The World Bank Ghana Economic Transformation Project (P166539) REPORT NO.: RES43132 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF GHANA ECONOMIC TRANSFORMATION PROJECT APPROVED ON JULY 2, 2019 TO MINISTRY OF FINANCE FINANCE, COMPETITIVENESS AND INNOVATION AFRICA WEST Regional Vice President: Ousmane Diagana Country Director: Pierre Frank Laporte Regional Director: Francisco Galrao Carneiro Practice Manager/Manager: Rashmi Shankar Task Team Leader(s): Thomas A. Vis, Farah Dib The World Bank Ghana Economic Transformation Project (P166539) ABBREVIATIONS AND ACRONYMS COVID-19 Coronavirus disease IDA International Development Association MOF Ministry of Finance PCU Project Coordination Unit SME Small and Medium Enterprise TOR Terms of Reference The World Bank Ghana Economic Transformation Project (P166539) BASIC DATA Product Information Project ID Financing Instrument P166539 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 02-Jul-2019 30-Nov-2025 Organizations Borrower Responsible Agency Ghana Investment Promotion Center,Ministry of Trade Ministry of Finance and Industry,Ministry of Business Development Project Development Objective (PDO) Original PDO The Project Development Objective is to promote private investments and firm growth in non-resource based sectors. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-64650 02-Jul-2019 17-Jan-2020 30-Nov-2025 200.00 0 196.61 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Ghana Economic Transformation Project (P166539) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Project was approved on July 2, 2019 and is not yet effective. The Financing Agreement between the International Development Association (IDA) and the Ministry of Finance (MOF) was signed on January 17, 2020. However, the effectiveness deadline had to be extended to August 31, 2020, as only two of the four effectiveness conditions had been met by the initial deadline. Currently, three effectiveness conditions have been met, and the fourth one is close to being met. 2. While the Project is not yet effective, implementation has begun, in preparation for effectiveness. Under the Project Preparation Advance, a few activities are already underway, and others are being procured. The initial 18-month work plan and budget for the Project has been prepared and is being finalized, which will then feed into the procurement plan. In some cases, Terms of Reference (TOR) for various activities have been reviewed and cleared by IDA. In particular, one of the first activities to be launched once effectiveness is declared is the Small and Medium Enterprise (SME) grant and technical assistance program, implemented by the National Board for Small-Scale Industries, which will play a key role in helping SMEs recover from the COVID-19 crisis. B. Rationale for Restructuring 3. The remaining effectiveness condition yet to be met is the staffing of the Project Coordination Unit (PCU). According to the Financing Agreement, the PCU should be composed of, at least, a Project coordinator, a procurement specialist, a financial management specialist, an environmental and social specialist, and technical specialists with expertise in the areas to be supported by the Project, all to be recruited on a competitive basis and with qualifications, experience and TOR satisfactory to IDA. The status of these recruitments is as follows: (a) Candidates have been competitively selected for the Project coordinator, procurement specialist, environmental and social specialist, and Component 3 technical specialist positions, and their contracts with MOF should be signed before August 28, 2020. (b) For the financial management specialist, MOF suggested assigning two accountants from the Controller and Accountant General’s Department to the PCU; IDA has reviewed their resumes and expressed its agreement with this arrangement. (c) Finally, the Components 1 and 2 specialists positions had to be re-advertised, after a first round failed to attract enough qualified candidates. Interviews for these remaining positions have been conducted, but the candidates selected do not meet the requirement of having expertise in the areas to be supported by the Project, namely investment climate and industrial development. IDA has recommended that these positions be advertised once more after a revision of their TOR and MOF’s recruitment strategy. 4. In order to declare effectiveness by August 31, 2020, the Financing Agreement has to be amended to allow more flexibility in the PCU staffing. The Financing Agreement will thus be amended to allow for the financial management specialist to be assigned to the PCU rather than be competitively recruited; and the recruitment of the technical specialists will be be made a dated covenant (within three months of effectiveness) rather than a condition of effectiveness, to allow for the possibility of re-advertising the positions of Components 1 and 2 specialists. The World Bank Ghana Economic Transformation Project (P166539) II. DESCRIPTION OF PROPOSED CHANGES 5. The proposed changes to the Financing Agreement are as follows: (a) Section I.A.3 of Schedule 2, paragraph (a) will be revised as such: “The Recipient shall establish and maintain throughout Project implementation a Project Co-ordination Unit (“PCU”) with a composition, mandate and resources satisfactory to the Association, including without limitation (i) a