The World Bank Sierra Leone Safety Nets Project (P143588) REPORT NO.: RES30517 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SIERRA LEONE SAFETY NETS PROJECT APPROVED ON MARCH 25, 2014 TO REPUBLIC OF SIERRA LEONE,REPUBLIC OF SIERRA LEONE SOCIAL PROTECTION & LABOR AFRICA Regional Vice President: Makhtar Diop Country Director: Henry G. R. Kerali Senior Global Practice Director: Michal J. Rutkowski Practice Manager/Manager: Jehan Arulpragasam Task Team Leader: Sarah Coll-Black The World Bank Sierra Leone Safety Nets Project (P143588) ABBREVIATIONS AND ACRONYMS The World Bank Sierra Leone Safety Nets Project (P143588) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P143588 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 25-Mar-2014 30-Jun-2019 Organizations Borrower Responsible Agency National Commission for Social Action,National Republic of Sierra Leone,Republic of Sierra Leone Commission for Social Action Project Development Objective (PDO) Original PDO The project development objective is to establish the key building blocks for a basic national safety net system and to provide income support to extremely poor households in Sierra Leone. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D0920 06-Aug-2015 18-Sep-2015 16-Dec-2015 30-Jun-2019 10.00 1.24 8.90 IDA-H9250 25-Mar-2014 14-Apr-2014 29-Aug-2014 30-Jun-2019 7.00 6.03 .45 TF-A0806 02-Sep-2015 18-Sep-2015 16-Dec-2015 30-Jun-2019 4.30 4.30 0 The World Bank Sierra Leone Safety Nets Project (P143588) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No Note to Task Teams: End of system generated content, document is editable from here. The World Bank Sierra Leone Safety Nets Project (P143588) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. PROJECT STATUS The Social Safety Nets Project is progressing well and on track to achieve its development objective. The project has made outstanding progress in setting-up the building blocks for a national safety nets system. Despite implementation challenges due to recent crises – the Ebola outbreak, fall of international iron-ore prices, and major floods and most recently landslides – the Social Safety Nets (SSN) Project has improved key elements of a social protection (SP) system, including (i) targeting mechanisms, (ii) the management information system (MIS); the SP Registry for Integrated National Targeting (SPRINT); (iii) related operational tools, including electronic data collection; (iv) the electronic payments system (e.g. payments delivered using electronic verification of beneficiary identity); and (v) grievance and anti-corruption mechanism. At the same time, the program has reached about 30,500 beneficiaries with timely cash payments. A recent targeting assessment concludes that the program’s targeting mechanism effectively reaches the extremely poor households. An ongoing impact evaluation will assess the effects of the SSN on the wellbeing and productivity of households. The implementation of the SSN is progressing well and has exceeded original targets. Examples include: (i) exceeding targets on number of beneficiaries and the proportion of which are female; (ii) ensuring four quarters of consecutive timely payments; (iii) reducing the time for resolution of grievances; and (iv) using the SSN systems to mainstream extremely poor households from temporary cash transfer interventions into the main SSN. The program is currently operating in 9 districts with a total of 30,453 beneficiary households enrolled as of January, 2017, exceeding the original target of 30,000. The program has successfully rolled out delivery of beneficiary workshops in all districts, in collaboration with community stakeholders, social workers, and the Ministry of Health. As of November 25, 2017, the Project had disbursed US$ 10.53 million representing 51% disbursement ratio and corresponding to 86.1% of IDA grant H9250, 3.3% of IDA grant D0920, and 97% of Trust Fund grant A08061. The Government has also committed the equivalent to US$2.5 million, of which US$250,000 have been disbursed as of October, 2017. The project has also supported critical activities to improve program management and capacity building. The project has supported Information, Education and communication (IEC) activities including; production of posters, jingles, holding of quarterly radio and television discussions and print media coverage, which has significantly improved the public’s understanding of the SSN. The project also funded regular quarterly and spot checks monitoring, workshops both in and outside the country for key stakeholders, meetings and activities of the Social Protection Inter-Agency Forum (IAF), Technical Assistance (TA) and several studies including Systems Assessment, Targeting Assessment, Payment Assessment, Coordination Assessment, Sierra Leone Social protection policy review and Financial In-depth Review among others and the operational costs of the implementing agency. As a result of these investments, the SSN systems are increasingly being used for cash transfers, which are currently the instrument of choice to protect the most vulnerable when affected by disasters. At the peak of the Ebola Outbreak, the Government decided to scale up cash transfer interventions in the country following standardized protocols, tools and systems developed under the Project. These efforts resulted in more than 50,000 extremely poor households benefiting from standardized cash transfers in the country during the Ebola Outbreak and the recovery period. A similar approach was adopted to respond to the recent landslides that affected the country in 2017. B. RATIONALE FOR RESTRUCTURING 1The project is funded by three grants: US$7million from the International Development Association (IDA), IDA H9250 approved 25- Mar-2014, US$10million IDA D0920, approved 06-Aug-2015 Additional Financing (AF) and US$4.3 million co-financing from the Government of the United Kingdom of Great Britain and Northern Ireland, represented by the Department for International Development under the Ebola Recovery and Reconstruction Trust Fund (ERRTF) approved on 02-Sep-2015. The World Bank Sierra Leone Safety Nets Project (P143588) The Government