FOR OFFICIAL USE ONLY Report No: PAD3172 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 25.1 MILLION (US$35 MILLION EQUIVALENT OF WHICH US$25 MILLION FROM THE REFUGEE SUB-WINDOW) AND A PROPOSED GRANT IN THE AMOUNT OF SDR 17.9 MILLION (US$25 MILLION EQUIVALENT FROM THE REFUGEE SUB-WINDOW) TO THE REPUBLIC OF RWANDA FOR THE SOCIO-ECONOMIC INCLUSION OF REFUGEES AND HOST COMMUNITIES IN RWANDA PROJECT APRIL 3, 2019 Social, Urban, Rural And Resilience 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, 2019) Currency Unit = Rwandan Franc (RWF) RWF 900 = US$1 US$1 = SDR 0.72 FISCAL YEAR January 1 - December 31 Regional Vice President: Hafez M. H. Ghanem Country Director: Carlos Felipe Jaramillo Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager: Robin Mearns Task Team Leader: Matthew Stephens ABBREVIATIONS AND ACRONYMS BDA Business Development Advisors BRD Development Bank of Rwanda CPF Country Partnership Framework CPS Country Partnership Strategy CRRF Comprehensive Refugee Response Framework DA Designated Account DDS District Development Strategy DRC Democratic Republic of Congo ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan FI Financial Intermediaries FM Financial Management GBV Gender Based Violence GDP Gross Domestic Product GRS Grievance Redress Service IBRD International Bank for Reconstruction and Development ICT Information and Communication Technology IDA International Development Association IFC International Finance Corporation IRR Internal Rate of Return JADF Joint Action Development Forum LODA Local Administrative Entities Development Agency M&E Monitoring and Evaluation MEIS Monitoring, Evaluation and Information System MFI Microfinance Institution MINALOC Ministry of Local Government MINECOFIN Ministry of Finance and Economic Planning MINEMA Ministry of Emergency Management MoE Ministry of Environment MoU Memorandum of Understanding MSME Micro, Small and Medium Enterprise MTEF Mid-term Expenditure Framework NGO Non-governmental Organization NPV Net Present Value O&M Operations and Maintenance OP/BP Operation Policy/ Bank Procedure PAD Project Appraisal Document PCR Physical Cultural Resources PDO Project Development Objective PFI Participating Financial Institution PFM Public Financial Management PIM Project Implementation Manual PIU Project Implementation Unit PPSD Project Procurement Strategy for Development PSC Project Steering Committee PWDs People with Disabilities REMA Rwanda Environment Management Authority RPF Resettlement Policy Framework RWF Rwandan Franc RSW Refugee Sub-Window RTDA Rwanda Transport Development Agency SACCOs Saving and Credit Cooperatives SCD Systematic Country Diagnostic SDR Special Drawing Right SEIRHCP Socio-economic Inclusion of Refugees and Host Communities Project SEP Stakeholder Engagement Plan SP Strategic Plan for Refugee Inclusion SPIU Single Project Implementation Unit STEP Systematic Tracking of Exchanges in Procurement TT Technical Team TTL Task Team Leader TVET Technical and Vocational Education Training UNHCR United Nations High Commissioner for Refugees WBG World Bank Group WDA Workforce Development Authority The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) TABLE OF CONTENTS DATASHEET ........................................................................................................................... 1 I. STRATEGIC CONTEXT ...................................................................................................... 7 A. Country Context................................................................................................................................ 7 B. Sectoral and Institutional Context .................................................................................................... 8 C. Relevance to Higher Level Objectives............................................................................................. 10 II. PROJECT DESCRIPTION.................................................................................................. 11 A. Project Development Objective (PDO) ........................................................................................... 11 B. Project Components ....................................................................................................................... 11 C. Project Beneficiaries ....................................................................................................................... 19 D. Results Chain .................................................................................................................................. 20 E. Rationale for World Bank Involvement and Role of Partners......................................................... 21 F. Lessons Learned from Global Experience and Reflected in the Project Design ............................. 21 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 23 A. Institutional and Implementation Arrangements .......................................................................... 23 B. Results Monitoring and Evaluation Arrangements......................................................................... 24 C. Sustainability................................................................................................................................... 26 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 27 A. Economic and Financial Analysis .................................................................................................... 27 B. Technical ......................................................................................................................................... 28 C. Fiduciary.......................................................................................................................................... 28 D. Safeguards ...................................................................................................................................... 30 V. KEY RISKS ..................................................................................................................... 33 VI. RESULTS FRAMEWORK AND MONITORING ................................................................... 35 ANNEX 1: Implementation Arrangements and Support Plan ................................................. 46 ANNEX 2: Economic and Financial Analysis .......................................................................... 52 ANNEX 3: Forced Displacement Context in Rwanda.............................................................. 61 ANNEX 4: Procurement ........................................................................................................ 65 ANNEX 5: Financial Management ......................................................................................... 72 ANNEX 6: Map ..................................................................................................................... 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Rwanda Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project Project ID Financing Instrument Environmental Assessment Category Investment Project P164130 B-Partial Assessment Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s) [ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) Expected Approval Date Expected Closing Date 30-Apr-2019 31-Oct-2024 Bank/IFC Collaboration No Proposed Development Objective(s) To improve access to basic services and economic opportunities for refugees and host communities, and support environmental management, in the target areas in Rwanda Components Component Name Cost (US$, millions) Page 1 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Access to Basic Services and Socio-economic investments 39.00 Economic Opportunity 9.00 Environmental Management 9.00 Project Management/M&E 3.00 Organizations Borrower: Ministry of Finance and Economic Planning Implementing Agency: Ministry in Charge of Emergency Management Development Bank of Rwanda PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 60.00 Total Financing 60.00 of which IBRD/IDA 60.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 60.00 IDA Credit 35.00 IDA Grant 25.00 IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount National PBA 10.00 0.00 0.00 10.00 Refugee 25.00 25.00 0.00 50.00 Total 35.00 25.00 0.00 60.00 Page 2 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Expected Disbursements (in US$, Millions) WB Fiscal Year 2019 2020 2021 2022 2023 2024 2025 Annual 0.00 6.00 20.00 16.00 10.00 6.50 1.50 Cumulative 0.00 6.00 26.00 42.00 52.00 58.50 60.00 INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Environment & Natural Resources, Finance, Competitiveness Social, Urban, Rural and Resilience Global and Innovation, Fragile, Conflict & Violence, Health, Nutrition Practice & Population Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of Yes country gaps identified through SCD and CPF b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or Yes men's empowerment c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ Substantial 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 Page 3 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 6. Fiduciary ⚫ Substantial 7. Environment and Social ⚫ Substantial 8. Stakeholders ⚫ Moderate 9. Other ⚫ Substantial 10. Overall ⚫ Substantial COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✔ Performance Standards for Private Sector Activities OP/BP 4.03 ✔ Natural Habitats OP/BP 4.04 ✔ Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔ Physical Cultural Resources OP/BP 4.11 ✔ Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔ Safety of Dams OP/BP 4.37 ✔ Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔ Legal Covenants Sections and Description Page 4 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Section I.A.1: No later than three (3) months after the Effective Date, the Recipient shall, through MINEMA, maintain, throughout Project implementation, the MINEMA-SPIU within MINEMA, composed of key staff, with qualifications and under terms of reference acceptable to the Association, including a dedicated Team for Project implementation, which shall include one Project manager, one procurement specialist, three financial management specialists, one internal auditor, one communications officer, one engineer, one livelihoods and business development specialist, one environmental and health and safety safeguards specialist, one social safeguards specialist, one monitoring and evaluation specialist, six district field specialists and any other technical, fiduciary, and safeguard specialists as may have been agreed with the Association, as further detailed in the PIM. The MINEMA-SPIU shall be responsible for the overall coordination of the Project (including in assisting Target Districts in screening and supervising investments under Part 1 of the Project) and day to day implementation of Parts 3 and 4 of the Project, including, inter alia, ensuring coordination with key stakeholders and governmental agencies, managing, implementing and supervising the fiduciary and safeguard aspects of Parts 3 and 4 of the Project, and overall Project monitoring and evaluation, as further detailed in the PIM. Sections and Description Section I.A.7: No later than three (3) months after the Effective Date, the Recipient shall adopt, and, thereafter implement, throughout Project implementation, a communications plan, in form and substance acceptable to the Association, detailing how to publicize the right to work of refugees in the Recipient’s territory. Conditions Type Description Effectiveness The Association is satisfied that the Recipient has an adequate refugee protection framework. Type Description Effectiveness The Project Implementation Manual (“PIM”) has been adopted by the Recipient, BRD and the Target Districts in form and substance satisfactory to the Association. Type Description Disbursement Under Category (1), unless and until, the Recipient, through MINEMA, signs Target District Implementation Agreements with each Target District, in form and substance satisfactory to the Association, and in accordance with Section I.F. of Schedule 2 to the Financing Agreement. Type Description Disbursement Under Category (2), unless and until: (i) the BRD Subsidiary Agreement is signed with the Recipient, in form and substance satisfactory to the Association, and in accordance with Section I.B. of Schedule 2 to the Financing Agreement; (ii) a Matching Grants Manual is adopted by BRD, in form and substance acceptable to the Association; and (iii) a communications plan is adopted by the Recipient, in form and substance acceptable to the Association, detailing how to publicize the right to work of refugees in the Recipient’s territory. Page 5 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Page 6 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) I. STRATEGIC CONTEXT A. Country Context 1. Rwanda’s economic success over the last decade is widely recognized. The country is one of Africa’s fastest growing economies with growth averaging more than 7 percent every year since 2000. Sustained economic growth rates have seen gross domestic product (GDP) per capita increase from US$242 in 2000 to US$787 by 2018.1 2. Rwanda is one of the few countries that has managed fast economic growth, robust reductions in poverty, and a narrowing of inequality. The impressive economic growth has been accompanied by substantial improvements in living standards, life expectancy, literacy, primary school enrollment, and spending on healthcare. The country’s focus on homegrown policies and initiatives has contributed to significant improvement in access to services and human development indicators. Poverty was reduced to 38.2 percent (from 44.9 percent in 2011 and 39.1 percent in 2014) and extreme poverty to 16.0 percent (from 24.1 percent in 2011 and 16.3 percent in 2014) in 2017.2 Inequality measured by the Gini coefficient fell from 52 in 2005 to 42.9 in 2017.3 Nevertheless, Rwanda remains one of the poorest countries in the world and incidence of poverty remains particularly high in rural areas. 3. The gains in poverty reduction are linked to the country’s impressive progress on stability, good governance and a strong drive for results. Rwanda ranks well in global governance metrics, including government effectiveness, regulatory quality and control of corruption, measured by the Worldwide Governance Indicators rankings and competitiveness in the World Economic Forum’s Global Competitiveness Index.4 The strength of institutions represents an important comparative advantage over most other countries in the region. 4. Rwanda is pursuing an ambitious agenda to reach upper middle-income status by 2035 and high-income status by 2050. The country’s Vision 2050 aims to deliver an improved standard of living for all Rwandans. This entails providing food security and nutrition, universal access to water and sanitation, affordable and reliable energy, and universal access to quality health care, education, financial services and housing. To reach middle- and high-income goals, the government has identified a modern agriculture and food sector, increased trade and regional integration, well-managed urbanization and major investments in human capital as its main priorities. Building on the successful economic performance of the last two decades, the government is pursuing the challenging second-generation economic reforms of export diversification, structural transformation, regional integration and financial sector deepening. To achieve the Vision 2050 goals, Rwanda will need to adapt to and mitigate the expected adverse impacts of climate change, which include more regular flooding and landslides and more extreme droughts due to increases in rainfall intensity and temperature. 5. Rwanda’s Vision 2050 and National Strategy for Transformation 1 recognize the pivotal role that the private sector will need to play to achieve these goals. Job-creating growth is central to attaining the vision, which requires 1 National Institute of Statistics of Rwanda (2018), GDP National Accounts 2018 at http://www.statistics.gov.rw/publication/gdp-national- accounts-2018. 2 National Institute of Statistics of Rwanda (2018). Rwanda Poverty Profile Report, 2016/17. See http://www.statistics.gov.rw/publication/eicv-5-rwanda-poverty-profile-report-201617. 3 Ibid, p. 36. 4 World Bank. 2018. Worldwide Governance Indicators. Accessed on October 22, 2018. See http://info.worldbank.org/governance/wgi/#reports; World Economic Forum. 2017. The Global Competitiveness Report 2017–2018. See https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018. Page 7 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) a shift from the public investment approach to private sector-led development in a country where private investments remain limited. 6. While Rwanda is peaceful and stable today, forced displacement has long been a feature of the region. Instability in neighboring Democratic Republic of Congo (DRC) and Burundi has seen many people flee to Rwanda, with the country hosting 149,602 refugees and asylum seekers (48 percent from Burundi and 52 percent from DRC).5 Burundian refugees arrived in 2015, but some of the Congolese have been in the country since the 1990s (See Box 1). Additional influxes cannot be ruled out given ongoing socio-political tensions in the region. 7. The legal and protection environment in Rwanda is conducive for a development response to forced displacement. The country is a signatory to the 1951 Refugee Convention. The 2014 Law Relating to Refugees complies with international law. The World Bank, in consultation with the United Nations High Commissioner for Refugees (UNHCR), has confirmed that Rwanda’s refugee protection framework is adequate.6 B. Sectoral and Institutional Context 8. Around 90 percent of refugees in Rwanda live in the six camps spread across the country, with the remainder living in urban locations, mostly Kigali. The camps are jointly managed by the Ministry in Charge of Emergency Management (MINEMA) and the UNHCR. Refugee demography is balanced, with 51 percent being female and 49 percent male. Women and children make up 76 percent of the refugee population, while 3 percent are elderly. Box 1. Situation of Forced Displacement in Rwanda Congolese refugees have fled to Rwanda since the mid-1990s due to insecurity and humanitarian crises in eastern DRC. Conflict in eastern DRC has been driven by multiple, interrelated factors including violence, spillover of conflicts from neighboring countries, weak governance and the failure of the state to provide security and basic services, longstanding ethnic tensions exacerbated by conflicts over land and natural resources, as well as the socio-economic vulnerability of the local population. The deepening humanitarian crisis in DRC has created one of the world’s largest forced displacement situations. The majority of refugees are currently unwilling to return to DRC due to concerns about insecurity (UNHCR, 2014). The risk of further displacement from DRC into neighboring countries is high, particularly in the eastern provinces and Kasai region. Further displacement is likely due to widespread militia activities and continued political instability. Burundian refugees have sought refuge in Rwanda since 1972, escaping successive cycles of interethnic violence, political crises and insecurity. Violence and insecurity continue to cause large-scale population displacement both within Burundi and into neighboring countries and beyond. The most recent political crisis began in April 2015 and is ongoing. The political and economic situation in Burundi remains fragile, the human rights situation is concerning, and food insecurity is widespread. Consequently, refugee arrivals are expected to continue…although at lower levels than in previous years. Source: World Bank. 2017. Forced Displacement Strategy Notes: Rwanda Background Paper. 5 UNHCR. Data as of 28 February 2019. See https://data2.unhcr.org/en/documents/details/68428. 6 IDA18 refugee sub-window, Board consultation on eligibility for Rwanda (November 2018). Page 8 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 9. Rwanda has responded progressively to the challenge of forced displacement. The country has signed on to the Comprehensive Refugee Response Framework (CRRF), a new global instrument built around the notion of including refugees in communities from the very beginning of displacement – that they can become self-reliant and active contributors to local economies when they gain access to education and labor markets. The decision to become a CRRF roll-out country flowed naturally from four commitments the government made at the 2016 New York Leaders’ Summit, as follows: (i) public launch of a joint government-UNHCR livelihood strategy, with a focus on graduating camp-based refugees out of assistance programs and increasing formal access to work opportunities; (ii) ensure 100 percent of refugees are in possession of valid refugee identity cards; (iii) 100 percent of refugee students in secondary school and 50 percent in primary schools will be integrated into national education systems; and (iv) ensure that 100 percent of urban refugees will have the opportunity to buy into the national health insurance system. In March 2019, the government completed a Strategic Plan for Refugee Inclusion 2019-2024 (SP), which spells out how the four commitments will be implemented. The government has also offered a pathway to naturalization for refugees, though few have taken up the offer due to either a desire to eventually return home or hopes of third country resettlement. 10. The protracted refugee presence has had mixed impacts at the local level. On one hand, the refugee population can be a burden on a country in which 56 percent of people still live below the international poverty line.7 On the other, refugees bring skills and potential to contribute to Rwanda’s development goals. The establishment of camps has affected food availability and strained basic services in the districts hosting refugees. Some local school populations have increased by more than 300 percent. Several camps have been set up in mountainous areas, leading to soil erosion and run-off into agricultural land. Deforestation has also occurred as refugees gather wood and non- timber forest products for cooking fuel and other purposes. Offsetting the negative effects, refugees have contributed to the local economy in the host districts through labor and trade.8 The World Food Program’s relatively recent transition from food aid to cash has reportedly boosted local markets and generated positive income spillovers. 11. Socio-economic inclusion of refugees will contribute to economic opportunities for host communities, who live in some of the poorer districts in the country. Poverty in five of the six districts hosting refugees is higher than the national average. Gisagara (which hosts the Mugombwa camp) and Karongi (which hosts the Kiziba camp) are two of the four poorest districts in the country, with poverty levels of 56 and 53 percent respectively. Host communities suffer from the same development constraints as refugees – limited employment opportunities, poor quality education and a dependence on low-income agriculture for livelihood. While relations are generally good between refugees and hosts, the project will promote continued peaceful co-existence by mitigating the negative impacts of refugee presence, by providing equitable access to project benefits to both groups and by promoting joint economic activity. 12. Rwanda is exerting efforts to improve access to finance, but more can be done, including for refugees . In 2017, 50 percent of Rwandans held an account at a financial institution, declining to 48 percent for women and 38.7 percent in rural areas.9 Only 8.1 percent of adults have access to credit nation-wide.10 Umurenge Savings and Credit Co- Operatives (U-SACCOs, referred to as SACCOs in this document) and Microfinance Institutions (MFIs) play an important role in improving financial inclusion. There are 416 SACCOs, one in each administrative sector, covering all of Rwanda’s 30 Districts. From 2008 to 2012, SACCOs increased access to formal financial institutions from 21 to 42 percent. 7 World Bank. Poverty and Equity Data Portal. Data as of October 2018. See http://povertydata.worldbank.org/poverty/country/RWA 8 Taylor, J. Edward, Mateusz J. Filipski, Mohamad Alloush, Anubhab Gupta, Ruben Irvin Rojas Valdes, and Ernesto Gonzalez-Estrada. 2016. “Economic Impact of refugees.” PNAS 113(27): 7449-53. 9 Findex 2017. 10 Ibid. Page 9 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Financial inclusion is a central part of the government’s strategy for economic inclusion of refugees, with a target of 90 percent of refugees using banking services. Access to financial services will support the economic integration of refugees and contribute to the Rwandan economy. All camps are moving away from food vouchers to cash transfers. This influx of liquidity will benefit from being hosted at a financial institution. Currently, refugees have access to financial products thanks to international non-governmental organizations (NGOs) through two channels: village savings associations and patient loans deployed through SACCOs.11 They also access financing from SACCOs thanks to Rwandans who act as guarantors. For access to finance through other institutions, refugees face obstacles related to a lack of regulatory clarity regarding the acceptability of proof-of-registration documents for the purposes of customer identification and verification.12 13. The proposed Socio-economic Inclusion of Refugees and Host Communities Project will be one of the main tools through which the government will implement the commitments in the Strategic Plan for Refugee Inclusion. The government and several development partners are beginning to move beyond humanitarian responses to refugee situations into development approaches that promote self-reliance. But current initiatives are small in scale and funding is limited. Greater effort is also needed to support a multi-agency government effort – together with development partners – that goes beyond humanitarian agencies. The scale and ambition of the proposed project would inform the government on the steps to be taken towards the socio-economic inclusion of refugees. C. Relevance to Higher Level Objectives 14. The proposed project is aligned with the Country Partnership Strategy (CPS) for FY14-18 and with emerging themes in the draft Systematic Country Diagnostic (SCD) that will guide the next country partnership framework.13 The project will promote private-sector led income-generation and employment for refugees and host communities. It will also support social and economic infrastructure in rural areas to enhance access to services and market opportunities. Accordingly, the project activities are consistent with two of the three themes of the current CPS: accelerating economic growth that is private sector-driven and job creating; and improving the incomes and productivity of the poor through rural development and social protection. The project aligns with key themes in the draft SCD, which highlights human development, environmental sustainability and private-sector driven growth as priorities. 