Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD1591 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT PAPER FOR AN ADDITIONAL LOAN IN THE AMOUNT OF US$66.7 MILLION TO THE REPUBLIC OF AZERBAIJAN FOR THE IDP LIVING STANDARDS AND LIVELIHOODS PROJECT June 17, 2016 Social, Urban, Rural and Resilience Global Practice Europe and Central Asia Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective May 20, 2016) Currency Unit = New Azerbaijani Manat (AZN) AZN 1.49 = US$1 US$0.71 = SDR 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing CPF Country Partnership Framework ESMF Environmental and Social Management Framework FM Financial Management GoA Government of Azerbaijan GRM Grievance Redress Mechanism GRS Grievance Redress Service IDP Internally Displaced Person IFR Interim Financial Report O&M Operations and Maintenance OM Operational Manual PDO Project Development Objective PIU Project Implementation Unit RAP Resettlement Action Plan RPF Resettlement Policy Framework SFDI Social Fund for the Development of IDPs Vice President: Cyril E Muller Country Director: Mercy Miyang Tembon Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Country Manager: Larisa Leshchenko Practice Manager: Nina Bhatt Task Team Leader: Michelle P. Rebosio Calderon REPUBLIC OF AZERBAIJAN ADDITIONAL FINANCING TO IDP LIVING STANDARDS AND LIVELIHOODS PROJECT (P155110) CONTENTS Project Paper Data Sheet i Project Paper I. Introduction 1 II. Background and Rationale for Additional Financing 1 III. Proposed Changes 3 IV. Appraisal Summary 12 18 V. World Bank Grievance Redress Annexes Annex 1: Revised Results Framework and Monitoring Indicators 19 ADDITIONAL FINANCING DATA SHEET Republic of Azerbaijan Additional Financing to IDP Living Standards and Livelihoods Project (P155110) EUROPE AND CENTRAL ASIA SOCIAL, URBAN, RURAL AND RESILIENCE Basic Information – Parent Original EA Parent Project ID: P122943 B - Partial Assessment Category: Current Closing Date: 31-Dec-2016 Basic Information – Additional Financing (AF) Additional Project ID: P155110 Financing Type Scale Up (from AUS): Regional Vice Proposed EA Cyril E Muller President: Category: Expected Country Director: Mercy Miyang Tembon 20-Dec-2016 Effectiveness Date: Senior Global Practice Ede Jorge Ijjasz- Expected Closing 31-Dec-2020 Director: Vasquez Date: Practice Nina Bhatt Report No: PAD1591 Manager/Manager: Michelle P. Rebosio Calderon, Nijat Valiyev, Team Leader(s): Rebecca Emilie Anne Lacroix Borrower Organization Name Contact Title Telephone Email Republic of Azerbaijan 994-124938103 Project Financing Data - Parent (IDP Living Standards and Livelihoods Project-P122943) (in US$, millions) Key Dates Ln/Cr/T Approval Signing Effectiven Original Closing Revised Project Status F Date Date ess Date Date Closing Date IBRD- 27-Oct- 16-Nov- 09-Feb- P122943 Effective 30-Jun-2016 31-Dec-2016 80960 2011 2011 2012 Disbursements % Ln/Cr/ Disburs Undisburse Project Status Currency Original Revised Cancelled Disburse TF ed d d IBRD- Effectiv P122943 US$ 50.00 50.00 0.00 48.57 1.43 97.14 80960 e Project Financing Data - Additional Financing Additional Financing to IDP Living Standards and Livelihoods Project (P155110)(in US$, millions) [X] Loan [ ] Grant [ ] IDA Grant [ ] Credit [ ] Guarantee [ ] Other Total Bank Total Project Cost: 78.53 66.70 Financing: Financing Gap: 0.00 Financing Source – Additional Financing (AF) Amount Borrower 11.83 International Bank for Reconstruction and Development 66.70 Financing gap 0.00 Total 78.53 Policy Waivers Does the project depart from the CAS in content or in other No significant respects? Explanation Does the project require any policy waiver(s)? No Explanation Team Composition Bank Staff Name Role Title Specialization Unit Michelle P. Rebosio Team Leader Senior Social GSU03 Calderon (ADM Development Responsible) Specialist ii Nijat Valiyev Team Leader Senior Infrastructure GTI03 Specialist Rebecca Emilie Team Leader Social Development GSU03 Anne Lacroix Specialist Sandro Nozadze Procurement Procurement GGO03 Specialist Specialist (ADM Responsible) Tural Jamalov Financial Financial GGO21 Management Management Specialist Specialist Daniel P. Owen Team Member Senior Social GSU03 Development Specialist Geoffrey John Team Member E T Consultant Infrastructure GTI02 Kurgan specialist Gohar Grigorian Team Member Senior Program GSU03 Assistant Gulana Enar Safeguards Senior Environmental GEN03 Hajiyeva Specialist Environmental safeguards Specialist Jimena Garrote Counsel Senior Counsel LEGLE Jose Janeiro Team Member Senior Finance WFALA Officer Nigar Sadikhova Team Member Executive Assistant ECCAZ Sarah G. Michael Team Member Program Leader ECCU3 Victoria Ahlonkoba Team Member Program Assistant GSU03 Bruce-Goga Extended Team Name Title Location Locations Country First Location Planned Actual Comments Administrative Division Azerbaijan Beylagan Rayon X X Azerbaijan Beylaqan Beylagan Rayon X Khocavend settlement Azerbaijan Beylaqan Beylagan Rayon X Harami area Azerbaijan Beylaqan Beylagan Rayon X Yeni Khocavend settlement iii Azerbaijan Beylaqan Beylagan Rayon X Guneshli settlement Azerbaijan Beylaqan Beylagan Rayon X Imamverdili village Azerbaijan Beylaqan Beylagan Rayon X Kebirli village Azerbaijan Beylaqan Beylagan Rayon X Tezekend village Azerbaijan Beylaqan Beylagan Rayon X Shefeq settlement Azerbaijan Beylaqan Beylagan Rayon X Tugh village Azerbaijan Beylaqan Beylagan Rayon X Turkler village Azerbaijan Zangilan X Azerbaijan Yardymli Rayon X X Azerbaijan Şuşa Rayonu X X Azerbaijan Imisli Shakh-Verdylyar X Azerbaijan Salyan Rayon X X Azerbaijan Sabirabad Rayon X X Azerbaijan Saatly Rayon X Azerbaijan Bilasuvar Rayon X X Azerbaijan Bilasuvar Rayon Bilasuvar Rayon X Settlement #5 Settlement #6 Azerbaijan Neftchala Rayon X X Azerbaijan Masally District X X Azerbaijan Lerik Rayon X X Azerbaijan Lankaran Rayon X X Azerbaijan Lankaran Rayon X Azerbaijan Laçın Rayonu X X Azerbaijan Aghjabadi Rayon Aran X Aran village Azerbaijan Qubadli Rayon X X Azerbaijan Xocalı X X Azerbaijan Fuezuli Kerimbeyli X Azerbaijan Imishli Rayon X X Azerbaijan Imisli Imishli Rayon X Govektala village Azerbaijan Imisli Imishli Rayon X Yeni settlement Azerbaijan Imisli Imishli Rayon X Galinchaq village Azerbaijan Imisli Imishli Rayon X Hacirustemli village Azerbaijan Fizuli X Azerbaijan Fuezuli Fizuli Rayon X Gayidish-3 settlement Gayidish-5 settlement Gayidish-6 settlement iv Azerbaijan Fuezuli Fizuli Rayon X Zobucuq 5 settlement Azerbaijan Fuezuli Fizuli Rayon X Gazakhlar village Azerbaijan Fuezuli Fizuli Rayon X Shukurbeyli village Azerbaijan Jebrail X Azerbaijan Jalilabad X Azerbaijan Fuezuli Boyuk Bahmanli X Azerbaijan Fuezuli Bala Begmenli X Azerbaijan Astara District X X Azerbaijan Imisli Alikulular X Azerbaijan Aghjabadi Rayon Aghjabadi Rayon X Aghgol area Azerbaijan Aghjabadi Rayon Aghjabadi Rayon X Takhta Korpu area Azerbaijan Aghjabadi Rayon Aghjabadi Rayon X Ashaghi Avshar Village Azerbaijan Aghdam Rayon X X Azerbaijan Agdam Aghdam Rayon X Kichikli village Azerbaijan Agdam Aghdam Rayon X Guzanli settlement Azerbaijan Agdam Aghdam Rayon X Seferli settlement Azerbaijan Agdam Aghdam Rayon X Gasimbeyli settlement Azerbaijan Agdam Aghdam Rayon X Tezekend Settlemetn Azerbaijan Agdam Aghdam Rayon X Ergi area Azerbaijan Agdam Aghdam Rayon X Ahmedaghali village Azerbaijan Agdam Aghdam Rayon X Tezekend village Azerbaijan Beylaqan Orankala X Azerbaijan Beylaqan Yeni Mil X Azerbaijan Fuezuli Horadiz X Azerbaijan Imisli Oruclu X Azerbaijan Beylaqan Yukhary- X Chemenli Azerbaijan Beylaqan Mayak X Azerbaijan Beylaqan Bolsulu X Azerbaijan Ali Bajramly X X Azerbaijan Shirvan Shirvan X Azerbaijan Şuşa Şəhəri X X Azerbaijan Tartar Rayon X Azerbaijan Zardab Rayon X X Azerbaijan Qabala Rayon Zaragan X v Azerbaijan Qabala Rayon Zaragan X Zaragab 2 settlement Azerbaijan Zaqatala Rayon X X Azerbaijan Agdam Birinci Yuzbasili X Azerbaijan Yevlakh Rayon X X Azerbaijan Goranboy Yengikend X Azerbaijan Oguz Yaqublu X Yaqublu village Azerbaijan Oghuz Rayon X X Azerbaijan Oguz Oghuz Rayon X Boyuk Soyudlu settlement Azerbaijan Oguz Oghuz Rayon X Jalud village Azerbaijan Oguz Oghuz Rayon X kerimli village Azerbaijan Ujar Rayon X Azerbaijan Goygol Rayon Uchtepe X Azerbaijan Tovuz Rayon X Azerbaijan Barda Rayon Tagilar X Azerbaijan Sumqayit Sumqayit X Azerbaijan Shamakhi Rayon X X Azerbaijan Shaki Rayon X X Azerbaijan Shamkir Rayon X Azerbaijan Abseron Saray X Saray Settlement Azerbaijan Barda Rayon Saatli X Azerbaijan Agdam Rzalar X Azerbaijan Goranboy Rus Borisi X Rusborisi village Azerbaijan Qazax X Azerbaijan Qax X Azerbaijan Qutqashen X Azerbaijan Agdam Orta-Karvend X Azerbaijan Barda Rayon Mollali X Azerbaijan Barda Rayon Mollagyullar X Azerbaijan Barda Rayon Mirzadzhafarli X Azerbaijan Mingacevir City Mingelchaur X Azerbaijan Agdam Mahrizli X Azerbaijan Abseron Masazir X Azerbaijan Qobustan X Azerbaijan Kurdamir Rayon X X vi Azerbaijan Kurdamir Rayon Kurdamir Rayon X Azerbaijan Qabala Rayon Qabala Rayon X Gabala city Azerbaijan Qabala Rayon Qabala Rayon X Kurd village Azerbaijan Qusar Rayon X X Azerbaijan Quba Rayon X X Azerbaijan Abseron Khirdalan X Azerbaijan Khodzhavend X X Azerbaijan Aghjabadi Rayon Khodzhavend X Azerbaijan Goygol Rayon X X Azerbaijan Goygol Rayon Goygol Rayon X Chaykend village Azerbaijan Goygol Rayon Goygol Rayon X Garabulaq village Azerbaijan Goygol Rayon Goygol Rayon X Mollacelilli village Azerbaijan Goygol Rayon Goygol Rayon X Shehriyar village Azerbaijan Goygol Rayon Goygol Rayon X Murovdagh settlement Azerbaijan Goygol Rayon Goygol Rayon X Yeni Gizilca settlement Azerbaijan Goygol Rayon Goygol Rayon X Balchili village Azerbaijan Goygol Rayon Goygol Rayon X Jumshudlu village Azerbaijan Goygol Rayon Goygol Rayon X Murovdagh village Azerbaijan Goygol Rayon Goygol Rayon X Keremli village Azerbaijan Goygol Rayon Goygol Rayon X Gizilqaya settlement Azerbaijan Khankendi X X Azerbaijan Khachmaz Rayon X X Azerbaijan Kurdamir Rayon Karrar X Azerbaijan Barda Rayon Kerimbeyli X Azerbaijan Kəlbəcər Rayonu X X Azerbaijan Goranboy Rayon X X Azerbaijan Goranboy Goranboy Rayon X Kohne mesheli village Azerbaijan Goranboy Goranboy Rayon X Ashaghi Aghcakend village Azerbaijan Goranboy Goranboy Rayon X Irevanli village Azerbaijan Goranboy Goranboy Rayon X Gazanchi village Azerbaijan Goranboy Goranboy Rayon X Yeni kochkun settlement Azerbaijan Goranboy Goranboy Rayon X Yeni Veyisli settlement Azerbaijan Goranboy Goranboy Rayon X Kohne Veyisli village Azerbaijan Goranboy Goranboy Rayon X Mesheli settlement vii Azerbaijan Goranboy Goranboy Rayon X Yeni yol village Azerbaijan Goranboy Goranboy Rayon X Garachinar village Azerbaijan Goranboy Goranboy Rayon X Gakhtut village Azerbaijan Goranboy Goranboy Rayon X Gazanbulaq village Azerbaijan Goranboy Goranboy Rayon X Ashiqli village Azerbaijan Goygol Rayon Yeni Zod X Azerbaijan Ismayilli Rayon X X Azerbaijan Ismayilli Ismayilli Rayon X Kelbend village Azerbaijan Ismayilli Ismayilli Rayon X Galinchaq village Azerbaijan Ismayilli Ismayilli Rayon X Kelbend village Azerbaijan Barda Rayon Guloglular X Azerbaijan Barda Rayon Gulgazli X