Document of The World Bank FOR OFFICIAL USE ONLY Report No: PP2288 PROJECT PAPER ON A PROPOSED GRANT IN THE AMOUNT OF(US$ 0.5 MILLION EQUIVALENT) TO THE REPUBLIC OF DJIBOUTI FOR A DJIBOUTI HOUSEHOLD SURVEY 2017 (P162743) This document is being made publicly available prior to approval. This does not imply a presumed outcome. This document may be updated following management consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective February 13, 2017) Currency Unit = Djibouti Franc (DJF) 1 DJF = US$0.0055 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ADDS Djiboutian Agency for Social Development (Agence Djiboutienne de Développement Social) BETF Bank Executed Trust Fund CPS Country Partnership Strategy DISED Direction of Statistics and Demographic Studies (Direction des Statistiques et Études Démographiques) EDAM Djibouti Household Survey (Enquête Djiboutienne Auprès des Ménages) FDI Foreign Direct Investment FM Financial Management GDP Gross Domestic Product GoD Government of Djibouti IFR Interim Financial Reports NSDS National Strategy for the Development of Statistics USAID United States Agency for International Development TA Technical Assistance Regional Vice President: Hafez Ghanem Country Director: Asad Alam Global Practice Senior Director: Carolina Sanchez Practice Manager: Benu Bidani Task Team Leader: Gabriel Lara Ibarra REPUBLIC OF DJIBOUTI Djibouti Household Survey 2017 TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................7 A. Country Context ............................................................................................................ 7 B. Sectoral and Institutional Context ................................................................................. 8 C. Higher Level Objectives to which the Project Contributes ........................................ 10 II. PROJECT DEVELOPMENT OBJECTIVES ..............................................................11 A. PDO............................................................................................................................. 11 Project Beneficiaries ......................................................................................................... 11 PDO Level Results Indicators ........................................................................................... 11 III. PROJECT DESCRIPTION ............................................................................................11 A. Project Components .................................................................................................... 11 B. Project Cost and Financing ......................................................................................... 12 IV. IMPLEMENTATION .....................................................................................................12 A. Institutional and Implementation Arrangements ........................................................ 12 B. Results Monitoring and Evaluation ............................................................................ 12 C. Sustainability............................................................................................................... 13 V. KEY RISKS AND MITIGATION MEASURES ..........................................................13 VI. APPRAISAL SUMMARY ..............................................................................................14 A. Other Safeguards Policies Triggered .......................................................................... 16 B. World Bank Grievance Redress .................................................................................. 16 Annex 1: Results Framework and Monitoring .........................................................................17 Annex 2: Implementation Arrangements ..................................................................................18 DATA SHEET Republic of Djibouti Djibouti Household Survey 2017 Small RETF Grant Project Paper . Middle East and North Africa GPV05 . Basic Information Date: 02/24/2017 Sectors: Poverty and Equity Country Director: Asad Themes: Poverty strategy, analysis and monitoring Alam Practice Manager/Global Benu Bidani / Carolina EA Category: C- Not Required Practice Senior Director: Sanchez Paramo Project ID: P162743 Instrument: IPF (small RETF) Team Leader(s): Gabriel Lara Ibarra . Recipient: Republic of Djibouti Executing Agency: Agence de Developpement Social Contact: Mahdi Mohamed Djama Title: Director General Telephone No.: +25321358655 Email: direction@adds.dj . Project Implementation Period: Start Date: 03/15/17 End Date: 04/20/18 Expected Effectiveness Date: 03/06/17 Expected Closing Date: 08/20/18 . Project Financing Data(US$M) Total Project Cost : 0.50 Total Financing : 0.50 Financing Gap : . Financing Source Amount(US$M) Trust Fund for Statistical Capacity Building 0.50 Total 0.50 . Expected Disbursements (in USD Million) Fiscal Year 2017 2018 Annual 0.46 .04 Cumulative 0.46 .50 . Project Development Objective(s) The PDO is to support the Department of Statistics and Demographic Studies to collect, analyze and disseminate data emanating from the Household Survey for Social Indicators (Enquete Djiboutienne Aupres de Menages) 2017. . Components Component Name Cost (USD Millions) Djibouti Household Survey 0.50 . Compliance Policy Does the project depart from the CAS /CPS/CPF in content or in other significant respects? Yes [ ] No [ X ] . Does the project require any exceptions from Bank policies? Yes [ ] No [ X] Have these been approved by Bank management? Yes [ ] No [X ] Is approval for any policy exception sought from the Board? Yes [ ] No [ X ] Does the project meet the Regional criteria for readiness for implementation? Yes [X ] No [ ] . Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waters OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X . Legal Covenants Name Recurrent Due Date Frequency Description of Covenant . Team Composition Bank Staff Name Title Specialization Unit UPI Gabriel Lara Ibarra Economist Team Leader (ADM responsible) GPV05 354996 Anathalie Muteteli Consultant Procurement Specialist GGO05 504513 Rock Jabbour Financial Management Analyst Financial Management Specialist GGO23 329395 Andrea E. Stumpf Lead Counsel Counsel LEGAM 267265 Marie Roger Augustin Legal Analyst Counsel LEGAM 157352 Brandon Enrique Carter Senior Environmental Specialist Safeguards Specialist OPSPF 365358 Cornelia Mirela Catuneanu Operations Analyst Operations Analyst GPV06 152088 Matthieu Louis Bonvoisin Counsel Counsel LEGAM 394916 Nina Chee Regional Safeguards Adviser Safeguards Advisor OPSPF 87513 Vibhuti Mendiratta Young Professional Team Member GPV06 354224 Eric Ranjeva Finance Officer WFAFO Finance Officer WFALN 278288 Jasna Mestnik Finance Officer WFAFO Finance Officer WFALN 259521 Vidya Narasimhan Finance Officer WFALA Finance Officer WFALA 255977 Non Bank Staff Name Title Office Phone City . Locations Country First Administrative Location Planned Actual Comments Division . I. STRATEGIC CONTEXT A. Country Context 1. Djibouti has experienced high economic growth rates in the last years. Taking advantage of its geographical location, Djibouti has become mainly a re-exporter of Ethiopian products and it has started to show its potential as a logistics platform. Between 2008 and 2014, the country has had an average annual economic growth of 4.9 percent, surpassing the average of developing countries in the Middle East and North Africa region (2.3 percent). The main drivers behind this trend have been public investment and the continued dynamism of the transport chain (Central Bank of Djibouti, 2014). 2. Djibouti is a rent-based economy, living in large part from rents of its strategically located port and foreign military bases (USAID -United States Agency for International Development - /Djibouti, 2004). Thus, Djibouti’s Gross Domestic Product (GDP) growth is largely related to evolution of the tertiary sector, with 67% of its GDP coming from this sector, especially from transport services. The primary sector is pretty small mainly because of hostile weather conditions which particularly have hampered the development of the agricultural sector. In addition, only 10% of the land is cultivable (Central Bank of Djibouti, 2014). 3. The era of high economic growth was boosted by the increase of foreign direct investment (FDI). FDI inflows started in 2003 and surpassed in some years (2007, 2008 and 2013) a level higher than 20% of GDP. The FDI is mainly concentrated in infrastructure for ports, roads, buildings and hotels. 4. The medium term for Djibouti looks favorable with a projected growth of 7 percent between 2016 and 2018, but there are recognized risks to stability and continued growth. In the coming years, investments in infrastructure are expected to show positive results in the economy. Upon completion of such projects, tourism, telecommunications and rents from foreign military bases are expected to promote the country's growth. Nonetheless, significant risks are ever present due to potential delays in construction or inefficient management of the recently completed infrastructure projects, slowdown in the Ethiopian economy, and the security situation in neighboring countries. 5. Unfortunately, the observed strong economic growth has not "trickled down" and the country has seen little improvements in poverty reduction. The extreme poverty incidence has remained high even after the high economic growth rates of recent years. The official estimates show that the poverty rate has only been reduced by one percentage point in the period 2002-2013 going from 24 percent to 23 percent. The incidence of poverty in rural areas has somewhat decreased, but it remains severe as 44.5% of the population has been classified as extreme poor. This implies that around 45 percent of the population was not able to cover its food requirements. Other indicators such as the global poverty rate have shown slow progress as well. The global poverty rate, based on a cost of basic needs approach by adult equivalent, reflects the percentage of the population that is not able to afford a minimum threshold of food and non-food needs. Nationally, global poverty was 46% in 2002 and 40% in 2013. 7 6. While the results seem troubling, it should be noted that there are important differences in the approach to measure welfare and poverty across these years which raise caution in their interpretation. In summary, there are two key factors that may affect the comparability of the poverty estimates. First, the modules to collect consumption information were different across years (length and details of questions used, use recall instead of a dairy, etc.) thus allowing for some difference to come from the change in this methodology. Second, the focus of the 2013 household survey was on updating the Consumer Price Index and focused on collecting information from urban households. To obtain national estimates of welfare and poverty, a subsample of rural households from a 2012 household survey was incorporated into the calculation. This combination of data sources could also affect the comparability of the poverty estimates discussed above. 7. Despite the shortcomings of the poverty monitoring system, other non-monetary indicators point to a consistent story of stagnation of welfare in the country. Diagnostics ran using the households’ surveys from 2002 and 2012 show limited effects of growth on improving individuals’ labor market outcomes, children’s health indicators or improvements on adults’ literacy rates. In 2012, the unemployment rate was 48% at the national level and 69% among the youth, about 30 percent of children were underweight and 34 percent were stunted, and literacy rates among the population 15 years old and older were just under 50 percent. Distributional analyses indicate enduring gaps in access to services, while improved educational attainment indicators are concentrated among the richest households and the bottom 20% remain stagnant. Households’ perceptions in 2012 suggest a worrying situation where a significant share of them expect poverty to keep increasing. Taken together, these findings suggest that, despite the recognized shortcomings of the poverty monitoring system in Djibouti, its general message of weak trickle down of growth appears to be correct. B. Sectoral and Institutional Context 8. The Government of Djibouti (GoD) has shown a strong commitment to a strong National Statistical Strategy. With support from donors, the first National Strategy for the Development of Statistics (NSDS) was developed for the period of 2006-2010. An updated strategy was developed for the period 2011-2015 embodied in law No123/AN/1/6eme L. The most recent NSDS only partially achieved the intended objectives - with the evaluation report highlighting that many of the activities could not secure timely funding. The NSDS third objective to "Improve the global quality and frequency of statistics of Household Living conditions" was met at 25%, whereas objective 4 "Promote access to data" was only met at 41%. The GoD is currently pursuing the definition and development of the NSDS 2016-2020 and it is expected that these objectives will still be at the fore front of the strategy. Reliable data and statistics will be key in informing the government's new programs for development and action plans. 