15. The proposed project is consistent with the World Bank Group’s (WBG) twin goals of eliminating extreme poverty and boosting shared prosperity. Beneficiaries and target districts will cover some of the poorest people and areas in the country. The World Bank’s development response to forced displacement aims to help refugees and host communities offset the impact of displacement through socio-economic development in the host communities. The proposed project will invest in basic services, environmental management and socio-economic inclusion through a participatory planning approach bringing together district level authorities, host communities and refugees. 16. The proposed project is consistent with the objectives of the IDA18 sub-window for refugees and host communities (RSW). Consultation with the World Bank Board of Directors, finalized in November 2018, has endorsed the WBG management opinion that Rwanda meets the eligibility criteria for the RSW. The endorsement was conditional on completion of the Strategic Plan for Refugee Inclusion 2019-2024 before project approval. With the 11 “Refugees and Their Money: The Business Case for Providing Financial Services to Refugees”. FSD Africa, 2018. 12 Ibid 13 World Bank. 2014. Country Partnership Strategy for Rwanda FY2014-2018. Report No: 87025-RW. The strategy was extended until FY20 through a Performance and Learning Review, Report No. 106731-RW of March 20, 2017. The SCD will be completed by June 2019. Page 10 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Strategic Plan now complete, the Government has complied with the RSW criterion of having an action plan or strategy with concrete steps for long-term solutions that benefit refugees and host communities. The project design is consistent with the RSW objectives of (i) mitigating the shocks caused by an influx of refugees and create social and economic development opportunities for refugees and host communities; and (ii) facilitating sustainable solutions to protracted refugee situations including through the sustainable socio-economic inclusion of refugees in the host country. While the WBG has determined that Rwanda offers an adequate protection framework for refugees, some risks persist, which will be monitored during project implementation. II. PROJECT DESCRIPTION A. Project Development Objective (PDO) PDO Statement To improve access to basic services and economic opportunities for refugees and host communities, and support environmental management, in the target areas in Rwanda. PDO Level Indicators 17. The following key indicators will be used to track progress toward the PDO: • Beneficiaries with improved access to social and economic infrastructure and services, disaggregated by type of service and target group, including refugees and host community members (number) • Beneficiaries of economic opportunity activities that report an increase in income, disaggregated by gender and target group, including refugees and host community members (number) • Direct project beneficiaries (number), of which percent of females (percentage) • People provided with improved environmental conditions in refugee hosting districts (number) B. Project Components 18. The project will contribute to the ongoing shift from a humanitarian to a long-term, government-led developmental response that integrates refugees and host communities. In line with the principles of the CRRF and the Strategic Plan for Refugee Inclusion, project activities will mitigate the negative impact of the refugee presence on the environment and access to and quality of services. The project will also increase livelihood and employment opportunities for refugees and host communities to grow the local economy and build self-reliance. The project will also look to address gender concerns and strengthen social relations between refugees and host communities. 19. The project will adopt an area-based approach that supports refugees and host communities. Beneficiaries will be supported through socio-economic infrastructure (schools, health centers, water systems, connective roads and market places); access to finance to promote private sector investment, opportunities for entrepreneurship and wage employment and skills development; and by addressing the degradation of the environment caused by the refugee presence. Investments will be possible in and outside camps, however, consistent with the long-term development approach, there will be a preference to support economic activity and government services outside the camps. Supporting the private sector will be central to the project’s approach to economic inclusion. At the same time, the project will build the capacity of the government to adopt a long-term development approach to forced displacement. Page 11 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 20. The project will build on existing economic activities and opportunities for new employment in the target districts. Livelihoods in the districts hosting the camps are based on a few core activities: agricultural production, retail and food trade, and trades based on ‘hands-on’ skills such as carpentry, construction, tailoring and hairdressing. Agro- processing activities also engage the districts’ workforce. Agriculture sector-related activities dominate all host districts and form the basis of livelihood and growth opportunities. There are existing and potential value-chains in the districts in livestock/meat production, milk processing, bananas and horticulture (fruits, vegetables). Some districts have potential to further develop their tea and coffee sectors – two major export-oriented value chains. Farmers’ associations and cooperatives form the basis of workforce mobilization. Refugee businesses in the camps, particularly in the more established camps, have developed relationships with wholesalers in their sector and district. 21. Harnessing synergies. Collaboration across Global Practices in the WBG is an important organizing principle for the operation. During project preparation, links have been established with several sector line agencies and World Bank- financed operations to promote collaboration and the inclusion of refugees into national programs. These include the Ministry of Gender and Family Promotion, the Ministry of Health and the Rwandan National Police on gender-based violence (GBV); the Ministry of Education on schools; the Ministry of Infrastructure on access to energy; the Ministry of Environment (MoE) on environmental management; and the Rwanda Transport Development Agency on roads. These connections will be maintained through the project’s inter-agency Steering Committee and Technical Team (TT) to support the broader aim of social and economic inclusion of refugees and host communities. Complementary World Bank-financed operations in the six project districts include the Great Lakes Emergency Sexual and Gender Based Violence and Women’s Health Project (P1474898), the Rwanda Feeder Roads Development Project (P126498), the Renewable Energy Fund (P160699) and the Rwanda Priority Skills for Growth project (P252350). The project will also complement a US$150 million pipeline education sector project. 22. Cross-cutting themes. The project will support two cross-cutting themes, social cohesion and gender equality, including addressing GBV. 23. Social cohesion. Social relations between refugees and host communities are generally smooth, but the refugee presence has given rise to sources of tension. These include a strain on basic services, environmental degradation and jealousy over the quality of services and humanitarian assistance that refugees receive. The proposed project will address these concerns by: (a) upgrading services used by refugees and host communities (health, education, water); (b) rehabilitating some of the environmental damage; and (c) ensuring equitable access to project benefits. Component 2 will encourage joint refugee-host community enterprises. Finally, the project will promote joint consultation between refugees and host community members to discuss and agree upon development priorities together. 24. Gender/GBV. Entrenched norms and practices perpetuate uneven power dynamics between men and women, increasing women’s vulnerability in the project areas. A 2016 inter-agency assessment in the camps identified that many of the gender gaps were tied to education and livelihoods. Gender-based violence is also a concern. Factors contributing to the risk of GBV include traditional attitudes, separation of family members and movement out of camps. Some women are also engaged in survival sex to provide for basic needs (UNHCR 2017). The project will adopt an integrated approach to address these concerns, focusing on the economic empowerment of women and GBV prevention. Some of the activities that will contribute to addressing gender gaps and GBV risks are: (a) social services – health, education and water supply – that are designed to consider ease and security of access; (b) economic opportunities for women and men through support for self and wage employment. This would reduce women’s exposure to GBV from existing livelihoods, such as gathering firewood; and (c) GBV education and awareness campaign, including through schools. Page 12 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 25. The project includes four components: (a) Access to Basic Services and Socio-economic Investments; (b) Economic Opportunity; (c) Environmental Management; and (d) Project Management/M&E. The investments will complement existing initiatives supported by humanitarian agencies, NGOs and other development partners. Component 1: Access to Basic Services and Socio-economic investments (US$39 million equivalent) 26. Component 1 includes subprojects to address the strain that refugee populations place on education, health and water services. Integration of refugee children into the national education system is a key commitment made by the Government in 2016 and the Strategic Plan for Refugee Inclusion (SP). This component will also enable the delivery of key steps outlined in the SP to achieve integrated education by upgrading school facilities near the camps. It can also support facility construction or upgrade and training for technical and vocational education. The component will also finance socio-economic investments to upgrade or rehabilitate roads connecting refugees and host communities to economic opportunities and market infrastructure near the camps to promote economic activity and social integration. Infrastructure under this component will be built in an energy-efficient manner to mitigate climate change impacts, will be accessible to people with disabilities (PWDs) and will address potential risk for GBV (e.g., includes appropriate lighting). The component will be implemented through two sub-components. Subcomponent 1(a): Access to Basic Services (US$24 million equivalent) 27. This sub-component will finance activities as follows: (a) Education: investments to support integration of refugee children into public schools, to harmonize the quality of education across refugee and host community populations and to support access to technical and vocational education (TVET). Elementary and secondary schools near the camps have a range of different needs. Overall schools hosting refugees are more crowded than district and national averages. Additional classrooms will be required to enable achievement of the commitment to include refugee children in the national system. Most schools lack important facilities such as adequate sanitation, science kits and Information and Communication Technology (ICT) equipment. Many refugees and host community members also lack post-secondary education options, particularly TVET, which can help employment prospects. Possible activities under this sub-component include: (i) construction, rehabilitation or upgrading of elementary, secondary and technical and vocational schools; (ii) provision of facilities and equipment as required for schools (books, furniture, toilets, science kits, etc.); and (iii) study grants for market-linked TVET jobs skills training. (b) Health: the basic needs of refugees are met in camp-based health clinics run by UNHCR implementing partners. However, for more serious health issues, refugees are referred outside to district hospitals and higher facilities. Some issues are also addressed through health centers at the sector level. Subprojects could include: (i) construction, rehabilitation or upgrading of health posts, centers and/or district hospitals; and (ii) purchase of equipment and medical supplies. (c) Water supply: The refugee presence often affects the water table as refugees and host communities utilize the same water source. Refugees also generally enjoy a higher level of service delivery through UNHCR implementing partners, which can be a source of tension with host communities. Investments for this subcomponent could include: (i) Construction or rehabilitation of water supply systems for host communities, such as wells, boreholes, pumps, water tanks or other community-based water systems. Page 13 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Subcomponent 1(b): Socio-economic investments (US$15 million equivalent) 28. This subcomponent will support investments to promote economic activity, connect remote refugee and host populations to markets and to strengthen the access of traders and entrepreneurs to the refugee and host populations. This subcomponent will finance: (a) Road upgrading/rehabilitation. Due to land scarcity, some refugee camps are in remote areas far from centers of economic activity. This increases the cost of travel to seek employment and is a major obstacle to self- reliance. It also prevents local traders from accessing the potentially lucrative refugee market. Under this subcomponent, roads can be rehabilitated or upgraded to link refugee populations and host communities to economic opportunities. (b) Market infrastructure is generally poor or non-existent in and around the camps. Assessments during project preparation to identify constraints to economic inclusion confirmed that investing in market places can increase economic activity and enhance social cohesion by providing a place for refugees and host communities to interact. This subcomponent can finance market facilities outside camps for the use of refugees and host communities. Subprojects could include: (i) construction or upgrading of market places and stalls; (ii) installation of lighting for security and extended business hours; (iii) construction of water and toilet facilities for markets; and (iv) construction of child care facilities to encourage women’s participation and minimize the problem of child neglect. 29. Implementation. Component One will be implemented by districts, with technical support from MINEMA. The Local Administrative Entities Development Agency (LODA) of the Ministry of Local Government (MINALOC) will provide technical advice through its membership of the Project Steering Committee (PSC) and TT. Community labor – with opportunities for refugees and host communities – will be the preferred mode implementation for infrastructure subprojects. 30. Subproject identification. Subprojects will be identified through the government’s regular district development strategy planning process. This includes consultations at the cell, sector and district levels and integration of national sector strategies. Additional consultations will be held with host communities, refugees and humanitarian agencies to ensure that the impacts – positive and negative – of the refugee presence are incorporated into subproject proposals. Districts will submit subproject proposals to the MINEMA Single Project Implementation Unit (SPIU), which will be supported by the TT, for screening. The decision on which subprojects to finance will be taken by the Steering Committee. Final decisions will be reported back to refugees and host communities to close the feedback loop. Subproject proposals will be assessed against the following eligibility criteria, which will be included in the Project Implementation Manual (PIM) and updated as necessary. Table 1: Selection Criteria for subprojects under Component One Summary Eligibility criteria Local community demand-driven Subproject is prioritized by participating local communities and refugees as meeting critical community needs Shared benefits for host community and The subproject will benefit both the host and refugee communities. refugees Addresses gender concerns and supports Gender and GBV concerns to be mainstreamed through the design (e.g., marginalized groups provide appropriate lighting for water points, build market infrastructure with child care facilities to encourage women’s participation). Infrastructure to be accessible to PWDs. Page 14 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Long term sustainability The government (district or national) – with support from humanitarian and development partners – guarantees operations and maintenance with budget provision and staffing to ensure subproject sustainability. No significant adverse negative social or The proposed subprojects do not have potential adverse social and environmental impacts environmental impacts. Consistent with district development The subproject is identified as a priority in the District Development strategy, National Strategy for Strategy (DDS) and/or Local Economic Development Plan and is Transformation (NST1) and Strategic Plan consistent with NST 1, related Sector Strategic Plans and the Strategic for Refugee Inclusion Plan for Refugee Inclusion. Gap-financing, not substitution The proposed subproject fills an existing gap but does not substitute for other available sources of funds. 31. Coordination will be required with relevant line agencies, such as the Workforce Development Authority (WDA) on TVET training and the Rwanda Transport Development Agency (RTDA) to ensure technical standards for roads. Memorandums of Understanding (MoUs) can be signed with technical agencies as necessary. All subprojects selected for project financing will be included in the appropriate institutional and individual performance contracts (imihigo). Component 2: Economic Opportunity (US$9 million equivalent) 32. This component will support implementation of the government’s commitment to improve refugee self-reliance, as described in the Strategic Plan for Refugee Inclusion. Drawing on analysis from a joint government-World Bank study on economic opportunity and activity, it will expand economic opportunities and promote access to finance and private sector investment in the six districts hosting refugee camps.14 The approach will be market-driven and consistent with local economic development plans. Opportunities will be open to both refugees and host communities. 33. Integration of refugees in the labor market through the right to work is essential for economic inclusion. Article 18 of Law 13/2014 stipulates that “Without prejudice to other laws, any person having obtained refugee status in Rwanda shall enjoy the rights and liberties provided for by international instruments on refugees ratified by Rwanda”. Article 17(1) of the 1951 Refugee Convention – to which Rwanda is a signatory – grants the same rights of wage-earning employment to refugees as those accorded to the most favorable nationals of a foreign country in the same circumstances. This right is granted to all refugees lawfully staying in the country of refuge. 34. Lack of awareness on refugees’ right to work has been consistently identified as a major constraint to economic inclusion, including in the Strategic Plan for Refugee Inclusion. To address this constraint, MINEMA will organize a targeted communication campaign towards employers, including the Private Sector Federation, and refugees themselves. The campaign will be implemented by the MINEMA-SPIU under Component 4. Acceptance by the World Bank of the communications plan for the campaign will be a condition of disbursement for sub-component 2(a). 35. Component 2 will be implemented by the Development Bank of Rwanda (BRD). The component will aim to contribute to refugee economic integration and economic growth in the six target districts by promoting entrepreneurship and employment for host community members and refugees. Specific objectives are as follows: • Economically empower refugees and host communities, in remote and rural areas through access to finance and employment opportunities; • Stimulate private investments, sectoral development and economic development; and 14 MINEMA & World Bank (2019, forthcoming) Economic Activity and Opportunity Study. Page 15 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) • Improve social cohesion by making opportunities available to refugees and host communities and encouraging joint ventures. 36. The component will be implemented through two subcomponents: (a) to promote entrepreneurship and employment through access to finance (grants or loans); and (b) improve access to finance through advisory services and capacity-building. Subcomponent 2(a): Access to finance for refugees and Rwandan entrepreneurs (US$8 million equivalent) 37. This sub-component will provide finance to refugees and Rwandan entrepreneurs. Both grants and loans will be possible. During the initial phase, a matching grant scheme will be implemented while exploring options to open up a line of credit that would be attractive to refugees and host communities. The remainder of this section describes the matching grant scheme. 38. Matching grants will be provided as a complement to loans offered by participating financial institutions, including SACCOs and MFIs. The process for the scheme will be as follows: • Cooperatives or enterprises will prepare a bankable proposal; • Participating financial institutions (PFIs), including SACCOs and MFIs, will appraise the proposal; • If the project is considered viable, then BRD will conduct safeguards screening; • The beneficiary contributes 10 percent; the program contributes in grant (30 percent) and the beneficiary contracts a loan with the PFI for the balance (60 percent); • The matching grant will be released once the loan is repaid; and • BRD will transfer the grant to the PFI or hold it until the loan has been repaid in the case of MFIs, which cannot hold deposits. 39. The grant will, therefore, serve both as a collateral and a repayment incentive for the loan. Going through financial institutions will allow for proper screening and appraisal of projects and will ensure that the projects are market-based and viable. The financing could cover initial investments or expansion of existing businesses. 40. This design uses existing access to finance mechanisms, while addressing the issue of lack of collateral for Rwandans and refugees, improving repayment rates and reducing non-performing loans, which tend to be high in the case of SACCOs (above 20 percent). The eligibility criteria, minimum allocation per district, maximum amount per grant and operating procedures – including a negative list of activities – will be detailed in a grants manual. 41. Eligible beneficiaries of this component are: • Micro, Small and Medium Enterprises (MSMEs) led by refugees and/or host communities; • SMEs with proposals that will employ people, of whom at least 10 percent are refugees; • Cooperatives with proposals that will employ people, at least 10 percent of whom are refugees; and • Joint cooperatives between refugees and Rwandan nationals. Subcomponent 2(b) Capacity building for improved access to finance (US$1 million equivalent) 42. The project will provide capacity-building to strengthen the financing value chain and improve access to finance in the six project districts through: Page 16 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) a) Building the capacity of enterprises and cooperatives to start and grow their projects; b) Enhancing the capacity of the existing network of Business Development Advisers (BDAs), who will, in turn, support local initiatives by linking them with funding from the project and other sources. In addition to existing BDAs, refugees will also be trained as BDAs and will operate in and outside the camps; and c) Enhancing PFI capacity, including SACCOs, to help them access financing and better manage their funds. 43. The government supports business planning and entrepreneurship skills through a network of BDAs, whose role is key in the financing value chain.15 They are paid success fees by the National Employment Program through vouchers when they provide support to entrepreneurs. Enhancing the skills of BDAs will enable them to better advise entrepreneurs and develop their portfolio, thereby increasing their activity and income, including by charging service fees to the enterprises or cooperatives they support. 44. SACCOs are a key element of the financing value chain given their widespread presence across the country.16 However, some lack capacity to manage funds and screen proposals. Strengthening SACCOs capacity for project screening, fund management and to identify new clients will contribute to improving access to finance for small entrepreneurs in the target districts. 45. Business planning and entrepreneurship skills are limited in the target districts. Many potential cooperatives and businesses lack the knowledge, skills or resources to draft bankable proposals for project financing. The project will therefore provide the following training and capacity building: • Self-initiative training, to be performed by a specialized training provider. This type of training has a proven track record for fostering entrepreneurship;17 • Training on financial literacy, business plans preparation, to be performed by BDAs; and • Cash flow management, loan repayment, basic accounting, to be performed by BDAs. 46. BRD will undertake a needs assessment and prepare a capacity-building plan for the BDAs and PFIs, including SACCOs. The Plan will describe in detail the needs and form of technical support to be provided in the six project districts. Component 3: Environmental Management (US$9 million equivalent) 47. The establishment of refugee camps has degraded the environment, creating tensions with host communities. Many camps are located on hilltops and have inadequate drainage systems. This has caused soil erosion and storm water run-off, leading to landslides and the formation of ravines. An environmental needs assessment conducted during project preparation identified other challenges, including the overexploitation of wood and non-timber forest products for cooking fuel and other purposes, contamination of water systems from poorly designed and managed refugee camp sanitation facilities and solid waste management. 