FOR OFFICIAL USE ONLY Report No: PAD3191 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF US$ 15 MILLION TO GRENADA FOR A DIGITAL GOVERNMENT FOR RESILIENCE PROJECT August 8, 2019 Governance Global Practice Latin America And Caribbean 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 {July 31, 2019}) Eastern Caribbean Currency Unit = Dollar USD 1.00 = XCD 2.70 FISCAL YEAR January 1 - December 31 Regional Vice President: Axel van Trotsenburg Country Director: Tahseen Sayed Khan Global Practice Director: Edward Olowo-Okere Practice Manager: Adrian Fozzard, Jane Treadwell Task Team Leader(s): Leah April, Onur Erdem, Raman V. Krishnan ABBREVIATIONS AND ACRONYMS AGD Accountant General’s Department CARCIP Caribbean Regional Communications Infrastructure Program CBA Cost-Benefit Analysis CIO Chief Information Officer CPU Central Procurement Unit DOI Department of Implementation DPA Department of Public Administration DTA Digital Transformation Agency EA Enterprise Architecture ESCP Environmental and Social Commitment Plan FM Financial Management GDP Gross Domestic Product GOG Government of Grenada HSAP Homegrown Structural Adjustment Program ICT Information and Communication Technologies IDA International Development Association IMF International Monetary Fund IRD Inland Revenue Department KPI Key Performance Indicator M&E Monitoring and Evaluation MOF Ministry of Finance MOIID Ministry of Infrastructure Development, Public Utilities, Energy, Transport and Implementation NPV Net Present Value OECS Organisation of Eastern Caribbean States PAU Project Accounts Unit PCU Project Coordination Unit PDO Project Development Objective POC Public Oversight Committee POM Project Operations Manual PPSD Project Procurement Strategy Document PS Permanent Secretary PSMRS Public Sector Management Reform Strategy RDVRP Regional Disaster Vulnerability Reduction Project RFP Request For Proposals RPS Regional Partnership Strategy SRD Systematic Regional Diagnostic VAT Value-Added Tax WBG World Bank Group WoG Whole-of-Government The World Bank Digital Government for Resilience (P167588) TABLE OF CONTENTS DATASHEET ................................................................................. Error! Bookmark not defined. I. STRATEGIC CONTEXT ...................................................................................................... 7 A. Country Context................................................................................................................................ 7 B. Sectoral and Institutional Context .................................................................................................... 8 C. Relevance to Higher Level Objectives............................................................................................... 9 II. PROJECT DESCRIPTION.................................................................................................. 10 A. Project Development Objective ..................................................................................................... 10 B. Project Components ....................................................................................................................... 10 C. Project Beneficiaries ....................................................................................................................... 15 D. Results Chain .................................................................................................................................. 16 E. Rationale for Bank Involvement and Role of Partners ................................................................... 16 F. Lessons Learned and Reflected in the Project Design .................................................................... 17 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 17 A. Institutional and Implementation Arrangements .......................................................................... 17 C. Sustainability................................................................................................................................... 18 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 18 A. Economic Analysis .......................................................................................................................... 18 B. Fiduciary.......................................................................................................................................... 19 C. Legal Operational Policies ............................................................................................................... 20 D. Environmental and Social ............................................................................................................... 20 V. GRIEVANCE REDRESS SERVICES ..................................................................................... 22 VI. KEY RISKS ..................................................................................................................... 22 I. RESULTS FRAMEWORK AND MONITORING ................................................................... 23 ANNEX 1: Detailed Project Description .......................................................................... 31 ANNEX 2: Implementation Arrangements ..................................................................... 39 ANNEX 3: Economic Analysis ......................................................................................... 45 The World Bank Digital Government for Resilience (P167588) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Grenada Digital Government for Resilience Project ID Financing Instrument Environmental and Social Risk Classification Investment Project P167588 Moderate Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s) [ ] Disbursement-linked Indicators (DLIs) [✓] 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) Expected Approval Date Expected Closing Date 29-Aug-2019 30-Sep-2024 Bank/IFC Collaboration No Proposed Development Objective(s) To enhance the efficiency, usage and resilience of selected government digital services. Components Component Name Cost (US$, millions) Page 1 of 47 The World Bank Digital Government for Resilience (P167588) Developing the enabling environment to modernize service delivery 5.90 Leveraging digital technologies to deliver selected services 5.00 Strengthening institutions and managing change for digital literacy and inclusion 4.10 Organizations Borrower: Grenada Implementing Agency: Ministry of Infrastructure Development, Public Utilities, Energy, Transport and Implementation PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 15.00 Total Financing 15.00 of which IBRD/IDA 15.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 15.00 IDA Credit 15.00 IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount National PBA 15.00 0.00 0.00 15.00 Total 15.00 0.00 0.00 15.00 Expected Disbursements (in US$, Millions) WB Fiscal Year 2019 2020 2021 2022 2023 2024 2025 Annual 0.00 0.74 1.15 2.02 3.41 4.97 2.72 Page 2 of 47 The World Bank Digital Government for Resilience (P167588) Cumulative 0.00 0.74 1.89 3.91 7.31 12.28 15.00 INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Governance Digital Development Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of Yes country gaps identified through SCD and CPF b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or Yes men's empowerment c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ Moderate 2. Macroeconomic ⚫ Moderate 3. Sector Strategies and Policies ⚫ Moderate 4. Technical Design of Project or Program ⚫ Substantial 5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial 6. Fiduciary ⚫ Substantial 7. Environment and Social ⚫ Moderate 8. Stakeholders ⚫ Moderate 9. Other Page 3 of 47 The World Bank Digital Government for Resilience (P167588) 10. Overall ⚫ Substantial 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 Not Currently Relevant Biodiversity Conservation and Sustainable Management of Living Natural Not Currently 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). Page 4 of 47 The World Bank Digital Government for Resilience (P167588) Legal Covenants Sections and Description Schedule 2, Section I.A.2. The Recipient, through the MOIID, not later than 30 days after the Effective Date, shall designate a Project manager to manage the implementation of the Project, including the coordination and collaboration among the MOIID, the MOF and any other agencies of the Recipient, with qualifications, terms of reference, and under terms and conditions acceptable to the Association and as set forth in the Project Operations Manual. Sections and Description Schedule 2, Section I.A.3. For the purpose of assisting with carrying out the Project and without limitation to the provisions of Section 3.01 of this Agreement the Recipient, through the MOIID, not later than 90 days after the Effective Date, shall hire a Project Management and Technical Advisory Firm in accordance with Section 5.13 of the General Conditions, to assist with Project implementation and provide advisory services to the Recipient, with qualifications, terms of reference, and under terms and conditions acceptable to the Association and as further described in the Project Operations Manual. Sections and Description Schedule 2, Section I.A.4. The Recipient, through the MOIID, not later than 30 days after the Effective Date, shall establish and thereafter operate and maintain a Project Oversight Committee throughout the implementation of the Project to monitor Project implementation and provide guidance on policy and institutional matters, with a composition and terms of reference satisfactory to the Association, as further described in the Project Operations Manual. Sections and Description Schedule 2, Section I.A.5. The Recipient, through the PMM, not later than 30 days after the Effective Date, shall establish and thereafter operate and maintain a Technical Committee throughout the implementation of the Project to assist with the technical oversight of the Project, with a composition and terms of reference satisfactory to the Association, as further described in the Project Operations Manual. Sections and Description Schedule 2, Section I.A.6. The Recipient, through the MOIID, not later than 60 days after the Effective Date, shall hire an environmental and social specialist in accordance with Section 5.13 of the General Conditions, with qualifications, terms of reference, and under terms and conditions acceptable to the Association and as further described in the Project Operations Manual. Sections and Description Schedule 2, Section I.B.1. The Recipient, through the MOIID and the MOF, shall carry out the Project in accordance with the provisions of a manual (the “Project Operations Manual”) acceptable to the Association, which shall include, inter alia: (a) a detailed description of Project activities and institutional arrangements for the Project; (b) the Project administrative, accounting, auditing, reporting, financial (including cash flow aspects in relation thereto), procurement and disbursement procedures; (c) the monitoring indicators for the Project; (d) the institutional and administrative mechanisms established to ensure inter-institutional coordination, including the roles and responsibilities of the MOIID, the MOF and the PMM in the implementation of the Project; and (e) principles applicable to technical assistance to ensure consistency with the Environmental and Social Standards. Page 5 of 47 The World Bank Digital Government for Resilience (P167588) Sections and Description Schedule 2, Section II. The Recipient shall furnish to the Association each Project Report not later than one month after the end of each calendar semester, covering the calendar semester. Sections and Description Schedule 2, Section I.C.1. The Recipient, through the MOIID, shall ensure that the Project is carried out in accordance with the Environmental and Social Standards, in a manner acceptable to the Association. Sections and Description Schedule 2, Section I.C.5. The Recipient, through the MOIID, shall maintain and publicize the availability of a grievance mechanism, in form and substance satisfactory to the Association, to hear and determine fairly and in good faith all complaints raised in relation to the Project, and take all measures necessary to implement the determinations made by such mechanism in a manner satisfactory to the Association. Conditions Type Description Effectiveness The Recipient, through the MOIID and the MOF, shall have adopted the Project Operations Manual in a form and manner acceptable to the Association. Type Description Effectiveness The Recipient, through the MOIID, shall have adopted the Labor Management Procedures in a manner acceptable to the Association. Page 6 of 47 The World Bank Digital Government for Resilience (P167588) I. STRATEGIC CONTEXT A. Country Context 1. Grenada is a small island economy of approximately 110,000 inhabitants. The country is highly vulnerable to climate change, natural disasters, volatile terms of trade, as well as economic downturns in external markets that impact tourism and foreign direct investment. These factors reinforce each other: as economic activity diminishes in the aftermath of a natural disaster, the cost of reconstruction imposes a direct fiscal burden, which limits budgets available for long-term investments in human capital, resilience and economic growth. 2. Estimates of average annual loss in Grenada due to natural disasters are the highest in the world at 10.8 percent per year between 1994 and 2013.1 Considered the worst hurricane in nearly 50 years, Hurricane Ivan caused widespread damage in Grenada in 2004, resulting in damages to 90 percent of the nation’s housing stock and losses amounting to 200 percent of GDP. The poverty rate increased from 32.1 to 37.7 percent between 1998 and 2008 exacerbated by the impacts of Hurricane Ivan and Hurricane Emily the following year in 2005 on the economy and socio-economic wellbeing. The collapse in external demand in the wake of the global financial crisis in 2008 further contributed to a protracted recession through 2012. Real GDP contracted by an average of 1.9 percent per year during this period. During the same period, unemployment rose sharply from 24.9 percent to 32.2 percent, hampering progress in overall poverty reduction. The combination of economic losses due to natural disasters, slow growth, limited private sector dynamism, and a sustained pro-cyclical fiscal policy stance led to rising public sector debt and expanding fiscal deficit. 3. The macroeconomic and structural policies that the government has implemented since 2012 have put Grenada on a path towards fiscal resilience. In 2013, with support from the World Bank Group (WBG), the International Monetary Fund (IMF), and the Caribbean Development Bank, the Government of Grenada (GOG) developed the Homegrown Structural Adjustment Program (HSAP), which put the country back on a path of recovery. Fiscal responsibility legislation and tax policy reforms have strengthened the macroeconomic policy environment. 4. Underpinned by fiscal rules capping expenditure growth and the public wage bill, the improved macroeconomic policy framework also included debt restructuring and a medium-term debt management strategy targeting a public debt to GDP ratio of 55 percent. The reform program has contributed to economic growth, which has averaged 5.5 percent since 2014 and resulted in fiscal surpluses since 2016. Increased economic activity in construction, tourism, and transport have been the key sectors driving growth. The strengthening economy, successful debt restructuring and continued fiscal discipline have led to a reduction of nearly 40 percentage points in the country’s public debt to GDP ratio since 2014, to 63 percent in 2018.2 The successful renegotiation of debt obligations with the insertion of hurricane clauses and lengthening of maturities has supported the positive fiscal outlook.3 The current account deficit is estimated to have widened in 2018 for the second consecutive year to 7.4 percent of GDP. Foreign direct investment inflows have consistently been above 8 percent of GDP since 2015 as conditions for private investment improved. International reserves are adequate, inflation is low and stable, and the banking sector remains sound. 5. Sustaining economic growth and development in Grenada will require the country to improve its productivity and competitiveness in key sectors by adapting to the digital era. It also will require the country to continue building the fiscal, financial, environmental, socio-economic, and institutional resilience necessary for adapting to climate change. The rise of digital technologies and the digital economy offers a unique opportunity for Grenada to unlock new pathways 1 Sönke Kreft, et al, “Global Climate Risk Index 2015”, Germanwatch, November 2014. 2 GoG 2019 Budget Statement November 2018. 3 The hurricane clause provides for automatic liquidity relief from debt servicing in the event of a qualifying disaster. Page 7 of 47 The World Bank Digital Government for Resilience (P167588) for economic growth, job creation and the delivery of public services, as well as to enhance the resilience of its institutions by embracing technologies that support business continuity. B. Sectoral and Institutional Context 6. The regional Digital Economy Moonshot Initiative in the Eastern Caribbean, a collaboration between the WBG and the Eastern Caribbean Central Bank, seeks to facilitate the region’s transition to a digital economy. This initiative will accelerate digital transformation in the region by supporting universal access to broadband infrastructure and digital services for a more inclusive digital economy. The initiative is anchored in strategies focusing on: investments in digital infrastructure, e-government, and digital finance; creation of digital platforms such as unique digital identification for citizens; and the improvement of digital skills and digital entrepreneurship. An early adopter of digital economy principles, Grenada joined the Caribbean Regional Communications Infrastructure Program (CARCIP) in 2012 to build the physical infrastructure to support the development of a digital economy. CARCIP is excepted to incrementally expand access to ICT across the country by providing fiberoptic connectivity to government buildings, schools, health centers, police stations and other selected users by the end of 2019. CARCIP intends to provide the GOG with the adequate broadband, physical, and cloud infrastructure for the government to provide reliable and accessible electronic services to citizens and businesses. 