9. The Direction of Statistics and Demographic Studies (DISED) has relied on the Enquete Aupres des Menages (EDAM) since 1996 to produce welfare and poverty indicators. This effort has undergone several improvements along the years. The first effort came with the Enquête Auprès des Ménages – Indicateurs Sociaux (EDAM-IS), conducted in 1996, where only an exploratory questionnaire was fielded with the support of the World Bank and the United Nations 8 Development Program (UNDP). DISED has continued to expand the frontier of data collected in the EDAM-IS, and significantly improved the data collection in 2002 when an updated sampling frame was constituted in 2001/02 to better represent the living conditions of Djiboutian households. The EDAM-IS 2002 collected information on 12 consumption components of approximately 2400 households. 10. The 2009 Census provided an excellent opportunity to update and draw better samples to understand the expenditures of households. The questionnaire of 2012 was designed to improve the detail of the data collected. Modules on food, housing and utilities, education, health, clothing, communication, transport, purchases of durable goods and other non-food collected data on a total of 107 items. Lastly, the EDAM-Budget Consommation (EDAM-BC) collected very detailed information on consumption as part of DISED’s effort to update the consumer price index. Using the information from the EDAM-BC 2013, a new poverty line and poverty rate were estimated. The most recent methodology to measure poverty in Djibouti uses the information from the EDAM-BC 2013 to calculate poverty. By adjusting the poverty lines using changes in prices across time, poverty rates for 2002 and 2012 were also calculated from the corresponding EDAM-IS. A forthcoming publication jointly produced by DISED and the African Development Bank (AfDB) contains the most recent poverty rate estimates. 11. The next EDAM is planned for 2017 and is expected to be in the field during the first quarter of this calendar year. The survey, in line with previous efforts but incorporating current good practices, will provide essential information on demographics, households' consumption, expenditures, as well as welfare indicators to calculate poverty and inequality in the country. The EDAM is expected to become the cornerstone of future dialogue on evidence-based policies, especially those aiming to improve the living conditions of the citizens as part of the GoD new "Vision 2035" strategy. 12. At the request of DISED, the Poverty GP has provided technical assistance (TA) during the last 12 months (P156794) to help improve the poverty monitoring system in the country. Poverty measurement in Djibouti rests on the availability and richness of data collected in the EDAM. Through this engagement the team has managed to establish a good working relationship with DISED management and technical staff. The TA activities have allowed to conduct diagnostics on previous survey instruments, welfare measurement methodologies and data collection protocols. As part of the TA, the team has focused on working closely with DISED on how to improve the survey instrument and to find feasible sampling strategies to include the nomadic population. The discussions have advanced at a good pace and DISED has been receptive to several of the suggested updates. 13. The team1 discussed and agreed with the DISED on the implementation of several improvements in the questionnaire. In line with current good practices, the team and DISED have begun reviewing the EDAM questionnaire to include improvements on the food item module, the durable goods section, health module, and the module on housing services and dwelling-related expenditures. A first draft of the questionnaire was shared by DISED with various partners in December 2016, including a multi-sectorial technical committee, line ministries, and other 1 The team benefitted extensively from discussions and comments received from DEC’s survey team, SP and MFM colleagues working in Djibouti. 9 international partners. The key objective was to elicit suggestions and recommendations that could help better attain the objectives of the EDAM and capture the welfare of Djiboutian households. A meeting with the Ministries and other partners was organized on January 11th 2017 where the engaging discussion led to further refinements of certain questions in the EDAM. The revised draft of the EDAM questionnaire is planned to be used in a pre-test in the field on a very small number of households during the last weeks of January. 