15 BDAs provide support at the sector level to generate business ideas, help MSMEs access financial services, and support existing businesses and start-ups. There are two BDAs in each sector in all 30 districts in the country. Under this project, they can a) raise awareness on the financing available to host communities and refugees; and b) support entrepreneurs and businesses access funding by helping them develop business plans and linking them to financial services. 16 There are 416 SACCOs in Rwanda – one in each administrative sector. 17 Teaching personal initiative beats traditional training in boosting small business in West Africa. Campos, Frese, Goldstein, Iacovone, Johnson, McKenzie. World Bank 2017. Page 17 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 48. Climate change is predicted to increase the likelihood of extreme weather events, flooding and landslides, exacerbating the current problems. In addition to affecting social cohesion, the environmental damage also has economic impacts through storm water runoff into agricultural land and damage to houses and infrastructure (such as roads and markets) in the host communities. 49. The environmental needs assessment recommended three priority actions, as follows: a) Rehabilitation of ravines and construction of reservoirs to harvest storm water; b) Commission a review of the socio-economic and environmental sustainability of the refugee camps, including a cost-benefit analysis of three scenarios: (i) Camp planning and resettlement with appropriate infrastructure; (ii) Decommissioning camps and relocation to appropriate sites; and (iii) Rehabilitation and sustainable use of decommissioned campsites; and c) Enhance the guidelines for the establishment and operation of emergency settlements with stipulations including: (i) Site identification; (ii) Environmental and Social Impact Assessment (ESIA) for emergency settlements; and (iii) Institutional roles and responsibilities in the operation and management of emergency settlements. 50. Activities. Component three will support the rehabilitation and stabilization of ravines and construction of reservoirs. This would entail investment in retainer structures to enhance drainage systems and storm water control, integrated with velocity-reducing storm water channels and surface water reservoirs (FAO advanced model) for productive use by host communities (irrigation; fish ponds, livestock water, etc.). These investments would reduce a major source of social tension and economic loss and address an urgent public safety issue in the targeted camps. 51. Implementation and subproject identification. This component will be implemented by MINEMA, with support from the TT, including the MoE and the Rwanda Environment Management Authority (REMA). The surface water reservoirs will be managed by village-level farmers’ associations, in collaboration with relevant host district authorities. Potential subprojects have already been identified through the needs assessment. Consultations will be held with refugees, host communities and district, sector and cell officials to prioritize subprojects for project financing. The shortlist will be submitted to the MINEMA SPIU for technical screening, with support from the TT, including the MoE and REMA. The final decision will be taken by the PSC and reported back to refugees and host communities. 52. Labor intensive public works. Where possible, activities under this component will be implemented through labor intensive public works. Employment opportunities will be made available to refugees and host communities. 53. Future environmental management activities. In addition to the activities to be funded under this component, the government has committed to implement recommendations b) and c) in paragraph 49 above, but through other sources of finance. In addition, the government has also agreed to explore options to address deforestation and alternative cooking energy sources. Component 4: Project Management/M&E (US$3 million equivalent) 54. This component will strengthen the technical and administrative capacity of the government to manage the project. It will cover the costs of project management, implementation and supervision at MINEMA and the districts, including: (a) procurement and financial management (FM); (b) M&E; (c) progress reporting; and (d) compliance with safeguards policies. It will also support the operational costs of the inter-agency PSC and TT. Project management will Page 18 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) include monthly coordination meetings between MINEMA, BRD and the participating districts to ensure effective management and information flows. 55. Stakeholder engagement. The component will support stakeholder engagement, including a grievance redress mechanism and a strategic communications plan to advocate for refugee inclusion and build understanding among key constituents of the contribution refugees can make to the local economy. The communications plan will include a targeted advocacy campaign to raise awareness on refugees’ right to work. 56. Capacity-building. Funding will be allocated in this component for capacity-building for the implementing agencies. This will include an allocation for technical assistance and knowledge exchanges on development approaches to forced displacement. C. Project Beneficiaries 57. Using an area-based development approach, the project will benefit communities in the six refugee‐hosting districts, including refugees in the six camps. The project is expected to benefit an estimated host community population of 2,164,799 and the camp-based refugee population of 135,123.18 Table 2: Refugee Hosting Districts/Sectors and Refugee Populations District Population Sector Population Refugee Population Camp Population Gicumbi (Northern Province) 395,606 Kayego 30,270 Gihembe 13,091 Gatsibo (Eastern Province) 433,020 Gatsibo 36,690 Nyabiheke 14,337 Kirehe (Eastern Province) 340,368 Mahama 23,643 Mahama 59,319 Nyamagabe (Southern Province) 341,491 Gasaka 41,522 Kigeme 20,643 Gisagara (Southern Province) 322,506 Mugombwa 22,712 Mugombwa 10,669 Karongi (Western District) 331,808 Rwankuba 37,802 Kiziba 17,064 58. The benefits to host and refugee communities across the project components are presented in Table 3. Table 3: Beneficiaries of Project Investments Component Subcomponent Beneficiaries Component 1. Subcomponent 1(a). Host community members and refugees will benefit from improved Access to Basic Access to Basic Services public infrastructure that will enhance the quality of education, health Services and and water services. Beneficiaries will also have access to technical Socioeconomic vocational and life skills training to support employment prospects. Investments Subcomponent 1 (b). Road rehabilitation/upgrading will support the access of refugees and Socioeconomic host communities to economic opportunities. It will also benefit local Investments businesses and traders, who will have easier access to the refugee population. Markets will support trade for refugees and host communities. Component 2. Subcomponent 2(a). Access to finance will support MSMEs and cooperatives run by host Economic Access to finance communities and refugees and larger businesses, which will employ Opportunity both. Will also benefit local micro-finance institutions and SACCOs by 18National Institute of Statistics of Rwanda (2012). Rwanda Fourth Population and Housing Census, Thematic Report: Population size, structure and distribution. See: http://www.statistics.gov.rw/publication/rphc4-atlas; and UNHCR refugee data as of February 28, 2019 see above n. 4. Page 19 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) increasing their lending portfolios. Subcomponent 2(b). Capacity-building support for BDAs, BRD and PFIs to help businesses in Capacity-building for the target districts to access financing. access to finance Component 3. Host communities will benefit from reduced flooding, landslides and Environmental crop and infrastructure damage from storm water and soil erosion. Management Host communities will benefit from storm water harvesting into surface reservoirs for productive use e.g., irrigation, fish production. Refugees will benefit from reduced social tension with host communities and from a safer living environment. Both groups will benefit from employment opportunities through labor intensive public works. Component 4. National and district level agencies will benefit from integrated Project Management/ planning, monitoring and evaluation (M&E) and knowledge exchange M&E on development responses to forced displacement. 59. The project’s institutional beneficiaries include government staff at the national and district levels, BRD and different line ministries and specialized agencies in Rwanda handling refugee issues and the delivery of essential services and participating financial institutions. D. Results Chain Page 20 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) E. Rationale for World Bank Involvement and Role of Partners 60. The World Bank’s approach of working through government systems is essential to help Rwanda shift from parallel humanitarian systems to nationally-led development responses to refugee situations. Through the IDA 18 refugee sub- window and earlier operations in the region and globally, the World Bank has a solid foundation of experience on development approaches. Knowledge exchange sessions were held for the Government of Rwanda during preparation to share lessons from the Horn of Africa and the Middle East. Additional opportunities will be supported during implementation under the capacity-building subcomponent and through regional policy dialogue on forced displacement under a grant to the International Conference on the Great Lakes Region (ICGLR). The Rwanda project will complement the regional dialogue and support alignment between actions on the ground and at the policy level. The World Bank’s role in facilitating policy dialogue provides additional value-added to the operational support. 61. The World Bank is active in a number of sectors relevant to the social and economic integration of refugees. The project will coordinate with ongoing operations on road transport, education, GBV and agriculture. 62. Role of Partners. The project has been prepared in collaboration with UNHCR to formulate appropriate long-term development responses to forced displacement in Rwanda. UNHCR will be a member of the PSC and TT. UNHCR will also assist with ongoing monitoring of the adequacy of the refugee protection framework. Consultations were held during project preparation with development partners and NGOs supporting refugees and/or service delivery and livelihoods in Rwanda. The World Bank team has also participated in regular Refugee Coordination Meetings convened by MINEMA and UNHCR that involve all development partners and government agencies supporting refugees. The task team will continue to participate in these meetings to gather and share information on the situation with respect to forced displacement in Rwanda. F. Lessons Learned from Global Experience and Reflected in the Project Design 63. The project incorporates global lessons with respect to development approaches to forced displacement, implementation experience in Rwanda from World Bank-financed and other development partner projects and multi- sectoral projects implemented through a framework approach. Key lessons include: a. Parallel service delivery in refugee-hosting areas is unsustainable and costly. Humanitarian responses to forced displacement often lead to parallel service-delivery, with limited links into mainstream government services. This can lead to duplicate socio-economic investments and low quality of service provision. The project presents a development response through close collaboration with UNHCR, which will contribute to bridging this gap. It also seeks to build on existing district development planning processes. The project will also help the government to meet targets to integrate refugees into national systems, including integration of refugee children into public schools. b. Development responses to forced displacement should be government-led and embedded within broader institutional systems of governance and financing. The project will be fully implemented by government agencies and funds will flow through government systems. Mechanisms will be established for inter-agency coordination and cooperation between national and district level agencies. Subprojects will be identified through an enhanced version of the existing district development planning process. c. A local economic development approach promotes jobs and generates livelihood opportunities for host and refugee communities. This approach addresses the underlying poverty in and vulnerability of host Page 21 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) communities, which is exacerbated by the refugee presence. The project includes investments to improve access to socio-economic infrastructure, vocational and life skills to open pathways to employment, and financing to support entrepreneurship. This approach has long-term potential to enhance economic opportunities, improve incomes, increase self-reliance, and contribute to social cohesion. d. Host and refugee communities are best suited to identify their priorities for socio-economic inclusion, so citizen engagement and feedback from beneficiaries is key to effectiveness. Rwanda has various home‐grown approaches for planning and implementing development initiatives at the local level. However, in general, decision-making in Rwanda on development is centralized. The project will build on existing district planning mechanisms while enhancing the participation of refugees and host communities. This will include additional consultations with refugees and host communities on needs and priority subprojects as part of the current DDS process. Decisions taken by the PSC on subprojects to be financed will be reported back to project beneficiaries to close the feedback loop. e. Multi-sectoral projects implemented at the local level require clear coordination and communication processes. Project management can be complicated in situations where multiple government agencies are involved at the national and sub-national levels. Inadequate staffing and weak coordination can affect project management tasks such as procurement and contract management, expenditure tracking, and M&E. Learning from similar projects in Rwanda, the project will include the following features: (i) inter-agency PSC and TT comprising key agencies for refugee inclusion; (ii) inception workshops involving all key agencies; (iii) monthly coordination meetings between MINEMA and the participating districts; and (iv) a project-specific Management Information System (P-MIS) that will consolidate information from all implementing agencies. f. Enhanced technical and implementation support by the World Bank is needed in situations where implementing agencies lack development experience. In forced displacement projects, implementing agencies are often mandated to respond to emergencies, and do not have a long-term socio-economic development outlook. Therefore, the proposed project will include adequate financial resources to cover technical and implementation support needs, including on World Bank fiduciary and safeguards standards. g. Infrastructure investments at the local level require adequate review of works design and plans by local and national agencies in a coordinated manner. Infrastructure subprojects such as road construction can be delayed due to poor engineering designs and design-related deficiencies (e.g., post start-up identification of auxiliary infrastructure needs, unforeseen sub-soil conditions, unrealistic timelines). The project will build adequate coordinated review mechanisms to ensure that both the districts and responsible central government agencies (i.e., LODA, RTDA, REMA) take an active role in reviewing detailed engineering designs. h. A holistic approach is needed to address gender issues in forced displacement, including GBV. Women’s participation in project processes is often constrained by socio-cultural norms. Community mobilization, consultations, training, institution-building, and leadership are needed to tackle the issue. A 2016 inter-agency gender assessment in the refugee camps concluded that addressing socio-economic needs of women is essential to tackle gender gaps and the underlying causes of GBV. The government has invested heavily in GBV response, but reporting rates remain low. The project will complement response efforts by focusing on prevention through awareness-raising and education campaigns (including through schools) and addressing root causes, which include poverty and lack of economic opportunity. Page 22 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 64. Institutional and implementation arrangements are based on the following principles: (a) build on existing government planning and budgeting systems; (b) support the government’s decentralization policy, which aims to enhance citizen engagement; (c) ensure effective coordination of what will be a multi-sector, inter-agency project, and (d) engage relevant government agencies in the implementation and supervision of project activities. 65. Project Steering Committee. A high-level inter-agency PSC will oversee the project. Chaired by MINEMA, members will include the Ministry of Finance and Economic Planning (MINECOFIN), the six participating districts, BRD, the Ministries of Education, Health, Gender and Family Promotion, Local Government, Trade and Industry, Agriculture, Youth and Sport, Infrastructure and the Environment and UNHCR. The Steering Committee will provide technical guidance and ensure consistency of project activities with national policies and the Strategic Plan for Refugee Inclusion. The PSC will also make final decisions on which sub-projects to finance. 66. Overall management. Coordination and leadership will be vested in the MINEMA SPIU. The SPIU will have overall responsibility for project implementation, coordinating activities on the ground and reporting on progress. This will include drafting of annual Work and Financial Plans for the review and approval of the PSC and the World Bank. 67. Inter-agency technical team. An inter-agency TT will be established, comprising technical level officials of the members of the Steering Committee. The TT will advise the MINEMA SPIU and other implementing agencies and ensure that project investments are consistent with government policies and practices. 68. Implementing agency by component. In accordance with the government’s decentralization policy, component one will be implemented by the districts that host refugee camps. The subproject types under this component also align with the mandate and capacity of the districts. MINEMA will sign District Implementation Agreements with each target district that will detail respective roles and responsibilities, including details on financial flows and compliance with World Bank fiduciary and safeguards standards and funds flow. MINEMA will provide technical support. Component Two will be implemented by the BRD. Component 3 will be implemented by MINEMA. Technical government agencies will provide implementation and supervision support to MINEMA per their mandates. 19 Details are provided in the table below. 69. Community participation and engagement. Aligned with the district development strategy process, the project will conduct consultations at the cell and sector level and in camps, including with host community and refugee representatives, to gather information on development challenges and to identify priority subprojects for project financing. To close the feedback loop, the project will ensure that all decisions taken on subprojects to be financed under the Socio-economic Inclusion of Refugees and Host Communities Project (SEIRHCP) will be reported back to refugees and host communities. At the district level the project will work in close collaboration with the Joint Action Development Forum (JADF), a multi-stakeholder platform established by government to facilitate and promote the participation of citizens in local governance. JADF members include local government officials, civil society organizations, the private sector and local development partners. 19The project builds on the experience of World Bank-financed Rwanda Second Emergency Demobilization and Reintegration Project where the implementing agency entered into multiple MOUs with various technical government agencies. Sample MOUs were shared with MINEMA during preparation and it is expected that the MOU arrangements will be implemented smoothly. Page 23 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 70. The project results framework includes three indicators related to community engagement, as follows: (i) beneficiaries participating in project planning activities; (ii) beneficiaries that feel project investments reflected their needs; and (iii) grievances registered related to delivery of benefits that are addressed. Together these three indicators will measure participation in the planning process, the extent to which the process is reflective of community priorities and the effectiveness of project mechanisms to handle and respond to community feedback. Table 4: Implementation Arrangements per Component Component Indicative subprojects Agency Key roles Responsible Component 1: • Construction, upgrade and/or Districts, • Define development problems and identify Access to Basic rehabilitation of health facilities. supported solutions, including through consultations Services and • Construction, upgrade and/or by MINEMA with project beneficiaries and stakeholders Socioeconomic rehabilitation of education • Propose subprojects for financing to the investments facilities. Steering Committee • Equipment and facilities for health • Validate and report back to beneficiaries on centers & schools final subproject decisions. • Technical vocational training • Implement subprojects • Community water systems • Monitor and report on progress • Road rehabilitation/upgrading • Ensure O&M budget is allocated to sustain • Market construction/ the investments. rehabilitation Component 2: • Financial support for MSMEs and BRD • Manage financing scheme with PFIs, and Economic cooperatives. safeguards screening. Opportunity • Capacity building for BDAs and • Identify training needs and organize capacity SACCOs building of PFIs and BDAs. Component 3: • Ravine rehabilitation MINEMA • Identify priority investments, in consultation Environmental • Drainage enhancement for with TT, including MoE and REMA Management stormwater control and damage • Validate final subproject list with avoidance beneficiaries • Stormwater harvesting surface • Implement subprojects water reservoirs • Monitor and report on progress • Ensure O&M budget is allocated 71. Collaboration with technical agencies. MINEMA and BRD will collaborate with relevant government agencies to provide technical support for the implementation of subprojects. This could include the RTDA for roads, the WDA for technical and vocational education, the Rwanda Cooperatives Agency for the establishment of and technical assistance to cooperatives, and REMA for environmental management activities, etc. The purpose of the technical collaboration is to ensure that subprojects are implemented in line with government standards. B. Results Monitoring and Evaluation Arrangements 72. The primary responsibility for project M&E will lie with the MINEMA SPIU. The SPIU will have a dedicated M&E team, with a presence in Kigali and the six target districts. BRD will be responsible for M&E of component two activities. The project will use a project-specific Management Information System (P-MIS). Page 24 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 73. The project will, to the extent possible, utilize existing government systems and procedures. Districts implement M&E activities under the coordination of LODA and use the LODA-administered Monitoring, Evaluation, and Information System (MEIS). The MEIS facilitates coordination of social protection planning, household profiling and M&E of projects from grassroots to central level. The system can generate reports with values on key figures and the progress of indicators. While the MEIS is operational and implemented nationally as the central MIS, the level of system utilization varies from district to district due to different levels of technical capacity. The SEIRHCP will build district capacity to use the MEIS. The MINEMA SPIU will receive required project data and information from the districts and consolidate it in the P-MIS. 74. Project M&E arrangements. The MINEMA SPIU will have a dedicated M&E team, which will include (i) a Kigali- based National Project M&E Specialist, who will oversee overall M&E implementation; and (ii) District field specialists (embedded in district offices, financed by the project) to monitor all project activities in the target districts. The District field specialists will support the districts to meet the project M&E requirements and ensure data accuracy and reporting quality. They will also ensure district-level M&E activities are implemented as per the agreed timelines and procedures. Progress on all project components will be reported in a consolidated quarterly report to the World Bank. Annual Reports will also be prepared and submitted to the World Bank. 75. BRD will collect and analyze data on component two activities. This includes data collection from participating entities (SACCOs, MFIs, MSMEs, cooperatives, etc.), monitoring indicators, and reporting on progress. BRD is hiring a firm to manage M&E under the two World Bank-financed projects it is currently implementing. The firm contract will be amended to also handle M&E under the SEIRHCP. BRD will prepare regular reports based on the Results Framework, and additional evaluations as requested by MINEMA, and will present progress in achieving the key and intermediate indicators to MINEMA quarterly. District field specialists will support the M&E of component two activities in the target districts. 