The World Bank KP Southern Area Development Project (P130835) REPORT NO.: RES26634 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF KP SOUTHERN AREA DEVELOPMENT PROJECT APPROVED ON JANUARY 11, 2013 TO ECONOMIC AFFAIRS DIVISION AGRICULTURE (GFA06) SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Patchamuthu Illangovan Senior Global Practice Director: Juergen Voegele Practice Manager/Manager: Loraine Ronchi Task Team Leader: Maha Ahmed, Bremala Malli The World Bank KP Southern Area Development Project (P130835) ABBREVIATIONS AND ACRONYMS CAP Community Action Plans CBO Community Based Organizations CDD Community Driven Development CDI Community Driven Investment CDS Community Development Support DIK Dera Ismail Khan DIU District Implementation Units EIG Economic Interest Groups FCV Fragility, Conflict and Violence KP Khyber Pakhtunkhwa MDTF Multi-Donor Trust Fund M&E Monitoring and Evaluation OBT Office Bearer Trainings PCNA Post Crisis Needs Assessment PDO Project Development Objective PMU Project Management Unit RVP Regional Vice President SADP Southern Area Development Project TPMA Third Party Monitoring Agent The World Bank KP Southern Area Development Project (P130835) BASIC DATA Product Information Project ID Financing Instrument P130835 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 11-Jan-2013 31-Dec-2018 Organizations Borrower Responsible Agency KP SADP PMU - Local Government, Elections & Rural Economic Affairs Division Development Department Project Development Objective (PDO) Original PDO To strengthen the capacity of the poor to improve their livelihood options through access to social and productive infrastructure using participatory approaches in the selected southern districts of Khyber Pakhtunkhwa province. i.e. Dera Ismail Khan (DIK), Tank and Lakki Marwat that are adversely affected by the crisis. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-13560 06-Feb-2013 06-Feb-2013 06-Feb-2013 31-Dec-2018 22.00 16.13 5.87 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank KP Southern Area Development Project (P130835) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Southern Area Development Project (SADP) is a well performing community driven development (CDD) operation, targeting one of the poorest parts of Pakistan in a fragility, conflict and violence (FCV) affected area that covers three districts in the Southern part of Khyber Pakhtunkhwa (KP) Province. By the end of 2016, implementation progress was on an upward trajectory, exceeding targets for 4 out of 6 indicators (including one PDO level indicator). These included the number of project beneficiaries, Community Action Plans (CAP) approved, CAP completion rate, and CAP disbursement rate. As a result, the project was last restructured in March 2017 to: (a) extend the closing date by 21 months to December 31, 2018; (b) increase the grant amount by US$4 million, to a total of US$22 million; and (c) revise indicator targets upwards, as well as expand the number of project development objective (PDO)- and intermediate-level indicators. 2. Since 2017, implementation has slowed, due largely to weak project management, fragility in the area and security threats in two out of the three districts where the project is operational. Further delays in activities were due to the nationwide general elections that were held in July 2018, for which the Election Commission of Pakistan stopped all development projects, including SADP, for several months. 3. As of October 2018, the project has disbursed US $16.13M out of the total Grant amount of US $22M (or 73.3%) and utilized US$ 9.2 million (or 42%). Implementation Status and Results (ISR) Report ratings over the past year have consistently rated progress towards achievement of the PDO and implementation progress as “Moderately Satisfactory”. Furthermore, there are no overdue audit reports. 4. The Grant is comprised of three components and the status is provided for each below: a) Component 1: Community Development Support (CDS) (US $1.6 million). i. Facilitation includes the recruitment and training of facilitators for the provision of guidance to Economic Interest Groups (EIGs) and Community Based Organizations (CBOs) in relation to social mobilization, capacity building, and community planning through inclusive, transparent and participatory planning processes leading to the development of CAPs. As of November 2018, the project has formed 1,292 (99.3%) CBOs against a target of 1,300. Of these, 40% are female groups. Since inception, the project has delivered 40 Office Bearer Trainings (OBTs), of which 13 OBTs were for females. A total of 1,020 office bearers were trained to run and sustain the CBOs/EIGs, of which 272 members were female. With their assistance, a total of 951 CAPs were formulated, of which approximately 53% were prepared by female CBOs. Despite this progress, only 320 CAPs have been completed while an additional 47 CAPs are under implementation, implying almost 600 CAPs have yet to be implemented, primarily due to slow decision making and lack of coordination between the project management unit (PMU) and district implementation units (DIUs). ii. Advisory Services and Input Support. This component includes provision of advisory services for crop and livestock management (both on-farm and off-farm), input support, adoption of new technology to enhance capacity to purchase inputs, to farming and post-production processing to EIGs and CBOs, capacity building to facilitate access to such advisory services and input support, participatory planning, and operations and maintenance of subprojects, and economic mobilization of EIGS/CBOs for enterprise development. The World Bank KP Southern Area Development Project (P130835) iii. Communications and Knowledge for local communities and other stakeholders. b) Component 2: Community Driven Investment Programme (CDI) (US $16 million). i. B1 – Social Infrastructure (US $7 million), including rehabilitation, rebuilding, and improvement of social infrastructure, such as schools, feeder roads, culverts, bridges, drifts, stock trading routes, boreholes, community health facilities, potable water supply facilities, rural electrification, and community water storage tanks, on the basis of CAPs. ii. B2 – Productive Infrastructure (US $7.4 million), including the establishment of small-scale productive physical and socioeconomic