14. The sampling strategy of the EDAM 2017 will incorporate two important features. The first feature is that, for the first time, the national household survey will include a strategy to include the nomadic population. According to the 2009 census, the nomadic population represented between 20-40% of the Djiboutian population. However, due to logistical and resources constraints, among others, the nomads have not been surveyed in any of the previous EDAMs. Given the likelihood of being among the most vulnerable in the country, having a strategy to survey them and to the extent possible include them in the calculation of national estimates of poverty and inequality will be a great improvement from all previous EDAMs. There is now an agreement to, in coordination with the ministry of agriculture, use the information on water points' maps to help draw enumeration areas that can frame the data collection efforts for the nomadic households. Another feature that will be included in the EDAM 2017, is the updating of the sampling framework to include slum areas (such as the community of Balbala). These areas have experienced large increases in population, due to immigration from within the country and elsewhere, and that raises caution on the usefulness of the 2009 census as a sampling framework. An updated list for these areas is expected to inform the framework from which the EDAM sample will be drawn. C. Higher Level Objectives to which the Project Contributes 15. The proposed activity relates to both the current Country Partnership Strategy (CPS) and the regional strategy. The first pillar of the CPS, Reducing Vulnerability, has identified the improvement of social safety net programs as well as the development of human capital through the improvement of health indicators and quality of education as key challenges. The improvement of the monitoring systems and welfare measurement in the country have the potential to inform and help design the targeting of the social safety net program and to provide solid foundation for tracking human development indicators. The activity is also in clear alignment to the Middle East and North Africa (MNA) Strategy Pillar on renewing the social contract via the improvement of monitoring of urban poverty reduction and income opportunities of women and youth. Finally, the results obtained from the EDAM 2017 are expected to provide timely inputs into the evidence required for the drafting of Djibouti’s Systematic Country Diagnostic, and ultimately inform the identification of key sectors for sustainable development in the Country Partnership Framework (both documents expected to be delivered in FY18). 16. This project is aligned with the stated objective of the NSDS 2016-2020 (currently under preparation) to be able to answer to the requirements of producers and users of statistics in order to monitor policies and programs, including the national strategy of employment and the Sustainable Development Goals. The outputs of this project are also expected to contribute directly to the country’s capacity to monitor the indicators needed to track progress on poverty reduction and human development, a key feature of Pillar IV of the country’s Vision 2035. 10 II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 17. The PDO is to support the DISED to collect, analyze and disseminate data emanating from the Household Survey for Social Indicators (EDAM) 2017. Project Beneficiaries 18. Primary stakeholders will be the users of the EDAM, both public and private. Line ministries are expected to be able to draw important information on the country's population and living conditions of households - particularly of the vulnerable groups. Social indicators are expected to inform the government's Vision 2035 as well. The public availability of data is expected to help researchers, academia and the international community and improve the understanding of the challenges faced by the population. PDO Level Results Indicators 19. Key expected results from this project include: (a) Data collection: Successful completion of the EDAM 2017 (b) Analysis: Publication of the Welfare and Poverty Analysis Report (c) Dissemination: Archiving of the 2017 EDAM for public access in an online microdata library (i.e. World Bank's Microdata Catalog) III. PROJECT DESCRIPTION A. Project Components 20. The project is planned to be executed under one component: Djibouti Household Survey 2017. The activities conducted under this operation will have the objective of supporting the successful implementation of the design, data collection and analysis of the EDAM 2017. Given the expected improvements to the questionnaire and sampling strategy, the 2017 EDAM is not only intended to produce poverty estimates, but also a substantially improved measure of households' welfare, and nationally representative indicators that include the nomadic population for the first time. 21. The implementation of the EDAM includes several tasks. The preparation of the questionnaire is well underway and expected to be finalized in February 2017. During the following months the DISED team will: (a) conduct cartographic work to update the enumeration areas mapping (including those for water points that will be used for the sampling of nomadic households); (b) conduct a listing and sampling exercise to define the households that will be surveyed in the EDAM; 11 (c) provide hands-on training for field personnel (including supervisors and enumerators) through a series of workshops; (d) program the questionnaire in a Computer Assisted Personal Interview format and pilot the survey; (e) interview and collect the data for the sample of selected households; (f) prepare the associated datasets with the information from the survey collected; and (g) prepare a welfare and poverty report describing the findings from the EDAM 2017. The datasets from the EDAM 2017 are expected to be made available publicly through the World Bank’s microdata catalog. The findings of the report will be disseminated, at least, through a presentation to stakeholders, line ministries and development partners. B. Project Cost and Financing Project Components Project cost Grant Financing % Financing 1. Djibouti Household Survey 2017 500,000 500,000 100% Total Baseline Costs Physical contingencies Price contingencies Total Project Costs 500,000 500,000 Interest During Implementation Front-End Fees Total Financing Required 500,000 500,000 IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 22. The activities will be implemented through an agreement between the Djiboutian Agency for Social Development (ADDS) and DISED. ADDS will be primarily responsible for the execution of the grant and fiduciary aspects, while DISED will be responsible for the technical aspects of the project, including providing data collection services. Through several discussions, it has been made clear to the team that a similar agreement has been successfully implemented by both entities in previous occasions, including the collection of data for the social registry of the World Bank project P158696, and even the EDAM 3 collected in 2012. B. Results Monitoring and Evaluation 23. A Results Framework &and Evaluation tool (annex 1) has been developed to track implementation progress and evaluate the achievement of the PDO. The framework contains 3 PDO level result indicators that will be monitored and reported on. 12 C. Sustainability 24. This grant is complemented by both BB and a Bank Executed Trust Fund (BETF) to ensure that the implementation is properly supervised and ongoing support is provided to the counterpart as needed. This support for complementary activities has already proven valuable in the definition of the EDAM 2017 questionnaire. Other support will be provided during the last stage of the sampling exercise, the programming of the questionnaire, and the development of poverty measurement and drafting of the final report. 