76. M&E procedures with implementing partners will be built into District Implementation Agreements, MOUs or contracts. Details of M&E activities (procedures, reporting formats, etc.) will be included in the PIM. An overview of project M&E tasks is provided below. Table 5: M&E Tasks Actor Tasks MINEMA • Data collection and monitoring on component one and component three activities • Regular reporting on all project components • Conduct annual surveys by contracting consultants/firms • Evaluate activities, inform implementation and suggest modifications as needed. • Use P-MIS for monitoring, data collection and collation/analysis for project components, and reporting to the public and the World Bank. BRD • Data collection, monitoring and reporting on component two • Support evaluation of economic opportunity activities. • Report regularly to MINEMA based on project-specific reporting requirements. Districts • Support data collection, monitoring and reporting on progress on component one activities, with District field specialist (project) support. • Use existing mechanisms, district planning procedures, and MEIS, to the extent possible, to ensure efficient implementation of project M&E. • Report regularly to MINEMA based on project-specific reporting requirements. Implementing Partners, • Include necessary resources in project implementation to support M&E Technical Agencies Page 25 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 77. Project-specific MIS (P-MIS). The P-MIS will be web-based and user-friendly and will not duplicate existing systems. It will be used to gather and consolidate data across the components. It will allow the project to track and report on project-specific data requirements disaggregated by group and sub-group (refugee, host community, women, children, etc.). The P-MIS will be housed at the MINEMA SPIU and accessible via a web-based application in project districts and at BRD. The system will be used to (a) collect data and information and monitor progress of project activities; and (b) generate reports, figures and tables for project M&E. 78. Regular progress monitoring will be complemented by externally-administered surveys to measure progress and effectiveness of activities and to understand beneficiary perceptions of socio-economic inclusion. Periodic technical audits will be carried out to verify infrastructure quality. A baseline study will be conducted during the inception phase and followed up with annual surveys and other assessments, a midterm evaluation, and at project closing, to evaluate qualitative and quantitative aspects of project results. An impact evaluation will be undertaken to evaluate outcome-level indicators on social and economic integration and to build the evidence base on the impact of refugee inclusion on local economic development. C. Sustainability 79. Institutional sustainability. The project will work through government systems and processes. District level capacity for planning, budgeting and implementation will be enhanced through activities under component one. Under component two the project will build the capacity of PFIs, including SACCOs and MFIs, and BDAs to reach out to target constituents among refugees and host communities. By working through private financial institutions, the project will support Rwanda’s financial system. The project will also strengthen capacity for multi-sector planning and collaboration through the inter-agency governance structure at the national level. Regional knowledge exchange will build the capacity of the government of Rwanda with respect to development responses to forced displacement. 80. Policy sustainability. The Strategic Plan for Refugee Inclusion outlines the policy framework for refugee inclusion in Rwanda. The project will contribute to the achievement of priority actions identified in the SP. At the same time, the SP outlines broader policy steps, which will contribute to the sustainability of actions for refugee inclusion. 81. Sustainability of infrastructure. The SEIRHCP will support investments in social and economic infrastructure such as classroom construction, health facility upgrading, community water supply, roads and markets. As a pre-condition for approval of a subproject proposal, relevant sectoral agencies and/or districts will be required to commit budget for O&M. Each subproject will require an O&M plan. 82. Economic sustainability. Investments under the economic opportunity component will be grounded in a solid assessment of market conditions and realities. The project will seek to either enhance existing private sector investments or attract new investments to the six districts hosting refugees. Furthermore, project financing will support business plans that have undergone due diligence from financial institutions for loan financing. This is expected to support sustainable economic activity with long-term benefits. 83. Social sustainability. Long-term inclusion of refugees into Rwandan society will only be sustainable if there is strong social cohesion between refugees and the communities that host them. The project aims to address sources of tension between the two groups, including environmental degradation and strain on basic services. Equitable access to project resources should help to minimize jealousy towards refugees, who often enjoy superior levels of service delivery. The project communications strategy will play an important role to inform Rwandan society about the Page 26 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) positive contribution refugees are making. And finally, the project will support joint implementation mechanisms, including joint cooperatives and businesses through component two activities. IV. PROJECT APPRAISAL SUMMARY A. Economic and Financial Analysis 84. The economic and financial analyses conducted for SEIRHCP demonstrate that the expected overall economic internal rate of return (IRR) is 66.3 percent.20 The project is utilizing a framework approach, so it is not possible to pre- determine the actual number of the different types of investments. Therefore, the analysis was undertaken based on the expected subproject types. Investments were analyzed over the expected life span of each sub-project. A social discount rate of six percent was used, in accordance with the World Bank guidelines.21 The cost of capital in Rwanda is estimated at 17 percent as per World Bank data. A ten-year-period average 2.18 percent USD inflation rate has been used in the analysis (WDI). 85. Each of the proposed initiatives, namely the construction/rehabilitation of schools at the primary, secondary and technical and vocational levels, primary health care centers (approximately 50,000 population capacity), water sources with hand pump, 50-stall market facilities, road rehabilitation/upgrading, finance for MSMEs and ravine rehabilitation show a positive net present value (NPV) and a robust economic IRR, confirming their economic viability under any scenario, including unfavorable ones with 20 percent higher costs and/or 20 percent lower benefits (see Table 6). The assessment is conservative, as each subproject presents larger economic returns in terms of indirect social benefits, which are not tangible nor readily quantifiable. Table 6: Cost-benefit analysis of selected sub-projects under different scenarios (figures in US$) Primary Primary Secondary TVET Health Water Market Road Micro Ravine School School Education Care Source Shed Rehab finance Rehab Center BASELINE SCENARIO Invest. $8,706 $8,706 $14,260 $62,820 $10,556 $33,116 $52,706 $400 $1,000,000 NPV* $89,280 $101,623 $66,223 $498,536 $113,571 $378,351 $225,874 $4,145 $3,143,606 IRR** 84.85% 95.27% 29.13% 67.82% 88.55% 93.45% 40.94% 85.64% 32.33% COSTS +20% SCENARIO Invest. $10,447 $10,447 $17,112 $75,385 $12,668 $39,739 $63,248 $480 $1,200,000 NPV* $64,297 $70,133 $59,652 $485,972 $110,625 $369,264 $191,684 $3,635 $2,913,869 IRR** 54.72% 58.83% 24.85% 56.87% 73.67% 77.78% 31.60% 65.14% 26.93% BENEFITS -20% SCENARIO Invest. $8,706 $8,706 $14,260 $62,820 $10,556 $33,116 $52,706 $400 $1,000,000 20 The pooled IRR refers to 11 sub-projects on a 20-year period 21 Discounting Costs and Benefits in Economic Analysis of World Bank Projects, February 2016. Page 27 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) NPV* $46,441 $49,808 $46,407 $386,264 $87,911 $293,594 $146,510 $2,806 $2,285,148 IRR** 48.68% 51.53% 23.93% 54.68% 70.70% 74.65% 29.71% 61.04% 25.84% COSTS +20% AND BENEFITS -20% SCENARIO Invest. $10,447 $10,447 $17,112 $75,385 $12,668 $39,739 $63,248 $480 $1,200,000 NPV* $21,459 $18,318 $39,837 $373,700 $84,965 $284,507 $112,321 $2,296 $2,055,410 IRR** 24.16% 21.80% 19.97% 45.90% 58.79% 62.11% 21.98% 44.62% 21.39% Source: Team calculations based on empirical data *NPV with 6 percent social discount rate over a 20-year period. **Rwanda's Cost of Capital 17.3 percent (World Bank) B. Technical 86. Quality control. All infrastructure subprojects will be subject to technical scrutiny to ensure they meet adequate design and engineering standards. When available, they will follow government-approved standard blueprints (e.g., school classrooms). Quality control through the project cycle will include financial, technical and environmental feasibility screening. Competitive selection of engineers for the MINEMA SPIU and of qualified and competent contractors will contribute to quality assurance. World Bank implementation support also contribute to quality control through careful scrutiny of procurement processes and on-site inspection of works to identify and remedy deficiencies. 87. Strengthening government systems for participatory planning and budgeting. The SEIRHCP made an informed choice to support the government’s decentralization policy and its desire to strengthen community voice in local governance. Districts will play a major role in implementation of component one activities. Subproject identification will align with the existing district development planning process, augmenting it with additional consultations with refugee and host community representatives. The feedback loop will also be closed by reporting back final decision on subproject selection to project beneficiaries. C. Fiduciary (i) Financial Management 88. The World Bank’s FM team conducted an FM assessment of MINEMA and its SPIU, the six project districts (Kirehe, Gatsibo, Gicumbi, Nyamagabe, Karongi and Gisagara), and the BRD. 89. The objective of the assessment was to determine whether the implementing entities have acceptable FM arrangements, which will ensure: (a) that funds are used for the intended purposes in an effective and efficient way; (b) that reliable, timely and accurate financial reports will be prepared; and (c) that project assets will be appropriately safeguarded. The assessment complies with the World Bank policy and directives on investment financing. 90. The arrangements for project oversight and accountability are considered acceptable and consist of: (a) management oversight (i.e., PSC, TT, MINEMA and BRD management and District leadership,); (b) internal oversight bodies (i.e., internal audit, audit committee) (c) external oversight bodies (i.e., Office of the Auditor General, OAG); and (d) Parliament, which reviews the OAG’s audit reports and approves the government’s budget, including for the project. Monthly financial reports will be prepared by MINEMA and submitted to MINECOFIN for internal monitoring. Page 28 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 91. The existing FM arrangements of BRD provide reasonable assurance that the financing proceeds will be used for intended purpose in a transparent, effective, and efficient manner. The BRD SPIU is experienced in development partner-financed projects (including the Renewable Energy Fund and Rwanda Housing Finance Project) and is staffed with one FM specialist and one accountant, who will manage FM requirements for the project. 92. The project FM risk is considered substantial. Key risks identified are as follows: (a) staffing gaps in FM and internal audit to absorb the additional workload generated by the project; (b) unreliable reporting and reconciliation at the district; and (c) inadequate and delayed implementation of the OAG recommendations and internal control weaknesses at the district level, resulting in adverse or qualified audit opinions in the majority of districts. 93. The proposed risk mitigation measures are as follows: (i) develop detailed FM guidelines for the project as part of the PIM and a grant management manual for the grants under component 2; (ii) recruit for MINEMA SPIU three additional FM staff and one additional internal auditor with terms of reference (ToR) to be agreed with the World Bank, and (iii) enroll the project into the Integrated Financial Management Information System (IFMIS). (ii) Procurement 94. Procurement will be carried out in accordance with the ‘World Bank Procurement Regulations for Borrowers under Investment Project Financing’, dated July 1, 2016, revised August 2018, hereafter referred to as ‘Procurement Regulations’. The project will be subject to the World Bank’s Anticorruption Guidelines, dated July 1, 2016. 95. As per the requirement of the Procurement Regulations, a Project Procurement Strategy for Development (PPSD) sets out the selection methods to be followed by the borrower during project implementation for the procurement of goods, works, and non-consulting and consulting services financed by the World Bank. The underlying Procurement Plan will be updated at least annually or as required to reflect actual project implementation needs. 96. The proposed project will use Systematic Tracking of Exchanges in Procurement (STEP), a planning and tracking system that provides data on procurement activities, establishes benchmarks, monitors delays, and measures procurement performance. There are ongoing initiatives to harmonize STEP with the government’s e-procurement system, but until this process is complete, both will be used in parallel. 97. A procurement capacity and risk assessment has been carried out by the World Bank for the MINEMA SPIU, the six participating districts and BRD. Based on the assessment, the procurement risk is rated ‘Substantial’. The Procurement Risk Assessment and Management System (PRAMS) will be finalized in due course. 98. Procurement Risks and Mitigation Measures. Risks identified are presented in the following table with mitigation measures and time frame: Table 7: Procurement Risks and Mitigation Measures Responsible Agency & No. Issue/Risk Recommended Mitigation Measures Time Frame 1 Lack of effective and efficient (a) form PSC chaired by MINEMA, that MINEMA. Before coordination between activities of includes the six participating districts, and a project effectiveness. different sectors such as education, TT reporting to the PSC; and (b) develop a health, roads, etc., and coordination PIM that defines procedures and roles and between implementing agencies at responsibilities of each stakeholder. national and district levels. Page 29 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 2 Failure to efficiently package PPSD to inform on the most efficient MINEMA. activities to ensure economy of scale packaging, based on market analysis. (Value for Money) and efficiency. 3 Delays due to time required for (a) MINEMA, Districts and BRD to initiate MINEMA and World design and tender document “Advance Procurement” before project Bank Procurement preparation, given the absence of in- effectiveness; (b) provide training on WB Specialist. Immediately house expertise on WB guidelines. procurement regulations, prior to project effectiveness, (c) TA in procurement and contract management to be hired. D. Safeguards (i) Environmental Safeguards 99. Environmental issues. The project proposes to improve the environment within and around selected refugee camps. The camps are mainly located in areas susceptible to erosion, with poor storm water management systems. The key environmental issues identified in and near the camps are: • Severe soil erosion resulting in deep gullies and ravine formation. This is exacerbated by poor drainage and storm water handling in the camps. The increased runoff affects agricultural land in the host communities; • Increased pressure on host community forest resources and woodlots, due to fuelwood shortages in the camps; and • Pollution resulting from poor sanitation systems i.e., communal septic tanks overflow during heavy rains. 100. An environmental needs assessment was conducted during project preparation to identify key environmental issues and propose remedial interventions to be supported by the project and/or funded from other sources. 101. In addition to the environmental management component, the project also plans to implement works such as road upgrading or rehabilitation; market infrastructure; and construction, rehabilitation and upgrading of schools, health facilities and water supply systems. These activities are likely to generate negative environmental and social impacts that will require the preparation and implementation of corresponding management plans. The potential environmental risks and impacts, which are generic to construction works, include soil compaction, dust emissions, vegetation clearing and noise. It is anticipated that construction activities will be implemented through labor intensive public works, with employment to be made available to refugees and host communities. The MINEMA SPIU will ensure that these sites meet the minimum operational health and safety requirements. Activities financed through component two could also generate environmental or social risks depending on the nature of the business considered (e.g., agriculture-related activities could generate environmental risks). 102. Environmental safeguards policies. The project triggers OP4.01 (environmental assessment), OP4.11 (physical cultural resources) and OP4.37 (Safety of Dams). Details of project activities and the precise locations of implementation sites in the six targeted districts are yet to be determined. As such, an Environmental and Social Management Framework (ESMF) was prepared to assess the environmental and social risks and provide guidance on how they will be addressed. The ESMF was disclosed in-country and on the World Bank website on March 25, 2019. Site-specific ESIAs and Environmental and Social Management Plans (ESMPs) will be prepared as appropriate, after project effectiveness. Page 30 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 103. Construction works are expected to be undertaken in the confines of existing settlements. Although it is unlikely that Physical Cultural Resources (PCR) will be affected, the ESMF includes “Chance Finds” procedures for potential impacts to the PCR. 104. Environmental safeguards implementation. MINEMA SPIU staff will undertake safeguards due diligence of project activities under Components 1 and 3 to ensure adequate incorporation of environmental and social issues. The staff will also advise the project steering committee on safeguards policy compliance requirements prior to subproject approval. BRD will screen proposals under component two for safeguards risks. MINEMA and BRD will seek clearance of subproject-specific safeguards instruments from the Rwanda Development Board (RDB) Environmental Compliance Unit, prior to implementation. 105. Public consultations. Several consultation meetings were held in all the six districts hosting refugee camps to introduce the project and elicit inputs for the project design. Those consulted include district, sector and cell officials; host communities; refugees; and the staff of UNHCR and its implementing partners. The consultations demonstrated strong overall support for the project. Key needs highlighted include improved access to services, support for entrepreneurship and livelihood and assistance to address environmental degradation caused by the refugee presence. Consultations also emphasized the need for balance and equity in the support given to refugees and host communities. Finally, joint refugee-host community forums were seen as important means for communication between the two groups. (ii) Social Safeguards 106. The overall social impacts of the project are expected to be positive. Anticipated social outcomes include (a) improved access to basic services (class rooms, health facilities, and vocational training) to address the strain that refugee populations place on these services, which will benefit both refugees and host communities. The project will also promote economic opportunities, including road upgrading and rehabilitation, market infrastructure and access to finance for both refugees and host communities. Stakeholders and beneficiaries will be directly involved in different aspects of the project, including through participation in subproject identification and design; and providing feedback regarding satisfaction with the completed subprojects and service delivery. The six districts will involve civil society and local councils in prioritizing subprojects. In addition, the project will mainstream the management of social risks, including GBV, across all project components to contribute to the sustainability of impacts. 107. Social safeguard policies. The project will operate in the districts that host Rwanda’s six refugee camps – Kirehe, Gatsibo, Gicumbi, Karongi, Nyamagabe and Gisagara. The project triggers the World Bank Social safeguard policy OP 4.12 (Involuntary Resettlement). Individual subprojects are not yet identified. Therefore, the project prepared a Resettlement Policy Framework (RPF) to address resettlement and land acquisition issues that might arise during implementation. The RPF was publicly disclosed in-country and on the World Bank website on March 25, 2019. 108. Social Risk Management, including gender issues. The project will endeavor to mitigate social risks comprehensively, including prevention of GBV and social conflicts within refugee settlements, among host communities and between host communities and refugees. The project will pay attention to gender dimensions by ensuring that women benefit from and have a role in the decision-making process on sub-projects. Vulnerable groups, including girls, women and people with disabilities (PWDs), will receive specialized support in all interventions. Project results will be disaggregated by gender and refugee/host community status. Page 31 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 109. Stakeholder engagement and grievance management. The client has prepared a Stakeholder Engagement Plan (SEP), which identifies key stakeholders and clarifies community consultative approaches and grievance redress mechanisms. The SEP seeks to facilitate meaningful engagement with refugee and host communities, and humanitarian and development actors. This will contribute to social conflict management, build ownership, and enhance sustainability and project outcomes. The engagement will be done through the wider use of publicly available information, consultative processes and feedback mechanisms. This will continue into implementation. 110. The project will mainstream the following: (a) increasing access to project information and use of various platforms to share information; (b) information campaigns on co-existence between host and refugee communities, mitigation of social conflict and prevention of violence, including GBV; (c) community participation to determine local investments needs and enhance ownership; and (d) feedback mechanisms designed to process complaints, feedback and questions from stakeholders at all levels. (iii) Safeguards Staffing and Capacity 111. Safeguards capacity of implementing agencies. MINEMA has no prior experience with World Bank- funded projects. Some of the participating districts are familiar with World Bank safeguards policies, but district personnel will require additional training and mentoring. MINEMA has hired two Environment and Social safeguards staff for the SPIU and to support the participating districts, working in collaboration with District Environmental Officers, District Health Officers, District Labor Officers, Social Affairs Directors at the Districts, Vice-Mayors in-charge of Social Affairs, Sector Social Affairs staff, Directors of Education at the District level, contractors and supervision consultant safeguards staff. MINEMA will screen subproject proposals issued by the districts. A safeguards capacity building plan for the project will be prepared. 112. BRD has experience working with the World Bank. BRD has two safeguards staff, who are currently working on two World Bank-financed projects. These staff will provide safeguards support for the implementation of the component two of the project. (iv) Grievance Redress Mechanisms 113. 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/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. Page 32 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) V. KEY RISKS 114. The overall risk to the successful implementation of a WBG-financed project on forced displacement in Rwanda is substantial. Rwanda has been a generous host to refugees over a long period. It is politically stable, enjoys solid economic growth and state institutional capacity has grown rapidly over the last two decades. However, experience with development responses to refugee situations is limited. The country is also located in a region that faces climate risks and is politically volatile. These dynamics could affect the proposed project, as well as public and government support for refugee inclusion. Accordingly, we identify six main risks: (i) political and governance; (ii) technical design; (iii) institutional capacity; (iv) fiduciary; (v) environment (including climate change) and social; and (vi) refugee protection. 115. Political and governance. Regional dynamics could affect achievement of the PDO. A long-standing political crisis in the DRC has exacerbated poverty and displacement. Close to 800,000 Congolese refugees are being hosted in neighboring countries and 4.5 million people are internally displaced. There is a high risk of additional influxes of refugees from Rwanda’s western neighbor. This could stretch Rwanda’s management capacity, particularly given the challenges of land scarcity. A major new influx would also further strain basic services and degrade the environment, raising the potential for social conflict. While the situation in Burundi has stabilized since the 2015 political crisis, it remains fragile, with the potential for conflict. The impact of any instability in Burundi would inevitably be felt across the border in Rwanda through refugee influxes and political tensions at the inter-governmental level. These dynamics would undermine government efforts to promote social and economic inclusion. 