ISDS THE WORLD BANK GROUP A 'orld Frea ol Poverty InfoShop Integrated Safeguards Data Sheet (Initial) Date ISDS Prepared/Updated: 10/11/2002 24957 Section I - Basic Information October 1 1, 2002 A. Basic Project Data Country: CAPE VERDE Project ID: P074055 Project: Growth and Competitiveness Project Task Team Leader: Sherri Ellen Archondo Authorized to Appraise Date: January 6, 2003 IBRD Amount ($m): Bank Approval: March 27, 2003 IDA Amount ($m): 11.50 Managing Unit: AFTFS Sector: General industry and trade sector (40%); Lending Instrument: Specific Investment Loan (SIL) General finance sector (20%); Compulsory pension Status: Lending and unemployment insurance (20%); General public administration sector (20%) Theme: Other financial and private sector development (P); Regulation and competition policy (S); Other public sector governance (S) I.A.2. Project Objectives: The Project's overall objective would be to broaden the base of private participation in Cape Verde's economic growth and enhance private sector competitiveness, as well as further develop its financial sector. This would be achieved through a series of actions supported by the project, notably (i) investment climate reform and improved supply chains; (ii) private sector and institutional capacity building; and (iii) financial sector reform, including pension reform. Cape Verde's strategic approach to reducing poverty identified in the Interim Poverty Reduction Strategy Paper (I-PRSP) includes: (i) the renewal of economic growth with equity; (ii) the linkage between poverty reduction strategies and macroeconomic and sectorial policies; and (iii) the improvement in the productive capacities of the poor, by focusing on the need to improve microfinance policy and to provide training. The project would thus help sustain the Government's poverty alleviation efforts by contributing to economic stability as well as providing the necessary mechanism to perpetuate continued growth and permanent improvements in Cape Verde's international competitiveness. I.A.3. Project Description: Component 1. Modernizing, Strengthtening and Restructuring the Financial Sector (US$4.4 million, of which US$3.5 million is financed by IDA)This component would deepen the reforms initiated under the earlier IDA project (Cr. 2864) and would consist of the two subcomponents described below, the largest of which is pension reform. * Pension Reform (US$2 million financed by IDA). Support Government to implement a series of reforms aimed at establishing a sustainable pension system. In addition to alleviating a 2 ISDS potential contingent liability risk on the government budget, another expected result of the reform is that it would help mobilize term resources that could be channeled through the financial sector to finance private investments. * Financial Sector Development (US$1.5 million financed by IDA'Support Government to strengthen the financial sector through improved regulation and supervision (FSD) by the Central Bank of Cape Verde and encourage the development of new instruments such as improved leasing regulation, more efficient payment systems, etc. Component 2. Enhancing Private Sector Competitiveness (US$8.5 million, of which US$6.4 million is financed by IDA-more accurate costing to be determined during pre-appiaisaThe aim of the component is to sustain high private sector growth and increased competitiveness, by enhancing the investment climate, institutional capacity building and improving supply chains in key subsectors. The main subcomponents are described below. * Investment Climate Reforn(US$2.5 million to be financed by IDAhe short- to medium-term of this subcomponent is to address key policy constraints to enhance the business environment and encourage private sector development. The medium- to long-term objective (end of project) would be to bring about permanent improvements in the quality of the interface between the private and public sector. This would be measured through decreased financial and time cost of doing business. * Institutional Capacity Building (US$2.0 million to be financed by IDA)Or the strategy to succeed, public/private partnerships and related institutional arrangements would have to be strengthened. The following institutions could receive support under the project: (i) PROMEX; (ii) IADE; (iii) Stock Exchange; and (iv) the Ministry of Justice. * Private Sector Capacity Building (US$1.5 million to befinanced by IDA) It is expected that the strategy will call for capacity building within private operators, especially SMEs. The project would support this area through a 50:50 matching-grant, using an approach and procedures successfully tested and developed in other IDA projects. The two Chambers of Commerce, who represent the private sector, and as manager/administrator of the matching grant, would benefit from the project to strengthen its capacity to deliver services to its members and manage the grant (on a first-come, first-serve basis). In addition the project would finance, as needed, the dissemination of business related-information which would: (i) widen the dialogue on business environment reforms; (ii) help to raise awareness among the business community as well as policymakers; and (iii) educate and build consensus among the concerned actors. Component 3. Supporting Project Implementatr"$3 million, of which US$2 million is financed by IDA) This component would finance a professional project management team (Director, Accountant, Procurement Specialist), attached to the Secretariat described below, as well as the required monitoring and evaluation (audits and so on). It should be noted that refinancing of the proposed PPF is included in the above component allocations. Components: 1. Modernizing, Strengthening and Restructuring the Financial Sector A. Pension Reform B. Financial Sector Development/BCV 3 ISDS 2. Enhancing Private Sector Competitiveness A. Investment Climate Reform B. Institutional Capacity Building