25. There is strong support from the GoD to the project as the survey will represent a cornerstone of the statistical monitoring system in the country and help provide evidence for future policy discussions. The government, through the Ministry of Finance, has also indicated their commitment to the implementation of the project – with a letter of demand for support signed by the minister himself. V. KEY RISKS AND MITIGATION MEASURES 26. The overall risk of the implementation of this project is moderate. 27. The team is aware of two previous efforts to implement a RETF by DISED. First, the Capacity Building for the National Statistical Agency (TF056372), approved in 2006 and under a different administration. A second effort was the Statistical Capacity Building for Macroeconomic and Poverty Work (TF016559), approved in 2013. However, the counterpart did not sign the Grant Agreement and the project was dropped. For the currently proposed RETF, DISED staff may be unfamiliar with the whole process leading to delays in the implementation of the survey, and if activities are not concluded before the hot season (starting in June) or the start of the Ramadan (end of May), there is a risk that the survey would have to be significantly postponed. 28. The project will be implemented by the ADDS in collaboration with DISED. The latter will be responsible for the technical aspect of the project whereas the former will be responsible for the fiduciary aspects. A contract will be established between ADDS and DISED which will detail the execution arrangements and both parties roles and responsibilities. A diagnostic on ADDS’s Financial Management (FM) preparedness was conducted. The FM risk was assessed as moderate, but certain mitigation measures have been identified that would satisfy the minimum requirements under OP/BP 10.00 and maintain the risk level at moderate. An assessment of procurement for ADDS has also been completed. The ADDS will be the Implementing Agency for this project, and it will be in charge of administering the procurement procedures of the project. It will also ensure that the World Bank procurement regulations for Borrowers are implemented. ADDS has vast experience in implementing World Bank projects. The procurement staff is qualified and has competencies for handling World Bank procurement procedures. The procurement capacity assessment was carried out and certain risks were identified. Hence the “Moderate” risk rate. However, clear mitigation measures have been identified to help the smooth implementation of the project. 29. DISED has successfully conducted several nation-wide surveys that are similar in nature to what is currently being proposed. There is strong demand from DISED to conduct this survey as 13 DISED has demonstrated commitment to its successful implementation by working continuously with the WB team, sharing information on previous EDAM data collection strategies, and being open to ideas that would help improve their poverty monitoring systems. A potential implementation issue is that the EDAM 2017 will include the nomadic population for the first time. To be able to appropriately identify them on the field, the DISED has already engaged the Ministry of Agriculture to create a water point map and help identify the routes and concentration points that will maximize the probability of being able to survey them. The surveyor training is also expected to aim to sensitize the surveyors when interviewing the nomadic population. DISED has previously conducted surveys on other vulnerable populations such as those living in urban slums (most recently as part of the social registry for ADDS). The DISED has also recognized the need for technical assistance, and has already requested the World Bank's support for key features of the implementation. Currently there are funds available from Bank Budget (P156794) and a BETF (P158471) to provide technical support for the implementation of the EDAM 2017. 30. Systematic Operations Risk-rating tool Risk category Rating 1. Political and governance - 2. Macroeconomic - 3. Sector Strategies and Policies - 4. Technical Design of Project or Program M 5. Institutional Capacity for Implementation and Sustainability M 6. Fiduciary M 7. Environmental and Social - 8. Stakeholders - 9. Other - OVERALL M VI. APPRAISAL SUMMARY 31. Given the nature of the PDO of supporting the collection, analysis and dissemination of data from the Household Survey 2017, the standard calculation of economic rate of return is not directly applicable or relevant to this project. The benefits from the project are multiple, but cannot be easily assessed in monetary terms. The data and findings emanated from the survey are expected to inform the design of public policies and make them more efficient through the production of evidence on targeting effectiveness, efficient use of public resources and a reliable monitoring system of households’ welfare. Financial Management 32. The proposed Grant will be implemented in line with World Bank policies that are standard for project implementation, including the July 2016 “Procurement Framework”. The Djibouti Agency for Social Development (ADDS) is a public institution and will be responsible for project management, including financial management and accounting. The Financial Management (FM) 14 assessment conducted during appraisal found the FM risk, as a component of the fiduciary risk, is rated as Moderate. 