of Sierra Leone is adopting a series of fiscal measures to close its fiscal financing gap, which were part of the negotiations with the IMF on the new Economic Country Framework. These measures included the removal of subsidies for fuel prices in November 2016, and potentially the removal of others, such as rice subsidies. The Government and IMF proposed to allocate a part of the budget support program to the expansion of the national SSN project, which the SSN funds, to mitigate the impacts of these measures. The removal of subsidies is expected to affect both the urban and rural poor, pointing to the need for a short-term measure, such as cash transfers, to offset these impacts. According to the most recent Poverty Assessment, the effects of a full pass-through of international fuel prices to retail price is two-fold: (i) direct effect from consumed fuel items, and (ii) secondary effects such as an increase in food prices due to higher transportation costs. The secondary effects impact poor households more, since fuel is almost exclusively consumed by wealthier urban households, with the exception of kerosene. The assessment notes that such a reform would have a higher impact on the bundle of goods mostly consumed by poorer households. Removal of rice subsidies is expected to have an even larger poverty impacts in the short-term, since rice is the largest component of household food spending (nearly 20%), nearly 85% of consumed rice is purchased, and nationally, about 50% of households consume only imported rice. Even in the absence of a rice subsidy removal, higher transportation costs due to increase in fuel prices are expected to impact the prices of local and imported rice. The assessment recommends a well-design cash transfer as an option to mitigate the effects of these fiscal measures on the poorest in both urban and rural areas. To mitigate the impact of these economic reforms on the poorest households, the Government will allocate US$ 5 million from the current IMF loan to the SSN. In November 2017, the Ministry of Finance and Economic Development (MOFED) officially communicated to the World Bank its intention to allocate the USD$ 5 million from the IMF budget support program to the SSN Project and requested that the World Bank modify the Financing Agreement (FA) for the Project to reflect this increase in the amount of counterpart funding. It was agreed that these funds will be allocated to the SSN Project in a manner that creates an integrated national program. To reflect this intention, the National Commission for Social Action (NaCSA) will manage these two sources of funds as a single program, with one consolidated annual work plan and budget and will produce one set of financial reports and audits. This approach will help consolidating the SSN as the Government’s national safety net and ensure the effective use of these funds to reach the intended beneficiaries. World Bank and MOFED agreed that in such an integrated program the existing systems and procedures for the SSN would be used for all sources of funding. The increase in Government funding to the SSN is anticipated to increase the program’s geographical coverage, while all activities and implementation arrangements will remain the unchanged. NaCSA has submitted to MOFED and the World Bank a detailed expansion plan to guide the use of the additional funding to scale up SSN activities, including increase in both geographical coverage and number of beneficiaries, as well as implementation capacity. It is possible that future allocations from the IMF to MOFED will include additional amounts to fund the SSN. However, NaCSA has planned the expansion in such a manner that recognizes this uncertainty in future contributions to the SSN. The World Bank Sierra Leone Safety Nets Project (P143588) II. DESCRIPTION OF PROPOSED CHANGES The proposed restructuring is level 2 and proposes to: (i) recognize the Government’s contribution as counterpart funding; (ii) enhance the scope of the program to national coverage; and (iii) modify the results framework slightly to reflect the aim of reaching more people. All other aspects of the Project remain unchanged. More specifically, the following changes are proposed: (i) Review the total cost of the Project from US$ 23.8 million2 to US$ 31.05 million to reflect the Government’s commitment to the SSN, including the US$ 5 million (from IMF budget support), and the remainder of the original counterpart funds equivalent to US$2.25 million. The cost per component will be reviewed as well to reflect more accurate project management and systems development cost, which are less than initially anticipated and are anticipated to decrease as the Project matures. (ii) Enlarge the geographic coverage of the program to reflect the Government’s aim of expanding the country nationwide. According to the SSN Additional Financing (P154454), the project covers nine districts from a total of 14 in the country. In 2017, the Government revised the geopolitical division of the country, whereby Bombali and Koinadugu districts were to be divided into two new districts (Karene and Falaba), resulting in a total of 16 districts nationally. Under this restructuring, the scope of the project will be nationwide, thus all 16 districts would be eligible to participate in the program: Bombali, Moyamba, Kono, Kenema, Tonkolili, Port Loko, Bo, Pujehun, Kailahun, Western Area Urban, Western Area Rural, Kambia, Bonthe, Koinadugu, Karene and Falaba, or other such administrative unit as may be elaborated in the Project Operational Manual from time to time. There are plans to update the geographical targeting tools, however these may not be updated in the short term (due to lack of data). This will not affect the ability of the program to target all 16 districts using the existing poverty maps, since the geopolitical divisions below the district level remain the same. (iii) Revise the Results Framework: a. Firstly, to increase the target for the number of beneficiaries to reflect the expanded scope of the Project. The target for indicator 4 in the results framework “Direct Project beneficiaries” would also be revised from 30,000 to 