7. The public sector in Grenada operates in institutional silos and with outdated information and communication technology (ICT) infrastructure. Core administrative functions are constrained by the reliance on manual systems, human resource capacity, limited strategic planning, and weak information management. Systems, processes and service delivery channels are fragmented across agencies. 8. Lack of institutional arrangements and foundational digital infrastructure enabling workflow and exchange of information across public sector institutions significantly limits the scope of public services that can be provided electronically to citizens and businesses. Foundational integrated digital infrastructure includes: identity management; electronic payments; recognition and validation of electronic records; and organized, systematic and open access to spatial and other non-confidential data. There are multiple identity systems for different government services such as the births and deaths registry, the electoral card system, and the passport issuance platform – none of which interface with each other. Government payment receipts are not regularly accompanied by identification, which introduces the risk of money laundering. While most payments to GOG are by check, the use of credit and debit cards is increasing exponentially. Card payments have proven difficult to reconcile and represent unique risks for which the GOG is not entirely prepared. In the absence of an electronic platform facilitating an integrated approach that enables transactions with the government, the payment ecosystem remains inefficient and vulnerable to fraud.4 9. Services such as civil registry and tax administration, which impact large segments of the population, are significantly hampered by inefficient procedures and obsolete ICT systems. Most payments for services such as birth certificates are made manually, take an average of two days to process, and require physical presence, which puts those who live outside of the capital at a significant disadvantage. Birth certificates are required for many citizen activities such as opening a bank account, school registration and voting for elections – approximately 60 such transactions are processed daily at the civil registry. Birth certificate records are kept on file in paper, which means that citizens may have to apply for a birth certificate multiple times in the same year. 10. SIGTAS, the tax administration information system, uses a document-based platform that does not seamlessly accommodate transactional and customer-centered service delivery. SIGTAS does not allow for an efficient processing 4A comprehensive assessment of the national payment system architecture was performed during project preparation and results presented to GOG in a Government Payments Assessment Report, August 2018. Page 8 of 47 The World Bank Digital Government for Resilience (P167588) of tax returns – it takes an average of three months for taxpayers to receive their assessment for personal income tax and an average of one month for value-added tax (VAT) – after returns are filed on paper. The tax system has limited controls in place to detect multiple entries for taxpayer registration pertaining to property taxes. Processing of refunds is a time-consuming process due to the largely manual processing and the subsequent preparation of the payment to the taxpayer, which can take from one to three months. According to the 2019 World Bank Doing Business Report, Grenada ranks 142 out of 190 countries on ease of paying taxes for businesses: a typical medium-size business performs 42 tax payment and contribution transactions per year and spends a total of 140 hours on these transactions. 11. The challenges the GOG faces in establishing the foundations for digital services are compounded by the recurrent loss of administrative data and public sector functionality in the aftermath of natural disasters. Climate change projections for Grenada predict an increase in average annual temperature, reduced average annual rainfall, potential for an increase in the intensity of tropical storms and increased sea surface temperatures, all of which are expected to lead to increased occurrences of extreme weather events. Since most of the public and private infrastructure in Grenada, including government facilities, are located on or near the coast, critical government information assets (such as archives and records) are lost and core public administration services (such as vendor payments and revenue administration) collapse in the event of a disaster. This failure interrupts the continuity of public service delivery and limits the ability of the government to respond to emergencies as well as facilitate rapid recovery and reconstruction. 12. The GOG envisions the future of the public sector in Grenada as an information-centric flow of data, information and services cutting across boundaries to deliver smarter, customer-centered public services. GOG’s Public Service Management Reform Strategy (PSMRS) has called for the development of new operating models to provide system-wide coordination of investment, resources and capabilities. The PSMRS identifies e-government as a critical tool necessary to improve the ease and efficiency of access by both citizens and businesses to government services. To leverage the connectivity infrastructure that CARCIP will deploy, the GOG requires the development and implementation of digital government platforms and an interoperability framework. The GOG also requires the establishment of adequate institutional arrangements and capacity to enable a whole-of-government (WoG) approach to digital governance, e- service delivery, digital initiatives for citizen engagement, and digital awareness and literacy skills in the public sector and the population. The project aims to build the institutional arrangements, digital government services and platforms, and the digital literacy skills that constitute the foundation for Grenada to transition to a digital economy and achieve the objectives set forth in the regional Digital Moonshot Initiative. C. Relevance to Higher Level Objectives 13. The project is aligned with higher-level GOG and WB objectives. The project stems from the GOG’s overarching strategy for public sector modernization and seeks to operationalize the e-government pillar of the PSMRS. The project is aligned with the World Bank Group’s FY2015-19 Regional Partnership Strategy for the Organisation of the Eastern Caribbean States (OECS), discussed by the Executive Directors on November 13, 2014, and extended through FY2020 by the Performance and Learning Review discussed by the Executive Directors on May 23, 2018, in particular with its Pillar 2: Enhancing Resilience. Furthermore, the project is aligned with the WBG Systematic Regional Diagnostic for the OECS and contributing to two focus areas: building resilience to external shocks from a 360-degree perspective, including in institutional governance; and embracing new technologies to transform private sector productivity and government effectiveness. Finally, the project is aligned with the recently launched World Bank Group’s Action Plan on Climate Change Adaptation and Resilience, which calls for providing upstream support to governments to introduce systems and platforms to manage climate risk across the public sector; and with the World Bank Group’s 2017 Small States Roadmap strategy. Page 9 of 47 The World Bank Digital Government for Resilience (P167588) II. PROJECT DESCRIPTION A. Project Development Objective PDO Statement: To enhance the efficiency, usage and resilience of selected government digital services. 14. Enhancements in the efficiency of the selected services will be captured through the measurement of the reduction in the time spent on tax-related transactions. The usage of the selected digital services will be captured through the measurement of daily transactions processed through the new civil registry system. The project defines resilience as the existence of business continuity in the aftermath of man-made or climate-induced disasters, cyberattacks, or other crises that may disrupt service delivery. For this project business continuity encompasses the preservation of critical government records and e-service functionality. In this context, the resilience of selected services will be measured through the availability of e-services (i.e. digital uptime) and critical government records during normal times as well as in simulations of potential service interruptions that might result from disasters and climate change risks. 15. PDO Level Indicators PDO Indicator 1: Reduction in time spent on tax-related transactions PDO Indicator 2: Number of daily civil registry transactions processed digitally PDO Indicator 3: Reduction in the time that selected government services are not available B. Project Components 16. The project has three components. Component 1 will build the enabling institutional, regulatory and technological environment needed to construct e-services. Component 2 will leverage this enabling environment to deliver two high-priority e-services: civil registry and tax administration. These services were selected in collaboration with GOG using a set of criteria outlined in the Detailed Project Description (Annex 1). Component 3 will strengthen institutional capacity, coordination, and management in the context of the challenges and particularities of operating in a small island state context, with the objective to ensure that the public sector, citizens, and businesses develop the digital literacy and awareness skills necessary to navigate the improvements introduced under the first two components. 17. The technological interventions introduced under Component 1 (e-payment system, digital identifier platform, and a geo-spatial data platform) are foundational elements necessary to build a WoG digital environment. The introduction of these elements will facilitate a wide array of public services to be delivered electronically to citizens and businesses in a manner that ensures business continuity in the face of climate, disaster, and cybersecurity risks. The connectivity infrastructure that CARCIP is expected to introduce will provide the backbone for the expansion of electronic service delivery as the GOG continues to implement its digital transformation agenda through this project and beyond. 18. Underpinning the cross-cutting platforms and e-services, the project will introduce other essential elements to manage digital government transformation. These include the preservation of critical government records, an Open Data framework, a data interoperability framework, and the governance and institutional arrangements to manage digital government. The project will help to foster a culture of iterative enterprise architecture assessment processes, as well as business continuity and cybersecurity principles, to ensure that the transformative agenda continues to evolve dynamically in a secure environment. The project will leverage the data center and public/private cloud infrastructure to protect critical data, records, and electronic service delivery channels against climate and cybersecurity risks. Page 10 of 47 The World Bank Digital Government for Resilience (P167588) Figure 1: Project design – Schematic overview Component 1. Developing the enabling environment to modernize service delivery (Estimated Cost: US$ 5.90 million) 19. This component will establish the technical, institutional, legal and regulatory foundations that provide the enabling environment to enhance internal administrative efficiencies and collaboration across government entities. It supports the design and implementation of a government-wide Enterprise Architecture (EA) and Interoperability Framework for deploying the cross-cutting platforms that are required to enable digital service delivery. It will develop the appropriate interoperability framework for the core, cross-cutting public sector platforms and back-end systems that GOG considers fundamental for government continuity, including by incorporating requirements for building climate resilience. The EA will focus on the technological, process, and human resource dimensions of digital transformation in an iterative and dynamic manner, and will inform the following: a. Review of legal and regulatory framework to identify gaps and advise GOG in preparing new or amending existing legislation as required; b. Re-engineering and streamlining of key business processes to improve efficiency and adaptation to new technologies and systems, including detailed mapping of the “As Is” and “To Be” states; c. Design and introduction of improvements to existing organizational structures, roles, and responsibilities, as well as Key Performance Indicators (KPIs) of impacted ministries and agencies; d. Development of a proposal for the governance and institutional arrangements in GOG for managing digital government transformation; and e. Development of recommendations to enhance the ability of public servants to respond to and sustain the post- technological implementation environment for the key departments that will be impacted by the reforms. 20. Under this component the project will deliver a document management system to register, archive, and preserve critical government records. Such records could include lands and deeds; birth, death, and marriage Page 11 of 47 The World Bank Digital Government for Resilience (P167588) certificates; government contracts; government directives; intellectual property; blueprints; and judicial records. This activity will entail the digitization of critical public records through the identification and conversion of paper documents for digital storage. The medium for storage will be the government datacenter and cloud infrastructure, which is expected to be built under CARCIP and have the appropriate disaster recovery protocols in place. This activity will aim to contract local labor to perform the digitization tasks, contributing to employment generation among the youth and women-owned businesses. 21. Together with the digitization of key government records, three cross-cutting digital platforms that constitute the building blocks for the development of a WoG digital government platform are selected for delivery under this component: a. Electronic Payment System. This platform will allow the government, citizens, and businesses to transact payments in a seamless and secure way, which also will help to enable continuity in the flow of funds in post- disaster periods. This activity will establish a platform that provides core payment and receipt issuance capability, with an integrated reporting mechanism that enables the tracking of the payments received for the e-services offered. b. Single Sign-on Digital Identifier Platform. This platform will establish a cloud-based, cyber-secure e-services identity framework, which will allow citizens to set up simple and unique digital identities via login and password to access e-services via a single sign-on mechanism. This platform may, upon further consultation with the GOG, become the foundation for the future design and introduction of a national digital ID system. c. Spatial Data Platform. This platform will enable government agencies to generate and access spatial (3- dimensional) data, to facilitate better recordkeeping, revenue generation, and post-disaster assessment and decision-making. This activity will invest in improving geographical information systems and spatial data management capacity, which would help GOG to identify and manage key infrastructure asset information such as land parcel and cadastral data, as well as provide the services associated with this data electronically to citizens in the future. 22. This component will streamline the Open Data framework and ensure that cybersecurity principles underpin all project interventions. Open Data contributes to improvements and efficiency in public services through fostering greater citizen and business engagement, facilitating the creation of innovative applications using government data and promoting collaboration across government agencies. 23. This component will also contribute to increasing resilience to climate change by reducing the vulnerability of government information assets and critical records to natural disasters. Requirements for building climate resilience, including principles for service continuity and decreasing operational costs, will be incorporated into all aspects of the process of establishing the technical, institutional, legal and regulatory foundations for modernized service delivery. Component 2. Leveraging digital technologies to deliver selected services (Estimated cost: US$ 5 million) 24. The objective of this component is to enable the delivery of two high-priority public services through digital technologies. It will build on the foundations introduced under the first component to offer two high-impact e-services to be delivered efficiently and in an accessible manner to all segments of the population. These are envisioned as digitized systems that provide access to the services online as well as in person at kiosks and government offices. The systems will be integrated with the digital identifier and electronic payment platforms developed under Component 1. 25. The project will finance the design, development, and deployment of the following digital services under this component: Page 12 of 47 The World Bank Digital Government for Resilience (P167588) a. Civil Registry, where citizens can apply for birth, death, marriage, and adoption certificates and pay for them online or in person; and b. Tax Administration Services, where citizens can access core tax administration services and the government can perform core tax administrative processes in a digital environment that is accessible online, at kiosks, and in person. 