Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD2293 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF EUR16.4 MILLION (US$20 MILLION EQUIVALENT) TO BURKINA FASO FOR A WEST AFRICA REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAM - APL-1B - BURKINA FASO PROJECT- ADDITIONAL FINANCING April 4, 2018 Transport and Digital Development Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective February 28, 2018) Currency Unit = XOF (C.F.A. Francs BCEAO) EUR1 = XOF655.957 US$1 = EUR0.81843107 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS 3G Third Generation 4G Fourth Generation ACE Africa Coast to Europe AF Additional Financing ANPTIC National Agency for the Promotion of ICT in Burkina Faso (Agence Nationale de Promotion des TIC du Burkina Faso) APL Adaptable Program Loan ARCEP Posts and Electronic Communications Regulatory Authority (Autorité de Régulation des Communications Electroniques et des Postes) BCEAO Central Bank of West African States (Banque Centrale des Etats de l'Afrique de l'Ouest) BUNEE Bureau National des Evaluations Environnementales CBA Cost-Benefit Analysis CEB Communauté Electrique du Bénin CIFE Circuit Informatisé des Financements Extérieurs CPF Country Partnership Framework CQS Selection Based on Consultants’ Qualification DA Designated Account ECOWAS Economic Community of West African States ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework FM Financial Management FY Financial Year GDP Gross Domestic Product GNI Gross National Income GoBF Government of Burkina Faso IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICT Information and Communication Technology ICS Individual Consultant Selection IDA International Development Association IFR Interim Financial Report IPF Investment Project Financing IRR Internal Rate of Return ISP Internet Service Provider ISR Implementation Status and Results Report ITU International Telecommunication Union IXP Internet Exchange Point Kbps Kilobit per second Mbps Megabit per second Gbps Gigabit per second M&E Monitoring and Evaluation MDENP Ministry for the Development of the Digital Economy and Posts (Ministère du Développement de l'Economie Numérique et des Postes) NCB National Competitive Bidding NREN National Research and Education Network PAD Project Appraisal Document PAP Project Affected Person PCU Project Coordination Unit PDO Project Development Objective PIM Project Implementation Manual PIU Project Implementation Unit PPP Public-Private Partnership PPSD Project Procurement Strategy for Development PTDIU Transport and Development of Urban infrastructures Project (Projet de transport et de développement des infrastructures urbaines) QCBS Quality- and Cost-Based Selection RPF Resettlement Policy Framework SAT3 South Atlantic 3 SCD Systematic Country Diagnostic SDR Special Drawing Rights SIM Subscriber Identity Module SP-PST Permanent Secretary for the sectoral program of Transports (Secrétariat Permanent du Programme Sectoriel des Transports) STEP Systematic Tracking of Exchanges in Procurement TA Technical Assistance TOR Terms of Reference VLP Virtual Landing Point WACREN West and Central African Research and Education Network WARCIP West Africa Regional Communications Infrastructure Program Vice President: Makhtar Diop Country Director AFCW2: Rachid Benmessaoud Country Director for Burkina Faso: Pierre Laporte Country Manager: Cheick Fantamady Kante Senior Global Practice Director: Jose Luis Irigoyen Practice Manager/Manager: Boutheina Guermazi Task Team Leader: Charles Hurpy BURKINA FASO WARCIP-APL-1B - ADDITIONAL FINANCING CONTENTS Project Paper Data Sheet i Project Paper 1 I. Introduction 1 II. Background and Rationale for Additional Financing 1 III. Proposed Changes 12 IV. Appraisal Summary 21 V. World Bank Grievance Redress 28 Annex 1: Revised Results Framework and Monitoring Indicators 29 Annex 2: Detailed Project Financing 36 Annex 3: Implementation Arrangements 40 Annex 4: Financial Management Arrangements 42 Annex 5: Procurement Arrangements 47 Annex 6: Economic and Financial Analysis 52 ADDITIONAL FINANCING DATA SHEET Western Africa West Africa Regional Communications Infrastructure Program - APL-1B - Burkina Faso Project - Additional Financing (P161836) AFRICA Transport and Digital Development Global Practice, GTD11 . Basic Information – Parent Parent Project ID: P122402 Original EA Category: B - Partial Assessment Current Closing Date: 30-Jun-2018 Basic Information - Additional Financing (AF) Additional Financing Project ID: P161836 Scale Up Type (from AUS): Regional Vice Makhtar Diop Proposed EA Category: B-Partial Assessment President: Expected Effectiveness Country Director: Pierre Frank Laporte 31-Oct-2018 Date: Senior Global Jose Luis Irigoyen Expected Closing Date: 30-Jun-2021 Practice Director: Practice Boutheina Guermazi Report No: PAD2293 Manager/Manager: Charles Pierre Marie Team Leader(s): Hurpy Borrower Organization Name Contact Title Telephone Email Ministry of Economy and Mohamed Diare Minister 224631613838 Finance Minister of Finance and Abdou Kolley Minister 2204227-954 Economic Affairs Ministère de l’Economie Hadizatou Rosine et des Finances du Ministre 0022625333095 cab_mef@yahoo.fr Coulibaly Sori Burkina Faso i Project Financing Data - Parent (West Africa Regional Communications Infrastructure Project - APL-1B-P122402) (in US$, Million) Key Dates Approval Signing Effectiveness Original Closing Revised Project Ln/Cr/TF Status Date Date Date Date Closing Date P122402 IDA-H7120 Effective 21-Jun-2011 04-Jul-2011 22-Dec-2011 31-Dec-2016 30-Jun-2018 29-Jun- P122402 IDA-H7130 Closed 21-Jun-2011 31-Oct-2011 31-Mar-2016 31-Dec-2016 2011 29-Jun- P122402 IDA-H7140 Closed 21-Jun-2011 19-Dec-2011 31-Mar-2016 31-Dec-2016 2011 Disbursements % Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed IDA- P122402 H7120 Effective XDR 14.20 14.20 0.00 11.58 2.62 81.55 IDA- P122402 H7130 Closed XDR 21.60 21.43 0.17 21.43 0.00 100.00 IDA- P122402 H7140 Closed XDR 21.00 20.91 0.09 20.91 0.00 100.00 Project Financing Data - Additional Financing West Africa Regional Communications Infrastructure Project - APL-1B - Burkina Faso - Additional Financing (P161836) (in US$, Million) [] Loan [ ] Grant [] IDA Grant [X] Credit [ ] Guarantee [ ] Other Total Project Cost: 20.99 Total Bank Financing: 20.00 Financing Gap: 0.00 Financing Source – Additional Financing (AF) Amount Borrower 0.99 International Development Association (IDA) 20.00 Total 20.99 Policy Waivers Does the project depart from the CAS in content or in other significant No respects? Explanation Does the project require any policy waiver(s)? No ii Explanation Team Composition Bank Staff Name Role Title Specialization Unit Charles Pierre Team Leader ICT Policy ICT Policy Specialist GTD11 Marie Hurpy (ADM Specialist Responsible) Mohamed El Procurement Senior Procurement GGOPF Hafedh Hendah Specialist (ADM Procurement Responsible) Specialist Sandrine Egoue Financial Financial Financial Management GGOAW Ngasseu Management Management Specialist Specialist Antoine V. Lema Social Senior Social Sr. Social Specialist GSU05 Safeguards Development Specialist Specialist Bienvenue Helene Team Member Program Assistant Program Assistant AFMBF Karambiri Hadiza Nyelong Team Member Team Assistant Program Assistant GTD11 Eneche Issa Thiam Team Member Finance Officer Disbursement WFACS Leandre Yameogo Environmental Senior Sr. Environmental GEN07 Safeguards Environmental Specialist Specialist Specialist Marc Jean Yves Team Member Senior Operations Sr. Operations Officer GTD11 Lixi Officer Michele Ralisoa Team Member Operations Operations Analyst GTD11 Noro Analyst Saba Nabeel M Counsel Legal Analyst Legal LEGAM Gheshan Tassere Pitroipa Team Member IT Analyst, Client ICT ITSCR Services Locations Country First Location Planned Actual Comments Administrative Division Burkina Centre Ouagadougou X Faso Burkina Est Est X Border with Benin Faso iii Institutional Data Parent (West Africa Regional Communications Infrastructure Project - APL-1B-P122402) Practice Area (Lead) Transport and Digital Development Contributing Practice Areas Additional Financing West Africa Regional Communications Infrastructure Project - APL-1B - Burkina Faso - Additional Financing (P161836) Practice Area (Lead) Transport and Digital Development Contributing Practice Areas Consultants (Will be disclosed in the Monthly Operational Summary) Consultants Required? Consultants will be required iv I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an IDA additional financing (AF) credit in the amount of US$20 million to the Burkina Faso West Africa Regional Communications Infrastructure Project - APL-1B (WARCIP-APL-1B) - P122402, Cr. IDA-H7120. This AF includes a Level 2 restructuring of the parent project involving (a) changes to the project components; (b) extension of the closing date of the parent project; (c) revisions to the Results Framework; and (d) application of the new procurement framework. 2. The proposed AF requested by the Government of Burkina Faso (GoBF)1 would finance a set of scaled-up activities under the parent project to enhance its impact. These activities include (a) the expansion and strengthening of connectivity infrastructure including fiber optic and wireless networks, Virtual Landing Point [VLP], Internet Exchange Point [IXP]), and the supply of international capacity, to increase the integration of regional telecommunications networks; (b) technical assistance (TA) and training to improve the legal and regulatory environment of the information and communication technology (ICT) sector and to establish relevant public-private partnerships (PPPs) for the efficient operationalization of national ICT infrastructure; and (c) the support to implement the AF activities, including covering some incremental operating costs such as audits, monitoring and evaluation (M&E), safeguards, and communication. II. Background and Rationale for Additional Financing in the amount of US$20 million Project Background 3. WARCIP-APL-1B - Burkina Faso was approved by the Board on June 21, 2011, in the amount of SDR 14.2 million (US$19.4 million equivalent). It is part of the WARCIP Program, which is a World Bank Interdependent Series of Projects aiming at improving regional communications infrastructure in Western Africa. WARCIP-APL-1B included three countries: Burkina Faso, the Republic of The Gambia, and the Republic of Guinea. The Gambia and Guinea projects closed in December 20162. The WARCIP-APL-1B - Burkina Faso became effective on December 22, 2011, and there have not been any changes to its original objectives, design, and scope. 4. The Project Development Objective (PDO) of WARCIP-APL-1B is to increase the geographical reach of broadband networks and to reduce costs of communications services in each of the territories of The Gambia, Guinea and Burkina Faso. The PDO of the WARCIP-APL-1B - Burkina Faso Project is to increase the geographical reach of broadband networks and to reduce the costs of communications services in the territory of Burkina Faso. The rest of the document refers only to the Burkina Faso Project, whose components consist of the following:  Component 1: Connectivity (US$17.3 million equivalent). This component primarily includes the support to international connectivity through the 1 Financing Request No2016/02014/MINEFID/SG/DGCOOP/DCM/Lzt, dated August 9, 2016. 2 Interim Implementation and Completion Results reports have been prepared for The Gambia and Guinea projects 1 establishment of a VLP and IXP, the build-out of a connectivity link between Ouagadougou and the border with Ghana, the supply of bulk international bandwidth capacity to all license operators and the rollout of limited national infrastructures between priority ministries and public agencies.  Component 2: Creation of an Enabling Environment and Strengthening of Institutions for Improved Connectivity (US$3.7 million equivalent). This component includes the due diligence of the regulatory environment; the optimization of the governance, ownership, and financing issues related to the operation of the VLP and the management of the bandwidth emanating from international connectivity; and several strategic, policy, and regulatory studies.  Component 3: Project Implementation (US$1.3 million equivalent). This component includes strengthening the institutional capacity of the project implementing agencies and covering the operating costs of the Project Implementation Unit (PIU).  Project Performance 5. Project ratings for Implementation Progress and ‘Progress toward achievement of the PDO’ of WARCIP-APL-1B – Burkina Faso have been rated ‘Moderately Satisfactory’ and ‘Satisfactory’, respectively, in the last project Implementation Status and Results Reports (ISRs). As of Mid-March 2018, overall disbursements under the project stood at about 82 percent of IDA resources. All the remaining funds have been committed under already signed and awarded contracts. Project implementation has however been slower than expected due to reasons discussed further below. Table 1. Project Ratings of the Regional WARCIP APL-1B in the Last Three ISR Sequences Project Performance November 2017 March 2017 September 2016 Development Objective S S MS Overall Implementation Progress Sa Sb MS Financial Management (FM) MS MS MS Project Management S S MS Counterpart Funding NA NA NA Procurement MS MS MS M&E S S S Note: S = Satisfactory; MS = Moderately Satisfactory; NA = Not Applicable. a. Overall implementation progress for Burkina Faso was MS for Component 1 and S for Components 2 and 3. b. Overall implementation progress for the three countries (Burkina Faso, Guinea, and The Gambia) was rated S, but the individual performance of the Burkina Faso project was rated MS. 6. The project was restructured upon the Government’s request, on February 26, 2016. The restructuring was triggered by (a) delays in project implementation, mostly due to a series of political events in 2014 and 2015 and several procurement issues3 for the largest 3 Unsuccessful procurement due to noncompliant bids, as well as protracted delays, in part related to political instability. 2 contract, namely the construction of the fiber optic network between Ouagadougou and the border with Ghana and (b) change in disbursement categories, to cater for the network extensions requested by the Government.4 The original financing closing date was extended until December 31, 2017, and funds from the unallocated category and the undisbursed balance of the Project Preparation Advance were reallocated. Due to delays in launching and preparing the AF, a second extension from December 31, 2017, to June 30, 2018, was granted in December 2017. 7. The implementation of the first two components of the parent project are near completion. The implementation status is as follows:  Component 1: Connectivity. The construction of the fiber optic network between Ouagadougou, Bagré, and the border of Ghana has been completed. In addition, the contract for the supply of the bulk international bandwidth capacity, to be delivered at the VLP, has been signed (the bandwidth will be delivered to the VLP, tested and made operational by end of April 2018). The facility that will host the VLP is ready and the active equipment is installed. The IXP, established as an association regrouping Internet service providers (ISPs) and content providers, is fully operational and very successful compared to other IXPs in the region in terms of traffic exchanged. All the other minor activities have been completed. The component performance is rated Moderately Satisfactory (because of implementation delays).  Component 2: Creating an Enabling Environment for Improved Connectivity. The entity in charge of the VLP has been created but with significant delays, given the complexity and the coordination requirements of the PPP model chosen by the stakeholders. This structure regroups the state and nine private telecommunications operators and ISPs within a cooperative society (Société Coopérative) owning and managing the VLP equipment, the supply of international capacity, and part of the international access infrastructure.5 The company statutes have been adopted and signed by all stakeholders (ensuring, among others, that the VLP will be operated under the obligations of open and nondiscriminatory access), and the company has been granted authorization to operate. All the other studies of this component have been started and most of them have been completed. The component performance is rated Satisfactory. 