33. A single segregated Designated Account (DA) in US Dollars will be opened at a commercial bank in Djibouti acceptable to the World Bank. Payments and withdrawal of eligible expenditures accompanied by supporting documents or statements of expenditure (SOE) for sums less than predefined thresholds for each expenditure category, following the applicable procedures and the World Bank's Disbursement Handbook. ADDS will be responsible for submitting replenishment requests on a monthly basis. All requests for withdrawals should be fully documented, maintained and made available for review by the Bank and project auditors. All disbursements will be subject to the terms of the Grant Agreement and to the procedures defined in the Disbursement Letter. 34. The general accounting principles for the project will be as follows: (a) project accounting will cover all sources and uses of project funds, including payments made and expenses incurred. Project accounting will be based on the cash basis of accounting; and (b) project transactions and activities will be separated from other activities undertaken by the ADDS. 35. The project financial reporting will include unaudited Interim Financial Reports (IFRs) and yearly Project Financial Statements (PFS): (a) IFRs should include data on the financial situation of the project. These reports should include: (i) a statement of funding sources and uses for the period covered and a cumulative figure, including a statement of the bank project account balances; (ii) a statement of use of funds by component and by expenditure category; (iii) a reconciliation statement for the DA; (iv) a budget analysis statement indicating forecasts and discrepancies relative to the actual budget; and (v) a comprehensive list of all fixed assets; (b) ADDS will produce the IFRs every quarter and submit to the Bank within 45 days at the end of each quarter. The annual PFS should include: (i) a cash flow statement; (ii) a closing statement of financial position; (iii) a statement of ongoing commitments; and (iv) an analysis of payments and withdrawals from the grant account. 36. ADDS will be responsible for preparing a simplified FM manual. The simplified FM manual will include a description of the fiduciary arrangements including financial management and accounting rules and procedures, specific internal control procedures, flow of information and funds for the project and each of its components. 37. The project financial statements will be audited by a private external auditor and will cover all aspects of the project, uses of funds and committed expenditures. The audit will also cover the financial operations, internal control and financial management systems and a comprehensive review of statement of expenditures. The audit report will include: (i) the auditor’s opinion on the project's annual financial statements; (ii) a management letter on the project internal controls; and (iii) a limited review opinion on the IFRs. The audit report will cover the entire life of the project or any other period specified by the Bank and will be submitted to the World Bank within six months from the end of such period. Procurement 15 38. The proposed Project will be implemented in line with the World Bank policies that are standard for project implementation. The procurement procedures will be conducted in conformity with the World Bank Procurement Regulations for IPF Borrowers for the Procurement of Goods, Works, Non-consulting and Consulting Services of July 2016. The Bank Guidelines on Fraud and Corruption, revised 2011 will also be applied to the Project. The procurement procedures will be administered by ADDS as the Implementing Agency for this Project and will ensure that the World Bank procurement regulations for Borrowers are implemented. ADDS has a vast experience in implementing the World Bank projects. The Procurement staff is qualified and has competencies for handling World Bank procurement procedures. 39. The risk assessment rate of procurement activities is evaluated to be “Moderate”. However, clear mitigation measures have been identified that will help the smooth implementation of the project (annex 2). A. Other Safeguards Policies Triggered 40. This project does not trigger any safeguards policies. B. World Bank Grievance Redress 41. 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. 16 Annex 1: Results Framework and Monitoring Republic of Djibouti Djibouti Household Survey 2017 Project Development Objective (PDO): The PDO is to support the Department of Statistics and Demographic Studies (DISED) to collect, analyze and disseminate data emanating from the Household Survey for Social Indicators (Enquete Djiboutienne Aupres de Menages - EDAM) 2017. Cumulative Target Values** Responsibility Description (indicator Core Unit of Data Source/ PDO Level Results Indicators* Baseline Frequency for Data definition etc.) Measure 2017 2018 Methodology Collection Successful completion of the Communication with 2017 Djibouti Household Yes/No No Yes Yes Upon completion DISED and EDAM DISED n/a Survey project manager Publication of the Welfare and Report presenting analysis and Poverty Analysis Report findings using the 2017 Communication with Djibouti Household survey Yes/No No No Yes Upon completion DISED and EDAM DISED data, including the project manager methodology to measure welfare and poverty Archiving the 2017 Djibouti Metadata and microdata Household Survey in the World associated with the 2017 Bank Microdata Catalog Yes/No No No Yes Upon completion Microdata Library DISED Djibouti Household Survey are archived in the World Bank Microdata Catalog INTERMEDIATE RESULTS Intermediate Result (Component One): Djibouti Household Survey 2017 Communication with Sampling framework and strategy Yes/No No Yes Yes Upon completion DISED and EDAM DISED n/a for the EDAM project manager Development of the EDAM 2017 Communication with questionnaire in a Computer Yes/No No Yes Yes Upon completion DISED and EDAM DISED n/a Assisted Personal Interview project manager format Training workshops for EDAM Communication