116. Technical design. The technical design of the project is relatively complex, covering multiple sectors and implementing agencies at both the national and subnational levels. The nature of the development challenges connected to the refugee presence by necessity requires a multi-sectoral response, including health, education, water, transport and access to finance. The project will involve districts and two implementing agencies at the national level. Component two will also involve financial institutions operating at the district level. The project structure will require concerted effort to ensure effective coordination and monitoring. To address this risk, the project has established an inter-agency PSC and TT to provide strategic guidance and technical support to the implementing agencies. District field specialists in each of the target districts will support coordination and monitoring of all project activities. The integrated P-MIS is also intended to facilitate effective and consolidated monitoring. 117. Institutional capacities. The main implementing agency, MINEMA, has no experience working with the World Bank and is new to multi-sector, longer-term development approaches to forced displacement. The project will challenge MINEMA’s capacity to manage finances, procure goods and services and comply with environmental and safeguards policies. It will also test MINEMA’s ability to coordinate and oversee an inter-agency operation that will be implemented partly at the national level and partly by districts. Significant technical support and mentoring will be required in the initial period of implementation to ensure that the project is managed in compliance with World Bank standards. MINEMA will also look to hire personnel with experience implementing World Bank-financed projects. For coordination, the project will have an inter-agency PSC and TT. Monthly coordination meetings will be held between MINEMA, BRD and the participating districts to promote smooth project implementation. MINEMA, BDA, SACCOs and MFIs will benefit from technical assistance to build their capacity to implement the project. 118. Fiduciary. Rwanda has solid fiduciary systems, however, financial management and procurement risks are substantial, as the main implementing agency, MINEMA, has staffing gaps and no experience with World Bank FM and procurement guidelines. The relatively complex implementation arrangements create additional challenges for the Page 33 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) coordination of planning, budgeting and reporting on the use of finances. The proposed risk mitigation measures are: (i) develop detailed FM and procurement guidelines as part of the PIM; (ii) augment MINEMA’s fiduciary staffing; (iii) provide training and technical support to the new project fiduciary staff; and (iv) establish an inter-agency PSC and TT to support effective coordination between the different agencies involved in project implementation. 119. Environment/climate change. Development challenges faced by refugees and host communities are likely to be compounded by climate change. Heavy rainfall events have been increasing over the last thirty years, causing more frequent flooding and landslides. In addition to loss of life and injury and damage to infrastructure, these events also affect agriculture-based livelihood. Drought is another recurrent climate risk that impacts water availability and agriculture and is expected to become more severe in the future, partly due to expected temperature increases. Climate change risks will be mitigated through the project by: (a) ensuring infrastructure is constructed in an energy- efficient manner; (b) providing access to water using climate-friendly technology; (c) addressing landslide impacts and risks in the location of infrastructure and through investments in the environmental management component; (d) supporting climate-smart agricultural practices through any investments in agriculture value chains under component two; and (e) promoting non-farm livelihood options to reduce dependence on natural resources. 120. Social. While social relations are generally good between refugees and host communities, the social assessment identified a number of sources of tension due to the refugee presence. These include: (a) the perception and, in some cases, reality that refugees enjoy higher standards of service delivery than host communities; (b) the economic impacts of environmental damage caused by the refugee presence; and (c) strains on the quality of health, education and water supply in host communities. The project will directly address these concerns by strengthening services enjoyed by both refugees and host communities, making economic opportunities available to both groups and by supporting long-term solutions to the environmental degradation. Community dynamics will be assessed on an annual basis to gather data on perceptions of the level of social cohesion between refugees and host communities to pre-empt problems and measure the social impact of the project. Consultations during the preparation of the social safeguards instruments also raised concerns that some refugees – particularly in Kiziba camp – do not react well to the idea of “inclusion” or “integration”, fearing this is an attempt to deny them options to return home or for third country resettlement. To address this concern, MINEMA will identify a Kinyarwanda name for the project that promotes the concept of harmony and cooperation, rather than integration or inclusion. 121. Risks to Refugee Protection.22 The WBG, in consultation with UNHCR, has confirmed that Rwanda’s protection framework is adequate for the purposes of the sub-window. UNHCR has provided the WBG with a positive assessment of Rwanda’s protection framework, but some important ongoing protection-related challenges remain: • GBV, sexual abuse and exploitation and trafficking. Exposure to these forms of abuse and violence are regularly cited by refugees in Rwanda, with a perception that they are related to the constrained opportunities for refugee youth. The project will pursue an integrated approach to addressing the GBV risk, combining support for access to services and livelihood with GBV awareness and prevention campaigns as a complement to the government’s strong support for response services; • Right to work. Barriers to refugee self-reliance include the lack of identity cards and the lack of awareness among Rwandan employers of refugees’ right to work. Under the Strategic Plan for Refugee Inclusion, the government has undertaken to issue identify cards to all refugees by mid-2019. The project will support a . targeted communications campaign to advise Rwandan employers that hiring refugees is legal. 22 This is the “other” risk in the SORT matrix. Page 34 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) VI. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Rwanda Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project Project Development Objectives(s) To improve access to basic services and economic opportunities for refugees and host communities, and support environmental management, in the target areas in Rwanda Project Development Objective Indicators RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline End Target Improve access to basic services and economic opportunities Beneficiaries with improved access to social and economic 0.00 325,919.00 infrastructure and services (Number) Refugees (Percentage) 0.00 40.00 Host community members (Percentage) 0.00 60.00 Beneficiaries of economic opportunity activities that report an 0.00 9,000.00 increase in income (Number) Refugees (Percentage) 0.00 40.00 Host community members (Percentage) 0.00 60.00 Female (Percentage) 0.00 50.00 Direct project beneficiaries (Number) 0.00 334,919.00 Female (Percentage) 0.00 50.00 Page 35 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline End Target Support environmental management for refugees and host communities People provided with improved environmental conditions in 0.00 30,000.00 refugee hosting districts (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline End Target Component 1: Access to Basic Services and Socio-economic Investments Climate resilient Infrastructure subprojects completed in refugee 0.00 263.00 hosting districts (Number) Beneficiaries participating in project planning activities (Number) 0.00 10,000.00 Refugees (Percentage) 0.00 40.00 Host community members (Percentage) 0.00 60.00 Female (Percentage) 0.00 50.00 Roads rehabilitated or upgraded (Kilometers) 0.00 24.00 Component 2: Economic Opportunity People employed by cooperatives and MSMEs receiving 0.00 8,000.00 financing support through the project (Number) Refugees (Percentage) 0.00 40.00 Host community members (Number) 0.00 60.00 Female (Percentage) 0.00 50.00 Beneficiaries of capacity building activities under component two 0.00 1,000.00 (Number) Page 36 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline End Target Female (Number) 0.00 50.00 Component 3: Environmental Management Beneficiaries using surface reservoir water for productive use 0.00 10,000.00 (Number) Ravines rehabilitated (Number) 0.00 6.00 Surface water reservoirs constructed (Number) 0.00 12.00 Component 4: Project Management/M&E P-MIS providing necessary information to measure project No Yes effectiveness and results (Yes/No) Beneficiaries that feel project investments reflected their needs 0.00 75.00 (Percentage) Grievances registered related to delivery of project benefits that 0.00 90.00 are addressed (Percentage) Increase in social cohesion among project beneficiaries (Percentage) 0.00 5.00 IO Table SPACE UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection This indicator will report the P-MIS, Data on indicator will Beneficiaries with improved access to number of beneficiaries Annually progress be collected from MINEMA SPIU/Districts social and economic infrastructure and (refugees and host reports subproject proposals. services communities in target districts) who have Page 37 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) improved access as a result of newly constructed or rehabilitated socio- economic infrastructure and services. Access is defined as the possible utilization of project-financed infrastructure by refugees and host communities. The number will be disaggregated by type of infrastructure: (i) education (including TVET centers), (ii) health, (iii) water supply systems, (iv) economic infrastructure, and (v) roads, and female, refugee beneficiaries, and host community beneficiaries. Refugees Host community members This indicator will assess how refugees and host community members are Data on indicator will faring economically after P- Beneficiaries of economic opportunity be collected from grant project’s economic Annually MIS/progress MINEMA SPIU, BRD activities that report an increase in applications and opportunity component reports income training reports. activities are implemented. The indicator covers (i) beneficiaries of capacity building support (small Page 38 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) entrepreneurship including cooperative members, BDAs, and SACCOs receiving support) and (ii) members of cooperatives and owners/employees (existing employees and new employees) of MSMEs (recipients of financing support). Refugees Host community members Female Direct beneficiaries are people or groups who directly derive benefits from the project. This includes (i) number of beneficiaries of subprojects under P-MIS, component one and Annually progress Progress reports MINEMA SPIU Direct project beneficiaries component three, and (ii) reports number of direct beneficiaries of component two activities (i.e. number of beneficiaries who derived direct benefits from technical assistance and financing support). P-MIS Female Page 39 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) This indicator will report on the number of people provided with improved environmental conditions as a result of project’s investments on environmental management (component three). Target beneficiaries include refugees residing in six refugee camps and population of the sectors or P-MIS, Data on indicator will People provided with improved cells, where the refugee Annually progress be collected from MINEMA SPIU environmental conditions in refugee camps are located. reports subproject proposals. hosting districts Improved environmental conditions are measured by (i) reduced exposure to risks due to ravine formation (covering entire refugee camp population and the immediate population where ravine rehabilitation works carried out) and (ii) improved use of water resources through water reservoirs constructed for productive use. ME PDO Table SPACE Page 40 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection This indicator will track the number of subprojects completed under component one. Targets will be established on an annual basis. Because the project will not be able to align with regular district budget and planning cycle for the first year of implementation, P-MIS, Data on indicator will Climate resilient Infrastructure subprojects that are Semi- progress be collected from MINEMA SPIU, Districts subprojects completed in refugee hosting consistent with the selection annually reports subproject proposals. districts criteria will be selected from the existing district development strategies for the first year. Subproject types are (i) education (including TVET), (ii) health, (iii) water supply systems, and (iv) market infrastructure. Reporting will start after first year of implementation. Data on indicator will This indicator will track the P-MIS, Semi- be collected from Beneficiaries participating in project number of people progress MINEMA SPIU, Districts annually attendance sheets and planning activities participating in project reports consultation reports. planning activities. Page 41 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Refugees Host community members Female Data on indicator will be collected from P-MIS, This indicator will track the Semi- technical supervision progress MINEMA SPIU, Districts Roads rehabilitated or upgraded kilometers of roads annually and works reports rehabilitated or upgraded. implementation progre ss reports. This indicator will track the number of individuals employed by the P-MIS, Data on indicator will People employed by cooperatives and cooperatives and MSMEs Semi- progress be collected from BRD SPIU MSMEs receiving financing support (existing employees and annually reports financing applications. through the project newly employed) and individuals that receive financing support under component two. Refugees Host community members Female This indicator will report on Data on indicator will the individual beneficiaries P-MIS, be collected from Semi- Beneficiaries of capacity building activities of the project’s capacity progress training and capacity BRD SPIU annually under component two building activities under reports support activity component two. The reports. indicator will track the Page 42 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) number of entrepreneurs, BDAs and SACCOs provided with capacity support. Female This indicator will track the number of beneficiaries using harvested water from P-MIS, Data on indicator will constructed surface Semi- Beneficiaries using surface reservoir water progress be captured MINEMA SPIU reservoirs for productive annually for productive use reports in subproject proposals. use. Productive means the reservoirs can be used for irrigation, fish ponds, or the needs of livestock. Data on indicator will This indicator will report on P-MIS, be collected from Semi- the number of ravines progress technical supervision MINEMA SPIU Ravines rehabilitated annually rehabilitated under reports and works progress component three. reports. This indicator will report on Data on indicator will the number of water P-MIS, be collected from Semi- reservoirs constructed for progress technical supervision MINEMA SPIU Surface water reservoirs constructed annually harvesting downstream reports and works progress storm water from refugee reports. camps for productive use. Data on indicator will This indicator will track P-MIS, be collected from whether the P-MIS is Semi- P-MIS providing necessary information to progress internal evaluation MINEMA SPIU providing necessary annually measure project effectiveness and results reports reports prepared by information for project M&E team. An M&E. evaluation form will be Page 43 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) developed to track the application/utilizati on of P-MIS by different users. This indicator will measure the extent to which P-MIS, Beneficiaries that feel project investments decisions about the project Annually progress Beneficiary survey MINEMA SPIU reflected their needs reflected beneficiary reports preferences in a consistent manner. This indicator will measure the utilization of Data on this indicator complaints/grievance P-MIS, will be collected by Semi- Grievances registered related to delivery mechanism by reporting on progress project GRM MINEMA SPIU annually of project benefits that are addressed percentage of number reports through hotlines, addressed grievances in complaint boxes, etc. comparison to number of grievances filed. Data on this indicator will be collected by beneficiary surveys. Social cohesion will be P-MIS, This indicator will track the measured by a Increase in social cohesion among project Annually progress MINEMA SPIU change in social cohesion composite index beneficiaries reports among project beneficiaries. (scored 1 to 5). The indicator will report on percentage increase in the score. ME IO Table SPACE Page 44 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Page 45 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) ANNEX 1: Implementation Arrangements and Support Plan Implementation Arrangements 1. Institutional Arrangements. The institutional arrangements for the SEIRHCP reflect the multi-sector nature of the project and the broader aim of promoting the social and economic integration of refugees and host communities. The project structures also build on mechanisms established in parallel with project preparation to prepare the Strategic Plan for Refugee Inclusion 2019-2024. Agencies involved in preparation of the Strategic Plan will continue in the project steering committee and technical team to ensure continuity and alignment between policy and project implementation. 2. The key institutions will be: (i) national level: the MINEMA; the BRD, and an inter-agency Steering Committee and TT; (ii) district level: the six participating districts, led by the Mayors, with support from district field specialists under the MINEMA SPIU; and (iii) sector level: the participating sectors, led by the respective Executive Secretaries, with support from sector-level BDA. 3. Implementation Arrangements. At the national level, overall oversight is with MINEMA. A PSC with Permanent Secretary representation will provide policy guidance and approve the annual work program, budget and subprojects for components one and three. Membership will include MINEMA, the MINECOFIN, the Ministries of Health, Education, Gender and Family Promotion, Local Government, Trade and Industry, Agriculture, Youth and Sport, the Environment and Infrastructure. The six districts will also be represented on the PSC, as well as UNHCR. An inter-agency TT will be established, comprising technical level officials of the PSC members. The TT will advise the MINEMA SPIU and other implementing agencies and ensure that project investments are consistent with government policies, standards and practices. Overall management will be vested in the MINEMA SPIU, which will have responsibility for project implementation, coordinating activities on the ground and reporting on progress. This will include drafting of annual Work and Financial Plans for the review and approval of the PSC and the World Bank. The SPIU staffing will include, inter alia, a Project Manager, M&E Specialist, Communications Specialist, Safeguards Specialists, Civil Engineers, Livelihoods/Business Development Specialist, Financial Management specialists, Procurement specialist and six district field specialists. 4. Implementing agency by component. In accordance with the government’s decentralization policy, component one will be implemented by the districts that host refugee camps. MINEMA will hire specialist technical support for detailed engineering designs, environmental and social screening and construction supervision to complement the capacities at the district level. The districts will procure contractors and manage funds for subproject implementation. The MINEMA SPIU will appoint district field specialists to support the districts and oversee implementation of all components. MINEMA will also sign District Implementation Agreements with each target district that will detail respective roles and responsibilities, including details on financial flows and compliance with World Bank fiduciary and safeguards standards and funds flow. Technical government agencies will provide implementation and supervision support to MINEMA as per their mandates.23 23The project builds on the experience of World Bank-financed Rwanda Second Emergency Demobilization and Reintegration Project where the implementing agency entered into multiple MOUs with various technical government agencies. Sample MOUs were shared with MINEMA during preparation and it is expected that the MOU arrangements will be implemented smoothly. Page 46 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 5. Component 2 will be implemented by the BRD, with support from BDAs at the sector level. The BDAs will generate awareness of the availability of project financing for MSMEs, cooperatives, etc. – including those with membership of marginalized groups – and assist them to prepare viable business plans and proposals. Screening of the viability of proposals will be undertaken by SACCOs and other MFIs in accordance with their normal procedures. Proposals will be sent to BRD for safeguards screening of proposals. BRD will also provide quality control for the screening process and manage disbursement of the matching grants or loans (should they be made available later). 6. Component 3 will be implemented by MINEMA, with technical support from the TT, including the MoE and the Rwanda Environment Management Agency (REMA). 7. The PIM detailing administrative, procurement, FM, safeguards, M&E procedures and arrangements for the Project as well as eligibility criteria and procedures for the selection of subprojects is being finalized. A diagram showing the institutional framework for project implementation is below. Figure 1.1: Implementation Arrangements for SEIRHCP 8. Community participation and engagement. The project will include consultations at the cell and sector level and in camps, including with host community and refugee representatives. Consultations will gather information on development problems and challenges and identify priority subprojects. To close the feedback loop, all decisions taken on subprojects to be financed under SEIRHCP will be reported back to refugees and host communities. At the district level, the project will work in close collaboration with the Joint Action Development Forum (JADF), a multi-stakeholder platform put in place by government to facilitate and promote the participation of citizens in local governance. JADF members include local government officials, civil society organizations, the private sector and local development partners. 9. Subproject identification. Subprojects for component 1 will be identified through the government’s regular district development strategy planning process. This includes consultations at the cell, sector and district Page 47 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) levels and integration of national sector strategies. Additional consultations will be held in parallel with host communities, refugees and humanitarian agencies to ensure that the impacts – positive and negative – of the refugee presence are incorporated into subproject proposals. Districts will submit subproject proposals to the MINEMA SPIU for screening. The decision on which subprojects to finance will be taken by the Steering Committee. Final decisions will be reported back to refugees and host communities to close the feedback loop. Table 1.1 describes the consultation and decision-making process. Proposals from the districts will be assessed against the eligibility criteria in Table 1.2 below, which will be included in the PIM and updated as necessary. 10. During the first year of project implementation, the project schedule will not be aligned with the district development strategy planning process. Accordingly, subprojects for component 1 will be identified directly from the district development plans. The proposed subprojects for year one will still need to be consistent with the eligibility criteria and subject to consultations with the districts, sectors and cells (plus refugees and host communities). Table 1.1: Subproject identification and decision-making process for Component 1 References Level Process Stakeholders involved PSC Decide on subprojects to PSC Members finance MINEMA Screen subproject proposals MINEMA against eligibility criteria and TT safeguards Vision 2020 District Finalize subproject District officials Vision 2050 identification and subproject Joint Action Development National Strategy for proposal preparation Forum Transformation District Council National sector strategies Private sector and CSOs Local Economic Consultation and Sector officials, Development Plans Sector consolidation of cell priorities community and refugee representatives Cell and camp Consultations at grassroots Community and refugee level through public hearings members and to identify development representatives priorities Table 1.2: Selection Criteria for subprojects under Component 1 Summary Eligibility criteria Local community demand- Subproject is prioritized by participating local communities and refugees as driven meeting critical community needs Shared benefits for host The subproject will benefit both the host and refugee communities. community and refugees Addresses gender concerns and Gender and GBV concerns to be mainstreamed through the design (e.g., supports marginalized groups provide appropriate lighting for water points, build market infrastructure with child care facilities to encourage women’s participation). Infrastructure to be accessible to PWDs. Long term sustainability The government (district or national) guarantees O&M with budget provision and relevant staffing to ensure sustainability of the subproject. Page 48 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) No significant adverse negative The proposed subprojects do not have potential adverse social and social or environmental impacts environmental impacts. Consistent with DDS, National The subproject is identified as a priority in the DDS and/or Local Economic Strategy for Transformation 1 Development Plan and is consistent with the NST1, related Sector Strategic (NST1) and Strategic Plan for Plans and the Strategic Plan for Refugee Inclusion. Refugee Inclusion Gap-financing, not substitution The proposed subproject fills an existing gap but does not substitute for other available sources of funds. 