26. The project will adopt a phased approach for rolling out the new tax administration services. The implementation sequence for the modules of a new system has been determined based on analyses of the criticality of the modules and the associated volume of transactions, as well as in some cases the importance of the front-end e- service for citizens. The scope and approximate cost of the proposed improvements to the tax administration environment and the scope and cost of the core tax system for financing under this project has been determined based on a series of analytical studies. Based on these studies, the core system that will be financed under the project has been defined as one that will facilitate: case management for collection, objections and audit; tax filing and processing of returns; taxpayer account statements; and revenue reporting; as well as critical e-services such as taxpayer registration, filing of returns, tax payments, requests for refunds and extensions, and taxpayer information services. It is expected that the new tax system also will support the filing and payment of individual tax returns by a third-party service provider, thereby facilitating private sector participation in the tax ecosystem. 27. The project expects that the introduction of the new tax administration system will open the space for a broader dialogue around tax policy and administration reform. The new system also will generate sex-disaggregated data that could support gender differentiated tax incidence analysis for better policy formulation and monitoring. This data will help identify explicit and implicit gender biases affecting women’s decisions to work in the formal sector and report their income for tax purposes. Moreover, these data can be used to improve tax administration by addressing major constraints identified by women-owned businesses. 28. Throughout the project, applications, dashboards, and other outreach activities will be financed and deployed for citizens and businesses to interact with the government to provide feedback on existing services and for the government to communicate how this feedback will be incorporated in the design of digital services. In addition, interactive mechanisms will be developed to communicate important information and messages to citizens, such as tax payer information services and early warning alerts, via different channels including mobile phones, radio, and the internet. Project activities will leverage local radio stations, mobile service providers and most commonly used social media platforms to facilitate citizen engagement and enable public message delivery. 29. This component will contribute to increasing resilience to climate change by reducing the vulnerability of the selected services to delivery interruptions due to natural disasters. The digital services introduced will feature robust business continuity protocols for service interruptions that may result from climate-induced events. The development and application of these protocols will build on existing climate change vulnerability assessments. Given the criticality of payment (taxes and fees for services) and identification (birth certificate) systems for citizens to access public and commercial facilities following natural disasters, facilitating the continuity of these services in the aftermath of a disaster will contribute to reducing the vulnerability of citizens and businesses to climate change. Component 3. Strengthening institutions and managing change for digital literacy and inclusion (Estimated cost: US$ 4.10 million) 30. The objective of this component is to strengthen the institutional and human capacity to manage digital government transformation. This component will finance activities to strengthen the technical and project management capacity of the public sector to transition to a digital service delivery environment, as well as to ensure that the public Page 13 of 47 The World Bank Digital Government for Resilience (P167588) sector, citizens, and businesses develop the digital literacy and awareness skills necessary to navigate the improvements introduced under the first two components. 31. The project aims to introduce fundamental changes in the way that the government, businesses, and citizens interact with each other. The lack of digital awareness and project implementation capacity within the civil service, as well as the lack of digital literacy in the larger population, constitute significant challenges for the introduction, institutionalization, and sustainability of digital transformation. The project preparation data collection and stakeholder capacity assessments indicated that the transformative nature of the project, its technical and operational complexity, and the challenging nature of conducting ICT procurements, will require long-term, on-the-ground, embedded project management and technical advisory services to help overcome the implementation challenges experienced in the past by Grenada and other small island states. 32. This component will provide capacity building, technical advisory, project management, and change management services to help ensure consistent progress on project activities and the sustainability of the results achieved. Because GOG has no prior experience implementing such a complex, transformational project, a project management and technical advisory firm will be procured that will mobilize a team to help GOG achieve core aspects of its digital government transformation vision. This team will be embedded in the Department of Implementation (DOI) and work directly with the Chief Information Officer (CIO), the Department of Public Administration (DPA), the Ministry of Finance (MOF), and other GOG entities involved in project implementation to perform the following activities: a. Capacity Building and Technical Advice. Long-term, on-the-ground capacity building and advisory support to strengthen the technical capacity of GOG counterparts in key aspects of digital government transformation and management, including: the institution of a culture of iterative EA application; design, management, and coordination of e-government projects in the public sector; establishment of the governance and institutional arrangements for digital government transformation (including the creation of a Digital Transformation Agency – DTA); and supporting the DTA until the agency becomes fully operational and managed by GOG. b. Project Management. Day-to-day coordination and project management of the activities carried out under the project, including the development and implementation of a project management plan, development of the technical specifications and the Requests for Proposals for the digital initiatives and consultancies in the procurement plan, vendor management and supervision, and quality control of vendor deliverables for government approval. c. Change Management. Development and implementation of a change management strategy to ensure that project interventions are internalized and utilized effectively by the public sector and citizens. 33. The Change Management Strategy developed by the project management and technical advisory firm will address two challenges facing the digital government agenda in Grenada: lack of organizational capacity and awareness within civil service, and lack of digital literacy among citizens and businesses. The project will address these issues through the following activities: a. Preparation of a political economy analysis to deepen understanding of attitudes to change of both government and citizen (male and female) stakeholders and to assist GOG to develop an effective change management campaign; b. Preparation of a government e-services Change Readiness Assessment, which will outline the current level of awareness of the vision, objectives, features, and benefits of the project, and specific benefits for individual stakeholder groups including civil servants, citizens, and businesses. Gender analysis will inform all digital literacy and awareness activities; Page 14 of 47 The World Bank Digital Government for Resilience (P167588) c. Design of a comprehensive change management strategy and communications plan for engaging stakeholder groups within and outside the government that may be affected by the implementation of e-services; d. Gender-informed community and citizen engagement campaigns to promote digital transformation and small- scale gender-equitable technical and vocational training initiatives to incubate a digital workforce. These campaigns will include training programs to increase awareness of and build the capacity for addressing the threats posed by climate change to government services. Such training will target government officials, businesses, and citizens and focus on climate-smart management of digital government infrastructure, assets, and services in concert with the GOG Business Continuity Plan; e. Co-creation events, including Hackathons or App Challenges, in partnership with academia, startups, and civil society to crowdsource solutions for priority service challenges and monitoring the quality of service delivery (e.g. grievance management, delivery effectiveness, information dissemination, etc.). The solutions will inform GOG efforts to improve service delivery efficiency based on citizen and beneficiary feedback. Attendance will be monitored and disaggregated by gender. Table 1: Estimated project cost by component Component Estimated Cost (US$ million) Component 1: Developing the enabling environment to modernize service delivery 5.90 • Development of Enterprise Architecture and Interoperability Framework .65 • Design and installation of cloud-based and cyber-secure cross-cutting platforms 2.75 • Digitization and cloud-storage of key government records 2.50 Component 2: Leveraging digital technologies to deliver selected services 5.00 • Design and implementation of new Civil Registry System 1.00 • Implementation of new Core Tax System 4.00 Component 3: Strengthening institutions and managing change for digital literacy and inclusion 4.10 • Project Management and Technical Advisory services for digital government management 3.10 • Implement activities for citizens and businesses identified in Change Management Strategy 1.00 Total 15.00 34. The project will follow a sequential process to implement digital government transformation in line with its underlying strategy to adopt a systematic and WoG approach to digital development. Expected for completion within the first year of project implementation, the EA assessment will inform the design of the technical specifications for the cross-cutting platforms anticipated under Component 1, which are expected to be developed and introduced by the third year of project implementation. The deployment of the digital services under Component 2 will be initiated during the third year of project implementation following the deployment of the enabling cross-cutting platforms. The institutional strengthening, capacity building, and change management activities anticipated under Component 3 are continuous processes that will begin at project inception and continue throughout project implementation. The soliciting of citizen feedback to inform and enhance digital services will carry on throughout the project. C. Project Beneficiaries 35. The immediate direct project beneficiaries are citizens and businesses using the selected services and civil servants. Citizens and businesses will benefit from more efficient and accessible public services, improved and streamlined business processes, automated applications and complaints handling, and more effective communication. The increased revenue that may be generated by the new tax system is likely to provide additional resources for the government to potentially be allocated to public services. In addition, citizen participation and feedback opportunities Page 15 of 47 The World Bank Digital Government for Resilience (P167588) provided by GOG is expected to generate demand for agencies to improve service delivery. Public servants in selected agencies will benefit from improved management capacity and better interagency coordination. Streamlined business processes through improved organizational performance are expected to increase the speed of service delivery and build capacity of civil servants to deliver services to citizens efficiently and with higher quality standards. Ultimately, the GOG will benefit from agencies delivering better services to citizens, which is expected to create a reform momentum for other GOG agencies. 36. Additionally, the resilience of GOG to extreme weather events and other disasters will be enhanced. The use of ICT and digital platforms and technologies will put the government in a better position to fortify and safeguard public sector functionality, as well as the critical physical and information data sets and systems that will allow it to deliver public services prior to and in the event of natural disasters or other crises. D. Results Chain E. Rationale for Bank Involvement and Role of Partners 37. The project complements the WBG’s ongoing engagements with GOG to support its long-term development agenda. These include projects to strengthen resilience against disaster risk through the Regional Disaster Vulnerability Reduction Project (RDVRP) (P117871), and advance public financial management and digital governance principles through the OECS/Jamaica Strengthening Public Expenditure Management and Digital Governance Technical Assistance (P161942). The WBG has built a wealth of knowledge and a network of local, domestic, and international partners that it can leverage to facilitate a trajectory of sustainable reform in Grenada, building on its institutional memory for public sector modernization in the region and its capacity to provide effective advice on the implementation of complex Page 16 of 47 The World Bank Digital Government for Resilience (P167588) projects. The combined digital development, ICT, institution strengthening and governance knowledge and experience of the WBG multi-disciplinary task team will provide the necessary support and guidance to facilitate successful implementation. F. Lessons Learned and Reflected in the Project Design 38. Project design builds on the lessons learned from global experience in countries that have launched government-wide digital transformation initiatives. Previous attempts at digital transformation in Grenada through the WBG-financed OECS e-Government for Regional Integration Program (e-GRIP) (P100635) provide the following key lessons: the importance of strong leadership to spearhead the transformation process; the importance of long-term, on- the-ground training, capacity building, and change management, particularly in the context of addressing the challenges pertaining to the implementation of complex, multi-sectorial projects; and the need for implementation of comprehensive digital government policies across the public sector to underpin e-government outcomes. 39. The project draws heavily on the findings and good practices outlined in the 2016 World Development Report on Digital Dividends. This report highlights the importance of leveraging digital technologies to strengthen the capacity of and coordination between public institutions and enhancing their efficiency and accountability to improve public service delivery. Project design also has benefited from WBG experience in designing and supervising the implementation of public sector digital transformation projects across the globe, including the Uruguay Improving Service Delivery to Citizens and Businesses through e-Government Project (P161989), the Argentina Modernization and Innovation for Better Public Services Project (P157136), the India Madhya Pradesh Citizen Access to Responsive Service Project (P149182), and the Albania Citizen-Centric Service Delivery Project (P151972). III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 40. The Department of Implementation (DOI) of the Ministry of Infrastructure Development, Public Utilities, Energy, Transport and Implementation (MOIID) will be the implementing agency for the project, responsible for overall project management, implementation and coordination. DOI will coordinate and oversee the implementation of project activities in line with its mandate for coordinating whole of government projects. The Permanent Secretary (PS) of DOI will supervise a Project Manager who will be responsible for managing all aspects of the project, including the facilitation of inter-agency coordination and collaboration. The Ministry of Finance (MOF) will support project implementation through key fiduciary activities performed by the Accountant General’s Department (AGD) and the Central Procurement Unit (CPU), and technical activities carried out by the Internal Revenue Department (IRD). The PS for Implementation in consultation with the PS for Finance, the PS for ICT and the PS for Public Administration will provide overall strategic leadership and guidance for the implementation of this project. 41. DOI will engage and oversee a project management and technical advisory firm to assist in project implementation and provide advisory services to the government. The responsibilities of this project management and technical advisory firm will include: developing project workplans and performing monitoring and evaluation; providing capacity development, technical assistance and knowledge transfer; developing terms of reference, technical specifications and requests for proposals (RFPs) for all goods and services to be procured under the project; working with the relevant GOG units to support procurement processes and ensure compliance with World Bank Group fiduciary and safeguards measures; and providing quality control of deliverables produced by vendors. The project management and technical advisory firm will advise and work together with the CIO on key project deliverables before they are submitted Page 17 of 47 The World Bank Digital Government for Resilience (P167588) to the Project Manager. It is expected that the engagement of the project management and technical advisory firm’s presence will be reduced as capacity is transferred to local counterparts. 