8. The parent project complies with key loan covenants, including audit and FM reporting requirements. There are no unresolved issues concerning fiduciary management and no unresolved environmental and social safeguards issues.  FM and procurement. The project’s FM performance and procurement performance are both rated Moderately Satisfactory. The overall FM risk is Moderate and the overall procurement risk is Substantial. The project is in full compliance with the financial reporting and the quarterly interim financial reports 4 A network extension to the original network design was requested, to link the Bagré region to the original backbone link between Ouagadougou and the border with Ghana. 5 The cooperative society will own and operate two pairs of fiber optic links between Ouagadougou and the border with Benin, out of the total 96 pairs of fiber optic links. 3 (IFRs). Reports and annual audit reports are submitted to the Association within the stipulated deadlines and are assessed as being in form and content satisfactory to the Association. All audits are current. The existing FM team and current arrangements are deemed sufficient to properly handle the proposed AF resources. Likewise, procurement arrangements will remain the same for the proposed AF.  M&E. The M&E arrangement under the project, led by the Project Coordination Unit (PCU), is Satisfactory. Project monitoring reports are submitted on time and are of adequate quality.  Safeguards. The policies triggered under the parent project are OP/BP 4.01 - Environmental Assessment, OP/BP 4.12 - Involuntary Resettlement, and OP/BP 4.11 - Physical Cultural Resources. Existing safeguards documents were disclosed in April 2014. The last Implementation Support Mission confirmed that the environmental management of the project’s works implemented to date complies with the World Bank’s safeguards policies. The overall safeguards rating of the project is Satisfactory. 9. In terms of results, the indicators show a satisfactory market trend with increasing penetration and declining ICT service prices, and all the targets of the parent project indicators have been met. The full effect of the project will materialize once the VLP is fully operational (that is, the international bandwidth has been made available at the VLP and is being sold by the VLP to national ISPs). The regulatory component of the project continues to be satisfactory, and the operations of the IXP are on track. Sector Context 10. The ICT sector in Burkina Faso has considerably and positively evolved over the past decade. On the policy and regulatory side, the national regulator has been efficient in implementing a series of reforms of the policy framework, which has enabled the emergence of a relatively competitive environment for ICT services. Burkina Faso has been one of the leading countries in the region with regard to adoption of Economic Community of West African States (ECOWAS) ICT policies6. 11. The ICT sector is today characterized by a relatively mature mobile telephony market, yet underperforming compared to other countries in the region. The penetration of (fixed and mobile) telephony services reached 83 percent of the population in December 2016, compared to 37 percent in December 2011.7 While showing significant growth, this performance remains relatively low compared to other countries in the region (see Figure 2). This situation is mainly due to lack of affordability of mobile telephony services, considering the low purchasing power of the population8 (see Figure 3), and to a lesser extent network coverage gaps in rural 6 Burkina Faso has been one of the leading countries in the region in terms of adopting ECOWAS ICT policies (for example, on licensing) and adhering to the supplementary acts. 7 Source: ARCEP (WARCIP indicators). 8 Burkina Faso had the lowest GDP per capita (current U.S. dollar) among the peer countries as of December 2015, after Niger. 4 and sparsely populated areas of the country. However, the competition dynamic is relatively healthy, with three active mobile operators competing on the mobile telephony market (Onatel with 45 percent market share, Orange with 37 percent, and Telecel with 18 percent, as of December 20169). 12. The Internet market, while growing rapidly, is still in its infancy and relatively underperforming. The fixed Internet access infrastructure is limited and progressively disappearing, with less than 10,000 subscribers at the end of 2016, quasi-exclusively served by Onatel.10 ISPs are limited in number and size, focusing on niche markets and small geographic areas. Mobile technologies have taken over the Internet access segment, with a rapid yet still limited take-up of 3G services, which offer relatively low-bandwidth Internet services—service penetration reached 19 percent in December 2016, according to TeleGeography, with subscriptions concentrated mostly in urban areas. This performance appears relatively low compared to other countries of the region (see Figures 4 and 5). In terms of prices, low-end packages are now offered at affordable prices, even to low-income individuals.11 However, despite these low entry prices, the reported limitations in terms of coverage and bandwidth remain an impediment to a larger service take-up. One of the key reasons for the underperformance of the Internet market are the limitations of the international connectivity, which remain expensive and largely controlled by one single player. International connectivity prices have fallen (to US$1,513 for a 2 Mbps link with a capital city in Europe in September 2017, down from US$9,000 in December 2011), but this level of prices, which is directly reflected in retail prices and usage caps, prevents ISPs from offering high-quality services (that is, fast connection with large traffic download cap) at affordable prices. Finally, 4G services are not yet available, limiting the quality of service that can be delivered to the final users. Figure 1. Mobile Telephony Penetration as a Figure 2. Mobile Telephony Basket Prices as a Percentage of Population (as of December 2015) Percentage of Gross National Income (GNI) Per Capita (2015) Source: International Telecommunication Union (ITU) 2016. 9 Source: TeleGeography, 2017. 10 Source: TeleGeography, 2017. 11 For instance, as of March 2017, Onatel prepaid 3G bundles start at FCFA 200 (~US$0.3) for 5 MB of usage (and a validity of 1 month); a 1 GB bundle costs FCFA 5,000 (~US$8.1) for a validity of 1 month. Source: Onatel (http://www.onatel.bf/particulier/internet-et-donnees/acces-et-tarifs-internet/3g-plus.aspx). 5 Figure 3. Mobile Broadband Penetration as a Figure 4. Percentage of Individuals using the Percentage of Population (as of December 2015) Internet Source: International Telecommunication Union (ITU) 2016. 13. Large public investments have been made in the ICT sector, and would require the creation of PPPs to ensure their efficient and sustainable management. The GoBF has been considering investing in an ambitious National Backbone project since 2010, including rolling out around 5,400 km of fiber optic network connecting 45 provinces’ capitals as well as major urban areas. The project planned for the establishment of a PPP for the management of these infrastructure, in which a public company would own the infrastructure and a private entity would exploit the infrastructure on its behalf. This project has been in discussions regularly with the vendor Huawei and materialized only in July 2017 (only a first phase of initially around 2,000 km of backbone to be rolled out). In addition, the country has benefited from several major investments in ICT infrastructure, besides WARCIP, such as the ‘G-Cloud’ project, which started in 2015 with funding from the Government of Denmark (for a total budget of EUR 45.5 million), as well as the ‘PKF 021’ project, supported by the Grand Duchy of Luxembourg and which will connect eight regions through satellite technologies. The ‘G-Cloud’ project will deploy new electronic services through ‘cloud nodes’ deployed in approximately 400 public facilities spread in 13 regional urban centers, connected through a 513 km fiber optic network. Additional fiber optic network will be deployed locally to connect each of those facilities, representing a total of around 740 km of fiber optic cables. This network, deployed primarily for the needs of the administration and owned by the state, could be leveraged for commercial use, with the setup of a structure for its management. Similarly, in the context of WARCIP, the PPP setup to manage the VLP will own and directly manage two pairs of fiber optic links dedicated to the international traffic transmitted over the link to Ghana built through WARCIP. The remaining capacity will be available for national traffic but needs a structure to be operationalized. The PPP envisioned to own and manage this infrastructure is yet to be created, but the authorities confirmed their willingness to aggregate their current and public investments in ICT infrastructures into such a PPP12 in a decision of the Conseil de Cabinet, dated April 6, 2016. Ultimately, this PPP could also encompass other assets such as the capacity available on other network companies (electricity, railway and so on) and any other relevant investments. The creation of this PPP will allow the Government to optimize the significant investments already made (and planned) in the sector and ensure the compliance with the obligations of open, transparent, and nondiscriminatory access. 12 Details of this PPP arrangement (ownership, management, financing, and so on) have not been defined. 6 Rationale for Additional Financing 14. Further retail price reductions are required to bring Internet broadband services to the population, including the most vulnerable. This in turn, requires improvements in international connectivity. The generalization of Internet broadband in Burkina Faso will be directly correlated to the availability of cheap and reliable international connectivity, which represents a fundamental element in the value chain and the largest operating costs for ISPs today in the country. The availability of international bandwidth, which is delivered by submarine cables in the coastal countries, is not yet sufficient and Burkina Faso continues to suffer because of its landlocked position. The international connectivity prices have already fallen (US$1,513 for a 2 Mbps link with a capital city in Europe in September 2017, down from US$9,000 in December 2011) but not enough to make retail prices affordable to a large portion of the population. With more abundance in the international bandwidth segment, and a more competitive environment at the wholesale level (to allow ISPs to buy international and national capacity at fair prices), significant price reductions could be achieved in the Internet segment, as its price in coastal countries of the region is today typically in the range of several hundred dollars. 15. The generalization of access to broadband Internet is necessary to complement and multiply the effects of other projects and investments in the ICT sector and beyond. In particular, the World Bank-funded eBurkina project (P155645)13 intends to improve capacity and use of ICT by the public administration and agencies for the provision of information and public e-services and to foster entrepreneurship in the digital economy. The success of this project will be linked to the ability to provide access and deliver services to the public entities, citizens, and businesses. 16. The activities proposed to be funded through the AF are aligned with the national strategy for the ICT sector, and will address key sector challenges on the regional and national connectivity front. The Government strategy for the sector includes ambitious programs on seven dimensions: (a) an efficient and effective governance of the national development policy for the digital economy; (b) an enabling environment for digital confidence; (c) the deployment of broadband infrastructures; (d) digital transformation of the public administration, as well as economic and social sectors; (e) innovation and digital expertise; (f) human capital; and (g) digital inclusion. The AF will contribute to the realization of some of these objectives and address some of the key sector challenges, complementing activities undertaken under the eBurkina project, through:  The rollout of a new backbone network up to the border with Benin, the purchase of additional international bandwidth, the operational strengthening of the VLP and the IXP (in terms of equipment, technical expertise, and management capacity), and the establishment of PPPs to ensure an efficient and sustainable management of the ICT infrastructures currently deployed in the country; and  The support to the implementation of key regulatory reforms (for example, universal service, wholesale regulations, spectrum management, cross-sector regulations, and 13 Approved by the Board on January 18, 2017. 7 so on) to further improve the competitive environment, leading to a decrease in retail prices, an improvement of digital inclusion, and a spur in innovation. Strong regulatory oversight is needed to ensure that price reductions at the wholesale level are effectively translated into price reductions at the retail level through efficient competition, to the benefit of end users, and not largely captured as additional margins by ‘dominant’ operators. 17. The proposed investments and activities are fully consistent with the PDOs of WARCIP - Burkina Faso. These objectives are to increase the geographical reach of broadband networks and reduce costs of communications services in the territory of Burkina Faso and will have a positive impact on the continued economic justification of WARCIP, as discussed in the following paragraphs. 18. The proposed AF is fully compliant with the eligibility criteria for IDA regional funding. The parent project is already a regional project that includes The Gambia and Guinea besides Burkina Faso. The activities of the AF will spill over country boundaries, generating positive network externalities between Burkina Faso and Benin and improving the regional connectivity resilience. There is a strong country ownership of the AF and the willingness to replicate the relationship established between Burkina Faso and Ghana, during the parent project, to Benin during the AF. Finally, the AF is fully in line with the regional connectivity integration strategy set at the ECOWAS level, which made the development of broadband infrastructure between member states a priority. 19. Rationale for an additional fiber optic network link with Benin. Burkina Faso is already connected to all its neighboring countries except Benin. Completing this regional network will provide several key benefits:  Affordability. The new link will enable wider access for Burkina Faso to low-cost international capacity, indirectly giving Burkina Faso access to the submarine cables South Atlantic 3 (SAT3) and Africa Coast to Europe (ACE) that land on the coast of Benin. This increase in supply channels will increase competition, which will translate into lower connectivity costs for operators and ISPs and in turn into lower retail Internet prices for users.  Accessibility. In terms of national network expansion, the new link will enable the deployment of rural connectivity in the southeastern part of Burkina Faso and the northwestern part of Benin, as operators will be in a position to build upon this backbone infrastructure to deploy middle- and last-mile infrastructure in both countries and thus reach the final users in these regions. Given the socioeconomic conditions in these areas (rural, poor, and sparsely populated), there is little or no financial incentive for operators to invest in this link without public subsidies. 8  Security and quality of service. The new link will provide additional redundancy to the national and regional network,14 as some telecommunications traffic would be diverted to this new link, in case of failure of other network links.  Leverage of existing infrastructures. Two fiber optic networks are already reaching the Burkina Faso-Benin border (one of Benin Telecom and one of the power utility company Communauté Electrique du Bénin [CEB]). Without a corresponding fiber optic network on the Burkinabe side, these networks would remain underutilized. In addition, the new link will branch out of the cross-country terrestrial fiber optic link owned by Onatel, thereby increasing the traffic carrier over this link and the corresponding revenues. 