trésor et de la Comptabilité Publique, General Direction of Treasury and Public Accounting DRH Direction des Ressources Humaines, Human Resources Department ECOWAS Economic Community of West African States EEP Eligible Expenditure Programs EITI Extractive Industries Transparency Initiative ENA Ecole Nationale d’Administration, National Public Administration School ESCP Environmental and Social Commitment Plan ESS Environmental and Social Safeguards EUR Euro FAD Fond d’Appui au Développement, Development Support Fund FCV Fragility Conflict and Violence FM Financial Management FMS Financial Management Specialist FP Fond de Péréquation, Equalization Fund FCFA Franc of the Financial Community of Africa FY Fiscal Year GBV Gender Based Violence GDP Gross Domestic Product GOLD Governance of extractives for Local Development GoN Government of Niger GRM Grievance Redress Mechanism GRS Grievance Redress Service HACP Haute Autorité à la Consolidation de la Paix, High Authority for Peace Consolidation HR Human Resources HRM Human Resources Management IDA International Development Association IAEA International Atomic Energy Agency IGF Inspection Générale des Finances ; General Inspection of Finance IFR Interim Financial Report IMF International Monetary Fund IPF Investment Project Financing IRR Internal Rate of Return IVA Independent Verification Agent IT Information Technology LG Local Government LSM Large Scale Mining M&E Monitoring and Evaluation MoF Ministry of Finance MoM Ministry of Mines MoP Ministry of Planning NPV Net Present Value OECD Organisation for Economic Co-operation and Development PBC Performance Based Condition PBR Performance Based Result PCDS Public Sector Capacity and Performance for Service Delivery PDES Programme de développement économique et social PDO Project Development Objective PFS Project annual financial statements PIM Project Implementation Manual PIU Project Implementation Unit PFM Public Financial Management Plan TCR Plan de Transfert des Ressources et des Compétences, Plan for the Transfer of Resources and Competences to Local Government PPSD Project Procurement Strategy for Development PRACC Projet d’Appui a la Croissance et la Competitivite, Project for Competitiveness and Growth SC Steering Committee SEP Stakeholder Engagement Plan SESA Mining Sector Strategic Environmental and Social Assessment SIGMINES Système d’Information Géologique Mines (Mining geological information system) SOPAMIN Société du patrimoine des mines du Niger, State-Owned Mining Investment Company SORAZ Société de Raffinage de Zinder, State-Owned Petroleum Refining Company SYSCOHADA Système Comptable de l’Organisation pour l'harmonisation en Afrique du droit des affaires, accounting system of the Organisation for the Harmonisation of Corporate Law in Africa TA Technical assistance ToR Terms of References TSA Treasury Single Account WAEMU West African Economic and Monetary Union WB World Bank The World Bank Governance of Extractives for Local Development & COVID-19 Response Project (P164271) TABLE OF CONTENTS DATASHEET ........................................................................................................................... 1 I. STRATEGIC CONTEXT ...................................................................................................... 7 A. Country Context................................................................................................................................ 7 B. Sectoral and Institutional Context .................................................................................................... 8 C. Relevance to Higher Level Objectives............................................................................................... 9 II. PROJECT DESCRIPTION.................................................................................................... 9 A. Project Development Objective (PDO) ............................................................................................. 9 B. Project Components ....................................................................................................................... 10 C. Project Beneficiaries ....................................................................................................................... 17 D. Results Chain .................................................................................................................................. 17 E. Rationale for Bank Involvement and Role of Partners ................................................................... 19 F. Lessons Learned and Reflected in the Project Design .................................................................... 19 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 20 A. Institutional and Implementation Arrangements .......................................................................... 20 B. Results Monitoring and Evaluation Arrangements......................................................................... 20 C. Sustainability................................................................................................................................... 21 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 22 A. Technical, Economic and Financial Analysis ................................................................................... 22 B. Fiduciary.......................................................................................................................................... 22 C. Legal Operational Policies ............................................................................................................... 24 D. Environmental and Social (E&S) ..................................................................................................... 25 V. GRIEVANCE REDRESS SERVICES ..................................................................................... 26 VI. KEY RISKS ..................................................................................................................... 26 VII. RESULTS FRAMEWORK AND MONITORING ................................................................... 29 Annex 1: Implementation Arrangements and Support Plan .................................................. 61 Annex 2: GOLD Project Contribution to Identified Relevant Gender Gaps ............................. 74 Annex 3: Extractive Revenue-Sharing Arrangement in Niger................................................. 76 Annex 4: Overview of Transfer of Responsibilities to Local Governments ............................. 77 Annex 5: Local Government Financing in Niger: opportunities .............................................. 78 Annex 6: Extractive Sector Management Challenges ............................................................ 80 Annex 7: GOLD Project Contribution to Niger FCV Risk Mitigation Strategy .......................... 86 Annex 8: Climate Co-Benefits Rationale ............................................................................... 88 Annex 9: Donor Partners and other World Bank Projects that have synergies with the GOLD Project .......................................................................................................................... 89 Annex 10: Economic Analysis of Niger-GOLD project ............................................................ 91 The World Bank Governance of Extractives for Local Development & COVID-19 Response Project (P164271) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Niger Governance of Extractives for Local Development & COVID-19 response Project Project ID Financing Instrument Environmental and Social Risk Classification Investment Project P164271 Substantial Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [✓] Fragile State(s) [✓] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Enhanced Implementation Support (HEIS) Expected Approval Date Expected Closing Date 03-Aug-2020 31-Jul-2025 Bank/IFC Collaboration No Proposed Development Objective(s) The project development objective is to strengthen local governments’ capacity and extractive sector management for service delivery in the targeted regions. Components Component Name Cost (US$, millions) Page 1 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Strengthening Local Government Capacity 59.00 Improving extractive sector’s management 37.00 Project management 4.00 Organizations Borrower: Republic of Niger Implementing Agency: Ministry of Planing PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 100.00 Total Financing 100.00 of which IBRD/IDA 100.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 100.00 IDA Credit 50.00 IDA Grant 50.00 IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount Niger 50.00 50.00 0.00 100.00 National PBA 50.00 50.00 0.00 100.00 Total 50.00 50.00 0.00 100.00 Expected Disbursements (in US$, Millions) Page 2 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) WB Fiscal Year 2020 2021 2022 2023 2024 2025 Annual 0.00 21.00 16.00 27.00 29.00 7.00 Cumulative 0.00 21.00 37.00 64.00 93.00 100.00 INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Governance Energy & Extractives Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance  High 2. Macroeconomic  High 3. Sector Strategies and Policies  Moderate 4. Technical Design of Project or Program  Substantial 5. Institutional Capacity for Implementation and Sustainability  High 6. Fiduciary  Substantial 7. Environment and Social  Substantial 8. Stakeholders  Substantial 9. Other  High 10. Overall  High Page 3 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance Assessment and Management of Environmental and Social Risks and Impacts Relevant Stakeholder Engagement and Information Disclosure Relevant Labor and Working Conditions Relevant Resource Efficiency and Pollution Prevention and Management Relevant Community Health and Safety Relevant Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities Cultural Heritage Not Currently Relevant Financial Intermediaries Not Currently Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). Legal Covenants Sections and Description Page 4 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Schedule 2, section I.A.1(a): The Recipient shall, not later than two (2) months after the Effective Date, establish and maintain, throughout the Project implementation period, with composition, mandate and resources satisfactory to the Association, a steering committee, to be chaired by a representative of the Ministry of Planning and to be composed of the Recipient’s key ministries and stakeholders Sections and Description Schedule 2, section I.A.2(ii): The PIU shall, not later than three (3) months after the Effective Date, recruit and thereafter maintain at all times during Project implementation, an assistant accountant, and a senior internal auditor each of whose qualifications, experience and terms of reference acceptable to the Association Sections and Description Schedule 2, section I.B.2.(a): The Recipient shall, not later than three (3) months after the Effective Date, install and thereafter maintain throughout the Project implementation period, an accounting software for the Project acceptable to the Association Sections and Description Schedule 2, section I.B.2.(b): The Recipient, not later than six (6) months after the Effective Date recruit, and thereafter maintain throughout the Project implementation period, an external auditor for the Project with experience, qualifications and on terms of reference acceptable to the Association Sections and Description Schedule 2, section I.E.(a): The Recipient shall, not later than three (3) months after the Effective Date, recruit and thereafter maintain, at all times during the implementation of the Project, an independent Verification Agent under terms of reference acceptable to the Association to verify the data and other evidence supporting the achievement of one or more PBRs Sections and Description Schedule 2, section I.C.1: 1: The Recipient shall, not later than November 30 of each year during the implementation of the Project, starting January 1, or such later date as the Association may agree in writing, prepare and furnish to the Association for its approval, the annual work plan and budget containing all proposed activities for inclusion in the Project during the following calendar year, together with the financing plan for such activities and a timetable for their implementation Sections and Description Schedule 2, section II: The Recipient shall furnish to the Association each Project Report not later than forty-five (45) days after the end of each calendar semester, covering the calendar semester Conditions Type Description Effectiveness Art. 5.01 (a): The Recipient has adopted a Project Implementation Manual in accordance with Section I.B.1 of Schedule 2 to this Agreement Page 5 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Type Description Effectiveness Art. 5.01 (b): The Recipient has recruited to the Project Implementation Unit (“PIU”) staff referred to in Section I.A.2.(i) of Schedule 2 to this Agreement Type Description Disbursement Schedule 2, Section III.B.1: No withdrawal shall be made: (a) for payments made prior to the Signature Date except that withdrawals up to an aggregate amount not to exceed $20,000,000 may be made for payments made prior to this date but on or after the date twelve (12) months preceding the Signature Date, for Eligible Expenditures under Category (2); or (b) on the basis of PBRs achieved prior to the Signature Date. (c) under Category (2), until and unless the Recipient has furnished evidence satisfactory to the Association that the respective PBRs set forth in the table in the Annex to this Schedule have been achieved in accordance with the Verification Protocols, as confirmed by the Verification Agent referred to in Section I.E.(a) of the Schedule 2 to this Agreement. Page 6 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) I. STRATEGIC CONTEXT A. Country Context 1. Niger’s economy is subject to high fragility and external shocks, with fiscal implications. Real annual Gross Domestic Product (GDP) growth rates averaged 6.3 percent between 2012 and 2019. Growth remains volatile and predominately driven by rain-fed agriculture vulnerable to climatic shocks. The extractive sector, accounting for 6.8 percent of GDP in 2019, is subject to sudden commodity price fluctuations.1 Moreover, a recent economic downturn in Nigeria and border closure has affected growth by 0.4 percent of GDP and government revenues. Public spending in the past few years was increasingly financed by public debt.2 Finally, Coronavirus Disease 2019 (COVID-19) pandemic is expected to affect growth negatively in 2020 and could have prolonged adverse impact on growth, public finances and poverty. Before the COVID-19 crisis, extreme poverty was expected to decline from 41.5 percent in 2019 to 40.1 percent in 2021 and the number of poor people to increase from 9.5 million to 10.1 million due to population growth. However, COVID-19 crisis’ economic impact increases household vulnerability to fall into poverty. 3 2. Niger is exposed to multiple challenges, stemming from a combination of deep-rooted causes and short-term factors limiting the impact of Government development efforts. The most immediate vulnerability is related to regional insecurity. This challenge affects livelihood and strains the fiscal space, given increased security spending and costs. 4 Niger is also affected by structural challenges such as limited economic opportunities for the youth, high gender inequality, 5 and insufficient access to basic education and health6. Access to basic services is affected by limited resources, high population growth, large country size, insecurity, and limited state presence and capabilities. 3. Key drivers of fragility are growing insecurity, natural resources competition, extractive sector related tensions, youth marginalization and limited service delivery:7 (i) Growing regional insecurity and terrorist attacks in border regions with Mali, Burkina Faso and Lake Chad affect Niger’s stability and fuel pre-existing intercommunal tensions; (ii) increasing competition over natural resources (water, arable land and forests) intensified by demographic pressure (70 percent population increase expected by 2030) and climate related stresses;8 (iii) marginalization of youth due to limited economic opportunities and low education levels potentially fueling grievances9 and making them vulnerable to radicalization; (iv) transparency challenge extractives management and mining revenue redistribution, exacerbating tensions, especially in mining areas; and (v) governance challenges hampering service delivery and contributing to popular dissatisfaction. 4. In addition, the COVID-19 outbreak has been affecting Niger since March 2020 . On March 11, 2020, the World Health Organization declared the virus outbreak a pandemic and Niger confirmed its first cases on March 19, 2020. As of July 6, 2020, 1,093 cases and 68 deaths have been confirmed. The COVID-19 outbreak and non-sanitary measures to mitigate the spread affect Niger’s economic activity, public sector management and service delivery. 1 For example, a decline in uranium prices reduced government mining revenues by 30 percent between 2014 and 2016. 2 In 2012-2017, public spending increased from 22.5 to 26.8 percent of GDP; and public debt from 26.1 to 49.7 percent of GDP. 3 World Bank (2020), Niger Public Expenditure Review 4 Insecurity and security responses affects local livelihood given limitations on trade (curfews, roadblocks, security costs for transports, etc.). 5 The 2015 Gender Inequality Index ranks Niger 157 out of 159 countries in terms of gender disparities. Annex 2. 6 Niger ranked 189 out of 189 countries by the 2019 Human Development Index. 7 World Bank (2017), Niger Risks and Resilience Assessment (RRA). 8 Forced displacement of vulnerable groups has also contributed to exacerbate pressure on service delivery and natural resources (land, water). 9 World Bank (2018), Country Partnership Framework (CPF), Niger, No. 123736-NE. Page 7 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) B. Sectoral and Institutional Context 5. The Government of Niger (GoN) has shown a strong commitment in addressing critical Fragility, Conflict and Violence (FCV) as well as COVID-19 challenges. Niger’s current Development Strategy, the Second Economic and Social Development Plan 2017-2021 (Deuxième plan de développement économique et social, PDES-II) recognizes insecurity as a major obstacle to economic, social and cultural development. In response, PDES-II proposes: (i) improving the security governance strategic framework; (ii) mitigating security threats; (iii) reducing community conflicts; and (iv) promoting development initiatives for peace and security. To mitigate COVID-19 impact, Niger declared a state of emergency on March 27, 2020, implemented non-sanitary measures10 and is working with partners to increase health system capacity. 6. The GoN has adopted reforms to improve the deployment and decentralization of public resources, and extractive revenue-sharing arrangement. Geographical concentration of financial and Human Resources (HR) in Niamey is a major service delivery bottleneck and impacts stability. A 2016 reform aims to decentralize education, health, water and environment sectors to Local Governments (LGs). In line with Article 152 of the Constitution and Law no. 2014-08 of April 16, 2014,11 the State of Niger introduced a clause in the Mining Code in 2006 and the Petroleum code of 2007, which allocates 15 percent of mining royalties to the affected populations and the regions and communes of the extraction zones. To mitigate the negative impact of extraction, GoN issued a plan in 2018 to incrementally transfers responsibilities and related resources in 2018-2021 (Annex 6). 7. Implementation pace of decentralization and extractive revenue reforms has been slower than expected. Roles and responsibilities for each government level need to be clarified and key policies, legislation and regulations remain to be established i.e. policy for deconcentration of central level civil servants, LGs´ civil servant legislation, and detailed regulations and norms related to LGs´ Public Financial Management (PFM)12. LGs’ HR capacity and training at LG training center – Centre de Formation en Gestion des Collectivités Territoriales (CFGCT), are limited. Actual transfers to LG have so far been limited and extractive revenue transfers fall short of legal requirements, in large part due to limited LG capacities. The GoN has issued a 2018-22 Clearance Plan for LG extractive revenue arrears accumulated in 2012-16 (Annex 5). 8. Agadez, Diffa, Tillabery and Zinder, the main extractive regions of the country, are facing fragility challenges . These four extractive regions account for most of current mining revenues and are home to 44 percent of the total population. Tillabery, one of the country’s most populated regions, shares security-vulnerable borders with Mali and Burkina Faso. A similar border situation applies to the regions of Diffa and Agadez. Limited extractive sector management in these regions potentially contributes to fragility risks, as most of the Artisanal and Small-scale Mining (ASM) value chain is informal, and is frequently associated with social and environmental risks, as well as terrorism financing. 13 9. Extractive regions contribute a quarter of government revenue14 and present a strong revenue potential if extractive sector management improves. Extractive sector development through better public management and further private sector investment is an avenue for structural transformation.15 There is high potential of gold, iron, copper, nickel, phosphate, salt and battery minerals, and Niger has recently become an oil producer.16 Implementation of legal and institutional reforms to attract private investment has been slow, and challenges in budgeting affect Ministries of 10 Including border closure, schools closing, lockdown and curfews in main cities affected, etc. 11 The Decree 2015-245 of 8 May 2015 stipulates that 85 percent finances investments, 10 percent the recurrent budget of the local authorities of the mining regions, and 5 percent finances technical support to local authorities by line ministries. 12 Decree 2016-302-PRN-MISPDACR-MF of June 29, 2016. 13 Cf. Annex 7: Gold ASM sites are in fragile border areas/attract youth; International Crisis Group (2019) Getting a grip on central Sahel’s gold rush. 14 Extractive sector exports accounted for 84 percent of total exports and 22 percent of government revenues in 2017. 15 World Bank (2017), Systematic Country Diagnostic, Niger. 16 The Agadem-Cotonou oil pipeline is expected to boost production from 20,000 barrels/day in 2019 to 110,000 barrels in 2022. Page 8 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Petroleum and Mines performance (Annex 6). Improved management capacity and further development of related regulations and procedures could improve new mining cadaster, geo-data management center and laboratory performance. Investing in geodata17 and sector transparency as per new Extractive Industries Transparency Initiative (EITI) Standard could strengthen GoN’s capacity to attract and secure more favorable terms with private sector investors. 10. This International Development Association Financed (IDA) project proposes to support GoN strategic reforms to deploy public resources, improve extractive sector management and contribute to addressing the COVID-19 crisis. Supporting the deployment of resources through decentralization will improve LG capacity, access to service delivery and COVID-19 response coordination beyond Niamey. Investing in geo-data and extractive sector’s management will attract investors, mitigate associated social and environmental risks, foster job creation and boost revenue mobilization. Formalizing ASM and enhancing oversight capacity will foster the sector as a driver of resilience. Increased transparency and participation in local governance and extractives will contribute to strengthen accountability and state credibility. C. Relevance to Higher Level Objectives 11. The proposed project is aligned with the World Bank Group Country Partnership Framework (CPF) for Republic of Niger on decentralization, governance, fragility and extractives .18 Niger’s CPF for the period FY18-22 emphasizes the role of governance and a well-managed extractive sector to: (i) ensure transparency, accountability and transfers of extractive revenue to LGs; (ii) mitigate FCV risks; (iii) increase revenue mobilization; (iv) promote private-sector development and job creation; and (v) adopt a citizen-centric approach to improve service delivery. The project is expected to contribute to these objectives. 12. This project will contribute to FCV risks mitigation efforts. This will be accomplished by addressing some of the structural drivers of FCV in Niger. Specifically, the project will seek to improve: (i) a positive state presence across the country related to service delivery, (ii) state capacity to prevent conflict and foster inclusiveness at local level; (iii) extractive sector management to foster sustainable growth; and (iv) local-level livelihoods, through ASM. 13. The project contributes to the World Bank’s Twin Goals and IDA priorities. The focus on increasing capacity at the local level is expected to contribute to strengthen GoN´s capability and governance, in service delivery as well as extractive sector activities. It will also contribute to maximizing beneficial impacts of extractive industries for poverty reduction, through both job creation and revenue mobilization. 14. The project also contributes to the World Bank response to COVID-19 pandemic . In the short term, the project will support the operationalization of local COVID-19 crisis management cells. In the mid-term, the project will contribute to COVID-19 resilience by contributing to improve service delivery, revenue mobilization from extractive sector and jobs, especially in ASM, which is likely to increase as alternative livelihood following COVID-19 crisis and impact on the economy. II. PROJECT DESCRIPTION A. Project Development Objective (PDO) PDO Statement 15. The project development objective is to strengthen local governments’ capacity and extractive sector management for service delivery in the targeted regions. 16. Proposed PDO-level results indicators are:  Increased access to water, primary education and health services in rural areas in the targeted regions  Improved municipalities’ budget execution rate in the targeted regions 17 Available data on geological resources cover less than 15 percent of Niger’s overall territory. 18 World Bank (2018), Country Partnership Framework (CPF), Niger, No. 123736-NE. Page 9 of 99 The World Bank Governance of Extractives for Local Development Project (P164271)  Increased extractive revenues transferred to LGs  Increased requests for mining exploration permits  Increased artisanal miners under valid mining permit and trained on environmental and social good practices B. Project Components 17. The project will combine Performance-Based Conditions (PBCs) and Technical Assistance (TA) to support Government reforms. The TA will finance, inter alia, expertise to improve the legal framework, strategies and processes, software and training manuals. PBCs of the Governance of Extractives for Local Development (GOLD) Project will provide incentives for implementation of policies, laws and regulations related to state deployment, COVID-19 coordination mechanism and extractive sector management. 18. PBCs will be needed to incentivize implementation of nascent reforms contributing to PDO achievement. There is a need to strengthen the inter-ministerial dialogue and coordination and to incentivize decentralization reform implementation. PBCs provide incentives for adequate LG transfers and enhanced mining sector’s oversight. This approach provides the fiscal space within a fragile and fiscally constrained context for implementing decentralization and extractive sector reforms, both at their infancy, which implies a shift in budgeting those reforms implementation. It increases predictability and strengthens institutional capacity by fostering: (i) alignment of interests between sector ministries and Ministry of Finance (MoF), and (ii) the dialogue between MoF and sector ministries on budgeting and expected results. 19. The project will target core institutions and actors involved in decentralization and extractive sector management in the extractive regions of Agadez, Diffa, Tillabery and Zinder. Institutions covered include core ministries (Ministry of Interior, MoF) and extractive sector ministries (Ministry of Mines (MoM), Ministry of Petroleum) and those subject to decentralization (Primary Education, Health, and Water) to effectively deploy public resources, execute budgets at the local level and strengthen extractive sector management.19 Support at the institutional level will be combined with large-scale capacity-building in the targeted regions: Agadez, Diffa, Tillabery and Zinder. Component 1. Strengthening Local Governments’ Capacities (US$59.0 million equivalent, including EUR26.5 million credit and SDR21.5 million grant) 20. This component is to finance TA to strengthen systems and capacities for state deployment policies and incentivize through PBCs the availability of public financing to transfer human and financial resources at local level. 21. Sub-component 1.1: TA to strengthen the systems for resource deployment and LG performance (US$7.0 million equivalent). This sub-component will finance: (i) Human Resource Management (HRM) TA including on: (a) local civil service management manuals and procedures; (b) training systems of LG staff and oversight over civil servants in partnership with CFGCT (including defining a capacity-building strategy and plan, training trainers, revising curricula, building the capacity of the CFGCT in management20). PBC#1 (Operational municipalities and decentralized services with adequately trained staff) will enable implementation and roll out of new curricula and the LG HRM process; (ii) PFM TA including for: (a) preparation of the legal framework and procedures for deconcentrated management of public resources and LG financing in line with the Western-Africa Economic and Monetary Union (WAEMU) directives (including drafting legal texts and procedures defining the modalities relative to budgeting/execution/reporting on sectoral transfers and extractive revenue to LG, on-the-job training at central level for targeted ministries’ Directorates of Studies and Programming (Direction des Etudes et Programmes, DEP) on pluri-annual programming and annual performance reporting, studies on decentralization; (b) deploying the Treasury Single Account (TSA) e-system at local 19 Sector ministries selection was based on three criteria: (i) the level of readiness to decentralization; (ii) core functions of the government essential to state deployment; and/or (iii) extractives sector. 20 Including strategic business planning and functional review of CFGCT, distance learning feasibility study. Page 10 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) levels (upgrading the e-TSA software, equipment, training of software users). PBC#1 on training at local level will include PFM legal framework updated through TA; (iii) Local governance and risk monitoring systems through the design and implementation of two information management systems for (a) monitoring LG management (HRM, PFM, including piloting perception data collection on service delivery); and (b) monitoring drivers of conflict and violence by the National Center for Strategic Security Studies (Centre National des Etudes Stratégiques et de Sécurité, CNESS), including perception surveys. 