Azerbaijan Barda Rayon Gulgazli X Azerbaijan Goychay Rayon X X Azerbaijan Ganja X X Azerbaijan Ganja City Ganja X Azerbaijan Kyadabek X X Azerbaijan Goranboy Erkec X Azerbaijan Davachi Rayon X X Azerbaijan Dashkasan Rayon X X Azerbaijan Dashkasan Rayon Dashkasan Rayon X Zaylik village Azerbaijan Dashkasan Rayon Dashkasan Rayon X Gushchu village Azerbaijan Goranboy Veyisli X Azerbaijan Barda Rayon Boyuk Goyuslu X Azerbaijan Agdam Benevshelyar X Azerbaijan Balakan Rayon X X Azerbaijan Oguz Bayan X Azerbaijan Barda Rayon Barda Rayon X X Hesenqaya village Azerbaijan Barda Rayon Barda Rayon X Kober village Azerbaijan Barda Rayon Barda Rayon X Bacirevan village Azerbaijan Barda Rayon Barda Rayon X İkinci Garademirchi village Azerbaijan Barda Rayon Barda Rayon X Jicimli village Azerbaijan Barda Rayon Barda Rayon X Jumalar village Azerbaijan Barda Rayon Barda Rayon X Gazakhlar village viii Azerbaijan Barda Rayon Barda Rayon X Gayali viillage Azerbaijan Barda Rayon Barda Rayon X Jeyirli village Azerbaijan Barda Rayon Barda Rayon X Gerene village Azerbaijan Barda Rayon Barda Rayon X Gerene village Azerbaijan Barda Rayon Barda Rayon X Memmedli village Azerbaijan Barda Rayon Barda Rayon X Tehle village Azerbaijan Barda Rayon Barda Rayon X Hesenli village Azerbaijan Barda Rayon Barda Rayon X Garademirchi village Azerbaijan Barda Rayon Barda Rayon X Azerbaijan Barda Rayon Barda Rayon X Gehremanli - Miressefli village Azerbaijan Barda Rayon Barda Rayon X Yeni Aghali village Azerbaijan Barda Rayon Barda Rayon X Yeni koshkun settlement Azerbaijan Barda Rayon Barda Rayon X Lek village Azerbaijan Barda Rayon Barda Rayon X Meshediibishli village Azerbaijan Barda X Azerbaijan Barda Rayon Barda X Barda city Azerbaijan Baku City X X Azerbaijan Baki Baku X Azerbaijan Agdam Baharli X Azerbaijan Agdam Ayakh-Karvend X Azerbaijan Absheron Rayon X X Azerbaijan Abseron Absheron Rayon X Pirekushkul settlement Azerbaijan Abseron Absheron Rayon X Azerbaijan Abseron Absheron Rayon X Jeyranbatan settlement Azerbaijan Abseron Absheron Rayon X Nubar Settlement Azerbaijan Qakh Rayon Amirdzhan X Azerbaijan Barda Rayon Aliyanly X Azerbaijan Aghsu Rayon X Azerbaijan Agsu Aghsu Rayon X Gurcuvan village Azerbaijan Aghdash Rayon X Agdzhabedy X Aghgol area Azerbaijan Agdzhabedy X Aghgol area Azerbaijan Qazax Bol'shoy X Khanuklar Azerbaijan Aghjabadi Rayon Muganli X ix Azerbaijan Agdam Uchoglan X Azerbaijan Kurdamir Rayon Pirili X Azerbaijan Barda Rayon Yenidashkend X Azerbaijan Aghstafa Rayon X Azerbaijan Mingacevir City X Azerbaijan Naftalan City X Azerbaijan Samukh Rayon X Azerbaijan Şəki Şəhəri X Azerbaijan Siazan Rayon X Azerbaijan Sumqayit City X Azerbaijan Khizi Rayon X Azerbaijan Yevlakh City X Azerbaijan Hajigabul Rayon X Azerbaijan Beylaqan Mil X Azerbaijan Beylaqan Sarisu X Azerbaijan Barda Rayon Shakhvelilar X Institutional Data Parent (IDP Living Standards and Livelihoods Project-P122943) Practice Area (Lead) Social, Urban, Rural and Resilience Global Practice Contributing Practice Areas Cross Cutting Topics [ ] Climate Change [ ] Fragile, Conflict & Violence [ ] Gender [X] Jobs [ ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Health and other social services Other social services 72 x Public Administration, Law, and Public administration- 10 Justice Other social services Finance SME Finance 6 Education Vocational training 6 Finance Microfinance 6 Total 100 Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Social dev/gender/inclusion Conflict prevention and post- 76 conflict reconstruction Financial and private sector Micro, Small and Medium 15 development Enterprise support Social protection and risk Improving labor markets 9 management Total 100 Additional Financing to IDP Living Standards and Livelihoods Project (P155110) Practice Area (Lead) Social, Urban, Rural and Resilience Global Practice Contributing Practice Areas Cross Cutting Topics [ ] Climate Change [X] Fragile, Conflict & Violence [X] Gender [X] Jobs [ ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Health and other social services Other social services 100 xi Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Social dev/gender/inclusion Conflict prevention and post- 40 conflict reconstruction Social dev/gender/inclusion Participation and civic engagement 20 Financial and private sector Micro, Small and Medium 20 development Enterprise support Rural development Rural services and infrastructure 10 Urban development Other urban development 10 Total 100 Consultants (Will be disclosed in the Monthly Operational Summary) Consultants will be required xii I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional loan in the amount of US$66.7 million to the Republic of Azerbaijan for the scale-up and restructuring of the IDP Living Standards and Livelihoods Project (P122943, IBRD-80960). This is in response to a letter from the government dated December 11, 2015, requesting Additional Financing (AF). The proposed AF loan would extend support for the social and economic infrastructure in beneficiary internally displaced person (IDP) communities and further strengthen IDP livelihoods. The closing date of the AF would be December 31, 2020. 2. The AF activities would be fully consistent with the project development objective (PDO) of the project. The original PDO “to improve living conditions and increase the economic self-reliance of targeted internally displaced persons” remains relevant and would remain unchanged. The Results Framework and Monitoring indicators have been revised to reflect changes in the scope of project activities as well as to improve the clarity of data gathered through the project monitoring and evaluation systems. There are no changes to the implementation arrangements. The AF scales up and restructures a well-performing project, which has been rated Satisfactory for implementation progress and development objectives since November 2013 (and Moderately Satisfactory between project inception and November 2013). II. Background and Rationale for Additional Financing in the amount of US$66.7 million 3. Strategic context. Azerbaijan has made great strides in economic growth and poverty reduction during the last decade. However, while Azerbaijan has been very successful in reducing poverty—poverty declined from 49 percent in 2001 to 5 percent in 2014—pockets of poverty still remain. The poor remain vulnerable to economic shocks. 4. Azerbaijan is currently facing economic challenges due to falling oil prices. Low oil prices could make it more difficult for the government to continue to invest in pro-poor public investment and thus, affect the quality and coverage of infrastructure provision, including water supply and sanitation and local roads. Understanding this problem, the government continues to prioritize investments in infrastructure with the support of international financial institutions. 5. IDPs constitute one of the most vulnerable segments of the population in Azerbaijan. Approximately 7 percent (around 628,000 people) of Azerbaijan’s population is displaced—forced to leave their homes and places of origin in response to the armed conflict with Armenia—making it one of the countries with the highest share of IDPs in the population. This group is particularly affected by circumstance-driven inequalities and is overrepresented among the poor. The reasons for continued vulnerability of IDPs lie both in their precarious living conditions, an issue addressed by this parent project and by substantial other government investments, as well as in the lack of opportunities for IDPs to make a living. In many cases, IDPs do not have the skills to work in the urban areas where they have resettled. In other cases, IDPs do not have the land to be able to use skills in cattle-breeding and agriculture. In yet other cases, IDPs live in remote areas with no access to markets. These constraints need to be addressed to reduce the vulnerability of this population. 6. Performance of the parent project. The World Bank and the government of Azerbaijan (GoA) have been working in partnership to assist IDP communities in Azerbaijan since the post-conflict period in the mid-1990s when the Bank provided financing for the Pilot Reconstruction Project and the IDP Economic Development Support Project. The original IDP Living Standards and Livelihoods Project loan in the amount of US$50 million was approved by the Bank on October 27, 2011, and became effective on February 9, 2012. The project is currently on track to achieve its development objective through provision 1 of funds for demand-driven community microprojects, improving housing conditions of IDPs, livelihoods support activities, and building opportunities for rural employment. 7. Implementation of the project is rated Satisfactory. To date, the project has disbursed 90 percent of loan funds (US$45.1 million) out of the total IBRD loan of US$50 million. A total of 199,601 people have benefited from the project (out of which 50 percent are women). Under Component A, 196 communities have implemented microprojects through community-driven processes. Project indicators show that over 93 percent of beneficiaries now have access to all-weather roads (96.1 percent), 24-hour water (93.3 percent), 24-hour electricity (97.5 percent), and community centers (94 percent). Under Component B, 83 collective center renovations are complete or near completion, with an additional 20 in the pipeline, out of a total of 103 planned renovations. These beneficiaries have improved access to water (91.9 percent had access to water 24 hours per day) and electricity (99.9 percent had access to 24-hour electricity), and problems with dampness and humidity have been reduced for all but 12.7 percent of households. Under Component C, the livelihoods activities have been very effective across the subcomponents. All targeted youth (1,300) have graduated from or have participated in training programs; all income-generating groups (200 communities comprising 2,239 individuals) have been formed and have already received grants; and microloans are fully disbursed (1,608 direct beneficiaries). The impacts to date are very encouraging and, among beneficiaries who are earning an income, the average increase in monthly income is 43 percent. Microfinance activities also greatly support livelihoods in IDP communities, and the repayment rate on loans is currently 100 percent. 8. Under the current project, the target of ensuring the project benefits an equal number of male and female beneficiaries has been achieved (50 percent of beneficiaries are women). This reflects dedicated and sustained efforts to reach out to women specifically across all components; these efforts will be continued under the AF. The community-driven nature of the project also lends itself well to citizen engagement activities. All microprojects are selected as a result of community engagement, priority rankings, and development of a community action plan. Under the parent project, several indicators already ensure monitoring and progress on gender targets as well as community engagement activities, such as share of female beneficiaries for various subcomponents, beneficiary satisfaction with access to and quality of investments, and percentage of beneficiaries who feel able to influence development decisions. 