75993 v1 Document of The World Bank FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ETHIOPIA SUSTAINABLE TOURISM DEVELOPMENT PROJECT CREDIT NO. 4624-ET BOARD APPROVAL DATE; 30 JUNE 2009 TO THE FEDERAL DEMOCRATIC REPPUBLIC OF ETHIOPIA March 8, 2013 FINANCE AND PRIVATE SECTOR DEVELOPMENT AFTFE 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. Restructuring Status: Draft Restructuring Type: Level two Last modified on date : 03/08/2013 1. Basic Information Project ID & Name P098132: ET-Tourism Develop. Project SIL Country Ethiopia Task Team Leader Hannah R. Messerli Sector Manager/Director Irina Astrakhan Country Director Guang Zhe Chen Original Board Approval Date 06/30/2009 Original Closing Date: 12/30/2014 Current Closing Date 12/30/2014 Proposed Closing Date [if applicable] EA Category B-Partial Assessment Revised EA Category B-Partial Assessment-Partial Assessment EA Completion Date 12/31/2008 Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised BORR 1.50 1.50 IDA 35.00 35.00 OLBC 3.00 3.00 Total 39.50 39.50 3. Borrower Organization Department Location Ministry of Culture and Tourism Ethiopia 4. Implementing Agency Organization Department Location 2 5. Disbursement Estimates (US$m) Actual amount disbursed as of 03/08/2013 8.49 Fiscal Year Annual Cumulative 2013 2.22 10.71 2014 20.86 31.57 2015 3.43 35.00 Total 35.00 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured project trigger any new safeguard policies? If yes, please select from N the checklist below and update ISDS accordingly before submitting the package. Safeguard Policy Last Rating Proposed Environmental Assessment (OP 4.01) X Natural Habitats (OP 4.04) Forestry (OP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP 4.11) X Indigenous Peoples (OP 4.10) Involuntary Resettlement (OP 4.12) X Safety of Dams (OP 4.37) Projects in International Waterways (OP 7.50) Projects in Disputed Areas (OP 7.60) 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The project development objective is to enhance the quality and variety of tourism products and services in targeted destinations so as to increase the volume of tourism, foreign exchange, earnings and jobs. The implementation of the project will yield the following key outcomes, particularly in key destinations: (i) an increase of annual international visitors; (ii) increased average spending by visitors translating into higher foreign exchange earnings; and (iii) an increased number of direct and indirect tourism-related jobs. 7b. Revised Project Development Objectives/Outcomes [if applicable] N/A 3 Reallocation of Proceeds _______________________________________________________________________ ETHIOPIA SUSTAINABLE TOURISM DEVELOPMENT PROJCET P098132 CREDIT NO. 4624-ET Restructuring Paper 1. Proceeds for Ethiopia: Ethiopia Sustainable Tourism Development Project (Credit No. 4624-ET, P098132) will be reallocated as follow: CURRENT REVISED CURRENT REVISED % OF FINANCING CATEGORY BUDGET BUDGET BUDGET BUDGET (SDR) (SDR) (US$) (US$) CURRENT REVISED SERVICE 5.20 2.58 7.67 3.82 100 % 100% GOODS 1.40 2.89 2.22 4.28 100% 100% WORKS 9.60 10.67 14.29 15.83 100% 100% TRAINING 1.50 1.34 2.27 1.99 100% 100% MATCHING GRANT SCHEME 2.00 1.48 3.00 2.20 100% 100% OPERATING COST 1.10 2.14 1.37 3.18 100% 100% PROJECT PREPARATION FACILITY 0.50 0.20 0.70 0.29 UNALLOCATED 2.30 2.30 3.48 3.41 TOTAL 23.60 23.60 35.00 35.00 2. Project implementation progress. The project has been effective since 25 February 2010 but was under partial suspension (Component 1) due to noncompliance in Lalibela with the Bank’s Safeguard Policies. The partial suspension was lifted on 27 June 2012. In addition, the project experienced extensive delays in finalizing the consultancy service for the development of a marketing strategy and baseline study; a steep learning curve in procurement processes; lengthy development of the marketing and promotional materials for the Matching Grant Scheme; and unusually high turnover of project staff. Since the lifting of the suspension, there has been good progress in the design consultancies and over US$ 9 million in works has been committed under Component 1 (Destination Development). This will support substantial infrastructure improvements in both Axum and Lalibela. In the other components, the Matching Grant Scheme has received 56 proposals from the private sector, which is 93% of the original targeted 60 beneficiaries. The disbursement rate of the project is 21.75% as of February 25, 2013. 3. Reasons for the proposed reallocation The proposed reallocation is found to be necessary to streamline the project activities to a more focused and realistic target and reallocate resources to meet the project’s development objectives by the closing date of 31 December 2014. This will enable achievement of the PDO and improved disbursements given the current status of the tourism sector in the country and as a result of the impact of the partial suspension on the project. Adjusting the outcome indicators of the project is also essential to have a better mechanism for tracking the project outcomes and to make sure that the financial utilization of the project is going to be satisfactory at the end of the project life. The proposed reallocation includes an increase in works (from USD 14.29 to USD 15.83) and goods (from USD 2.22 to USD 4.28) to enable and better reflect current costs for efforts in these two categories in each of the targeted destinations. The reallocation also better reflects the realities of PCU and SMU operations and project implementation, underestimated throughout this project. Finally, the reallocation supports the implementation of the Resettlement Action Plan including drawing upon some of the unallocated funds. 