22. Sub-component 1.2: PBCs for effective deployment of public resources (US$52.0 million equivalent). This sub- component is designed to incentivize, through PBCs, the mobilization of resources to implement public human and financial resources deployment at the local level in the targeted regions and sectors. Table 1. State Deployment PBCs PBCs Performance Based Results (PBRs) US$m Schedule PBR#1.1 Following application of decrees/codes on the Local Civil Service Law: 6.0 Year 1 revised LG code, decree on status of LG executive staff, decree on status of LG PBC#1: Operational fiduciary staff, decree on status of LG auxiliary staff, decree on status of technical municipalities and staff; and (ii) revised manual for payroll process have been prepared and adopted in decentralized services a manner satisfactory to the Association in Calendar Year (CY) 2020 with adequately PBR#1.2 Increased number of Public Officials from municipalities and decentralized 15.0 Year 2-4 trained staff services of Targeted Sectors trained in local public financial management and HR management and are at post in the Targeted Regions PBR#2.1 Inter-ministerial decision on modalities for allocation and execution of 4.0 Year 1 extractive revenues has been prepared and adopted in a manner satisfactory to the Association in CY20 PBR#2.2 Annual Extractive Revenue Transfers to LGs have increased as follows: 4.0 Year 2-5 PBC#2: Effective PBR#2.2.1: By end of CY21, 40% Annual Extractive Revenue Transfers have been mechanism for transferred to LGs extractive revenue PBR#2.2.2: By end of CY22, 50% Annual Extractive Revenue Transfers have been transfers to LGs transferred to LGs PBR#2.2.3: By end of CY23, 60% Annual Extractive Revenue Transfers have been transferred to LGs PBR#2.2.4: By end of CY24, 70% Annual Extractive Revenue Transfers have been transferred to LGs PBR#3.1: All municipalities in Targeted Regions have effectively received 3.0 Year 2-4 PBC#3: Improved notification of their annual budget allocations from the Ministry of Finance no later timeliness of transfers than 20 days after Finance Laws have been signed in CY21, CY22 and CY23, to LGs respectively PBC#4: Improved LG PBR#4.1: Targeted Regions’ municipalities’ annual spending in Targeted Sectors has 2.0 Year 4 capacity for better increased by 200% in comparison with CY19 service delivery in the PBR#4.2: All municipalities of the Targeted Regions have an average student-to- 2.0 Year 5 Targeted Sectors teacher ratio below 41 in their primary schools PBC#5: Effective PBR#5.1: 8 regional COVID-19 crisis management cells have been established in 10.0 Year 1 central-local accordance with ministerial decision no.052/PM of March 20,2020 and are coordination operational in a manner satisfactory to the Association in CY20 mechanism for COVID- PBR#5.2: The 8 regional COVID-19 crisis management cells have prepared and 2.0 Year 2 19 emergency provided to the Recipient’s central COVID-19 crisis management cell cumulatively response 80 weekly reports to central level since their establishment PBC#6: Increased PBR#6.1: the Recipient has prepared and adopted Inspection Manuals satisfactory 0.5 Year 1 impact of inspection to the Association in CY20 Page 11 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) PBCs Performance Based Results (PBRs) US$m Schedule missions and PBR#6.2: at least 200 Public Entities have been inspected annually using the 1.5 Year 2-4 coordination with LGs Inspection Manual by end of each CY in (i) CY21, (ii) CY22, (iii) CY23 in Targeted Sectors PBR#6.3: at least 100 Public Entities inspected the previous CY have implemented 2.0 Year 3-4 70% or more of inspection recommendation by each CY in (i) CY2022, and (ii) CY2023 Total Financing allocated 52.0 PBC#1 on HR deployment 23. Purpose. This PBC#1 will incentivize the implementation of the HR strategy related to decentralization to ensure all LG have the key executive staff posted in the LG and adequate support from line ministries at local level, thus increasing the capacity of LG to manage their financial resources, improve service delivery and foster local development. This PBC will also incentivize an increase in CFGCT’s capacity to implement at scale the training of LG executive staff, local councilors and relevant deconcentrated services in HRM & PFM – thus building human capacity in managing the transfer of financial resources and responsibilities to LG. 24. Eligible Expenditure Programs (EEP). Related EEP are from the National Agency for Financing Territorial Communities (ANFICT)21, LG recurrent budget (financed mostly through the LG Development Support Fund, FAD),22 the CFGCT and the Ministry of Interior in charge of Decentralization departments i.e. General Direction of Decentralization and LG (Direction Générale de la Décentralisation et des Collectivités Territoriales, DGDCT), HR Department (Direction des Ressources Humaines, DRH), and DEP. Those departments are implementing HR and LG staffing policy. ANFICT is responsible for the management of FAD, providing LG subsidy for recurrent spending. Resources to those departments and FAD have to increase to implement decentralization HR policies. The CFGCT, responsible LG trainings across the territory, resources will increase significantly to scale-up trainings. PBC#2-3-4 on LG spending 25. Purpose. These PBC#2, PBC#3 and PBC#4 will incentivize the implementation of the mechanism for transferring financial resources to LG in time, hence increasing LG spending in the targeted social sectors, i.e. primary education, health and water – the main responsibilities transferred to LG. Those PBCs are complementary to one another, capturing the PFM chain: from effectiveness and timeliness of transfers to budget execution capturing the capacity to both plan and execute budget, and ultimately, deliver services. These PBCs are in synergy with PBC#1 on HRM. 26. EEP. Related EEP are from the ANFICT, DGDCT and the Directorate General of Treasury and Public Accounting (Direction Générale du Trésor et de la Comptabilité Publique, DGTCP) and its Regional Directorates and the Decentralization units in the targeted sector Ministries (Primary Education, Health, Water). ANFICT supports LG in PFM and the monitoring of central transfers to LG (FAD and the Equalization Fund ( Fond de Perequation, FP). DGDCT oversees monitoring and controlling LG budgeting and annual accounts, while the DGTCP is responsible for the control of LG budget execution. The sector Regional Directorates and the decentralization unit in the sector ministries comprising of the DEP, DRH, Inspection Services (IGS, Inspection Générale des Services) play a crucial role in budget planning and oversight of LG for their respective sectors. Thus, this EPP relates to the implementation of the PFM mechanism related to decentralization, shifting resources and building capacity in those institutions in charge of local PFM. PBC#5-6 on COVID-19 and social sectors’ coordination with LG 21 Agence Nationale de Financement des Collectivités Territoriales, National Agency for Financing Territorial Communities 22 Fond d’Appui au Développement, LG Development Support Fund Page 12 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 27. Purpose. PBC#5 and PBC#6 will incentivize the coordination of social sector ministries at central and local level with the LGs on COVID-19 emergency response as well as inspection of service providers across the territory. The COVID-19 emergency response makes it imperative to clearly define coordination channels and responsibilities between deconcentrated services, LGs and the central government. The increase of supervision and inspection missions is also a consequence of on-going decentralization policy and civil service reform. Both are impacting the ability of line ministries to fulfill their functions. Ministerial reorganization, as well as transfers of responsibilities aim to increase the field presence of line ministries, in order to support LG, supervise frontline service providers and ultimately improve service delivery. 28. EEP. Related EEP are from targeted line ministries’ departments (Primary Education, Health, Water) responsible for planning, facilitating and implementing supervision: Inspection (IGS), Planning (DEP) and HR (DRH), as well as from the local representatives of the Directorate General of Territorial Administration and Deconcentration ( Direction Générale de l’Administration du Territoire et de la Deconcentration, DGATD) coordinating the COVID-19 response in the field with LGs. 29. Verification protocols. An Independent Verification Agent (IVA) will be contracted, not later than three months after the effective date, to support the General Inspection of Finance (Inspection Générale des Finances, IGF) and Court of Auditors (Cour des Comptes) in the annual verification of PBRs and audit the EEP as needed, prior to their submission to IDA. The World Bank retains the right to make the final decision on whether a PBR has been achieved or not and may undertake independent quality assurance checks of selected PBRs to ensure continued robustness of the system. 30. Retroactive Financing. The project will retroactively finance certain activities, aligned with the PDO, and which the GoN has been implementing within the reform processes undertaken as part of this project. The retroactive financing will cover activities related to the implementation decrees of the 2019 Local Civil Service Law, 23 the revised procedures for payment processes, the joint inter-ministerial decision on implementation modalities for extractive revenue transferred to LG, and the operationalization of local COVID-19 crisis management cells. As such, no withdrawal shall be made prior to the financing agreement date, except for withdrawals up to an aggregated amount not to exceed US$20 million for payments made one year prior to the signature of the finance agreement for eligible expenditures. Table 2. Synergies between GOLD TA, GOLD PBC and Current IDA on public sector Implementation through IDA PCDS24 results GOLD project’s TA at central level PBCs Civil service TA: ministerial organization, TA on manuals to implement local HRM PBC#1: staffing and PFM/HRM performance evaluation system TA on curricula for LG, training of trainers training; PBC#2-3-4: spending; (2018/20); biometric census (2019/20) TA and equipment for LG performance monitoring PBC#6: inspection missions system TA on program budgeting (2017/19), TA on LG PFM regulation in line with WAEMU directives PBC#1: adoption of key LG TA on central TSA (2018/19) TA and equipment on LG e-Treasury Single Account PFM regulation (2020) TA on National M&E System (2019/20) TA on curricula for training LG on PFM PBC#4: LG financial transfers LG Census (2018) TA and equipment for M&E of LG performance 31. Component 2. Improving extractive sector’s management (US$37.0 million equivalent, including EUR16.6 million credit and SDR13.5 million grant). This component will finance TA to improve extractive sector’s management and investment attractiveness and its integration into the local economy. The component will, through PBCs, incentivize the availability of public financing to register and train ASM miners and to increase oversight on mining sites. 32. Sub-component 2.1 TA to improve extractive sector management (US$27.0 million equivalent). This subcomponent aims to improve extractive sector management through better regulatory framework, geo data 23 Revised LG code, decrees on status of LG executive staff, LG fiduciary staff, LG auxiliary and LG technical staff. 24 Public Sector Capacity and Performance for Service Delivery (PCDS) P145261 Page 13 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) management and risk mitigation capacity, and to improve extractive sector integration in the local economy through enhanced local content and ASM capacity. The sub-component will finance TA on: (i) The regulatory framework: (a) updating legal and policy framework (including fiscal regime, local content, emergency response policies and social and environmental regulations), (b) building capacity (including training and toolkits on monitoring licenses and contracts, environmental and social impacts). PBC#7 and PBC#8 support at scale implementation of the legal framework at the local level; (c) developing long-term socio-economic and environmental government strategy for uranium mine closure (diagnostic, strategy, multi-stakeholders consultation, action plan) without financing mining closure activities; (d) developing strategy, action and capacity-building plans for implementation of extractive industries local content policies; (ii) Geo-data management: Support GoN to acquire, process, store, and disseminate information about the country’s subsoil to better assess, promote and manage its mineral potential, and to help the identification of dedicated artisanal mining zones, through: (a) an airborne and geophysical and geological data collection and verification campaign in priority zones;25 (b) design and implementation of an integrated information management system for the extractive sector, enabling a web-based integrated management of geodata, mining and petroleum cadaster, contracts, environmental, fiscal and production data, in line with EITI; (c) capacity-building for the mineral sector laboratory in Niamey and the mining cadaster, which are both part of the MoM, to operate in line with international good practices; and (d) development and implementation of an investment promotion strategy of large mineral deposits to attract investors26; (iii) ASM management by (a) elaborating a strategy for the formalization of the gold ASM value chain (including an organizational assessment of ASM oversight, studies on supply chain, multi-stakeholders dialogues on gold ASM); (b) trainings public officials on the revised institutional framework, including social and environmental impacts’ management at mine site level27 – PBC#7 and PBC#8 will support the implementation of this legal framework by trained public officials when they formalize ASM and control mining sites; (c) designing training and demonstration centers at pilot salt and gold ASM sites to showcase internationally recognized socially and environmentally sound mining practices and techniques, and miners’ business practices, specifically targeting women; 28 and (d) supporting the organization for Women in Extractives in Niger (AFSIEN29) with capacity building and studies. 33. Sub-component 2.2: PBCs for effective extractive sector oversight (US$10.0 million equivalent) . This sub- component is designed to incentivize through PBCs the mobilization of resources to implement the effective oversight of the extractive sector, from ASM to Large Scale Mining (LSM) sites to improve social, environmental and fiscal compliance. Table 3. Extractives PBCs PBCs PBRs US$m Schedule PBR#7.1: at least 70 mining license holders have been subject to annual inspection using the Extractive Sites Inspection Manual in CY22, CY23, and 3.0 Year 3-5 PBC#7: Increased impact of CY24 inspection missions of PBR #7.2: at least 50 mining license holders inspected the previous CY have mining sites implemented 70 percent or more of inspection’s recommendations using the 2.0 Year 4-5 Extractive Sites Inspection Manual CY23 and CY24 PBC#8: Number of artisanal PBR#8: 400 new artisanal and small-scale mining permits issued in compliance 5.0 Year 2-5 and small-scale mining with the Recipient’s Mining Code 25 Including geo-data surveys, data banks, compilation of data aiming at the production of national thematic maps (geology and prospectivity), etc. 26 Including maps and reports, workshops, media documentation, and participation in international conferences and industry meetings. 27 Capacity-building on good practices for mining and processing techniques, mining titles, waste management, mine site organization, environmental and social risks (including gender dimensions) and mitigation measures, revenue mobilization, and management. 28 E.g. guide on good practices for ASM miners, training on health & safety issues; environmentally responsible mining techniques methodologies. 29 Association des Femmes du Secteur des Industries Extractives du Niger, Women in Extractive Sector Network. Page 14 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) PBCs PBRs US$m Schedule permits issued by the MoM Total Financing allocated 10.0 PBC#7 on mining sites inspection 34. Purpose. This PBC#7 will incentivize the increase of inspection of mining sites, which are currently limited, thus improving mining sites’ oversight (both large scale and ASM) and coordination with local authorities. This will increase the implementation of the policy and legal framework, enhancing mining sites’ compliance. It will also improve MoM’s understanding of mining sites’ issues and inform policy and strategy. 35. EEP. Related EEP are from the MoM, in charge of exploitation and environment at central and deconcentrated levels, as well as the mining laboratory and geological research center ( Centre de Recherche Géologique et Minière, CRGM) and the local representatives of the DGATD. MoM services and CRGM are overseeing mining sites and will need additional resources to achieve the PBC. DGATD is involved at local level in mining inspection missions to ensure continuous oversight of social and environmental aspects of mining sites with communities, LG and traditional authorities. PBC#8 on ASM 36. Purpose. This PBC#8 will incentivize the formalization process of, currently mostly informal, artisanal mining. ASM permits are valid for three years and geographically defined. Up to date information on ASM will inform GoN on challenges related to ASM and inform MoM programming, as well as provide the opportunity for MoM’s deconcentrated units to increase awareness of ASM permit owners on environmental and social practices, and supply chain. 37. EEP. Related EEP are from the MoM departments responsible for ASM permits verification and registration, and awareness-raising and training (Artisanal Mining; Planning; Geology; CRGM; Environment; Legal; Financial Management; HR). The local representative of the DGATD will also be involved to ensure coordination with traditional authorities and ASM representatives. Increase in temporary staffing and operating costs are expected to achieve the PBC. 38. Verification protocols. An IVA will be contracted to support the IGF and Court of Auditors ( Cour des Comptes) to conduct annual verification for PBRs and audit the EEP upon needs, prior to their submission to IDA. The World Bank will retain the right to make the final decision on whether a PBR has been achieved and may undertake independent quality assurance checks of selected PBRs to ensure continued robustness of the system. Table 4. Synergies between GOLD TA, GOLD PBC and current IDA on extractive sector Building on PRACC30 and PCDS projects’ GOLD project’s TA at central level Implementation results through PBCs TA on mineral cadaster and laboratory (2019) TA on legal and policy framework, incl. templates for PBC#7: mining and oil and mining codes (2017) inspection, capacity building of public officials inspection Audit of SOPAMIN31 (2018); TA on oil and TA on ASM strategy, ASM monitoring tools PBC#8: ASM mining codes (2017); census of ASM sites TA and equipment for pilot training ASM sites (2019) Component 3: Project management (US$4.0 million equivalent, including EUR1.8 million credit and SDR1.5 million grant) 30 Projet d’Appui à la Croissance et la Competitivite, Project for Competitiveness and Growth), P127204. 31 Société du patrimoine des mines du Niger, State-Owned Mining Investment Company (SOPAMIN) Page 15 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 39. This component will ensure project coordination and management . The component will support: (i) day to day management of the project; (ii) procurement and financial management; (iii) monitoring and evaluation (M&E); (iv) coordination of project activities; (v) communication; (vi) support of training and advisory services needed for the overall performance of the project; and (vii) leadership and change management to address collaboration and cooperation challenges, e.g. through coaching on Rapid Result approach within targeted ministries. Cross-cutting topics in project’s components 40. Project activities are designed to contribute to citizen engagement (CE) and women empowerment and mitigate FCV risks and climate change. Project activities in both components contribute to address key FCV drivers related to social inclusion, CE, extractive sector-related risks, jobs, and improving GoN capacity to monitor risks of conflicts (Annex 7). Climate change considerations are integrated in project activities wherever possible (Annex 8). Project activities will also:  address gender gaps related to extractive sector and local governance: (i) in access to water, health and education, sectors decentralized to LG, which the project intends to contribute to improve; (ii) in women participation in local governance, which the project intends to improve by fostering training of female public officials, and by including gender budgeting and participatory approaches to LG management in the large-scale trainings of local authorities; (iii) in artisanal mining (low pay, low status, higher health risks), which the project intends to contribute to improve through training and coaching female artisanal miners in particular, piloting ASM and LG partnership in local development planning, especially related to issue affecting women in particular (Annex 2);  contribute to fostering CE: project supervision will include consultations with direct beneficiaries and citizens, and feedback will be used to adjust project’s implementation. A project grievance redress mechanism will be set up following best practices, inform project’s implementation and its performance will be tracked through a project’s intermediary indicator. Also, the following project’s activities will contribute to strengthen CE by the GoN : (i) large- scale capacity-building mainstreaming of participatory approach in LG management; (ii) pilot data collection on service delivery and decentralization from citizens; (iii) pilot ASM miner participation in the LG planning; (iv) compliance with new EITI standards. 41. Project activities will also contribute to mitigate the COVID-19 impact: They will (i) provide support to operationalize local COVID-19 crisis management units including in social sectors and for LG and local authorities; (ii) integrate pandemic aspects in GoN fragility driver’s monitoring system; (iii) provide support for a LG performance monitoring information system to monitor service delivery i.e. health; (iv) support e-TSA deployment at the local level, to reduce use of cash; (v) strengthen local authorities’ coordination capacity, including in health sector; (vi) increase extractive revenue mobilization, hence mid-term fiscal and economic resilience; and (vii) increase ASM oversight as ASM is increasing as an alternative livelihood following COVID-19 crisis. Table 5. Synergies between GOLD TA, GOLD PBC and current IDA on extractive sector Components US$ million Component 1: Strengthening Local Governments’ Capacities 58.50 - Sub-component 1.1: TA to strengthen the systems for resource deployment and LG performance 6.50 - Sub-component 1.2: PBCs for effective deployment of public resources 52.00 Component 2: Improving extractive sector’s management 36.50 - Sub-component 2.1 TA to improve extractive sector management 26.50 - Sub-component 2.2: PBCs for effective extractive sector oversight 10.00 Component 3: Project Management 3.80 Project Preparation Advance 1.20 Total 100.00 Page 16 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) C. Project Beneficiaries 42. The direct beneficiaries of the project will be: (i) civil servants from targeted ministries and agencies, (ii) LG staff and elected representatives in targeted regions, and (iii) the artisanal miners targeted by the ASM pilot, with a focus on women and youth. Indirect beneficiaries include citizens in the targeted regions, who benefit from better service delivery by LG, especially in health, primary education and water. In addition, citizens will also greatly benefit from a coordinated COVID-19 crisis response between the central and local government, mitigating both health and economic impacts. D. Results Chain 43. The project will support government efforts in deploying human and financial resources to LGs, coordinating the COVID-19 response, investing in geo-data and transparent extractive sector management, and supporting the contribution of ASM to sustainable development. By supporting deconcentration and decentralization reforms, the project will increase financial execution and access to service delivery outside Niamey, especially in the context of the COVID-19 pandemic. Investing in geo-data, extractive sector management and transparency will help attract investors, foster an extractive sector more integrated in the local economy, mitigate associated social and environmental risks, foster job creation and boost revenue mobilization. Formalizing ASM and enhancing oversight capacity will foster the sector as a driver of resilience rather than of fragility. Increased transparency and participation in local governance and extractive industries, at all levels, will contribute to strengthen accountability and state credibility (Figure 1). Page 17 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Figure 1. GOLD Project Theory of Change Outputs Outcomes PDO Impact Increased LG HR capacity in the targeted regions in PFM, HRM, CE and conflict mediation (PBC#1) Increased spending of LG in social sectors (Primary Education, Health, Water) (PBC#2, PBC#3, PBC#4) Increased access to services in Primary Education, Health, Water Increased oversight of LG LG performance improved Component 1 Improved LG public finance Increased oversight of social sector ministries & management Drivers of Fragility mitigated coordination at local level (PBC#5) (incl. COVID-19 response, PBC#6) To strengthen Local - Improved access to services Governments’ capacity - Improved citizen engagement Improved analysis on conflict risk and - Improved capacity to mitigate extractive sector local conflict Improved extractive sector legal and policy framework in management - Increased transparency in line with global good practices for extractive sector service delivery - Decreased negative social and Increased capacity for extractive policy framework in environmental impacts of the implementation the targeted extractive extractive industries in targeted Increased interest from private regions regions Increased oversight of mining sites (PBC#7) sector investment in extractive - Increased jobs related to Component 2 extractive sector Increased knowledge of geological potential Increased use of environmental and social good practices in Revenue mobilization from Increased capacity of artisanal miners in environmental, extractives, including artisanal and extractive sector increased social safeguards, and business (PBC#8) small-scale mining Increased transparency of extractive sector Intermediate Results Indicators PDO Level Indicators • Public officials trained on LG’s PFM and HRM, conflict mediation and Citizen Engagement • Increased access to water, primary education and health services in rural • Citizens in the targeted regions who are aware of their municipality's annual investment projects plan and think it area in the targeted regions corresponds to their priorities Grievances received and addressed timely by the project • Improved municipalities’ budget execution rate in the targeted regions • Municipalities’ own-tax recovery rate increased • Increased extractive revenue transferred to LG • National reports on risk of conflict produced, incl. perceptions • Increased requests for mining exploration permit • Beneficiaries’ satisfaction • Increased artisanal miners under valid mining permit and trained on • EITI compliance to new standard environmental and social good practices • Geological knowledge increased • Mine closure strategy adopted • Local content strategy for extractives adopted • Women leadership in ASM sites increased • Perceptions of extractive firms on legal system and geo-data management improved Page 18 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) E. Rationale for Bank Involvement and Role of Partners 44. The project is suited for GoN’s current public sector reform agenda. The project is expected to help GoN’s efforts to build a positive state presence, focused in four main extractive regions displaying a clear economic potential and key challenges in terms of fragility, service delivery, and social stability. This is the case, for example, with the deployment of state’s financial and human resources, combining hands-on support through TA and PBCs to incentivize and support on- going PFM and public sector reforms in targeted sectors (primary education, health and water). The Bank´s involvement also adds value by bringing international experience and know-how from similar contexts. 45. PBCs are designed to incentivize the GoN to deploy additional resources while addressing sustainability issues. While decentralization in Niger has been part of the government’s agenda since 1996, it remains limited. The project’s PBCs have been designed to bolster these reforms and give them the weight and incentives needed for full operationalization. The project will also help to ensure that extra costs associated with deployed resources are sustainable, through synergies associated with the development of the extractive sector. This will eventually generate additional public revenue, 15 percent of which is earmarked for LGs from extractive regions. 46. The mining sector is a priority for the GoN and a key source of growth essential to achieving five key sustainable development targets. These targets are poverty elimination, gender equality, shared and sustainable growth, reduced income inequality, and social inclusion. Project interventions directly relate to the provision of public goods that can stimulate private economic activity and investment. Moreover, the project was selected as a priority for IDA allocation, given the high potential of the mining sector for poverty reduction through export-led growth, public sector financing, employment opportunities for the youth through local procurement and ASM. 47. The project builds on past interventions and synergies with other partners. GOLD’s support builds on the results of the ongoing Public Sector Capacity and Performance for Service Delivery (PCDS, P145261) project, on PFM and HRM reforms achieved at central level, and the Project for Competitiveness and Growth (PRACC, P127204), with regards to the extractive sector. Support to decentralization is complemented by other projects and partners supporting the decentralization process.32 Supporting effective state deployment will also provide foundations for on-going and future projects in education, water and health (cf. Annex 9). Finally, the Swiss government has expressed interest to provide additional support to the ASM component through a trust fund of between US$7.0-10.0 million to be implemented by the GOLD PIU. The preparation has been delayed because of the COVID-19 crisis, but approval is expected by 2021. F. Lessons Learned and Reflected in the Project Design 48. Bank experience in Niger and countries with similar features shows combining result-based financing and TA as an effective mix. Combining PBC and TA has been successfully implemented in other fragile contexts such as Afghanistan, Mali and conflict-affected provinces of Pakistan. Lessons from on-going projects using PBC in Niger guided GOLD design on both verification process and PBC formulation.33 Lessons from other projects on public sector reform were also incorporated, such as: (i) consolidating TA in a few large contracts to reduce procurement-related bottlenecks; and (ii) support institutional change management through Rapid Result and Leadership TA. 34 49. Lessons from Bank operations within the Economic Community of West African States (ECOWAS) highlight the need to focus on long-term investment in institutional capacity-building to oversees extractive industries and foster a sustainable development of the sector. The GOLD project builds upon reforms already supported in Niger by the PRACC 32 Mostly focused on hands-on TA to LGs and financing LG investments projects directly. Cf. annex 9. 33 Lessons from Niger PCDS-P145261 and Health-P147638: (i) combining an IVA with the IGF and the Cour des Comptes (Court of Auditors) for EEP verification; (ii) indicators should be clear, measurable, transformative and aligned with government programs. 34 E.g. Niger PCDS-P145261, Niger Health-P147638. Page 19 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) (P127204), notably the new petroleum and mining codes, the new mineral cadaster and laboratory, and the EITI process. Experience from PRACC indicates that: (i) long-term capacity-building of public administration to implement and enforce the laws, and (ii) the presence of public officials on the ground is crucial, as mine site level impacts cannot be managed from Niamey. In this regard, the PBC will provide the incentives and the means for enhanced control of extractive industries. The PRACC project has provided the team with, on the one hand, strong working relations with the ministries of Mines and Petroleum, and on the other hand, with real insights in the strengths and challenges of those ministries. In addition, the project builds upon lessons learned from other extractive sector’s TA in West Africa, such as the Mineral Development Support Project (MDSP-P124648) in Burkina Faso (2012-2018), which focused on increasing knowledge of resources, institutional capacity building for monitoring, evaluation and enforcement, mine revenue collection and transparency, and legal and regulatory aspects. The Mali Governance in Mining sector (P164242) project was recently approved, and shares several objectives with the Niger project, notably the formalization of the ASM sector and the collection and management of geodata. Where relevant, the project will seek to foster south-south learning between the respective Ministries of Mines. 50. A gender-sensitive approach in extractive was also considered in project design. As per World Bank report and projects,35 taking a gender-sensitive approach in extractive may have a positive and significant development impact. Therefore, the GOLD project makes use of these guidelines to strengthening the role of women in ASM. The gender- sensitive framework was successfully implemented in ASM with Democratic Republic of Congo Growth with Governance in the Mineral Sector (P106982), and Natural Resources Governance Project in Central African Republic (P161973). III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 51. The project will be managed by a PIU embedded at the Ministry of Planning (MoP) . Institutional arrangements ensure: (i) coordination with the Ministries of Interior, Finance, Civil Service, Mines and Petroleum; and (ii) project coordination, fiduciary management and M&E. The Steering Committee (SC) will include main project stakeholders and will validate project planning and implementation reports submitted by the PIU. PIU staffing will comprise a national coordinator, two technical experts on extractives and public sector management who will coordinate with the relevant lead ministries, a financial management specialist, an accountant, a procurement specialist, an environmental safeguards specialist, a social safeguards specialist, an M&E specialist, and a communication specialist. The PIU shall be maintained at all times during project implementation with functions, resources and staffing satisfactory to IDA. Leading counterparts in the main beneficiary ministries (Ministry of Interior, MoF, MoM) will be designated to support the PIU in project implementation, and focal points in other involved ministries and agencies will be designated to ensure coordination between beneficiaries with the PIU. The Project Implementation Manual (PIM) detailing administrative, procurement, financial management, safeguards, M&E procedures and arrangements is in preparation and should be finalized by effectiveness. B. Results Monitoring and Evaluation Arrangements 52. The PIU will develop a M&E framework to support project implementation. The M&E system will be a result- based framework, conceived as a management tool, and emphasizing project impacts and outcomes, as well as the regular monitoring of inputs and outputs covering the three project components. The M&E system will build on the targeted ministries Annual Performance Report as well as the National M&E system being improved under the leadership 35 World Bank (2015) Gender and the Extractive Industries: An Overview. Page 20 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) of the MoP with TA from PCDS project. 