9. Fiduciary aspects of the project are rated Satisfactory. Procurement administration is satisfactory and procurement activities are being implemented as planned. Issues raised by the Bank are quickly addressed and no known complaints have been brought to the Bank’s attention. Similarly, financial management (FM) and disbursement arrangements are satisfactory. The project is in compliance with FM covenants: the quarterly unaudited Interim Financial Reports (IFRs) and project audit are being submitted to the Bank on time and have been found to be satisfactory. In April 2015, the Bank FM and procurement teams conducted a joint review of post review contracts under the project and no deficiencies were noted. The project has also complied with environmental safeguards policies, although capacity to manage safeguards within the project was lacking over the past year. However, a full-time safeguards specialist has now been hired and capacity to manage and supervise safeguards is now satisfactory. Rationale for Additional Financing 10. In a letter to the Bank dated December 11, 2015, the GoA requested AF for the project. An amount of US$50 million was initially requested; this was subsequently revised to US$66.7 million in the light of additional needs identified during the appraisal process. In response to this request, this loan will provide an additional US$66.7 million to the GoA and would extend the project for four additional years, until December 31, 2020. The amount of $66.7 million includes the full financing of project activities, and does not include the $11.83 million in taxes that will be funded directly by the GoA. 2 11. The proposed AF supports scaling-up of activities initiated under the original project. Various options were considered during the preparation phase to identify the best framework for meeting the development objectives and responding to the government’s request, including preparation of a new project, financing from the state budget, and the proposed AF. Preparation of a new project was not found justifiable or necessary given that the proposed additional activities are closely related to the ongoing activities and represent a natural continuation and scale-up of the ongoing project. The scale-up has been deemed necessary given the needs of vulnerable IDPs in Azerbaijan, especially their continued need for infrastructure and livelihoods support to improve their living standards. 12. Alignment with the Bank and government strategies. The AF is included in the Azerbaijan Country Partnership Framework (CPF) FY2015–20 (Report Number: 95860-AZ) and is fully consistent with the CPF Focus Area 1: Public Sector Management and Service Delivery as well as the CPF Focus Area 2: Economic Competitiveness. The project contributes directly to Objective 1.2: Support access to, and satisfaction with, public services; Objective 1.3: Improve access to water, sanitation, and communal services; and Objective 2.2: Support enhanced access to finance for micro, small, and medium enterprises. Azerbaijan’s development strategy, ‘Azerbaijan: Vision 2020’, specifically emphasizes the need to improve housing conditions and social infrastructure for IDPs and to enhance employment opportunities for them as one of the strategic priorities of the government. 13. The proposed AF is also well aligned with the Bank’s corporate agenda of reducing poverty and enhancing shared prosperity. The project will directly improve living standards and livelihoods of IDPs, a strata of society predominantly falling into the bottom 40 percent of population. Benefits would also accrue to non-IDP populations living in proximity to IDPs, who will use social and economic infrastructure provided by the project. The gains resulting from the project can hence become a powerful tool for alleviating poverty, improving job opportunities, and boosting the incomes of the bottom 40 percent. III. Proposed Changes Summary of Proposed Changes The main changes proposed in the AF are (a) additional support to construct and/or rehabilitate physical infrastructure in new IDP housing areas; (b) providing funding to operate and maintain infrastructure financed by the project; (c) increasing the scope of livelihoods activities; and (d) supporting an impact evaluation. These activities contribute to the current objective of the project. There will be an effort to consolidate the geographic scope of activities to maximize synergies between project components. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ X ] No [ ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] 3 Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ ] No [ X ] Development Objective/Results PHHHDO Project’s Development Objectives Original PDO The objective of the Project is to improve living conditions and increase the economic self-reliance of targeted internally displaced persons. Change in Results Framework PHHCRF Explanation: The Results Framework has been updated to better capture the results of new activities as well as to improve the clarity of results of ongoing activities. Some indicators have been simplified, while some (that have not been yielding useful data) will be retired. The AF will fund a firm to carry out more complex monitoring and evaluation activities, which will also design and carry out an impact evaluation covering the AF period. Because of this, the method of data collection may vary for several existing indicators. To make it possible to assess the overall impact of the project, some data may therefore be collected in two different ways: once by existing methods and once by the consulting firm. Although this involves some additional expenses, this will make it possible to gauge results for the life of the project. Compliance PHHHCompl Change in Safeguard Policies Triggered PHHCSPT Explanation: Involuntary Resettlement - OP 4.12. In the AF, Component B will support multiple infrastructure investments in selected IDP settlements constructed by the government since 2005 (so-called ‘New Settlements’). Because this may lead to increased pressure on land in communities with little land availability, the project will trigger OP 4.12 as part of the AF. Although state-owned land is expected to be available to municipalities for these investments, informal occupants or minor impacts upon livelihoods cannot be ruled out. The Project Implementation Unit (PIU), the Social Fund for the Development of IDPs (SFDI), has developed a Resettlement Policy Framework (RPF) that has been consulted and disclosed in- country and in the Operations Portal. The SFDI will screen proposed project investments for potential impacts covered under OP 4.12 and will prepare Resettlement Action Plans (RAPs) where necessary. 4 International Waterways - OP 7.50. The project will support implementation of microprojects on water supply and sanitation systems for beneficiary communities. However, the scale of the investments will be limited and will mostly consist of rehabilitation and repair of existing infrastructure (ongoing schemes). Although new connections to existing water supply systems may occur for a limited number of new investments, these are not of a nature to have adverse impacts on the quality and quantity of water flows to riparian states. An exception from OP 7.50 had been issued by the Regional Vice President for Europe and Central Asia for the original project. As the AF will continue to support the investments of the same nature and scale, such exception for the AF was also issued on January 13, 2016. Current and Proposed Safeguard Policies Current (from Current Proposed (from Triggered: Parent ISDS) Additional Financing ISDS) Environmental Assessment (OP) (BP 4.01) Yes Yes Natural Habitats (OP) (BP 4.04) No No Forests (OP) (BP 4.36) No No Pest Management (OP 4.09) No No Physical Cultural Resources (OP) (BP 4.11) No No Indigenous Peoples (OP) (BP 4.10) No No Involuntary Resettlement (OP) (BP 4.12) No Yes Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP Yes Yes 7.50) Projects in Disputed Areas (OP) (BP 7.60) No No Covenants - Additional Financing ( Additional Financing to IDP Living Standards and Livelihoods Project - P155110 ) Source of Finance Description of Funds Agreement Date Due Recurrent Frequency Action Covenants Reference All the Borrower’s obligations referred to in Schedule 2, Section I of CONTINU IBRD Section I, Schedule 2 to the New OUS Paragraph 1. Original Loan Agreement shall apply to the execution of the Project. 5 Without limitations upon the provisions of paragraph 1 of this Section, prior to the carrying out of any activities to be financed with the proceeds of the Loan, the Borrower shall Schedule 2, and shall cause IBRD Section I, the Project New Paragraph 2. Implementing Entity to: (a) amend the Subsidiary Agreement, and (b) update the Operational Manual, all for purposes of this Loan and in a manner satisfactory to the Bank The Borrower shall ensure that Part B.2 of the Schedule 2, Project is carried CONTINU IBRD Section I, New out in accordance OUS Paragraph 3. with the provisions of the RPF Conditions PHCondTbl Source Of Fund Name Type IBRD Condition of Effectiveness Effectiveness Description of Condition The Project Agreement has been amended PHCondTbl Source Of Fund Name Type IBRD Condition of Effectiveness Effectiveness 6 Description of Condition The Subsidiary Agreement has been amended in a manner acceptable to the Bank PHCondTbl Source Of Fund Name Type IBRD Condition of Effectiveness Effectiveness Description of Condition The Operational Manual has been updated in a manner acceptable to the Bank Risk PHHHRISKS Risk Category Rating (H, S, M, L) 1. Political and Governance Moderate 2. Macroeconomic Moderate 3. Sector Strategies and Policies Moderate 4. Technical Design of Project or Program Low 5. Institutional Capacity for Implementation and Sustainability Low 6. Fiduciary Moderate 7. Environment and Social Moderate 8. Stakeholders Moderate 9. Other Moderate OVERALL Moderate Finance PHHHFin Loan Closing Date - Additional Financing ( Additional Financing to IDP Living Standards and Livelihoods Project - P155110 ) Source of Funds Proposed Additional Financing Loan Closing Date International Bank for Reconstruction and 31-Dec-2020 Development Change in Disbursement Estimates (including all sources of Financing)PHHCDE Explanation: Expected disbursements of the AF loan are indicated below. Expected Disbursements (in USD Million)(including all Sources of Financing) Fiscal Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Annual 5.00 15.35 30.80 15.55 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative 5.00 20.35 51.15 66.70 66.70 0.00 0.00 0.00 0.00 0.00 Allocations - Additional Financing ( Additional Financing to IDP Living Standards and Livelihoods Project - P155110 ) Source of Category of Disbursement %(Type Currency Allocation Fund Expenditure Total) 7 Proposed Proposed Goods, works, non- consulting services, and consultant services IBRD USD 66,533,250.00 100.00 (including audits), Small Grants, Micro-Credits, Training Front-end Fee 166,750.00 0.00 IBRD USD Total: 66,700,000.00 Components PHHHCompo Change to Components and Cost PHHCCC Explanation: The project will continue to have four components, with some changes made to each component as described below: Component A: Microprojects (AF: US$16.5 million; parent project: US$15 million). This component will continue to finance demand-driven economic and social infrastructure investments in communities with a significant proportion of IDPs. Microprojects may include (a) repair or rehabilitation of physical infrastructure (for example, water supply, power supply, access roads, drainage systems) and (b) repair or rehabilitation of social infrastructure, such as schools and health centers. The component will also continue to finance community mobilization and outreach for micro-project proposal development. The key changes to component design are the following: (a) the component will expand in geographic scope and (b) while the ceiling for the value of infrastructure supported will remain at US$250,000, the SFDI board approval will be sought for projects above US$150,000. In the parent project, the ceiling for the SFDI board approval is US$100,000. Increasing the size of projects requiring board approval will help avoid delays resulting from a high volume of reviews and enable the board to focus on the largest investments. Community contributions will continue to be set at 3 percent of the total value for the component. Operations and maintenance (O&M) activities will be significantly strengthened under the AF as will community engagement throughout the subproject implementation cycle. Component B: Housing Renovation and Social and Economic Infrastructure for IDP Settlements (Original Component Title: Housing Renovation. AF: US$22.53 million; parent project: US$33 million). Component B will undergo the most changes in scope during the AF stage. In the parent project, the component financed the renovation of IDP collective centers that were in a state of disrepair. The GoA, however, is now aiming to resettle a large number of people currently living in IDP collective centers to ‘New Settlements’ and has therefore asked for this component to change focus. The GoA will be financing the ‘New Settlements’ using other financing but has stated that there is a great need to rehabilitate social and economic infrastructure in the ‘New Settlements’ built before 2005. Component B under the AF will therefore finance multiple small to medium-size infrastructure investments in each of approximately 30 locations, as contrasted with Component A where only one investment is possible at any one time. While any community with a significant share of IDP population is eligible for Component A, under Component B, only investments in the ‘New Settlements’ are eligible for funding. Investments under Component B will include repair of social infrastructure (for example, schools, health care centers) and repair of other physical infrastructure (for example, access roads, water supply). Selection will be based on an infrastructure needs assessment analyzing (a) the extent of infrastructure needs in each settlement and (b) whether addressing 8 specific infrastructure needs is likely to promote economic development. During project implementation, the SFDI will create or revitalize community groups, present to them the assessment of infrastructure needs in their community, and then, help them develop a final priority list of infrastructure investments to be supported by the project. Although communities will be part of the process of defining the final list of infrastructure, investments will be selected from a needs assessment generated menu, contrary to Component A where communities self-select microprojects. Component B will also finance ongoing O&M of all infrastructure supported by the project. In parallel, this component will also provide technical assistance and training to strengthen the GoA’s capacity to operate and maintain IDP-focused infrastructure, including all investments financed under the project. The inclusion of these new activities is based on lessons learned during the implementation of the parent project, where maintenance that took place was not of optimal quality. Component C: Livelihood Support (AF: US$20 million; parent project: US$11 million). This existing component will be scaled up and expanded geographically. Targeting for the component will also be modified to be more integrated with Components A and B—the component will specifically target communities benefitting from infrastructure investments. In addition, a new subcomponent will be added to Component C that will focus on providing integrated economic support to beneficiaries. The component will, therefore, comprise four subcomponents: (a) Youth Training and Business Development; (b) Income Generating Activities; (c) Provision of Microcredit for IDPs; and (d) (new) Integrative Economic Support Pilot. Activities under each subcomponent are as follows: (a) Youth Training and Business Development: This subcomponent will continue to provide skills training (technical and computer skills) to young people. The subcomponent supports skills training graduates with tools that allow them to start income generating activities. To promote integration of IDPs into host communities and expand business opportunities, an annual youth workshop will be organized to bring together beneficiaries of the project with other youth entrepreneurs from around the country for mutual learning and exchange. (b) Income Generating Activities: This subcomponent will continue to support vulnerable IDPs to form groups to carry out income generating activities. Income generation groups that have been successful in developing activities with previous project financing will also be encouraged to apply for a second round of support, which can finance groups to add value to their products or to be able to benefit from more complex technology for income generation. (c) Provision of Microcredit for IDPs: Microfinance institutions that carry out activities under this subcomponent currently select IDP and non-IDP beneficiaries (80 percent IDP) to receive up to US$3,000 per group or US$1,000 per individual in initial microfinance funds to be used toward productive business activities. The repayment rate for these microloans is currently 100 percent, which indicates both that microfinance institutions have been able to successfully select viable enterprises as well as that there is scope to encourage microfinance institutions to take greater risk by targeting more vulnerable individuals. Under the AF, this subcomponent will focus increasingly on vulnerable individuals. Microfinance institutions will be required to ensure that at least 50 percent of the recipients of microloans have not received a loan in the past, and that they have an annual income that does not exceed US$1,200. Additional technical advice on micro and small business development will be offered to these vulnerable loan takers to ensure sound utilization of loans and promote business development. About 80 percent of recipients of microloans will continue to be IDPs. These changes are expected to significantly increase the poverty reduction impacts of this subcomponent, which although currently performing well, may not be benefitting the core target group for this project. 9 (d) Integrative Economic Support Pilot: This subcomponent will work in the ‘New Settlements’ supported under Component B and will provide beneficiaries’ access to integrated economic support. Under this subcomponent, residents of the ‘New Settlements’ will be eligible to apply for training and business development support to benefit from income generating activities and the beneficiaries of these two activities will also be eligible to receive microcredit. This pilot will be carefully evaluated to make it possible to see whether integrated support significantly boosts income generation and sustainability of livelihoods. Component D: Project Management, Implementation Support, and Capacity Building (AF: US$7.5 million; parent project: US$7 million). This component will finance project management and capacity building as well as monitoring and evaluation activities. The only change expected under this component is the financing of an impact evaluation. Currently, the project has successfully gathered data on outputs, but there are indications that broader outcomes and impacts of the project are not being successfully captured. Because of this, a firm will be competitively selected to carry out an impact evaluation. The firm hired to carry out this evaluation will also take over some of the more complex monitoring and evaluation activities currently carried out by the PIU, also making it possible for the PIU staff currently carrying out these activities to focus on other aspects of project implementation. The following breakdown does not include the front-end fee of US$166,750. (Note: The actual total cost for the infrastructure support to IDP communities component is US$22,533,250, rounded to US$22.53 million). Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Micro-projects Microprojects 15.00 16.50 Revised Housing Renovation and Social and Economic Housing Renovations 33.00 22.53 Revised Infrastructure for IDP Settlements Livelihood Support Livelihood Support 11.00 20.00 Revised Project Management, Project Management Implementation Support, 7.00 7.50 Revised and Capacity Building and Capacity Building Total: 66.00 66.53 Other Change(s) PHHHOthC PHImplemeDel Implementing Agency Name Type Action Change in Implementation Schedule PHHCISch Explanation: The Project closing date is extended until 31 December 2020. In line with this, an additional mid-term review will be rescheduled at implementation mid-point. 10 Appraisal Summary PHHHAppS Economic and Financial Analysis PHHASEFA Explanation: The analysis carried out for the preparation of this AF indicates significant positive economic and financial impacts over a period of 15 years. The summary of the analysis is as follows:  Component A: The overall costs of Component A are US$36.31 million. The component will benefit 314,401 IDPs and host community residents. In its most likely scenario, and including the AF, the net present value of Component A is expected to be US$122.65 million.  Component B: The overall costs of Component B are US$64.77 million. The component will benefit 73,717 people. Under the parent project, the net present value of Component B was calculated to be negative, at −US$19.89 million. However, once the AF activities are added, the net present value of this component rises to US$20.12 million.  