5 Annex 1 Table of the Outcome Indicators The updated Results Framework is as follows: Project Development Objective (PDO): To enhance the quality and variety of tourism products and services in targeted destinations so as to increase the volume of tourism, foreign exchange earnings, and jobs Revised Project Development Objective: n.a. D=Drop Cumulative Target Values** ped Resp C=Cont Unit Data onsibl Source1/ Core PDO Level Results inue of Baseli Y e for Indicators* YR YR YR YR Frequency N= New Measu ne R Method Data 1 3 4 5 re 2 ology Colle R=Revise ction d Indicator One: R % Axum 23 Annual Baseline: PCU Average annual : 19% % (before end Baseline increase of the number of 2013 and survey Lalibe 33 of international visitors in the targeted la: % of 2014) dated destinations of Axum 27% October and Lalibela 2012 2013 reporting : Interim impact survey 2014 reporting : End- project Impact Assessm ent survey Indicator Two: R USD $310 $35 Annual Baseline: PCU Increase of average 0 (before end Baseline foreign currency of 2013 and survey spending per international tourist per of 2014) dated day in all the three October targeted destinations of 2012 Addis/Environs, Axum 2013 and Lalibela reporting 1 The information from the Project Coordination Unit is based on an extensive review done by an external consultancy drawing upon multiple sources of data from the public and private sectors. 6 : Interim impact survey 2014 reporting : End- project Impact Assessm ent survey Indicator Three: R No. Axum 580 Baseline: PCU Number of jobs created : Baseline in tourism-related 440 survey industries in the targeted destinations of Lalibe 860 dated Axum and Lalibela la: October 650 2012 2013 reporting : Interim impact survey 2014 reporting : End- project Impact Assessm ent survey INTERMEDIATE RESULTS Intermediate Result Component One – Destination Development: C1.1: Heritage sites in targeted destinations rehabilitated and basic infrastructure enhanced C1.2.1: Enhanced visitor centers in targeted destinations in operation C1.2.2: Increased cultural offerings in targeted destinations C1.3: Tourism products improved at emerging destinations Revised Intermediate Result Component One – Destination Development: C1.2.2 is dropped As part of the MTR process, C1.3 is revised as follows - Tourism product development plans developed in secondary (emerging) destinations Intermediate Result R No. None =/> 6 Semi- PCU PCU indicator C1.1: annual Quarterly, a) Number of historic Semi- monuments/ sites rehabilitated in annual all the three targeted and destinations Annual (Addis/Environs, project Axum and Lalibela) reports b)Kilometers of R No. None =/> 4 access/town roads km rehabilitated 7 Intermediate Result R No. None =/> 3 Semi- PCU PCU indicator C1.2: annual Quarterly, Number of visitor Semi- service centers established and staffed annual in all the three targeted and destinations of Annual Addis/Environs, Axum project and Lalibela reports Intermediate Result D Semi- PCU PCU indicator C1.2.2: annual Quarterly, Number of trails with Semi- signage in selected destinations annual and Annual project reports R No. None =/> 3 Semi- PCU PCU Intermediate Result annual Quarterly, indicator C1.3: Semi- Number of tourism annual product development and plans prepared in Annual secondary destinations project reports Intermediate Result Component Two – Market Development: C2.1.1: Branding and marketing strategies to attract specific target segments and markets developed and implemented C2.1.2. Efficient and informative e-travel platform and online booking developed and operational C2.2.1. Matching grant scheme to support private sector operations innovation C2.2.2. Community-based products and services diversified and improved Revised Intermediate Result Component Two – Market Development: C2.1.1 is revised as follows: Marketing and promotion strategies to attract specific target segments and markets developed and adopted by main stakeholders C2.1.2 is dropped C2.2.1 is revised as follows: A matching grant scheme to support private sector innovations established and utilized C2.2.2 is revised as follows: Community-based and tourism-related business ventures established Intermediate Result R No. None =/> 3 Semi- PCU PCU indicator C2.1: annual Quarterl Number of marketing y, Semi- and promotion strategies adopted with annual at least 3 international and tourism market Annual segments project reports Intermediate Result D indicator C2.1.2: Number of independent SME travel service providers using e-travel platform Intermediate Result R No. None =/> Semi- PCU PCU indicator C2.2: 50 annual Quarterl Number of beneficiary y, Semi- 8 firms utilized the annual matching grant and financing Annual project reports R No. None =/> Semi- PCU PCU Intermediate Result 45 annual Quarterl indicator C2.2.2: y, Semi- Number of community- annual based and tourism- and related business Annual ventures established project reports Intermediate Result Component Three – Institutional Development and Capacity Building: C3.1: Capacity of the Ministry of Culture and Tourism expanded and strengthened C3.2: Management capacity and professionalism of the tourism sector strengthened Revised Intermediate Result Component Three – Institutional Development and Capacity Building: C3.1 is revised as follows: “Government capacity for overall tourism development enhanced at all administrative levels� C3.2 is revised as follows: “Private sector operational and professional capacity enhanced� Intermediate Result R No. None =/> Semi- PCU PCU indicator C3.1: 1 annual Quarterly, a) A strategy with a Semi- detailed 3 – 5 year action plan to support annual the implementation and of the national Annual tourism strategy project developed reports b)A lodging grading R No. None =/> regime compatible to 1 international standards developed and pilot tested c) A national tourism R No. None =/> statistics system 1 upgraded that is capable of capturing basic tourism indicators upgraded 9 Intermediate Result R No. None =/> Semi- PCU PCU indicator C3.2: 40 annual Quarterly, a) Number of Semi- instructors/ annual and trainers trained on Annual training curricula project developed under the reports project at vocational schools b) Number of R No. None =/> people in the 200 tourism industry trained in Addis/Environs, Axum and Lalibela World Bank core indicators: Direct project N No. 500 Semi- PCU PCU beneficiaries annua Quarterly, l Semi- annual and Annual project reports Of which female N No. 100 Semi- PCU PCU beneficiaries annua Quarterly, l Semi- annual and Annual project reports 10