42. The office of the CIO will be the primary technical counterpart for the project. The CIO will have technical oversight responsibility for all project activities. The CIO will be the primary point of contact for the project management and technical advisory firm in the day-to-day implementation of the project. The CIO will chair a Technical Committee, composed of ICT, change management and other technical professionals from the MOF, the DPA, the Ministry of ICT and other entities as appropriate to help the CIO to review the RFPs and deliverables. The Technical Committee will meet regularly (at least bi-monthly) or as required to meet project deliverables. 43. Given the cross-cutting and multi-stakeholder nature of the project, a Project Oversight Committee (POC) will be established. The POC will be chaired by the PS for Public Administration as the custodian of the PSMRS in which this project is anchored, and comprise the PS for Finance, the PS for ICT, and the PS for Implementation. The POC will meet once a month to monitor implementation progress; provide guidance, discuss and agree on corrective measures; evaluate recommendations and requests that have policy and institutional implications; and report to the Cabinet per standard GOG procedures. Detailed implementation arrangements can be found in Annex 2. B. Results Monitoring and Evaluation Arrangements 44. The project results framework will form the basis of the results monitoring and evaluation arrangements. The DOI, through the Project Manager (with the support of the project management and technical advisory firm and the Technical Committee) will collect, compile and analyze the information and prepare quarterly monitoring and evaluation (M&E) reports for the DOI, the POC, and the WBG. The reports will serve as the source for publishing project results and progress on a periodic basis online and reporting at quarterly public meetings. More details on M&E utilization, including methodology for data collection, will be specified in the Project Operations Manual (POM). C. Sustainability 45. The project aims to sustain ownership of the digital transformation agenda by institutionalizing governance arrangements for its continued implementation beyond the project closing date. The change management and on-the- ground technical advisory and capacity building features built into project design are intended to generate widespread buy-in and increase demand from citizens and civil servants for the continuation of a culture of efficiency improvements in service delivery through digital interventions. The project will empower a digital transformation team inside the government to adopt and maintain a culture of iterative, dynamic approach to selecting public services to be reengineered beyond the scope and duration of this project. IV. PROJECT APPRAISAL SUMMARY A. Economic Analysis 46. The economic analysis indicates that the project will generate positive social and economic returns from the project’s investments in enhancing the delivery of the selected public services. The implementation of the digital ID and tax administration systems are expected to yield a net present value (NPV) of USD 5.92 million with an economic internal rate of return of 16 percent. The financial returns are from fees that the government expects to charge for the provision of the civil registry services and an increase in tax revenue due to the reengineering of tax administration processes. Economic returns are from the reduction in the amount of time citizens spend traveling and waiting in line to receive civil registry and tax administration services, the reduction in the amount of time and resources it takes taxpayers to prepare and file tax returns (i.e. reduction in compliance costs), and improved business continuity resulting from the automation Page 18 of 47 The World Bank Digital Government for Resilience (P167588) of the selected public services and digitization of critical government records constitute the basis for the analysis of the financial and economic benefits that the project is expected to generate. The cost-benefit analysis (CBA) that underpins the economic analysis is presented in Annex 3. B. Fiduciary (i) Financial Management 47. Project financial management functions and responsibility for investment project financing from the WBG will be executed by the AGD. The AGD has established a new Project Accounts Unit (PAU) that will be dedicated to executing the financial management responsibilities for all Bank-financed projects. With the exception of one Certified Accountant and one Accounting Clerk, the remaining staff are not experienced in implementing WBG-financed projects. However, staff have the basic knowledge fundamental for executing the financial management responsibilities under the project. The PAU will be headed by the experienced Senior Certified Accountant to ensure that there is compliance with the project’s financing agreement and Bank policies. The Bank has conducted financial management training to introduce the unit to the Bank’s policies and procedures. The Bank will provide continuous financial management training and support during project implementation. The head of the PAU will conduct internal staff trainings internal trainings to ensure that there is a transfer of knowledge and continuous skills development among staff. 48. The financial management (FM) functions and procedures will be guided by the financial management procedures manual adopted by the AGD and cleared by the Bank. This manual will be an integral component of the POM. 49. The FM assessment has been completed in accordance with OP/BP on IPF and the Financial Management Practice Manual (issued by the Financial Management Sector Board on March 1, 2010). The assessment concluded that the AGD has an adequate FM system that should provide, with reasonable assurance, accurate and timely information on the status of the funds as required by the World Bank. (ii) Procurement 50. The Central Procurement Unit (CPU) will be responsible for carrying out procurements for the project. Although the CPU is well-established, and its procurement officers are familiar with the national procurement rules and procedures, it has limited experience in conducting procurement processes guided by the World Bank procurement rules. Additionally, the CPU’s workload is heavier than it has been in the past, as this unit is now in charge of all procurement activities carried out by the GOG, including contracts financed by own funds, WBG funds and other donor funds. Therefore, there is a need for additional procurement training and additional support. 51. Procurement will be carried out in accordance with the “World Bank Procurement Regulations for Borrowers under Investment Project Financing” (November 2017) (“Procurement Regulations”). In accordance with paragraph 5.9 of the Procurement Regulations, the WBG’s Systematic Tracking and Exchanges in Procurement (STEP) system will be used to prepare, clear, and update Procurement Plans and monitor all procurement transactions for the Project. A Project Procurement Strategy for Development (PPSD) describes how procurement in this operation will support the achievement of the PDO and deliver value for money using a risk-based approach. The PPSD provides adequate supporting market analysis for the selection methods detailed in the Procurement Plan. Mandatory Procurement Prior Review Thresholds detailed in Annex I of the World Bank’s Procurement Procedures are applied. All procurement procedures, including roles and responsibilities of different participating entities and units, are defined in the POM. A summary of the PPSD is presented in Annex 2. Page 19 of 47 The World Bank Digital Government for Resilience (P167588) 52. A procurement capacity assessment was conducted in April 2019. The assessment concluded that while the CPU has some capacity to carry out the procurement activities envisaged in the project, improvements are required. The CPU will need additional procurement training and could benefit from technical support. In addition, while the CPU is subject to substantial oversight from different bodies, the scope of audits lacks adequate coverage of procurement. To mitigate this risk, it is recommended that the CPU adopt the World Bank's Standard Procurement Documents for all their tenders under the project, even when approaching the national market. 53. Supervision arrangements. In addition to prior review supervision to be carried by the WBG, the capacity assessment recommends annual, in-country supervision missions to carry out post review of at least 1:10 procurement actions. The procurement prior review thresholds will be detailed in the PPSD. Mandatory Procurement Prior Review Thresholds detailed in Annex I of the WBG’s Procurement Procedures are applied. .C. Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No . . D. Environmental and Social . The Environment and Social Risk is moderate. The project may include minor installation of computer equipment for the digital document management system and its footprint will be negligible. Environmental impacts are likely to be fully reversible. If the project replaces significant numbers of existing computer hardware, the risk will become moderate, as there will be a need to determine what will happen to the e-waste. An-waste management plan will be developed by 11/2019 as part of the Borrower’s Environmental and Social Commitment Plan (ESCP,) that was disclosed on May 2, 2019. The project will then recruit a specialist to assess the main means of handling this waste. The team will examine these issues further during preparation. The social risk of the project is moderate because it is developing in a context, where social inequalities remain high. Government capacity to implement policies for inclusive development is also weak. The project is concerned about these risks and will adopt a participatory and inclusive approach to enhance social inclusiveness, and in sensitive cross cutting areas such as: Governance; Poverty and Equity, Transport and Digital Development. The project impacts may fall disproportionately on persons who are subjected to prejudice or discrimination - women, children, minorities with disadvantages, the elderly, poor people that live in slums, LGBT, people with disabilities. - E.g. people who are blind are especially likely to be excluded from accessing improvements in e-services that require a visual interface. Measures to mitigate their exclusion, such as screen readers will be considered. The project will seek to incorporate data privacy approach to help prevent breaches and enforce security. -Privacy of: behavior and action; communication; data and image; association among others. The project will also consider ergonomic issues related to data entry as well as access to systems and platforms by Page 20 of 47 The World Bank Digital Government for Resilience (P167588) those . with physical limitations. 54. Gender and Social Inclusion. According to the Enterprise Survey for Grenada of 2010, the percentage of women- owned firms reporting tax administration as a major constraint is nearly double (40.4 percent) to that of firms owned and managed by men (24.3 percent). Women participate in ownership in 57.3 percent of firms in Grenada; and 24 percent of firms have a female top manager. Grenada is one of three countries in the Caribbean to boast of at least 20 percent of their firms being predominantly owned by females.5 Overall, 66.7 percent of firms reported visiting or being required to meet with tax officials (slightly higher for male-managed firms 67.3 percent compared to 64.8 percent of female-managed firms). However, when businesses did visit tax officials, female-managed firms reported higher number of visits than male-managed firms (3.9 visits on average vs. 3.1, respectively). The new tax system will automate audit selection and assignment of audits to specific auditors and thus eliminate gender bias against women-owned businesses in audit selection and engagement with auditors. Overall, the new tax system will permit GOG to disaggregate tax data by gender, individuals and firms, providing the necessary management information to address major constraints related to tax administration identified by women-owned businesses. 55. Citizen engagement. GOG’s efforts to improve efficiency of selected e-services through citizen engagement will be two-fold. First, the introduction of new digital channels for the provision of citizen feedback is a key feature of the project. The activities proposed for implementation under Component 3 focus on the introduction of citizen engagement mechanisms, such as crowdsourcing apps, public dashboards, and grievance mechanisms, as well as community-based initiatives such as digital literacy campaigns, vocational training initiatives and focus groups. The apps and platforms developed will be used to solicit ideas and feedback from citizens on how to improve service delivery, communicate messages from the government on what is being done in response to their feedback, and gauge citizen satisfaction with the e-services introduced under the project. Second, the project will conduct yearly user-satisfaction surveys on civil registry services from year three to ensure steady improvement of user experience. The results of these yearly surveys will be used to enhance the systems that will be deployed under the project and ultimately improve service delivery efficiency. 56. Climate change co-benefits. The climate change co-benefits assessment performed during project appraisal concluded that the project would bring a co-benefits contribution of 15.4 percent. The project undertook the Climate and Disaster Risk Screening Tool during preparation. The project stems from the recently completed Systematic Regional Diagnostic (SRD) for the OECS and will contribute specifically to the SRD’s focus on building resilience to climate impact from a 360-degree perspective by strengthening the resilience of public sector institutions. Additionally, the project is aligned with the recently launched World Bank Group Adaptation and Resilience Action Plan, which calls for providing upstream support to governments to introduce systems and platforms to manage climate risk across the public sector. 57. Private Sector Engagement. The project will facilitate the establishment of an Advisory Group for Digital Transformation in Grenada. The WBG will leverage its convening power to bring together representatives from leading regional and international technology companies that have been active in the disaster response, GovTech, Cloud for Development spaces to form an Advisory Group, whose role will be to act as a pro-bono knowledge resource and sounding board as the GOG pursues its digital transformation agenda. The project also will aim at leveraging non-partisan and non-political organizations such as Code for America to explore adapting these initiatives to the Caribbean context with support from the private sector. The project’s interventions to build robust business continuity protocols for the proposed digital platforms and e-services will explore formalizing collaboration with private sector providers particularly in the context of access to alternative power and connectivity sources in the aftermath of a natural disaster. 5 Winston Moore, et al, “Gender Gap in the Region: The Performance of Women-Led Firms,” January, 2017 http://competecaribbean.org/proteqin/ Page 21 of 47 The World Bank Digital Government for Resilience (P167588) V. GRIEVANCE REDRESS SERVICES 58. Communities and individuals who believe that they are being or will be adversely affected by the Project will be able to submit complaints through the Grievance Redress Service (GRS). The GRS will ensure that complaints received are promptly reviewed in order to address project-related concerns. Project-affected communities and individuals will be able to submit their complaint to the WBG independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WBG 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 59. The overall risk rating for the project is Substantial. In particular, risks associated with the complexity of technical design, scope of the project, institutional capacity for implementation, and fiduciary arrangements will require careful monitoring and mitigation. 60. Technical Design of Project: Substantial. The operation incorporates technologies and processes that are new in the context of Grenada. To mitigate this risk, the WBG will work with the GOG to ensure that the project is anchored in a realistic sequence of activities. The technical advisory committee will ensure that the necessary back-end IT infrastructure and management processes designed under the project are robust and complete prior to developing e- government services. The change management component will help GOG to introduce the technological and institutional reforms in a measured and sustainable manner. 61. Institutional Capacity for Implementation and Sustainability: Substantial. Grenada has limited experience in forging and implementing multi-stakeholder initiatives such as the transformational reforms envisaged under the project. Additionally, there are a limited number of technical experts in core ministries, with varying institutional capacity, significant gaps in M&E capacity and lack of clarity in the lines of accountability. To mitigate these substantial risks, the project will engage a project management and technical advisory firm to provide technical assistance and capacity building. Furthermore, the project oversight committee will provide overall guidance and direction on all project activities and initiatives to help ensure sufficient capacity is built and knowledge is transferred to the GOG. 62. Fiduciary: Substantial. The fiduciary functions for the project have been absorbed by various units within the government. Under this arrangement, the lack of adequate coordination may adversely impact the execution of the financial management and procurement responsibilities. The majority of the staff to be engaged under the project are inexperienced in implementing Bank-financed projects, and thus, there is an assumed learning curve. To mitigate these risks, financial management training and support will be provided by the WB during implementation. In addition, the project management and technical advisory firm will help to strengthen the capacity of the GOG to develop, evaluate and implement complex procurement packages and consultancies. During project implementation, the risk will be reviewed periodically and revised as needed. . Page 22 of 47 The World Bank Digital Government for Resilience (P167588) I. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Grenada Digital Government for Resilience Project Development Objectives(s) To enhance the efficiency, usage and resilience of selected government digital services. Project Development Objective Indicators RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 To enhance the efficiency, usage and resilience of selected government digital services Reduction in time spent on tax related transactions 140.00 140.00 140.00 105.00 79.00 59.00 59.00 (Hours) Percentage of daily civil registry transactions 0.00 0.00 0.00 50.00 70.00 90.00 90.00 processed digitally (Percentage) Reduction in the percentage of time that selected government 8.00 8.00 8.00 2.00 1.00 0.05 0.05 services are not available (Percentage) PDO Table SPACE Page 23 of 47 The World Bank Digital Government for Resilience (P167588) Intermediate Results Indicators by Components RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Developing the enabling environment to modernize service delivery Establishment of selected Preliminary design of Design of Electronic Targeted cross-cutting cross-cutting platforms Cross-cutting Electronic Payment Spatial Data platform digital identifier Payment System N/A platforms established platforms do not exist System deployed consolidated (Text) platform completed finalized and operational Archive of newly digitized key public records 0.00 20.00 20.00 20.00 20.00 20.00 100.00 (Percentage) Leveraging digital technologies to deliver selected services Reduction of processing time for delivery of selected 48.00 48.00 48.00 24.00 12.00 6.00 6.00 civil registry services (Hours) Reduction of time to receive VAT assessment 30.00 30.00 30.00 22.00 17.00 11.00 11.00 notices (Days) Tax transactions performed online (registration, filing, 2.00 2.00 2.00 25.00 50.00 80.00 80.00 payment) (Percentage) Tax transactions performed online (registration, filing, 2.00 2.00 2.00 25.00 50.00 80.00 80.00 payments) by women- owned businesses (Percentage) Strengthening institutions and managing change for digital literacy and inclusion Civil servants trained in digital literacy programs 0.00 250.00 500.00 750.00 1,000.00 1,250.00 1,250.00 (cumulative) (Number) Number of citizen 0.00 25.00 25.00 25.00 25.00 25.00 125.00 Page 24 of 47 The World Bank Digital Government for Resilience (P167588) RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 engagement/ interactive/ outreach activities (Number) Number of interactive/outreach activities to inform citizens of actions taken 0.00 5.00 5.00 10.00 10.00 15.00 45.00 based on their feedback (Number) Number of outreach activities to the business community on tax 0.00 7.00 7.00 7.00 7.00 7.00 35.00 administration system (Number) Number of outreach activities targeting women-owned 0.00 4.00 4.00 4.00 4.00 4.00 20.00 businesses (Number) IO Table SPACE UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Service Decrease in the number Number of hours that Yearly (years Delivery of hours that Reduction in time spent on tax related businesses spend on tax Project Manager/MOF 3, 4 and 5) Information businesses spend on transactions related transactions Reports tax related reduced by 25% each year transactions. Reduction Page 25 of 47 The World Bank Digital Government for Resilience (P167588) of 25% per year, starting in YR3 of the project. Percentage of daily civil Service registry transactions Delivery Number of daily civil registry Yearly (years processed digitally Project Manager/ Percentage of daily civil registry Information transactions subjected to 3, 4 and 5) increased by 20% each Implementing Agency transactions processed digitally System digital processes year, starting in YR3 of Reports the project. Baseline is based on estimates provided by the Government of Service Grenada. Delivery The indicator Reduction in the percentage of time that Average time that selected Yearly (years Project Manager/ Information measures decrease in selected government services are not government services are not 3, 4 and 5) Implementing Agency System the percentage of time available available during the year Reports that selected government services are not available in a year. 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 operationalization of Service Desired functionality Establishment of selected cross-cutting Yearly Project Manager/CIO the Electronic Payments Delivery of selected cross- platforms System, the Digital Identifier Information cutting platforms Page 26 of 47 The World Bank Digital Government for Resilience (P167588) Platform, and the Spatial Systems (Electronic Payments Data Platform System, Digital Identifier Platform, and Spatial Data Platform) will be verified using Service Delivery Information System 20% of the total agreed records (as a part of total government records) will be Newly digitized key public digitized and Service records archived in the archived each year. Key Delivery Archive of newly digitized key public cloud for easy retrieval Yearly records agreed are Project Manager/CIO Information records during normal times, defined as: registry, Systems disaster, and post-disaster legal affairs, library, periods national archives, GG vault, crown lands, ministry of works – infrastructure. Average processing time (in hours) for Number of hours to process Service births, death, marriage Yearly Project and deliver civil registry Delivery and adoption Reduction of processing time for delivery (years 3, 4 Manager/Implementing services (births, death, Information certificates decreased of selected civil registry services and 5) Agency marriage and adoption Systems by 50% each year, certificates) starting in YR3 of the project. Page 27 of 47 The World Bank Digital Government for Resilience (P167588) Time to receive VAT Service Yearly assessment notices Delivery Reduction of time to receive VAT Reduction of time to receive (years 3, 4 decreased by 25% each Project Manager/MOF Information assessment notices VAT assessment notices and 5) year, starting in YR3 of Systems the project. Percentage of tax transactions (registration, filing, payment) performed online increased to 80% Percentage of all tax Service Yearly by project end. transactions done online Delivery Tax transactions performed online (years 3, 4 Note: VAT may remain Project Manager/MOF (registration, filing, Information (registration, filing, payment) and 5) an outlier because VAT payment) vs total Reports filing is complex, and transactions some small business lack the appropriate technology to file online. Percentage of women- owned businesses performing Percentage of women- tax transactions online Service owned businesses Yearly (registration, filing, Tax transactions performed online Delivery performing tax related (years 3, 4 payment) increased to Project Manager/MOF (registration, filing, payments) by Information transactions online and 5) 80% by project end. women-owned businesses Reports (registration, filing, Note: VAT may remain payments) an outlier because VAT filing is complex, and some small business lack the appropriate Page 28 of 47 The World Bank Digital Government for Resilience (P167588) technology to file online. 250 total civil servants Project Number of civil servants Class receiving training in a Manager/DPA/Change Civil servants trained in digital literacy trained in digital literacy Yearly attendance year. Data will be management component programs (cumulative) programs, disaggregated by records disaggregated by sex. lead sex Outreach activities, events, surveys, etc. to interact with citizens and businesses to gather feedback on Project Activities and events to Attendance existing services and Manager/DPA/Change Number of citizen engagement/ promote and inform citizens Yearly records/surv suggestions for management component interactive/ outreach activities of digital transformation eys improvements, and lead initiatives communicate how this feedback will be incorporated in the design of digital services. Outreach activities, events, surveys, etc. to interact with citizens Attendance Project and businesses to Number of interactive/outreach Activities and events to records/minu Manager/DPA/Change Yearly communicate how their activities to inform citizens of actions inform citizens of actions tes of management component feedback is taken based on their feedback taken meetings lead incorporated in the design of digital services and other project activities. Page 29 of 47 The World Bank Digital Government for Resilience (P167588) Trainings, seminars, workshops and other outreach events for Number of trainings, local businesses on the Project Manager/Change Number of outreach activities to the Attendance seminars, workshops and Yearly use of the tax management component business community on tax records other outreach events for administration lead/MOF administration system local businesses system. One event per year in each of the seven Parishes. Trainings, seminars, Number of trainings, workshops and other seminars, workshops and outreach events for Project Manager/Change Attendance Number of outreach activities other outreach events for Yearly local businesses, with management component records targeting women-owned businesses local businesses, with emphasis on targeting lead/MOF emphasis on targeting women-owned women-owned businesses businesses ME IO Table SPACE Page 30 of 47 The World Bank Digital Government for Resilience (P167588) ANNEX 1: Detailed Project Description COUNTRY: Grenada Digital Government for Resilience 1. The project has three components. Component 1 will build the enabling institutional, regulatory and technological environment needed to construct e-services. Component 2 will leverage this enabling environment to deliver two high-priority e-services – civil registry and tax administration services – that are resilient to cyber risks and observed and anticipated climate change impacts, while increasing revenue for GOG. Component 3 will strengthen institutional capacity, coordination, and management in the context of the challenges and particularities of operating in a small island state context, with the objective to ensure that the public sector and citizens develop the digital literacy and awareness skills necessary to navigate the improvements introduced under the first two components. 2. The technological interventions introduced under Component 1 (e-payment system, digital identifier platform, and a geo-spatial data platform) are foundational elements necessary to build a WoG digital environment. This will facilitate a wide array of public services to be delivered electronically to citizens and businesses in a manner that ensures business continuity including in the face of climate and disaster as well as cybersecurity risks. The connectivity infrastructure that CARCIP is expected to introduce will provide the backbone for the expansion of electronic service delivery as GOG implements its digital transformation agenda through this project and beyond. 3. Underpinning the cross-cutting platforms and e-services, the project will introduce other essential elements to manage digital government transformation. These include the preservation of critical government records, an Open Data framework, a data interoperability framework, and the necessary governance and institutional arrangements. The project will help to foster a culture of iterative processes, business continuity and cybersecurity principles, to ensure that the transformative agenda continues to evolve dynamically in a secure environment. The project will leverage the proposed data center and public/private cloud infrastructure financed by CARCIP to protect critical data, records, and electronic service delivery channels against climate and cybersecurity risks. Component 1. Developing the enabling environment to modernize service delivery (Estimated Cost: US$ 5.90 million) 4. The objective of this component is to establish the technical, institutional, legal and regulatory foundations that constitute the enabling environment to institutionalize digital government. These foundational elements also will serve as the building blocks for the development of selected e-services, as well as contribute to enhancing government business continuity and resilience. In this context, the component will: implement a Whole of Government Enterprise Architecture (EA) and interoperability framework for deploying the cross-cutting platforms that are required to enable digital service delivery; and deliver a document management system to register, archive, and preserve critical government records. 5. The project will support the design and implementation of a government-wide EA and interoperability framework. The EA will provide the basis for digital transformation along the three dimensions of technology, processes, and people. The EA will introduce the appropriate interoperability framework for the core, cross-cutting public sector platforms and back-end systems that GOG considers fundamental for digital government effectiveness and continuity. The EA and the interoperability framework will promote the automatic exchange and flow of information and data across different entities, as well as increased storage and protection of core data. This will strengthen the enabling environment for intragovernmental coordination and decision-making, contribute to the ability to design and develop integrated approaches to service delivery, and facilitate business continuity for the systems that underpin key public administration functions before, during and after crisis situations. The interoperability framework will allow for the use of disruptive technologies such as artificial intelligence to ease the creation of data and automation of data exchange. Page 31 of 47 The World Bank Digital Government for Resilience (P167588) 6. The EA framework will focus on the technological, process, and human resource dimensions of digital transformation in an iterative and dynamic manner. As such, it will inform: the re-engineering and streamlining of key business processes to improve efficiency and adaptation to new technologies and systems, including detailed mapping of the “As Is” and “To Be” states; the design and introduction of improvements to existing organizational structures, roles, and responsibilities, as well as Key Performance Indicators (KPIs) of impacted ministries and agencies; and recommendations to enhance the ability of staff to respond to and sustain the post-technological implementation environment for the key departments that will be impacted by the reforms. 7. This component also will finance the establishment and implementation of the Whole-of-Government Digital Transformation Model and Operating Framework. It will define the governance structures and institutional arrangements responsible for streamlining and coordinating all digital interventions across government in a sustainable manner. Successful implementation of digital transformation initiatives relies heavily on mature governance structures to be in place. In Grenada, a robust, sustainable, and purposeful governance structure for digital government transformation will need to be developed to ensure that the digital government approach is embedded into the governance culture. The EA will include an analysis of the human resources needed within GOG, as well as the recommended structure for the government unit or structure in charge of streamlining and coordinating all digital intervention across the government under a “Digital Transformation Agency” (DTA). The DTA would be expected to advise line ministries on digital projects and coordinate the digital interventions to avoid duplication of efforts and overlapping of investments. The agency would be empowered to work across the government to facilitate the absorption of new systems and disruptive technologies more effectively, making it simpler and faster for citizens to use government services. Through targeted capacity building and training, the operationalization of a government-wide digital transformation agenda would also contribute to the longer-term sustainability of improving digital interventions within the government using systematic, coordinated, and data-driven approaches. 8. This component also will finance activities for the design, deployment, and operation of the cross-cutting platforms to enable digital service delivery. The EA will serve as the basis for the design and implementation of these platforms. These unified and common platforms – sometimes referred to as “back-end systems” – can be used across multiple entities. As such, they constitute the building blocks for the delivery of a wide range of e-services. They also underpin the continued and effective delivery of the critical administrative functions of a government during normal times and in the aftermath of a disaster. Three platforms are selected for delivery under this component: an electronic payment system; a single sign-on digital identifier platform; and a spatial data platform. 