53. The M&E process will involve data collection and reporting, production of periodic activity reports, and biannual reviews. A mid-term review will be conducted no later than three years after the first disbursement. A final independent evaluation will be conducted in the last semester of project implementation to assess overall project results achievement. Beneficiaries satisfaction surveys will be included to inform the Result Framework. 54. The implementation and results of this project will be monitored through a variety of instruments, including close supervision of the World Bank through missions, regular field visits by project beneficiary entities and project staff; oversight of the project SC; annual verification of PBRs and audit of EEP, annual operational audits that will produce timely information on the compliance of all stakeholders with the procedures and responsibilities outlined in the PIM and M&E plan. C. Sustainability 55. Project sustainability depends on client policy and institutional capacity, continuity, and political stability. The design of the project aims at fostering policy implementation in the long term, as PBCs incentivize the government commitment to finance state deployment policy as well as extractive sector oversight and transparency. The alignment of TA and PBCs with the relevant government programs is expected to foster sustainability of the TA outputs. The MoF in addition to targeted line ministries was closely associated during the design. Large-scale PFM and HRM capacity building in targeted regions will foster better management of resources transferred to LGs. Meanwhile, a viable state deployment policy and extractive sector investment can only be sustainable if LG financial resources allocations are maintained. 56. External factors such as insecurity and international commodity prices may impact project sustainability . Insecurity may favor security spending, affecting budget allocation to other sectors. Insecurity as well as international commodity prices may impact foreign direct investment in extractives. Meanwhile, the project will contribute to mitigate fragility risks, increase fiscal space, and foster access to information on geological data. 57. Stability and peace are enhanced by this project through public resources’ deployment, risks monitoring and increased extractive sector’s oversight. By enhancing local accountability and creating peace dividends (stronger local development from increased transfers to LGs), the project will help to mitigate factors that drive fragility. Improved coordination between LG and line ministries will improve service delivery as well as COVID-19 response and resilience. Enhanced risk monitoring will enable a better allocation of resource by the GoN on sectors and areas to mitigate risks. Increasing investments from the private sector in extractives will improve the fiscal space, enabling state deployment implementation, and the consequent improvements of service delivery across the territory. 58. Sub-regional coordination to sustain effort on the artisanal gold mining sector will be important . Coordination and harmonization at sub-regional level with border or peer countries in the sub-region will be a key to ensure efforts on gold ASM last. This project will support regional dialogue on ASM management to the extent possible, through close collaboration with other TA projects that support the formalization of ASM in Mali, Burkina Faso, Togo and Guinea. 59. Fiscal sustainability. The Economic Analysis shows a positive rate of return of investments (Annex 10). Implementation of decentralization and extractive policies will require additional efforts and resources from the departments in charge of operationalizing the LG transfer mechanism and enhancing control of extractive sector in the short term, which the EEP will contribute to cover. In the mid-term, the fiscal sustainability impact is limited because: (i) increase of LG spending is mostly a shift from central government spending to LGs and spending efficiency is expected to be higher when executed by LGs; (ii) increased recurrent spending at the local level is marginal compared to the national budget and mitigated by the expected increase in LG own-source revenue mobilization; and (iii) revenue mobilization Page 21 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) from extractive industries is expected to increase following projects’ investment. IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic and Financial Analysis 60. The economic analysis shows that the project is largely economically profitable with a positive Net Present Value (NPV) of US$48.01m and an Internal Rate of Return (IRR) of 22.5 percent. The sources of quantifiable economic gains attributable to the project are: (i) the deployment of the state’s financial resources through decentralization reform; (ii) the increase in revenues from the extractive sector; and (iii) mitigation of conflicts’ risks. The benefits are converted into monetary terms using a method based on the fiscal multiplier (Annex 10). The positive NPV and IRR are robust to adverse scenarios. The project is also expected to generate welfare gains that cannot be quantified. B. Fiduciary Financial Management 61. A new PIU will be created and embedded at the MoP by project effectiveness date. The PIU of the MoP will manage both the technical and the fiduciary aspects of the proposed project. 62. Highlights from the Financial Management (FM) assessments of the MoP and risk mitigating steps . An assessment of the FM arrangements has been conducted for the MoP which will host the new PIU. The objective of the assessment was to determine whether this entity has adequate FM arrangements (including planning and budgeting, accounting, internal control, funds flow, financial reporting and auditing). The FM arrangements are acceptable if they are considered capable of (a) correctly recording all budgets, transactions and balances; (b) supporting the preparation of regular and reliable financial statements; (c) safeguarding the entity’s assets; and (d) reflecting auditing arrangements acceptable to the World Bank. The FM assessment was carried out in accordance with the FM Manual for World Bank Investment Project Financing (IPF) Operations (effective on March 1, 2010 and was last revised on February 10, 2017). The detailed summary of the completed FM assessment and suggested measures to address risks are described in Annex 1, and summarized hereafter. The FM arrangements in the MoP will be adequate when the following measures are implemented:  Project Implementing Unit. A PIU is created by a ministerial act and embedded in the MoP.  Accounting Staff. (i) A FM Specialist (FMS) and a senior accountant are recruited not later than three months after the Effective Date.  Computerized accounting information system. The MoP has acquired an accounting software to support project specifics, within three months after effectiveness.  FM Manual. The MoP has prepared and adopted an FM manual as part of the PIM, in form and substance acceptable to the WB, for the purpose of implementing this proposed project; this is an effectiveness condition.  Internal Audit. An internal audit unit is established. The internal audit team will comprise of a senior internal auditor. The senior internal auditor is to be recruited not later than three (3) months after the Effective Date. An additional internal auditor would be recruited if needed, during the project implementation.  External Audit. The MoP through its PIU has recruited an external auditor not later than six (6) months after the Effective Date.  PBCs verification. No later than three (3) months after the Effectiveness Date, the MoP, through its PIU, shall recruit an independent audit firm for the purpose of supporting the IGF to carry out an annual independent assessment and verification of the performance of the targeted ministries towards achieving the PBCs and EEP. The Court of Account (Cour des Comptes) will validate the report and issue the certification of expenditures. Page 22 of 99 The World Bank Governance of Extractives for Local Development Project (P164271)  Project Account. The MoP will be required to open a separate bank account for project funds. 63. The overall FM risk for the project is rated Substantial. The conclusion of the FM assessment is that the proposed FM arrangements, including the mitigation measures for the project, meet the World Bank’s minimum FM requirements under Policy and Directive for IPF operations, and, hence, are adequate to provide, with reasonable assurance, accurate and timely information on the status of the project required by the IDA. 64. Eligible expenditure programs (EEPs) will consist of salary and wages, training, and operating cost of the ministries and entities involved in the achievement of the PBCs. The World Bank Guidance Note on IPFs with PBCs dated January 2020, World Bank Policy and Procedures for IPFs, including procurement, FM, safeguards policies and anti- corruption guidelines apply to this project. Upon achievement and verification of PBCs, the World Bank will disburse funds to a government’s account located at the central bank, against the EEPs, as evidenced in the project’s semiannual Interim unaudited financial reports (IFRs). The definition of EEPs for this project will be included in the PIM. Eligible expenditures, as ascertained in the EEPs Statement, will form part of the IFRs submitted for disbursement, and exceed PBCs’ allocated amount. EEPs will be audited as part of the project’s annual financial statement audit. Table 6. Estimate of Eligible Expenditure Programs Ref. local Eligible Expenditure Amount (US$ million) Identified EEP level (salaries and benefits, operating costs) 2019 2020 2021 2022 2023 2024 Total exec. FAD: LG recurrent cost subsidy 3.81 x 3.18 3.50 3.85 4.23 4.23 18.99 ANFICT 0.65 x 0.99 1.09 1.20 1.32 1.32 5.91 CFGCT 1.36 x 1.27 1.52 1.83 2.19 2.19 9.01 Ministry of Interior: DGDCT, DRH 0.36 - 0.40 0.44 0.44 0.44 0.44 2.16 Treasury network (DGTCP) 6.88 x 6.37 6.37 6.69 6.69 6.69 32.81 Regional Directorates (4 regions) x anddecentralization unit (DEP, DRH, IGS) 8.08 8.27 8.35 8.35 8.35 8.35 41.67 of Ministry of Primary Education Regional Directorates (4 regions) x anddecentralization unit (DEP, DRH, IGS) 1.96 1.82 1.91 1.91 1.91 1.91 9.48 of Ministry of Public Health Regional Directorates (4 regions) x anddecentralization unit (DEP, DRH, IGS) 0.95 0.99 1.01 1.01 1.01 1.01 5.01 of Ministry of Hydraulic and Sanitation Directorate in charge of Territorial x 0.12 0.22 0.24 0.24 0.24 0.24 1.16 Administration: DGATD Ministry of Mines 1.61 x 1.66 1.83 1.90 1.98 1.98 9.34 CRGM 0.24 - 0.24 0.26 0.29 0.32 0.32 1.43 TOTAL EEP (component 1.2+2.2) 26.02 25.41 26.52 27.70 28.68 28.68 136.98 NB(1): the percentage of EEP to be executed at local level is est. 50 percent from a 2019 baseline of 34 percent NB(2): GOLD project amount allocated to PBC is US$62.0 million, 45 percent of EEP amount Procurement 65. The Borrower will carry out procurement for the project in accordance with the World Bank Procurement Regulations for IPF Borrowers (Procurement Regulations) dated July 2016 and revised in November 2017 and August 2018 under the New Procurement Framework, and the Guidelines on Preventing and Combating Fraud and Corruption Page 23 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) in Projects Financed by International Bank for Reconstruction and Development Loans and IDA Credits and Grants, dated October 15, 2006 and revised in January 2011 and as of July 1, 2016. 66. All works, goods and non-consulting services will be procured in accordance with the requirements set forth or referred to in the Section VI-Approved Methods: Goods, Works, and Non-Consulting Services of the Procurement Regulations. The Consulting Services will be procured in accordance with the requirements set forth or referred to in the Section VII-Approved Selection Methods: Consulting Services of the Procurement Regulations, the Project Procurement Strategy for Development (PPSD), and the Procurement Plan, approved by the World Bank. The Procurement Plan, including its updates, shall include for each contract: (i) a brief description of the activities/contracts; (ii) selection methods to be applied; (iii) cost estimates; (iv) time schedules; (v) the World Bank review requirements; (vi) any other relevant procurement information. The Procurement Plan covering the first 18 months of the project implementation was prepared and agreed during negotiations. Any update of the Procurement Plan will be submitted for the World Bank approval. The Borrower shall use the World Bank online Systematic Tracking of Exchanges in Procurement (STEP) to prepare, clear, and update its Procurement Plans and conduct all procurement transactions. 67. All procuring entities as well as bidders, and service providers, i.e. suppliers, contractors, and consultants shall observe the highest standard of ethics during the procurement and execution of contracts financed under the project in accordance with paragraph 3.32 and Annex IV of the Procurement Regulations. 68. When procurement is done in the national market, as agreed in the Procurement Plan, the country’s own procurement procedures may be used with the requirements set forth or referred to in paragraphs 5.3 to 5.6 related to National Procurement Procedures. 69. PPSD. The Borrower prepared its PPSD, which describes how fit-for-purpose procurement activities will support project operations for the achievement of project development objectives and deliver value-for-money. The PPSD was reviewed by the Bank that found it acceptable. The main procurement activities include: aerial geophysical survey works, geological mapping works, supply of Information Systems Information Technology (IT) equipment, supply of small equipment for ASM training activities, TA on Decentralization and improvement of the e-TSA information system, third party control of geological survey works, TA on extractive sector legal framework, regulations and policies (Mining, ASM, petroleum), TA on a long-term social and environmental strategy to mitigate the impact of mines’ closure, and the recruitment of the IVA. The Client will use open and international/national approaches as well as restricted and international/national approaches. The project envisages some complex procurement like aerial geophysical survey works, geological mapping works, supply of Information Systems IT equipment that challenge the Borrower capacity. With the recruitment of firms dedicated to TA and quality control, the capacity will be strengthened. Small contracts of goods (≤ US$100,000) will be procured through Request for Quotation under Restricted/national approach. 70. The procurement risk prior to the mitigation measures is considered Substantial based on the challenges of the national procurement system and given that the key staff of the PIU is not recruited yet. The risk can be reduced to a residual rating of Moderate after controls or mitigation measures have been applied. A detailed procurement description and institutional arrangements is done in Annex 1. .C. Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No . Page 24 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) D. Environmental and Social (E&S) 71. Although being technical assistance-based, the project is assigned a substantial E&S risk rating . This project is rated substantial not because of the project’s activities, which are largely TA, with very few, if any, minor civil works, but more due to the following: longer-term environmental and social risks that could result from this TA, a project that is seeking to increase the number of ASM licenses in a sector that is currently little controlled by GoN. If the project can require GoN to put in place processes to ensure that the targeted licenses are accompanied by some sort of training, these risks will be minimized. If the project helps to increase the number of licenses, without deep rooted training in the sector, then the risks are elevated, and the environment rating does reflect this risk. The project also will produce soil/geology studies that may lead to further extractive investigations by the Recipient. Instead, Component 2.1 will train some ASM miners on improved extractive management practices and reduce their impact on the environment and their personal safety, thereby providing a positive environmental impact. Likewise, Component 2.1 will not fund the closure of uranium sites but will fund a study that will help develop a long-term environment and social strategy for the city of Arlit as it deals with the technical aspects of sustainably and safely closing uranium mines. The project’s components are therefore designed to improve the capacity of GoN to manage the environmental and social risks associated with the mining sector. On the social side, the risk is also Substantial because the mining sector in general and the ASM sub-sector in Niger is a fertile ground for health hazards, gender-based violence (GBV), and abuse and exploitation of women, children and migrant workers. The project will not generate social adverse impacts such as physical displacement of population, economic displacement, land acquisition, loss of assets or access to assets. The project activities will require inclusive stakeholder mobilization and a robust information-sharing system. During implementation the project will conduct a social assessment to identify the specific needs of stakeholders considered in the Stakeholder Engagement Plan (SEP), such as ASM, private sector, community leaders, women’ and youth organizations, as well as other stakeholder platforms. 72. Borrower capacity for the Environmental and Social Commitment Plan (ESCP36) implementation The PIU will hire an environmental specialist and a social specialist with the role and responsibility of ensuring the implementation of the environmental and social standards requirements. 73. Borrower’s commitments to address environmental and social risks and impacts . To address the key risks and impacts of the project, the Borrower has completed the following actions/measures: prior to the Board: (i) preparation, consultation and disclosure of the SEP finalized, adopted and disclosed in February 202037 ; (ii) preparation, consultation, adoption and disclosure of the updated Mining Sector Strategic Environmental and Social Assessment (SESA) with the final version to be completed and disclosed within the first six months of project implementation38 and (iii) a Labor Management Procedure was adopted on July 9, 2020. The possible issues to be addressed outlined in the ESCP include timelines for the following : (i) implementation of the SEP; (ii) preparation of sector relevant environmental and social guidelines including for ASM activities; (iii) preparation and implementation of awareness sessions on health, safety and environment for miners and others; (iv) dialogue with GoN on conditions for ASM licenses; (v) preparation and implementation of a capacity building plan; (vi) preparation of a GBV action plan; (vii) recruitment of a full time environmental/social specialist; (viii) design of a sector-wide Grievance Redress Mechanism. 74. In addition, it is important to pay special attention to integrating GBV, child labor, and forced labor issues which is usually precipitated by mining activities. This project will undertake a gender analysis to explore deeper the gender 36 Negotiated ESCP dated June 4, 2020 disclosed on June 5, 2020 on World Bank website. 37 SEP was disclosed in Niger newspaper Le Sahel and on World Bank website on February 10, 2020 38 The draft SESA has been prepared, consulted upon and disclosed on the World Bank website prior to appraisal and on GoN website in February 28, 2020: https://beeei.zd.fr/ressources/centreaccesinfo/rapports_provisoires/rapports-devaluation-environnementale-strategiques/ ) Page 25 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) constraints as well as the specific project approach to ensure gender is mainstreamed into the planning and implementation process. The study will also establish key indicators for monitoring. The project will identify and consult with relevant gender focused Non-Governmental Organizations, Community Based Organizations and local women in the project discussions and initiatives. 75. The Borrower will provide quarterly reports as set out in the ESCP to the World Bank of the results of the monitoring of environmental and social issues. Such reports will provide an accurate and objective record of project implementation, including compliance with the ESCP and the requirements of the Environmental and Social Safeguards (ESS). Such reports will include information on stakeholder engagement conducted during project implementation in accordance with ESS 10 on Stakeholder Engagement and Information Disclosure. . 76. Environmental and Social Safeguard Summary . The project's direct and short-term environmental risk is minimal. However, longer term environmental risks are substantial as the project increases the number of artisanal miners that are licensed, without any wider scale complimentary sustainability/environmental training to this group. For example, 400 new artisanal and small-scale permits are envisioned in the formalization process of existing ASM, but only a fraction of these artisanal miners will be exposed to training under the project. The team has started to engage Government to ensure linkages of ASM formalization with some sort of capacity training. There are also substantial social risks due to the negative legacy of the mining sector in general in the country, and civil society organizations may raise strong concerns about the project. The quality of the Stakeholder engagement Plan and its effective implementation will reduce the reputational risk of the Bank. The updated SESA will also be a strong outcome of the project because key specific risks management measures that will be identified in the SESA could also be implemented to strengthen outcomes and reduce longer- term . environmental and social risks. V. GRIEVANCE REDRESS SERVICES 77. 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 World Bank 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 Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. VI. KEY RISKS 78. The overall risk for this project is rated as High, with political and governance, macroeconomic, and institutional capacity, sustainability and security risks being high, while technical design of the project, fiduciary, environment and social, stakeholders’ risks rated substantial. The governance and macroeconomic risks are mitigated by the country reform program undertaken by the GoN with support from the development partners. The other risks will be mitigated by (i) ensuring an institutional arrangement that fosters collaboration at the central level and piloting an integrated approach to local development in key mining communities; (ii) using a collaborative leadership approach to overcome implementation bottlenecks; and (iii) building public administration capacity, as well as systems to continue the training Page 26 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) over time. Given the emergency context due to COVID-19, a virtual communication channel with the GoN and PIU will be established to ensure continued engagement on issues impacting project performance and compliance. 79. Political and governance risks: High. The political situation is overall stable. Protests in urban centers are common, with occasional burst of violence, mostly short-lived. Local elections have been postponed since 2016 and might be a driver of protests. Overall governance performance is below regional averages39 with potential challenges in government coordination and access to information. National local and presidential elections 2020-2021 may affect project implementation. The project is designed to mitigate those risks by involving central- and local-level stakeholders, with clear leadership at the MoP level. 80. Macroeconomic risks: High. Niger faces risks related to COVID-19. The pandemic will shrink output as a result of the interplay of the supply and demand contraction. Public finances will be strained as a result of the public responses to support the health system, the economy and the population, both on the revenue and expenditure sides. Poverty is projected to rise, affecting mainly urban poor in the service and the natural resource sector. In addition, apart from COVID-19 related risks, volatile commodity prices, Nigeria’s border closure, insecurity, high debt and limited fiscal space are key risks. This could affect the operation by limiting available resource for targeted sectors. The proposed operation helps address these risks by fostering extractive sector revenue, thereby increasing fiscal space. It also contributes to mitigating conflict’s risk and costs, through conflict prevention in mining communities, improved service delivery and job creation. It also supports COVID-19 response coordination and hence contributing to mitigating the pandemic. Additional mitigating factors include the on-going International Monetary Fund Extended Credit Facility programs and Niger’s inclusion in WAEMU contributing to adequate macro-fiscal management. 81. Institutional capacity and sustainability: High. Institutional capacity is a challenge, particularly outside of Niamey, due to constraints related to turnover, civil servants’ capacity, collaboration and information, resistance to change, and lack of HR, affecting policy and project implementation. These risks will be mitigated by: (i) ensuring an institutional arrangement that fosters collaboration at the central level and by piloting an integrated approach to local development in key mining communities; (ii) using a collaborative leadership and Rapid Result approach to overcome implementation bottlenecks; and (iii) building public administration capacity, as well as systems to continue the training over time. Additional mitigating factor include the on-going functional review and HRM reengineering supported by PCDS project. 82. Technical Design Risk: Substantial. The plurality of stakeholders combined with the combination of financing instruments brings the design risks to substantial. To mitigate this risk, the design of the project’s components builds on lessons learned from previous capacity-building operations in Niger namely the PCDS and the PRACC on public and mining sectors. Also, PBC and TA have been carefully designed to complement each other and aligned with government programs. 83. Fiduciary: Substantial. Based on the experience from IDA-funded projects executed in Niger, there is potential to further improve capacity to implement externally funded projects, given the long lead times in procurement, and thus the fiduciary risk rated as Substantial. Also, Niger’s PFM system still faces challenges in budget planning and execution as there is potential to further involve sector ministries in the budget formulation process and to further strengthen forecasting capacity. The GoN’s commitment to the PFM reform agenda as evidenced by progress made in program- budgeting (effective since 2018), commitment controls, TSA, civil service payroll (using banking system for payroll, integrating payroll and HRM database, biometric census) and on-going TA in PFM are expected to help mitigate fiduciary risks. The proposed operations will complement these efforts by: (i) deepening PFM reform at decentralized levels; and (ii) improving transparency on budget and extractive revenues; while (iii) institutional arrangements will mitigate 39As measured by Worldwide Governance Indicators, the Mo-Ibrahim Index, the Country Policy and Institutional Assessment), the Open Budget Index and the Fragile States Index. Page 27 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) project’s fiduciary risks with experienced fiduciary experts in the PIU and independent verification for the EEP . Furthermore, given the current context of the COVID 19 pandemic, the controls implemented in IDA funded projects may be impacted. To that end, the World Bank will assist the project on adaptations and flexibilities that could make possible to guarantee an acceptable level of transparency in operations. 84. Environment and social risks: Substantial. Direct project’s potential adverse risks and impacts on human populations or the environment are not likely to be significant, because the project will mostly provide TA and does not involve activities such as resettlement, land acquisition, loss of assets or access to assets, rights of way, clearing of trees which involve high potential negative impacts on people or the environment.The potential risks and issues directly induced by the project are likely to have the following features: (i) predictable and expected to be temporary and/or reversible; (ii) low in magnitude; (iii) site-specific, without likelihood of impacts beyond the actual project’s footprint; and (iv) low probability of direct serious adverse effects to human health or the environment. Overall, there are no environmental and social safeguards issues of large scale, significant and/or irreversible impacts anticipated. Meanwhile, there are some key longer-term risks: (i) contextual risk in the extractive sector, a sector that has a high potential for social and environmental grievances and (ii) longer-term environmental risks that could result from a project seeking to increase the number of ASM licenses in a sector currently not well controlled by GoN. The mining sector in Niger has been subject to criticisms including grievances on environmental impacts and institutional failures. Concerns of communities are related to radioactive pollution, water resource depletion and pollution, work-related diseases, and the appropriation of land and water resources. Legally enshrined common property regimes and pastoral territories, have in the past often been affected by extractives permits without the appropriate compensation which may heighten the scrutiny on the project. The project will work closely with the GoN on strengthening both the legal framework and government capacity for monitoring of social and environmental impacts of resource extraction. It will also support policy dialogue regarding the criteria for licensing of ASM, in an effort to ensure that sustainable mining is embedded in the process. This will start with the pilot training of artisanal miners with regards to sustainable mining practices. 85. Stakeholder: Substantial. Both, deploying state’s human and financial resource and developing the extractive sector, concern a high number of stakeholders from the public sector, the formal and informal private sector, and the civil society, and at the central, regional and local levels. The proposed project will mitigate stakeholder risks by: (i) fostering access to information on project; (ii) promoting access to information on LGs, budget, extractives revenue and geodata; (iii) fostering a multi-stakeholder’s platform at local, regional, and national levels on extractives; (iv) strengthening public sector and LG coordination on service delivery at local, regional and central levels. 86. Other risks: Security: High. Persisting insecurity could impact foreign investment, including extractive, divert public spending to security, affect human resources’ deployment in conflict-affected areas and project’s implementation in some areas. The pandemic could have an impact on project activities. The proposed project is expected to: (i) increase extractives revenue mobilization and hence mitigate the impact on service delivery of a potential fiscal crunch; (ii) support rural development and service delivery; (iii) help improve local livelihoods in mining communities, including for destitute . youth; and (iv) increase the GoN’s conflict risk and ASM activity monitoring capacity. Page 28 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) VII. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Niger Governance of Extractives for Local Development & COVID-19 response Project Project Development Objectives(s) The project development objective is to strengthen local governments’ capacity and extractive sector management for service delivery in the targeted regions. Project Development Objective Indicators RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Strengthen Local Government Capacity Unsatisfactory: 30.6 percent Improved: 40 percent of of population with access to population with access to Increased access to water, primary drinkable water point, 31.3 drinkable water point, 25 education and health services in students per teacher, 52.52 students per teacher, 60 the targeted regions (Text) percent of population with percent of population with integrated health center integrated health center within 5km within 5km For Water: population with access to drinkable water point 30.6 percent 32 percent 34 percent 40 percent (Text) For Education: reduced student PBC 31.30 30.00 29.00 25.00 per teacher ratio (Text) 4.2 For Health: population with integrated health centers within 52.52 percent 54 percent 57 percent 60 percent 5 km (Text) Page 29 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Improved municipalities budget execution rate in the targeted PBC 3 38.00 40.00 45.00 50.00 regions (Percentage) Increased extractives revenues PBC 54.00 40.00 50.00 60.00 70.00 transfered to LG (Percentage) 2.2 Improve extractive sector’s management Increased requests for mining 59.00 65.00 120.00 139.00 exploration permits (Number) Increased artisanal miners under valid mining permit and trained on 0.00 1,500.00 3,000.00 5,000.00 environmental and social good practices (Number) of which women (Number) 0.00 500.00 1,000.00 1,700.00 2,000.00 PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Strengthening Local Government Capacities Public officials trained on LG’s PFM & HRM, conflict mediation & PBC 0.00 750.00 1,750.00 4,000.00 Citizen Engagement (Number) 1.2 Of which percentage are women (Percentage) 0.00 30.00 National report on drivers of 0.00 1.00 2.00 3.00 4.00 conflict produced, incl. perceptions Page 30 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 (Number) Municipality's own tax recovery 30.00 35.00 50.00 60.00 rate (Percentage) Beneficiaries’ satisfaction (Percentage) 0.00 60.00 70.00 70.00 70.00 Women beneficiaries' 0.00 70.00 70.00 70.00 satisfaction (Percentage) Citizens in the targeted regions who are aware of their municipality's annual investment 0.00 50.00 70.00 projects plan and think it corresponds to their priorities (Percentage) Women in the targeted regions who are aware of their municipality's annual 0.00 70.00 investment projects plan and think it corresponds to their priorities (Percentage) Inter-ministerial decision on modalities for allocation and PBC execution of extractive revenues No Yes 2.1 adopted (Yes/No) Increased spending of targeted municipalities in targeted sectors PBC 0.00 20.00 70.00 120.00 200.00 4.1 (Percentage) COVID-19 response Effective central-local COVID-19 coordination mechanism are no coordination between local emergency response coordination PBC 5 effective with regular level and central level mechanism (Text) reporting from regional crisis management cells Page 31 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Increased impact of Inspection missions in targeted social sectors PBC 0.00 100.00 200.00 300.00 6.3 (Number) Improving extractive sector management Geographical coverage of 12.86 14.00 15.00 17.86 geological knowledge (Percentage) Adoption of mine closure strategy (Yes/No) No Yes Adoption of Local content strategy for extractives (Yes/No) No Yes Increased women leadership in 0.00 15.00 30.00 targeted ASM sites (Percentage) EITI compliance to new standard No Yes Yes Yes Yes (Yes/No) Perceptions of extractive firms on legal system and geo-data 0.00 20.00 50.00 management as encouraging investment (Percentage) Increased impact of mining sites' PBC 0.00 50.00 100.00 150.00 inspection (Number) 7.2 Increased formalization of artisanal and small scale mining sites PBC 8 168.00 268.00 368.00 468.00 568.00 (Number) Project Management Grievances received and addressed 0.00 20.00 50.00 70.00 timely by the project (Percentage) IO Table SPACE Page 32 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Ministries in This indicator measures the Extracts from official charge of access to service in the four statistics from the Ministries in charge of Increased access to water, primary Primary targeted regions for primary Annual Ministries in charge of Primary Education, education and health services in the Education, education, health and water Primary Education, Health and Water targeted regions Health and and disagreated in sub- Health and Water Water indicators. This indicator is the Households' access rate to drinkable water source, within less than 30 minutes (i.e. the time to fetch water from household). The Extracts from official Ministry in indicator is the average of statistics from the Ministry in charge of For Water: population with access to Annual charge the four regions' rate, i.e. Ministry in charge of Water drinkable water point of Water for the baseline: Water Agadez (34.93 percent), Diffa (40.93 percent), Tillabery (14.17 percent), and Zinder (32.39 percent) This sub-indicator aims to Ministry of Extract from the annual Ministry in charge of For Education: reduced student per reduce the student to Annual Primary statistics from the Primary Education teacher ratio teacher ratio which Education Ministry of Primary currently greatly varies from Education Page 33 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) region to region. The indicator is the average of the primary schools' of the targeted regions. This sub-indicator aims to increase access to health centers by service users. The indicator is the average of Extract from official the indicators in each Ministry in data from the Ministry in charge of For Health: population with targeted regions. Baseline is Annual charge of ministry in charge of health. integrated health centers within 5 km hence the average of health. health. Agadez (68.41 percent), Diffa (49.24 percent), Tillabery (49.9 percent) and Zinder (42.54 percent). This indicator is the average Municipalitie DGCT consolidates data of the annual budget s records Improved municipalities budget execution Annual on municipalities' DGDCT execution rate of consolidated rate in the targeted regions financial data annually municipalities of the at DGCT targeted regions Transfers of the 15 percent extractive sector taxes to LG Planned and executed include (i) the 2009-2017 Annual allocated budget as Increased extractives revenues transfered arrears plan execution Annual MoF with PIU finance law well as the Arrears to LG expected in 2018-2022 and Plan. (ii) the annual 15 percent following 2017 (i.e. 2018 and onwards). Number of mining Ministry of Data from the Ministry Increased requests for mining exploration Annual Ministry of Mines exploration permits' request Mines of Mines permits registered (cumulative) Page 34 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Number of artisanal miners who benefited from at least Increased artisanal miners under valid 4 days training on both Ministry of Ministry of Mines Annual Ministry of Mines mining permit and trained on social and environmental Mines database on ASM environmental and social good practices safeguards and active under a valid authorization for mining exploitation Number of women artisanal miners who benefited from at least 4 days training on Ministry of Ministry of Mines both social and Annual Ministry of Mines of which women Mines database on ASM environmental safeguards and active under a valid authorization for mining exploitation ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection The CFGCT will keep a Number of public officials database of all who who benefited from a Public officials trained on LG’s PFM & Semi- CFGCT have benefited from training from the CFGCT on CFGCT HRM, conflict mediation & Citizen annual database their trainings HRM or PFM or citizen Engagement desegregated by engagement or conflict institution and gender. mediation This indicators measures and tracks the number of Of which percentage are women women that are beneficiaries of training. Page 35 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Semi- National report on drivers of conflict Report published by the CNESS CNESS records CNESS and PIU annual produced, incl. perceptions CNESS on drivers of conflict Average of the own-source LG Consolidation of data tax recovery rate of the Annual Administrativ DGDCT Municipality's own tax recovery rate from LGs' accounts municipalities in the e accounts targeted regions An exit satisfaction Average satisfaction rate survey will be (satisfied and very satisfied) conducted at the end of of the beneficiaries of Semi- Satisfaction each training by the PIU Beneficiaries’ satisfaction trainings programs for both Annual surveys CFGCT, and two surveys components: at the mid-term and decentralization and end of project by a firm extractives. will adjust the results. This indicators tracks the Same as Same as percentage of women main main Same as main indicator Same as main indicator Women beneficiaries' satisfaction beneficiaries that are indicator indicator satisfied This indicator aims to Two surveys will be Citizens in the targeted regions who are measure the level of Twice (mid conducted (at mid term aware of their municipality's annual engagement of citizens in term and Surveys DGDCT and PIU and before the end of investment projects plan and think it their commune as well as end) project) corresponds to their priorities their satisfaction of their commune' spending This indicator aims to Women in the targeted regions who measure the level of Same as Same as are aware of their municipality's engagement of women in main main Same as main indicator Same as main indicator annual investment projects plan and their LG as well as their indicator indicator think it corresponds to their priorities satisfaction of their LG' spending Page 36 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Adoption of interministerial Inter-ministerial decision on modalities decision on modalities for Official Once. Official Gazette PIU for allocation and execution of extractive the allocation & execution Gazette revenues adopted of the extractive revenue transferred to LG This indicator measures the percentage increase of total annual spending of all Municipalitie Increased spending of targeted municipalities in the Annual DGDCT database DGDCT s' budget municipalities in targeted sectors targeted retions in the targeted sectors (primary education, health, water) compared to 2019 baseline. The indicator measures the effective coordination mechanism of the COVID-19 Central database of the central Effective central-local COVID-19 emergency response with COVID-19 quaterly COVID-19 coordination PIU emergency response coordination the creation of regional coordination cell mechanism COVID-19 crisis cell management cells, the production of report to the central level The indicator measures the inspection number of local public reports from structures (from front-line ministries in service delivery providers to charge of review of inspection Increased impact of Inspection missions in local public administration) annual PIU primary reports targeted social sectors in the targeted sectors education, (primary education, health, health and water) which implemented water. >70 percent of inspections recommendations. Page 37 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) The indicator seeks to A spatial geo data increase the geological Ministry of Geographical coverage of geological Annual collection will be Ministry of Mines knowledge throughout the Mines knowledge conducted country, with geological mapping at 1/200,000 This indicator measures the Availability of A strategy for mine adoption of the GoN mine Once the written closure is officially Minisitry of Mines Adoption of mine closure strategy closure strategy along with strategy adopted its implementation road map A written and A strategy for the local This indicator measures the adopted content for the Ministry of Mines & Adoption of Local content strategy for adoption of the GoN Local Once strategy is extractives sector is Ministry of Petroleum extractives content strategy for the available officially adopted extractives sector Surveys at Women leadership in ASM Baseline in beginning of management is the increase 2020, mid- project to of women in decision- term establish Surveys in targeted Increased women leadership in targeted making roles in ASM sites, Ministry of Mines & PIU review and baseline, ASM sites ASM sites within the ASM value chain end of mid-term in this ASM site, as well as project review, end business around the ASM of project site. This indicator reflects the government's commitment EITI secretariat to make the extractive EITI confirms Niger sector transparent by Annual PIU EITI compliance to new standard Secretariat compliance to new making key information on standard mining and oil management accessible to the public Page 38 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Sample for the survey of extractive firms active in Niger or The indicator will measure interested by Niger will Survey of the perceptions of come from Ministry of Baseline, extractive extractive firms on Niger's Mines, EITI secretariat Perceptions of extractive firms on legal mid-term firms active legal system and geo-data and PIU system and geo-data management as and end of in Niger or management, and whether Cadaster. Questionnair encouraging investment project interested by it encourage private sector e and data collection Niger investment or do not deter will build from the it. Fraser Institute Annual Mining Company Survey This indicator measures the number of mining permit holders who have been Ministry of review of inspection Increased impact of mining sites' annual PIU subject to inspection Mines reports inspection mission and implemented >70 percent of recommendations. The indicator measures the number of artisanal and ministry of review of ministry of Increased formalization of artisanal and small scale mining permits semester Ministry of Mines mines mines database small scale mining sites registered by the ministry of mines in compliance with the mining code. This indicator measures the Semi- PIU M&E extracts from PIU M&E Grievances received and addressed timely PIU percentage of grievances Annual database database by the project and received and processed Page 39 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) by the PIU within the delay set in the PIM. ME IO Table SPACE Performance-Based Conditions Matrix DLI_TBL_MATRI X PBC 1 PBC 1. Operational municipalities & decentralized services with adequately trained staff Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 21,000,000.00 Period Value Allocated Amount (USD) Formula Baseline Legal framework for LG HRM incomplete, municipalities staffing inadequate, training at scale not rolled up yet December 2020 0.00 December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 Legal framework for LG HRM is adopted; and 21,000,000.00 Staff is trained and certified and at post. Page 40 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) DLI_TBL_MATRI X PBR 1.1 (i) the application decrees of the Local Civil Service Law and (ii) revised manual for payroll process have been PBC 1.1 adopted in a manner satisfactory to the Association in CY20 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Yes/No 6,000,000.00 6.00 Period Value Allocated Amount (USD) Formula Baseline No December 2020 Yes 6,000,000.00 December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 Yes 0.00 DLI_TBL_MATRI X PBR 1.2 Increased number of Public Officials from municipalities & decentralized services of Targeted Sectors trained in PBC 1.2 local PFM and HRM and at post in the Targeted Regions Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Number 15,000,000.00 15.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 December 2020 0.00 December 2021 750.00 2,812,500.00 Page 41 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) December 2022 1,750.00 3,750,000.00 December 2023 4,000.00 8,437,500.00 December 2024 4,000.00 0.00 $3750 per person trained and certified at post DLI_TBL_MATRI X PBC 2 PBC 2: Effective mechanism for extractive revenue transfer to LG Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 8,000,000.00 Period Value Allocated Amount (USD) Formula Baseline limited transfer and opacity on allocation December 2020 0.00 December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 increased transfer of extractive revenue to LG 8,000,000.00 DLI_TBL_MATRI X PBR 2.1 Inter-ministerial decision on modalities for allocation and execution of extractive revenues has been prepared and PBC 2.1 adopted in a manner satisfactory to the Association in CY20 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Text 4,000,000.00 4.00 Period Value Allocated Amount (USD) Formula Page 42 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Baseline Legal text is incomplete December 2020 Legal text has been adopted 4,000,000.00 December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 Legal text has been adopted 0.00 DLI_TBL_MATRI X PBC 2.2 PBR 2.2 Annual Extractive Revenue Transfers to LGs increased Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome No Percentage 4,000,000.00 4.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 December 2020 0.00 0.00 December 2021 40.00 1,000,000.00 December 2022 50.00 1,000,000.00 December 2023 60.00 1,000,000.00 December 2024 70.00 1,000,000.00 Page 43 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) DLI_TBL_MATRI X PBR 3.1: All municipalities in Targeted Regions have effectively received notification of annual budget allocation from MoF PBC 3 no later than 20 days after Finance Laws signed in CY21, CY22, and CY23 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Yes/No 3,000,000.00 3.00 Period Value Allocated Amount (USD) Formula Baseline No December 2020 0.00 December 2021 Yes 1,000,000.00 December 2022 Yes 1,000,000.00 December 2023 Yes 1,000,000.00 December 2024 Yes 0.00 DLI_TBL_MATRI X PBC 4 PBC 4: Improved LG capacity for better service delivery in the targeted sectors Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome Yes Text 4,000,000.00 Period Value Allocated Amount (USD) Formula Baseline limited capacity of LG to improve service delivery December 2020 0.00 December 2021 0.00 Page 44 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) December 2022 0.00 December 2023 0.00 December 2024 Increased capacity of LG to improve service 4,000,000.00 delivery DLI_TBL_MATRI X PBR 4.1 Targeted Regions’ municipalities’ annual spending in Targeted Sectors has increased by 200 percent in comparison PBC 4.1 with CY19 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Percentage 2,000,000.00 2.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 December 2020 0.00 December 2021 0.00 December 2022 0.00 December 2023 200.00 2,000,000.00 December 2024 200.00 0.00 Page 45 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) DLI_TBL_MATRI X PBR 4.2 All municipalities of the Targeted Regions have an average student-to-teacher ratio below 41 in their primary PBC 4.2 schools Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome No Percentage 2,000,000.00 2.00 Period Value Allocated Amount (USD) Formula Baseline 78.00 December 2020 0.00 December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 100.00 2,000,000.00 DLI_TBL_MATRI X PBC 5 PBC 5: Effective central-local coordination mechanism for COVID-19 emergency response Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 12,000,000.00 Period Value Allocated Amount (USD) Formula Baseline Very limited inspection missions & coordination of social sectors with social sectors' deconcentrated services December 2020 0.00 Page 46 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 Effective coordination mechanisms for the 12,000,000.00 COVID-19 response mechanism DLI_TBL_MATRI X PBR 5.1 8 regional COVID-19 crisis management cells established in accordance with ministerial decision 052/PM of March PBC 5.1 20,2020 and operational in a manner satisfactory to the Association in CY20 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Number 10,000,000.00 10.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 December 2020 8.00 10,000,000.00 $1,250,000 per regional crisis cells operationnal up to muni December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 8.00 0.00 Page 47 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) DLI_TBL_MATRI X PBR 5.2 The 8 regional COVID-19 crisis management cells have provided to the Recipient’s central COVID-19 crisis PBC 5.2 management cell cumulatively 80 weekly reports to central level since establishment Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Percentage 2,000,000.00 2.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 December 2020 0.00 December 2021 80.00 2,000,000.00 December 2022 0.00 December 2023 0.00 December 2024 80.00 0.00 DLI_TBL_MATRI X PBC 6 PBC 6: Increased impact of inspection missions and coordination with LG in targeted sectors Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Text 4,000,000.00 4.00 Period Value Allocated Amount (USD) Formula Baseline limited missions with no impact December 2020 0.00 December 2021 0.00 Page 48 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) December 2022 0.00 December 2023 0.00 December 2024 increased inspection of services and active 4,000,000.00 monitoring of recommendations DLI_TBL_MATRI X PBC 6.1 PBR 6.1 The Recipient has prepared and adopted Inspection Manuals satisfactory to the Association in CY20 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Text 500,000.00 0.50 Period Value Allocated Amount (USD) Formula Baseline Inspections Manuals not yet adopted December 2020 Inspection Manuals adopted 500,000.00 December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 Inspection Manuals adopted 0.00 DLI_TBL_MATRI X PBR 6.2 At least 200 Public Entities have been inspected annually using the Inspection Manual by end of each CY in (i) CY21, PBC 6.2 (ii) CY22, (iii) CY23 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Number 1,500,000.00 1.50 Period Value Allocated Amount (USD) Formula Page 49 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Baseline 0.00 December 2020 0.00 December 2021 200.00 500,000.00 December 2022 400.00 500,000.00 December 2023 600.00 500,000.00 December 2024 600.00 0.00 DLI_TBL_MATRI X PBR 6.3 At least 100 Public Entities inspected the previous CY have implemented 70 percent or more of inspection PBC 6.3 recommendation by each CY in (i) CY22, and (ii) CY23 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome No Number 2,000,000.00 2.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 December 2020 0.00 December 2021 0.00 December 2022 100.00 1,000,000.00 December 2023 200.00 1,000,000.00 December 2024 200.00 0.00 Page 50 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) DLI_TBL_MATRI X PBC 7 PBC 7: Increased impact of inspection missions of mining sites Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Text 5,000,000.00 5.00 Period Value Allocated Amount (USD) Formula Baseline limited inspection, limited follow up December 2020 0.00 December 2021 0.00 December 2022 0.00 December 2023 0.00 December 2024 increase mining sites inpection and active 5,000,000.00 monitoring DLI_TBL_MATRI X PBR 7.1 At least 70 mining license holders have been subject to annual inspection using the Extractive Sites Inspection PBC 7.1 Manual in CY22, CY23, CY24 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Number 3,000,000.00 3.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 December 2020 0.00 December 2021 0.00 0.00 Page 51 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) December 2022 70.00 1,000,000.00 December 2023 140.00 1,000,000.00 December 2024 210.00 1,000,000.00 DLI_TBL_MATRI X PBR 7.2 At least 50 mining license holders have implemented 70 percent or more of inspection’s recommendations using PBC 7.2 the Extractive Sites Inspection Manual CY23 and CY24 Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Number 2,000,000.00 2.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 December 2020 0.00 December 2021 0.00 December 2022 0.00 December 2023 50.00 1,000,000.00 December 2024 100.00 1,000,000.00 DLI_TBL_MATRI X PBC 8 PBC 8: 400 new artisanal and small-scale mining permits issued in compliance with the Recipient’s Mining Code Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Number 5,000,000.00 5.00 Period Value Allocated Amount (USD) Formula Page 52 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Baseline 168.00 December 2020 0.00 0.00 December 2021 268.00 1,250,000.00 December 2022 368.00 1,250,000.00 December 2023 468.00 1,250,000.00 December 2024 568.00 1,250,000.00 USD12,500 per ASM permit delivered Verification Protocol Table: Performance-Based Conditions PBC 1 PBC 1. Operational municipalities & decentralized services with adequately trained staff Description This PBC is disaggregated in two Data source/ Agency Verification Entity Procedure PBR 1.1 (i) the application decrees of the Local Civil Service Law and (ii) revised manual for payroll process have been PBC 1.1 adopted in a manner satisfactory to the Association in CY20 This PBC aims to ensure Government has adopted a series of legal texts: (i) the implementation decree on LG civil service Description (revised LG code, decree on status of LG executive staff, decree on status of LG fiduciary staff, decree on status of LG auxiliary staff, decree on status of technical staff); (ii) ministerial decision revising civil service career and pay processes Page 53 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Data source/ Agency Official Gazette. Verification Entity IVA Publication and submission to the IVA Procedure PBR 1.2 Increased number of Public Officials from municipalities & decentralized services of Targeted Sectors trained in PBC 1.2 local PFM and HRM and at post in the Targeted Regions This condition aims to increase the number of municipalities and decentralized services that are in line with the minimum Description required staffing to effectively run and support municipalities and that I have trained and certified staff which are effectively in their post. Data source/ Agency DGDCT Verification Entity Court of Auditors / IVA Verification of the CFGCT database on trainings plus cross check data with HR-payroll database. Procedure PBC 2 PBC 2: Effective mechanism for extractive revenue transfer to LG Description The PBC is disagregated in two Data source/ Agency Verification Entity Procedure PBR 2.1 Inter-ministerial decision on modalities for allocation and execution of extractive revenues has been prepared and PBC 2.1 adopted in a manner satisfactory to the Association in CY20 Adoption of interministerial decision on modalities for the allocation and execution of the extractive revenue transferred to Description LG Data source/ Agency Official Gazette Verification Entity Court of Auditor / IVA Page 54 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Publication of adopted texts in official documents. Procedure PBC 2.2 PBR 2.2 Annual Extractive Revenue Transfers to LGs increased The PBC aims to improve the actual annual transfers of extractvie revenue due to Local Governments as planned in the Description Finance Laws and Arrears Plans. Data source/ Agency MoF Verification Entity Court of Auditors / IVA Verification of official Budget data in the approved budget. Procedure PBR 3.1: All municipalities in Targeted Regions have effectively received notification of annual budget allocation from MoF PBC 3 no later than 20 days after Finance Laws signed in CY21, CY22, and CY23 Description This PBC aims to improve transparency and timeliness of the central government transfers to LG Data source/ Agency ANFICT and MoF Verification Entity Court of Auditors / IVA IVA will verify ANFICT and MoF Notifications, as well as survey receptions of those notifications in targeted municipalities Procedure PBC 4 PBC 4: Improved LG capacity for better service delivery in the targeted sectors Description This PBC is disaggregated in two Data source/ Agency Verification Entity Procedure Page 55 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) PBR 4.1 Targeted Regions’ municipalities’ annual spending in Targeted Sectors has increased by 200 percent in PBC 4.1 comparison with CY19 This PBC aims to increase municipalities' spending in social sectors. As such, annual municipalities' spending in the targeted Description sectors (primary edu., health, water) in the targeted regions have increased by 200 percent compared to 2019. This is expected to be reached in 2023. Data source/ Agency Municipalities' budget Verification Entity IVA / Court of Auditors DGDCT based on LGs Administrative accounts submitted by LGs Procedure PBR 4.2 All municipalities of the Targeted Regions have an average student-to-teacher ratio below 41 in their primary PBC 4.2 schools Description The PBC measures the average primary schools' students per teachers ratio per municipalities in the targeted regions. Data source/ Agency Ministry of Primary Education official statistics Verification Entity IVA Based on the official statistics from the Ministry of Primary Education, the IVA will perform a control on a sample of Procedure schools. PBC 5 PBC 5: Effective central-local coordination mechanism for COVID-19 emergency response Description This PBC is disagregated in two . Data source/ Agency Verification Entity Procedure Page 56 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) PBR 5.1 8 regional COVID-19 crisis management cells established in accordance with ministerial decision 052/PM of March PBC 5.1 20,2020 and operational in a manner satisfactory to the Association in CY20 This result measures the operationalization of the COVID-19 response coordination mechanisms, through the creation and operationalization of local crisis management cells. The COVID-19 crisis regional cells are considered operational when (i) the members are clearly identified and include representatives from all Local Governments in the given region and social Description sectors deconcentrated services (health, education, water), (ii) the communication tree from the municipal, departmental, regional and central level established, (iii) each regions have produced at least 1 reporting to the central government on COVID-19 situation. Data source/ Agency Central COVID-19 coordination cell Verification Entity IVA / Court of Accounts The IVA will verify the official documents establishing the local COVID-19 crisis cells and their periodic reports. Procedure PBR 5.2 The 8 regional COVID-19 crisis management cells have provided to the Recipient’s central COVID-19 crisis PBC 5.2 management cell cumulatively 80 weekly reports to central level since establishment The indicator measures the effectiveness of the COVID-19 emergency response coordination mechanism between central Description and local level. The target of 80 reports (cumulative of all regional cell) is an indication of active reporting from the regional cells to the central level. Data source/ Agency regional reports / Central COVID-19 response cell Verification Entity IVA / Court of Accounts The IVA will assess the number of report produced per regions during the COVID-19 crisis in Niger Procedure PBC 6 PBC 6: Increased impact of inspection missions and coordination with LG in targeted sectors Description This PBC is disaggregated in two Data source/ Agency Verification Entity Page 57 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Procedure PBC 6.1 PBR 6.1 The Recipient has prepared and adopted Inspection Manuals satisfactory to the Association in CY20 The PBC aims to ensure that Inspection Manuals in primary edu., health and water satisfactory to IDA adopted by end of Description CY2020 Data source/ Agency Ministries in charge of primary education, health and water Verification Entity IVA Review of the inspection manuals Procedure PBR 6.2 At least 200 Public Entities have been inspected annually using the Inspection Manual by end of each CY in (i) PBC 6.2 CY21, (ii) CY22, (iii) CY23 The PBC aims to ensure that at least 200 public entities subject to inspections using the new template by end of CY2021 in Description primary edu., health and water Data source/ Agency Ministries in charge of primary education, health and water Verification Entity IVA Review of inspection reports and control on sample. Procedure PBR 6.3 At least 100 Public Entities inspected the previous CY have implemented 70 percent or more of inspection PBC 6.3 recommendation by each CY in (i) CY22, and (ii) CY23 This PBC aims to ensure that by end of 2022 at least 100 public entities inspected the previous year implementing >70 Description percent of mission’s recommendations Data source/ Agency Ministries in charge of primary education, health and water Verification Entity IVA Review of inspection reports and control on sample. Procedure Page 58 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) PBC 7 PBC 7: Increased impact of inspection missions of mining sites Description This PBC is disaggregated in two. Data source/ Agency Verification Entity Procedure PBR 7.1 At least 70 mining license holders have been subject to annual inspection using the Extractive Sites Inspection PBC 7.1 Manual in CY22, CY23, CY24 This PBC measures the increase of field inspection of mining sites led by the MoM, using the manuals and template for Description extractive inspection developed under the TA. Data source/ Agency Ministry of Mines Verification Entity IVA Verifying mining inspection report produced, their compliance with the adopted manual and templates, and verifying with a Procedure sample of mining permits holders PBR 7.2 At least 50 mining license holders have implemented 70 percent or more of inspection’s recommendations using PBC 7.2 the Extractive Sites Inspection Manual CY23 and CY24 This PBC ensures that there is an active monitoring of mining inspection recommendations and actual implementation by Description mining permits holders of those recommendations. Data source/ Agency MoM Verification Entity IVA Inspection missions report and on-site verification onselected sample. Procedure PBC 8 PBC 8: 400 new artisanal and small-scale mining permits issued in compliance with the Recipient’s Mining Code Description The PBC measures the government's efforts to formalize the artisanal mining sector by increasing the number of permit Page 59 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) holders of small and artisanal scale miners compliant with the mining code Data source/ Agency MoM database Verification Entity IVA / Court of Accounts Control based on the MoM database, completed with survey of a sample of permit holder. Procedure Page 60 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 1: Implementation Arrangements and Support Plan COUNTRY: Niger Governance of Extractives for Local Development and COVID 19 Response Project 1. The project will be managed by a PIU embedded at the MoP. Institutional arrangements are designed to ensure (i) strong coordination with the ministries of Interior, Finance, the Civil Service, Mines and Petroleum; and (ii) strong project coordination, fiduciary management and M&E. 2. The SC will include the main beneficiaries and stakeholders of the project. The SC will review and validate project implementation planning (Annual Work Plan and Budget) and implementation (bi-annual progress reports) submitted by the PIU. The SC will be established not later than two months after the Effective Date and maintained throughout the implementation period. 