with field personnel Number 0 1 1 Upon completion DISED and EDAM DISED n/a project manager Stakeholder meetings with the line Communication with ministries and development Number 0 1 1 Upon completion DISED and EDAM DISED n/a partners project manager *Please indicate whether the indicator is a Core Sector Indicator (see further http://coreindicators) **Target values should be entered for the years data will be available, not necessarily annually 17 Annex 2: Implementation Arrangements REPUBLIC OF DJIBOUTI: Djibouti Household Survey 2017 Project Institutional and Implementation Arrangements 1. Project administration mechanism: The project will be implemented by the ADDS in collaboration with DISED. The latter will be responsible for the technical aspect of the project whereas the former will be responsible for the fiduciary aspects. A contract will be established between ADDS and DISED which will detail the execution arrangements and both parties ’ roles and responsibilities. 2. The PMO will include staff from ADDS and DISED and will be responsible for the day-to- day implementation of the project. Financial Management, Disbursements and Procurement Financial Management 3. The project will be implemented by the Djibouti Agency for Social Development (ADDS) in collaboration with the Statistical Agency (DISED). The later will be responsible for the technical aspect of the project whereas the former will be responsible for the fiduciary aspects. A contract will be established between ADDS and DISED which will detail the execution arrangements and both parties roles and responsibilities. 4. ADDS Financial Management Assessment was conducted by the Bank FM team. Based on the assessment the FM risk (as part of the fiduciary risk) is assessed as Moderate. 5. ADDS will need to incorporate the below measures in order to satisfy the minimum requirements under OP/BP 10.00 and maintain the risk level at Moderate: (a) Staffing: ADDS will mobilize from its own staff or recruit an accountant to handle the FM aspects of the project. The accountant will be responsible for preparing the withdrawal applications, recording the daily transactions and preparing the quarterly financial reports in addition to the yearly financial statements. The World Bank will provide the necessary training and capacity building related to FM procedures if needed. (b) Accounting System and Reporting: For the purpose of the grant, a ring fenced accounting system will be adopted where excel spreadsheets will be used to generate the required Project Interim Un-audited Financial Reports (IFRs). The documentation and supporting documents shall be maintained at ADDS and DISED for subsequent review and audit. The Project IFRs will be prepared on a quarterly basis and will be submitted to the Bank within 45 days at the end of each quarter. (c) Internal Controls: ADDS will prepare a simplified FM manual. The simplified FM manual will include a description of the fiduciary arrangements including financial management and accounting rules and procedures, specific internal control procedures, flow of information and funds for the project and each of its components. 18 (d) Disbursements and Flow of Funds: ADDS will open a separate Designated Accounts (DA) in USD to receive the Grant proceeds. The proceeds of the Grant will be disbursed in accordance with the Bank's disbursements guidelines as outlined in the Disbursement letter. (e) Budgeting: ADDS will prepare an annual budget in addition to a periodical disbursement plan. The annual budget and the disbursement plan will be divided on a monthly basis. The disbursement plan will be monitored quarterly and will be updated as needed. (f) Auditing: An external independent auditor acceptable to the Bank, financed by the Grant, will be engaged by ADDS to carry out the Project audit in accordance with international standards of auditing, issue the required independent opinion, and prepare the management letter. The audit report and management letter covering the entire life of the project or any other period specified by the Bank will be submitted by ADDS to the Bank no later than six months after the end of such period. ADDS will be responsible for preparing the TORs for the auditor and submitting them to the Bank for clearance. The auditor will be requested also to provide an opinion on the Project’s effectiveness of internal control system. According to the World Bank Policy on access to Information issued on July 1, 2010, the audit report with audited financial statements of the Project will be made available to the Public. Proposed Disbursement Arrangements 6. The project would be financed through the multi-donor trust fund for statistical capacity building which is administered by the World Bank. There is no multi- or bilateral agencies co- financing this project. The project cost is estimated at US$ 500,000. 7. Method of Disbursement: The following disbursement methods may be used under the Grant: 1) Reimbursement 2) Advance 3) Direct payment The Grant categories are divided as follows: Category Amount of the Grant Percentage of Allocated Expenditures to be Financed (expressed in USD) (Inclusive of Taxes) (1) Goods, consultants’ 500,000 100% services, training and audit under the Project TOTAL AMOUNT 500,000 8. Designated Account. To ensure that funds are readily available for Project implementation, a U.S. Dollar Designated Accounts (DA) will be opened in the name of the project with a ceiling of US$ 200,000. Authorized signatories, names and corresponding specimens of their signatures would be submitted to the Bank prior to the receipt of the first Withdrawal Application. Deposits 19 into and payments from the DA will be made in accordance with the disbursement letter and Bank Disbursement Guidelines. Monthly reconciliations for the Designated Accounts will be prepared by ADDS and copies of reconciliations of will be sent to the World Bank together with the IFRs. 9. The proceeds of the Grant will be disbursed in accordance with the Bank's disbursements guidelines as outlined in the Disbursement letter and in accordance with the Bank Disbursement Guidelines for projects. Transaction based disbursement will be used under this project. Accordingly, requests for payments from the Grant will be initiated through the use of withdrawal applications (WAs) either for Advances, Direct Payments and Reimbursements to the Designated Account. All WAs will include appropriate supporting documentation including detailed SOEs for reimbursements and replenishments to the DA. 10. For requests for Reimbursement. Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments made under contracts costing US$ 100,000 per contract or more; Statement of Expenditure in the form attached for all expenditures; List of payments against contracts that are subject to the World Bank's prior review. 11. For reporting eligible expenditures paid from the Designated Account. Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments made under contracts costing US$ 50,000 per contract or more; Statement of Expenditure (SOE) for all expenditures; List of payments against contracts that are subject to the World Bank's prior review in; a copy of the Designated Account Bank Statement. 12. For requests for Direct Payment: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices. 13. Governance and Anti-Corruption (GAC). Fraud and corruption may affect the Project resources, thus impact negatively the Project outcomes. The World Bank FMS worked closely with Project’s Task Team Leader (TTL) as well as Procurement Specialist and developed with the team an integrated understanding of possible vulnerabilities and agreed on actions to mitigate the risks. The above proposed fiduciary arrangements, including financial management manual, reporting and auditing arrangements are expected to address the risk of fraud and corruption that are likely to have a material impact on the Project outcomes. The team agreed on arranging combined FM and procurement supervision and continues discussion of Project implementation. 14. Supervision Plan. The financial management of the Project will be supervised by the Bank in conjunction with its overall supervision of the Project and conducted at least twice a year. 15. Supporting Documentation and Record Keeping. All supporting documentation was obtained to support the conclusions recorded in the FMAR. Procurement 16. The proposed Project will be implemented in line with the World Bank policies that are standard for project implementation. 20 17. The procurement procedures will be conducted in conformity with the World Bank Procurement Regulations for IPF Borrowers for the Procurement of Goods, Works, Non- consulting and Consulting Services of July 2016. The Bank Guidelines on Fraud and Corruption, revised 2011 will also be applied to the Project. 18. The procurement procedures will be administered by ADDS as the Implementing Agency for this Project and will ensure that the World Bank procurement regulations for Borrowers are implemented. ADDS has a vast experience in implementing the World Bank projects. The Procurement staff is qualified and has competencies for handling World Bank procurement procedures. 19. A procurement capacity assessment was carried out and found out that the main procurement risks related to the Project would be: (a) Potential delays in procurement processes and configuration for the tablets to be used during the survey; (b) Potential delays in selection of survey staff (field coordinators, facilitators, enumerators, etc); (c) Delays may also occur in payment for the services rendered by the staff due to potential delay in justifying the use of funds already received before requesting the next installment. (d) Risk of improper procurement implementation due to unfamiliarity of 20. The ADDS staff on the Procurement Regulations for IPF Borrowers for the Procurement of Goods, Works, Non-consulting and Consulting Services of July 2016. 21. The following mitigation measures are proposed to smoothly implement the Project: (a) ADDS, as a well-established institution with experience in handling similar projects and which is familiar with the World Bank procurement procedures will implement the Project in terms of fiduciary management and procurement of the materials to be used during the survey; such as tablets and office stationary. DISED will carry out the recruitment of survey staff and assure the survey activities are conducted and will produce outputs/deliverables including the final results of the survey to ADDS and to the World Bank. A partnership convention that defines the responsibilities of each institution will be signed between both institutions. (b) The designed ADDS PIU procurement staff will handle the bids/proposals’ evaluation and support the DISED Evaluation committee during selection of survey staff and production of the selection/evaluation reports as well as assisting in contracts management. All the procurement proceedings under the Project would be carried out in collaboration with DISED staff. For instance, for the purchase of tablets, DISED will provide to ADDS the technical specifications or characteristics of items required. (c) Following the World Bank new regulations on procurement, the PIU staff involved in the Project implementation, mainly the Procurement staff and the Project Coordinator, will be trained at the early stage of Project on the new procurement Regulations for IPF Borrowers (d) To provide advice and assistance on a regular basis by the Bank’s Procurement Specialist. 22. An initial Procurement Plan for the Project will be prepared by the Project Implementation Unit (PIU) in collaboration with DISED staff and it will be agreed between the Government and the Bank during negotiations. 21 Environmental and Social (including safeguards) 23. This project does not trigger any safeguards policies. Monitoring & Evaluation 24. A Monitoring and Evaluation (annex 1) has been developed to track implementation progress and evaluate the achievement of the PDO. The framework contains 3 PDO level result indicators that will be monitored and reported. The data is expected to be made available through frequent communication with the implementing unit as well as DISED. The team has secured resources to closely supervise the implementation of the survey and data collection, as well as providing technical assistance for the indicators to be produced in a timely manner. 22