11. Collaboration with technical agencies. MINEMA and BRD will collaborate with relevant government agencies to provide technical support for the implementation of subprojects. This could include the RTDA for roads, the WDA for technical and vocational education, the Rwanda Cooperatives Agency for the establishment of and technical assistance to cooperatives, and REMA for environmental management activities, etc. The purpose of the technical collaboration is to ensure that subprojects are implemented in line with government standards. Implementation Support Plan Strategy and Approach for Implementation Support 12. This project is MINEMA’s first time to implement a World Bank-financed operation. It is also the first Government of Rwanda project in support of a development response to forced displacement. The social and economic integration of refugees necessarily requires broad-based, multi-agency engagement in the project governance structure. Consequently, the implementation arrangements are multi-sector and cover the national and district levels. As a project under the IDA 18 Sub-window for Refugees and Host Communities, the World Bank is also required to monitor the ongoing adequacy of Rwanda’s protection framework for refugees. 13. The strategy for the Implementation Support Plan (ISP) has also been devised to undertake the necessary mitigation measures to address the major risks identified in SORT: (a) political and governance related to the potential impact of regional dynamics on displacement in Rwanda; (ii) sector strategies and policy, related to whether Rwanda will be able to fully implement the Strategic Plan for Refugee Inclusion and commitments under the CRRF; (iii) institutional capacities, particularly for MINEMA as newcomer to World Bank financing; (iv) sustainability of refugee economic integration; (v) environment (including climate change) and social, including maintaining social cohesion between refugees and host communities; and (vi) risks to refugee protection. The project design cannot address all the risks, but measures are in place to mitigate most. The ISP is designed to review and ensure the mitigation measures are effective and to reinforce them where necessary. The ISP is also designed to enhance the capacity of implementing agencies in a range of technical areas. 14. The ISP will be undertaken by World Bank staff, based on four major principles: (a) maintain high-level dialogue with the Government of Rwanda on policy for refugee inclusion, including support for implementation of the Strategic Plan; (b) support regional dialogue on forced displacement in light of its trans-national nature; (c) frequent local level and field-based supervision of project activities, including consultations with beneficiaries, complemented by DC-based implementation support; and (d) technical capacity-building for all implementing agencies. 15. In the initial period of project implementation, the ISP will focus on supporting core management skills to Page 49 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) help ensure compliance with World Bank fiduciary and safeguards requirements. The World Bank will also provide targeted technical assistance on M&E, including the project-specific MIS, which will be a key tool to address the inevitable coordination challenges that will flow from the complicated implementation arrangements. Support will also be provided to BRD to refine the grants manual and to reach out to enterprises in the districts. 16. Over time the team will work to support government capacity in the following areas: (a) development approaches to forced displacement, including economic self-reliance; (b) participatory and consultative planning processes at the local level; (c) ability to supervise construction of infrastructure to a high technical standard; and (d) environmental management. 17. UNHCR will play an important role in monitoring the ongoing adequacy of the refugee protection framework. Implementation Support Plan and Resource Requirements 18. The World Bank’s task team will be led by a Task Team Leader (TTL) based in Washington DC. The team will include country-based FM, procurement and safeguard staff and sector specialists. The ISP will make use of the following tools: (a) regular implementation support missions, at least twice a year; (b) a mid-term review, which will be an opportunity to make major adjustments to the project design if necessary; (c) regular fiduciary compliance reviews, including review of Interim Financial Reports and external audits; (d) technical audits of the quality of infrastructure; (e) impact assessment; and (f) implementation completion, where an assessment of the project will be undertaken and lessons drawn to inform future or similar operations. 19. The table below presents the focus of the implementation support and the skills required. Table 1.3 Implementation Support and skills required Time Focus Main Skills Needed Resource Partner estimate (SW) Role First • Project implementation start up Task management/social 14 UNHCR and twelve • Establish project team in SPIU development (HQ/CO- partners to months • Support to building blocks of project based) support management (FM, procurement, Fragility and conflict/forced 4 monitoring M&E, inter-agency governance displacement of ongoing structure) and participatory FM (CO-based) 3 adequacy of development processes the refugee Procurement (CO-based) 3 • Development of monitoring protection methodology, including baseline Safeguards (CO-based) 6 framework survey M&E/MIS (HQ/CO-based) 3 Livelihood/private sector 5 development/access to finance (HQ/CO-based) Rural infrastructure 2 engineer Strategic Communications 1 Page 50 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 12-48 • Joint ISMs with government and Task management/social 14 As above. months UNHCR to monitor implementation development performance Fragility and conflict/forced 4 • Review of annual work/financial displacement plans FM 3 • Review of quarterly/annual reports Procurement 3 • Review of audits/IFRs Safeguards 5 • Review subproject selection Environmental management 4 processes Health 1 • Support for innovations on Education 1 economic self-reliance Livelihood/private sector 5 • Support for integration of refugees development/access to into national programs finance • Undertake MTR Rural infrastructure 4 engineer M&E/MIS 4 48-60 As above, plus: As above As above As above months • Impact assessment • Project completion Page 51 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) ANNEX 2: Economic and Financial Analysis 1. The economic and financial analysis conducted for the SEIRHCP suggests that each of the project’s proposed initiatives is economically viable at a discount rate of 6 percent over their expected lifetime (20 years on average, except for water and market facility sub-projects for which a 10-year period has been considered). This conclusion is rather conservative as each subproject presents far larger economic returns in terms of indirect social benefits (described in the “Sub-projects’ Costs and Benefits” section), which are presently not tangible or readily quantifiable. 2. The analysis employs a simplified cost-benefit methodology, where solely direct cost and monetary value of selected benefits are compared, and NPV and economic IRR are presented.24 Implementation costs and benefits, adjusted for inflation and the country’s economic conditions, were estimated based on existing empirical evidence to assess economic viability. The project’s overall economic IRR has been calculated at 66.3 percent over a 20-year period, covering nine expected sub-project investments. 3. Both hosting and refugee communities benefiting from the project face poverty and lack of economic opportunities. The main hypothesis, as described in the project appraisal document (PAD), is that the appropriate design and implementation of various investments would significantly increase the social and economic conditions of those groups through improved economic outcomes, achieved by meeting basic needs and acquiring essential services, including access to finance. 4. In particular, the sub-projects’ incremental benefits relate to improving the socio-economic conditions of the populations in the areas of interventions through access to better and comprehensive education (schools), clean water and health conditions (water sources, health centers), upgraded infrastructure and channels for trade to maximize productivity, efficiency, and economic returns, including in agriculture (roads and markets), increased productivity and income due to infrastructure interventions to contain soil degradation (ravine rehab) and finance for higher business productivity (matching grants). 5. An important development objective achievable through the project’s investments is the creation of an effective labor market, which in turn would lead to more self-reliant communities with higher levels of social cohesion and reduced friction-driven security risks. 6. The assessed interventions include nine potential sub-projects across different sectors including education, health, water sanitation and hygiene (WASH), infrastructure, agribusiness, access to finance, and environmental management (EM). Both positive NPV at six percent discount rate and higher-than-cost of capital IRR for each of the sub-projects show they are economically viable (see Table 2.1). 24Bugnion, C (1998) “Economic Rationalization of Humanitarian Aid: Use of cost and effectiveness indicators to evaluate ECHO funded humanitarian emergencies”. European Community Humanitarian Office. Page 52 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Table 2.1: Cost-benefit analysis of selected sub-projects under different scenarios (figures in USD) Primary Primary Secondary TVET Health Water Market Road Micro Ravine School School Education Care Source Shed Rehab finance Rehab Center BASELINE SCENARIO Invest. $8,706 $8,706 $14,260 $62,820 $10,556 $33,116 $52,706 $400 $1,000,000 NPV* $89,280 $101,623 $66,223 $498,536 $113,571 $378,351 $225,874 $4,145 $3,143,606 IRR** 84.85% 95.27% 29.13% 67.82% 88.55% 93.45% 40.94% 85.64% 32.33% COSTS +20% SCENARIO Invest. $10,447 $10,447 $17,112 $75,385 $12,668 $39,739 $63,248 $480 $1,200,000 NPV* $64,297 $70,133 $59,652 $485,972 $110,625 $369,264 $191,684 $3,635 $2,913,869 IRR** 54.72% 58.83% 24.85% 56.87% 73.67% 77.78% 31.60% 65.14% 26.93% BENEFITS -20% SCENARIO Invest. $8,706 $8,706 $14,260 $62,820 $10,556 $33,116 $52,706 $400 $1,000,000 NPV* $46,441 $49,808 $46,407 $386,264 $87,911 $293,594 $146,510 $2,806 $2,285,148 IRR** 48.68% 51.53% 23.93% 54.68% 70.70% 74.65% 29.71% 61.04% 25.84% COSTS +20% AND BENEFITS -20% SCENARIO Invest. $10,447 $10,447 $17,112 $75,385 $12,668 $39,739 $63,248 $480 $1,200,000 NPV* $21,459 $18,318 $39,837 $373,700 $84,965 $284,507 $112,321 $2,296 $2,055,410 IRR** 24.16% 21.80% 19.97% 45.90% 58.79% 62.11% 21.98% 44.62% 21.39% Source: Team calculations based on empirical data *NPV with 6 percent social discount rate over a 20-year period. **Rwanda's Cost of Capital 17.3 percent (World Bank) Proposed Interventions for Component 1: Access to Basic Services and Socio-economic Investments Analysis of Costs and Benefits - Primary, Secondary, and TVET Education Classroom – Estimated Investment for 1 classroom (30 students): Primary and Secondary Education US$8,706; TVET US$14,260. 7. Costs refer to the construction of a fully equipped and furnished classroom for 30 students on average. Annual O&M costs of education amounts, on average, to US$278 for primary and US$356 for secondary level per student.25 In the CBA, a classroom is assumed to be attended by 30 students. As such, O&M costs for a primary and secondary level classroom amount, on average, to US$8,354 and US$10,693 respectively. 25 How Much Does School Cost? What Your Donation Can Do. https://www.aidforafrica.org/girls/how-much-does-school-cost/ Page 53 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 8. Both primary and secondary education entail several benefits, many of which can be quantified and expressed in monetary terms. Among them, the most important appear to be reduction in child mortality and maternal deaths, and an increase in income per year of schooling.26 9. Specifically, the Global Partnership for Education determines a 50 percent reduction in child mortality in case of mothers able to read. Also, a 67 percent reduction in maternal deaths if a mother has completed primary education. Finally, a 10 percent increase in income per year of schooling completed.27 In monetary terms, such benefits amount to US$15,938 for primary and US$18,624 for secondary education per classroom, on average. Table 2.2: Direct and Indirect Benefits of Primary and Secondary Education Sub-project (figures in USD) Primary and Secondary Education Classroom Discount rate 6% Indirect Benefits PRIMARY EDUCATION Investment $8,706 - Higher attendance of students and teachers lead to improved learning outcomes and building solid social capital NPV $89,280 - Poverty reduction as demonstrated by higher income per year of IRR 84.85% schooling. - Parental education positively affects the child’s educational level SECONDARY EDUCATION - Boosts technological change by diffusion of knowledge Investment $8,706 - Reduction of financial burden through efficient access to education for girls, rural communities, ethnic minorities, and migrants NPV $101,623 - Reduction in criminal activity due to both increased time dedicated to IRR 95.27% school participation and increased level of education. Source: Team calculations 10. As for technical and vocational education, 77 percent of TVET students are expected to be employed soon after graduation. As such, benefits are estimated in US$3,442 per classroom. Moreover, according to a Global Partnership for Education report,28 each year of education is correlated with a 10-percent increase in income. Total benefits per classroom amount to US$8,608. Table 2.3: Direct and Indirect Benefits of TVET Education Sub-project (figures in USD) TVET Education Classroom Discount rate 6% Indirect Benefits Investment $14,260 - Increased productivity due to higher presence of skilled labor in the economy - Reduction of unemployment due to faster placement of TVET NPV $66,223 graduates vis-à-vis traditional education. 26 Global Partnership for Education. https://www.globalpartnership.org/education/the-benefits-of-education 27 Ibid. 28 Global Partnership for Education: https://www.globalpartnership.org/education/the-benefits-of-education Page 54 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) - Increased psychological well-being both at the individual and community level due to early economic autonomy/independence. This also contributes to higher productivity. - Faster turnover due to skilled workforce benefits enterprises IRR 29.13% - In social terms, improved health due to better economic conditions, crime reduction due to lower unemployment, increased and improved social cohesion as a consequence, and strengthened, faster social integration. Source: Team calculations - Sub-project: Primary Health Care Center – sub-project estimated investment: US$62,820 11. The PHCC sub-project has been analyzed over an estimated life span of 20 years and assumed to serve a 50,000-individual community. Its O&M costs have been calculated as US$15,527, on average.29 12. Total benefits have been estimated as a consequence of reduced maternal mortality and morbidity- related deaths due to both preventative and curative actions generated by the proposed initiative. In particular, according to Lincetto,30 a reduction of maternal mortality at birth by 33 percent as a consequence of health care interventions both in terms of antenatal care (ANC) and curative interventions, 52 maternal lives are saved vis- à-vis an estimated maternal mortality rate of 158 per year per sector/camp, which registers an average population of 54,320 (average local and refugee population combined). At a statistical value of life per year-life saved for Rwanda estimated in US$1,788 as per Viscusi,31 the economic benefits due to reduction in maternal mortality amount, on average, to US$30,679 per sector/camp per year. 13. Furthermore, preventative and curative care is conservatively expected to reduce morbidity-related deaths by 25 percent. As such, the estimated number of survival due to health care is calculated as over 54 individuals per sector/camp per year, on average. Such a benefit translates into an economic benefit of US$9,676 per sector/camp per year, considering a conservative effectiveness of intervention rate of 10 percent. Total benefits amount to US$40,355 per year, on average. Table 2.4: Direct and Indirect Benefits of Primary Health Care Center Sub-project (figures in USD) Primary Health Care Unit Discount rate 6% Indirect Benefits Investment $62,820 - Increased immunization - Improved fight against HIV/AIDS as well as treatments of those infected NPV $498,536 - Diminishing overall budget burden as the result of increased immunization IRR 67.82% and reduction of severe illness Source: Team calculations 29 UKAID Cost Analysis of the Essential Package of Health Services (EPHS). https://assets.publishing.service.gov.uk/media/57a089e8e5274a27b2000305/Somalia-cost-analysis-of-the-essential-package- of-health-services-.pdf. 30 Lincetto, O., Mothebesoane-Anoh, S., Gomez, P., and Munjanja, S. (2006). Antenatal care. Opportunities for Africa’s newborns, pages 51–62. World Health Organization. http://www.who.int/pmnch/media/publications/aonsectionIII_2.pdf. 31 W. Kip Viscusi* and Clayton J. Masterman Income Elasticities and Global Values of a Statistical Life https://law.vanderbilt.edu/phd/faculty/w-kip-viscusi/355_Income_Elasticities_and_Global_VSL.pdf. Page 55 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) - Water Source with Hand Pump – sub-project investment average: US$10,556 14. Costs for the construction or rehabilitation of a water source with hand pump for an assumed 500-user amount to US$10,556, on average.32 The life span of such an intervention is estimated as 10 years, provided regular annual maintenance. Empirical evidence shows that operations and maintenance costs amount, on average, to US$0.60 per user. At 500 users, average annual O&M costs for one water source are US$300. Access to clean water generates several economic and social benefits (Table 2.5). The most important appear to be improved health and time saving.33 In particular, the analysis reveals an estimated economic return of approximately US$100 per source due to health-related improvements and US$9,127 from improved time management because of the intervention. The total estimated benefit per source is, therefore, calculated as US$9,223, on average. 15. According to the World Health Organization (WHO), access to clean water reduces diarrhea morbidity by 25 percent. Considering diarrhea-related deaths represent 7.2 percent of total deaths and 500 users per sector/camp per water source per year vis-à-vis a statistical value of life per year-life saved of US$1,788 as per Viscusi, economic benefits of improved health conditions amount to approximately US$100 per water source per 500-user sub-group, on average. 16. Furthermore, time saved due to proximity of water source is estimated to amount to 4.5 hours per week per household.34 Accounting for an average 125 household per sector/camp per water source, and a per capita GDP per hour of US$0.31, the estimated economic benefits due to time saving amount to an average US$9,127 per water borehole per sector/camp. Table 2.5: Direct and Indirect Benefits of Water Borehole Sub-project (figures in USD) Water Borehole Discount rate 6% Indirect Benefits Investment $10,556 - Time management: Time saved can be used for children's welfare and up- bringing, gaining new skills, training or participation in associations. NPV $113,571 - Reduction of conflicts and tensions over scarce availability of water - Strengthening social cohesion as a consequence of reduced conflicts - Reduced costs of treatment for poor quality water-related illnesses IRR 88.55% - Reduction of greenhouse emissions with compensatory reforestation around water points. Source: Team calculations - Sub-project: Market Facility – sub-project investment average: US$33,116 17. Implementation costs for an estimated 50-stall market facility, with a minimum logistics and administrative capacity (e.g., warehouse, managing offices, security, etc.) have been calculated at US$33,116, 32 A Systematic Review: Costing and Financing of Water, Sanitation, and Hygiene (WASH) in Schools. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5409642/. 33 Water, sanitation and hygiene links to health: https://www.who.int/water_sanitation_health/publications/facts2004/en/. 34 Progress on Drinking Water, Sanitation and Hygiene: 2017 Update and SDG Baselines. https://theconversation.com/women- still-carry-most-of-the-worlds-water-81054. Page 56 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) on average.35 Annual costs to operate and maintain a market amount, on average, to US$885. In terms of benefits, a 50-stall market shed is expected to generate US$101,550 in sales,36 on average, which translates to US$30,465 in direct taxes at an income tax of 30 percent.37 Table 2.6: Direct and Indirect Benefits of Market Shed Sub-project (figures in USD) Market Facility Discount rate 6% Indirect Benefits - Organized trade may help level prices, thus contributing to reduced retail and Investment $33,116 wholesale prices. - Well-defined markets (and location) can help the government regulate and NPV $378,351 coordinate trade with the consequence of increasing revenues while reducing costs associated with monitoring and tax collection. - Organized markets reduce security risks faced by isolated market stalls and, if IRR 93.45% combined with infrastructure such as improved roads, can increase trade activity, this way making both traders and consumers better off. Source: Team calculations Sub-project: 10 km Road Improvement – sub-project investment average: US$52,706 18. Upgrading costs for a 10 km road have been calculated as US$52,706, as per World Bank data on infrastructure costs in Sub-Saharan Africa.38 Based on another World Bank analysis,39 recurrent costs to operate and maintain a road are US$850 per km per year. The subproject road has been assumed to be 10 km long. Accordingly, such an infrastructure requires an average annual cost of US$8,500, if the road is to be fully maintained over an estimated life span of 20 years. 19. On the other hand, benefits appear to be much higher, by only considering returns from increased economic activity and decreased accidents. Another World Bank report indicates that roads increase trade and economic activity by 10 percent.40 Using market stalls as a proxy, such a benefit is estimated as an average US$4,920 increase in economic activity per sector/camp. 20. Also, improved roads reduce mortality and disability due to car- and traffic-related accidents.41 The estimated deaths and healthy life years lost in Eastern Sub Saharan Africa is approximately 13.2 per year per km. Accounting for that, the proposed sub-project is expected to save 132 lives per year. With a statistical value 35 THE COMPOSITE BUDGET OF THE GA EAST MUNICIPAL ASSEMBLY FOR THE 2015 FISCAL YEAR https://www.mofep.gov.gh/sites/default/files/composite-budget/2015/GR/Ga-East.pdf. 36 UN South Sudan COUNTRY PROGRAMME PERFORMANCE SUMMARY. 