3. The staffing of the PIU will include a national coordinator, two technical experts housed in the relevant ministries to implement activities related to extractives and public sector management who will closely coordinate with the relevant lead ministries, a FM specialist, an accountant, a procurement specialist, a safeguards specialist, an M&E specialist, and a communication specialist. 4. The PIU shall be maintained at all times during Project implementation with functions, resources and staffing satisfactory to IDA. The PIM detailing administrative, procurement, FM, safeguards, monitoring and evaluation procedures and arrangements for the Project is being finalized. 5. Counterpart from the ministries of Finance, of Interior and of Mines will be designated and support implementation of the two components. Focal points from involved ministries (Education, Health, Hydraulics) will be the Director of Programs. The counterpart’s team from the Ministry of Finance will be from the Financial Management Department (Direction des Ressources Financières et du Matériel) and DGTCP, and from DGDCT for the Ministry of Interior. Those counterparts will be integrated to the PIU. Figure A1.1: Project Implementation Arrangements Steering Committee: Ministries of (i) Planning (Chair); (ii) Interior; (iii) Mines; (iv) Petroleum; (v) Primary Education; (vi) Public Health; (vii) Hydraulics; (viii) Finances; (ix) Civil Service Ministry of Planning Counterparts and focal points from beneficiary ministries of: -Interior -Finance; PIU Coordinator Expert: Public Sector Management -Mining; -Petroleum; -Primary Education; Expert: Extractive Sector -Public Health; Management FM Internal Procureme ESS Communica -Hydraulics; Speciali auditor nt Speciali tion and -EITI; st Specialist st M&E Specialist -CNESS; -ANFICT; Accountant Procurement -CFGCT assistant Page 61 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Financial Management. 6. In line with the guidelines stated in the FM Manual for World Bank IPF Operations of March 1, 2010 and last revised on February 10, 2017, a FM assessment was conducted within the Ministry of Planning. It was agreed that a new PIU will be created and embedded at the MoP and to implement overall project’s activities as per the Financing Agreement. The new PIU to be created to manage both the technical and the fiduciary aspects of the proposed project. The assessment of the FM capacity of the MoP was conducted by the Niger Country Office FMS. The objectives of the assessment were to determine the following: (a) whether this entity has adequate FM arrangements in place (planning, budgeting, accounting, internal control, funds flow, financial reporting, and auditing arrangements) to ensure that project funds will be used for purposes they are intended for and in an efficient and economical way; (b) that project financial reports will be prepared in an accurate, reliable and timely manner; and (c) the project’s assets will be safeguarded. 7. The MoP is currently implementing the Niger - Competitiveness and Growth Support Project (P127204, US$50.0 million) and the Niger - Investment Climate Support Project (P148839, US$9.08 million). Fiduciary compliance was deemed satisfactory for both projects. For example, the unaudited Interim Financial Reports (IFRs) were submitted on time and found acceptable to World Bank. The last audited financial statements, for the fiscal year ended December 31, 2018 were submitted to the World Bank in a timely manner with an unqualified audit opinion for both projects. The audit reports were found acceptable to the World Bank. 8. The FM assessment concluded that current arrangements would need to be strengthened to meet the World Bank’s minimum requirements under IPF World Bank Policy. As a result of the identified FM capacity constraints, the following actions need to be completed to ensure adequate FM arrangements for all aspects of the project: preparing and adopting of the PIM by effectiveness, including FM procedures such as internal controls, budget process, assets safeguards, and description of roles and responsibilities of all stakeholders; recruit an FMS and a senior accountant be effectiveness. In addition, the PIU will recruit an additional accountant, a senior internal auditor, an internal auditor, and purchase an accounting software to reflect the specificities of the project, all these, not later than three months after the Effective Date. An external auditor for the audit of project’s financial statements and an IVA for the PBCs will be recruited based on Terms of References (ToR) acceptable to the World Bank, respectively not later than six months and three (3) months after the Effective Date. 9. Given that the MoP will be reinforced by creating a new PIU to be staffed with necessary external resources and the implementation of the mitigation measures, the FM assessment notes that the FM residual risk for MoP is Substantial. Planning and Budgeting Arrangements 10. The budgeting process from elaboration to execution and control will be clearly defined in the PIM, including FM arrangements, and the budget will be reviewed and adopted by the SC before the beginning of its execution. Annual draft budget will be submitted to the World Bank non-objection before adoption and implementation, and no later than November 30 of each year. Periodic monitoring of budget execution and variance analysis will be prepared by the PIU and included in the semi-annual unaudited IFRs. Accounting Arrangements 11. FM Manual. A PIM detailing administrative, procurement, FM, safeguards, monitoring and evaluation procedures and arrangements for the project will be elaborated and adopted by the MoP in form and substance satisfactory to the World Bank, by the project effectiveness date. Page 62 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 12. Accounting staff. By project effectiveness date, a FMS and a senior accountant will be recruited based on ToRs satisfactory to the World Bank. 13. Accounting information systems. A computerized FM system will be acquired and installed not later than three months after the Effective Date. The accounting software to be procured would include the following modules to be integrated: budgeting, general accounting, cost accounting, reporting, monitoring and evaluation, fixed assets management, preparation of withdrawal applications, and tracking of disbursements by donors. 14. Accounting standards: The PIU will use the accounting system of the Organisation for the Harmonisation of Corporate Law in Africa (Système Comptable de l’Organisation pour l'harmonisation en Afrique du droit des affaires, SYSCOHADA) accounting standards which are commonly used among West African Francophone countries. The chart of accounts will be prepared to reflect various project components to facilitate the preparation of relevant monthly, quarterly, semi-annual and annual financial statements. Annual financial statements will be prepared in accordance with SYSCOHADA accounting standards and relevant International Public-Sector Accounting Standards using a computerized accounting system. Internal Control and Internal Auditing 15. Manuals. Financial Procedures will be detailed in the PIM to be elaborated and adopted in form and substance satisfactory to the World Bank by project effectiveness date. The financial procedures will cover at least the following aspects: institutional arrangements, budget and budgetary control, disbursement procedures and banking arrangements, receipt of goods and payment of invoices, internal control procedures, accounting system and transaction records, reporting requirement, and audit arrangement. The financial procedures will also include guidance for handling project funds by any relevant entity involved in the project activities implementation, as well as annexes with template forms and reports such as asset control form and register, budget formats, monthly, quarterly, and semi-annual reports, annual financial statements, etc. 16. In addition to the PIM, an Internal Audit Manual will be elaborated by the project’s internal auditor within six months after the consultant in charge of internal audit functions is in place. 17. Internal audit functions. A qualified and experienced senior internal auditor will be recruited with ToRs acceptable to the World Bank and will provide support to PIU. The senior internal auditor will be recruited not later than three months after the Effective Date. 18. The project internal auditor will advise on the adequacy of project systems of internal controls and will conduct reviews of the implementation of project’s activities. The role of project internal auditor will also include following up on implementation of appropriate actions to improve effectiveness of risk management, control, and governance processes at all levels and training of project’s staff. The internal auditor will be trained on risk-based audit. Additional trainings will be recommended as part of continuing professional education. The project’s SC is expected to have a fiduciary oversight function. Funds Flow and Disbursement Arrangements 19. Disbursement arrangements and use of funds. Proceeds of the financing will follow the standard World Bank procedures for IPF, for use by the Borrower for eligible expenditures as defined in the Financing Agreement. The project will finance 100 percent of eligible expenditures inclusive of taxes. 20. The design features of the proposed project cater to the requirements of a hybrid funding structure, all within the IPF instrument of the World Bank. This involves a result-based approach through PBC for project financing across subcomponents 1.2 and 2.2 of the project. In addition, some funding will be provided to the PIU under subcomponents 2.1 and 2.1 and Component 3, based on the traditional investment financing approach to support the non-PBC activities. Page 63 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 21. The operation proposes US$100 million to be allocated to the Borrower in the form of IDA credit and grant of US$50 million each. Proceeds of the financing will be used by the project for payments of eligible expenditures upon achievement of PBRs as defined in the Financing Agreement and further detailed in the Annual Work Plans and Budgets and Procurement Plans. Disbursement arrangements have been designed in consultation with the Borrower after considering the assessment of the Implementing Agency’s FM capacities and anticipated cash flow needs of the operation. For the PBC subcomponents there will be no advances into the Designated Account. The Borrower will only receive funding on satisfactory achievement of results as verified by the IVA and acceptable to IDA. Modalities for Disbursements under PBC of subcomponents 1.2 and 2.2 22. Performance-Based Conditions. The total resources allocation to be implemented under the PBCs is estimated at US$62.0 million across subcomponents 1.2 and 2.2 of the project. In line with World Bank guidelines, for IPF with PBCs, there will be no advance but, the underlying principle will be, following project effectiveness to disburse, funds to the government’s account only upon satisfactory achievement of the PBC. As per the design, disbursements under these subcomponents will be measured and valued in monetary terms for each respective year through a set of identifiable and measurable PBC over the project implementation period. For each subcomponent (1.2 and 2.2), the respective PBCs have been defined into a set of achievable results. 23. Satisfactorily achieving the defined PBC targets as identified in the Results Framework and Monitoring table and in the Financial Agreement will constitute the primary basis for triggering credit disbursements under the subcomponents 1.2 and 2.2 of the project. The PBC have been individually priced, and as such the eligible disbursement amount will be the sum of the achieved results multiplied by the unitary monetary value (price) as per the disbursement schedule. 24. While noncompliance with a PBC target in a period will result in funds associated with that PBC being withheld, disbursement associated with the achievement of other PBCs will not be affected. Where achievement of a PBC results cannot be verified, an amount equivalent to the PBC result’s value will be withheld or considered as undocumented and outstanding obligation on the Borrower. This amount will be paid at any later date, during project life, and at the discretion of the World Bank when such achievement can be verified. The task team may consider that a later achievement of the PBC result would not qualify for disbursement against the unmet result if it determines that the on-schedule (timely) achievement of the result is critically fundamental to achieving the overall objectives of the project. 25. Additional details of the verification protocols and the independent verification process shall be documented in the PIM. The verification protocols to be defined will incorporate good practices expected from the impact of the TA implemented under the project to support sound management of the resources made available to LG. The protocols would highlight the need for the segregation of duties between authorization and accounting officer and to the principle of accounting, which are essential to ensure that the LG resources are used to achieve their intended purposes and avoid negative externalities. 26. Eligible Expenditure Program. The overall Government program of expenditures to be supported under the subcomponents 1.2 and 2.2 is defined as the set of defined eligible expenditures. EEPs will consist of expenditures for goods, non-consulting services, consulting services (including for audits), and trainings related to the achievement of the PBCs for decentralization and extractive sector, incurred by the Borrower as described in the Financing Agreement. The World Bank Guidance Note on IPFs with PBCs dated January 2020, World Bank Policy and Procedures for IPFs dated October 2018 applies to this project. Consistent with IPF Policy, the World Bank ensures the efficiency of any expenditures it finances. In the case of salaries, the World Bank will ensure that there are adequate accounting systems and controls are in place for personnel management. The World Bank will ensure that the solutions currently being implemented by the PCDS, in particular the biometric census of civil servants (2019-2020) and the integrated payroll and HRM system (2019-2020) are used in order to mitigate the risks associated with controlling the number of the Government’s overall personnel and other inherent FM risks. These measures are complementary to the independent verification mechanisms. Page 64 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Table A1.1. Estimate of Eligible Expenditure Programs Ref. Eligible Expenditure Amount (US$ million) Identified Eligible Expenditure Program 2019 2020 2021 2022 2023 2024 Total FAD: LG recurrent cost subsidy (salaries & 3.81 3.18 3.50 3.85 4.23 4.23 18.99 operating cost) ANFICT (subsidy: salaries & operating costs) 0.65 0.99 1.09 1.20 1.32 1.32 5.91 CFGCT (subsidy: salaries & operating costs) 1.36 1.27 1.52 1.83 2.19 2.19 9.01 Ministry in charge of Interior: DGDCT, DRH 0.36 0.40 0.44 0.44 0.44 0.44 2.16 …salaries and benefits 0.09 0.09 0.10 0.10 0.10 0.10 ...operating costs 0.27 0.31 0.34 0.34 0.34 0.34 Treasury network (DGTCP) 6.88 6.37 6.37 6.69 6.69 6.69 32.81 …salaries and benefits 4.9 4.9 4.9 5.15 5.15 5.15 ...operating costs 1.98 1.47 1.47 1.54 1.54 1.54 Regional offices (4 regions) and decentralization unit (DEP, DRH, IGS) of 8.08 8.27 8.35 8.35 8.35 8.35 41.67 Ministry of Primary Education …salaries and benefits 7.46 7.46 7.46 7.46 7.46 7.46 ...operating costs 0.62 0.81 0.89 0.89 0.89 0.89 Regional offices (4 regions) and decentralization unit (DEP, DRH, IGS) in 1.96 1.82 1.91 1.91 1.91 1.91 9.48 Ministry of Public Health …salaries and benefits 0.88 0.88 0.88 0.88 0.88 0.88 ...operating costs 1.08 0.94 1.03 1.03 1.03 1.03 Regional offices (4 regions) and decentralization unit (DEP, DRH, IGS) in 0.95 0.99 1.01 1.01 1.01 1.01 5.01 Ministry of Hydraulics …salaries and benefits 0.83 0.83 0.83 0.83 0.83 0.83 ...operating costs 0.12 0.16 0.18 0.18 0.18 0.18 Directorate in charge of Territorial 0.12 0.22 0.24 0.24 0.24 0.24 1.16 Administration: DGATD …salaries and benefits 0.06 0.06 0.06 0.06 0.06 0.06 ...operating costs 0.06 0.16 0.18 0.18 0.18 0.18 Ministry of Mines 1.61 1.66 1.83 1.90 1.98 1.98 9.34 …salaries and benefits 0.97 1 1.10 1.10 1.10 1.10 ...operating costs 0.64 0.66 0.73 0.80 0.88 0.88 CRGM (subsidy: salaries & operating costs) 0.24 0.24 0.26 0.29 0.32 0.32 1.43 TOTAL EEP 26.02 25.41 26.52 27.70 28.68 28.68 136.98 NB: GOLD project amount allocated to PBC is US$62.0 million, i45 percent of the EEP amount 27. Upon achievement and verification of PBCs, the World Bank will disburse funds to a government’s account located at the central bank, against the EEPs, as evidenced in the project’s semiannual unaudited IFRs. The eligible expenditure amount, as ascertained in the EEPs Statement, will form part of the IFRs submitted for disbursement. EEPs will be audited as part of the project’s annual financial statement audit. Page 65 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 28. The allocated amounts for the PBCs are less than the overall amount of the EEPs . The World Bank will ensure that the eligible expenditure amount, as ascertained in the EEP Statement that will form part of the IFR submitted for disbursement exceeds the PBC results’ allocated amount. Where the EEPs for a reporting period are less than the total value of PBC result earned within the reporting period, disbursement shall be limited to the value of the verified EEPs. 29. As part of its reporting, the PIU will prepare semi-annual Budget Execution Reports (EEP Spending Reports) and make them available to their respective ACE Impact center fiduciary staff for preparation of the EEP Statement which will be incorporated into the IFRs and used to monitor implementation progress of the EEPs . Such EEP would be verified by the IVA as part of the documentation for achieving results. The EEP Statements will be audited annually by the external audit firm as part of the Project Financial Statement Audit to confirm that EEPs were incurred under the agreed budget lines and are eligible for World Bank financing. The audited EEPs will be submitted to the World Bank. 30. Documentation under PBC subcomponents. It is expected that on a half-yearly basis, the MoP will provide satisfactory documentary evidence indicating the achievement of the PBCs as per the Financing Agreement. To document results, the following are required (i) acceptable IFRs, (ii) EEPs Spending Reports, and (iii) evidence of independent verification of the set of PBC results for that specific year/period in which they have been achieved. These reports will then form the basis of documenting and used to determine the earned amount to be transferred to the Reimbursement Account. Funds flow and disbursement arrangements 31. Disbursements for subcomponents 1.1 and 2.1 and component 3 which will be managed by the PIU for the technical assistance to strengthen the systems for state deployment and LG performance and to foster extractive investment and integration in local economy, and for overall project management and coordination, shall be transactions- based. The World Bank will disburse loan proceeds to the PIU into a Designated Account (DA) denominated in Franc CFA (FCFA) of BCEAO (West Africa Central Bank, Banque Centrale des États de l'Afrique de l'Ouest), maintained at a commercial bank acceptable to the World Bank for subcomponents 1.1 and 2.1 and Component 3. Disbursements would be transactions based whereby withdrawal applications will be supported with Statement of Expenditures. Overall disbursement arrangements will follow standard disbursement policies and procedures established in the Disbursement Guidelines for IPF dated February 2017, and in the Disbursement Letter of the Project. The Figure A1.2 below depicts the project’s funds flow mechanism. Table A1.2: Disbursements per Expenditure Category Category Amount allocated Percentage of expenditures to be (in US$ million) financed (including taxes) (1) Goods, minor works, non-consulting services, consulting services, 36.8 100% Training, and Operating Costs under Parts 1.1, 2.1 and 3 of the Project. (2) Eligible Expenditures Program under Parts 1.2 and 2.2 of the 62.0 Up to 100% of the Amount of Project. Financing allocated to each PBCs (3) Refund of Preparation Advance40 1.2 TOTAL ALLOCATED AMOUNT 100.0 32. Operating Costs means the reasonable costs, approved by the IDA, in each Annual Work Plan and Budget, for the incremental expenses incurred on account of project implementation, consisting of vehicle operation and maintenance, communication and insurance costs, banking charges, rental expenses, office (and office equipment) maintenance, utilities, document duplication/printing, consumables, travel cost and per diem for PIU staff for travel linked to project 40Project preparation advance is financing the recruitment of key PIU staff; the preparation of key documents (PIM, SEP, ESCP, SESA, PPSD, LMP) and several technical studies on decentralization, geological data management, artisanal mining, mine closure and information systems diagnostics. Page 66 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) implementation, and salaries of PIU contractual staff (but excluding consulting services and salaries of officials of the Borrower’s civil service). 33. If ineligible expenditures are found to have been made from the Designated Account, the Recipient is obliged to refund the amount in question, and IDA will have the right to suspend disbursement of the funds if reporting requirements are not complied with as provided for in the Financing Agreement. The World will periodically assess adequacy of the FM systems and this will form the basis of any change in disbursement methods. The authorized signatories of each participating country will sign and submit withdrawal applications electronically through the World Bank Client Connection website. 34. Further details about disbursements to the project will be included in the disbursement procedures described in the Disbursement and Financial Information Letter (DFIL) and the financial procedures included in the PIM. Figure A1.2: Flow of Funds Financial Reporting Arrangements 35. In line with the World Bank’s FM guidelines, the PIU will be required to prepare and submit semi-annual IFRs to account for activities funded under this project. The project FMS and Accountants within the PIU are responsible for preparing and submitting acceptable Unaudited IFRs to the World Bank, no later than 45 days after the end of the semester. The IFRs will be designed to provide relevant and timely information to the project’s management on all project related Page 67 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) activities implemented by the MoP through its PIU. The formats and contents of the IFRs have been agreed on between the World Bank and the MoP during negotiations. These reports will as a minimum include: (i) a statement of sources and uses of funds and opening and closing balances for the semester and cumulative; (ii) a statement of uses of fund that shows actual expenditures appropriately classified by main project activities (categories, sub-components) as per the PAD, including comparison with budget for the semester and cumulative; (iii) a statement on movements (inflows and outflows) of the project Designated Account including opening and closing balances; (iv) a statement of expenditure forecast for the next semester together with the cash requirement; (v) notes and explanations; (vi) Any other report that shall be required to provide further and relevant information on project expenditure including the EEPs Spending Report for the PBC components. Auditing and verification of PBCs 36. Project annual financial statements (PFS) will be audited by an external auditor acceptable to the World Bank following International Standards for Auditing issued by the International Federation of Accountants, and specific terms of reference (ToR) acceptable to the World Bank. Annual audits will cover all project funding and expenditures. Audit reports together with management letters must be submitted to the World Bank within six months after the end of the government’s fiscal year. In accordance with World Bank Policy on Access to Information, the Borrower is required to make its audited financial statements publicly available in a manner acceptable to the World Bank. Following the World Bank formal receipt of these statements from the borrower, the World Bank also makes them available to the public. The scope of audit will be detailed in the ToRs. Opinions will be required on: Designated Account; Statements of Expenditures, PFSs; compliance and internal controls. It is required that the firm is recruited in line with World Bank Procurement Guidelines to ensure competitive selection. In this regard, the ToRs will be reviewed and cleared by the World Bank. The PIU must ensure that all EEPs are audited. External auditor will be appointed not later than six months after the Effective Date. Table A1.3: Audit Reports Audit Report Due Date (PFS and management letter to be submitted by the MoP Submitted within six months after the end of each financial through its PIU. year. Financial Management Action Plan 37. Following on from the FM Assessment for the MoP which identified some challenges and areas of improvement, the below FM Management Action Plan is recommended as a means of mitigating any risk and helping to improve the fiduciary environment during implementation. Table A1.4: Financial Management Action Plan Action Due by Responsible 1. Prepare and adopt the FM Manual. By Effective Date 2. Recruit a FM Specialist (FMS) with qualifications and experience By Effective Date satisfactory to IDA in fiduciary work 3. Recruit a senior accountant with qualifications and experience By Effective Date satisfactory to IDA MoP 4. Acquire a computerized accounting information system for project not later than three months after the management, with specifications acceptable to IDA Effective Date 5. Recruit a Senior internal auditor with qualifications and experience not later than three months after the satisfactory to IDA to support the PIU. Effective Date Page 68 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Action Due by Responsible 6. Recruit an external auditor with ToRs acceptable to IDA Not later than six months after the Effective Date 7. Recruit an IVA for the PBC Not later than three months after the Effective Date 38. Financial Covenants. Financial covenants related to standard FM requirements are covered under Section 5.09 of the IDA General Conditions and specific FM aspects are included in the DFIL. Conclusion of the FM Assessment 39. A description of the project’s FM arrangements as documented in the preceding paragraphs indicates that they satisfy the World Bank’s minimum requirements as per World Bank Policy. Overall, the FM residual risk is assessed and rated as Substantial. The substantial risk rating is because of inherent risk associated with the design, including amongst others, (i) the third project using PBC in the country and (ii) possible challenges with multiple sectors involving in the project’s activities implementation. 40. Supervision Plan. Based on the risk rating of the project and the current FM arrangements, it is expected that in the first year of implementation, there will be four quarterly onsite visits to ascertain adequacy of systems and supplemented by desk reviews of IFRs and audit reports should the current COVID-19 crisis permit.. The FM supervision mission’s objectives will include ensuring that adequate FM systems are maintained for the project throughout project life. In adopting a risk-based approach to FM supervision, the key risk areas of focus will include assessing the accuracy and reasonableness of budgets, their predictability and budget execution, compliance with payment and fund disbursement arrangements and the ability of the systems to generate reliable financial reports. Procurement 41. The PIU will be responsible for the project for procurement planning and management. The project Coordinator will be responsible for decision-making during the procurement process. 42. Filing and record keeping. As part of the PIM, the Procurement Procedures will set out detailed procedures for maintaining and providing readily available access to project procurement records, in compliance with the Financing Agreement. An archiving room will be available, and the PIU will assign one person responsible for maintaining the records. A logbook of the contracts with a unique numbering system shall be maintained. Signed contracts as in the logbook shall be reflected in the commitment control system of the Recipient’s accounting system or books of accounts as commitments whose payments will be updated with reference made to the payment voucher. This will put in place a complete record system whereby the contracts and related payments can be corroborated. 43. Project Procurement Strategy for Development. As part of the preparation of the project, the Borrower prepared its PPSD, describing how fit-for-purpose procurement activities will support project operations for the achievement of project development objectives and deliver value-for-money. The PPSD was reviewed by the Bank that found it acceptable. The main procurement activities include : aerial geophysical survey works, geological mapping works, supply of Information Systems IT equipment, supply of small equipment for ASM training activities, TA on Decentralization and improvement of the e-TSA information system, third party control of geological survey works, TA on extractive sector legal framework, regulations and policies (Mining, ASM, petroleum), TA on a long-term social and environmental strategy to mitigate the impact of mines closure, and the recruitment of the IVA. The Client will use open and international/national approaches as well as restricted and international/national approaches. The project envisages some complex procurement like aerial geophysical survey works, geological mapping works, supply of Information Systems IT equipment that will challenge the Borrower capacity. With the recruitment of firms dedicated to TA and quality control, the capacity will be strengthened. Small contracts of goods (equal or less than US$100,000) will be procured through Request for Quotation under Page 69 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Restricted/national approach. The recruitment of civil servants as individual consultants or as part of the team of consulting firms will abide by the provisions of paragraph 3.23 (d) of the Procurement Regulations. 44. Procurement Plan. The Borrower prepared a detailed 18-month Procurement Plan was agreed between the Borrower and the World Bank during the negotiations. The Procurement Plan will be updated in agreement with the World Bank annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 45. Training, Workshops, Study Tours, and Conferences. Training activities would comprise workshops and training, based on individual needs, as well as group requirements, on-the-job training, and hiring consultants for developing training materials and conducting training. Selection of consultants for training services follows the requirements for selection of consultants above. All training and workshop activities (other than consulting services) would be carried out on the basis of approved Annual Work Plans/Training Plans that would identify the general framework of training activities for the year, including (a) the type of training or workshop; (b) the personnel to be trained; (c) the institutions that would conduct the training and reason for selection of this institution; (d) the justification for the training, i.e. how it would lead to effective performance and implementation of the project and or sector; (e) the duration of the proposed training; and (f) the cost estimate of the training. Reports by the trainees, including completion certificate/diploma upon completion of training, shall be provided to the Project Coordinator, will be kept as parts of the records, and will be shared with the World Bank if required. Detailed training and workshop terms of reference providing the nature of training/workshop, number of trainees/participants, duration, staff days/weeks/months, timing, and estimated cost will be submitted to IDA for review and approval prior to initiating the process. The selection methods will derive from the activity requirement, schedule, and circumstance. After the training, the beneficiaries will be requested to submit a brief report indicating what skills have been acquired and how these skills will contribute to enhancing their performance and attaining the project objective. 