9. Electronic Payment System. A government e-payment assessment carried out during project preparation revealed that majority of payments that GOG receives are still in the form of checks, followed by direct deposits, cash, and card. Card payments are transacted differently and have unique rules, fees and risks for which GOG is not well- prepared. Payments are not accompanied regularly by a verifiable method of identification. The current reliance on manual reconciliation by the AGD and within ministries is labor-intensive, risky and so neither scalable nor resilient. The lack of interface between the government’s tax administration, customs administration, and financial management information systems makes the systems vulnerable to fraud. The objective of this activity is to deploy an integrated electronic payment system that allows the government, citizens, and businesses to transact payments in a more seamless and secure way and facilitate continuity in the flow of funds during post-disaster and reconstruction periods. 10. Single Sign-on Digital Identifier Platform. The facility for digital identification of users constitutes the backbone for the provision of e-government services as they allow safe, secure and legally verifiable access to these services. This facility creates the legal foundations for the validation of contractual and non-contractual interactions between the government and citizens. Digital identification allows governments to move services online, resulting in improvements in efficiency, productivity, and user satisfaction. In a post-disaster situation, this facility is critical to facilitate the transactions to which citizens typically need access (e.g. social transfers and citizen records such as deeds and birth Page 32 of 47 The World Bank Digital Government for Resilience (P167588) certificates). Grenada currently has multiple and disparate systems for identification verification that impede ease of interaction with the government. The objective of this activity is to enable GOG to consolidate the different citizen identity systems that it currently employs into a unique, cloud-based digital identifier platform, which, together with the electronic payment system, will facilitate the provision of e-services that require authentication and authorization. 11. Spatial Data Platform. There have been multiple projects in Grenada attempting to identify and collate spatial data across the government. In the absence of a central repository where all spatial data is stored and accessible, many agencies, including the Statistics Agency, resort to making their own base maps to fulfill their missions. The National Disaster Management Agency does not have a systematic accounting of and access to spatial data, which hampers disaster response and planning. Lack of this data also constitutes a bottleneck for revenue generation due to difficulties in updating property valuations for tax purposes. The objective of this activity is to build a WoG spatial data platform that will enable government agencies to generate, collect, and access spatial data, facilitating government recordkeeping, revenue generation, and post-disaster and reconstruction assessment and decision-making. 12. In addition to the above-mentioned cross-cutting platforms, this component also will enable the preservation of key government records and digital assets. Much of the key government records are currently maintained manually. Under this component key government records, assets, and information will be digitized to ensure their preservation. Such records could include lands and deeds; birth, death, and marriage certificates; government contracts; government directives; intellectual property; blueprints; and judicial records. The medium for storage will be the government datacenter and cloud infrastructure, which is expected to be built under CARCIP with multiple layers of backup and disaster recovery protocols in place. This activity will aim to contract local labor to perform the digitization tasks, contributing to employment generation among the youth and women. The digitization of these assets will fortify government resiliency by making these data and information readily accessible in post-disaster situations, permitting GOG to resume continuity of operations in a timely fashion. A preliminary list of priority government records and archives needed to be digitized has been identified by GOG based on its priorities and Government Business Continuity Plan. 13. In enabling the cross-cutting platforms and digitization of key government records underpinned by cybersecurity principles, this component will streamline an Open Data framework across all interventions. Open Data promotes collaboration across government agencies and contributes to improvements in the efficiency of public services through fostering greater engagement from citizens and businesses. 14. This component will contribute to increasing resilience to climate change by reducing the vulnerability of government information assets and critical records and archives to natural disasters. Requirements for building climate resilience, including principles for service continuity and decreasing operational costs, will be incorporated into all aspects of the process of establishing the technical, institutional, legal and regulatory foundations for modernized service delivery. Component 2. Leveraging digital technologies to deliver selected services (Estimated cost: US$ 5 million) 15. This component will build on the foundations introduced under the first component to enable the delivery of selected government digital services. It will support initiatives that will allow GOG to introduce a set of high priority public services that are easily accessible through different channels (digital and analog), including in the aftermath of natural disasters. 16. Three public services were identified for support under this component in collaboration with GOG on the basis of the following criteria: • Alignment of the service with the priorities set forth in GOG’s Medium-Term Agenda; • Provision of services that are citizen-facing; • Potential of the service to contribute to resilience goals; Page 33 of 47 The World Bank Digital Government for Resilience (P167588) • Potential of the service to contribute to revenue generation; • The extent of the regulatory burden associated with the introduction of the service; • Potential contribution of the service to ease of doing business with the government; • The extent to which the service is cross-cutting in nature; • The extent to which the service leverages the key horizontal services built under Component 1; and • The capacity of the associated Ministry or Agency to own and run the system. 17. Through the application of these criteria the following services have been identified as priorities for implementation under this project: 18. Civil Registry. The Civil Registry is significantly hampered by inefficient processes and multiple data entry of the same information. Births and deaths are entered in regional offices and then sent for re-entry in reports to the main office. In addition to the extra work burden this creates on staff, it introduces the probability of data entry error in seminal documents that are used for identification by other parts of government. Furthermore, payment is made manually and requires the physical presence of the citizen, which puts those who live outside of the capital at a significant disadvantage compared to citizens who reside in locations that are close to where the government offices are located. Birth certificates are required for many citizen activities such as opening a bank account, school registration and voting for elections. The institution that offers the service keeps the citizen’s birth certificate records on file in paper. Consequently, citizen may have to apply for birth certificate multiple times in the same year. The objective of this activity is to implement a fully online system where citizens can request key documents and pay for them online. This system will be integrated with the digital identifier and electronic payment services to be developed under the first component. It will have full integration with other key government systems electronically via the data interoperability mechanisms proposed under the first component. 19. Tax Administration Services. The tax administration system in Grenada is a twenty-one-year-old, document-based platform that does not seamlessly accommodate transactional and customer-centered service delivery. The system does not allow efficient processing of tax returns – it can take months for citizens to receive their tax assessment after filing their returns, which are submitted on paper. The tax system has limited controls in place to detect multiple entries for taxpayer registration pertaining to property taxes. Processing of refunds is a time-consuming process due to the largely manual nature of the refund process. 20. The Inland Revenue Department (IRD) – the agency responsible collecting revenue on behalf of GOG – intends to register a minimum of eighty percent of taxpayers to become active users of IRD’s e-services. IRD’s goal is to process all taxes and licenses digitally, allowing taxpayers to register, file and pay online. However, the current tax system software is outdated with limited or dated features, unable to adapt to modern revenue administration practices, no longer properly supported by the vendor, and as such at a point of failure. 21. This component will finance the implementation of a new generation tax administration system that meets IRD’s current business processes. The system will interface with the existing customs and financial management information management systems. It would perform key tax administration functions (such as registration, cashing, assessment and audit, objection and appeals, document management, workflow management, auditing, case management, risk management and compliance monitoring) in a digital, secure environment that is accessible online, with robust business continuity protocols in place. 22. The project will adopt a phased approach for rolling out the new tax administration services. The implementation sequence for the modules of a new system has been determined based on the criticality of the module and the associated volume of transactions, as well as the importance of the e-service for citizens. Based on this assessment, the core system that would be financed under the project has been defined as one that would facilitate: Page 34 of 47 The World Bank Digital Government for Resilience (P167588) taxpayer registration; case management for collection, objections and audit; filing and processing of returns; payment of taxes and licenses; taxpayer account statements; and revenue reporting; as well as critical e-services such as registration, filing of returns, tax payments, requests for refunds and extensions, and taxpayer information services. It is expected that the new tax system also will support the filing and payment of individual tax returns by a third-party service providers, thereby facilitating private sector participation in the tax ecosystem.6 23. The exact technical specifications and budget for the tax system will be determined as part of the EA assessment that will be performed at project inception. Given the fact that currently there are no established open source tax systems or those using Software as a Service (SaaS) architecture, it is expected that the replacement system would be a Commercial-off-the-Shelf (COTS) software package. Market analysis performed during project preparation regarding the COTS systems currently available, as well as global experience with the implementation of tax systems in similar contexts, suggests an estimated value of US$3 million for the procurement of the tax software package for Grenada, delivering the core functionalities described above. Additional post-warranty support for operations and maintenance (O&M) is usually calculated at 20 percent of the software cost per annum. Recurrent costs not specifically related to the COTS licenses are difficult to predict with precision without first identifying the vendor and the IT architecture employed. GOG has a practice of incorporating annual O&M costs for its key IT systems for financial management and customs administration in its national budget and will do the same for the new tax system following the end of the project. 24. Throughout the project, applications, dashboards, and other outreach activities will be deployed to interact with citizens and businesses to gather feedback on existing services and suggestions for improvements and communicate how this feedback will be incorporated in the design of digital services. In addition, interactive mechanisms will be developed that can communicate important information and messages accessible by mobile devices such as, for example, tax payer information services and early warning alerts. Project activities will leverage local radio stations, mobile service providers and most commonly used social media platforms, as well as feature an online dashboard, to facilitate citizen engagement and enable public message delivery. 25. This component will contribute to increasing resilience to climate change by reducing the vulnerability of selected services to delivery interruptions due to natural disasters. The digital services introduced will feature robust business continuity protocols for service interruptions that may result from climate-induced and man-made disasters. The development and application of these protocols will build on existing climate change vulnerability assessments. Given the criticality of payment (taxes and fees for services) and identification (birth certificate) systems for citizens to access public and commercial facilities following natural disasters, facilitating the continuity of these services in the aftermath of a disaster will contribute to reducing the vulnerability of citizens and businesses to climate change. Component 3. Strengthening institutions for digital governance and managing change for digital literacy and inclusion (Estimated cost: US$ 4.10 million) 26. The objective of this component is to strengthen the institutional and human capacity to manage digital government transformation. It will introduce a comprehensive package of interventions to strengthen the institutional coordination and management mechanisms in the context of the challenges and particularities of operating in a small island state context, as well as ensure that the public sector and citizens develop the digital literacy and awareness skills 6The scope and approximate cost of the proposed improvements to the tax administration environment and the scope and cost of the core tax system for financing under this project has been determined based on a series of analytical engagements undertaken and reports produced by PricewaterhouseCoopers Tax and Advisory Services Limited (PwC). These reports include Assessment of ICT Capabilities and Platforms Report – GRENADA, June 2015; Country Specific Action Plan – GRENADA, September 2015; Definition of Business and Technical Requirements for a New Tax System and the Integration of the Customs, PFM and Tax Systems Business and Technical Requirement Report, March 2017; and Definition of Business and Technical Requirements for the Common tax system and the Integration of the Customs, PFM and Tax Systems – SOLUTION’S SUSTAINABILITY STRATEGY, March 2017. Page 35 of 47 The World Bank Digital Government for Resilience (P167588) necessary to navigate the improvements introduced under the first two components. These activities also will serve to increase awareness and build capacity on threats posed by climate change to government services through training. Such training will be delivered to government officials, businesses, and citizens and further focus on climate-smart management and delivery of e-government infrastructure and services in concert with GOG’s Business Continuity Plan, currently under development. 27. The project preparation data collection and stakeholder interviews indicated the specific need for Grenada to have access to embedded technical advisory services to help overcome the implementation challenges that have been experienced in the past by Grenada and other small island states. This component will finance procurement of a project management and technical advisory firm whose scope of work will include, but is not limited to: a. Long-term, on-the-ground advisory support to strengthen the technical capacity of GOG counterparts, propose and help establish the governance arrangements for digital transformation including a Digital Transformation Agency; b. Support the Digital Transformation Agency by transferring institutional capacity until the agency becomes fully operational and managed by GOG; c. Day-to-day coordination and project management of the activities carried out under the project, including the development and implementation of a project management plan, development of the technical specifications and the Requests for Proposals for the digital initiatives and consultancies in the procurement plan, vendor management and supervision, and quality control of vendor deliverables for government approval; d. Transfer of knowledge to GOG counterparts to institute a culture of iterative EA application and project management capacity for e-government interventions; and e. Development and implementation of a change management strategy to ensure that project interventions are internalized and utilized effectively by the public sector and citizens. 28. This component also will assist GOG to design strategies, systems, and processes to help people understand the need for change and to motivate them to take action. The project will help achieve sustainable changes in behavior by addressing two key problems related to advancing the digital government agenda in Grenada: lack of organizational capacity and awareness within civil service, and lack of digital literacy in the larger population. The project will address these issues through the following activities. 