20. Rationale for strengthening the VLP and the IXP as key contributors to the regional integration on the connectivity front. The VLP has been established in the parent project as a complex PPP structure gathering nine private operators and ISPs and the state. It will operate the international capacity carried on the fiber optic link built between Ouagadougou and the border of Ghana, which requires strong technical capabilities as well as commercial and organizational capacities. Assistance to its operations will be crucial in ensuring that the benefits of the additional capacity are fully and efficiently transferred to the market players and ultimately to the end users. With an additional link to Benin to manage, additional equipment and consultancies (for example, revision of the business plan) will be required. To improve quality and resilience, the VLP could also open up a second site in Bobo-Dioulasso; this second site would additionally allow the operators and service providers of that region to connect easily to the VLP without buying transit capacity from Onatel for the link between Bobo-Dioulasso and Ouagadougou, thus reducing their operating costs considerably. In addition, scaling up the IXP—currently operational—will contribute to lower the cost and improve the quality of national connectivity and stimulate the production and usage of local content and services. If the IXP growth continues on the current trend, and the international connectivity prices decrease, this IXP has the potential to become a regional hub and greatly facilitate the supply of content and services in the sub-region. Lastly, this activity will ultimately improve the delivery of the services to be developed in the eBurkina project and could enable the education institutions of Burkina Faso to provide additional and enhanced services at lower costs (for example, National Research and Education Network). 21. Rationale for an additional supply of international connectivity to the country. The parent project is financing the purchase of the equivalent of US$4 million worth of international capacity. This capacity will be made available to all telecommunications operators in Burkina Faso at the VLP through a dedicated PPP, operating in compliance with the obligations of open, transparent, and nondiscriminatory access. The original subsidy was downsized from an initial planned envelope of US$10 million to US$4 million. This change was made to accommodate the request of the Government to finance a longer-than-anticipated network: a link to Bagré-pôle was added to the initial design15, which only planned for a link between Ouagadougou and the border with Ghana. While the unit prices of international capacity have decreased considerably over the past five years, the demand has also increased with the generalization of bandwidth-hungry applications and services (for example, video services, peer-to-peer files sharing, and so on). 14 Burkina Faso is already connected to all neighboring countries by fiber optic links, except Benin. 15 Safeguards documents were updated to reflect this modification in design. 9 Additional capacity available at the VLP will translate into cheaper capacity for operators (international capacity can represent up to 60 percent of the operating costs of small ISPs), which in turn would pass on this cost reduction to the end users (and/or increase the quality of service, that is, the bandwidth), provided that the competition intensity is sufficient. The impact would be especially noticeable for small ISPs, which have little negotiating power when purchasing international capacity outside the VLP. Strengthening small ISPs would help level the playing field between ISPs and large mobile operators and consequently drive retail prices down. 22. Rationale to extend the coverage of broadband Internet services and provide value- added services to rural populations and universities, building on the existing universal service fund and National Research and Education Network (NREN). The substantial social and economic benefits from broadband Internet services are even more impactful for rural populations, which suffer from the lack of basic services and infrastructure. Expanding access to broadband Internet services to rural populations who are currently unserved remains a critical objective of the Government, to guarantee fair and universal access to ICT services. The sectoral policy for 2016–2020, published in 2015, thus mentions the following dual strategic orientation: (a) to promote the integration of ICT in all economic, social, and cultural aspects of the country and (b) to make Burkina Faso a country of ICT-based services. To reach this objective, the Government intends to ensure equitable, fair, and affordable access to ICT services and infrastructures, adapted to the needs of the population, and to promote the integration of ICT in all processes of the economic actors. To do so, the universal service fund (to which all telecom operators are contributing), which had CFAF 31.5 billion (that is, approximately US$52.4 million) as of the end of 2014, will play a key role in financing connectivity projects in selected rural areas, focusing on the (expensive) last-mile and middle-mile parts of the telecommunications networks. A strategy for the use of this fund has been crafted under the parent project but was only finalized in early 2016 and is yet to be approved by the Council of Ministers.16 Once the strategy is approved, the effective operationalization of the fund will require TA to translate this strategy into well- designed action plans and ultimately impactful universal service projects. The benefits will extend to the eBurkina project financed by the World Bank, for instance, which relies on broadband connectivity to achieve its objectives of (a) provisioning information and public e-services and (b) fostering entrepreneurship in the digital economy. In addition, strengthening the NREN will contribute to ensure that the benefits of additional connectivity reach the final users in the education centers. The Burkina Faso NREN (FasoREN) signed a partnership agreement with the regional West and Central African Research and Education Network (WACREN) in May 2017.17 WACREN intends to promote collaboration between national, regional, international research, and education communities. Additional support to this initiative (in the form of technical expertise, equipment, and/or supply of international capacity)18 will help materialize the benefits expected, with a focus on gender initiatives (to improve education for girls and women): as highlighted by the World Development Report 2016, digital technologies can empower women economically and socially, but education and trainings on ICT targeting women/girls remains critical to bridge the gender gap. Specific actions to address the distinct needs of women/girl (men/boys) will therefore 16 Note: The lack of an approved strategy prevented the use of the accumulated funds to this date. 17 See http://lefaso.net/spip.php?article77011. 18 The FasoREN is already getting support from the World Bank-funded Education Access and Quality Improvement Project. The activities carried out through the AF will complement those carried out through this project, as needed. 10 be implemented during the project leveraging the NREN platform (education programs, trainings, communication, etc.). 23. The AF is the preferred financing mechanism. Given that the new activities are the natural continuation of the activities of the parent project, an AF is seen as the most efficient option and one that can be processed relatively quickly in response to the GoBF’s request. It will also help maintain the positive momentum of the results achieved to date and ensure the continuation of the ongoing sector reforms through Component 2: Creation of an Enabling Environment and Strengthening of Institutions for Improved Connectivity, and the ongoing progress on international connectivity through both Components 1 and 2. Consistency with the Systematic Country Diagnostic and the Country Partnership Framework 24. The proposed additional activities are aligned with the constraints identified in the Systematic Country Diagnostic (SCD)19 and the objectives listed in the new Country Partnership Framework (CPF) for Burkina Faso under preparation. The SCD highlighted that “Burkina Faso needs to improve its communication infrastructure, particularly in terms of connections to the international network and in isolated regions. The implementation of the appropriate regulations is also essential to prevent excessive prices (or limited access), including for Internet access, which at present remains very expensive”. Taking into account these constraints, the proposed activities will contribute to the Objective 1.3 of the draft CPF – “Develop transport, trade and ICT for improved access to markets”, which requires the enhancement of communication services. Implementation Arrangements 25. The institutional and implementation arrangements set up for the parent project will be maintained for the AF activities. The arrangements involve two organizational levels: a Steering Committee and the PIU. The Steering Committee is composed of representatives from the ministry in charge of ICT (Ministre du Développement de l'Economie Numérique et des Postes, MDENP), the Ministry of Finance, the Ministry of Environment, the Sectoral Regulation Authority (Autorité de Régulation des Communications Electroniques et des Postes, ARCEP), and the mobile operators, and it is chaired by the Permanent Secretary who will oversee the overall supervision of the AF. The Project Steering Committee is expected to continue to provide strategic guidance and ensure effective coordination across the various agencies and the private sector. The committee will be responsible for ensuring that the PDOs are achieved and will take key decisions to ensure smooth implementation of the project. The PIU (Secrétariat Permanent du Programme Sectoriel des Transports, SP-PST) will remain in charge of the day-to-day activities of the project, including procurement, FM, M&E, and safeguards. The PIU is operational and is experienced in implementing World Bank operations. 26. The PPP established through the parent project to manage the VLP will be strengthened and its operations scaled up. The PPP will be in charge of signing the new contract for the supply of international connectivity to the country, managing the VLP, and selling this 19 Report #114393, dated March 2017 and available here: http://documents.worldbank.org/curated/en/950551492526646036/pdf/SCD-Final-april-10-FINAL-002-de-002- 04132017.pdf 11 additional capacity to operators in the country, in compliance with the obligations of open, transparent, and nondiscriminatory access. TA will be provided, and additional equipment will be acquired to accompany the growing service offering and the additional international bandwidth supplied. III. Proposed Changes Summary of Proposed Changes The proposed AF, requested by the GoBF, would finance a set of activities in direct continuation of the original project activities and grouped under the same three broad components as the original project. It would expand and maximize the development impacts of these activities by supporting (a) the expansion and proper operationalization of connectivity infrastructure (for example, backbone networks, VLP, and IXP) and the strengthening of the regional telecommunications networks integration and (b) the completion of TA to improve the legal and regulatory environment of the ICT sector. This AF includes a Level 2 restructuring of the parent project involving (a) changes to the project components; (b) extension of the closing date of the parent project; (c) revisions to the Results Framework; and (d) application of the new procurement framework. 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 [ ] No [ X ] 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 [ X ] No [ ] Cancellations Proposed Yes [ ] No [ X ] 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 [ X ] No [ ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ ] No [ X ] 12 Development Objective/Results Project’s Development Objectives Original PDO The development objective of WARCIP is to increase the geographical reach of broadband networks and reduce costs of communications services in West Africa. For WARCIP-APL-1B, the Project's development objectives are to increase the geographical reach of broadband networks and to reduce costs of communications services in each of the territories of The Gambia, Guinea and Burkina Faso. Change in Results Framework PHHCRF Explanation: The key results are in line with the results expected for the parent project. However, the project Results Framework will be updated to reflect the impact of the AF by increasing the target values of the PDO level indicators and to consider several new or redefined indicators:  Volume of international traffic  Access to telephony and Internet services  Average monthly price of wholesale international E1 capacity link from the capital city to Europe  Average retail price for mobile and fixed Internet access  Network coverage for mobile Internet and mobile telephony  Total length of national fiber optic network  National Internet traffic exchanged at the IXP The indicator ‘Volume of international traffic per person’ will be deleted as redundant and less adequate than the indicator ‘Volume of international traffic.’ Similarly, the indicator ‘Direct project beneficiaries’ will be deleted, as redundant and less adequate than the indicators ‘Access to telephone services’ and ‘Access to Internet services’. Citizen engagement has been mainstreamed in the AF. The Results Framework includes a new indicator on ‘Citizen perception of the affordability of broadband services (including perception by women)’, to ensure that citizens directly inform project implementation, as it will track beneficiaries’ satisfaction with the retail price and quality of broadband services under the AF. The data for this indicator will be collected twice through a survey, just after the effectiveness of AF and at the time of closing. The baseline will be collected in December 2018, because the funds to conduct the survey will be available only after project effectiveness. Data on female users will be tracked and reported. Compliance Covenants - Additional Financing (West Africa Regional Communications Infrastructure Project - APL-1B - Burkina Faso - Additional Financing - P161836) 13 Source of Finance Description of Funds Agreement Date Due Recurrent Frequency Action Covenants Reference The Recipient shall not later than five (5) Revision of months after the Terms of effective date, Reference update and 31-Mar- IDA (TOR) for the revise TOR of New 2019 external auditor the external (Schedule auditor of the 2.A.6) parent project in a manner acceptable to the World Bank. The Recipient shall, not later than two (2) months after the Update of FM effective date, manual update the 31-Dec- IDA New (Schedule Financial 2018 2.A.4) Management manual in a manner satisfactory to the World Bank. The Recipient shall, not later than two (2) months after the Update the effective date, accounting upgrade and software 31-Dec- IDA thereafter New “TOM2PRO” 2018 maintain its (Schedule accounting 2.A.5) software, in a manner acceptable to the World Bank. Respect of The ministry in 30-Nov- IDA international charge of New 2018 and binational territorial 14 agreements administration related to and border issues decentralization (Schedule shall, not later 2.A.7) than one (1) month after the effective date, provide a legal opinion confirming that the activities carried out under Part 1 do not infringe any international or binational agreements related to border issues between the recipient and neighboring countries and/or other international organizations. The Recipient shall update and Update of the thereafter adopt Project the Project Implementation IDA Implementation 31-Jan-2019 New manual manual not later (Schedule than three (3) 2.D.1 (i)) months after the effective date. The Recipient shall ensure that No project no Project activities personnel carry carried out in out any IDA the Kourou- New activities in the Koalou area Kourou-Koalou (Schedule area, including 2.C.1) PCU staff and consultants for 15 any Project related matters. The Recipient shall ensure that the relevant Respect of the mitigation and provisions of monitoring the safeguards IDA provisions of the New documents ESMF, ESIA, (Schedule ESMP, and/or 2.C.1) RAP are appropriately implemented. Conditions Source of Fund Name Type IDA Disbursement