46. Operational Cost financed by the project would be incremental expenses, incurred by the PIU, the SC and the PIU counterparts and focal points based on the Annual Work Plans and Budgets as approved by IDA, on account of project implementation, management, and monitoring and evaluation, including the reasonable costs for utilities and supplies, bank charges, communications, vehicle operation, maintenance, and insurance, office space rental, building and equipment maintenance, public awareness-related media expenses, travel and supervision, and salaries of contractual and temporary staff, but excluding salaries, fees, honoraria, and bonuses of members of the Borrower’s civil service. Such service needs will be procured using the procurement procedures specified in the PIM accepted and approved by the World Bank. 47. Procurement Manual. Procurement arrangements, roles and responsibilities, methods, and requirements for carrying out procurement shall be elaborated in detail in the Procurement Manual, which will be a section of the PIM. The PIM shall be prepared by the Borrower and agreed with the World Bank by the effectiveness date. 48. Procurement methods. The Borrower will use the procurement methods and market approach in accordance with the Procurement Regulations. Open National Market Approach is a competitive bidding procedure normally used for public procurement in the country of the Recipient and may be used to procure goods, works, or non-consultant services, provided it meets the requirements of paragraphs 5.3 to 5.6 of the Procurement Regulations (see Table A1.5). Table A1.5: Requirements and Actions for National Open Competitive Procurement # Requirements Actions 1 The request for bids/request for proposals will require that Reinforce the related provisions by taking into account the Bidders/Proposers submitting Bids/Proposals present signed aspects related to the World Bank Anti-Corruption acceptance at the time of bidding to be incorporated in any Guidelines (including without limitation the WB’s right to resulting contracts, confirming application of, and compliance sanction and the World Bank inspection and audit rights). with, the World Bank Anti-Corruption Guidelines, including Introducing a template of this acceptance in the bidding without limitation the World Bank right to sanction and the documents. A World Bank -approved template will be World Bank inspection and audit provided Page 70 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 2 Contracts with appropriate allocation of responsibilities, risks, Update and take into account the required new elements and liabilities (in particular to strengthen environmental and social performance, health, and safety) 3 Rights for the World Bank to review procurement documents The requirement must be included in the bidding and activities documents to grant rights to the World Bank to review procurement documentation and activities. The legal agreement may also allow this provision 4 An effective complaints mechanism None 5 Maintenance of records of the Procurement Process The requirement must be included in the bidding documents and in the legal agreement. The PIU must spell out the practical modalities and the appropriate documentation to archive in the procurement manual 49. The thresholds for specific market approaches and procurement methods and the World Bank prior review requirements are also provided in table. Table A1.6: Thresholds for Procurement Methods, and Prior Review Expenditure Contract (C) Value Contracts Subject to Procurement Method Category Threshold* [US$] Prior Review /[US$] Open Competition International Market Approach and ≥ 10,000,000 C ≥ 10,000,000 Direct Contracting Works 200,000 < C < Open Competition National Market Approach None 10,000,000 C ≤ 200,000 Request for Quotation None Open Competition International Market Approach and ≥ 2,000,000 C ≥ 500,000 Goods, IT, and non- Direct Contracting consulting services 100,000 < C < 500,000 Open Competition National Market Approach None C ≤ 100,000 Request for Quotation None National shortlist for C < 100,000 For Consulting Services None selection of consultant firms C ≤ 200,000 For Engineering and Construction Supervision None International shortlist C ≥ 100,000 For Consulting Services ≥ 1,000,000 for selection of consultant firms C > 200,000 For Engineering and Construction Supervision ≥ 1,000,000 Selection of ≥ 300,000 All values All Approaches Individual consultants Direct contracting As agreed in All values Procurement Plan Training, workshops, All values Based on approved Annual Work Plan & Budgets study tours Note: *These thresholds are for the purposes of the initial procurement plan for the first 18 months and for the risk rated substantial. The thresholds will be revised periodically based on reassessment of risks. All contracts not subject to prior review will be post-reviewed. 50. Procurement Risk Rating. The project procurement risk prior to the mitigation measures is Substantial. The risk can be reduced to a residual rating of Moderate upon consideration of successful implementation of the mitigation measures contained in the action plan provided in table. Page 71 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Table A1.7: Action Plan for Strengthening Procurement Capacity Key Risks Mitigation actions By By when Lack of a procurement Develop a PIM with a section on procurement PIU by project effectiveness procedures manual based on detailing all applicable procedures, instructions, and “World Bank Procurement guidance for handling procurement, the standard Regulations for IPF Borrowers” bidding documents, and other standard dated July 2016, revised in procurement documents to be used. The PIM will November 2017 and August 2018 outline the interaction between the project stakeholders responsible for procurement Lack of Procurement Specialist Recruit a Procurement Specialist on competitive PIU by project effectiveness basis Bureaucratic practices and Closely monitor and exercise quality/control of all PIU Throughout project unnecessary control may result in aspects of the procurement process, including implementation procurement delays affecting evaluation, selection, and contract award in line project implementation with the provisions of the procurement manual. Set up a monthly meeting within the PIU on the progress of procurement activities and report to the Ministry and the World Bank. Revise as necessary PIU the decree on the establishment of independent Public expert committees in externally funded projects to Procurement give to PIUs the autonomy and speed required for Regulatory project implementation. Authority Limited competition for Using specific procurement approach such as PIU/WB During emergency international procurement limited/restricted approach. Apply the 14 provisions period and when it’s activities due to the current decreed by World Bank during COVID-19 emergency requested and required COVID-19 response/recovery period (procurement tips on submission of bids phases: Borrower travel bans in electronically including for countries whose e- place for contractors/ suppliers/ Procurement is not yet approved by the World consultants’ foreign personnel; Bank). Measures for constraints in institutional and suppliers/contractors/consultants preferencing like implementing capacity in direct payments by World Bank, advance payments, borrowing country etc. will be applied on need basis. The procurement in unsecured Apply World Bank streamlined Procurement PIU During emergency situation can restrict competition Arrangements for Projects in Situations of Urgent period and when and possibly increase prices and Need of Assistance or Capacity Constraints under requested and required collusion risks paragraph 12 of Section III of the IPF Policy (March 7, 2019) Poor filing which can lead to loss Provide adequate space and equipment for the PIU Expected within 6 of documents procurement archive and set up an adequate filing months after the system for project records to ensure easy retrieval beginning of project of information/data according to World Bank implementation requirements for archiving. Designate or recruit an officer to be responsible for data management Insert in STEP the documents at each stage of procurement process. 51. Procurement supervision. In addition to prior review and World Bank implementation support missions, at least two missions per year, with at least one visit to the field to carry out post-review of procurement actions is recommended. Page 72 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 52. Post-review procurement. Post-reviews can be done either by World Bank . They may also be carried out by third parties such as supreme audit institutions, procurement regulatory authorities, consulting firms, Non-Governmental Organizations, and others, according to procedures acceptable to the World Bank to ascertain compliance with procurement procedures as defined in the legal documents. The procurement post-reviews will cover at least 10 percent of contracts across the World Bank portfolio that have not been prior reviewed in a financial year. The sampling is risk based and considers (a) project procurement risk rating (with riskier projects having a larger sample); and (b) contract risk rating, to ensure that riskier contracts constitute a higher proportion of the sample. Post-reviews contribute to the overall procurement performance rating of the project based on the rating of the post-procurement review and provide a basis for updating the project procurement risk and the risk mitigation plan. 53. Oversight and monitoring arrangements for procurement. The PIM will define the project’s internal organization and its implementation procedures. It will include, among other things, all relevant procedures for calling for bids, selecting consultants, and awarding contracts. The project monitoring arrangements for procurement will be specified. Detailed procurement documentation (namely, the PPSD) may be referenced as such and retained in the project files. The detailed 18-month Procurement Plan was agreed with the Recipient on March 28, 2020 and have been uploaded to the World Bank website after the negotiations. Page 73 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 2: GOLD Project Contribution to Identified Relevant Gender Gaps Gender gaps relevant to GOLD project 1. Gender inequality in Niger is high and hampers economic growth. The 2019 Gender Inequality Index41 places Niger 154 out of 160 countries in 2018. Niger also has the lowest Gender Development Index (0.298 in 2018).42 GDP per capita could increase by up to a third with gender equality, translating in higher income by women and lower population growth.43 2. Girls continue to be less likely to complete primary and secondary cycles than boys . In 2016, the primary completion rate is estimated at only 26.5 percent for girls aged 15-18 versus 41.4 percent for boys; for lower secondary, completion rates are estimated at 6.2 percent for girls aged 18-20 versus 15.6 percent for boys. For upper secondary, completion rates remain extremely low as well, at 2.4 percent among girls aged 21-24 versus 6.5 percent for boys . 3. There is a strong negative relationship between child marriage and educational attainment for girls across Western African countries. Completion rates for lower secondary school and the child marriage prevalence rate are strongly correlated across countries, pointing to the important role of schooling at the secondary level in ending child marriage. In Niger itself, evidence suggest that child marriage does reduce educational attainment. 4. Gender gaps in productivity and earnings are significant and strongly correlated with education and occupational segregation. When considering individual sources of income, gender gaps are observed across agricultural productivity, entrepreneurship profits and earnings, ranging from 21 to 55 percent.44 Gender differences in labor productivity and earnings are primarily the result of inadequate access to labor and other productive inputs, occupational segregation, and lower levels of education. 5. An inadequate legal framework also contributes to inequality at work. Legal barriers to women’s employment and entrepreneurship persist. Niger’s performance is below the average for Sub-Saharan Africa in five of eight areas scored in the 2020 Women, Business, and the Law database. Out of a maximum score of 100 per area, Niger scores an average of 59 versus an average of 70 for Sub-Saharan Africa.45 6. Gender gaps in the extractive sector reflects similar challenges from: (i) low status, low pay and very few women with graduate level technical positions in the extractives sector, both public and private; (ii) limited access to finance to carry out economic initiatives around extractives activities; and (iii) limited women’s participation in the elaboration of community development plans resulting in lower focus on gender-sensitive activities in LG development plans and Corporate Social Responsibility activities of extractives firms. 7. In addition, a number of sector-specific challenges make women particularly vulnerable : (i) physically exhausting jobs, rarely own/manage mine pits or included in mining cooperatives; (ii) risk of gender-based violence 46; (iii) environment and health issues47 as working conditions at ASM sites are challenging for workers at the lower levels of the value chain, and for women in particular, given the limited use of protective gear, and access to health care or water. 8. Legislative reforms have been introduced since 2000 to improve women representation in politics. Since 2000, a quota law has been in place, which mandated that the proportion of elected candidates of either sex should not be lower 41 UNDP, 2019: Gender Inequality Index. 42 Ratio of female to male HDI values. 43 World Bank, 2019, Economic Impacts of Gender Inequality in Niger. 44 2014 Living Standards Measurement Study. 45 World Bank, 2020, Women, Business and the Law: https://wbl.worldbank.org. 46 World Bank, 2018, Preliminary study on gender and human rights in the ASM sector in Niger. 47 Mercury and cyanide are increasingly used. Page 74 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) than 10 percent in parliamentary and local election, raised to 15 percent in 2014. The 2009 National Gender Policy implementation plan contains specific objectives to promote women’s political participation.48 9. Women representation and participation in politics and civil service remains low. As of January 2020, Niger counts 7 women ministers in government out of 44 (i.e. 15 percent) and ranks 125 out of 189 countries in terms of women representation in Parliament, with 17 percent of seats.49 At the local level, about 14.5 percent of municipal councilors are women50 and only eight mayors are women.51 In civil service, an estimated 36 percent of women are civil servants, decreasing to 25 percent for high level (category A).52 GOLD project contribution to address identified gender gaps53 10. In Component 1, public sector management TA will include gender specific activities: (i) Gender-budgeting and particular attention to inclusion in the revised CGFCT curricula and trainings of LG public officials on LG public finance management, as well as in the revised methodology for local development planning; (ii) Increased transfer to LG is expected to increase access to services in health, primary education and water, contributing to bridge the gender gaps in those services particularly relevant for women and girls. 11. In Component 2, ASM pilot sites will be selected according to the strong presence of women miners on site, to ensure that they benefit from equal training opportunities as men. In particular: (i) Emphasis will be placed on coaching women on business development and cooperatives’ management and a gender and public health component, included in the training program. Equal field experience and training opportunities will be offered on the geodata survey and analysis; (ii) Capacity building will be provided to the AFSIEN, to strengthen the position of women in leadership positions and promote women and girls’ enrollment in higher education relevant for the mining industry; (iii) Dialogue will be facilitated between ASM, communities and LG through TA in ASM pilot sites, to ensure municipal development plans include service delivery needs from women in ASM communities; (iv) TA will be provided to support reforms of the legal and policy framework in the extractive sector at the local level: gender will be mainstreamed to improve women’s ownership, control of assets and access to jobs in the upstream and downstream. (v) A mine closure strategy will be developed for Arlit, and gender mainstreamed across the strategy, to address the needs of women and girls with regards to jobs and service delivery (education, water, health) after the closure of the uranium mines. 12. The following gender specific indicators will be monitored throughout project implementation: (i) women in ASM trained in business management, social and environmental good practices; (ii) female public officials trained by the project; (iii) women’s beneficiaries satisfaction; (iv) women leadership in ASM sites; (v) women in the targeted regions who are aware of their LG annual investment program and think it corresponds to their priorities. 48 OECD, SIGI 2019. 49 IPU, 2020. 50 GoN, 2018, LG census. 51 2015 survey from the Association of Women Jurists. 52 Data from the National Statistics Institute for the year 2017. 53 Project activities and indicators are in line with the 3 priority pillars as highlighted in WB Notes Why Gender Matters for Extractives and Suggested project activities and indicators to close the gender gaps in extractives: enhancing women’s voice (consultations and communities decision-making processes, national networks, GBV); improving human endowments (health, education); and removing constraints for more and better jobs. Page 75 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 3: Extractive Revenue-Sharing Arrangement in Niger 1. Oil and mining revenues-sharing arrangement with local governments of the extraction zones is provided by law. Article 152 of the Constitution and Law no. 2014-08 of April 16, 2016 allocates 15 percent of oil and mining revenues to the affected populations through the regional governments and municipalities of the extraction zones, in order to assure shared prosperity in the communities that might otherwise be impacted by the oil and mineral extraction. Municipalities are allocated 85 percent and regional government 15 percent. Most transfers to LG finance investment (85 percent), while the rest finance recurrent costs (10 percent for LG, five percent for deconcentrated services supporting LG). 2. The transfers have been limited so far because of limited capacity at local level and lack of modalities for the processing of transfers and reporting. Following the delays in the transfer of the extractive revenue to LG, the government established in 2018 an 2012-2016 arrear repayment plan to be implemented in 2018-2022. While some transfers were made in 2019 to the targeted RG, modalities of allocation to municipalities are unclear. The transfers raise many challenges: (i) capacity: the windfall is unprecedented, and municipalities may not have the technical capacity to absorb and execute this budget; (ii) territorial equity: non-extractive regions do not benefit from this additional windfall, and the ANFICT allocation is too low to counterbalance; (iii) transparency: the lack of clarity on allocations formulae to municipalities and on impact may fuel grievances. 3. Based on simulations performed from this plan we can estimate the amount of extractive revenue that the LG of the regions of Agadez, Diffa and Tillabery would receive every year. The region of Zinder does not figure in these calculations yet because it was not part of the arrear repayment plan as oil activities in Zinder are recent. The simulations conclude that Agadez would receive US$1.2m every year, Diffa US$10.4m and Tillabery US$0.4m (Figure A3.1). Figure A3.1. Equalization Simulation (CFAF per capita) 30000 25000 20000 15000 10000 5000 0 Agadez Diffa Dosso Maradi Tahoua Tillabery Zinder Fiscal Revenues 2017 Fiscal Revenues 2017 + Royalties Fiscal Revenues 2017+ Royalties + Arrears Fiscal Revenues 2017 + Royalties + Arrears 2022 NB: The blue column shows the aggregated fiscal revenues of the communes of each region, including their own resources and the transferred revenues. The orange column shows the impact that the transfers of the 15 percent would do to their resources. The grey column shows the fiscal revenues of the regions with the transfer and the arrears repayment based on the amount for 2019. Finally, the yellow column shows the region’s fiscal revenues with the transfer of the 15 percent and the arrear repayment amount planned for 2022. Source: World Bank calculations based on MoF data Page 76 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 4: Overview of Transfer of Responsibilities to Local Governments 1. With the successful rollout of local elections in 2011, Niger’ s decentralization process has gained momentum. In 2012, the first roadmap for the operationalization of skills transfer to the local levels elaborated through a National Decentralization Policy Framework was adopted. Equally, the 2013 National Policy for the Modernization of the State, sets short to long term orientations and guidelines for the government in improving public sector performance. Implemented under the leadership of the Prime Minister’s Office it includes decentralization reforms. 2014 was a landmark year with (i) the development of a methodological guide for the transfer of skills and resources; and (ii) the adoption of the modalities of transfer of competences and resources from the Central government to the LGs. Decrees 2016-075 and 076 of January 26, 2016 and 2016-076 of January 26, 2016 detail transferred competences to LGs (municipalities and regions). 54 De jure responsibilities of LGs include infrastructure maintenance, equipment, construction while line ministries keep responsibilities for staff management (e.g. teachers, doctors), policy-making, and control of service delivery quality. 2. Actual transfers of competences for Education, Heath, Water and Environment are planned by decree for 2018- 2021 and on-going for primary education, health and water. A new momentum was reached in 2017 with the adoption of the Plan for the Transfer of Resources and Competences 2018-2021 (Plan TCR) for four sectors: Health, Education, Water and Environment, with different level of implementation. The GoN is currently taking stock of the implementation of the, Plan TCR for 2018 to identify implementation gaps and progresses. For now, three ministries appear to be the most advanced in rolling out the incremental transfer of responsibilities and related resources: (i) The Ministry of Primary Education has transferred three of the five responsibilities to LG early 2019: (i) the recruitment and management of contractual teachers; (ii) school mapping planning; (iii) the construction and maintenance of kindergartens, preschools, primary schools, and non-formal primary education centers, with the technical support of ANFICT and financed by the new Education Fund (Fonds commun pour l’éducation). Two competences remain to be transferred: (i) the equipment of school, literacy centers, non-formal education centers; and (ii) the acquisition and management of school supplies, teaching and learning materials. (ii) The Ministry of Hydraulics transferred water points service to LGs. The transfers’ roadmap of the Ministry of Hydraulics is aligned with the 2010 Water Law which outlines the distribution of responsibilities in the water and sanitation sector—with a principle of subsidiarity. The Promotion of Hygiene and Basic Sanitation strategy and the Water, Hygiene and Sanitation sector program 2016-30 aim to ensure the availability and sustainable management of water resources and sanitation for all. In 2018, all water points services were mapped, and their ownership and management transferred to LG. (iii) The Ministry of Health is finalizing in 2020 its action plan to transfer responsibilities to LG. (iv) The Ministries of Vocational Training, Secondary Education and Environment are in the early stage of preparing their LG transfer plan. Decree 2016-075/PRN/MISPD/ACR/MEP/A/PLN/EC/MH/A/MESU/DD/MEF/MEP/T/MFP/RA and decree 2016-076/ PRN/ MISPD/ACR/ 54 MEP/A/PLN/EC/ MH/A/ MESU/DD/ MEF/ MEP/T/ MFP/RA. Page 77 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 5: Local Government Financing in Niger: opportunities 1. LGs have financial autonomy and have to adopt a budget to spend transferred and locally sourced funds. The local councils debate and adopt a budget based on a budget framework letter received from their competent authority and the multi-year local development plan and annual investment plans. The budget must be adopted before January 1 of each year after which the oversight authority has 30 days to validate or send the budget back for modification. 2. LG significantly improved their planning processes and have now defined a dedicated financing framework and mechanisms. The LG budgeting and accountability legal framework is clear55 though control mechanisms could improve. The government has created two funds managed by ANFICT56 to provide revenues to decentralized entities: (i) the FAD for recurrent expenditures; and (ii) the FP for investments. ANFICT resources have been limited and unpredictable. 57 ANFICT is facing challenges with the equalization formula as it requires statistical data that are not generated yet. 3. There is room for improvement in LG capacities and LG resources. The graphs below illustrate LG local tax recovery rate is low (Figure A5.1), and government transfers (Figure A5.2), estimated at 2 percent of total GoN budget. This can be explained by limited LG capacity in FM (Figure A5.3) and control on these resources if they were to be transferred (Figure A5.4). While most municipalities have development, some of them are out of dates (Figure A5.5). The combination of all these challenges leads to a low execution rate of LG recurrent and investment budget (Figure A5.6). Figure A5.1: Niger LG’s Own-source Revenue Mobilization (2017) Source: BOOST and 2018 LG Census Figure A5.2: Financial Resources Transferred to LG (2017) Source: 2018 LG Census 55 Decree2016-302-PRN-MISPDACR-MF of June 29, 2016. 56 TheANFICT is a public agency, supervised by the Ministry of Decentralization and MoF, responsible for LG financing Law 2008-38 of July 10, 2008. 57 FAD and FP budget execution rates varies from 30 percent (2015) to 100 percent (2017); FAD and FP 2016-19 annual executed amounts range between US$1.8-2.0m. Page 78 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Figure A5.3: Obstacles to Financial Resource Transfer to LG: Limited Technical Capacity Source: 2018 LG Census Figure A5.4: Obstacles to Financial Resource Transfer to LG: Limited a Posteriori Control Source: 2018 LG Census. Figure A5.5 LG Development Plan and its Median Age 100% 2020 90% 2015 80% 2010 70% 2005 Agadez Diffa Dosso Maradi Niamey Tahoua Tillabéri zinder Yes No Median Age Source: 2018 LG Census. Page 79 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 6: Extractive Sector Management Challenges 1. The extractive sector contributes significantly to the economy of Niger , accounting for 83.43 percent of total exports making 6.8 percent of the GDP in 2019 (although it currently contributes less than one percent to local employment). The sector lacks diversification and is dominated by oil production (70 percent value) and uranium mining (28.5 percent)58. 2. The potential for extractive industries development in Niger is high . The country’s mining authorities have expressed the intention to diversify their mining sector in the medium term. The MoM has announced the existence of deposits in the Aïr mountains (titanium and vanadium59, lithium) and in Liptako (lithium, iron60), as well as phosphates deposits in Tahoua.61 The finalization of a pipeline for export of crude oil is expected to increase the production to 110,000 barrels/day in 2022 from 200,000 barrels/day in 2020. The 2013 discovery of gold in the Agadez region (Djado, Tafassasset and Aïr) have resulted in a proliferation of artisanal mining sites, which employ an estimated 450,000 persons. Meanwhile, the downturn in prices, and lower cost options in other countries, resulted in a scale-back of mining projects in Niger. The extractive sector is hampered by limited human resources and technical capacity, both at national and regional levels. Challenges in extractive sector management 3. The extractive sector is hampered by limited human resources and technical capacity . Over the last decades the sector has been constrained by a lack of investment in HR capacity and development programs to enhance professional skills. Women are under-represented both in universities and within higher-level roles in the sector itself. Key areas to develop include all aspects of modern mining management, including environmental management and tax and auditing, data management, and small scale and artisanal mineral extraction and processing technologies. 4. Legal, institutional and technical improvements have been made, but implementation capacity is limited . A new petroleum code was adopted in 2017, and the 2006 Mining Code and Mining Policy are being revised. The 2017 amendment to the mining law provides a much-needed legal framework for ASM, defining and adapting legislation on ASM activities. The reforms, which included the delegation of several regulatory responsibilities to the SOPAMIN, were introduced to facilitate regulation of the ASM sector, defining rights and obligations. Yet, the legal and institutional frameworks are hampered by realities on the ground. The mining cadaster and geo-data management center (SIGMINES62) have been modernized and a new mineral laboratory was built and equipped in 2017-2019. 63 Yet management capacity could be further improved, and many related regulations and procedures still need to be developed. The laboratory is not yet operational due to insufficient staffing and resources for recurrent spending, and SIGMINES and the cadaster are facing challenges with aging staff that is not being replaced upon retirement. 5. Public sector capacity to oversee extractive sector is limited. Budget management challenges affect the performance of the ministries of Petroleum and Mines.64 Most of the budget is spent at central level, and the staffing and equipment is mostly based in Niamey. Oversight at operational level is limited. 65 Public spending on mining and petroleum has been less than one percent of annual GoN spending in 2013-2017. Both ministries are coping with ageing staff close to, 58 EITI 2017, 2019 United Nations Comtrade (United Nations International Trade Statistics Database. 59 Supposedly 8 MT of TiO2 and 49,000 To of V2O5 likely reserves. 60 The Say-Kollo iron deposit, with resource estimates of 1.2bn/t @ 40 - 45 percent Fe. 61 Deposits in Tahoua and in “Parc du W”, with resource estimate of 1.2 bn/t @ 23 percent P2O5. 62 Système d’Information Géologique Mines, geo-data management center. 63 The WB has been supporting the extractive industries through the US$50 million Competitiveness and Growth Support project (P127204) and the Africa Extractive Industries Trust Fund (P150108) to strengthen GoN capacity to negotiate mining and petroleum deals. 64 Budget execution rates in 2013-2017 varied from 6-41 percent for Ministry of Energy andOil, and 27-82 percent for Ministry of Mines and Industry. 65 E.g. spending of the Ministry of Mines & Industry in 2017 is estimated >95percent in Niamey and central level. Page 80 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) or past, retirement age. 6. Niger was re-admitted into the Extractive Industries Transparency Initiative (EITI) Process in the February 2020 . Niger was an active member of the EITI since 2005. In October 2017 Niger was suspended from EITI due to inadequate progress in implementing the 2016 Standard and insufficient civil society engagement. The GoN subsequently withdrew from the EITI Process. Niger has re-submitted its candidacy application in October 2019 to the EITI, under the leadership of the Prime Minister. Re-joining EITI is an important signal towards the investment community. Niger has rich experience with EITI implementation and there are many achievements that can be built upon. Large Scale Extractive Industries in Niger 7. Oil. The Agadem Rift Basin is located in the administrative region of Diffa, in South East Niger, and covers an area of 27,516 km2 towards lake Chad. It is part of the main Central African Rift Basin, which extends into Nigeria, Chad, Cameroon and Sudan.  Since 2011, China National Petroleum Corporation (CNPC) is the main actor in Niger in the oil sector, with 97 discoveries from the last 127 exploration wells. Despite the high success rate seen in the Agadem Rift Basin to date, the oil industry believes the basin to have large untapped potential. In late 2018, British Savannah Petroleum announced the fifth oil discovery on its Agadem permit, foreseeing the start of commercial production by 2019, on what they believe to contain approximately 2.8bn barrels of ‘yet-to-find’ crude oil prospective resource.  CNPC also operates the Zinder oil refinery, a 60-40 percent joint-venture with the GoN, through the Société de Raffinage de Zinder (SORAZ). Completed in 2011, the refinery produces diesel, gasoline, and LPG products, which cover local market demand (CNPC, 2019). SORAZ oil products are both sold internally and exported through the Niger Petroleum Product Company (Société Nigérienne des Produits Pétroliers), an enterprise wholly owned by the State of Niger, created in 1977 and responsible for the importation, transportation, storage, refining and marketing of petroleum products.  On January 2019, the GoN signed a bilateral agreement for the construction of a 2,000 km-long pipeline running from Nigerien oil fields in the Agadem Rift Basin to the port of Cotonou. The pipeline, whose construction was planned to start end 2019, delayed till at least September 2020, could start operating by 2022, for a projected cost of US$2-4bn. The pipeline would be managed by companies set up by CNPC for this purpose in both transit countries with possible participation of the host governments.  In November 2018, the GoN confirmed viable oil discovery by Algeria’s state-owned Sonatrach on the Kafra block and signed a production sharing contract allowing Sonatrach to start commercial production, estimated to yield some 90,000 b/d in the near future.  