29. Development of the vision for digital government transformation. This will start with a political economy analysis to deepen understanding of attitudes to change of both government and citizen stakeholders. Such analysis and understanding will assist GOG to develop a targeted and effective change management campaign that is specific to the Grenadian context. This analysis will contribute to updating and strengthening the overall digital government transformation vision, scope and scale of change. It will identify key stakeholders within and outside the government that will be impacted by the initiatives introduced under the project. This will culminate in the preparation of a government e-services Change Readiness Assessment, which will outline the current level of awareness of the vision, objectives, features, and benefits of the project, and specific benefits for individual stakeholder groups; current level of commitment of the key stakeholders of the project and current perception on overall project implementation and management; stakeholders’ perception of critical success factors and impediments to the project implementation; willingness of the stakeholders to adapt to the new environment and potential constraints during system adoption; and current level of involvement of the stakeholders and understanding of the need for additional involvement in overall project implementation. The findings of the Change Readiness Assessment will feed into the development of a comprehensive change management, communications and outreach/training strategy. Page 36 of 47 The World Bank Digital Government for Resilience (P167588) 30. Design of a change management strategy. The change management strategy will provide a comprehensive plan for engaging stakeholder groups within and outside the government that may be affected by the implementation of e- services. The approach will consider each stakeholder’s role in the implementation of these systems and the level of impact they will experience in the post-systems implementation environment to determine the ‘management’ approach that works best for these groups. 31. New digital channels for citizen feedback will be a key feature of the change management strategy. The project will develop crowdsourcing apps to solicit feedback and ideas on ways to improve select services. In response, GOG will plan to leverage different channels of communication and implement basic dashboards to communicate with citizens on what is being done. As digital services are made available, mechanisms including apps, portals and other methods will be used to gauge and measure citizen satisfaction with these services. 32. Design and implementation of communications and outreach plans. These plans will address the need to speak with the people affected by the process, system and structural changes created by the implementation of the project. An inclusive, gender-informed Communication Management Plan will be developed to address the specific communication needs of each stakeholder group. The plan will include a targeted public education campaign and behavioral change communication to help citizens become aware of the benefits of digital transformation. 33. Implementation of an inclusive capacity building and training ecosystem for civil service and citizens. Based on the capacity building and training initiatives identified in the Change Management Strategy, these activities and programs will aim to create the conditions for active and informed citizens and businesses to engage with digital government and practice the learnings from the trainings to use digital tools and platforms. The digital literacy and awareness building initiatives to be financed will include: a. gender-informed community and citizen engagement campaigns to promote digital transformation and small- scale gender-equitable technical and vocational training initiatives to incubate a digital workforce, including training programs to increase awareness of and build the capacity for addressing the threats posed by climate change to government services. Such training will target government officials, businesses, and citizens and focus on climate-smart management of digital government infrastructure and services in concert with the GOG Business Continuity Plan; b. co-creation events, including Hackathons or App Challenges, in partnership with academia, startups, and civil society to crowdsource solutions for priority service challenges and monitoring (e.g. grievance management, delivery effectiveness, information dissemination, etc.). The solutions will inform GOG efforts to improve service delivery efficiency based on citizen and beneficiary feedback. Attendance will be monitored and disaggregated by gender. 34. The project will follow a sequential process to implement digital government transformation in line with its underlying strategy to adopt a systematic and whole-of-government approach to digital development. The project management and technical advisory firm will be mobilized immediately at project inception. The project management and technical advisory firm will initiate the engagement process for and oversee a consultancy to conduct the EA assessment planned under Component 1. The EA assessment will be completed in the first year of project implementation to inform the design of the technical specifications for the cross-cutting platforms implemented under Component 1 and implemented in the third year of project implementation (See Figure 1.1). 35. The development of the technical specifications for the civil registry and tax administration services will follow a similar process starting with the EA assessment at project inception. The deployment of these services under Component 2 will be initiated during the third year of project implementation following the deployment of the cross- cutting platforms to enable these services under Component 1. The institutional strengthening, capacity building, and Page 37 of 47 The World Bank Digital Government for Resilience (P167588) change management activities anticipated under Component 3 are continuous processes that will begin at project inception and continue throughout project implementation. The scope and presence of the project management and technical advisory firm will be phased out gradually as GOG capacity is built to manage the digital government transformation agenda. The Figure 1.1 below depicts the anticipated implementation timeline. Figure 1.1: Project Implementation Schedule Page 38 of 47 The World Bank Digital Government for Resilience (P167588) ANNEX 2: Implementation Arrangements COUNTRY: Grenada Digital Goverment for Resilience Operational Arrangements 1. The principal GOG stakeholders involved in the implementation of the Digital Government for Resilience project are the Department of Implementation, the Ministry of Finance, the Ministry of ICT, the Cabinet Office, and the Project Oversight Committee. 2. The project will be housed in the Department of Implementation (DOI) in the Ministry of Infrastructure Development, Public utilities, Energy, Transport and Implementation MOIID) in line with its mandate to manage the implementation of projects that are a high-priority for the GOG given their size, complexity, and strategic and cross- cutting nature. The DOI will prepare the annual work plan and act as the main coordinating body and convening authority among the project stakeholders. The DOI will systematically monitor and evaluate project implementation progress, as well as identify and address implementation shortcomings, challenges, and disputes. 3. The DOI will appoint a dedicated Project Manager, who will act as the focal point for the Digital Government for Resilience project with the appropriate level of authority to undertake day-to-day project management decisions. The Project Manager is the official point of contact with the World Bank for matters relating to project supervision and monitoring, including the consolidation of technical progress reporting, monitoring and evaluation (M&E), and the submissions of requests for “No Objections.” 4. The DOI will liaise with the Ministry of Finance (MOF) on fiduciary management and reporting required for the project. The Accountant General’s Department, through the Project Accounting Unit, will ensure timely availability of cash resources for project implementation; manage banking operations; liaise with the World Bank on disbursements; establish and manage systems for internal controls and for the processing of payment requests and cheques to consultants and vendors; and prepare periodic financial reports in accordance with the requirements of the financing agreement for the project. The Central Procurement Unit will be responsible for the procurement of goods and services required for the project, in accordance with the World Bank guidelines. 5. The DOI will engage and oversee a project management and technical advisory firm to assist in project implementation and provide advisory services to the government on digital transformation. The project management and technical advisory firm will deploy a team of long-term resident advisors (led by a Team Leader) and other short- term professionals as necessary. This project management and technical advisory firm will work with the participating GOG agencies to develop the project workplans and perform monitoring and evaluation; provide capacity development, technical assistance and knowledge transfer to GOG counterparts on the institutional and technical aspects of digital government transformation; develop the terms of reference, technical specifications and requests for proposals for all digital platforms and consultancy services to be procured under the project; work with the relevant GOG units to support procurement processes and ensure compliance with World Bank fiduciary and safeguards measures; manage and update the project’s results framework; provide quality control of deliverables produced by vendors and service providers; and implement change management. The Team Leader will report directly to the Project Manager and seek concurrence from the Chief Information Officer on key project deliverables before they are submitted to the Project Manager for payment authorization. It is expected that the engagement of the project management and technical advisory firm will be phased out as capacity is transferred to local counterparts. Page 39 of 47 The World Bank Digital Government for Resilience (P167588) 6. The Chief Information Officer (CIO) will be the primary technical counterpart for the project. The CIO will have technical oversight responsibility for all project activities. The CIO will be the primary point of contact for the Project Management and Technical Advisory project management and technical advisory firm in the day-to-day implementation of the project. The CIO will review and approve all RFPs before procurement and all project deliverables before the Project Manager can authorize payment. The CIO will chair a Technical Committee, composed of ICT, change management and other technical professionals from the Ministry of Finance (MOF), the Department of Public Administration (DPA), the Ministry of ICT, the DOI, and other entities as appropriate to help the CIO to review and approve the RFPs and deliverables conveyed to the CIO by the project management and technical advisory firm. 7. Given the cross-cutting and multi-stakeholder nature of the project, a Project Oversight Committee (POC) will be established. The POC for the Digital Government for Resilience project will be chaired by the PS for the DPA, and comprise the PS for MOF, the PS for ICT, and the PS for Implementation. The POC will meet once a month to monitor implementation progress, evaluate recommendations and requests that have policy and institutional implications; provide guidance, identify project issues, discuss and agree on corrective measures, and report to the Cabinet as per standard GOG procedures. 8. As the principal custodian of the Public Service Management Reform Strategy in which the Digital Government for Resilience project is anchored, the DPA will play an important role in facilitating the reengineering of the administrative processes that underpin the selected public services under the project. The MOF will play a prominent role in the implementation of project activities that have implications for Public Financial Management reform, including the e-payment platform and project interventions relating to tax services. 9. The Cabinet Office monitors and actively promotes linkages between a select group of high-impact projects and the broader medium-term strategic objectives of the government as outlined in the GOG’s Medium-Term Agenda (MTA). For this select group of high-priority projects, the Cabinet Office receives regular updates from the MOF on implementation progress throughout the annual budget cycle. The Digital Government for Resilience project is a priority Page 40 of 47 The World Bank Digital Government for Resilience (P167588) project that underpins the public sector modernization pillar of the MTA and as such also will be monitored at the Cabinet level. Fiduciary Arrangements (i) Financial Management 10. Risk Assessment. The overall financial management (FM) risk rating assigned to this project is Substantial. 11. Staffing. Since December 2018, the financial management functions for all World Bank-financed projects have been undertaken by a newly established Project Accounts Unit (PAU) established within the Accountant General Department (AGD). One Senior Certified Accountant and one Accounting Clerk have been reassigned to the Project Accounts Unit (PAU). This unit will comprise of two Certified Accountants and three Accounting Clerks. Direct oversight of the unit will rest with the Senior Certified Accountant, who will directly report to the Accountant General. Responsibilities will be assigned based on functions, which will also ensure that there is adequate segregation of duties established. With the exception of the Senior Certified Accountant and Accounting Clerk, the staff within the PAU are not experienced in implementing Bank financed projects. Although they are all versed in the basic accounting knowledge which is fundamental to executing the financial management function, there is an assumed learning curve in respect to adequately executing the financial management functions and responsibilities in accordance with the Bank’s policies and procedures. The staff of the PAU have been trained in the Bank policies and financial management procedures. The Bank will continue to provide ongoing financial management training and support during implementation. In addition, to ensure continuous learning and development of PAU staff, internal trainings will be conducted by the Senior Certified Accountant who is well experienced in Bank financed projects. 12. Accounting. The accounting for the project will be done by the PAU and be consistent with the current accounting procedures and processes previously applied. The PAU will record and report project transactions using the cash basis of accounting. Accounting records will be maintained in both QuickBooks Pro 2012 accounting system, and GOG Integrated Financial Management Information System – SmartStream. QuickBooks Pro 2012 will be upgraded to QuickBooks Premier 2019, as the 2012 version is no longer supported by the service providers. Also, more licenses are available under the Premier 2019, which would provide user access for the entire team. A separate company within QuickBooks will be established for the Digital Governance Project, and a chart of accounts will be designed by project components, sub- component, categories and activities. This will facilitate proper accounting and reporting of project transactions as required by the Bank. At the end of each month, the project accounts will be reconciled, and project transactions posted to Smartstream via accounts journals. In addition, reconciliation will be conducted between SmartStream and QuickBooks to ensure that the government accounts are correctly updated. All payments will be processed and approved through SmartStream, except for U.S. dollar payments. U.S payments will be made outside of SmartStream until the system is updated and enabled to perform this function. 13. Budgeting. A master budget for the life of the project will be prepared by the Ministry of Implementation and Infrastructure in collaboration with Accountant General’s Department, Central Procurement Unit, Project Manager and Chief Information Officer. This master budget will be updated periodically, and an annual budget will be derived from the master budget. Once the annual budget is finalized, it will then be sent to the Ministry of Finance for approval and inclusion in the Government’s estimates of revenue and expenditures. The budget will be reflected under the project’s line Ministry, Ministry of Implementation and Infrastructure. Quarterly variance analyses will be incorporated in the project status reports. 14. Internal Controls. The organizational structure of the Accountant General’s Department should provide adequate oversight, segregation of duties, and ensure that there is a proper review and approval process over project transactions. The daily activities under the project will be guided by a project’s operations manual, and financial procedures manual Page 41 of 47 The World Bank Digital Government for Resilience (P167588) which will detail the applicable internal control procedures. These manuals shall be submitted to the Bank for review and approval prior to project negotiation. Currently, there is no internal audit in place for development projects in Grenada. However, the overall internal control system at AGD should be adequate. 15. Funds Flow and Disbursement Arrangements. U.S. dollar Designated Account and a local currency (Eastern Caribbean Dollar) bank account will be opened at the Grenada Cooperative Bank, upon effectiveness of the project. Both bank accounts will be segregated accounts. Under the Advance disbursement modality, funds will be advanced to the Designated Account based on six-month cash forecast, and subsequently, quarterly IFRs will be used for the documentation of expenditures. The designated account will be used to make U.S. dollar payments and facilitate the transfer of funds to the local currency (Eastern Caribbean Dollar) bank account, which will finance local currency expenditures. 