under Category Disbursement (1) Description of Condition No withdrawal shall be made under Category (1) unless and until: (i) the Contractual Arrangement is amended to transfer the proceeds of Category (1) to the Selected Operator for the international bandwidth; (ii) the amendment of the Contractual Arrangement has been duly authorized or ratified, executed and delivered; (iii) the Capacity Purchase Contract has been entered into. Source of Fund Name Type IDA Disbursement under Category Disbursement (3) Description of Condition No withdrawal shall be made under Category (3) unless and until the amounts allocated for Category (3) under the parent project have been disbursed or committed in full. Source of Fund Name Type IDA Recruitment of internal Effectiveness auditors Description of Condition The PIU has completed the recruitment of two internal auditors (senior and a junior) for the Project, with qualifications and under terms of reference satisfactory to the Association. Risk PHHHRISKS Risk Category Rating (H, S, M, L) 1. Political and Governance Moderate 16 2. Macroeconomic Moderate 3. Sector Strategies and Policies Moderate 4. Technical Design of Project or Program Substantial 5. Institutional Capacity for Implementation and Sustainability Substantial 6. Fiduciary Moderate 7. Environment and Social Moderate 8. Stakeholders Substantial 9. Other Moderate OVERALL Moderate Finance Loan Closing Date - Additional Financing (West Africa Regional Communications Infrastructure Project - APL-1B - Burkina Faso - Additional Financing - P161836) Source of Funds Proposed Additional Financing Loan Closing Date IDA 30-Jun-2021 Loan Closing Date(s) - Parent (West Africa Regional Communications PHHCLCD Infrastructure Project-APL-1B - P122402) Explanation: It is proposed to extend the closing date of the parent project, currently June 30, 2018, to September 30, 2018, to allow the signing of the AF before the parent project reaches its closing date. Status Original Current Proposed Previous Ln/Cr/TF Closing Date Closing Date Closing Date Closing Date(s) IDA- Effective 31-Dec-2016 30-Jun-2018 30-Sep-2018 31-Dec-2016, H7120 31-Dec-2017, 30-Jun-2018 Change in Disbursement (including all sources of Financing) Estimates Explanation: Disbursement estimates have been updated to reflect the additional activities to be supported under the AF and the proposed closing date. Expected Disbursements (in US$, millions) (including all sources of financing) Fiscal Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Annual 0.57 0.18 1.76 3.26 1.44 7.70 4.09 6.00 11.00 7.00 Cumulative 0.57 0.75 2.51 5.77 7.21 14.91 19.00 25.00 36.00 43.00 17 Allocations - Additional Financing (West Africa Regional Communications Infrastructure Project - APL-1B - Burkina Faso - Additional Financing - P161836) Allocation (US$ Disbursement %(Type Source of Category of million) Total) Currency Fund Expenditure Proposed Proposed Lease of Capacity IDA US$ 6.00 100.00 (Component 1) Goods, works, Operational Costs, non-consulting IDA US$ 13.00 100.00 services and consultants’ services (Components 1 and 2) Goods, works, Operational Costs, non-consulting IDA US$ 1.00 100.00 services and consultants’ services (Component 3) Total: 20.00 Components Change to Components and Cost Explanation: The scale-up activities to be financed by the proposed AF will be linked to the existing Component 1 (Connectivity), Component 2 (Creation of an Enabling Environment and Strengthening of Institutions for Improved Connectivity), and Component 3 (Project Implementation). The activities to be financed by the AF under each of the components are described below. Component 1: Connectivity (US$14 million equivalent) will support the following activities: (a) International capacity. Supplying of bulk international bandwidth capacity to national licensed operators, through the purchase of high-capacity bandwidth from the neighboring countries to be delivered at the VLP, at the lowest cost and highest quality. The additional purchase would restore (at least partially) the initial envelope of US$10 million, as requested by the Government. (b) The VLP and IXP. Strengthening the VLP (in terms of equipment, technical expertise, and management capacity), to expand its operation considering the international capacity exchanged over the new link with Benin and to improve redundancy by opening up a second site in Bobo-Dioulasso. In addition, this component will include the scaling up of the IXP to lower the cost and improve the quality of the 18 national connectivity and to stimulate the production and usage of local content and services. (c) Backbone network. Building out the missing backbone network between Burkina Faso and Benin. The contemplated link would connect the towns of Fada (Burkina Faso) and Porga (Benin) along the N18 road, which represents the shortest route (around 180 km) between the existing national infrastructure (Onatel backbone) and Benin. The network will be based on fiber optic up to the border of the disputed Kourou-Koalou area; at that point, a tower will be built to carry the signal wirelessly to the other side of the Kourou- Koalou area, in Benin, where the signal will be picked up by another tower (not financed by the project). With this approach, no investment will be made in the Kourou- Koalou area. The project will provide resources for the construction of this backbone as well as the necessary supervision of the construction work. (d) Infrastructure sharing. This activity will finance the deployment of a passive (for example, ducts, fiber optic cables, towers) and/or active (electronics equipment) network, in collaboration with other construction projects, to pilot the sharing of civil works. The Projet de transport et de développement des infrastructures urbaines (PTDIU – P151832), financed by the World Bank and led by the Transport and Digital Development Global Practice, has been identified as a good opportunity to test this mutualized rollout on a path that would adequately extend the existing fiber optic network footprint financed through the parent project. Component 2: Creation of an Enabling Environment and Strengthening of Institutions for Improved Connectivity (US$5 million equivalent) will support the following activities: (a) Environmental and social studies. Preparing the environmental and social studies for the project, organizing the consultations, and disclosing the documents. (b) Strengthening the policy-making capacity of the MDENP and carrying out macro- environment and cross-sector initiatives, including (i) a study on the taxation of the sector; (ii) the setting up of a proper regulatory framework governing the sharing of infrastructures and the sharing of construction works between sectors; (iii) the licensing regime, including 4G licenses; (iv) operationalization of the universal service strategy; (v) support to the NREN (technical expertise, equipment and/or supply of international capacity); and (vi) the creation of geographic database of ICT infrastructures. (c) Operationalization of the national infrastructure. Setting up a PPP20 for the national infrastructure (national backbone) that the Government has already financed or is considering investing in (for example, the national capacity of the WARCIP Ouagadougou-Ghana link, the fiber optic network built under the ‘G-Cloud’ project, and links financed under the National Backbone project). The creation of this entity, if successful, will allow the Government to optimize the significant investments already 20 Note: A priori, different from the PPP set up under the parent project. 19 made (and planned) in the sector, in compliance with the obligations of open, transparent, and equitable access. (d) Support to the implementation of key regulatory reforms. Assisting ARCEP in developing regulatory instruments and implementing key regulatory reforms on (i) the open access to infrastructure (market analysis to identify market dominance, price regulations, cost models, wholesale offers, and so on); (ii) the implementation of the universal service strategy; (iii) other key regulatory issues (spectrum management, monitoring of the quality of service, number portability, General Security Database, transition from IPv4 to IPv6, etc.) (e) Capacity building. Strengthening of the capacity of the implementation agencies to implement the project activities, with a particular focus on (i) the operationalization of the infrastructure investments made through this project and beyond and (ii) the regulatory reforms. Component 3: Project Implementation (US$1 million equivalent) will support the following activities: (a) Operating costs. Covering the incremental operating costs including project management, audits M&E, safeguards, and communication. (b) Contingencies. This component will include contingencies to cater for unexpected price and exchange rates variations. Current Proposed Current Component Proposed Cost (US$, Cost (US$, Action Name Component Name millions) millions) Burkina Faso: Burkina Faso: Component 1: Component 1: 17.30 31.30 Revised Supporting Supporting Connectivity Connectivity Burkina Faso: Burkina Faso: Component 2: Enabling Component 2: 3.68 8.68 Revised Environment for Enabling Environment Connectivity for Connectivity Burkina Faso: Burkina Faso: Component 3: Project Component 3: Project 2.0221 3.02 Revised implementation and implementation and Contingency Contingency Total: 23.00 43.00 21 This component includes a price contingency of US$0.76 million 20 Other Change(s) Implementing Agency Name Type Action Ministère du Développement de Implementing Agency No Change l'Economie Numérique et des Postes Autorité de Régulation des Implementing Agency No Change Communications Electroniques et des Postes Change in Procurement Explanation: The procurement for works, goods, and non-consulting and consulting services for the AF project will be carried out in accordance with the procedures specified in the ‘World Bank Procurement Regulations for IPF Borrowers’, dated July 2016 (Procurement Regulations), revised November 2017, and the World Bank’s Anti-Corruption Guidelines (Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants, revised as of July 1, 2016). The client shall comply with the Project Procurement Strategy for Development (PPSD) dated February 12, 2018. This document concludes that the PIU can rely on a strong experience with World Bank’s projects in terms of procurement, provided that sufficient technical support is given by the technical entities (MDENP, ARCEP and ANPTIC). The priority will be put on the largest contracts in terms of value (namely, the construction of the fiber optic network and the acquisition of the international bandwidth), using international tenders with pre-qualification. In addition, the experience of the original project shows that the tender for major consultancies will have to be launched internationally, given the limited number of national firms able to carry out these specialized studies. The recipient shall use the World Bank’s online procurement planning and tracking tools (Systematic Tracking of Exchanges in Procurement [STEP]) to prepare, clear, and update its Procurement Plans and conduct all procurement transactions. Change in Implementation Schedule Explanation: The implementation schedule is updated to reflect the new activities to be undertaken with the AF support and is in line with the new closing date. There are no changes to the implementation arrangements or implementing agencies. Appraisal Summary Economic and Financial Analysis PHHASEFA Explanation: 21 The rationale for public sector financing is strong. Given the lack of economic viability in the short term for large-scale ICT investments, the GoBF is willing to absorb the investment risk associated with significant investments in broadband connectivity to create effective competition for international connectivity, reduce the digital gap, and link the country to its borders. The GoBF’s objective is to provide opportunities to grow its dynamic and competitive ICT sector. In this context, the main rationale for the World Bank’s involvement is to provide targeted financing to (a) stimulate the growth of the Internet sector (still nascent) on the policy and infrastructure sides and (b) safeguard open access and PPP principles. The World Bank’s value added arises from its technical expertise and global knowledge. The World Bank’s value added arises from the World Bank’s technical expertise as well as its global knowledge in areas such as the creation of an environment where competition can flourish and where PPPs for building and operating the underlying backbone network infrastructure can be established when needed. In addition, it has considerable experience in addressing the challenges of accelerating high-speed Internet access in many countries around the world, including through the Global Solutions Group ‘Broadband for All’. With a World Bank team that is highly knowledgeable about the ICT sector challenges and the supervision of large fiber optic infrastructure investments under open access regimes, value added during implementation will be substantial. The AF intends to continue reducing barriers to connectivity in Burkina Faso by targeting the affordability, availability, and quality of ICT services, especially broadband. The project will strengthen the environment for private sector ICT investment, which will further enable competitive service offerings and innovation. The AF will also expand on the parent project by improving the infrastructure for international and national connectivity and by leveraging PPPs to optimize existing and future ICT infrastructure. These actions will improve network coverage, quality, and reliability while lowering the price of services, ultimately increasing the number of Internet subscribers and enabling the digital transformation of Burkina Faso. Increasing the number of Internet subscribers enough to decidedly engage the digital transformation of Burkina Faso will directly and indirectly foster economic growth. Digital transformation enables economic growth by allowing businesses to leverage ICT tools to boost productivity, lowering transaction and information costs for citizens, and offering the Government the ability to improve records management and gain service delivery efficiencies. In addition, improving the resiliency and reliability of broadband Internet will strengthen ICT-backed innovation in the health, financial, agriculture, and education sectors and stimulate entrepreneurship and innovation throughout the country. The AF will accelerate the growth in Internet users owing to faster improvements in accessibility and affordability, which will set the stage for the adoption of locally developed and relevant digital apps and services. Estimates indicate that AF will result in an additional 1.47 million Internet users in 2020, compared with the increase that would happen organically without the AF. Based on a literature review, each 10 percentage point increase in broadband penetration is assumed to increase the country’s annual gross domestic product (GDP) growth by approximately 0.23 percentage points. With these assumptions,22 the increase in yearly GDP will go up to US$22.2 million over the next few years. The cost-benefit analysis (CBA) 22 And assuming a discount rate of 15 percent. 