The World Bank North East Rural Livelihoods Project (NERLP) (P102330) REPORT NO.: RES35908 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NORTH EAST RURAL LIVELIHOODS PROJECT (NERLP) APPROVED ON DECEMBER 20, 2011 TO MINISTRY OF DEVELOPMENT OF NORTH EAST REGION AGRICULTURE SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Senior Global Practice Director: Juergen Voegele Practice Manager/Manager: Kathryn Hollifield Task Team Leader: Priti Kumar, Varun Singh The World Bank North East Rural Livelihoods Project (NERLP) (P102330) I. BASIC DATA Product Information Project ID Financing Instrument P102330 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 20-Dec-2011 15-Mar-2019 Organizations Borrower Responsible Agency Ministry of Development of North East Region North East Livelihoods Promotion Society Project Development Objective (PDO) Original PDO To improve rural livelihoods, especially that of women, unemployed youths and the most disadvantaged, in the participating North Eastern States Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-50350 20-Dec-2011 20-Jan-2012 12-Mar-2012 15-Mar-2019 130.00 82.88 30.37 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank North East Rural Livelihoods Project (NERLP) (P102330) Project Status: The North East Rural Livelihood Project (NERLP) is being implemented by the Ministry of Development of North Eastern Region (MDoNER) in 11 districts in Mizoram, Nagaland, Sikkim and Tripura. The project is on track to achieve the PDO indicators and will overachieve some of the intermediate targets. The project has already achieved the targets of Community Based Organizations (CBOs) in terms of formation of Self Help Groups (SHGs), SHG Federations and Community Development Groups (CDGs). The formation of SHGs, SHG Federations and CDGs has been impressive providing the much-needed institutional platform to about 300,000 households for livelihood enhancement. SHG capitalization has increased appreciably, including community investment fund (CIF), SHG own savings and bank loans. More than 220,000 women SHG members have taken loans and utilized the capital for productive assets and multiple income earning activities. The implementation of Community Development Plans (CDPs) in project villages is making positive impact in the village economy. Under Livelihoods Models and Value Chain Development, 30 intensive livelihood clusters have been initiated and are at advanced stage of completion. 501 Producer Groups have been formed across 31 different commodities/products for improved production & productivity, aggregation and value addition and for better access to inputs, technology, financial services and markets. The project has also formed 22 Producer Organizations (POs), of which about 10 POs have been legally registered. Agribusiness planning and due diligence procedures for assessing the readiness of PGs and POs to receive financing have also been undertaken. Over the past one year, construction of small processing and marketing infrastructure units in livelihood clusters has been accelerated. Many of these infrastructure units and community development projects are under construction and will require at least 3-4 months for completion and commissioning. The overall performance rating on PDO and IP is retained as Moderately Satisfactory. Procurement and Financial Management ratings are Moderately Satisfactory. Project disbursements stand at 73% of the allocation reflecting project expenditures for the quarter that ended September 2018, and is expected to reach 78% by including expenditures incurred in the quarter that ended December 31, 2018. MDoNER has submitted a financial plan for the remainder funds as part of its request for restructuring. The statutory audits up to FY18 have been received and no audits are overdue. No significant procurements and fund transfers to communities will be carried out during the proposed extended project period, and most of the unspent resources will be utilized for completion of existing commitments on CDPs, Processing/Marketing Infrastructure, PG Activity Plans, PO Business Plans, SHGs/SHG Federations, Vocational training providers and technical partners/consultants. Recent reviews by the Bank have highlighted the need for improved utilization of community funds, strengthening internal controls and monitoring and providing on-going supervision and oversight over decentralized community procurements and contracts. A Financial Management (FM) action plan for maintaining adequate internal controls has been agreed with the project to address the pending actions. Environmental and Social Safeguards performance is rated Moderately Satisfactory. The safeguards arrangements, as agreed, will continue to be in place in the extended period. The integration of environmental and social safeguard guidelines into the livelihoods and CDPs is streamlined. In-order to ensure the sustainable management of the created infrastructure, guidelines on O&M are being developed in local language and trainings to community are proposed. On social safeguards, the project has been implementing basic requirements for screening of land sites for the community infrastructure and maintaining adequate documentation at the community levels. Multiple channels are being used to deal with beneficiary focused grievances, such as toll-free number, website, Project Grievance Committee, postal correspondence and periodic field visits by project functionaries. The project is strengthening the mechanism for data compilation on grievances received and redressed. Monitoring and Evaluation rating is Moderately Satisfactory. A rigorous impact evaluation is underway by the design and data collection firms, including a set of thematic studies on community development plans, livelihoods, financial inclusion and social inclusion.A web-based MIS has been functioning for last 2 years. The World Bank North East Rural Livelihoods Project (NERLP) (P102330) Proposed Changes: An extension of the closing date from March 15, 2019 to September 30, 2019 is requested. The rationale for the request for extension is summarized below: i) Northeast monsoon and floods: The project was adversely impacted by the Northeast monsoon and floods during July-Sept 2018. Nearly 50 of the project's under-construction community infrastructure sites, largely in Tripura (the largest state by project investment) were damaged. In addition, the new political leadership in Tripura also affected some of the minor infrastructure projects on the ground, by way of changes in pre-agreed sites and plans. These two factors caused a slowdown in implementation and fund utilization, especially in the important state of Tripura, which has an allocation of about 50-60% of project investments. ii) Exit strategy and integration of NERLP under the GoI-supported National Rural Livelihoods Mission (NRLM): Following recommendations from the Tripartite Portfolio Review Meeting (TPRM) co-chaired by the Department of Economic Affairs (DEA) and World Bank held in February 2018, MDONER and MORD senior officials have had multiple strategic meetings on the exit strategy and integration of NERLP community institutions under the NRLM. It was felt that the two Ministries and their state units need more time to carry out the transition given the low institutional capacity of NRLM in the North East and sensitivities involved in the fallout on staffing and jobs in NERLP. iii) Ongoing impact evaluation: An impact evaluation of NERLP is underway and requires an additional 3-4 months for completion. This exercise will provide important insights on the performance and outcomes of this large-scale project. The above factors were presented by the project to DEA at the TPRM held on November 29 2018 and a six months extension in-principle was agreed by DEA and World Bank. A formal request for extension from DEA was received in January 2019. Considering the above, an extension of the closing date is requested to allow time for completion of the infrastructure facilities, utilization of remainder funds, development of an exit strategy and completion of the impact evaluation. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-50350 Effective 31-Mar-2017 15-Mar-2019 30-Sep-2019 30-Jan-2020