37 PWC. https://www.pwc.com/rw/en/assets/pdf/taxguide2015-rwanda.pdf. 38 World Bank. http://siteresources.worldbank.org/INTROADSHIGHWAYS/Resources/rocks_2-3_statistics1.xls. 39 Why road maintenance is important and how to get it done. https://siteresources.worldbank.org/INTTRANSPORT/Resources/336291-1227561426235/5611053- 1231943010251/TRN4_Road_Maintenance.pdf. 40 World Bank Scaling up and coordinating investments in physical structures and infrastructure. http://documents.worldbank.org/curated/en/854221490781543956/122290272_201711346032501/additional/113851-PUB- PUBLIC-PUBDATE-2-9-2017.pdf. 41 Road-Safety-Burden-of-Injuries-in-Africa. http://pubdocs.worldbank.org/en/356861434469785833/Road-Safety-Burden-of- Injuries-in-Africa.pdf. Page 57 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) per year-life saved of US$1,788 and considering a conservative effectiveness rate of 10 percent, (the intervention’s effectiveness rate in actually saving lives) benefits in monetary terms amount to US$23,607 per year on average. Total benefits of the improved 10 km road sub-project are calculated as US$28,527 per year, on average. Table 2.7: Direct and Indirect Benefits of Paved Road Sub-project (figures in USD) Paved Road Discount rate 6% Indirect Benefits Investment $52,706 - Transportation of commodities to/from the areas of the project, and access to markets (this is a large positive impact) - Better access to community facilities and services such as health centers, NPV $225,874 schools, and places of worship, amongst others - Creation of job opportunities for local unskilled and skilled persons - Provision of markets for locally available resources needed for road construction, rehabilitation, and maintenance (sand, gravel, etc.) - Boost tourism potential through improved access to tourist destinations - Improved road drainage infrastructure and general discharge of storm water IRR 40.94% from the road/carriageway - Less dust in the air from rugged, unpaved roads - Increased presence of government due to improved regional and inter- community connections - Cost-effective ability to manage the territory with fewer resources Source: Team calculations Proposed interventions for Component 2: Economic Opportunity - Sub-project: Microfinance – sub-project investment average (per single avg. loan): US$400 21. A World Bank/IFC report indicates the average microloan amounts to US$400.42 Similarly, its average maintenance costs, estimated at 33 percent of the loan amount, together with a US$22.20 cost per borrower on average, generate a management (O&M) cost per loan of US$154.60. On the other hand, benefits are mainly due to income tax generated by each loan – specifically US$35 per loan – and job creation each operation is expected to generate. Accounting for a very conservative number of 3 employees per micro-enterprise (generally they are between 5-9), the benefits due to reduced unemployment translate into US$446 per loan/borrower. Total benefits deriving from the initiative amount to an average US$481 per year per loan. Table 2.8: Direct and Indirect Benefits of Microfinance Sub-Project (figures in USD) Microfinance Discount rate 6% Indirect Benefits - Self-sustainability of communities due to increased business activity Investment $400 - Increased and improved livelihood opportunities 42 World Bank/IFC: https://www.smefinanceforum.org/sites/default/files/IFC_Factsheets_SSA_rgb_ONLINE_1.pdf. Page 58 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) - Reduced friction as direct consequence of increased inter-community trade NPV $4,145 - Reduced crime and violence due to reduced unemployment - Reduction in mortality and morbidity due to malnutrition and infection as a IRR 85.64% consequence of increased income and household economic conditions Source: Team calculations Proposed interventions for Component 3: Environmental Management - Sub-project: Ravine Rehabilitation – sub-project investment average: US$1,000,000 22. Implementation costs to rehabilitate a ravine are calculated at approximately US$1,000,000 as per a recent World Bank assessment. The Kigali Institute of Science and Technology estimates that the five-year periodic O&M costs for a ravine amount on average to US$68,589 per kilometer. Considering three maintenance interventions over a 20-year period and amortizing costs over the estimated 20-year life span of the sub-project, annual O&M costs are US$12,963. 23. Benefits include US$26,826 in terms of a conservative average of 15 lives saved per year by the interventions due to averted landslides (considering a statistical value of life per year-life saved of 1,788 as per Viscusi) and US$281,739 worth of agricultural output saved per host community (average population 32,107) due to reduction in soil deterioration and landslides. A World Bank report estimates agricultural output at the household level as US$650 per year.43 By recovering 25 percent of output otherwise loss to ravines, the economic value of the saved production is US$163 per HH per year. Considering an estimated number of farmers of approximately 17,000 per sector and a conservative effectiveness rate of the interventions of 10 percent, the benefits in terms of agricultural output saved amounts to US$281,565 per sector per year. As such, total benefits are calculated as US$308,565. Table 2.9: Direct and Indirect Benefits of Ravine Rehabilitation Sub-Project (figures in USD) Ravine Rehabilitation Discount rate 6% Indirect Benefits - Reduced friction between host and refugee community due to minimization Investment $1,000,000 of damages caused by water storms from refugee camps - Increased household income due to recovered crops, otherwise loss to NPV $3,143,606 ravine/landslides - Improved economic output in host community and, as a consequence, in IRR 32.33% refugee camp. Source: Team calculations Sensitivity Analysis 24. A sensitivity analysis has been conducted to assess the effect of possible variations in benefits and costs on both NPV and IRR for each of the sub-projects evaluated. All results confirm the economic viability of each of the sub-projects under any circumstances (Table 2.10). 43World Bank: http://documents.worldbank.org/curated/en/417721468306853258/pdf/WPS6770.pdf. Page 59 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 25. In fact, notwithstanding an increase in costs (implementation and O&M) of 20 percent or a decrease in the total estimated benefits by 20 percent, the results remain robust. Moreover, a third scenario that contemplates a 20 percent increase in costs combined with a 20 percent decrease in benefits still shows robust NPV at 6 percent discount rate (20 years) and IRR, vis-à-vis the cost of capital of 17.3 percent. Table 2.10: Cost-benefit analysis of selected development sub-projects under unfavorable conditions (figures in USD) Primary Primary Secondary TVET Health Water Market Road Micro Ravine School School Education Care Source Shed Rehab finance Rehab Center COSTS +20% SCENARIO Invest. $10,447 $10,447 $17,112 $75,385 $12,668 $39,739 $63,248 $480 $1,200,000 NPV* $64,297 $70,133 $59,652 $485,972 $110,625 $369,264 $191,684 $3,635 $2,913,869 IRR** 54.72% 58.83% 24.85% 56.87% 73.67% 77.78% 31.60% 65.14% 26.93% BENEFITS -20% SCENARIO Invest. $8,706 $8,706 $14,260 $62,820 $10,556 $33,116 $52,706 $400 $1,000,000 NPV* $46,441 $49,808 $46,407 $386,264 $87,911 $293,594 $146,510 $2,806 $2,285,148 IRR** 48.68% 51.53% 23.93% 54.68% 70.70% 74.65% 29.71% 61.04% 25.84% COSTS +20% AND BENEFITS -20% SCENARIO Invest. $10,447 $10,447 $17,112 $75,385 $12,668 $39,739 $63,248 $480 $1,200,000 NPV* $21,459 $18,318 $39,837 $373,700 $84,965 $284,507 $112,321 $2,296 $2,055,410 IRR** 24.16% 21.80% 19.97% 45.90% 58.79% 62.11% 21.98% 44.62% 21.39% *NPV with 6 percent social discount rate over a 20-year period. **Rwanda's Cost of Capital 17.3 percent (World Bank) Source: Team calculations based on empirical data Page 60 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) ANNEX 3: Forced Displacement Context in Rwanda Background on Refugee Situation 1. Rwanda currently hosts 149,602 refugees and asylum seekers.44 This constitutes 1.3 percent of the population of Rwanda. There are two distinct groups of refugees in the country. Over 70,000 (48 percent) are from Burundi and arrived in the aftermath of the 2015 political crisis there. Most of the remaining refugees (77,000 or 52 percent) originate from the DRC. The Congolese refugees, some of whom have been in Rwanda since 1996, represent a particularly protracted case, whose circumstances are related to the cross-border disputes between Rwanda and DRC in the mid- to late- 1990s and whose future is closely linked to solutions being found for the residual population of more than 200,000 Rwanda refugees currently in eastern DRC. In light of ongoing instability in DRC, there is a risk of further inflows. 2. A relatively large section of refugees in Rwanda could benefit from durable solutions, nevertheless a sizeable population is likely to remain for some time further. Some 10,000 Congolese refugees have been re- settled from Rwanda to the USA and a further 23,000 are expected to relocate by the end of 2021. Rwanda has some of the most progressive nationality laws in the region, with the potential for naturalization. Many Congolese refugees already hold Rwandan National ID cards, although fall short of full naturalization. Despite these potential pathways to durable solutions, the majority of refugees in Rwanda do not have a clearly identified end point for their refugee status and are, therefore, directly affected by policies for refugee hosting. 3. Rwanda’s growing economy provides a promising context for the economic inclusion of refugees. Economic growth rates of close to 8 percent per annum through the last decade led to a decline in the percentage of people living below the national poverty line from 58.9 in 2000 to 38.2 percent in 2018. The Government of Rwanda’s intention to base further economic growth on modern agriculture/food sector, increased trade and regional integration, well-managed urbanization and major investments in human capital, has the potential to include and enhance the socio-economic opportunities of refugees. 4. Rwanda has a long history of and familiarity with forced displacement issues. Following 1994, more than two million Rwandan citizens were themselves displaced across the region. Their return and subsequent reintegration was one of the largest return processes ever, and this process has been widely recognized as a comprehensive repatriation process entailing support for physical return, settling of grievances and the resumption of social and economic life at community level.45 The direct experience of so many Rwandans, including many senior Government officials, of being a refugee has a strong bearing on the country’s generous and progressive approach to refugee hosting. On the global scene, Rwanda has long been a champion of local integration as a durable solution for refugees and of greater socio-economic inclusion with a recognition that the chances for repatriation of the current refugee population is low. 5. In reality, however, most refugees in Rwanda remain in camps. This situation is influenced by security considerations, a lack of available land and the provision of humanitarian aid through the camp-based model. Around 92 percent of refugees live in one of six camps and two reception centers. The Mahama camp was established in 2015 in the south-east of the country and hosts Burundian refugees. It is the largest of all 44 UNHCR Operational Update February 2019 at https://data2.unhcr.org/en/documents/details/68428. 45 World Bank 2015. Page 61 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) the camps in Rwanda; some 59,000 Burundian refugees are currently residing there. The other five camps date back as far as 1996 and host Congolese nationals; they vary in size from 10,600 to 20,600 persons. Refugees in the camps do, however, enjoy some degree of freedom of movement. Refugees need only register once every three months in the camps to retain access to humanitarian assistance, so it is reported that many move back and forth between life in and outside the camps. Figure 3.1: Rwanda refugee population Source: UNHCR February 2019 6. A heavy reliance on humanitarian assistance and poor nutritional status is common to all the camp populations. UNHCR data suggests that about 90 percent of refugees in the camps rely on humanitarian cash/food assistance as their main source of household income due to the lack of land for cultivation and limited income generating opportunities.46 But with humanitarian funding shortages and rationing in place, this assistance fails to meet their nutritional needs.47 In Mahama, global acute malnutrition and stunting among children are at critical rates. In the Congolese camps, it is estimated that only half of the refugee households have adequate food consumption. 48 46 UNHCR 2017. 47 UNCHR and WFP 2014. 48 UNHCR 2017. Page 62 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 7. Conditions in the camps vary widely. Mahama which was built in 2015, has good health services, schools and adequate water and shelter. However, conditions are poor in some of the longer-standing locations, such as Kigeme, where shelter and facilities are in bad condition, water and sanitation provision falls below humanitarian standards, there is severe over-congestion and parts of the camp are at risk of collapsing into a deep ravine due to inappropriate drainage systems that lead to landslides and soil erosion. 8. Research suggests that host communities are better off than the refugees in camps and have experienced both positive and negative impacts of refugee presence. Host communities around Kigeme, Nyabiheke and Gihembe refugee camps have higher average income and lower poverty rates than refugees.49 They are proven to have benefitted from the presence of refugees with improved educational outcomes for local children and positive spillover effects for host community households, businesses and trade from the use of cash assistance. Alongside this, the negative impacts of refugee presence have been food scarcity (as grain crops were bought up by humanitarian agencies for distribution to refugees), pressure on local services and severe environmental degradation. 9. Environmental degradation has been a source of tension between refugees and host communities, but generally social relations are good. The refugee camps have contributed to deforestation, reduction of biodiversity, water runoffs, sedimentation and infertility of agricultural land, all of which has been a source of tension. Some host communities also express an unmet desire to access facilities in the camps, where they are perceived to be superior to their own. But UNHCR research suggests that host community perceptions are largely positive. Most of the refugees share a similar language and cultural traits with the host communities, which has facilitated social integration. 10. Approximately eight percent refugees in Rwanda (all of which are Burundian) live in urban centers such as Kigali and Huye. Some urban refugees are self-sufficient, using remittances and business revenues to sustain themselves. However, there are considerable challenges to economic self-reliance even in the urban context. One survey found that only 17 percent of urban refugees are working and UNHCR regularly receives applications for urban refugees to relocate from the urban context into camp settings to access humanitarian assistance. 11. Women and children make up 76 percent of all refugees in Rwanda. Refugee women and girls are exposed to increased risk of sexual violence and exploitation. Factors contributing to the risk of GBV include: overcrowding of shelters; traditional gender attitudes; separation of family members; and movement out of camps, e.g., to collect firewood. Girls hired in the host community are perceived to be at higher risk of exploitation and sexual abuse. Young girls may resort to transactional sexual activities, in order to provide for their basic needs. Consequently, girls are at increased risk of unwanted pregnancy and exposure to HIV and sexually transmitted infections. Refugee boys and girls have also become vulnerable to trafficking in Kibungo and Kigali.50 Legal, Institutional and Policy Framework 49 Alloush, et al 2015. 50 UNHCR 2017. Page 63 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 12. Rwanda has signed and ratified the three main international agreements relevant to refugees. Rwanda is a state party to the 1951 Convention, the 1967 Protocol relating to the Status of Refugees and the 1969 Organization of African Unity Convention Governing the Specific Aspects of Refugee Problems in Africa. Rwanda has made a reservation to Article 26 of the 1951 Convention on freedom of movement, but this is not reflected in national legislation. 13. National legislation on the status and treatment of refugees in Rwanda is consistent with the 1951 Convention and 1967 Protocol. Law 12/2014 governs the rights of refugees and asylum seekers in Rwanda. The law includes key rights including non-refoulement, freedom of movement and freedom of employment. Under the law, the State is responsible for refugee status determination (RSD) according to a procedure, process, and timeline that are clearly stipulated and detailed in the law. 14. The Ministry in Charge of Emergency Management (MINEMA), is responsible for refugee affairs. MINEMA oversees refugee status determination, management and security of the camps, supported by UNHCR. The National Identification Agency (NIDA) is responsible for population registration and the provision of identity documents. The Rwanda Director General of Immigration and Emigration issues travel documents to refugees. 15. The government is actively engaged in moves towards a more inclusive approach to hosting refugees. At the 2016 New York Leaders’ Summit, the government made four public commitments to strengthen socio - economic inclusion of refugees: (i) Public launch of joint MIDIMAR-UNHCR livelihoods strategy, with a focus on graduating camp- based refugees out of assistance programs and increasing formal access to work opportunities;51 (ii) Commitment to ensure that 100 percent of refugees are in possession of valid refugee identity cards issued by the Government of the Republic of Rwanda (NIDA) by end of 2017; (iii) Commitment to ensure that 100 percent of refugee students in secondary school and 50 percent in primary schools will be integrated into national education systems by the end of 2018; and (iv) Commitment to ensure that 100 percent of urban refugees will have the opportunity to buy into the national health insurance system by the end of 2017. 16. In March 2019, the Social Cluster of Cabinet endorsed a Strategic Plan for Refugee Inclusion 2019-2024. The Strategic Plan provides additional details on how the four commitments will be met, including a detailed timeline and results framework. The Plan provides a solid policy framework for the SEIRHCP, which will be one of the government’s main tools for its implementation. 17. Earlier, in February 2018 the Government of Rwanda adopted the CRRF. In June 2018, the government hosted a workshop to consult on the planned roll-out of the CRRF. The Government sees the adoption of the CRRF as an opportunity to expand the vision for inclusive refugee hosting beyond the sectors, aims and targets of the original four commitments. 51 MINEMA was formerly known as MIDIMAR, the Ministry of Disaster Management and Refugee Affairs. Page 64 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) ANNEX 4: Procurement 1. Procurement for the project will be carried out in accordance with the ’World Bank Procurement Regulations for Borrowers under Investment Project Financing’, dated July 1, 2016, as revised August 2018, hereafter referred to as ‘Procurement Regulations’. The project will be subject to the World Bank’s Anticorruption Guidelines, dated July 1, 2016. 2. As per requirements in the Procurement Regulations, a PPSD was prepared. The PPSD informs the Procurement Plan (PP) procurement plan, which describes the selection methods to be followed by the borrower during implementation to procure goods, works, and non-consulting and consulting services financed by the project. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Box 4.1: Summary of the PPSD The project procurement profile comprises procurement of construction, rehabilitation, or upgrading works, goods/supplies & non-consultancy services and consultancy services. National Competitive Bidding will be used to hire construction companies, procure goods/supplies, non-consultancy services and consultancy services. The works mainly comprise construction or upgrading of schools, health centers, market facilities and roads, and the rehabilitation of ravines and construction of surface water reservoirs. Procurement of Goods/supplies mainly comprises the supply of vehicle and motorcycles for the project, office equipment for the project staff, supply of IT equipment and related services. The project also envisages procuring consultancies to undertake feasibility studies for construction works, construction supervision, EIA/EMP/RAP/Valuation/Environmental Audits as well audit firms. Some services will also be required for capacity-building and project assessments. For component 1 activities (Access to Basic Services and Socio-economic investments), districts will be the implementing agency with responsibility for procurement. For the infrastructure sub-projects within this component, the districts will procure consultant and works contracts for sub-project design and construction, rehabilitation, and upgrading. However, MINEMA will manage procurement related to supervision of these sub-projects. For component 2 (Economic Opportunity), procurement will be needed for sub-component 2b on capacity building. This will be managed by BRD. Sub-component 2a consists of the provision of finance from BRD to enterprises and cooperatives through SACCOs or MFIs. Procurement under component 3 (Environmental Management) will be led by MINEMA. After evaluating various options, the national market approach using NCB and RFQ would be the optimum selection arrangement for procurement of Works and Goods/Supplies; whereas for consultancy services, the international market approach using QCBS and IC selection methods is the optimum selection method. The international or national market approach will be used based on availability in the national market and volume. Page 65 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) The MINEMA-SPIU, BRD, and Districts are the implementing agencies of SEIRHCP. Districts hosting refugee camps have prior experience in implementing projects of a similar nature funded by World Bank and other development partners. The District staff are familiar with the World Bank’s procurement guidelines but new to the procurement regulations. BRD also has experience in implementing two World-Bank funded projects. MINEMA is not familiar with World Bank procurement guidelines. Thus, tailored training will be offered to MINEMA, BRD and district staff by the World Bank. Based on the assessment the project risk is rated ‘Substantial.’ 3. STEP. The proposed project will use STEP, a planning and tracking system that provides data on procurement activities, establishes benchmarks, monitors delays, and measures procurement performance. There are ongoing initiatives to harmonize STEP with the government’s e-procurement system, but until this process is complete, both will be used in parallel. 4. Procurement risk assessment. A procurement capacity and risk assessment has been carried out by the World Bank for the implementing agencies, including the SPIU of MINEMA, the six districts where camps of displaced persons are located (Nyamagabe, Gisagara, Gicumbi, Gatsibo, Kirehe and Karongi), and the BRD. The assessment reviewed the organizational structure and functions, experience, staff skills and capacity, procurement cycle management, quality and adequacy of supporting and control systems and record keeping. 5. The assessment shows that the risk for procurement is deemed Substantial as the identified procurement activities cut across all sectors in the spirit of ensuring integrated development of displaced persons’ needs. Because of the nature of the activities, many sectors in each district are taking part and coordination of the tasks could be a challenge. MINEMA-SPIU does not have prior experience with World Bank-financed projects or the necessary technical staff. The existing staff are not adequate in number to manage the project on top of their current work load. In addition, the overall procurement risk rating for BRD is deemed Substantial based on issues encountered in the use of STEP and capacity limitations in implementing procurement following the regulations with the ongoing World Bank-financed projects. 6. The key procurement risks are: (i) Lack of effective and efficient coordination between activities of different sectors such as education, health, roads etc., and coordination between implementing agencies at national and district levels, (ii) Lack of efficient packaging of activities to ensure economy of scale (Value for Money) and efficient process, and (iii) delays due to the time required for design and tender document preparation at MINEMA-SPIU, given capacity and experience constraints. 7. The proposed mitigation measures for the identified risks are: (i) forming an inter-agency project steering committee chaired by MINEMA at the national level, including the six participating districts mayors’ as members and BRD, plus a technical team reporting to the steering committee; (ii) develop a PIM where roles and responsibilities of each stakeholder and procedures to be followed are clearly prescribed; (iii) prepare the PPSD to inform on the most efficient procurement packaging based on a detailed analysis of the market; (iv) MINEMA-SPIU and BRD to initiate “Advance Procurement” as early as practicable, before project effectiveness; (v) provision of basic training on World Bank Procurement regulations, prior to effectiveness of the project, through a training session to be arranged in conjunction with the World Bank Page 66 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Procurement Specialist; and (vi) a TA specializing in Procurement and contract management to be hired under the project finance. New procurement staff at MINEMA-SPIU, dedicated to the project, will be hired to support procurement functions. The Procurement Risk Assessment and Management System (PRAMS) will be finalized in due course. 8. General Project Procurement Profile. Procurement activities envisaged through the project are broadly grouped into: (i) construction works of schools, roads, health centers, market facilities, environmental rehabilitation and access to water supply, implemented by the MINEMA-SPIU and districts; (ii) capacity-building training and mentoring related to economic opportunity activities, implemented by BRD; (iii) procurement of goods for capacity building, implemented by BRD; and (iv) capacity-building for implementing agencies, hiring of staff, communication strategy, refugee integration, grievance redress mechanisms, etc., implemented by MINEMA. All these activities are packaged duly considering factors like geographic spread (regions) and similarity of requirements, and capacity of potential contractors/market players. The contract packaging will also take into account the readiness to implement the contracts, including, but not limited to availability of complete scope definitions or client requirements, availability of land and no other obstacles to handover of the site to the contractor. As all envisaged works contracts are scattered over the six districts, works contracts are expected to be packaged by district while the consultancy services, including design and supervision, will be implemented by MINEMA-SPIU. The package sizes are small, such that no Regional Procurement Manager (RPM) and Operations Procurement Regional Committee (OPRC) cases are anticipated. It is also likely that the very few or no contracts will be subject to prior review by the World Bank. 9. The proposed project will be implemented by the MINEMA-SPIU, the six districts hosting camps of displaced persons and BRD. MINEMA-SPIU will have the overall coordination role, in addition to its responsibility to implement some components of the project. The six project districts have either limited or no prior experience implementing World Bank-financed projects. However, the MINEMA-SPIU is currently implementing three projects financed by other development partners and the government. One with US$8.5 million, another one financed by UNHCR for RWF 1.3 billion for one year and the third by German development Agency - GIZ with amount of Euro 7.5 million implemented over a period of 5 years. The projects under implementation by MINEMA-SPIU are of a different nature. The fact that MINEMA-SPIU has not implemented a World Bank-financed project mans they are not familiar with World Bank regulations. Therefore, the MINEMA-SPIU needs to hire a TA specializing in procurement and contract management who will provide procurement and contract management support MINEMA-SPIU and districts. 