22 presents a benefit-cost ratio of 3.94 for an investment of US$20 million in the AF. The expected internal rate of return (IRR) (using CBA calculations) is 68.54 percent. Finally, increased connectivity will allow for improved and faster information flow within Burkina Faso. The AF will support the online dissemination of information and content that is relevant to citizens which will encourage increased connectivity. Citizens searching for information on topics such as government services, health, or agriculture market prices will be able to access such information through the Internet. Accessing information from the Government and private sector will benefit citizens and has the potential to boost labor productivity by reducing travel times and lowering transactions costs. Technical Analysis PHHASTA Explanation: Objective alignment with the parent project. In line with the parent project, the AF recognizes the need to remove key infrastructure and policy environment bottlenecks to ensure better telecommunications access to a wider population, especially the bottom 40 percent. Lifting these bottlenecks will improve the competitive intensity, by allowing, in particular, small ISPs to compete on markets larger than they are today and have a significant impact on the beneficiaries. The AF will strengthen the institutional and regulatory environment to help attract and sustain investment in the telecommunications sector. Regional integration. The AF provides a unique opportunity to continue improving international connectivity at the regional level, by increasing competition and providing multiple access routes to international connectivity on both sides of the Burkina Faso-Benin border. The AF will in effect connect Burkina Faso with its last neighboring country with which it has no direct link yet, in response to the regional connectivity guidelines set at the ECOWAS level, which made the development of broadband infrastructure between member states a priority, especially for landlocked countries such as Burkina Faso. Finally, Burkina Faso is increasingly positioning itself as a champion of innovative applications and value-added content in the region. Improved and affordable connectivity is a critical element to the distribution and use of these applications and content at the national and regional levels. Open access regime and PPP for the international and national connectivity investments. The technical design of the AF builds on the infrastructure, policy, and governance achievements of the parent project and strengthens the identified shortcomings. Using the existing entity that will manage the VLP for the international capacity carried by the new link will save on transaction costs and operating costs of the national shared infrastructure and is strongly supported by local telecom operators and ISPs. In addition, the AF will continue to create innovative and flexible PPP frameworks for national and international connectivity, which reflects both private and public interests. Leveraging the existing and future connectivity infrastructures in a coherent and global approach will allow the Government to obtain larger economic and social returns on these significant investments than with the current approach, in which various projects are led in parallel and managed by different agencies (MDENP, Agence Nationale de Promotion des TIC du Burkina Faso [ANPTIC]) or departments within these agencies. 23 Climate change adaptation. The project’s climate change adaptation related investments are estimated to include the entirety of the component related to connectivity. In this context, the expansion of the regional and national backbone networks will serve to increase resilience in a number of ways. First, the investments will allow for rerouting information traffic in the event of a network failure due to a natural disaster. Additionally, according to the International Telecommunications Union, ICT can play an important role in facilitating climate change adaptation, given that ICT not only helps improve weather forecasting and climate monitoring but is also essential in disseminating information to large audiences, for example, through mobile phones. This can help the country establish better early warning systems and facilitate monitoring of soil conditions, weather information, and water quality. Social Analysis PHHASSA Explanation: Social benefits. The AF is expected to generate substantial social benefits similar to those generated by the original project, including the possibility of better access to ICT services for the population of Burkina Faso (and to a more limited extent, the population of Benin), and improved government service delivery. Improved quality and reduced costs of communications lower the cost of doing business and weaken the effects of insularity, thus improving access to markets. In recent years, several ICT applications were developed in different countries in the region, bringing other sectoral improvements through ICT platforms. Examples of this are access to financial services through mobile banking, improved livelihoods of farmers through increased information on agricultural techniques and crop prices, and positive impacts on education through access to eLearning programs. More generally, the project will:  Foster ICT as a major contributor to sustainable economic growth;  Set the basis for enabling the Government to use ICT to provide decentralized services, such as the ones developed through the eBurkina project;  Improve access and quality of ICT services for the population, businesses, and the Government; and  Reduce isolation and enhance economic activities in rural areas. Social safeguards. The proposed additional activities trigger OP/BP 4.12 - Involuntary Resettlement, as is the case for the original project. The Government has prepared a Resettlement Policy Framework (RPF). The findings of the RPF concluded that 270 households and about 1,350 Project Affected Persons (PAP) will be affected by project activities. The impacts are not expected to induce physical displacement but are rather economic and site-specific impacts, just as in the initial project. After review and clearance by the World Bank, the RPF was disclosed in-country on July 4, 2017, and on the World Bank’s external website on June 29, 2017. The proposed additional activities do not trigger OP/BP 4.10 - Indigenous Peoples. A Resettlement Action Plan (RAP) will be prepared after effectiveness. The civil works will rely on the punctual utilization of local workforce for the digging of the trenches in which the fiber optic network will be laid down. All required safeguards mitigation and monitoring provisions will be embedded in the contract with the 24 supplier to ensure compliance with the Bank’s directives, and the execution will be monitored by the Bank’s safeguards specialists. Arrangements for social safeguards supervision have been defined and agreed. In line with the original project, the implementation and supervision of AF activities related to safeguards will be conducted as part of the overall project implementation by the PIU and the national environmental agency, Bureau National des Evaluations Environnementales (BUNEE). The environment and social safeguards specialist of the PIU will be in charge of coordinating the implementation and monitoring (control and audit) of the project’s social and environmental aspects and act as an interface between the project, contractors, local authorities, and other stakeholders. Environmental and social clauses will be incorporated into the contracts for works. To ensure successful implementation of the project’s safeguard measures, the project will continue to support the capacity-building efforts of the PIU as well as of the related ministries as needed. To ensure effective World Bank support, before implementation review missions, the PIU will prepare and update reports on the implementation of the safeguards instruments prepared under the project. Gender. The AF is classified as gender informed. The project will have positive impacts on gender equality. Direct beneficiaries of the project include people who are connected to the communications network in Burkina Faso and Benin (including telecommunication services and Internet users, schools, hospitals, banks, corporations, and public administrations). Indirect beneficiaries potentially include all of the country’s population, since increased communications capabilities at affordable rates for some of the population may eventually have externalities for all. The World Development Report 2016 on ‘Digital Dividends’ highlighted that in many countries, gender gaps in technology remain vast and that barriers to access can be particularly salient in the case of the Internet, especially in poor and remote localities. By reducing the barriers to access to the Internet, the AF will contribute to the reduction of this gender gap. The World Development Report 2016 highlighted that digital technologies can empower women economically and socially: because social norms and time and mobility constraints are often more severe for women than for men, women can benefit greatly from ICT. Education and trainings on ICT targeting women/girls is therefore critical to bridge the gender gap. Specific actions to address the distinct needs of women/girl (men/boys) will be implemented during the project, especially through the support to the NREN platform, ensuring that specific actions (education programs, trainings, communication, etc.) are carried out targeting women/girls. Also, by increasing the reach of the eBurkina project, the AF will indirectly contribute to the usage by women and young girls of the online services produced through the eBurkina project (in health, education, and agriculture) and to their larger participation in the digital economy. Environmental Analysis Explanation: The project is not expected to have large environmental impacts. The terrestrial connectivity is expected to follow a major road already in place between Fada and the border with Benin. As the precise route and civil works are still to be determined, an Environmental and Social Management Framework (ESMF) has been prepared, reviewed, approved, and disclosed. The impact of laying the additional fiber optic cable along the defined route will be very minimal. Environmental impacts 25 of the project are likely to come mainly from the laying of the fiber (excavation and crossing of human settlements, farms, rivers, forest, and so on) and may lead to soil erosion; the potential pollution of soil and water; loss of vegetation; the disruption of living environment and socioeconomic activities and livelihoods located on the right-of-way (workshops, garages, shops, and so on); the disruption of the traffic, noise, dust, and/or risk of accident; and the generation of solid and liquid wastes; the acquisition of all or part of some private lands; potential destruction of crops and/or woodlands according to the seasons of farming; and the risks of vandalism and frustration when the local workforce is not employed. Environmental safeguards. The project is rated as a Category B project. In addition to OP/BP 4.01 (Environmental Assessment), the project triggers OP 4.04 (Natural Habitats) as the cable is being laid along a road that goes through a national park and other areas, and OP 4.11 (Physical Cultural Resources), as there is a possibility that the cable may be laid in areas where cultural assets exist. It should be noted that the project connection at the border with Benin should not lead to social conflicts because the borders between the two countries have been clearly delineated and materialized. The backbone network will cross the disputed area of Kourou-Koalou, declared a neutral zone since May 2009, but using wireless technologies that will not rely on any physical infrastructure built in the area. The ESMF, which includes an Environmental and Social Management Plan, has been prepared, updated, reviewed, and cleared by the World Bank, and disclosed in-country on June 14, 2017, and in the World Bank’s InfoShop on June 16, 2017. Arrangements for environmental safeguards supervision have been defined and agreed with the client and are similar to those applicable for social safeguards. Burkina Faso has an adaptation plan to climate change. In connection with this issue, the African Center for Scientific Research (Centre Africain de Recherche Scientifique - CRES) is involved in a regional high-level research and development program and, specifically, a master’s degree in climate change. A national strategy of Burkina Faso (Programme d’action national d’adaptation à la variabilité et aux changements climatiques) has been adopted in November 2007 and updated in 2015. Burkina Faso has participated in the COP21 in Paris, the COP22 in Marrakech (Morroco), and the COP23 in Germany. A new project called ‘CREWS-Burkina’ is in the preparation stage with the national office of meteorology (Risques climatiques et Systèmes d’Alerte Precoce). The West African Science Service Center on Climate Change and Adapted Land Use based in Accra, Ghana, has held a regional workshop to analyze and share, with national and regional stakeholders, its program of research and procedures for projects implementation. The Government has prepared a climate change adaptation strategy (2015, PANA – Programme d’Action national D’Adaptation; vulnerable sectors incorporate climate risks and potential impacts in plans and projects) and has initiated its implementation. This strategy is defined in the project documents as an ‘Emergencies Response Plan’. Risk Explanation: There is considerable interest and commitment on the part of the GoBF for the proposed additional activities. The World Bank is playing a key role in supporting the GoBF’s efforts to establish an enabling environment for sustained growth of the telecommunications and digital 26 economy sector. The project stakeholders include a wide range of operators and ISPs, as well as the line ministry MDENP, the ANPTIC, and the regulator ARCEP. Stakeholders are fully involved in the implementation of the parent project and in the proposed additional activities. The risk for the proposed AF is rated Moderate, and remains unchanged, in view of the nature of the proposed additional activities. Some risks are nevertheless rated as Substantial.  The technical design of the project or program risk is rated Substantial, because (a) the AF is partly dependent on adequate coordination on both sides of the border to provide effective cross-border interconnectivity between Burkina Faso and Benin. Therefore, discussion with the Government of Benin will continue with a dedicated TA, leveraging on the experience with the link to Ghana under the parent project. In addition, there have been significant market shifts that are creating uncertainties with regard to the investments of the private sector. In particular, the telecom operator Orange acquired Airtel Burkina Faso, with a strong ambition to compete against Onatel on the infrastructure front, while the Government is also investing in a large-scale national backbone that could shift the investment plans of private operators. In this context, there is a possibility that the envisioned link to the border with Benin will be encompassed in one of the private or public investments in the coming years. If so, other regional links could be considered in this AF, especially a connection in the southwest of the country, linking the city of Banfora to Côte d’Ivoire via Loropéni23 and Kampti. This link will create additional supply and redundancy and bring fiber connectivity in the regions crossed.  The institutional capacity for implementation and sustainability risk is rated Substantial, because of potential delays in decision making and construction of the new links. Therefore, the counterparts agreed to continue holding weekly progress meetings (on the build out of the additional links) with all the stakeholders on the Burkinabe side, the consultant in charge of monitoring and control, the manufacturer, the safeguards focal points, and the representative of the private wholesale operator. A technical expert will be recruited to assist the PIU and contribute effectively to the technical discussions between the PIU and the implementing agencies.  The stakeholders risk is rated Substantial, given that the successful implementation of the project, and especially the running of the PPP(s), will rely on the active participation of and coordination between many public and private stakeholders. While a key milestone has been reached with the adoption of the statutes of the entity that will operate the VLP and the creation of the association running the IXP, the scaling up of the VLP and the IXP will require a strong alignment and commitment of many stakeholders. Environmental risks. Climate variability is characterized by drought, increasing winds, and floods throughout the country. The Sudano-Sahelian zone targeted by the AF activities is subject to these extreme variations. The nature and extent of the civil works could be influenced by temporary 23 The ruins of Loropéni were inscribed on UNESCO’s World Heritage List in 2009. 27 shutdowns but are not likely to jeopardize the overall progress of the work, especially since the fiber optic infrastructure will be buried underground. The risk is Moderate. IV. World Bank Grievance Redress 27. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org). 