In January 2019, the GoN approved a new strategic policy for the development of the oil industry in the country by 2025. The policy estimates that, with the completion of the Benin pipeline by 2021-2022, the oil sector could contribute up to 25 percent of the country’s GDP (while it was 4 percent in 2017) and employ between 8 and 12 percent of the country’s workforce. 8. Uranium. Niger is the world’s fifth producer of uranium and hosts reserves of uranium ore for 425,600 tU, 5 percent of the world total (Organization for Economic Co-operation and Development (OECD)/International Atomic Energy Agency (IAEA), 2019). Uranium deposits are located within the Tim Mersoï Basin, close to the twin mining towns of Arlit and Akokan, 900 km north-east of the capital Niamey on the southern border of the Sahara Desert and on the western range of the Air mountains. Uranium concentrates are trucked to ports in Benin and then mostly exported to the Malvési conversion facility in France.  Uranium production in Niger started in 1971 with the Société des Mines de l'Aïr (Somaïr, Air Mines Company) and 1978 by the Compagnie minière d'Akouta (Cominak, Akouta Mining Company). In 2007, China National Nuclear Corporation broke a 36-years monopoly in uranium exploitation by French company Areva (in partnership with the Page 81 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) GoN and other ventures) by creating the Société des Mines d’Azelik to mine the Azelik/Teguidda deposits, however only active in 2010-2015. Cumulative production since 1970’s to the end of 2017 was about 140,000 tU. Uranium production peaked to 4,116 tU in 2015 thanks to the introduction of more efficient recuperation techniques but dropped sharply in 2016 and was 3,449 tU in 2017.66 Such trend is explained by the decrease of production at the Somaïr open pit and the Cominak underground mine, as well as the shut down in 2015 of the Azelik mine as a result of enduring depressed uranium prices and high extraction costs.  After peaking at US$136/lb in June 2007, uranium prices dropped continuously, reaching the current lows of US$25/lb. The decommissioning of nuclear power plants in some economies and the accumulated uranium stockpiles by countries such as China and Japan made the current supply exceed the demand; the industry predicts that such trend will not be reversed for at least the entire 2020 decade. In the current market downturn, the industry estimates that uranium production in Niger is estimated at 3,500 to 5,000 tU/yr in the foreseeable future.  Uranium sites in Niger employed some 3,850 people in 2017.67 French mining company Orano announced the dismissal of some 1,250 employees at its Cominak subsidiary at the end of 2019, and the mine’s closure between 2020 and 2021.  In 2009 Areva started building what would have been the biggest open-pit uranium mine in Africa at Imouraren, with a potential capacity of 5,000 tU/yr for 35 years. In 2014, the drop in uranium prices pushed the French operator to put the construction project on hold. The discovery of gold sites in the Djado at the same period allowed to mitigate the negative impacts in terms of jobs and livelihood loss.  The Imminent closure of the majority of Niger’s uranium mines poses a significant risk for revenue mobilization, service delivery and Arlit’s economy as well as regional stability. Uranium mines are the main purveyor of jobs and social services in Arlit, a city of 150,000 inhabitants. They are also the principal client of the Nigerien Coal Company (Société Nigérienne du Charbon); the coal-fired powerplant that provides power to the town. The closure of the mines will most likely result in the collapse of the Nigerien Coal Company. The mines and surrounding areas bear significant environmental risks and no environmental or social plans exist yet to anticipate and mitigate the impact of closure. 9. Large-scale gold mining. Samira Hill, an open-pit exploitation active since 2004 under a 80-20 percent joint venture Liptako Mines Company (Société des Mines du Liptako) between Canadian Mining Exploration Society in West Africa)and the GoN, is the only large-scale gold mine in Niger; in 2017 Liptako Mines Company recorded a production of just 706 kg, representing 2.9 percent of the total export value of the extractive sector in Niger. ASM gold mining is not reported in official trade statistics but produces an estimated 10 tons of gold per year.68 Coexistence between ASM and large-scale mines is not yet as significant an issue in Niger as in other gold producing countries in the region. Nevertheless, the issue remains pertinent given some progress to attract largescale investment, including from Turkish owned exploration companies in Tillabery and Chinese owned companies in the north. Currently, should a deposit be discovered in an ASM zone, the overlying ASM permit will not be renewed. ASM in Niger 10. ASM for gold in Niger – spanning the Tillabery, Agadez, and to a lesser extent Maradi administrative regions – represents the country’s most important mining sector in terms of employment and profitability. It is also the fastest growing and most significant driver of social, environmental, and security issues. Besides gold, other ASM mineral 66 Comtrade data, 2019 67 As of 1 January 2018, 898 workers were employed at the Somaïr and 776 at the Cominak mines. Orano reported that 99 percent of the workers at these two mines are Nigerien. About 680 workers were employed at the Azelik mine, but due to the cessation of mining operations, only 25 have been retained. The Imouraren project employed about 300 during the development stage and was expected to create about 1,400 permanent and up to 3,000 indirect jobs when the facility is in full production. 68 OECD 2018, Gold at the crossroads: Assessment of the supply chains of gold produced in Burkina Faso, Mali and Niger. Page 82 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) commodities produced in Niger include: sand and gravel aggregate; gypsum from the Tahoua region used in cement production; cassiterite (tin) from the Air mountains; trona (natron) from Diffa, Dosso and Zinder regions and used in cattle feed; salt from Dosso and Agadez; copper from Agadez, and gemstones.69 11. The emergence of the ASM sector motivated a revision of the Mining Code in 2017, but control mechanisms established have yet to be implemented due to capacity constraints, operational challenges on the ground, and confusion over roles and responsibilities. Most of the sector remains outside of the formal framework, with Komabangou in Tillabery region being the only site which remains officially open according to mining sector officials. Taxes, royalties, and licensing fees are not systematically collected; designation and enforcement of ASM designated zones is incomplete; ASM sites remain unmonitored, unpermitted, or have difficulty renewing permits; environmental, safety and reporting requirements are mostly unmet; and site-level government presence and provision of supports and extension services is lacking. 70 12. Formal governance of the sector remains centralized. Regional directorates are not authorised to issue mining permits and there is no direct formal role for local authorities. As per the 2017 reforms, SOPAMIN has, in theory, assumed responsibility for: site monitoring missions; provision of support and extension services; control of ASM gold exports; and statistics, cartography, and data management. Meanwhile, the MoM and its Directorate of Small-Scale Mining Operations remain responsible for: permitting and licensing ASM sites, miners, and traders; designation of ASM zones; and the collection of fees and royalties on behalf of the MoF. The Department of the Interior assumes responsibility for mine site security. 13. State, LG and traditional authorities all source varying types of revenue from ASM operations, albeit the coverage, legality, and enforcement of taxes and fees varies considerably from site to site. In the formal framework, taxation and regulation of ASM activities is differentiated by artisanal mining, semi-mechanised mining, and re-mining of tailings. Currently, the only formal taxes effectively paid for relate to the issuing and renewal of mining permits (FCFA 150,000 per 400m2 for artisanal sites with FCFA 250,000 annual renewal), royalty taxes, individual access permits (e.g., FCFA 10,000 per m2 per year for an artisanal site), individual access cards (FCFA 20,000 with annual renewal); and authorisations to engage in trade and a sales tax for approved traders (FCFA 3,000,000 fixed cost with 3 percent on value). 71 Altogether, public revenues from the sector totaled FCFA 730 million in 2018 (MoM). 14. The value and volume of ASM gold production has surged since the 2014 discovery of gold fields and ensuing gold rush in the Agadez region, along with an increasing gold price. Total estimates of production range from 5.7 tons in 2018 (figures from MoM, based on transactions declared by a roughly 50 agreed traders) to 12 tons per year (10 tons in Agadez and two tons in Tillabery),72 representing up to US$633 million in current prices in 2019.73 ASM production therefore represents between 79-89 percent of total gold produced in Niger, assuming the country’s only large scale mine in Tillabery, Samira Hill, runs at its 1.5 tons per year processing capacity. 15. ASM gold direct employment is estimated between 100,000 to 400,00074, with the sector attracting Nigerien nationals and foreign migrants, providing off-season livelihood for workers in the agricultural sector, and indirectly 69 Djibo Sambo, C. ‘Exploitation et Fiscalite Miniere Au Niger’; ILO, ‘Social and Labour Issues in Small-Scale Mines’; UNECA, ‘Niger | ASM’. 70 Bibi Traore M. & Arji, S. ‘Preliminary Study on the Artisanal Mining Sector in Niger Final Report’. Levin Sources, 2019. 71 Costs indicated are for artisanal sites. Costs for semi-mechanized and tailings mining are higher. Other formal framework taxes not currently enforced include an annual tax on equipment owners (e.g., FCFA 200,000 per year per metal detector). Massaran Bibi Traore, and Saidou Arji,. ‘Preliminary Study on the Artisanal Mining Sector in Niger Final Report’. Levin Sources, 2019. 72 Sollazzo, R. 2019. ‘Gold at the Crossroads: Assessment of the Supply Chains of Gold Produced in Burkina Faso Mali Niger’ OECD. 73 February 28th, 2020 prices of US$1,644 per ounce. 74 Nigerien authorities estimated that at its peak in 2017, ASM gold could have employed directly and indirectly as many as 600 000 people. In the first half of 2018, wages from ASM gold in the north were thought to be about XOF 54 000 to 85 000 (US$96 to US$151) a month, markedly more than the XOF 40 000 to 50 000 (US$71 to US$89) a month a worker in Niamey could expect. Marcena, H. ‘Pulling at Golden Webs: Combating Criminal Consortia in the African Artisanal and Small-Scale Gold Mining and Trade Sector’, 2019. Page 83 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) supporting many more through upstream supply and service activities.75 There is limited downstream value-added activity, such as jewelry manufacturing. Notably, there is one gold refinery located in Niger with up to 300 employees, built in 2018, and refining processed ore from ASM operations, albeit with limited transparency. 16. ASM gold production is frequently smuggled out of Niger, directly via plane or over land onto trading hubs and end markets including the United Arab Emirates, India, Lebanon, and Switzerland. 76 Financial incentives to smuggle gold stem from: 1) Nigerien taxes (i.e. a 350,000 FCFA per kilogram customs tax and a 120,000 FCFA per kilogram export tax); and 2) BCEAO currency exchange fee (1.2 percent for US$/FCFA exchanges as of July 2019).77 Combined, these legal mechanisms represent about three times more than the cost of smuggling. 78 Failure to compete with illicit export channels explains why a recent SOPAMIN scheme (2018) to buy ASM gold through mobile trading posts has largely failed. Nevertheless, official export receipts are rising and greater formalization is anticipated to help gold overtake uranium as the country’s second largest official export earner (after petroleum), with official export receipts from gold forecast by the International Monetary Fund (IMF) to climb more than 500 percent from 19 billion FCFA in 2018 to 121 billion FCFA in 2024.79 17. Geological potential, continued growth in gold prices, along with an ample supply of labor are expected to drive continued growth in the sector for the coming years. Gold prices performed strongly in 2019, increasing by 18.4 percent, and are forecast to continue to rise in response to financial and geopolitical uncertainty combined with low interest rates and gold purchases from central banks.80 Along with an increased number and size of mine sites, the sector has an opportunity to increase the scale and productivity of its operations.81 18. Gold production in the Agadez region is split into three areas – Tchibarakten, Air Mountains, and the Djado plateau – all of which experienced gold rushes following their discoveries around 2014. There were an estimated 25 sites in the Djado plateau before it was shut down by the GoN in 2017. Gold from the Djado plateau is sourced mostly from alluvial deposits. These deposits are of a higher carat quality (gold nuggets) than the mostly orogenic gold mined in Tchibarakten and Air mountains. During the initial gold rush, extraction required only shovels and metal detectors and no mercury or cyanide processing.82 Being relatively cheap, fast and easy to exploit, the area continues to produce gold despite the formal closure by the government. Besides the Djado plateau, Gold in the Agadez region is produced in roughly 87 sites in the Air mountains, and 22 in Tchibarakten alongside the Algerian border. These sites are predominantly orogenic deposits, exploited through pit mining with crushed ores being processed with mercury or transported to cyanidation plants around Agadez and the Air mountains. Gold production in the Agadez region is markedly different from operations to the south in Tillabery, with hardly any women involved, and a larger share of totally informal sites that fall completely outside of ASM permitted boundaries and with no official state presence. Notably, the surge of ASM has been considered a stabilizing factor, providing alternative livelihoods to local populations. 75 HACP & Peace Nexus Foundation, ‘Etude Sur La Typologie Des Conflits Dans La Secteur Minier Au Niger’; Massaran Bibi Traore and Saidou Arji, ‘Preliminary Study on the Artisanal Mining Sector in Niger Final Report’. 76 Marcena, H. ‘Pulling at Golden Webs: Combating Criminal Consortia in the African Artisanal and Small-Scale Gold Mining and Trade Sector’, 2019. Bibi Traore, M. & Arji, S. ‘Preliminary Study on the Artisanal Mining Sector in Niger Final Report’. Levin Sources, 2019. Sollazzo, R. ‘Gold at the Crossroads: Assessment of the Supply Chains of Gold Produced in Burkina Faso Mali Niger’. OECD, 2018. 77 As required by the WAEMU, all exporters are to repatriate profits from gold exports into the FCFA zone via the BCEAO. 78 Combined these bring the total cost to legally export a kilo of gold to FCFA 760,883 per kg, compared to an estimated FCFA 513,603 per kg through smuggling networks and black-market exchanges; Sollazzo, R. ‘Conflict Risk Analysis’. 79 IMF, ‘IMF Country Report No. 19/239’. 80 World Gold Council, ‘Gold Outlook 2020’. 81 Sollazzo, R. ‘Gold at the Crossroads: Assessment of the Supply Chains of Gold Produced in Burkina Faso Mali Niger’. OECD, 2018. 82 Grégoire, E & Gagnol, L. ‘Ruées Vers l’or Au Sahara : L’orpaillage Dans Le Désert Du Ténéré et Le Massif de l’Aïr (Niger)’. EchoGéo, 2017. Page 84 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 19. Tillabery represents Niger’s oldest gold producing region, with roughly 73 sites, generally located along three segments of the Birimian greenstones belt – a gold-rich geological formation that extends across the border into Burkina Faso. Tillabery’s gold production is relatively more developed and has historically had a closer relationship with state regulators. Meanwhile, the security situation in the area has deteriorated significantly along with the rise of armed groups in the broader Liptako-Gourma region, generating operational risks for interventions and raising security costs for GoN involvement. Some reports also indicate that armed groups benefit from the mine sites.83 Other unique challenges include the presence of children on and around mine sites and marginalization of women who are exploited at lower rungs of the value chain and are generally in vulnerable positions in mining communities. 20. Gold production in Maradi is relatively limited with an estimated 7 sites. Production is mostly sourced from alluvial deposits along river systems. Security risks have increased in the past couple of years with armed violence against civilians from unidentified groups along the border with Nigeria. 21. The ASM sector has an important relationship with the environment . Sites in the south completely close off during the rainy season and serve as a source of employment and livelihood for off-season agricultural workers. Threats to the environment stem from uncontrolled use of mercury, cyanide and other chemicals (e.g., detergent) that poison the air, soil and scare water supplies. In addition, ASM activities leave behind lasting physical damage to the surface environment, occur in protected nature and wildlife, and exacerbate unsustainable demand for wood used in ASM pits and infrastructure. 22. ASM sites are also dangerous places to work and can be destitute sources of livelihood for people engaged in the lower value jobs (e.g., processing through winnowing and ore washing), which in the south are often women. Lack of protective equipment and use of explosives leads to chemical exposure, accidents and fatal injuries. Drug abuse (i.e., tramadol) is also common to help extend working hours in pit mining. Access to health care is difficult and health centers are sometimes located tens of kilometers from mining sites. Access to water is another challenge, particularly in Agadez, with workers suffering from heat and dehydration. 23. A 2019 study from Niger’s High Authority for Peace Consolidation (Haute Autorité à la Consolidation de la Paix, HACP) identified four types of conflicts facing Niger’s mining sector : 1) land use conflicts (tied to disagreements over site perimeters, contracts or permits); 2) environmental conflicts (concerning soil and water pollution, deforestation and sanitation); 3) governance conflicts (implicating relationships between communities, businesses, and authorities, and states); and 4) security conflicts (including inter- and intra-communal tensions, banditry, scams, and conflicts that could implicit jihadist groups).84 24. The COVID-19 pandemic impact on Niger’s economy will likely increase the number of ASM . The impact of the pandemic on trade and jobs, combined with the rising value of gold will almost certainly cause the population of the ASM communities to grow. Economic necessity and ASM’s de facto low entry barriers will pull people into the sector. This will impact the health, safety and income of ASM miners and their communities. This could also result in an increased risk for conflict and inequality, and thus a growing need for effective state presence on mining sites. 83 ‘Managing Trafficking in Northern Niger’. International Crisis Group, 2020; Assanvo, W. ‘Is Organised Crime Fuelling Terror Groups in Liptako- Gourma?’ Institute for Security Studies, 2019; Lewis, D. & McNeill, R. ‘Special Report: How Jihadists Struck Gold in the Africa’s Sahel’. Reuters, 2019. 84 HACP & Peace Nexus Foundation. ‘Etude Sur La Typologie Des Conflits Dans La Secteur Minier Au Niger’, April 2019. Page 85 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 7: GOLD Project Contribution to Niger FCV Risk Mitigation Strategy 1. Niger is exposed to multiple conflict and fragility risks, which stem from a combination of deep-rooted structural causes and short-term drivers. The most immediate vulnerability is related to the growing regional insecurity and violent extremist groups, which threaten the country’s stability and fuel pre-existing intercommunal tensions. Five key drivers of fragility have emerged from the 2017 Risk and Resilience Assessment:  increasing competition over natural resources (water, arable land and forests) intensified by demographic pressure (increase by 70 percent by 2030) and climate related stresses;  marginalization of youth due to limited economic opportunities, difficulty in accessing land and low education levels potentially fueling grievances and making them vulnerable to radicalization;  governance challenges hampering services and contributing to popular dissatisfaction;  transparency challenges in the management of extractives and unequal redistribution of mining revenues exacerbating tensions, especially in the mining areas;  growing regional insecurity and violent extremist groups that threaten Niger’s stability and fuel pre-existing intercommunal tensions. 2. The GoN has shown a strong commitment in addressing critical FCV risks and articulated its approach in a series of key strategic documents. Niger’s development strategy, PDES-II, operationalizes Niger’s Renaissance Program, launched by President Issoufou in 2011. The program recognizes that insecurity constitutes an obstacle to economic, social and cultural development and considers key: (i) improving the strategic framework of security governance; (ii) mitigating security threats; (iii) reducing community conflicts; and (iv) promoting development initiatives for peace and security. 3. The GoN has also established national bodies dedicated to promoting peace and security, which act as key national counterparts for the WB and other partners. The HACP is an institution attached to the Presidency of the Republic of Niger in charge of analysis, prevention and management of crises and conflicts. The CNESS has been created in 2016 and its role is to carry out prospective analysis and studies on strategic and security issues, as reflected in its Strategic Orientation Plan (2017-2019). 4. IDA19 classified Niger as Fragile Country. Priority FCV risks mitigation areas and activities identified in the World Bank 2017 Risks and Resilience Assessment were (i) reducing grievances through more equitable and transparent institutions and improved local governance and service delivery; (ii) increasing opportunities for youth and women in fragile regions and supporting the peaceful management and sharing of agropastoral resources; (iii) strengthening crisis prevention, preparedness and response. 5. GOLD Project significantly contributes to mitigate Niger fragility risks. The interdependence of extractive sector and state deployment policies and how they contribute to fragility is laid out in figure below. GOLD project activities contributing to mitigate fragility risks are: (i) Capacity strengthening of local authorities on conflict management and citizen engagement. The project will provide TA and capacity-building to deconcentrated services and LGs, in partnership with CFGCT. The objective will be to strengthen local capacities for peace, aimed at supporting the inclusion of conflict prevention issues into local processes and mainstreaming participatory approaches into local development planning. The following areas for capacity-building activities for LGs and deconcentrated services in the targeted regions on: (i) conflict management, prevention and response; (ii) communication capacities of LGs civil servants to better communicate to citizens on FCV related issues; (iii) social inclusion, transparency and participatory approach in local governance. (ii) Grievance Redress Mechanisms. The project will finance a GRM for project activities, that will inform both, the MoM on a design of a sector-wide GRM for the extractive sector, and the Ministry of Interior on a potential GRM for LG. Page 86 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) (iii) Mitigating risks from extractives. The project will (i) provide TA to improve the legal framework related to environmental and social aspects related to extractive industries as well as the GoN strategy for mine closure anticipating the social impact of Arlit mining closure; and (ii) strengthen through PBC the control and oversight of mining sites as well as the capacity of the government and ASM miners on environmental and social risks, norms and good practices. (iv) Fostering jobs in extractive sector. The project will (i) improve the capacity of artisanal miner in improving their business and livelihood, (ii) strengthen the capacity of the MoM for implementing local content, increasing the potential for jobs for Nigerien in the extractive sector and (iii) increasing the likelihood of private sector investment in extractive sector given the availability of geological data, and therefore job creation. (v) Fostering extractive sector transparency. The project will contribute to build trust between citizens, civil society and the government through TA on access to information on extractives, from geological data to contract and revenue (EITI). (vi) Measuring the perception of citizens on conflict and service delivery. The joint United Nations-World Bank Pathways for Peace highlighted that “one of the greatest risks of violence today stem from the mobilization of perceptions of exclusion and injustice, rooted in inequalities across groups”. Therefore, the project will carry out perception surveys of citizens on conflict (with CNESS) and on service delivery quality (pilots with Ministry of Interior). (vii) Conflict risk monitoring and early warning system. GOLD project will contribute to the national conflict risk monitoring system by providing TA to CNESS to set up an integrated conflict risk-related information management system. Also, the TA to the Ministry of Interior to set up an Information and Communication Technology based integrated information management system on LG performance will feed into the conflict risk monitoring system. 6. In parallel, the Niger Risk Mitigation World Bank-Executed Trust Fund85 will feed the policy dialogue with the GoN to: (i) provide recommendations on a harmonized early warning and response system; (ii) generate consensus at the client level and among partners; and (iii) clarify leadership. While the GoN has committed to security and peace-building, the limited integration and harmonization of initiatives is a challenge. HACP is an institution attached to the Presidency of the Republic of Niger in charge of analysis, prevention and management of crises and conflicts. The HACP has put in place peace committees in the Diffa and Tillabery regions for peacebuilding and conflict mediation. In parallel, the Min. of Interior is supporting the setup of vigilance committees, through equipment (radio, mobile phone) and training. Finally, CNESS, established in 2016, is in charge of regularly monitoring the evolution of security risk in Niger and in the sub-region. 85 Maximizing the Development Impact of the IDA18 FCV Risk Mitigation Regime in Niger: P170773 Page 87 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 8: Climate Co-Benefits Rationale 1. Climate change affects both rural development and extractive industries; and contribute to Niger’s fragility risks. The GoN’s priorities to reduce Green House Gas emissions is to improve the resilience of agriculture, animal husbandry and forestry as well as sustainable land management – including water resources management. 86 Roughly 80 percent of Niger’s farmland is degraded due to climate change. Temperatures rises 1.5 times faster than the global average. As a result, droughts and floods are growing longer and more frequent, undermining food production. About 10 million people in Niger depend on livestock rearing for survival, while the land available to pastoralists shrinks as population growth pushes farmers northward to cultivate more crops. The region is home to the largest number of people who are disproportionately affected by global warming.87 The Industrial Mining Sector is affected by the increasing water scarcity, which makes operating water and energy intensive processes of mineral treatment more costly and complicated. Yet, the main impact of climate change on the extractive Industries in Niger is that it provides alternative livelihoods for people that have lost their livelihoods in agriculture and livestock sectors because of climate change. This is particularly relevant for the ASM sector, which plays an important role in providing job opportunities for young people that have no longer any alternatives. Meanwhile, increasing state footprint and monitoring system is crucial to improve oversight of climate risks and inform policy- making, and increasing the capacity of LG to integrate climate resilience in their development planning is as important. 2. The project will contribute to mitigate climate risks by including  climate resilience into the core training of LG executive staff on development planning;  climate data and analysis in the risk monitoring information system;  climate mitigation and adaptation into the revision of extractive legal and policy framework;  climate resilience into the training of public officials on the environmental impact of mining and into the template report for extractive sites inspection;  the identification of new underground water resource and additional climate related analysis through the geodata collection88;  climate resilience and Green House Gas -reducing activities (such as land rehabilitation, afforestation, etc.) in the elaboration of the GoN strategy for mine closure; and  climate mitigation, adaptation and resilience in the training for miners on sustainable ASM practices. 3. Finally, the strengthening of the policy framework, mining cadaster and the geodata management will improve land use planning and governance of land and water, contributing to mitigate conflicts between different land users, and thus also contributing to a sustainable management of natural resources. 86 Nationally Determined Contributions intends to reduce Green House Gas emissions under the United Nations Framework Convention on Climate Change, currently at elaboration stage. 87 https://www.climatecentre.org/news/1066/un-sahel-region-one-of-the-most-vulnerable-to-climate-change. 88 Increased geodata knowledge could serve further than extractive sector development: land use management (for agriculture, water flow management, land planning related to stability and contamination issues including areas more susceptible to landslides, identification of underground water bodies). Page 88 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 9: Donor Partners and other World Bank Projects that have synergies with the GOLD Project Partner Amount Period Geographic Targeting Axis of intervention United Nations Children's Fund US$11.0 2017-2020 266 LGs Modernization of the Civil Registry systems million US$245 588 2019 - 2021 24 LG Citizen Engagement at LG level European Union EUR25.6 2013-2018 3 Regions (Agadez, Tahoua Local development and stabilization of the North million and Tillabery) EUR12,9 3 year Diffa Region (cities: Maine Strengthen institutional and community resilience in Diffa million Soroa, Chétimari, Diffa, Assaga, Toumour, Kabelawa, N’Guimi Swiss Aid ~ CHF 44.1 2015-2019 32 LGs (Maradi-25 LG; several projects supporting LGs such as citizen engagement for improved million Dosso : 10 communes) social and economic livelihood; support to the media and water and sanitation EUR6.6 million 2018-2022 Nationwide Regional Program to Support Financial Decentralization in West Africa. This project is co-financed with the BMZ and additional funding is being sought for the delivery of the entire program Swiss Aid (together with the World US$7.0- 2021-2024 Regions : Agadez and Support for the Formalization of the Artisanal Gold Mining Sector, with a Bank) 10.0Million (pipeline) Tillabery string focus on strengthening the position of women and addressing Conflict Risk International Organization for US$35.0 2019 Regions : Agadez and Tawar Conflict prevention-social cohesion Migrations million Belgian cooperation EUR16.0 Closed in 2018 Dosso Region Strengthening local governance and food security million German cooperation EUR8.0 million 2018-2020 51 LG in Tillabery, Tahoua Governance and Decentralization: Support to the implementation of the and Agadez regions transfer of resources to LG through ANFICT EUR28.0 2019-2022 Regions: all LG (106) of Governance: Support to LG Public Investment Management million Tillabery Tahoua and Agadez French cooperation EUR5.0 million 2019? (4 2 Regions: Diffa and Tillabery State modernization for service delivery (Capacity building of years) decentralized and deconcentrated services) United States Agency for US$18.0 2019-2021 LG in Maradi and Zinder Support to local development Administrative and PFM capacity building; International Development million Enhance civic Engagement and citizen feedback loops Luxembourg EUR105.0 2016-2020 Regions: Agadez; Dosso; The portfolio consists of 6 interventions spanning from Basic to million Zinder professional education; regional capacity building; water and sanitation Page 89 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Partner Amount Period Geographic Targeting Axis of intervention and local development IDA Urban Water and Sanitation US$160.0 2011-2020 Nationwide Access to sustainable water supply services and to improved sanitation P117365 million services in some urban areas IDA Population and Health US$103.0 2015-2021 Regions Increase the utilization of reproductive health and nutrition services in Support Project (P147638) million Targeted Areas IDA Niger Community Action US$70.0 2012-2019 Nationwide Strengthen local development planning and implementation capacities, to Program Phase 3 (P132306) million support targeted population in improving agriculture productivity, and effectively respond to crisis or emergencies IDA Niger Refugees and Host US$80.0 2018-2023 Regions: Diffa, Tillabery and Improve access to basic services and economic opportunities for refugees Communities Support Project million Tahoua and host communities P164563 IDA Social Safety Nets (P123399) US$101.0 2011-2019 Nationwide Establish and support an effective and adaptive safety net system increase and P155846 million access of poor and vulnerable people to cash transfer and cash for work programs IDA Niger Disaster Risk US$100.0 2014-2020 Diffa, Dosso, Niamey and Multi-sector: support to LG; Disaster Risk management and Climate Management and Urban million Tillabery change adaptation, Urban development, Water resources, and agriculture. Development Project (P145932) IDA PCDS (P145261) US$40.0 2014-2021 Central Support to HR and PFM reforms. million Government/Nationwide IDA PRACC (P127204) US$65.4 2012-2021 Nationwide Support to improve selected aspects of Niger's business environment, to million support the development of select industries and to increase local business participation in the extractive industry sector. African Development Bank US$1.4 million 2013- 2019 Nationwide Domestic Resources Mobilization Support and Governance Improvement Project Page 90 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Annex 10: Economic Analysis of Niger-GOLD project 1. The PDO is to is to strengthen local governments’ capacity and extractive sector management for service delivery in the targeted regions. The targeted regions are Agadez, Diffa, Tillabery and Zinder. The project combines PBCs and TA to support government reforms. Support to legal framework and policy formulation is combined with large-scale capacity-building in targeted regions. The project targets core ministries (Interior, Finance, Planning, Civil Service), targeted line ministries in extractives (Mines, Petroleum) and social sectors subject to deconcentration and decentralization (Primary Education, Health, Water). The expected benefits of the project include: 1) deployment of human and financial resources, 2) improved investment climate in the extractive sector, and 3) mitigation of violence . Additional gains that could not be quantified are expected from: a) formalization of the artisanal mining sector, and b) mitigation of environmental costs of extractives. 