16. Two other disbursement modalities to be available under the project are Direct Payment and Reimbursement. The requisite documentations and minimum application size for Direct Payments and Reimbursements can be found in the Disbursement Letter. The overall disbursement arrangements will follow standard disbursement policies and procedures established in the Disbursement Guidelines for Investment Project Financing dated February 2017, and the Disbursement and Financial Information Letter of the Project. 17. Financial Reporting. Interim Financial Reports (IFRs), in form and substance acceptable to the Bank, will be required each calendar quarter and should be submitted to the Bank within 45 days of the end of each calendar quarter. 18. External Auditing. Audited Financial Statements will be required for the Project. Each audit of the Financial Statements will cover the period of one fiscal year (Jan-Dec) and shall be furnished to the Bank not later than six (6) months after the end of such period. The audits will be performed by Grenada’s Supreme Audit Institution. The execution of the audit should be guided by an audit terms of reference reviewed and cleared by the Bank. (ii) Procurement 19. Procurement will be carried out in accordance with the “World Bank Procurement Regulations for Borrowers under Investment Project Financing” (November 2017) (“Procurement Regulations”). 20. Procurement capacity assessment. An assessment of the Central Procurement Unit (CPU) of the Ministry of Finance to implement and manage procurement and contracts was carried out in April 2019. The assessment concluded that CPU has potential capacity to carry out the procurement activities envisaged under the project, but some improvements are required. Although the CPU is well-established, and its procurement officers are familiar with the national procurement rules and procedures, only a few officers have experience in conducting procurement processes guided by World Bank procurement rules, and some have no previous experience in implementing a Bank financed project. The CPU’s workload is heavier than it previously was, as this unit is now in charge of all procurement activities carried out by the Government, including contracts financed by own funds, WBG funds and other donor funds. CPU will benefit from additional procurement training and support. While CPU is subject to substantial oversight from different bodies, the scope of audits lacks adequate coverage of procurement. To mitigate this risk, it is recommended that CPU adopt the World Bank Standard Procurement Documents for all their tenders under the project, even when approaching national market. 21. The overall Procurement risk rating assigned to this project is Substantial. During project implementation, the risk will be reviewed periodically and revised as needed. 22. Procurement Documents. It is expected that most project activities will be carried out through national or international competition. The World Bank’s Standard Procurement Documents shall be used for all contracts subject to Page 42 of 47 The World Bank Digital Government for Resilience (P167588) international competitive procurement. For contracts subject to national competitive procurement, the Borrower should use Procurement Documents agreed with and found acceptable by the Bank. 23. Project Procurement Strategy for Development and Procurement Plan. The Procurement Plan for the first 18 months has been prepared by the Borrower in accordance with the analysis and results from the PPSD. A summary of the PPSD, including recommended procurement approach for higher value/risk contracts, is presented in a table at the end of this section. Procurement of goods, services and consulting services will include: design, supply and installation of IT systems; technical assistance and advisory services for project implementation; digitization of government archives; development of a single sign-on digital identifier platform; development of an e-payment platform; among others. The procurement methods and prior review thresholds are detailed in the PPSD. The PPSD is developed for the project before negotiations and defines the applicable procurement arrangements, appropriate selection methods, including market approach, and type of review to be conducted by the World Bank. The PPSD describes how procurement in this operation will support the PDO and deliver value for money using a risk-based approach. The PPSD provides adequate supporting market analysis for the selection methods detailed in the Procurement Plan. 24. Systematic Tracking and Exchanges in Procurement (STEP). In line with paragraph 5.9 of the World Bank’s Procurement Regulations, the World Bank Systematic Tracking and Exchanges in Procurement (STEP) system will be used to prepare, clear, and update Procurement Plans and monitor all procurement transactions for the project. 25. Operating costs. Operating costs refer to reasonable recurrent expenditures that would not have been incurred by the implementing agency in the absence of the project. The project may finance operating costs, such as office supplies, communication and advertising costs, computers and equipment maintenance, travel and per diem for local and international staff, and project implementation support personnel. Government’s administrative procurement procedures have been reviewed and may be applied for operating costs. 26. Training. The project may also finance costs of training course, travel and per diem of trainers and trainees, and rental of facilities. Government’s administrative procurement procedures have been reviewed and may be applied for training-related expenditures. 27. Supervision arrangements. In addition to prior review supervision to be carried out by the World Bank team, the capacity assessment recommends annual supervision missions to the field to carry out post review of at least 1:10 of procurement actions. The procurement prior review thresholds are detailed in the PPSD. Mandatory Procurement Prior Review Thresholds detailed in Annex I of the World Bank Procurement Procedures are applied. 28. Summary of PPSD. The Summary of the PPSD is included in the table below, which covers the procurement activities for the initial 18 months of implementation. As the PPSD and the corresponding PP are living documents, both will be updated over the project implementation, to reflect the needs of the project: Type Description Estimated Cost Average Bank Procurement Selection Evaluation (USD) Risk Oversight Approach/ Method Method Competition CS Consulting services to develop 650,000 3.0 Post International QCBS MAP Enterprise Architecture and Open Interoperability Framework S Digitization of government archives 2,000,000 2.0 Prior International RFB LEB Open S Design, supply and installation of 4,000,000 4.2 Prior International RFP MAP new Core Tax System Open CS Consulting services to provide 3,100,000 4.2 Prior International QCBS MAP technical assistance and advisory Open services for project implementation Page 43 of 47 The World Bank Digital Government for Resilience (P167588) CS Development of Referencing 1,000,000 2.7 Prior International QCBS MAP System for title deeds and other Open related documents and services CS Development of single sign-on 750,000 3.8 Post International QCBS MAP digital identifier platform Open CS Development of e-payment 100,000 3.7 Post International QCBS MAP platform Open CS Implementation of e-payment 900,00 3.7 Post International QCBS MAP platform Open CS Development and installation of 250,000 2.7 Post International CQS N/A central system for all government Open registries CS Development of work-flow 1,000,000 3.7 Prior International QCBS MAP platform for civil registry Open G IT Equipment 250,000 2.0 Post National RFB LEB Open Page 44 of 47 The World Bank Digital Government for Resilience (P167588) ANNEX 3: Economic Analysis COUNTRY: Grenada Digital Government for Resilience 1. The economic analysis assesses the expected social returns from the project’s investments in enhancing the delivery of the selected public services. The analysis follows a standard cost-benefit analysis (CBA) methodology: a cash flow analysis and the resulting financial analysis is complemented with assumptions of social and economic values for inputs and outputs, which taken together inform the economic returns and justification for the project. The costs are calculated based on the market value of the goods and consultancy services that will be financed directly by the project. The calculation of benefits is based on the estimated economic value resulting from the improvements in the availability and usage of the selected public services, and the reduction in processing time and compliance cost for these services. 2. The project is expected to generate positive economic returns. Project costs incorporated into the CBA include the fixed cost of the investment undertaken by the project (USD 15 million), as well as the operation and maintenance (O&M) costs for the digital platforms introduced under Component 1 and the e-services introduced under Component 2. The financial analysis incorporates the financial benefits resulting from the introduction of the two e-services supported by the project, civil registry and tax administration, arising from: the fees that the government would expect to charge for the provision of the civil registry services and the expected increase in tax revenue due to an increased number of registered taxpayers using the new tax administration system. The economic benefits resulting from these two services include: (i) reduction in the time citizens spend traveling and waiting in line for the two services; and (ii) reduction in the amount of time and resources it takes citizens and business to make tax payments and contributions (i.e. reduction in compliance cost). Other economic benefits resulting from project interventions that have not been quantified in the economic analysis due to lack of data include: (i) reductions in the unit cost of service delivery as a function of the time it takes civil servants to process citizen requests for services; (ii) reduced paper costs; (iii) the gains from the possible introduction in the future of a wider range of e-services to citizens (thanks to the enabling digital platforms to be built under Component 1); and (iv) improved business continuity due to the automation of the selected public services and digitization of critical government records, which is expected to reduce the risk of losing sensitive documentation (such as birth certificates, tax payment records, ownership titles) that have intrinsic economic value. The social and environmental safeguards assessment conducted during project preparation found no negative externalities that may result from the investments that the project will finance. 3. The CBA is built on the inputs and assumptions that stem from the available baseline public service user data provided by GOG. The number of birth certificates processed in 2017 was 14,260. The Doing Business Report 2018 observes that an average business spends a total of 140 hours per year to make tax payments and contributions. Approximately 2,000 medium-size businesses and 18,000 individuals pay taxes, spending about 4 hours on each transaction. The annual growth rate for these transactions is projected at 2 percent. At an average processing fee of USD 3 per civil registry transaction, as well as an estimated 2 percent increase in total tax revenues as a result of the introduction of the new tax system, the financial analysis starts yielding a positive cash flow starting the fourth year of the project lifecycle considering the fixed cost of the investment (USD 15 million) as well as O&M costs.7 The economic analysis incorporates the expected savings due to the reduction in processing times by a projected 36 hours for civil registry and 4 hours for tax payment transactions (calculated based on the corresponding GDP per capita per hour), as well as the potential reduction in compliance costs resulting from improvements in the tax administration system. 7 In accordance with industry standards, annual O&M costs are estimated at approximately 20 percent of the software cost for the systems expected for introduction under Components 1 and 2. O&M expenses are projected to start materializing in the sixth year of the project when all systems are expected to be operational and continue for ten years, at which point the investment lifecycle is projected to end. Page 45 of 47 The World Bank Digital Government for Resilience (P167588) 4. Analysis of compliance gaps, taxpayer attitudes towards compliance, and compliance costs is limited in the Caribbean. The value of accumulated tax arrears compared to the total tax collection is generally high in the Caribbean region by international standards, reflecting low collection enforcement capacity and insufficient resources devoted to this function. In Grenada, the value of arrears in percentage of total tax collection hovers around 40 percent (approximately USD 5.6 million). 8 This mainly reflects weak compliance monitoring by the tax administrations – as the number of taxpayers exceeds administrative capacity, some aspects of compliance management, such as monitoring filing obligations, are weakened. In the absence of studies that systematically analyze the compliance gap and compliance costs in Grenada, the financial analysis relies on the assumption that the efficiency gains in compliance monitoring and enforcement due to the new tax system would help address the chronic situation in arrears management. This is projected to yield approximately USD 1 million in additional revenue starting in year four, with a gradual increase in revenue collection throughout the investment lifecycle.9 For the reduction in compliance costs, the economic analysis assumes that the efficiencies introduced by the new tax system could lead to a reduction in compliance costs equivalent to 8 percent of total tax revenue.10 5. The economic analysis under these assumptions yields an NPV of USD 5.92 million and an economic IRR of 16 percent.11 The analysis presumes that the civil registry and tax administration services would be available 99 percent of the time thanks to the project’s investments in resiliency. Under a scenario where service availability is interrupted due to a natural or human-made disaster, the projected benefits would have been lower. 8 Tax Administration Reforms in the Caribbean “Challenges, Achievements, and Next Steps .” Schlotterbeck, Stephane. IMF Working Paper. April 2017. 9 IMF Article IV July 2018 projects approximately 4 percent year-on-year increase (approximately USD 15 million per year) in tax revenues between 2021 and 2023 primarily based on GDP growth projections. Article IV further notes that improvements in tax administration processes could yield additional revenue. 10 While a compliance cost analysis for Grenada is not available, for small tax bases (i.e. less than 50 million), it is not uncommon to observe compliance costs equivalent to approximately 20 percent of total tax revenue. The economic analysis assumes that in the Grenadian case the new tax system could help to save 40 percent of the estimated compliance cost (i.e. 8 percent of total tax revenue). The sensitivity analysis shows that even at 6 percent the project remains economically viable. 11 An economic discount rate of 10 percent was used in the analysis. Page 46 of 47 The World Bank Digital Government for Resilience (P167588) Grenada Digital Government for Resilience Project Calculation of Costs and Benefits Table of Parameters and Assumptions Transactions Birth Certificates 14,260 Growth 2% Tax payments (individual) 18,000 Tax payments (businesses) 2,000 50,320,000 Tax Revenues (IMF Article IV 2018) Savings in compliance costs plus additional resources for growth 8% Financial Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Transactions 14,260 14,545 14,836 15,133 15,435 15,744 16,059 16,380 16,708 17,042 17,383 17,731 18,085 18,447 18,816 Fees (USD) 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Increases in Tax Revenues (2%) 1,006,400 1,026,528 1,047,059 1,068,000 1,089,360 1,111,147 1,133,370 1,156,037 1,179,158 1,202,741 1,226,796 1,251,332 Revenue 42,780 43,636 44,508 1,051,798 1,072,834 1,094,291 1,116,177 1,138,500 1,161,271 1,184,496 1,208,186 1,232,350 1,256,997 1,282,136 1,307,779 Investment 3,750,000 3,750,000 3,750,000 3,750,000 Operations & Maintenance 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 Total Expenditure 3,750,000 3,750,000 3,750,000 3,750,000 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 554,307 Net Cash Flow -3.75 -3.71 -3.71 -3.71 0.50 0.52 0.54 0.56 0.58 0.61 0.63 0.65 0.68 0.70 0.73 0.75 Economic Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Transactions (time savings) Birth Certificates 14,260 14,545 14,836 15,133 15,435 15,744 16,059 16,380 16,708 17,042 17,383 17,731 18,085 18,447 18,816 Tax payments (individual) 18,000 18,360 18,727 19,102 19,484 19,873 20,271 20,676 21,090 21,512 21,942 22,381 22,828 23,285 23,751 Tax payments (businesses) 2,000 2,040 2,081 2,122 2,165 2,208 2,252 2,297 2,343 2,390 2,438 2,487 2,536 2,587 2,639 Benefits Reduction in processing times (GDP/cap hours) - - - 393,549 802,840 818,897 835,275 851,980 869,020 886,400 904,128 922,211 940,655 959,468 978,657 Reduction in compliance costs (% of Tax Returns) 4,106,112.0 4,106,112.0 4,106,112.0 4,106,112.0 4,106,112.0 4,106,112.0 4,106,112.0 4,106,112.0 4,106,112.0 4,106,112.0 4,106,112.0 Revenues - - - 393,549 4,908,952 4,925,009 4,941,387 4,958,092 4,975,132 4,992,512 5,010,240 5,028,323 5,046,767 5,065,580 5,084,769 Investment 3,750,000 3,750,000 3,750,000 3,750,000 Operations & Maintenance 600,000 612,000 624,240 636,725 649,459 662,448 675,697 689,211 702,996 717,056 731,397 746,025 Total Expenditure 3,750,000 3,750,000 3,750,000 3,750,000 600,000 612,000 624,240 636,725 649,459 662,448 675,697 689,211 702,996 717,056 731,397 746,025 Net Cash Flow -3.75 -3.75 -3.75 -3.75 -0.21 4.30 4.30 4.30 4.31 4.31 4.32 4.32 4.33 4.33 4.33 4.34 Net Present Value (Economic) $ 5.92 EIRR 16% Sensitivity to Savings Rate Compliance Costs NPV Economy 5.92 5% (0.91) 6% 1.36 7% 3.64 8% 5.92 9% 8.20 10% 10.47 Page 47 of 47