28 ANNEX 1: RESULTS FRAMEWORK AND MONITORING The Results Framework below shows only indicators relevant to the Burkina Faso project. The indicators pertaining to the Gambia and Guinea have been excluded. Project Development Objectives Original Project Development Objective - Parent: The development objective of WARCIP is to increase the geographical reach of broadband networks and reduce costs of communications services in West Africa. For APL-1B, the Project's development objectives are to contribute to increasing the geographical reach of broadband networks and to reducing the costs of communications services in each of the territories of The Gambia, Guinea and Burkina Faso. 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 Status Indicator Name Corporate Unit of Measure Baseline Actual(Current) End Target Revised Burkina Faso: Average Amount(US$) Value 9,000.00 1,513.00 700.00 monthly price of wholesale Sub Type Date 31-Dec-2010 30-Sep-2017 30-Jun-2021 international E1 capacity link from capital city to Europe Breakdown Comment The target has (US$ per month per 2Mbps) been adjusted from 2,500 to 700 to reflect the impact of the growing operations of the VLP and the added international connectivity, leading to 29 increased competition and reduced wholesale prices. Revised Burkina Faso: Access to Number Value 37.20 88.00 92.00 telephone services (fixed Sub Type Date 31-Dec-2010 30-Sep-2017 30-Jun-2021 mainlines plus cellular phones per 100 people) Breakdown Comment The target has been adjusted from 62 to 92 to reflect that the increase in mobile penetration will be driven by further decreasing in retail telephony prices, to reach a more mature state (Note: the mobile penetration is calculated in terms of SIM cards and not unique subscribers). Sub Type Date 31-Dec-2010 23-Dec-2016 30-Dec-2016 Breakdown Comment Marked for Burkina Faso: Volume of Number Value 28.00 164.00 74.00 Deletion international traffic: Sub Type Date 31-Dec-2010 30-Sep-2017 31-Dec-2016 International Communications (Internet, Breakdown Comment Telecoms, and Data) Sub Type Date 31-Dec-2010 23-Dec-2016 30-Dec-2016 bandwidth per person (kbps per person) Breakdown Comment 30 Revised Burkina Faso: Access to Number Value 0.20 25.00 40.00 Internet Services (number of Sub Type Date 31-Dec-2010 30-Sep-2017 30-Jun-2021 subscribers per 100 people) Breakdown Comment Mobile Internet The end target has corresponds to been adjusted technologies at from 0.6 to 40 to 3G level or reflect the growth above. of the (mostly Subscribers are mobile) Internet defined as users market, driven by having used an more accessibility Internet and higher connection in the affordability. preceding three months. Fixed Internet corresponds to technologies offering download speeds at 256 kbps and above. Marked for Burkina Faso: Direct project Number Value 4,594,000.00 16,412,000.00 11,326,000.00 Deletion beneficiaries Sub Type Date 31-Dec-2010 30-Sep-2017 31-Dec-2016 Breakdown Comment Marked for Burkina Faso: Female Percentage Value 51.00 51.00 51.00 Deletion beneficiaries Sub Type Supplemental Marked for Female beneficiaries Percentage Value 40.00 41.33 44.00 Deletion Sub Type Supplemental Intermediate Results Indicators 31 Status Indicator Name Corporate Unit of Measure Baseline Actual(Current) End Target Revised Burkina Faso: Volume of Number Value 0.78 17.70 30.00 available international Date 31-Dec-2010 30-Sep-2017 30-Jun-2021 capacity: International Communications (Internet, Comment The end target has Telecoms, and Data) been revised from bandwidth (Gbps) 7.7 to 30 to reflect the increase in the usage of existing Internet users and in the number of Internet users. Additional bandwidth that will be supplied by the additional link. New Burkina Faso: Retail price of Amount (US$) Value 16.00 8.00 mobile Internet services (5Go Date 31-Dec-2016 30-Jun-2021 prepaid package with 3G technologies or above) Comment This indicator will be calculated as an average of the retail prices offered by the ISPs for these types of packages. New Burkina Faso: Retail price of Amount (US$) Value 130.00 70.00 fixed Internet services Date 31-Dec-2016 30-Jun-2021 (download speed at 2Mbps or above) per month Comment This indicator will be 32 calculated as an average of the retail prices offered by the ISPs for these types of packages. New Burkina Faso: Network Percentage Value 80.00 90.00 coverage for mobile Date 31-Dec-2016 30-Jun-2021 telephony (as % of population) Comment This indicator will show the percentage of population covered by at least one mobile telephony network. New Burkina Faso: Network Percentage Value 25.00 60.00 coverage for mobile Internet Date 31-Dec-2016 30-Jun-2021 (3G and above, as % of population) Comment This indicator will show the percentage of population covered by at least one mobile Internet network New Kilometers Value 1,860.00 3,500.00 Date 31-Dec-2016 30-Jun-2021 33 Burkina Faso: Total length of Comment This target reflects national fiber optic networks the contribution of (km) WARCIP, G- Cloud, and the network extensions of Orange and Onatel. New Burkina Faso: National Number Value 350.00 1,500.00 Internet traffic exchanged at Date 31-Dec-2016 30-Jun-2021 the IXP (Mbps peak times) Comment New Burkina Faso: Citizen Percentage Value 75.00 perception of the affordability Date 30-Jun-2021 and quality of broadband services (Including Comment This new The baseline perception by women) citizen will be engagement collected in indicatora will December be 2018. collected twice through a survey, just after the effectiveness of AF and the closing date. Breakdown data for women users will be also tracked. Revised Number Value 0.00 4.00 4.00 34 Burkina Faso: Impact on Sub Type Date 31-Dec-2010 30-Sep-2017 30-Jun-2021 Telecom sector of World Breakdown Comment Bank Technical Assistance (composite score: 1 - low impact to 5 - high impact) Note: a. This indicator reflects citizen engagement activities undertaken by the project. It is aligned with the ‘collecting, recording and reporting on inputs received from beneficiaries’ citizen engagement approach, as measured by an indicator of the type ‘Beneficiaries satisfied with (specified dimensions for example, access, quality of services, responsiveness to needs, quality of facilities) (percentage)’. 35 Annex 2: Detailed Project Financing 1. The proposed scale-up AF will expand and maximize the development impacts of the WARCIP parent project by supporting (a) the expansion of connectivity infrastructure (for example, fiber optic networks) and the strengthening of the regional telecommunications networks integration and (b) TA to improve the legal and regulatory environment of the ICT sector. 2. Proposed additional activities under Component 1: Connectivity (US$14.0 million equivalent)  International capacity. Purchase of additional international bandwidth, to ensure that international capacity is available to the country at the lowest cost and highest quality. The parent project is financing the purchase of the equivalent of US$4 million worth of capacity, which was downsized from an initial envelope of US$10 million to finance a longer-than-anticipated network (a link to Bagrépôle was added to the initial design). An additional purchase would restore (at least partially) this initial envelope, as requested by the Government.  VLP and IXP. Strengthening the VLP, to complement this future infrastructure and accompany the increasing demand and usage of international capacity. The VLP established in the parent project will operate the international capacity carried on the fiber optic link built between Ouagadougou and the border of Ghana. Its operation could be expanded to operate the international capacity exchanged over this new link with Benin, which will require additional equipment and a scaling up of its status and operations. The VLP could also open up a second site in Bobo-Dioulasso: this second site would provide geographic redundancy and allow the operators and service providers of that region to connect easily to the VLP without buying transit capacity from Onatel for the link between Bobo-Dioulasso and Ouagadougou, thus reducing their operating costs considerably. In addition, this component will include the strengthening of the IXP—currently operational—with the objective to lower the cost and improve the quality of the national connectivity and to stimulate the production and usage of local content and services. To do so, additional equipment will be required, as well as the establishment of direct links with key sites such as the ANPTIC data center in Ouagadougou. This activity will ultimately improve the delivery of the services to be developed in the eBurkina project and could enable the education institutions of Burkina Faso to provide additional and enhanced services at lower costs (for example, NREN).  Backbone network. Building out the missing connectivity link (fiber optic backbone network) between Burkina Faso and Benin. The contemplated link will connect the towns of Fada (Burkina Faso) and Porga (Benin) along the N18 road, which represents the shortest route (around 180 km) between the existing national infrastructure (Onatel backbone) and Benin. The network will be based on fiber optic up to the border of the disputed Kourou-Koalou area; at that point, a tower will be built to carry the signal wirelessly to the other side of the Kourou-Koalou area, in Benin, where the signal will be picked up by another tower and then converted back into optic signals carried over the fiber optic backbone network in Benin. With this approach, no investment will be 36 made in the Kourou-Koalou area. The project will provide resources for the construction of this backbone as well as the necessary supervision of the construction work. Figure 2.1. Map of Fiber Optic Network in Burkina Faso Note: Onatel (current) in blue, WARCIP in red, ‘G-Cloud’ (planned) in orange, and proposed WARCIP AF in purple. Source: MDENP  Infrastructure sharing. Financing a pilot project combining the deployment of ICT infrastructure with other civil works. Sharing the costs of civil works, for instance by laying down fiber optic while doing road repairs, can save up to 60 percent of the overall rollout costs for fiber optic network deployment. This activity would finance the deployment of a passive (for example, ducts and fiber optic cables) and/or active (electronics equipment) network, in collaboration with other construction projects. The PTDIU, financed by the World Bank and led by the Transport and Digital Development Global Practice, has been identified as a good opportunity to test this mutualized rollout on a path that would adequately extend the existing fiber optic network footprint financed through the parent project. 3. Proposed additional activities under Component 2: Creation of an Enabling Environment and Strengthening of Institutions for Improved Connectivity (US$5.0 million equivalent)  Environmental and social studies. Preparing the environmental and social studies for the project, organizing the consultations, and disclosing the documents.  Strengthening the policy-making capacity of the MDENP and carrying out macro-environment and cross-sector initiatives, including (a) a study on the taxation of the sector to feed the authorities’ reflection on the trade-off between a heavy taxation regime to maximize immediate and direct fiscal proceeds versus a lighter taxation regime to maximize long-term indirect fiscal, economic, and social 37 benefits; (b) the setting up of a proper regulatory framework governing the sharing of infrastructure and the sharing of construction works between sectors; (c) the review of the licensing regime, including 4G licenses; (d) operationalization of the universal service strategy; (e) support to the NREN (technical expertise, equipment and/or supply of international capacity); and (f) the creation of geographic databases of ICT infrastructure.  Operationalization of the national infrastructure. Setting up a PPP for the national infrastructures (fiber optic backbones) that the Government has already financed or is considering investing in. In April 2016, the authorities confirmed their willingness to aggregate their public investments in ICT infrastructure (the national capacity of the WARCIP Ouagadougou-Ghana link, the fiber optic network built under the ‘G-Cloud’ project, and potentially other links financed under the National Backbone project) into a PPP that would be operated by the private sector. Other fiber networks could be included in this PPP, such as the capacity available on other network companies (electricity, railway, and so on), and potentially infrastructure built through mutualized construction works (Cf pilot project of Component 1). The creation of this entity, if successful, will allow the Government to optimize the significant investments already made (and planned) in the sector, in compliance with the obligations of open, transparent, and equitable access.  Support to the implementation of key regulatory reforms. Assisting ARCEP in implementing key regulatory reforms on (a) the regulation of wholesale offers (market analysis to identify market dominance, price regulations, cost models, access to infrastructure, and so on); (b) spectrum management; (c) monitoring of the quality of service; (d) implementation of number portability and the General Security Database; (e) the transition from IPv4 to IPv6; and (f) any other relevant regulatory studies.  Capacity building. Strengthening of the capacity of the implementation agencies (ministry in charge of ICT, regulation authority, ANPTIC) to implement the project activities, with a particular focus on (a) the operationalization of the infrastructure investments made through this project and beyond and (b) the regulatory reforms. 4. Proposed additional activities under Component 3: Project Implementation (US$1.0 million equivalent). This component will cover the incremental operating costs including project management, audits, M&E, safeguards, and communication. Contingencies for unexpected price variations will also be covered under Component 3. Table 2.1. Overall Cost Estimation by Component TOTAL WARCIP Original WARCIP Burkina Proposed AF (US$, Component Burkina Faso (US$, Faso (US$, millions) millions) millions) Component 1: Supporting 17.30 14.00 31.30 Connectivity Component 2: Enabling Environment for 3.68 5.00 8.68 Connectivity 38 TOTAL WARCIP Original WARCIP Burkina Proposed AF (US$, Component Burkina Faso (US$, Faso (US$, millions) millions) millions) Component 3: Project 1.26 1.00 2.26 Management Contingencies 0.76 0.00 0.76 TOTAL PROJECT COSTS 23.00 20.00 43.00 39 Annex 3: Implementation Arrangements Institutional Arrangements 1. The AF will be implemented by the same agencies as the parent project WARCIP-APL- 1B Burkina Faso with:  The MDENP responsible for overseeing and implementing the activities financed by the AF under Component 1;  The ARCEP in charge of most of the AF activities under Component 2 (except the TA to operationalize the national ICT infrastructure through PPPs); and  The SP-PST remaining as the PIU in charge of the day-to-day activities of the project, including the overall coordination, implementation, and supervision of the proposed AF. 2. The PIU, led by a Project Coordinator, is already in place and will manage both the WARCIP Burkina Faso operation and the AF-related activities, in particular, (a) procurement and monitoring; (b) preparation of annual work program, budget, and Procurement Plan; and (c) Finalization of the TOR for the different activities, in coordination with the implementation agencies. The PIU will also ensure the dissemination of internal and external audit reports (for the parent project’s Grant and the AF’s credit) and the implementation of their recommendations. The Project Coordinator will be supported by a full team of FM, procurement, safeguards, and M&E specialists. 3. The PIU will report on implementation progress to the Steering Committee. The Steering Committee is composed of representatives from the MDENP, Ministry of Finance, Ministry of Environment, ARCEP, and the mobile operators, and it is chaired by the Permanent Secretary who will oversee the overall supervision of the AF. The Project Steering Committee is expected to continue to provide strategic guidance to the MDENP and ensure effective coordination across the various agencies and relevant private sector. The committee will be responsible for ensuring that the PDOs are achieved and will take key decisions to ensure smooth implementation of the project. Monitoring & Evaluation 4. The PIU will monitor and evaluate the project. They will bear the primary responsibility for project M&E and, as such, will establish standard formats and guidelines for data collection and reporting. The PIU’s current M&E specialist for WARCIP will also be in charge of the AF’s M&E. The M&E specialist will review and validate the reports on performance indicators and recommend corrective action if necessary. 