45,000. b. Secondly, to revise an intermediate indicator to accurately reflect implementation. Intermediate indicator 3 “Proportion of cash transfer recipients paid through electronic payment” will be revised to “Proportion of cash transfers delivered with electronic verification (as % of paid beneficiaries)”. The project has systems and protocols in place to ensure delivery of payments in time and to the intended people. Given the fragile context, under-developed mobile environment, and high illiteracy of beneficiaries, payments are delivered in cash with electronic verification and photo validation following strict protocols accompanied by strong monitoring activities from both NaCSA and the Anti-Corruption Commission as key implementing partner to deter corruption and mitigate leakage risks. All other aspects of the Project will remain the same: The restructuring does not does not entail any change in: project development objectives, activities, components, institutional arrangement, implementation arrangements. The project is category C does not trigger any Social or Environment Safeguards policy. The proposed restructuring has no implications on safeguards or risk ratings. 2The original SSN project included US$7 million financed by an IDA grant and US$1 million Government funding. With the SSN, Additional Financing the project increased by US$ 15.8 million, including a commitment of US$ 1.5 million from Government funding, adding up to USD$23.8 million IDA and USD$2.5 million counterpart funding. From the total US$2.5 million committed as counterpart funding, US$250,000 have been disbursed as of October, 2017. The World Bank Sierra Leone Safety Nets Project (P143588) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Components and Cost ✔ Change in Legal Covenants ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Change in Implementation Schedule ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE The World Bank Sierra Leone Safety Nets Project (P143588) RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Proportion of beneficiary households below the extreme poverty line Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 62.60 63.30 70.00 No Change Date 15-Aug-2016 20-Dec-2017 30-Jun-2019 Proportion of beneficiary households receiving cash transfers by the 15th of the month after each payment quarter Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 92.20 100.00 70.00 No Change Date 15-Aug-2016 20-Dec-2017 30-Jun-2019 Proportion of cash transfer component related grievances resolved within three months of being recorded in the GRM database Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 94.00 66.30 70.00 No Change Date 15-Aug-2016 30-Dec-2016 30-Jun-2019 Direct project beneficiaries Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 22917.00 30453.00 45000.00 Revised Date 27-Mar-2014 20-Dec-2017 30-Jun-2019 Female beneficiaries Unit of Measure: Percentage Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action The World Bank Sierra Leone Safety Nets Project (P143588) Value 91.70 92.60 70.00 No Change Intermediate Indicators IO_IND_TABLE Targeting and enrollment, payment and grievance redress mechanisms established Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value Yes Yes Yes No Change Date 15-Aug-2016 20-Dec-2017 30-Jun-2019 Proportion of households identified through community targeting with PMT data entered in the Beneficiary Registry Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 90.00 94.40 90.00 No Change Date 15-Aug-2016 20-Dec-2017 30-Jun-2019 Proportion of cash transfer recipients paid through electronic payment Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 100.00 96.60 60.00 Revised Date 15-Aug-2016 20-Dec-2017 30-Jun-2019 OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Development of Systems for Development of Systems for Implementation of Social Safety 1.61 Revised Implementation of Social 1.86 Net Interventions Safety Net Interventions The World Bank Sierra Leone Safety Nets Project (P143588) Cash Transfers to Extremely Poor Cash Transfers to Extremely 16.98 Revised 23.59 Households Poor Households Program Management and Program Management and 5.21 Revised 5.60 Capacity Building Capacity Building TOTAL 23.80 31.05 OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action Finance Agreement :Internal audit service and auditors | Description :The Recipient shall, not later than two (2) months after the Effective Date, appoint: (a) a IDA-H9250 consultant for NaCSA’s internal audit service; and (b) Complied with No Change two assistant internal auditors, all in accordance with the provisions of Section III.C of Schedule 2 to the Financing Agreement | Due Date :28-Oct-2014 Finance Agreement :External auditors | Description :To facilitate the carrying out of external audits under Part B.3 of this Section II, the Recipient shall, not later than IDA-H9250 four (4) months after the Effective Date, appoint an Complied with No Change external auditor, in accordance with the provisions of Section III.C of Schedule 2 to theFinancing Agreement. | Due Date :28-Dec-2014 Finance Agreement :Procurement filing | Description :The Recipient shall, not later than three (3) months IDA-H9250 after the Effective Date, update its procurement filing Complied with No Change and record keeping system, in form and substance acceptable to the Association. | Due Date :28-Nov-2014 Finance Agreement :Section III.3.02 | Description IDA-D0920 Complied with No Change :Disbursement condition | Frequency :Yearly The World Bank Sierra Leone Safety Nets Project (P143588) Finance Agreement :Section IV.B.1(c) | Description IDA-D0920 Complied with No Change :Disbursement condition | Frequency :Yearly Section V. Other Undertakings: The Recipient shall open in a commercial bank acceptable to the Association, a counterpart funds account to be maintained and operated on terms and conditions IDA-H9250 Not yet due New satisfactory to the World Bank and managed by NaCSA, into which it shall deposit from time to time its counterpart contribution corresponding to its share of the cost of the Project Note to Task Teams: End of system generated content, document is editable from here.