C. Private Sector Capacity Building 3. Project Implementation/PPF I.A.4. Project Location: (Geographic location, information about the key environmental and social characteristics of the area and population likely to be affected, and proximity to any protected areas, or sites or critical natural habitats, or any other culturally or socially sensitive areas.) The project will not be "island specific". The objective of the project is to develop a vibrant and competitive private sector. Each island has different characteristics, for example there are wineries on the island of Fogo, services industries on Santiago and textiles on Mindelo (in an industrial park). Through the two Chambers of Commerce (located on Santiago and Mindelo), all eligible Cape Verdean enterprises may take the opportunity to avail themselves to training and technical expertise. With respect to the pension reform and financial sector development, while the majority of actions will take place in the capital, Praia, financial sector development will be initiated in the other islands where there are financial services. Institutional capacity building may also be undertaken in any targeted island. B. Chieck Environmental Classification: C (Not Required) Comments: The overall objective to this project is to broaden private sector participation. In order to do this, the components consist of capacity building, addressing policy constraints, and implementing financial reforms. There are no environmental or safeguard issues. C. Safeguard Policies Triggered Policy Applicability Environmental Assessment (OP/BP/GP 4.01) . Yes * No TBD Forestry (OP/GP 4.36) 3 Yes * No TBD Natural Habitats (OP/BP 4.04) Yes * No TBD Safety of Dams (OP/BP 4.37) ..Yes *No lTBD Pest Management (OP 4.09) .Yes *No TBD Involuntary Resettlement (OP/BP 4.12) Yes *No TBD Indigenous Peoples (OD 4.20) Yes * No '&TBD Cultural Property (OP 4.11) Yes * No i TBD Projects in Disputed Territories (OP/BP/GP 7.60)* Yes * No . TBD Projects in International Waterways (OP/BP/GP 7.50) 1 Yes * No l TBD *By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' clairms on the disputed areas Section II - Key Safeguard Issues and Their Management D. Summary of Key Safeguard Issues. Please fill in all relevant questions. If information is not available, describe steps to be taken to obtain necessary data. II.D. Ia. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts. not applicable 4 ISDS II.D. I b. Describe any potential cumulative impacts due to application of more than one safeguard policy or due to multiple project component. not applicable II.D. I c Describe any potential long term impacts due to anticipated future activities in the project area. not applicable IL.D.2. In light of 1, describe the proposed treatment of alternatives (if required) not applicable II.D.3. Describe arrangement for the borrower to address safeguard issues not applicable II.D.4. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. There will be several methods to ensure stakeholder participation. It will be the responsibility of the PIU to ensure that stakeholder participation is consistent. First there are the beneficiaries themselves, who will be actively involved in preparing the project, based on their commitment to the National Development Plan, as well as Investment Strategy. Most of the proposed beneficiaries already have 2-5 year work plans under these programs and a subset will be drawn out and developed into project components, with performance indicators which they feel are reasonable, rational and attainable within the project timeframe. Second, during preparation, there will be meetings with the donor community to avoid duplication of support and to seek their views on the economic and financial environment in CapeVerde. Finally, there will be two mini-private sector forums organized by the Chambers of Commerce (for geographical representation) to ensure that the issues are well discussed and appropriate solutions presented, which can be translated into project subcomponents. E. Safeguards Classification. Category is determined by the highest impact in any policy. Or on basis of cumulative impacts from multiple safeguards. Whenever an individual safeguard policy is triggered the provisions of that policy apply. [ ] SI. - Significant, cumulative and/or irreversible impacts; or significant technical and institutional risks in management of one or more safeguard areas S2. - One or more safeguard policies are triggered, but effects are limited in their impact and are technically and institutionially manageable [X] S3. - No safeguard issues SF. - Financial intermediary projects, social development funds, community driven development or similar projects which require a safeguard framework or programmatic approach to address safeguard issues. F. Disclosure Requirements Environmental Assessment/Analysis/Management Plan: Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Date of distributing the Exec. Summary of the EA to the ED (For category A projects) Resettlement Action Plan/Framework: Expected Actual Date of receipt by the Bank 5 ISDS Date of "in-country" disclosure Date of submission to InfoShop Indigenous Peoples Development Plan/Framework. Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan: Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Darn Safety Management Plan: ExVected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop If in-country disclosure of any of the above documents is not expected, please explail why. Signed and submitted by Name Date Task Team Leader: Sherri Ellen Archondo October 10, 2002 Project Safeguards Specialists 1: Serigne Omar Fye October 10, 2002 Project Safeguards Specialists 2: Project Safeguards Specialists 3: Approved by: Name Date Regional Safeguards Coordinator: Serigne Omar Fye October 10, 2002 Sector Manager/Director: Demba Ba October 10, 2002 For a list of World Bank news releases on projects and reports, click here REARCH FEEOBACK SITE MAP SHOWCASE m