5. The PIU will set up the same M&E system as for the parent project to keep track of and evaluate implementation progress of the AF within the broader context of the institutional framework for the telecommunications sector. Although increased geographical reach and reduction of costs at the country level remain the hallmark of success of an enabling environment, the project’s M&E system will seek first to measure results that are closely associated with project activities including the quality, quantity, and cost. Ultimately, improvement of laws and decrees 40 by the project activities (Component 2) will have positive ripple effects on the whole sector and on service delivery. 6. The views of direct beneficiaries will be brought into the M&E process, through a TA including a survey on the use of telephony and Internet to inform regulatory policies. Environmental and Social Safeguards 7. The AF is rated Category B, the risk is Moderate, and no new safeguard policies are triggered. An update of the safeguards documents disclosed in April 2014 for WARCIP-APL-1B Burkina Faso was undertaken—to reflect the new activities of the proposed AF—and disclosed. 8. The last implementation support mission confirmed that the environmental management of the parent project complies with the World Bank safeguard policies. The overall rating is Satisfactory. The laying of the new fiber cable system is expected to have a fairly minimal and temporary environmental and social impact. The cost of environmental and social measures of around US$770,000 is included in the project costs. 41 Annex 4: Financial Management Arrangement 1. The FM system and performance of the SP-PST, PCU, at the MDENP and the dedicated FM Unit set up at the SP-PST under the parent WARCIP-APL-1B (P122402) are acceptable to IDA. The PCU and the FM Unit set up within the SP-PST will be responsible for FM aspects of the AF and remain the World Bank’s focal point. The FM team is familiar with the World Bank’s FM requirements and is currently managing the first phase of this IDA-financed project, WARCIP. The FM arrangements of the AF will follow the same approach as the implementation arrangements in place for the ongoing project. The current FM staffing, composed of an FM officer (responsable administratif and financier) and one accountant, is adequate. The FM performance of the parent project was rated Satisfactory following the last supervision mission completed in February 2018 and the FM risk was deemed Substantial. The following key issues were identified: (a) the use of the WARCIP funds to finance the operating costs of other IDA- financed projects managed by the same PIU and (b) the lack of internal auditor. 2. Furthermore, the last supervision mission of PAMOSET (P156892), one of the World Bank-financed projects managed by the SP-PST, concluded FM performance is Moderately Satisfactory and the FM risk was rated Substantial. The following main weaknesses identified during the assessment need to be addressed during the first months of AF effectiveness: (a) the lack of a transparent and efficient cost-sharing mechanism of operating costs of the SP-PST and (b) ineffectiveness of the Steering Committee and internal audit function at the SP-PST. 3. The overall fiduciary risk of the AF has been assessed Substantial following the primary risk assessment which considered the current risk rating of the parent project and the mitigation measures required for the AF (Table 4.1). It is considered that the FM arrangements satisfy the World Bank’s minimum requirements under World Bank Policy and Directive – Investment Project Financing (IPF) and therefore is adequate to provide, with reasonable assurance, accurate and timely FM information on the status of the project required by the World Bank. Table 4.1. Update of the FM Risk Rating Residual Risk Rating Brief Explanation of Changes and Any New Mitigation Type of Risk Previous FMAR* Measures Inherent Risk Country level M M Entity level S S Unclear mechanism of cost-sharing of operating cost leading to possible duplication of expenditure - Assessment requested Program level M S Type/nature of activities to implement Overall Inherent S S Risk Budgeting M M Annual Work Plan and Budget to be prepared and submitted to IDA by November 30 of each year Accounting M M The computerized accounting software will be customized to reflect the AF. Internal controls S S Internal audit function is not effective in the projects implemented in the sectors - Recruitment of an internal auditor Funds flow S S Designated Account and Project Account opened with option to use direct payment and special commitment ‘Letter of Credit’ 42 Residual Risk Rating Brief Explanation of Changes and Any New Mitigation Type of Risk Previous FMAR* Measures Financial M M reporting Auditing M S The TORs of the current external auditor of the parent project should be revised to include the AF accounts. Overall control S S risk Overall FM risk S S Note: M = Moderate; S = Satisfactory; H = High. *Financial Management Assessment Report 4. To mitigate the risks, the following measures will be required: (a) the composition, the mandate, and frequency of meeting of the Steering Committee will be strengthened; (b) the configuration of the current accounting software ‘TOM2PRO’ will be updated to reflect the AF activities; (c) the existing FM procedures manual, which was prepared during the parent project, will be revised to reflect the aspects of the AF and changes resulting from the recommendations of the latest implementation support mission; and (d) the internal audit function of the SP-PST will be operationalized with the selection, on a competitive basis, of an internal auditor and a junior internal auditor, both with qualifications and experiences acceptable to the World Bank. The scope of work of the team of internal auditors will include all World Bank-financed projects managed by the SP-PST. The contract of the external auditor of the parent project will be revised to include the audit of the financial statements of the AF. The selection of the team of internal auditors is a condition of effectiveness for this AF. All other actions and measures are dated covenants and should be implemented within two to five months following the AF effectiveness date (Table 4.2). Table 4.2. FM Action Plan Deadline and Action Responsible Party Conditionality (1) Update the FM manual to reflect the AF aspects. SP-PST Two months after AF effectiveness (2) Update the configuration of the accounting software SP-PST/FM officer and Two months after AF ‘TOM2PRO’. procurement specialist effectiveness (3) Open new DAs for AF at the BCEAO and the MEF/SP-PST Expected by the first project accounts in a commercial bank under terms request for and conditions acceptable to IDA. disbursement of initial advance (4) Recruit the internal auditors (senior and a junior) to SP-PST By effectiveness work on all the projects managed by the SP-PST. (5) Revise the TORs of the external auditor of the SP-PST (procurement Five months after AF parent project to include the audit of the financial specialist and FM officer) effectiveness statements of the AF. 5. The unaudited IFRs for the parent project are prepared every quarter and submitted to the World Bank regularly (for example, 45 days after the end of each quarter) on time. The frequency of the preparation of the consolidated IFR (parent project and AF project) as well as its format and content will remain unchanged. 6. The internal audit function of the SP-PST is not effective. This function is included in the organigram of the SP-PST. However, the internal auditor resigned in June 2017. It was agreed during the preparation of the AF to set up a team of two internal auditors because of the increase 43 in the number of donor-financed projects implemented and managed by the SP-PST, which in turn, require more effective internal control systems. Furthermore, the establishment of a team of two internal auditors will help the SP-PST monitor the implementation of the World Bank and other donor-financed projects within the sectors. The internal auditors’ responsibility and scope of work will include the three World Bank-financed projects managed by the SP-PST as well as other donor-funded projects and their costs will be co-shared by the World Bank-financed projects and any other donors. 7. There is no overdue audit report in the project and the entity at the time of preparation of the AF. The audit report of WARCIP managed by the SP-PST, covering the period ending on December 31, 2016, was submitted on time; the external auditor expressed an unmodified (clean) opinion. The financial statements of the AF will be audited on an annual basis and the external audit report will be submitted to IDA not later than six months after the end of each calendar year similar to the ongoing Phase 1 of the project. The TORs of the audit and contract of the current external auditor should be revised to reflect the AF no later than 5 months following the AF effectiveness date. The project will comply with the World Bank disclosure policy on audit reports and place the information provided on the official website within one month of the report being accepted as final by the team. The World Bank will also publicly disclose the audit reports on its website in accordance with the World Bank disclosure policy. 8. Upon credit effectiveness, transaction-based disbursements will be used. The credit will finance 100 percent of eligible expenditures inclusive of taxes. One new designated account (DA) managed by the SP-PST will be opened in C.F.A. Francs BCEAO at the Central Bank of West African States (Banque Centrale des Etats de l'Afrique de l'Ouest) (BCEAO). A Transaction Account in C.F.A. Francs BCEAO will be opened in a commercial bank on terms and conditions acceptable to the World Bank. The ceiling of the DA will be stated in the Disbursement and Financial Information Letter. The existing signatory arrangements of the parent project will remain unchanged. An initial advance up to the ceiling of the DA will be made and subsequent disbursements will be made against submission of statements of expenditure reporting on the use of the initial/previous advance. Funds will therefore flow from the DA in C.F.A. Francs BCEAO to the Transaction Account in C.F.A. Francs BCEAO. The option to disburse against submission of quarterly unaudited IFR (also known as report-based disbursements) could be considered as soon as the project meets the criteria. The other methods of disbursing the funds (reimbursement, direct payment, and special commitment ‘Letter of Credit’) will also be available to the project. The minimum value of applications for these methods is 20 percent of the DA ceiling. The project will sign and submit withdrawal applications electronically using the eSignatures module accessible from the World Bank’s Client Connection website (Table 4.3). 44 Table 4.3. Funds Flows IDA Transaction based SP-PST Supporting DA in BCEAO document Transaction Account in a commercial bank Local services providers Foreign services providers Transfers of funds Flow of documents (invoices, good receipt notes, purchase order, contract) Payment to suppliers 9. Disbursements by category. Table 4.4 sets out the expenditure categories to be financed out of the credit proceeds. This table considers the prevailing country financing parameter for Burkina Faso in setting out the financing levels. Table 4.4. Disbursement by Category Percentage of Amount of the Expenditures to be Category Financing Allocated Financed (expressed in EUR) (inclusive of taxes) (1) Lease of capacity (Component 1) 5,000,000 100% (2) Goods, works, Operational Costs, non-consulting 10,400,000 100% services and consultants’ services (Components 1 and 2) (3) Goods, works, Operational Costs, non-consulting 1,000,000 100% services and consultants’ services (Component 3) TOTAL AMOUNT 16,400,000 10. The retroactive financing mechanism. The GoBF has requested retroactive financing for payments related to the AF. In accordance with OP 10.00, retroactive financing is permitted under the following conditions which are satisfied in this specific case: (a) the activities financed are included in the project description, (b) such payments do not exceed 20 percent of the loan amount, and (c) the payments were made by the borrower not more than 12 months before the expected date of the signing of the Loan Agreement. In this context, the GoBF may make withdrawals up to an aggregate amount not to exceed EUR2,500,000 for payments made before the date of the Loan Agreement but on or after January 1, 2018, for eligible expenditures under Category (1) and (2) of Section III.A of Schedule 2 to the Loan Agreement. 11. Based on the overall residual FM risk, which is Substantial, the project will be supervised twice a year to ensure that project FM arrangements still operate well and funds are used for the intended purposes and efficiently (Table 4.5). 45 Table 4.5. Implementation Support Plan FM Activity Frequency Desk reviews IFRs’ review Quarterly Audit report review of the program Annually Review of other relevant information such as interim internal Continuous, as they become available control systems reports On-site visits Review of overall operation of the FM system (Implementation Semester, for Substantial risk Support Mission) Monitoring of actions taken on issues highlighted in audit reports, As needed auditors’ Management Letters, internal audits, and other reports Transaction reviews As needed Capacity-building support FM training sessions Before project effectiveness and during implementation as needed 12. The description of the project’s FM arrangements above satisfies the World Bank’s minimum requirements under World Bank Policy and Directive - IPF. 46 Annex 5: Procurement Arrangement General 1. Applicable guidelines. Procurement for works, goods, and non-consulting and consulting services for the AF project will be carried out in accordance with the procedures specified in the ‘World Bank Procurement Regulations for IPF Borrowers’, dated July 2016 (Procurement Regulations), revised November 2017, and the World Bank’s Anti-Corruption Guidelines (Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants, revised as of July 1, 2016), as well as the provisions stipulated in the Financing Agreement. All goods and non-consulting services will be procured in accordance with the requirements set forth or referred to in Section VI. Approved Selection Methods: Goods, Works and Non-Consulting Services of the Procurement Regulations, and the consulting services will be procured in accordance with the requirements set forth or referred to in Section VII. Approved Selection Methods: Consulting Services of the Procurement Regulations, the PPSD, and the Procurement Plan approved by the World Bank. The Procurement Plan, including its updates, shall include, for each contract, (a) a brief description of the activities/contracts; (b) the selection methods to be applied; (c) the cost estimates; (d) time schedules; (e) the World Bank’s review requirements; and (f) any other relevant procurement information. An initial Procurement Plan covering the first 18 months of the project implementation was prepared (dated January 29, 2018). Any updates of the Procurement Plan shall be submitted for the World Bank’s approval. The Recipient shall use the World Bank’s online procurement planning and tracking tools (STEP) to prepare, clear, and update its Procurement Plan and conduct all procurement transactions. 