2. This economic analysis estimates the expected economic impact that could be attributable to this project. The method selected for the analysis is the NPV because the project is expected to provide a stream of economic and welfare gains that are amenable to a year by year accounting. More specifically, the exercise will determine as precisely as possible the economic added value that can be directly attributed to the results of the project and compare it to the cost of the project. Both economic gains and economic costs measurable in monetary terms will be discounted to obtain the net present value to assess the viability of the project. 3. The use of a methodology based on the concept of fiscal multiplier89 helps to circumvent many of the issues associated with measuring the economic gains of a decentralization or PFM project. The fiscal multiplier estimate is based on the IMF framework90 and on the assumption that LGs have higher fiscal multipliers than central governments. This assumption is supported by the arguments that LGs are more accountable to local populations and are more aware of the needs of their constituents which leads to less waste and leakages. This assumption is also supported by some empirical evidence as presented in the methodology section below. For consistency, the method is also applied to the economic gains estimate from increased revenues generated by the development of the mining sector. Additional economic gains come from alleviation of conflict, approximated using available literature and added to the calculations. 4. The economic analysis will evaluate whether the economic benefits of the project are justified relatively to its cost of US$100 million. The direct beneficiary of the project will be (i) the civil servants from the targeted ministries and public agencies, (ii) the LG staffs and elected representatives in the targeted regions, and (iii) the artisanal miners targeted by the pilot on ASM, with a focus on women. Indirect beneficiaries include citizens from the targeted regions, who will benefited from better service delivery from LG, especially in health, education and water thanks to state deployment policy. By supporting deconcentration and decentralization reforms, the project will increase financial execution and access to service delivery outside Niamey. Investing in geo-data, extractive sector management and transparency will attract investors, foster an extractive sector more integrated in the local economy, mitigate the associated social and environmental risks, foster job creation and boost revenue mobilization. Formalizing ASM and enhancing oversight capacity will foster the sector as a driver of resilience rather than of fragility. Increased transparency and participation on local governance and extractive industries at all levels will contribute to strengthen accountability and state credibility. Fiscal Multiplier Methodology and Underlying Assumptions 5. Some of the project’s expected impact does not directly generate streams of revenues which are what is normally evaluated through Net Present Value methods. The resources that will be deployed and transferred to LGs are not earmarked. The project will also result in better management of resources thanks to increased predictability and 89 The IMF (2014) paper defines fiscal multipliers as the measure of the short-term impact of discretionary fiscal policy on output, i.e. the ratio of a change in output to an exogenous change in the fiscal deficit with respect to their baselines. 90 Fiscal Multipliers: Size, Determinants and Use in Macroeconomic Projections, IMF Technical Notes and Manuals, Sept. 2014. Page 91 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) reliability of transfers from the central government to LGs; improved PFM capacity at the local level resulting in better budget planning and execution, reporting and accounting practices and less leakages; improved administrative capacity at the local level resulting in improved responsiveness of municipal governments to citizens’ concerns, needs and requests; increased mobilization of local taxation revenues; and improved accountability linkages between local decision makers and citizens. Additionally, though some of these infrastructures will be beneficial for the general population and will be targeted toward the most vulnerable populations (women, children and people with disability), they are more directed towards increasing welfare than generating predictable streams of revenues. Environmental and violence cost mitigation are also two factors that have been associated with important economic gains but do not have direct associated flows of revenues. 6. The use of a methodology based on the concept of fiscal multiplier has multiple advantage for this type of situation. First, because the output from the method is in units of the GDP, it is directly measurable and limited to the added-value provided by each activity, meaning that it includes the value of the additional jobs and services provided by the investment while accounting for the opportunity cost. The second advantage of this method is that it makes more straightforward the task of incorporating other indirect economic benefits of the project. For example, while the literature for the impact of less conflict on specific projects is scant, there is abundant study of the aggregate impact of conflict on GDP which can then serve as good approximations and can be incorporated in this framework. 7. To determine the appropriate size of the fiscal multiplier, the IMF proposes a framework for countries where no reliable estimate is available. The IMF recommends the use of their bucket approach which bunches countries into three groups that are likely to have similar multiplier values based on their structural characteristics and then adjusting for specific factors such as monetary policy and types of instrument. The estimate can then be cross-checked with general findings from the literature on other countries. 8. One key aspect of the method from the IMF is that it takes into account the permanency effect of fiscal shocks. In general, model-based and econometric studies find that the output effect of an exogenous fiscal shock vanishes within five years—even if fiscal measures are permanent. The effect does not decline in a linear way but usually has an inverted U shape, with the maximum impact occurring in the second year. Meanwhile, the duration of these effects varies according to several factors: (i) the persistence of the fiscal shock; (ii) the type of fiscal instrument; and (iii) conjunctural factors such as the cyclical position and whether monetary policy responds to the fiscal shock. A fiscal shock at time t would have output effects at time t, t+1, …, t+3. This is illustrated in Table from the IMF (2014) 91. Table A101 Illustration of IMF Multiplier effects 9. For the purpose of this analysis, the multi-year approximation for the fiscal multiplier of Niger is set at (0.6, 0.8, 0.6, 0.3) for the four years of the effect. This considers structural characteristics, such as trade openness, flexible labor 91The IMF (2014) paper defines fiscal multipliers as the measure of the short-term impact of discretionary fiscal policy on output, i.e. the ratio of a change in output to an exogenous change in the fiscal deficit with respect to their baselines. IMF (2014) Fiscal Multipliers: Size, Determinants, and Use in Macroeconomic Projections Page 92 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) markets, spending and revenue inefficiencies, debt levels, etc., of Niger. Developing economies are generally placed in the low-multiplier bucket and IPFs have the highest fiscal multiplies. As LG transfer levels are assumed permanent, the considered fiscal shock is the difference between transferred amounts at time t and t-1, meaning the incremental increase. This offers a conservative and lower bound level for the economic gains from the transfers to LGs. 10. A central assumption of the project is that LGs have a higher productivity on their investments, meaning a lower unit cost. This claim is supported by data comparing local and central unit costs for different projects in Guinea (the Support to Local Governance Project, P167884) and in Mali (Decentralization project, P164561). This means that, for example, a US dollar spent by a LG would have a bigger welfare and economic impact than a US dollar spent by the central government. This higher productivity comes from a lower unit cost of the local projects due to lower levels of leakages as LGs are often more accountable to their beneficiaries, and lower transaction and supervision costs. Due to the lack of available data for Niger, data from Guinea was used to try to measure the difference in productivity at the local and central level. Data for Niger will be collected during project execution Based on the table below taken from a similar project in Guinea, the Support to Local Governance Project, the initial productivity markup used for this economic analysis is 15 percent. This claim is supported by data comparing local and central unit costs for different projects and presented in the table below. In addition to a lower unit cost, better alignment of the investments with the local needs could lead to higher welfare gains. One caveat of using the Guinea data is that the country is more advanced than Niger in their decentralization and therefore their efficiency at the local level might be higher. This possibility is going to be addressed in the sensitivity analysis of this economic analysis. 11. In terms of general macro assumptions, the analysis assumes a market exchange rate fixed at the recent average rate of FCFA 580 for US$1 and a 6 percent discount rate which is standard for a WAEMU country. It is also assumed that these macroeconomic assumptions are to remain constant over the project’s life. Table A10.2 Example of Projects at Local and Central levels in Guinea (Guinean Francs million) Improved LG Offices Health Clinic Elementary School Drilling Well W/toilet, incinerati 3 W/toilet on pit, W/equipment, classrooms no unit and Home & home, water W/Equipme Source Rural Urban and homes equip garbage fence, access and nt for ment pit solar kit, fence teachers water access Compagnie des Bauxites 600 de Guinée Prog. d’Appui aux 404 526 550 448 80.4 47 communautés villageoises 3 Prog. d'appui à la gouvernance 288 360 98.7 des redevances minières Prog. sectoriel 628 pour l'éducation Plan Guinée 448 National Budget 500 550 400 100 of Guinea Page 93 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Project Economic Benefits and Costs 12. Through its activities, the project is expected to have multiple economic benefits that are quantifiable . The expected benefits of the project include: 1) deployment of human and financial resources, 2) improved investment climate in the extractive sector, and 3) mitigation of violence costs. 13. Benefit 1: Deployment of public human and financial resources. The project will contribute to operationalize decentralization. The project will also support the country system by completing the legal framework and procedures on LG PFM and oversight, as well as building the capacity of Niger to train future cohorts of LG civil service. The hypothesis is that the budget executed locally will be: (i) executed at lower cost (unit cost is lower when executed locally); (ii) according to local preferences and needs (less waste, better targeting for poor, and included in participatory process, and hence higher impact); and (iii) invested in all communes, mostly on small infrastructures in both urban and rich areas, which tend to impact poor population first (water points, classrooms in primary school, small road infrastructures, etc.). The estimated amount used for the analysis comes from simulations on public expenditures taken from the BOOST database. Table A10.3: Budget from Targeted Ministries Transferred to LGs (FCFA billion) 2019 2020 2021 2022 2023 2024 Baseline (prediction) (prediction) (prediction) (prediction) (prediction) Amount of Public Expenditure Deployed BASELINE 24.88 25.85 26.82 27.79 28.76 29.73 Share of budget executed at regional, departmental and LG (PROJECT TARGETS) 0.10 0.20 0.30 0.40 0.50 0.50 Amount of Public Expenditure Deployed with Project 24.88 51.71 80.47 111.17 143.82 148.67 Difference 0.00 25.85 53.65 83.38 115.05 118.94 Increment of the difference 25.85 27.79 29.73 31.67 3.88 14. For the purpose of the economic analysis using the fiscal multiplier methodology, the amount of public expenditures that matters is the additional amount of public expenditures spent at the local level rather than at the central level (the difference row) above the previous year’s amount (the increment of the difference row), given that the fiscal multiplier applies to changes in fiscal policy and not to levels. The following table shows the economic gains of the baseline scenario. The present discounted value for the economic gain of the first benefit is therefore US$56.51 million. Table A10.4. Economic Gains from the Transfer of Resources (FCFA billion) 2020 2021 2022 2023 2024 2025 2026 2027 Gain from 2020 Increment 2.33 3.10 2.33 1.16 Gain from 2021 Increment 2.50 3.34 2.50 1.25 Gain from 2022 Increment 2.68 3.57 2.68 1.34 Gain from 2023 Increment 2.85 3.80 2.85 1.43 Gain from 2024 Increment 0.35 0.47 0.35 0.17 Total for the year 2.33 5.60 8.34 10.08 8.08 4.65 1.77 0.17 15. Benefit 2: Improved investment climate in the extractive sector. The approach used in estimating the economic benefit from the mining component of GOLD project is in line with the objective of that component. The objective is to increase Niger’s fiscal space through extractive sector, and job creation by fostering a conducive environment for investors in sustainable mining, enhancing the integration of extractive industries in local economy. 16. The extractive sector’s economic benefits are expected to come from the improvement of its contribution to the Government’s long-term growth objectives. Exploration of extractive resources’ potential improved public sector capacity Page 94 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) to regulate and manage the actors involved, and increased transparency will lead to an augmentation of investment in the extractive sector. 17. Direct returns to the Government will be in the form of fiscal benefits which accrue from (a) increase in revenues from the growth of large-scale mining production; (b) increase in revenues from formalized small-scale mining operations; and (c) increase in household income from improved small-scale mining practices. A secondary effect of the project would be an increase of rural employment and incomes through better performance of small-scale mining, and the broadening of the tax base as local procurement stimulates the creation of jobs and small businesses as local suppliers of goods and services to large-scale mining operations. 18. The table below shows the assumptions that have been made regarding the baseline productions of the two extractive sectors targeted by the project: gold and uranium. The projections are from the IMF in collaboration with the Government from 2019 to 2024. Table A10.5. Predictions on the Productions of Gold and Uranium (at market value, FCFA billion) 2017 2018 2019 2020 2021 2022 2023 2024 Total (baseline) 198.042 147.714 160.202 181.755 188.625 186.607 178.011 198.736 Uranium, (baseline) 169 123 131 134 121 120 80 80 Gold (baseline) 29 24 29 48 68 66 98 119 Total (with project) 198 148 160 182 191 190 184 211 Uranium, (with project) 169 123 131 134 122 121 81 81 Gold (with project) 29 24 29 48 69 68.3 102.9 130.6 Total Increment 0 0 0 0.48 2 3 6 13 19. First, the assumptions made are based on the fact that the project will help in the management of uranium site closure and in the formalization of artisanal mining which will have a positive impact on the production of ASM, especially gold and salt. Second, investing in geodata will increase investment in the sector due to greater interest by exploration firms, due to reduced costs and risks; and will contribute to strengthen the GoN’s capacity to attract and secure more favorable terms with investors. This will increase the production of minerals in general and gold in particular. Lastly, the assumption is that as the ASM will become formal and other new investment in the same sector comes due to the project, the share of mining revenues in total production will become important and more revenues will be collected. 20. The of share of mining revenues and by backward induction the de facto average effective tax rate for the extractives in total production for the period of 2015-2018 was 10 percent. There are three reasons to believe that the effective tax rate will increase based on the project. First, the formalization of the small-scale miners would mean that gold would be formally exported instead of smuggled out. Second these small-scale miners would be paying taxes on their production of which 15 percent is already earmarked for LGs. The ASM formalization will lead to a reduction of their transaction costs of having to operate illicitly such as avoiding patrols, paying fines and paying enablers. Finally, there are additional market opportunities associated with ASM formalization and extension. Based on these observations, we make the assumptions that the effective tax rate will gradually increase from 10 to 20 percent over the course of the project. Table A10.6. Direct Production Revenues and Fiscal Revenues 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Share of mining production in revenues (in %) 7.00 5.67 11.11 10.15 10.20 15.00 18.00 20.00 20.00 20.00 Resource budget revenues from mining due to 0.00 0.00 0.00 0.00 0.00 0.07 0.35 0.64 1.14 2.53 the project, CFAF billion Increment of budget revenues 0.07 0.28 0.29 0.50 1.39 Gains from production due to the project 0.00 0.00 0.00 0.00 0.00 0.40 1.61 2.55 4.56 10.14 Page 95 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) 21. The increase in production revenue is a direct economic gain for the economy and, additionally, some of it will lead to an increase in fiscal space for the Government. The effective tax rate allows to determine the proportion of the new extractive revenues to which we can also apply a fiscal multiplier effect. We assume that 100 percent of the new taxes will be converted into public spending, the reason being that a 15 percent of the revenues is already earmarked for LGs. These LGs do not have the possibility to borrow and therefore do not have debts toward which the new revenues could go to and they are underfunded, leading to a high spending propensity. In this table we apply the central multiplier because the conversion of the 15 percent into local expenditure was done in the previous section using the difference of multiplier method. Combining the gains of both the direct production increase and the additional public spending for the second benefit of the mining component leads to a present-discounted economic benefit of US$33.47 million. Table A10.7 Economic Gains from transfer of resources at the local level 2020 2021 2022 2023 2024 2025 2026 2027 Gain from 2020 Increment 0.04 0.06 0.04 0.02 Gain from 2021 Increment 0.17 0.22 0.17 0.08 Gain from 2022 Increment 0.2 0.2 0.2 0.1 Gain from 2023 Increment 0.3 0.4 0.3 0.2 Gain from 2024 Increment 0.8 1.1 0.8 0.4 Total gain from increased fiscal revenues 0.04 0.23 0.44 0.72 1.49 1.50 0.99 0.42 22. Benefit 3: Mitigation of the risk of fragility and violence, and their consequences on poverty, service delivery, social inclusion and livelihood. Being an RMR financed IPF, mitigation of conflict risk pervades the GOLD project’s theory of change and is an expected outcome of the project. According to the Pathways for Peace report, it is clear that violent conflicts exact an incalculably high cost in direct and indirect damage to societies, economies, and people. It kills and injures combatants and civilians alike and inflicts insidious damage to bodies, minds, and communities that can halt human and economic development for many years. long-term effects on the countries involved, and on their neighbors, include costs such as reduced economic growth, minimized trade and investment, and the added cost of reconstruction. 23. The consequences are hugely negative for fragile contexts. Mavriqi (2016)92 finds that countries experiencing violent conflict suffer a reduction in annual GDP growth of 2–4 percent and up to 8.4 percent if the conflict is severe. On average, countries that border a high-intensity conflict zone experience an annual decline of 1.4 percentage points in their GDP and an acceleration in inflation of 1.7 percentage points.93 For Hoeffler (2017)94, the cost of violence can be understood as the sum of the cost to (1) the individual victim (2) to their family (3) their immediate community and (4) to society at large. Some of the costs of violence are easier to express in monetary terms than others. The medical care, lost income and criminal justice system cost are relatively straightforward to measure and are termed tangible costs. The intangible costs of pain, suffering, decreased quality of life and psychological distress are more difficult to monetize. The author estimates that for Sub-Saharan Africa, the cost of collective violence is approximately 0.63 percent of GDP and the cost of interpersonal violence at 3.68 percent of GDP. 24. The Global Peace Index Report95 directly addresses the idea of the fiscal multiplier in conjuncture with fragility: “the multiplier effect’s (the reason that a dollar of expenditure can create more than a dollar of economic activity) exact magnitude is difficult to measure, but it is likely to be particularly high in the case of expenditure related to containing violence. For instance, if a community were to become more peaceful, individuals would spend less time and resources protecting themselves against violence. Because of this decrease in violence there are likely to be substantial flow-on 92 Mavriqi, R. R. 2016. “Global Economic Burden of Conflict.” Unpublished manuscript. 93 Röther, B., G. Pierre, D. Lombardo, R. Herrala, P. Toffano, E. Roos, G. Auclair, and K. Manasseh. 2016. “The Economic Impact of Conflicts and the Refugee Crisis in the Middle East and North Africa.” IMF Staff Discussion Note SDN/16/08, International Monetary Fund, Washington, DC. 94 Hoeffler, A., 2017, “What are the costs of violence?”, Forthcoming in Politics, Philosophy & Economics. 95 Global Peace Index 2018, Institute for Economics and Peace. Page 96 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) effects for the wider economy, as money is diverted towards more productive areas such as health, business investment, education and infrastructure.” The report estimates the cost of violence for Niger at 11 percent of GDP. 25. Niger is exposed to multiple conflict and fragility risks, which stem from a combination of deep-rooted structural causes and short-term drivers. The project will contribute to mitigate these risks by contributing to improving: (i) a positive state presence across the country, service delivery, state capacity to prevent and mediate conflict at local level and foster participation; (ii) extractive industries’ management; and (iii) livelihood of artisanal miners, especially women and youth. The project supports activities to increase civic engagement and the inclusion of citizens in decision-making. 26. In line with RMR’s objectives, the project will also support capacity strengthening of local authorities on conflict management and social inclusion. The objective will be to strengthen local systems and capacities for peace, aimed at supporting the inclusion of conflict prevention issues into local processes and social inclusion. The following areas for capacity-building activities for LG and deconcentrated services in the targeted regions on (i) conflict management, prevention and response; (ii) communication capacities of local civil servants to give LGs the tools to better communicate to citizens on FCV related issues; (iii) social inclusion, transparency and participatory approach in local governance. 27. The project will also support mitigating risk in extractive sector: ASM, mining closure strategy, jobs and EITI. The project will (i) support ASM sound management to make it a driver of resilience, through capacity-building to artisanal miners in environment and social good practices and in business development; (ii) build the capacity of public oversight of ASM which will also mitigate the risk for public decision affecting ASM, as in the closing of the ASM sites in the Djado in 2017; (iii) support the government and LG in anticipating the social impact of Arlit mining closure; (iv) contribute to build trust between citizens, civil society and the government through transparency in extractives (EITI). 28. Conflict risk monitoring & early warning system. GOLD project will contribute to the national conflict risk monitoring system by providing TA to CNESS to set up the ICT-based integrated conflict risk-related information management system. Also, the TA to the Min. of Interior to set up an ICT-based integrated information management system on LG performance will feed into the conflict risk monitoring system. In parallel, the Niger RMR Bank-Executed Trust Fund will feed the policy dialogue with the GoN to (i) provide recommendations on a harmonized early warning and response system; (ii) generate consensus at the client level and among partners; and (iii) clarify leadership. While the GoN has committed to peacebuilding, the limited integration and harmonization of initiatives is a challenge. 29. Based on the literature and the expected impact of these activities, the economic analysis uses as a baseline hypothesis the reduction of the risk of violence by 1 percent. The project could reduce the cost of violence by 0.11 percent of GDP on an annual basis, out of the 11 percent estimated by the Global Peace Report. Based on these assumptions, the decrease of violence risk by 1 percent GDP savings lead to an economic gain of US$58.03 million. Table A10.8. Savings from conflict mitigation in FCFA billion 2020 2021 2022 2023 2024 GDP of Niger96 6056.00 6527.00 7402.00 8011.00 8721.00 Savings from Conflict mitigation 6.6616 7.1797 8.1422 8.8121 9.5931 Summary of the Baseline Analysis 30. Based on the assumptions made we can estimate the economic gain from the transfers of the extractive revenues to the LG. When discounted and converted into US$ the economic gains from the project are approximately US$49.02 million and an IRR of 22.5 percent. We believe this measure to be conservative for many reasons. First, the residual value was mostly ignored to account for a worst-case scenario that the reforms take longer to take effect and because it is hard to predict price and conflict evolution over a longer time horizon. Second, this economic analysis can only take into account 96 At current prices, sourced from IMF Article IV 2019. Page 97 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) the measurable impacts which is only a small fraction of the expected impact of this structural project. Table A10.9. Summary of the baseline scenario Cost of project -100.00 Gains from transfers of resources at the local level 56.51 Gains from development of the extractive sector 33.47 Gains from mitigation of conflict risk 58.03 Total 148.02 IRR 22.50% Sensitivity Analysis 31. For the analysis of the sensitivity of the results to the assumptions made, four adverse scenarios are evaluated. The first scenario assesses the case where the local tax multiplier does not end up being as good as expected. The baseline scenario considered a productivity markup of 15 percent of the local multiplier over the central multiplier. In this first scenario we therefore assume that the markup is only 5 percent which leads to a reduction of the NPV from US$48.02 million to US$10.35 million. The second scenario evaluates a case where the extractive revenues is a 1/3 of what is expected. This assumption leads to a NPV of US$25.71 million. The third scenario evaluates the case where the project fails to mitigate as much fragility and violence risks as expected, meaning a decrease of the cost of violence by 0.5 percent of 11 percent instead of 1 percent of 11 percent. In that case, the NPV is decreased from US$48.02 million to US$19 million. For all three of these adverse the NPV and the IRR remain positive. A final case combines all scenarios into a worst- case scenario. The NPV become negative and the IRR drops below the discounting rate only in the worst-case scenario, suggesting a robust economic profitability of the project. The results are presented in the table below. Table A10.10. Sensitivity Analysis Baseline Scenario 1 Scenario 2 Scenario 3 Worst Case Cost of Project -100.00 -100.00 -100.00 -100.00 -100.00 Decentralization Economic Gains 56.51 18.84 56.51 56.51 18.84 Mines Economic Gains 33.47 33.47 11.16 33.47 11.16 Violence mitigation Economic Gains 58.03 58.03 58.03 29.02 29.02 NPV in US$ (net of project cost) 48.02 10.35 25.71 19.00 -40.98 IRR 22.5% 4.3% 12.4% 10.5% -20.8% Conclusion 32. From the above analysis, it is clear that when the project’s benefits are compared with its associated costs the NPV and IRR show positive outcomes. This means that the project’s investments are economically viable. When discounted and converted into US$ the economic gains from the project are approximately US$49.02 million and the IRR to 22.5 percent. We believe this measure to be conservative for many reasons. First, the residual value was mostly ignored to account for a worst-case scenario that the reforms take longer to take effect and because it is hard to predict price and conflict evolution over a longer time horizon. Second, this economic analysis can only take into account the measurable impacts which is only a small fraction of the expected impact of this structural project. Also, many of the activities of the project are also expected to have an impact on the social welfare of the beneficiaries and to have second order effects, both of which are difficult to translate into monetary value. These elements include the benefits of citizen engagement, increased economic opportunities for women, the stabilizing impact of giving jobs to idle youth, etc. Furthermore, violence has humanitarian and spillover costs that were not included in the analysis. A sensitivity analysis conducted to test the robustness of the analysis regarding choice of analysis assumptions also showed positive outcomes when adverse scenarios are considered. Page 98 of 99 The World Bank Governance of Extractives for Local Development Project (P164271) Details on Extractives Calculations Table A10.11. Changes in Volumes with and Without Project 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Production in volumes Uranium, tons (baseline) 4,334 2,924 3,525 2,870 3,054 2,983 2,689 2,733 1,819 1,819 Gold, kg (baseline) 1,516 1,517 1,518 1,519 1,520 2,160 2,940 2,885 3,919 4,748 Uranium, tons (with the project) 4,334 2,924 3,525 2,870 3,054 2,983 2,702 2,760 1,837 1,837 Gold, kg (with the project) 1,516 1,517 1,518 1,519 1,520 2,182 2,999 2,972 4,115 5,223 Uranium growth due to the project) 0 0 0 0 0 0 0.5 1.0 1.0 1.0 Gold growth due to the project 0 0 0 0 0 1.0 2.0 3.0 5.0 10.0 Table A10.12. Assumptions on Prices for Uranium and Gold 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Nominal GDP, CFAF billion 4,289 4,511 4,726 5,163 5,571 6,056 6,527 7,402 8,011 8,721 Price, uranium international, 1000 CFAF/Kg 22 16 13 11 17 17 17 17 17 17 Export price, uranium for Niger, 1000 CFAF/Kg 56 61 48 43 43 45 45 44 44 44 Export price, gold 1000 CFAF/gram 19 22 19 16 19 22 23 23 25 25 Page 99 of 99