infrastructure, income-earning assets, and extension service-type activities, based on collective demand, all principally in the agriculture and livestock sectors, employment generation for youth and promoting sustainable livelihoods. Since 2017, weak project management resulting from a concomitant high turnover of project staff, and lack of coordination between the PMU and DIUs have slowed decisions, resulting in delays in completion of infrastructure schemes and the release of final instalments to community groups after completion. iii. B3 – Asset Building for Ultra-Poor (US $1.6 million) includes the provision of emergency assistance to the ultra- poor and the vulnerable for the purposes of lost assets, such as shelter or income sources (livestock, poultry, etc.), and rejoining economic activity. Ultra-poor and vulnerable are identified by the communities through the CAPs, however, the project has further specified nine categories of vulnerable individuals who will be prioritized through these activities. c) Component 3: Program Implementation Support (US $4.4 million) includes project management, development of a communications strategy, a governance and accountability framework, and a project monitoring and evaluation system, exploration of introduction of new or innovative approaches to community-government partnerships, minor repairs to district offices in participating districts, and capacity building of project staff for the purpose of project implementation. The project currently does not have a comprehensive M&E system covering all indicators, data collection forms, frequency of data collection and the reporting protocols. As a result, data collection, analysis and reporting on progress and process indicators are not consistent and systematic. B. Rationale for Restructuring 5. The provincial Government is very committed to SADP, and considers it is an important project with a proven delivery model with a significant potential for development impact. The Government has, therefore, recently taken actions to improve project management, replacing the project director while recruitment for key vacant positions is underway to speed up implementation. A review committee led by the Director General Local Government has been set up in the Local Government Department to regularly monitor the project performance and to improve coordination between the PMU and DIUs. In addition, Provincial Planning and Development Department has designated the Director General Post Crisis Needs Assessment (PCNA) for overall project coordination with the World Bank and Federal Government. 6. The Bank task team is paying close attention to the project with quarterly updates on the results framework. An independent fiduciary review has been carried out to improve fiduciary arrangements including the project hiring the services of an independent audit firm for internal audit firm. A Third-Party Monitoring Agent (TPMA), hired by the Bank for all Multi-Donor Trust Fund (MDTF) Grant projects, visits the project beneficiaries on a quarterly basis. The TPMA finds project implementation to date is satisfactory. 7. With many of the implementation issues therefore addressed, the project is well set to achieve its significant outreach in a fragile and challenging environment. With the project about to close, however, and $5.87 million remaining undisbursed, the grant will be in jeopardy of not achieving its PDO, which it is fully capable of doing with an extension. The World Bank KP Southern Area Development Project (P130835) The delays suffered are largely due to the risks inherent to operating in an FCV environment, while recent implementation weaknesses have been addressed with commitment and energy from the government as well. 8. It is important to note that of all the projects being implemented in the province, SADP has the distinction of having reached the largest proportion of female beneficiaries (over 47%). With its emphasis on livelihoods promotion and provision of social infrastructure in a remote area, the project has been prioritized by the Government to restore citizen’s trust in the state by addressing the emerging needs of the area. Consequently, the Government has requested the Bank to extend the project closing date. 9. Due to fragility, poor law and order, and limited accessibility, a no-cost extension of 18 months is proposed to strengthen local community institutions, develop and execute remaining CAPs and fully deliver the CDI program with special emphasis on women and youth. II. DESCRIPTION OF PROPOSED CHANGES C. Proposed Changes 10. Extension of closing date. The project became effective on February 6, 2013 with an initial implementation period of approximately 2 years and 4 months, to June 30, 2015. The Grant was subsequently extended a total of six (6) times due to the timing of the decision to extend the overall MDTF program (Trustee Account extension) that funds this project, including one Level 2 Restructuring in March 2017, which included a cumulative 21-month extension from March 31, 2017 to the current closing date of December 31, 2018, bringing the total extension period to 3.5 years. With the proposed 12- month extension, the cumulative extension period would be four and half (4.5) years. 11. Implementation Schedule. The SADP PMU staff have prepared a consolidated work plan for the proposed extension period (to December 31, 2019), which has been reviewed by the Bank and is broadly acceptable. Furthermore, the Bank team confirms through its review of the plan and budget that implementation arrangements will not change during the proposed extension period. A 12-month no cost extension is requested to get the project back on track to strengthen local community institutions, develop and execute remaining community action plans and fully deliver the community driven investment program with special emphasis on women and youth. Although the risks remain high, the PDO and results would be achievable with an extension of the proposed duration. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ The World Bank KP Southern Area Development Project (P130835) Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-Oct-2015, 12- Dec-2015, 30-Jun- TF-13560 Effective 30-Jun-2015 2016, 31-Dec-2016, 31-Dec-2019 30-Apr-2020 31-Mar-2017, 31- Dec-2018 . The World Bank KP Southern Area Development Project (P130835)