Component C: The overall costs of Component C are US$39.92 million. The component will benefit 16,233 people. The net present value of Component C is US$216.15 million under the most likely scenario. Overall, under the most likely scenario, the project’s net present value is US$393.95 million. The sensitivity analysis carried out found that changes in +/−10 percent of the value of only three assumptions led to a change in net present value of over 5 percent. The same change in other assumptions rendered a change of less than 4 percent (not critical). The full economic and financial analysis is included in the project file. Technical Analysis PHHASTA Explanation: Systems are currently being strengthened under the parent project to boost the quality of construction, supervision, and O&M of infrastructure investments. These systems will continue to ensure the quality and sustainability of infrastructure supported by the project during the AF stage. Social Analysis PHHASSA Explanation: OP/BP 4.12 - Involuntary Resettlement is triggered on a precautionary basis as the type and location of new project activities under Component B are not yet known, and the type and scale of civil works and land acquisition are still to be determined. An RPF has, therefore, been prepared and RAPs will be prepared as needed. To mitigate social risks and help improve project outcomes, the AF places renewed emphasis on participatory decision making, beneficiary feedback mechanisms, and entry points for citizen engagement. Environmental Analysis PHHASEnvA Explanation: The environmental due diligence procedures and processes envisaged under the original Environmental and Social Management Framework (ESMF), will remain relevant for the scope of AF. However, the 11 ESMF has been updated to accommodate extended geographical coverage and address anticipated impacts of new income generating activities proposed under the AF. Risk PHHASRisk Explanation: The overall risk rating for the project is Moderate. It remains unchanged from the parent project. Despite the recent devaluation of the New Azerbaijani Manat, strong support from the GoA for livelihoods and employment will help ensure continued investments into this sector. The parent project implementation has also been rated as Satisfactory for over two years and the AF builds on the successful experience of this project. The implementation review of the parent project indicates that the maintenance that took place was not of optimal quality. Component B will therefore also finance ongoing O&M of all infrastructure supported by the project and provide technical assistance and training to strengthen the GoA’s capacity to operate and maintain IDP-focused infrastructure. IV. Appraisal Summary A. Economic Analysis 14. An analysis carried out as part of preparation of this AF indicates significant positive economic and financial impacts. As part of the analysis, the project costs were identified and these were compared to the expected benefits of investments over a period of 15 years, starting in 2013, when parent project activities began and ending in 7 years after the completion of activities under the AF. The analysis used existing project monitoring and evaluation data and other project records to determine actual project costs, identify actual accrued benefits from 2013 to 2015, and then, make assumptions about other benefits that are linked to project activities. The key assumptions applied to the analysis include the following:  A 6 percent discount rate  Income generated and savings would grow at a rate of 10 percent. (This assumption comes from the 18 percent compound average growth rate of income in Azerbaijan between 2004 to 2014, as reported by the State Statistical Committee (http://www.stat.gov.az), and the fact that the interest rate of savings saved as deposits is between 10–12 percent.) 15. The results of the analysis are as follows:  Component A: The overall costs of Component A are US$36.31 million. The component will benefit 314,401 IDPs and host community residents over 15 years. Benefits of this component accrue because of time savings, lower travel costs, lower repair costs, and improved health resulting from infrastructure investments. In its most likely scenario, and including the AF, the net present value of Component A is expected to be US$122.65 million.  Component B: The overall costs of Component B are US$64.77 million. The component will benefit 73,717 people over 15 years. Calculations for Component B differ for the parent project, which funded the renovation of collective centers, and for Component B under the AF, which funds infrastructure investments in the ‘New Settlements.’ Under the parent project, the net present value of Component B was calculated to be negative, at −US$19.89 million. This is because IDPs in collective centers are mostly economically inactive, so savings in time do not bring about economic benefits, and because savings in the cost of energy or water do not accrue for this population, as these IDPs do not pay for utilities. However, once the AF activities are added, the net present value of this component rises to 12 US$20.12 million. This was calculated using the same assumptions as for Component A because infrastructure investments are likely to bring about similar benefits to those living in mixed communities or in the ‘New Settlements.’  Component C: The overall costs of Component C are US$39.92 million. The component will benefit 16,233 people over 15 years. For this component, there are three additional important assumptions: (a) a 30 percent increase in assets for those making a living from livestock, (b) a 30 percent increase in income for income generation groups, and (c) a 25 percent increase in income for microcredits. These assumptions are expected to be conservative because the project monitoring data indicates that the income generation groups saw their income rise by 43 percent and beneficiaries of microcredits saw their income rise by 52.9 percent. More modest assumptions would not make sense as the income generated for both income generation groups and microcredit beneficiaries come mainly from livestock, which increase incrementally. The more conservative estimate for microloans comes from the potential effect of the credit burden on increases in income. The assumption for the skills development subcomponent is that the AF will achieve the same results as the parent project. Using these assumptions, the net present value of Component C will be US$216.15 million under the most likely scenario. 16. The following table summarizes the results of the analysis for the three components over 15 years: Net Number of Project Project Internal Number of Present Beneficiaries, Project Costs* Benefits Rate of Beneficiaries, Value current project Component (US$, (US$, Return including AF (US$, as of January 7, millions) millions) (%) (persons) millions) 2016 (persons)** Component A 36.31 280.79 122.65 28 164,401 314,401 Component B 64.77 167.95 20.12 9 28,717 73,717 Component C 39.92 613.55 216.15 30 6,483 16,233 Total 156.92 1,062.29 393.95 20 199,601 404,351 Note: *Project costs are the sum of the allocated funds for the current project and requested costs for the new one; ** Beneficiaries are IDP households and their members, as well as neighbors in areas affected by the project. Direct beneficiaries of microprojects having access to project's products are considered as a project community (this can be part of the village, not necessarily the whole village if not reached by the project resources). *** The project also bears administrative (management) costs (US$8.42 million under the parent project and US$7.50 under the AF), which are not included under the Components A, B and C. 17. A sensitivity analysis was carried out to determine what would happen if key assumptions were not to hold true. The net present value changed over 5 percent only for three assumptions, when 10 percent was added to or subtracted from them. The same change in other assumptions rendered a change of less than 4 percent (not critical). Variation of NPV due to +/− Variable 10% change in assumption (Variation in Assumptions by 10%) % change Impact +10 −8.27 Critical Discount rate −10 8.90 Critical Annual increase in assets (livestock) for Subcomponent +10 8.12 Critical C(b): Income Generation Program (IGP) −10 −6.17 Critical 13 Variation of NPV due to +/− Variable 10% change in assumption (Variation in Assumptions by 10%) % change Impact +10 6.77 Critical Impact of the IGP on increase of income −10 −5.57 Critical Note: NPV = Net Present Value. 18. The analysis also points out that the AF contributes 62 percent to the project benefits in the most likely scenario. In addition, the effect of AF covers only 11 years (15 years minus 4 years of the current project). The benefits of the project would be higher if calculated for an additional 4 years due to impact of incremental growth. 19. Finally, the analysis points to unquantified potential benefits. Increases in growth and profits of businesses as an effect of improved access to 24-hour electricity, water, and road infrastructure have not been calculated and neither have the impacts of improved schools and kindergarten facilities on learning of children, and consequently, better productivity in the labor market, and so on. Quantifying these benefits would increase the value of the project as well. B. Technical 20. Systems are currently being strengthened under the parent project to boost the quality of construction, supervision, and O&M of infrastructure investments. These systems will continue to ensure the quality and sustainability of infrastructure supported by the project during the AF stage. This is essential considering the large number of infrastructure subprojects expected to take place during the AF. 21. Technical scope of works. By the close of the current loan agreement, the project will have financed more than 196 microprojects that support the living standards of IDPs, particularly those living in rural areas of the country. The AF will support an additional 200 microprojects under Component A and approximately 120 investments in 30 or so ‘New Settlements’ under Component B. These investments will mainly consist of rehabilitation works but may also include some new construction. In the past, microproject types have included roads (and accompanying drainage structures), potable water facilities, schools and kindergartens, community centers, health points, irrigation facilities and on-grid electricity facilities. Similar projects are expected to be financed in the AF, with the caveat that Component B projects are more likely to be larger in scale and that economic infrastructure (roads, irrigation, energy) is more likely to be financed. The AF will also allocate funds for O&M of infrastructure supported under the project, which will require some technical supervision. 