43558 Authorized INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE Disclosure I. Basic Information Date prepared/updated: 11/02/2006 Report No.: AC2348 Public 1. Basic Project Data Country: China Project ID: P096285 Project Name: Micro and Small Enterprise Finance Project Task Team Leader: Jun Wang Estimated Appraisal Date: October 30, Estimated Board Date: February 12, 2007 2006 Authorized Managing Unit: EASFP Lending Instrument: Financial Intermediary Loan Sector: Micro- and SME finance (90%);Banking (10%) Disclosure Theme: Small and medium enterprise support (P) IBRD Amount (US$m.): 100.00 Public IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER 0.00 GERMANY: KREDITANSTALT FUR WIEDERAUFBAU (KFW) 53.78 Authorized BORROWING COUNTRY'S FIN. INTERMEDIARY/IES 4,391.92 4,445.70 Environmental Category: F - Financial Intermediary Assessment Simplified Processing Simple [] Repeater [] Disclosure Is this project processed under OP 8.50 (Emergency Recovery) Yes [ ] No [X] Public 2. Project Objectives The objective of the MSE Finance Project is to assist the Borrower in strengthening the institutional and human resource capacity of the PFIs in the provision of commercially sustainable MSE lending with massive outreach. 3. Project Description The project will establish CDB as an MSE finance wholesaler engaged in lending to, and Authorized arranging technical support for, PFIs. The project consists of two closely linked components: (i) a Credit Facility of US$ 90 million for on-lending to eligible PFIs; and (ii) a Technical Assistance (TA) Facility of up to US$ 10 million to support capacity building and MSE subloan administration in the PFIs. Disclosure 4. Project Location and salient physical characteristics relevant to the safeguard Public analysis The project is not location specific and is expected to cover micro and small businesses in urban and peri-urban areas. 5. Environmental and Social Safeguards Specialists Mr Songling Yao (EASSD) 6. Safeguard Policies Triggered 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 Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: With determined selection criteria, the project will provide funds for micro and small enterprise which include no land-related issues and result in minor environmental impacts. So there is no potentially large scale, significant impacts. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: No. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. The project is Category FI project, which consists of a great number of micro and small subprojects. These subprojects will be chosen also according to an agreed environmental framework, so that adverse of environmental and social impacts will be avoided or minimized. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. A sound environmental framework for the selection, preparation and implementation of all subprojects under the project has been developed and accepted by both the TT and the CDB. The Framework includes such components as i) Applicable Laws, Policies on Environment; ii) Environmental Screening of Subprojects; iii) Environmental Assessment Institutions and Responsibilities; iv) Procedures of Environmental Screening; v) Environmental Management: Training, Supervision and Monitoring, as well as Reporting. Based on assessment of the CDB capacity, the Framework proposed an environmental management system within the project: i) Environmental Management Group (EMG) of CDB, consisting of 3 personnel, one director assigned by the CDB and 2 environmental consultants (to be selected out of a short list with no objection from the Bank); and ii) an EMG in the PFI, consisting of 2-3 personnel, one head assigned by the PFI and 1-2 environmental consultants (ratified by EMG/CDB). However, it is agreed that an EMG at the PFI level will not be mandatory. A PFI can choose between setting up an EMG with participation from outside, independent EA experts, and designating a senior manager in charge of EA issues. In the latter case, the designated environmental manager will have unfettered access to the expert advice of a qualified EA expert, to be engaged by the PFI. CDB will assume overall responsibility for the environmental soundness of the MSE finance project and take all necessary measures to ensure that PFIs put in place adequate policies, procedures, organizations, and staffing, to comply with Chinese laws and regulations on environmental protection. The environmental due diligence measures will be incorporated in cooperation agreement with PFIs and integrated in the entire credit process. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The stakeholders of the project mainly include the PFIs and urban and peri-urban MSEs. The MSEs cannot be identified at this stage nor can the sub-projects to be financed. The Framework will be distributed among the PFIs, MSEs and be available on the Website of the CDB. Other stakeholders include the SEPA at the national level and EPBs at the local level. CDB and PFIs are required to communicate closely with these environmental authorities to seek their guidance and cooperation in enforcing the environmental laws and regulations, while making every effort to ensure the sustainability of the MSE finance project. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Date of receipt by the Bank 08/07/2006 Date of "in-country" disclosure 09/29/2006 Date of submission to InfoShop 10/23/2006 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? Yes If yes, then did the Regional Environment Unit or Sector Manager (SM) Yes review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the Yes credit/loan? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's No Infoshop? Have relevant documents been disclosed in-country in a public place in a No form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities Yes been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project Yes cost? Does the Monitoring and Evaluation system of the project include the Yes monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the Yes borrower and the same been adequately reflected in the project legal documents? D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Jun Wang 10/17/2006 Environmental Specialist: Mr Songling Yao 11/01/2006 Social Development Specialist Mr Songling Yao 11/01/2006 Additional Environmental and/or Social Development Specialist(s): Approved by: Sector Manager: Mr Tunc Tahsin Uyanik 11/02/2006 Comments: The data sheet was approved by a separate email message on 11/01/2006.