Project coordinator, (ii) a procurement specialist, (iii) a financial management specialist, and (iv) an environmental and social specialist, all to be recruited on a competitive basis or assigned to the Project, and with qualifications, experience and terms of reference satisfactory to the Association”, removing the reference to technical specialists. (b) A new legal covenant will be added to Section I.A.3 of Schedule 2 which will read as such: “The Recipient shall, not later than three (3) months from the Effective Date recruit, and thereafter maintain throughout the Project Implementation technical specialists with expertise in the areas to be supported by the Project with experience, qualifications and terms of reference acceptable to the Association.” III. SUMMARY OF CHANGES Changed Not Changed Legal Covenants ✔ Other Change(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Institutional Arrangements ✔ The World Bank Ghana Economic Transformation Project (P166539) Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action Schedule 2 Section I.A.1(a) of FA. The Recipient shall establish, within one (1) month after the Effective Date, and thereafter maintain at all times IDA-64650 during Project implementation, a Project Oversight Not yet due No Change Committee (“POC”), with a composition, mandate and resources satisfactory to the Association to provide policy guidance and oversight for the Project. Schedule 2 Section I.A.2(a) of FA. The Recipient shall establish, within one (1) month after the Effective Date, and maintain throughout Project Implementation, a Technical Committee for the Project, IDA-64650 with a composition, mandate and resources satisfactory Not yet due No Change to the Association to be responsible for inter alia providing strategic and technical guidance on technical implementation of the Project in accordance with this Agreement and the PIM. Schedule 2 Section I.A.3(b) of FA. IDA-64650 The Recipient shall, not later than three (3) months Not yet due No Change from the Effective Date recruit, and thereafter maintain The World Bank Ghana Economic Transformation Project (P166539) throughout the Project Implementation a monitoring and evaluation specialist with experience, qualifications and terms of reference acceptable to the Association. Schedule 2 Section I.A.3(d) of FA. The Recipient shall, within three (3) months from the Effective Date, recruit, and thereafter maintain during IDA-64650 the implementation of the Project, an independent Not yet due No Change external auditor for the Project, with qualifications, experience and under terms of reference acceptable to the Association. Schedule 2 Section I.A.5.1(a) of FA. The Recipient shall cause VCTF to carry out Parts 3.3(a), 3.3(b) and 3.3(c) of the Project (“VCTF Parts”) and to this end, shall cause VCTF to: (a) not later than one (1) month after the Effective Date, or any such later date as agreed with the Association, establish, and thereafter maintain, IDA-64650 Not yet due No Change throughout Project implementation, the Fund Management Teams, with composition, mandate, governance and management structure and resources satisfactory to the Association, in charge of carrying out the implementation of the Part 3.3(a) and 3.3(b), respectively, of the Project. IDA-64650 Schedule 2 Section I.A.5.2(c)(ii) of FA. Not yet due No Change The Recipient shall ensure that VCTF shall: enter into an agreement with SCF and SIF respectively (“SCF Agreement” and “SIF Agreement”, respectively) under terms and conditions acceptable to the Association, as set forth in the PIM, and including, inter alia, the obligation of SCF and SIF to: (ii) not later than one (1) month from the selection of their respective BoD, or such later date as agreed with the Association, cause their respective BoD to select and maintain an Investment Committee in form and with functions, composition, resources, terms of reference and qualifications acceptable to the Association and as further described in the PIM. To this end, without limiting the generality of the foregoing, the Investment Committee shall (A) be authorized to The World Bank Ghana Economic Transformation Project (P166539) make all decisions relating to the SCF Investments and SIF Investment and SIF Direct Investments, respectively, and (B) be composed of independent experts with relevant expertise in the area of venture capital financing and entrepreneurship in the Recipient’s territory, as further defined in the PIM. Schedule 2 Section I.G.1 of FA. No later than ninety (90) days after the Effective Date, the Recipient shall recruit on a competitive basis one or more organizations with experience, independence, integrity and capacity and under terms of reference IDA-64650 Not yet due No Change acceptable to the Association (“Independent Verification Agent(s)” or “IVA”) to verify the data and other evidence supporting the achievement of one or more DLI as set forth in the DLI Verification Protocol and recommend corresponding payments to be made. Schedule 2 Section I.A.3(e) of FA. The Recipient shall, not later than three (3) months from the Effective Date recruit, and thereafter maintain throughout the Project IDA-64650 Implementation technical specialists with expertise in Not yet due New the areas to be supported by the Project with experience, qualifications and terms of reference . acceptable to the Association.