22. Technical staffing. A technical team within the SFDI will oversee all planning and engineering aspects of the project. The technical team will be headed by a senior technical manager reporting directly to the deputy director. A senior technical specialist will report to the senior technical manager and will supervise four regional technical coordinators (based outside of Baku) as well as the appraisal team. The regional technical coordinators will be responsible for the work of site supervision engineers, who will in turn be responsible for quality of civil works and work zone safety. Together, the team will be responsible for overseeing the individual project feasibility studies, the design process, tendering of works contracts, and civil works. The team will also be responsible for implementing comprehensive O&M strategies for all socioeconomic infrastructure supported by the project. 23. Contracting. To ensure technical quality, the tendering process will involve the development of detailed bills of quantity that specify work needs and performance expectations to the greatest extent 14 possible. Each contract will have a minimum six-month defects and liability clause, which will be leveraged by using an initial punch list inspection before the release of the 95th percentile payment, a three month inspection once the asset is in service, and a final inspection before the final payment and release of any bank guarantees. C. Financial Management 24. The current project has a strongly performing PIU, and the AF proposes to use the same implementation, procurement, and FM arrangements. The proposed AF would not require changes in the FM arrangements. The FM functions under the proposed AF, including flow of funds, staffing, accounting, reporting, and auditing, will remain under the responsibility of the PIU at the SFDI, as under the parent project. FM arrangements of the parent project have been reviewed periodically as part of project supervision and have been found satisfactory. The last implementation support mission, including FM review, was held in April 2015. Sound internal control procedures are in place. The client is in compliance with the FM covenants: unaudited IFRs have been submitted on a regular and timely basis, the project audit reports have been received by their due date, and the auditor has given an unqualified opinion on the project financial statements with no serious internal control issues in the management letters. The overall FM risk for the project remains Moderate. 25. Audit arrangements similar to the arrangements under the parent project will be adopted for the proposed AF. The audit will be conducted by an independent private auditor in accordance with terms of reference acceptable to the Bank and procured by the PIU. The current format and components of the project financial statements will remain the same. The annual audited project financial statements will be submitted to the Bank within six months after the end of each reporting period. The audited financial statements will be posted on the SFDI website within one month of the receipt of audited reports from the auditor. In addition, following the Bank’s formal receipt of the financial statements from the recipient, the Bank will make them available to the public in accordance with the Bank Policy on Access to Information for Bank- financed operations. The cost of the audit will be financed from the proceeds of the loan. Project management oriented unaudited IFRs will be used for the proposed AF monitoring and supervision. The existing IFR formats will be used and the PIU will produce a full set of IFRs every quarter throughout the life of the project and will submit them to the Bank no later than 45 days after the calendar quarter end. 26. Disbursement. The proposed AF will follow the flow of funds and disbursement arrangements established under the original project, that is, reimbursement, direct payment, advances, and special commitments, including the use of Statement of Expenditure procedures. A separate designated account for IBRD funds under the AF loan will be opened in a commercial bank on terms and conditions acceptable to IBRD. It was agreed to set the Ceiling of Advances to the designated account at US$6 million to ensure quick and efficient disbursements for the proposed AF. D. Procurement 27. Procurement risk assessment. A procurement assessment carried out by the Bank’s procurement specialist found three potential risks: (a) the procurement environment may be affected by problems related to governance and corruption; (b) as the project involves participation of communities in Component C, addressing procurement issues at that level may be challenging due to lack of capacity among communities; and (c) procurement capacity might not be sufficient to accommodate new packages under the AF. 28. Risk mitigation. The following measures were agreed to mitigate the remaining risks and maintain the implementing team’s capacity. The project procurement risk following application of mitigation measures is Moderate. Risk mitigation measures were discussed with the SFDI during project appraisal and it was agreed that they will be included in the project Operational Manual (OM). 15 (a) The procurement section of the OM will be updated by the SFDI to meet the specific needs of the new project, which, among other things, will elaborate on the roles and responsibilities in the management and coordination of the procurement process, including procurement arrangements regarding community participation in procurement, preparation of terms of reference and technical specifications, evaluation, establishment and appointment of evaluation committees, conflict of interest mitigation measures, record keeping, contract management, a complaint handling mechanism, and so on. (b) The Bank’s procurement specialist assigned to the project will provide the team with a full set of the most recent procurement documents, including but not limited to Procurement and Consultant Guidelines, standard and sample bidding documents, proposal, evaluation report documents, and so on. (c) The SFDI will hire an additional procurement assistant with adequate experience in procurement in the Bank-financed projects. The assistant will be hired on a full-time basis for maintaining and further streamlining procurement transactions under the upcoming project. The selection will be based on procedures outlined in the Consultant Guidelines. E. Social (including Safeguards) 29. The social impacts of the project are expected to be positive. The project will improve community infrastructure and services for IDPs through microprojects targeting urgent basic needs and its livelihood support component, which will also be expected to contribute to improved living standards for beneficiaries. 30. Safeguards. OP/BP 4.12 - Involuntary Resettlement is triggered on a precautionary basis as the type and location of new project activities under Component B are not yet known, and the type and scale of civil works and land acquisition are still to be determined. This would likely occur on publicly owned land but might entail private land acquisition. An RPF has, therefore, been prepared and will be followed by all project activities. The RPF was consulted with stakeholders and disclosed publicly, in-country on the SFDI website on December 18, 2015, and through the Bank’s Operations Portal on January 4, 2016. Site- specific RAPs will be prepared and implemented before commencement of works at any site where resettlement, land use, or acquisition is required. Potential impacts are limited to Component B since, as was the case under the parent project, under Component A, no microprojects that involve land acquisition (permanent or temporary) or resettlement will be approved, and no civil works are planned under Components C and D. Screening is carried out for all physical investments to ensure impacts covered under OP 4.12 are identified. As the SFDI does not have significant experience with oversight of OP/BP 4.12 (Involuntary Resettlement), additional capacity has been retained for the project in the form of a dedicated full-time safeguards consultant (combining environmental and social safeguards) and safeguards will be closely supervised and supported by the Bank. 31. Citizen engagement. To mitigate social risks and help improve project outcomes, the AF places renewed emphasis on participatory decision making, beneficiary feedback mechanisms, and entry points for citizen engagement in the current project. The OM will be updated by effectiveness to reflect the lessons learned to date. Key changes include the following: (a) Community consultations to determine the priority microprojects will be conducted, wherever possible, separately with women and men, and reports will include the priority rankings of both groups. Communities will be eligible to apply for more than one microproject to ensure potentially different needs are met. Furthermore, proposed microprojects will also need to demonstrate proactive steps to ensure inclusion of the elderly, youth, and people living with a disability in the consultation process (for example, at times and in forms and places that 16 enable participation). Proposed investments should include measures to facilitate access of people with limited mobility and/or with a disability, where relevant. (b) The periodic surveys measuring impact will include open-ended questions to capture feedback on the project as a whole and on the relevant specific investment/subcomponent in particular. (c) The existing grievance redress mechanism (GRM) will further be strengthened and its use as a monitoring tool systematized. Questions, comments, and complaints will continue to be proactively collected during interactions with communities and beneficiaries under all components. These will be centrally analyzed by a dedicated staff member within the SFDI to facilitate monitoring of the project and the reporting back to communities regarding the impact of their feedback. For example, the GRM will be aggregated at the project level and quarterly reports shared with beneficiaries through the SFDI website and through leaflets during community mobilization activities. (d) A communication strategy will be developed to systematize the ongoing and planned outreach activities and ensure these are tailored to the needs and interests of different stakeholder groups. This includes mechanisms for two-way communications (for example, web portal, brochures with contact details, and information about the GRM) and for closing the feedback loop (that is, reporting back on the result of feedback to beneficiaries). 