2. Workshops, seminars, and conferences. All training and workshop activities will be carried out on the basis of approved annual programs to be cleared by the task team leader that will identify the general framework of training activities for the year, including (a) the type of training or workshop; (b) the personnel to be trained; (c) the selection methods of institutions or individuals conducting such training; (d) the institutions which will conduct the training; (e) the justification for the training, how it will lead to effective performance, and implementation of the project and or sector; (f) the duration of the proposed training; and (g) the cost estimate of the training. Report by the trainee, upon completion of training, would be mandatory. Generally, attending training activities are not part of the Procurement Plan and are not subject to procurement clearances. Certain very large workshops and training events organized by the recipient where a firm is hired to package training services, catering, rental of accommodations, rental of conference faculties, and so on could be procured through a competitive process and would be part of the Procurement Plan. 3. Operating costs. The operating costs shall mean the incremental expenses incurred on account of project implementation, consisting of reasonable expenditures for office supplies, vehicle operation and maintenance, communication and insurance costs, banking charges, rental expenses, office and office equipment maintenance, utilities, document duplication/printing, consumables, travel and meal costs for project staff for travel linked to the implementation of the project, and salaries of contractual staff for the project (but excluding salaries of officials of the recipient’s civil service). Operating costs financed by the project will be procured using the implementing agency’s administrative procedures described in the Project Implementation 47 Manual (PIM) reviewed and found acceptable to IDA and are generally not part of the Procurement Plan. 4. Implementation of the procurement. Procurement for the AF will be carried out by the procurement unit within the SP-PST which carry out procurement for the initial project, which is a well-established project management unit. The SP-PST has considerable experience in implementation of World Bank-financed projects. The SP-PST has a Procurement Manual, which will need to be updated according to the procurement regulations and to take into account the new project. The existing archiving system is acceptable. The SP-PST will have the full responsibility of the administrative matters of procurement, the technical matters (preparation of the technical specifications, TORs, and evaluation of bids) will be carried out in concertation with the Ministry in charge of ICT. 5. Assessments of the risks and the related mitigation measures. The main risks identified in this project are the following: (a) the Procurement Unit within the SP-PST may not be able to manage the additional procurement activities of this project appropriately, considering that other World Bank-funded projects are being implemented; (b) the SP-PST may not be familiar with the procurement procedures according to the procurement regulations; (c) having two sets of rules for the same unit could disturb efficient implementation and timely disbursement; and (d) control and regulation mechanism according to the provisions of the country procurement rules and its application procedures could delay the procurement process. The overall unmitigated risk for procurement is Substantial. 6. Mitigation measures. Proposed corrective measures agreed to mitigate the risk are summarized in Table 5.1. Table 5.1. Mitigation Measures Action to be Undertaken Time Frame Responsible (1) Update the Procurement Manual to include mainly Three months after SP-PST the procurement methods to be used in the project project effectiveness along with their step-by-step explanation as well as the key role to be played by for all stakeholders involved in the project implementation (2) Train the SP-PST’s procurement specialist, DMP Three months after World Bank (Direction des Marchés Publics), and DCMF project effectiveness (Direction du Contrôle des Marchés et des Engagements Financiers) on the new procurement framework. 7. The prevailing risk can be upgraded to Moderate, provided the above corrective measures are implemented. Procurement Plan 8. Procurement Plan. The recipient has prepared a Procurement Plan for the first 18 months of project implementation, specifying approaches to market and procurement methods for each activity, which has been agreed between the client and the World Bank. The Client will 48 use STEP to create and modify Procurement Plans, to create and publish all procurement notices under the project, including the General and Specific Procurement Notices, Requests for Expression of Interest and for Prequalification, and Contract Award Notices. 9. Procurement methods and review thresholds. Procurement methods and World Bank review requirements for the procurement risk rated Substantial are summarized in Table 5.2. Table 5.2. Thresholds for Procurement Approaches and Methods (US$, thousands) Thresholds for Procurement Approaches and Methods (US$ thousands) Type of Open Open Request for Prior Review Threshold Procurement International National Quotations ൒ < ൒ Works (including turnkey, supply As the project risk is Substantial, all and installation contracts with estimated cost equal to 5,000 5,000 200 of plant and US$10 million or above are subject to equipment, and World Bank prior review. PPP) Goods, IT As the project risk is Substantial, all systems, and non- contracts with estimated cost equal to 1,000 1,000 100 consulting US$2 million or above are subject to services World Bank prior review. Short-list of National Consultants As the project risk is Substantial, all Engineering and contracts with estimated cost equal to Consultants firms Consulting services construction US$1 million or above are subject to < 200 supervision ൑ 400 World Bank prior review. CQS < 300,000 Post review Individual As the project risk is Substantial, all contracts with estimated cost equal to US$0.3 million or consultants above are subject to World Bank prior review. Note: All TORs, regardless of the value of the contract, are subject to World Bank approval. All justifications for Direct Contracting/Single Source, when the estimated value of the contract is below the prior review threshold, must be submitted to World Bank approval with the Procurement Plan. As agreed with the Government and set out in the National Procurement Law, the contracts submitted to IDA for prior review will not be reviewed by the Government. The contracts subject to IDA post review are subject to national prior review according to the thresholds. The strategy is to have all the contracts reviewed either by the World Bank or by the client and avoid double review. 10. Frequency of procurement supervision. In addition to the prior review to be carried out, it has been recommended that two supervision missions are conducted to visit the field once a year and carry out post review of procurement actions once annually. 11. Brief summary of the PPSD. The client has prepared, with the World Bank’s team support, a PPSD including a Procurement Plan, which has been sent to the World Bank. The key elements are summarized as follows: “(...) the national and international environment is favorable for the procurement of works, goods, consulting services and non-consulting services intended for the implementation of the project. The market is able to meet the needs of works, computer equipment, office equipment and furniture as well as office consumables which will be purchased according to the relevant procedures. The same applies to the market for consultant services. SP- PST has experience in managing these types of markets and therefore has a clear knowledge of the national, subregional, and international market.” 49 Summarized Procurement Plan 12. The main works, goods, and non-consulting services to be procured in the AF are listed in Table 5.3. Table 5.3. Works, Goods, and Non-Consulting Service Contracts to Be Procured Comments/ Estimated Domestic Review by Reference Procurement Expected Bid Description Cost Preference World Bank No. Method Opening (US$) (Yes/No) (Prior/Post) Date Works - New link to the December 30, 1 6,320,000 ICB No Post border with Benin 2018 Acquisition of international 2 6,000,000 ICB No Prior June 30, 2019 bandwidth Equipment to upgrade the March 30, 3 800,000 ICB No Post VLP 2018 Works - New link to Zabré December 31, 4 480,000 NCB No Post (sharing with roads) 2018 February 28, 5 Equipment to upgrade the IXP 500,000 ICB No Post 2019 Acquisition of an industrial accounting model for the April 30, 6 300,000 ICB No Post calculation of costs of 2019 services Note: ICB = International Competitive Bidding; NCB = National Competitive Bidding. 13. The main consulting assignments of the AF are listed in Table 5.4. Table 5.4. Consulting Assignments with Selection Methods and Time Schedules Ref. Estimated Review by Comments/ Selection No. Description of Assignment Cost World Bank Expected Bid Opening Method (US$) (Prior/Post) Date TA to support the VLP in its operation and its growth, to include 1 the additional links in the existing 700,000 QCBS Post September 31, 2018 PPP model, and to boost the development of the IXP Monitoring and supervision - 2 650,000 QCBS Post September 30, 2018 Additional links TA to support the implementation of 3 600,000 CQS Post June 30, 2019 geographic databases TA to set up the PPP for the national 4 500,000 QCBS Post December 31, 2018 infrastructures TA to prepare the bidding documents for a solution enabling the monitoring of the quality of service for 5 350,000 QCBS Post January 31, 2019 broadband and to conduct a survey on the use of telephony and Internet to inform regulatory policies Assistance to the preparation and evaluation of the bids for the new 6 links’ construction, the acquisition of 300,000 QCBS Post December 31, 2018 the additional bandwidth, and the establishment of Memoranda of 50 Ref. Estimated Review by Comments/ Selection No. Description of Assignment Cost World Bank Expected Bid Opening Method (US$) (Prior/Post) Date Understanding between Burkina Faso and Benin for cross-border fiber optic interconnection 7 Safeguards studies for the new links 200,000 CQS Post June 31, 2018 8 Recruitment of an ICT expert 200,000 IC Post October 31, 2018 9 TA to strengthen the NREN 200,000 CQS Post June 30, 2019 TA for the implementation of number 10 portability and the General Security 400,000 CQS Post June 30, 2019 Database TA to develop regulations and procedures to foster cross-sectoral 11 200,000 CQS Post May 31, 2019 synergies when deploying broadband infrastructure TA to conduct a taxation study on the 12 200,000 CQS Post May 31, 2019 ICT sector Note: QCBS = Quality- and Cost-Based Selection; CQS = Selection based on Consultants’ Qualification; IC = Individual Consultant. 51 Annex 6: Economic and Financial Analysis 1. Expected effects of the AF on connectivity. The base-case scenario (that is, without the AF) estimates that the percentage of individuals using the Internet will reach around 50 percent in 2027. In the current environment, the growth of GDP per capita would typically allow the country to reach 20–25 percent of Internet user penetration (see Figure 6.2). It is expected that owing to further decline in costs on the demand side (handsets and service) and on the supply side (technology improvements, infrastructure investments amortized, and so on), Burkina Faso and countries of similar GDP per capital levels will be able to replicate the penetration growth experienced in richer countries such as Morocco, Tunisia, Nigeria, and Kenya, who achieved penetration ranges in the range of 45 percent to 55 percent as of December 2015 (see Figure 6.1). The AF is projected to accelerate the growth rate of Internet users in Burkina Faso in the early years of implementation, thanks to faster improvements in accessibility and affordability (owing to the high-price elasticity of demand from the currently unserved population) than without the AF. This advance is projected to peak at 7 percentage points in 2020, representing an advance of roughly two years. This advance will then progressively reduce over time (see Figure 6.3), as the AF impacts become absorbed by the natural market evolution. Figure 6.1. Percentage of Individuals Using the Figure 6.2. Percentage of Individuals Using the Internet Internet vs. GDP per Capita at constant US$a (2015) Source: ITU World Bank Note: a. Benchmarked countries: Cameroon, Ghana, Uganda, Tanzania, Benin, Côte d'Ivoire, Nigeria, Senegal, Morocco, Tunisia, Kenya, and Burkina Faso. 52 Figure 6.3. Projected Increase in Total Internet Users (as percentage of population) With and Without the AF Source: ITU, World Bank analysis. 2. The increased connectivity attributed to the AF will contribute to additional GDP growth. A review of cross-country regression studies by Bertshek (2016)24 reports that a 10 percentage point increase in fixed broadband penetration is expected to increase annual GDP growth by 0.23 to 0.9 percentage points. These estimates were based on a sample of Organization for Economic Co-operation and Development (OECD) countries and EU countries. Additionally, an analysis commissioned by the World Bank (Sepulveda 2017)25 reports an increase, on average, between 0.48 and 0.50 percentage points in per capita GDP arising from a 10 percentage point increase in mobile broadband penetration. As a conservative approach, the lower band estimate of a 0.23 percentage point addition to annual GDP growth was used for the projection for Burkina Faso, even if the growth of penetration is expected to be almost entirely driven by mobile broadband technologies. 3. The increased connectivity attributed to the AF will enable the economic benefits of an additional 1.47 million Internet users in 2020, compared with the increase that would happen organically without the AF. Based on a literature review, each 10 percentage point increase in broadband penetration is assumed to increase the country’s annual GDP growth by approximately 0.23 percentage points. With these assumptions, and assuming a 15 percent discount rate, the increase in yearly GDP will go up to US$22.2 million over the next few years. The CBA presents a benefit-cost ratio of 3.94 for an investment of US$20 million in the AF. The expected IRR (using CBA calculations) is 68.54 percent. 24 Bertschek, Irene and Briglauer, Wolfgang and Hüschelrath, Kai and Kauf, Benedikt and Niebel, Thomas, The Economic Impacts of Telecommunications Networks and Broadband Internet: A Survey, ZEW - Centre for European Economic Research Discussion Paper No. 16-056, August 15, 2016 25 “Broadband & Economic Development: Regression Analysis”, Edgardo Sepulveda, for World Bank Group, February 2017 53 Table 6.1. Benefits of Increased Internet Penetration on GDP Internet Users % Percentage Addition of Total Internet Users In point Projection (population growth internet Millions addition of adjusted) subscribers Addition to GDP internet with the AF with the AF Without the With the Without the With the users with Year (in millions) AF (A) AF (B) AF (C) AF (D) the AF (D- (B-A) C) 2016 3.50 3.50 19% 19%                 ‐ 0.00 2017 4.33 4.40 23% 23%              0.38 0.07 (20,000,000) 2018 5.13 5.67 26% 29% 2.72 0.54 7,635,909 2019 5.97 7.01 29% 34% 5.08 1.04 14,891,445 2020 6.83 8.30 33% 40% 7.02 1.47 21,482,888 2021 7.73 9.23 36% 43% 6.93 1.50 22,165,162 2022 8.76 10.08 39% 45% 5.91 1.32 19,769,453 2023 9.75 10.90 43% 48% 5.03 1.15 17,568,576 2024 10.74 11.68 45% 49% 3.96 0.93 14,439,797 2025 11.62 12.51 48% 51% 3.66 0.89 13,958,647 2026 12.45 13.27 50% 53% 3.29 0.83 13,121,184 2027 13.20 13.94 51% 54% 2.86 0.74 11,917,466 NPV $51,121,628 Benefit - Cost Ratio 3.94 Internal Rate of Return (IRR) 68.54% 4. The financial benefits from the AF will also come from leveraging of public investments in ICT through the creation of PPPs not yet set up and the unleashing of existing financial resources. For example, the ‘G-Cloud’ project will deploy a 513 km inter-city fiber optic network to connect and carry the traffic between public nodes. The bandwidth needs of the public entities are expected to be much lower than the capacity installed, thus leaving a substantial amount unused if not commercialized to the private sector. By establishing the relevant PPP for this operationalization, the GoBF will strengthen the competition in the national bandwidth market and receive financial returns. Similar effects could be gained from the utilization of unused capacity available on network owned by public companies (for example, rail and power transmission lines). In addition, the AF aims at unlocking the disbursement of the universal service fund, which accumulated CFAF 31.5 billion (that is, US$52.4 million) as of the end of 2014. 5. Finally, increased connectivity will set the stage for Burkina Faso’s digital transformation and will lead to increased entrepreneurship and growth of Burkina Faso’s private sector. Investing in digital growth and network resilience and reliability will potentially spur innovation and job creation, leveraging digital platforms. Additional emphasis will be placed on digital inclusion to ensure that a wide range of citizens will participate in and benefit from Burkina Faso’s digital transformation. 54