32. Gender. The efforts to ensure effective participation of women in the decision-making process and access to the benefits of the project will be continued. Overall, women represent 50 percent of total project beneficiaries (breakdown by component is 50.4 percent, 47.2 percent, and 56.5 percent for Components A, B, and C respectively). Opportunities to further improve the gender sensitivity of the project were identified during a workshop with the SFDI and implementing partners, through the preparatory studies (on Component B and livelihoods), through a report on Gender and Sustainable Livelihoods that focused on providing recommendations to this project, and through consultations with beneficiaries themselves. Gender norms and gendered structural inequalities were identified that prevent women from benefitting equally from the project. Key areas that the project will support to address these inequalities include (a) systematic and meaningful participation of women in community consultations across all components; (b) strengthening of female role-model and leadership roles in community consultations and livelihood activities; and (c) specific support to female entrepreneurs as part of the microfinance subcomponent. Credit unions will have to demonstrate that lack of collateral is not a hindrance to lending to women and a target of 20 percent of loans going to women has been set. To facilitate monitoring of gender impacts, all indicators are disaggregated by gender whenever possible as part of the project quarterly reports, as well as in key indicators related to participation as part of the Results Framework. F. Environment 33. The environmental aspects of the original project have been governed by the provisions of the ESMF. The environmental due diligence procedures and processes envisaged under the original ESMF will remain relevant to the scope of AF. However, the ESMF has been updated to accommodate extended geographical coverage and address anticipated impacts of new income generating activities proposed under the AF. The updated ESMF has been redisclosed in selected locations of the project area and on the SFDI website on January 5, 2016. The detailed minutes of public consultation meetings have been duly recorded and enclosed in the updated ESMF. 34. The capacity of the SFDI PIU has been recently reinforced though hiring a full-time designated safeguards specialist who will be responsible for ensuring proper environmental and social management of the project and will undertake regular monitoring and reporting to PIU management and the Bank. 17 G. Implementation Arrangements 35. Implementation arrangements during the AF will stay the same. However, small changes will be made to staffing to improve the clarity of roles and the quality of supervision. During the AF, the staffing structure will be as follows:  SFDI’s director will have overall authority over project activities and be supported by a deputy director.  A chief accountant and a senior technical coordinator will report directly to the deputy director.  A procurement team, consisting of a deputy manager for procurement and two assistants, will report to the deputy director.  A senior technical specialist will report to the senior technical coordinator and will supervise four regional technical coordinators (based outside of Baku) as well as the appraisal team. Two additional senior manager positions will be created, reporting to the deputy director: (a) A senior community mobilization manager will be responsible for information sharing, community mobilization, monitoring and evaluation, and safeguards activities and (b) a senior livelihoods manager will be responsible for implementation of all activities under Component C. Four regional community mobilization coordinators will report to the senior community mobilization manager and will be responsible for supervising all nontechnical aspects of the project. V. World Bank Grievance Redress 36. Communities and individuals who believe that they are adversely affected by a Bank supported project may submit complaints to existing project-level GRMs or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed to address project-related concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of Bank’s noncompliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the Bank's attention and the Bank management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s corporate GRS, please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Inspection Panel, please visit www.inspectionpanel.org. 18 Annex 1: Results Framework Project Additional Financing to IDP Living Standards and Livelihoods Project Project Stage: Additional Financing Status: DRAFT Name: (P155110) Team Requesting Rebecca Emilie Anne Lacroix on 17-Aug- Michelle P. Rebosio Calderon ECCU3 Created by: Leader(s): Unit: 2015 Responsible Rebecca Emilie Anne Lacroix on 19- Product Line: IBRD/IDA GSU03 Modified by: Unit: May-2016 Country: Azerbaijan Approval FY: 2017 Lending Region: Europe and Central Asia Investment Project Financing Instrument: Parent Project Parent Project ID: P122943 IDP Living Standards and Livelihoods Project (P122943) Name: Project Development Objectives Original Project Development Objective - Parent: The objective of the project is to improve living conditions and increase the economic self-reliance of targeted internally displaced persons. Proposed Project Development Objective - Additional Financing (AF): No change Results Core sector indicators are considered: Yes Results reporting level: Project Level Project Development Objective Indicators Unit Actual Status Indicator Name Core of Baseline End Target (Current) Measure Number Value 0 199,601 371,000 Direct project Date 09-Feb-2012 15-Oct-2015 31-Dec-2020 Revised beneficiaries End target and date modified to Comment – – reflect AF Percentage No Change Female beneficiaries Value 0 50.10 50 Sub Type 19 Supplemental Percentage Value 77.00 95.60 30.00 Percentage of Date 15-Apr-2011 15-Oct-2015 31-Dec-2020 households with New increased access to basic Improvement in relation to the rural infrastructure Comment – – new baseline to be established as part of the impact evaluation Percentage Value 3.60 92.70 30.00 Percentage of households who are Date 15-Apr-2011 15-Oct-2015 31-Dec-2020 Revised satisfied with the quality Improvement in relation to the of basic rural Comment – – new baseline to be established infrastructure as part of the impact evaluation Percentage Value 59.90 96.40 75.00 Percentage increase in Marked for Deletion access to all-weather Sub Type Date 15-Apr-2015 15-Oct-2015 30-Jun-2016 rural roads Breakdown Comment – – Original target exceeded Percentage Value 83.20 92.50 75.00 Percentage with access Marked for Deletion Sub Type Date 15-Apr-2015 15-Oct-2015 30-Jun-2016 to 24-hour water Breakdown Comment – – Original target exceeded Percentage Value 89.10 97.20 75.00 Percentage with access Marked for Deletion Sub Type Date 15-Apr-2015 15-Oct-2015 30-Jun-2014 to 24-hour electricity Breakdown Comment – – Original target exceeded Percentage Value 82.00 94.00 75.00 Percentage with access Marked for Deletion Sub Type Date 25-Sep-2014 15-Oct-2015 30-Jun-2016 to community centers Breakdown Comment – – Original target exceeded Percentage Value 33.00 96.00 75.00 Changes in housing Revised deficiencies: satisfaction Date 25-Sep-2014 15-Oct-2015 31-Dec-2020 with housing condition Comment – – Original target exceeded Percentage Value 93.50 15.20 25.00 Marked for Deletion Sub Type Date 25-Sep-2014 15-Oct-2015 30-Jun-2016 20 Percentage of households suffering Breakdown Comment – – Original target exceeded from dampness Percentage of Percentage Value 2.30 98.40 75.00 households with energy- Marked for Deletion Sub Type Date 25-Sep-2014 15-Oct-2015 30-Jun-2016 efficient doors and windows Breakdown Comment – – Original target exceeded Percentage Value 44.30 89.60 75.00 Percentage with access Marked for Deletion Sub Type Date 25-Sep-2014 15-Oct-2015 30-Jun-2016 to 24-hour water Breakdown Comment – – Original target exceeded Percentage Value 69.60 99.90 75.00 Percentage with access Marked for Deletion Sub Type Date 25-Sep-2014 15-Oct-2015 30-Jun-2016 to 24-hour electricity Breakdown Comment – – Original target exceeded Percentage Value 0.00 43.00 20.00 Improvement in the Date 15-Oct-2015 31-Dec-2020 quality and New sustainability of IDP Improvement in relation to the livelihoods Comment – – new baseline to be established as part of the impact evaluation Targeted beneficiaries Percentage Value 19.60 52.60 25.00 whose main source of Marked for Deletion Date 15-Apr-2015 15-Oct-2015 30-Jun-2016 household income is self-generated Comment – – Original target exceeded Intermediate Results Indicators Unit of Actual Status Indicator Name Core Baseline End Target Measure (Current) Number Value 0 196 490 Number of completed Revised subprojects Date 09-Feb-2012 15-Oct-2015 31-Dec-2020 (disaggregated by type) Comment – – – Number of people Number Value 0 153,512 313,000 benefitting from access Revised Date 09-Feb-2012 15-Oct-2015 31-Dec-2020 to improved infrastructure Comment – – – 21 (disaggregated by type; also disaggregated by direct and indirect) Number Value 0 87 103 Number of collective Revised centers that have been Date 09-Feb-2012 11-Jan-2016 31-Dec-2020 renovated by the project Comment – – – Grievances registered Percentage Value – 100.00 100.00 related to delivery of New Date 15-Apr-2015 15-Oct-2015 31-Dec-2020 project benefits addressed (percentage) Comment – – – Grievances registered Number related to delivery of New Sub Type Value 0 15 60 project benefits that are addressed (number) Supplemental Percentage Value 0.00 43.00 20.00 Increase in income of Revised direct project Date 15-Apr-2011 15-Apr-2015 31-Dec-2020 beneficiary households Comment – – – Number Value – – – Increase in income of New direct project Date – – 31-Dec-2020 beneficiary households Comment TBD – TBD + 20% (in AZN) Number Value 0 3,906 9,600 Number of targeted Revised beneficiaries who gain Date 15-Apr-2011 15-Oct-2015 31-Dec-2020 employment Comment – – – Number Value 0 2,661 5,400 Number of targeted New beneficiaries who gain Sub Type Date 15-Apr-2011 15-Oct-2015 31-Dec-2020 employment - female Breakdown Comment – – – Number Value 0 3,237 4,000 Increased value of assets Revised owned by direct Date 09-Feb-2012 15-Apr-2015 31-Dec-2020 beneficiaries Comment – – TBD + 10% New Percentage Value 0.00 – 20.00 22 Percentage increase in Date 15-Apr-2011 – 31-Dec-2020 profit of microloan beneficiary businesses Comment – – – Number Value 0 1,608 3,300 Number of active loan Revised Date 09-Feb-2012 15-Apr-2015 31-Dec-2020 accounts - microfinance Comment – – – Percentage Percentage of active New loan accounts held by Sub Type Value 30.00 30.00 50.00 vulnerable IDPs Supplemental Percentage Percentage of active New loan accounts held by Sub Type Value – – 20.00 women Supplemental Percentage of project- Percentage supported institutions Revised Sub Type Value 0.00 100.00 100.00 that are reporting on this indicator Supplemental Percentage Value 0.00 1.44 3.00 Community contribution Marked for Deletion in the total project costs Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 (%) Comment – – – Amount(US$) Total community Revised Sub Type Value 0.00 531,546.66 500,000.00 contribution (US$) Supplemental Conflict-affected people Number Value 0 34,285 25,000 receiving benefits in 1st Marked for Deletion Date 9-Feb-2012 17-Apr-2014 17-Apr-2014 year of project effectiveness Comment – – – Conflict-affected people Number Value 0 16,663 12,500 receiving benefits in 1st Revised Sub Type Date 9-Feb-2012 17-Apr-2014 17-Apr-2014 year of project effectiveness - female Breakdown Comment – – – Marked for Deletion Percentage Value 0.00 41.00 35.00 23 Percentage of active Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 loans to women - microfinance Comment – – – Percentage of project- Percentage supported institutions Revised Sub Type Value 100.00 100.00 100.00 that are reporting on this indicator Supplemental Number Value 0 200 200 Number of active Marked for Deletion Date 09-Feb-2012 15-Oct-2015 30-Jun-2017 microsavings accounts Comment – – – Percentage of project- Percentage supported institutions Revised Sub Type Value 0.00 100.00 100.00 that are reporting on this indicator Supplemental Number Value 0 1,608 1,500 Number of active loan Marked for Deletion Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 accounts - microfinance Comment – – – Increase in targeted Percentage Value 15.00 75.50 40.00 beneficiaries rating Marked for Deletion Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 housing conditions as good Comment – – – Percentage Value 0.00 41.00 35.00 Percentage of active Marked for Deletion loans to women - Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 microfinance Comment – – – Number Value 0 539 400 Number of new social Marked for Deletion institutions formed Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 under the project Comment – – – Percentage of targeted Percentage Value 94.00 97.50 75.00 beneficiaries who feel Marked for Deletion Date 11-Apr-2014 15-Apr-2015 30-Jun-2016 able to influence development decisions Comment – – – Marked for Deletion Number Value 0 2,178 1,500 24 Number of new Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 businesses and microenterprises created under the project, which Comment – – – are generating profit after one year Percentage of targeted Percentage Value 6.10 2.10 2.10 beneficiaries who feel Marked for Deletion Date 11-Apr-2014 15-Apr-2015 30-Jun-2016 socially excluded in the wider society Comment – – – Number Value 0 3,944 4,500 Number of members of Marked for Deletion Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 social institutions Comment – – – Beneficiaries rating Percentage Value 2.70 95.90 30.00 access to Marked for Deletion Date 11-Apr-2014 15-Apr-2015 30-Jun-2016 service/utility/infrastruct ure as good Comment – – – Percentage Value 3.60 93.80 30.00 Beneficiaries rating quality of Date 11-Apr-2014 15-Apr-2015 30-Jun-2016 Marked for Deletion service/utility/infrastruct Moved to PDO indicator ure as good Comment – – section Percentage of targeted Percentage Value 89.70 90.80 80.00 beneficiaries whose Date 11-Apr-2014 15-Apr-2015 30-Jun-2016 Marked for Deletion social map of trusted relations includes IDPs Comment – – – as well as non-IDPs Amount (US$) Value 0.00 1,558.00 1,000.00 Amount of monthly Marked for Deletion Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 household income Comment – – – Note: TBD = To be determined. 25 Project Development Objective (PDO): To improve living conditions and increase the economic self-reliance of targeted internally displaced persons Cumulative Target Values PDO Level Results Responsibility for Progress to Date Original Project Unit of Measure Data Collection Methodology Data Source/ Start (2011) Comments Frequency Indicators Baseline (2015) Core YR1 YR2 YR3 YR4 Quarterly 1(a). Number Quarterly and Number of direct and annual 0 199,601 220,000 260,000 325,000 371,000 annual Project MIS project project project beneficiaries reports reports Quarterly Quarterly and 1(b). of and annual % NA 50.1 50 50 50 50 annual Project MIS which female project project reports reports Change from original wording which stated: Change in 2. Percentage access to of 3 times improved Randomized households 30% 30% 30% 30% during quality of impact Consulting with improvement improvement improvement improvement project services, % 77 95.6 evaluation; firm (to be increased on new IE on new IE on new IE on new IE (baseline, infrastructure ex post hired) access to baseline baseline baseline baseline midterm, and utilities. evaluation basic rural final) Definition of infrastructure basic rural infrastructure will include water supply, roads, utilities, 26 health centers, schools, and irrigation. New. During the AF, this 3. Percentage information of 3 times will be Randomized households 30% 30% 30% 30% during collected by a impact Consulting who are improvement improvement improvement improvement project consulting % 3.6 92.7 evaluation; firm (to be satisfied with on new on new on new on new (baseline, firm as part ex post hired) the quality of IE baseline IE baseline IE baseline IE baseline midterm, of the impact evaluation basic rural final) evaluation infrastructure and not by the project team. This indicator has been modified. In the AF, only maintenance of housing will be carried out. 4. Changes in 3 times The indicator Randomized housing during will therefore impact Consulting deficiencies: project measure the % 33 96 75 75 75 75 evaluation; firm (to be satisfaction (baseline, satisfaction ex post hired) with housing midterm, with housing evaluation condition final) improvement s and maintenance. Originally, the indicator read: Changes in housing deficiencies: 27 % decrease in households suffering from dampness; % increase in households with energy; efficient doors and windows; % increase in access to 24- hour water; % increase in access to 24- hour electricity New. Original PDO level indicator for livelihoods activities (% 20% of targeted improvement beneficiaries in relation to 3 times whose main 5. Randomized the new 20% 20% 20% during source of Improvement impact Consulting baseline to improvement improvement improvement project household in the quality % 0 43 evaluation; firm (to be be from new from new from new (baseline, income is of IDP ex post hired) established IE baseline IE baseline IE baseline midterm, self- livelihoods evaluation as part of the final) generated) impact will be evaluation tracked as an Intermediate Results indicator. Quality and sustainability of IDP 28 livelihoods will be measured through an index, including IDP increased incomes, assets, access to services. Note: IE = Impact Evaluation. 1. For new indicators introduced as part of the AF, the Progress to Date column is used to reflect the baseline value. 2. Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the ‘Comments’ column. Intermediate Results and Indicators Target Values Results Indicators Responsibility for Progress To Date Original Project Unit of Measure Data Collection Methodology Intermediate Data Source/ Start (2011) Frequency Baseline (2015) Core Comments YR1 YR2 YR3 YR4 Intermediate Result 1: Improved IDP living standards Type = water 1. Number supply, electricity, of Quarterly irrigation, road, completed and annual Project Number 0 196 270 340 410 490 SFDI health centers, subprojects project MIS schools, and so on (disaggregat reports for Components A ed by type) and B. 2. Number Changed wording. Quarterly of people Original reads: and annual Project benefitting Number 0 129,512 170,000 230,000 270,000 313,000 SFDI Number of people project MIS from access provided access to reports to improved services/utility/inf 29 infrastructur rastructure. Type e = water supply, (disaggregat electricity, ed by type; irrigation, road, also health centers, disaggregate schools, and so d by direct on. and indirect) Changed wording. 3. Number Quarterly Original reads: of collective and annual Project Number of centers Number 0 66 103 103 103 103 SFDI project MIS collective centers renovated by reports having full-scale the project renovation 4(a). Grievances registered related to Quarterly delivery of and annual Project Number 0 15 30 45 60 75 SFDI – microproject project MIS benefits that reports are addressed (number) 4(b). Grievances registered related to Quarterly delivery of and annual Project microproject % 0 100 100 100 100 100 SFDI – project MIS s benefits reports that are actually addressed (%) Intermediate Result 2: Improved IDP livelihoods 5. Increase 3 times Consulti Change in Randomiz in income of Percent during ng firm wording from: 0 43 20 20 20 20 ed impact direct age project (to be ‘Amount of evaluation project (baseline, hired) monthly 30 beneficiary midterm, ; ex post household households final) evaluation income’ 6. Increase 3 times Randomiz in income of during Consulti TBD + TBD + TBD + TBD + ed impact direct project ng firm Number 0 TBD 20% (in 20% (in 20% (in 20% (in evaluation New project (baseline, (to be AZN) AZN) AZN) AZN) ; ex post beneficiary midterm, hired) evaluation households final) 7(a). 3 times In the AF, Randomiz Number of during Consulti tracking also self- ed impact targeted project ng firm employment. Will Number 0 6,000 7,200 8,400 9,600 evaluation beneficiaries 3,906 (baseline, (to be also track # of ; ex post who gain midterm, hired) hours of evaluation employment final) employment. 7(b). Number of 3 times Randomiz targeted during Consulti ed impact beneficiaries project ng firm Number TBD 2,661 3,000 3,600 4,200 5,400 evaluation New. who gain (baseline, (to be ; ex post employment midterm, hired) evaluation - female final) beneficiaries Change in 8. Increased 3 times Randomiz wording from: value of during Consulti ed impact ‘Number and type assets TBD + TBD + TBD + TBD + project ng firm Number TBD – evaluation of assets acquired owned by 10% 10% 10% 10% (baseline, (to be ; ex post by direct midterm, hired) evaluation IDP as a result of beneficiaries final) the project’ 9. 3 times Percentage Randomiz during Consulti increase in ed impact Percent project ng firm profit of 0 – 20 20 20 20 evaluation New age (baseline, (to be microloan ; ex post midterm, hired) beneficiary evaluation final) businesses This will be measured through an index including 31 IDP risk and dependency on state assistance, number of successive months in which beneficiaries’ income exceeds state assistance. 10. Number of active Quarterly loan and annual Project Number 0 1,608 2,100 2,500 2,900 3,300 SFDI accounts – project MIS microfinanc reports e 10(a). New. Vulnerable Percentage IDPs will be of active Quarterly defined as IDPs loan Percent and annual Project living in remote 0 30 30 40 50 50 SFDI amounts age project MIS rural communities held by reports or those living vulnerable under the poverty IDPs line. 10(b). Percentage Quarterly of active Percent and annual Project loan 0 0 10 10 15 20 SFDI New age project MIS amounts reports held by women 10(c). Percentage of project- Quarterly supported and annual Project institutions Percent 0 0 100 100 100 100 SFDI – project MIS that are reports reporting on this indicator 32 Note: 1. Please indicate whether the indicator is a Core Sector Indicator (for additional guidance – please see http://coreindicators). 2. For new indicators introduced as part of the AF, the Progress to Date column is used to reflect the baseline value. 3. Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the ‘Comments’ column. 33