10. The BRD has experience in providing direct lending and on-lending, managing loan portfolios, and providing services expected to be offered and used under the World Bank-financed Housing Finance Project. The BRD is also the implementing agency for the World Bank-financed Renewable Energy Fund Project. The BRD is well positioned for adequate administration, including accounting and bookkeeping, an effective internal audit function, and functional information systems. 11. Starting July 1, 2017, all procurement entities in the country started using the Rwanda E-Procurement system for projects financed by the government and most financed by development partners. World Bank- financed projects started using Rwanda e-Procurement from January 1, 2019 for all post-review contracts. It is agreed with the government that “Prior” review contracts will also start using the E-GP soon. Rwanda is taken as a pilot country to interface STEP and E-GP. This is at the concept stage. Page 67 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 12. Suppliers of goods, works and services required for this project are available in sufficient number and category in the country. However, market limitations for specialized consultancy services are anticipated. This risk will be addressed through recommendations in the PPSD on the appropriate market approach and selection methods. 13. Procurement control and oversight mechanisms are assessed to be sound. There is internal and external procurement oversight by the internal audit and by the OAG, which conducts annual audits. The Rwanda Public Procurement Authority (RPPA) also conducts annual procurement audits, though not regular. 14. There is adequate complaint review and resolution mechanism in Rwanda. The National Independent Review Panel (NIRP) is independent of government, that deals with complaints received from bidders or consulting firms or individuals, as provided in the procurement law. The E-GP system has included a feature to receive and respond to complaints through the e-Procurement (disclosing), adding more transparency to the appeals handling mechanism. 15. The MINEMA-SPIU is staffed with a Coordinator and a Procurement Specialist. The Ministry also has a procurement officer reporting to the Director of Administration and Finance (DAF). There are two separate internal tender committees (ITCs) at MINEMA; one under the Ministry overall and the other for the MINEMA-SPIU. The MINEMA-SPIU ITC has five members. Evaluations and award recommendations by the SPIU ITC are approved by the Permanent Secretary, who is the Chief Budget Manager. The SPIU Coordinator is involved in the preparation of technical specifications and plays a key role in quality assurance. The coordinator, however, is not involved in the evaluation and approval of contract awards, unlike other implementing agencies where the SPIU coordinator reviews before submitting to the chief budget managers for approval. Some IAs have also set thresholds for approval by SPIU Coordinator and the PS. 16. In general, the assessment revealed that the track record of procurement performance of MINEMA- SPIU is satisfactory. However, the lack of experience in the use of World Bank regulations and the scattered nature of the activities could pose potential risk. Therefore, there is a need to organize trainings by the World Bank Procurement Specialist, before project effectiveness. 17. The preliminary procurement plan with a list of procurable items, corresponding cost estimates, review types and selection methods has been produced, based on the PPSD. The World Bank’s standard procurement documents would be used for all ICB contracts. 18. Use of national procurement procedures. All contracts falling under the national market approach shall follow the procedures set out in the Rwanda Public Procurement Law, “Law governing public procurement N°62/2018 of 25/08/2018”. The RPPA governs the purchase of works, goods, and services using public resources by national and district level entities, sectors, health and education institutions and City of Kigali. As a regulatory body, the RPPA sets out the rules and procedures of public procurement and provides a mechanism for enforcement of the law. The procurement function is decentralized to individual procuring entities. The RPPA has an oversight and regulatory function, including undertaking procurement reviews and audits. The provisions of the procurement law are consistent with the World Bank Procurement Regulations Section V - Paragraph 5.4, National Procurement Procedures. Page 68 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 19. Procurement of works: procurement of works will include: construction, upgrade and/or rehabilitation of health facilities (posts, centers and/or district hospitals); construction, upgrade and/or rehabilitation of education facilities (elementary, secondary, and technical and vocational schools); construction or rehabilitation of community water systems; road rehabilitation and upgrading; market construction or rehabilitation, including installation of lighting for security and extended business hours, water and toilet facilities and child care facilities for markets; construction works related to environmental management, such as rehabilitation and stabilization of the natural environment by addressing ravines and building water surface reservoirs. Works contracts other than through ICB would use national procurement procedures and SBDs as agreed with and deemed satisfactory to the World Bank. Small value works will be undertaken through request for quotation procedures. The request for quotation will indicate the specifications works as well as the delivery/completion time and the contract award will be based on comparing price quotations from several qualified contractors, with a minimum of three, to ensure competition. When the value of the contract of such works exceeds the request for quotation threshold and when procured through NCB procedures, the national SBDs issued by the RPPA and acceptable to the World Bank will be used. Direct contracting shall be used where the PPSD informs so and it is to the benefit of the project and in accordance with procurement regulations. 20. Procurement of goods and Non-Consultancy Services. Goods and Non-consultancy services to be procured under the project include: equipment and facilities for health centers; equipment and facilities for schools (books, furniture, toilets, science kits, ICT equipment, etc.), purchase of equipment and medical supplies. 21. Procurement of goods and non-consultancy service other than through ICB would use the national procedures and SBDs as agreed with and deemed satisfactory to the World Bank. Direct contracting will be used where the PPSD informs so to the benefit of the project. 22. Procurement while approaching the international market will be done using the World Bank’s Standard Procurement Documents. Procurements while approaching the national market will be done using the National Standard Bidding Documents with an additional annex to address the World Bank’s Anticorruption Guidelines and to ensure universal eligibility. 23. Procurement of consultancy services. Consulting services to be procured under the project include; technical vocational training, teacher training; study grants for market-linked TVET jobs skills training; capacity-building for SMEs, cooperatives, etc.; training and continuous support to ensure economic opportunities (to be detailed); capacity building for BDAs and SACCOs; citizen engagement and capacity building of implementing agencies. Procurement methods to be used are specified in the PPSD. Any staff required for project implementation support will be recruited/selected following Project Implementation Support Personnel, paragraph 7.32 of Procurement Regulations. However, recruitment of government officials working on the project will follow Rwandan government procedures. 24. Operating costs. These items will be procured using the borrower’s national procurement and administrative procedures acceptable to the World Bank including selection of project implementation support personnel. The borrower will also pay for costs associated with any resettlement, land acquisition, compensation, and relocation of services from counterpart funds. Incremental recurrent expenditures incurred on account of implementation of component two activities, based on periodic budget acceptable Page 69 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) to the World Bank, including, among others, travel expenditures and other travel-related allowances such as per diems and reasonable accommodation costs; equipment rental and maintenance; vehicle operation (including fuel); local support to the BRD in the areas of project management, FM, procurement, and social/environmental safeguards; and so on. The operating expenditures may follow the BRD procurement procedures. 25. Record keeping. All records pertaining to award of tenders, including bid notification, register pertaining to sale and receipt of bids, bid opening minutes, bid evaluation reports and all correspondence pertaining to bid evaluation, communication sent to/with the World Bank in the process, bid securities, and approval of invitation/evaluation of bids will be retained by respective agencies and uploaded in STEP. BRD will be in charge of filing and record keeping of component two activities. 26. Disclosure of procurement information. The following documents shall be disclosed on the agencies’ websites: (a) Procurement Plan and updates; (b) invitations for bids for goods and works for all contracts; (c) requests for Expressions of Interest for selection/hiring of consulting services; (d) contract awards of goods, works, and non-consulting and consulting services; (e) a monthly financial and physical progress report of all contracts; and (f) an “action taken” report on the complaints received on a quarterly basis. 27. The following details shall also be published in the United Nations Development Business and the World Bank’s external website: (a) invitations for bids for procurement of goods and works following open international market approaches, (b) requests for Expression of Interest for selection of consulting services following open international market approaches, and (c) contract award details of all procurement of goods and works and selection of consultants using open international market approaches. 28. Fiduciary oversight by the World Bank. The World Bank shall prior review contracts according to prior review thresholds set in the PPSD/Procurement Plan. 29. All contracts not covered under prior review by the World Bank shall be subject to post-review during implementation support missions and/or special post-review missions, including missions by consultants hired by the World Bank or third-party independent auditors delegated by the World Bank. To avoid doubts, the World Bank may conduct, at any time, independent procurement reviews of all the contracts financed under the loan. 30. Contract Management. Currently, high-risk and high-value procurements have not yet been identified for increased contract management support. However, if such contracts are identified during implementation, the agencies will develop key performance indicators (KPIs) for such identified contracts and the KPIs will be monitored during actual execution of contracts. The World Bank team will provide additional due diligence and independent review of the contract performance of such identified procurements. MINEMA-SPIU will be responsible for overall project management and management of contracts under component three. Districts will manage contracts under component one. BRD will manage contracts under component two. 31. Risks and Mitigation Measures. Risks identified are presented in the table below, with mitigation measures and time frame: Page 70 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Table 4.1: Procurement Risks and Mitigation Measures Owner and No. Issue/Risk Recommended Mitigation Measures Time Frame 1 Lack of effective and efficient (a) form inter-agency project steering Before project coordination between activities committee chaired by MINEMA at national effectiveness of different sectors such as level with the six participating districts education, health, roads etc., mayors and BDR as members and a and coordination between technical team reporting to the steering implementing agencies at committee, and (b) develop PIM that national and district levels. specifies roles and responsibilities of each stakeholder and clearly defines procedures. 2 Lack of having most efficient PPSD to inform on the most efficient MINEMA packaging of the activities to approach to packaging, based on a detailed ensure economy of scale (Value analysis of the market. for Money) and efficient process. 3 Delays due to time required for (a) MINEMA-SPIU, BRD and districts to Immediately design and tender document initiate “Advance Procurement” as early as preparation at MINEMA-SPIU, practicable, before project effectiveness; (b) given that its lack of experience provision of basic training on World Bank implementing World Bank- Procurement regulations, prior to financed projects. effectiveness of the project, through a training session to be arranged in conjunction with the World Bank Procurement Specialist; (c) a TA specializing in Procurement and contract management to be hired under the project finance. Page 71 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) ANNEX 5: Financial Management 1. Based on an assessment conducted for the SEIRHCP, the FM risk is considered substantial.52 The key risks identified are: (i) staffing gaps in FM and internal audit to absorb the additional workload generated by the project; (ii) unreliable reporting and reconciliation at the district level; and (iii) inadequate and delayed implementation of OAG recommendations and internal control weaknesses at the district level, resulting in adverse or qualified audit opinions for many districts. 2. The proposed mitigating measures are as follows: (i) develop detailed FM guidelines for the project as part of the PIM, and a grant management manual for component two; (ii) recruit three additional FM staff and one additional internal auditor with ToR to be agreed with the World Bank; and (iii) enroll the project into IFMIS. 3. The arrangements for project oversight and accountability are considered acceptable. These arrangements comprise management oversight (i.e., Committee, TT, MINEMA and Districts, BRD), internal oversight bodies (i.e., internal audit, audit committee), external oversight bodies (i.e., OAG) and Parliament, which reviews the OAG’s audit reports and approves the government’s budget, including that of the project. Monthly financial reports are prepared by MINEMA and submitted to MINECOFIN for internal monitoring. The existing FM arrangements of BRD provide reasonable assurance that the financing proceeds will be used for intended purpose in a transparent, effective, and efficient manner. The BRD PIU is experienced in World Bank-financed projects (Renewable Energy Funds, Rwanda Housing Finance Project) and is staffed with one FM specialist and one accountant. FM Conditions and FM covenants 4. Based on the assessment, the following conditions and covenants are proposed. (i) develop detailed FM guidelines for the project as part of the PIM; and a grant management manual for component two activities [disbursement condition for sub-component 2(a)]; and (ii) recruit for the MINEMA SPIU three additional FM staff and one additional internal auditor with ToR to be agreed with the World Bank, not later than three months after effectiveness. Country System and Use of Country System 5. Rwanda’s public financial management (PFM) system is anchored in: (i) The 2003 Rwanda Constitution revised in December 24, 2015, Articles 162 to 166; (ii) The Organic Law N° 12/2013 of 12/09/2013 on State Finances and Property that establishes principles and modalities for sound management of State finances and property. The organic law 52The objective of the assessment was to determine whether the implementing entities have acceptable financial management arrangements, which will ensure: (a) that funds are used for the intended purposes in an effective, efficient and economical way; (b) financial reports will be prepared in a reliable, accurate and timely manner; and (c) project assets will be appropriately safeguarded. The assessment covered the Ministry in Charge of Emergency Management (MINEMA) and its SPIU; and the six Districts (Kirehe, Gatsibo, Gicumbi, Nyamagabe, Karongi and Gisagara). The assessment complies with World Bank policy and directives on investment financing. Page 72 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) applies to all budget entities at the central and decentralized levels and sets up fundamental public finance management principles as comprehensiveness, transparency, accountability, uniformity, consolidation and gender balance in public State finance management; (iii) The Ministerial Order n°001/16/10/TC dated 26/01/2016 on financial regulations that regulates the structure and functioning of public FM, the preparation and implementation of the State budget; the accounting and reporting of all financial transactions, and financial control. The Order applies to the management of public finances of all public entities including of the Central Government, decentralized entities, public institutions and subsidiary entities; (iv) Government Accounting Policies Manual; and (v) Articles 165-166 of the Rwanda revised Constitution and the Law N° 79/2013 of 11/9/2013 determines the mission, organization and functioning of the Office of the Auditor General of State finances. 6. The PFM system had gone through series of reforms since 2008, guided by the PFM strategy plan 2008- 2012, the SSP 2013-2018 and the 2018-2023 PFM strategy. At the national level, progress has been made in budget planning, expenditure efficiency, enhancement of the internal audit function, external audit coverage, and financial reporting. The PEFA 2016 confirmed these strengths. Nevertheless, areas for improvement include the weak consultative approach to budget preparation, access to fiscal information, lack of critical mass of qualified PFM staff and low alignment of budget with policies. At the District level, these weaknesses are exacerbated and have resulted in adverse or qualified audit opinions on financial statements by many districts. To address these weaknesses, policies reforms and initiatives are ongoing to strengthen the PFM system at Central and Decentralized level. The project’s arrangements will rely on the existing PFM system at Central and Decentralized level, with some amendments to take into account the project’s and the World Bank’s FM requirements. Table 5.1: FM Risks and Mitigating Measures Risk Risk Mitigating Measures Incorporated into Project Residual Risk Design Rating Inherent risk Moderate Country level Implement the PFM reform agenda with the support of Moderate Lack of critical mass of qualified the World Bank and other donors. The World financed PFM staff project (PFM Reform Project) is supporting the implementation of the PFM Learning and development strategy and accountability and the 2018-2023 PFM strategy Entity level Implement the new PFM Reform strategy and the new Substantial District PFM outcomes weak as decentralization policy to better empower districts evidenced by adverse or qualified audit opinions Project level The PIM, Grant Manual (to be prepared by BRD), and Moderate Multiple transactions at Districts MoUs and District Implementation Agreements will and grant management by BRD clarify further roles and responsibilities render the project complex Control Risk Moderate Budgeting Strictly follow national budget procedures and timeline. Substantial Unreliable budget forecast Engage all project stakeholders effectively early during Page 73 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) planning and budgeting process (Districts, BRD, World Bank). Ensure that annual work plan and budget is in line with procurement plan to prevent any delays. Accounting Recruit for MINEMA SPIU three additional FM staff with Substantial Workload resulting in delayed ToRs agreed with the World Bank to handle workload accounting ledger update, non- generated by the project. compliance with accounting Provide training on accounting standards related to standards, and financial financial consolidation. consolidation principles Internal Controls and Internal District Implementation Agreements and PIM will lay Substantial audit down accountability mechanisms with Districts. Inadequate accountability at Develop grant management manual to clarify Districts, and management of procedures for component two activities that will be grants. implemented by BRD. Ineffective audit function due to Recruit one additional Internal Auditor for MINEMA inadequate coverage of project with ToRs agreed with the World Bank. activities Delegate approval of small payments to the MINEMA Inefficiency in payment process SPIU Coordinator and Director of Finance. Funds Flow Open a Designated Account (DA) at the Central Bank in Moderate Risk of delay in the disbursement USD and project account in RWF at District and BRD of the funds to the Districts level. Funds disbursed by the World Bank on six-months cash flow need. Funds shall be transferred to Districts and BRD based on future cash flow need determined from credible AWP. Financial Reporting and Enroll the project into IFMIS. Moderate Monitoring Unreliable IFRs and delay in submitting the IFRs. External Auditing The OAG has mandate to audit all public funds and will Low Delay in submitting the audit audit the project. MINEMA shall inform the OAG earlier report to include the assignment in the audit plan Fraud & Corruption Monitor the Grievance Redress Mechanism. Moderate Risk of fraud & corruption. Few cases of fraud detected under program financed by Government own funds and correctives measures were effectively taken. Overall Risk Substantial 7. The overall residual risk rating is Substantial. Table 5.2: Key weaknesses and Action Plan to reinforce the control environment Significant Weaknesses or Actions Responsible Completion risks FM staffing gap Recruit 3 additional accountants and 1 MINEMA Within three months Internal auditor of effectiveness Financial Management Staffing Page 74 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 8. MINEMA. FM staff and functions are overseen by the Chief Budget Manager. The MINEMA organizational structure comprises a Director of Finance, a Budget officer and an accountant. All positions are filled. The MINEMA SPIU has a Director of Finance pursuing the CPA, two accountants, one with an MBA and the other a bachelor’s degree. The SPIU accountants are dedicated to disaster and refugee program management. The SEIRHCP will generate significant FM transactions at MINEMA but also at the district level, requiring additional FM staff. FM capacity will be strengthened by hiring three additional FM staff and one additional internal auditor. The qualifications and experience of these staff will be agreed with and cleared by the World Bank via a ToR. At the least, they should be pursuing an Association of Chartered Certified Accountants or Certified Public Accountant, or hold an MBA, bachelor’s degree or Certified Accounting Technician qualification. Table 5.3: Staffing qualifications at MINEMA and project districts District Current staffing Qualifications Experience Vacant position Gatsibo Director of Finance 7 yrs. Accountant 4 yrs. Budget Officer 2 yrs. Kirehe Director of Finance 4 yrs. as Sector Accountant 1 yr. as Director Budget Officer 5 yrs. District accountant 7 yrs. Gicumbi Ag. Director of Finance Bachelor's in Business 2.5 yrs. at Ngarama district Director Administration (option of hospital as Accountant Administrative Accounting) 2.5 yrs. as Gicumbi District and Finance CPA Intermediate level Accountant (recruitment (level 2) 1 yr. as District Ag. Director of ongoing) Finance at Gicumbi Budget officer Bachelor's in Accounting 2 yrs. as accountant at “Banque Populaire” du Rwanda, 7 yrs. as sub-branch Manager and 10 mos. as District Budget officer Accountant Bachelor's in Accounting 10 mos. as District accountant 2 accountants Nyamagabe Director of Finance Bachelor's in Business 12 yrs. as Director of Finance at Administration Nyamagabe District Budget officer Bachelor's in Accounting 9 yrs. as Nyamagabe District ACCA (Intermediate level) accountant and 1 yr. as District Budget officer Accountant Bachelor's in Accounting 6 yrs.’ experience as Nyamagabe CPA (Advanced level) District accountant Accountant Bachelor’s in Accounting 2.5 yrs. as Accountant in Nyamagabe District Ag. Local Revenue Bachelor’s in Finance 1 yr. as Ag. Local Revenue Inspector Inspector in Nyamagabe District, 16 months as Finance and Administration Officer in Mushubi Sector Karongi Director of Finance Master’s in Business Lecturer in University (2 yrs.), Vacant account Administration (Finance Director of Finance (3 yrs.) position and accounting), CPA District Budget officer A0 Accounting Procurement Officer (5 yrs.), District Accountant (3 yrs.) Page 75 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) District accountant A0 Management Accountant Health center (10 yrs.), District accountant (2 yrs.) Gisagara Director of Finance Bachelor’s Degree 7 yrs. Accountant Bachelor’s in Accounting 5 yrs. Accountant Bachelor’s in Accounting 3yrs. Accountant Bachelor’s in Accounting 6 yrs. 9. Districts. FM staffing at the District level is defined by the standard District organizational structure. The current situation reveals that most of the FM positions have been filled. FM staff have basic qualifications, but none are qualified accountants. Some of the FM staff have experience in development partner financed projects. However, some positions are still vacant, weakening internal controls. The vacant positions shall be filled to ensure a more robust internal control for the District and project FM management. 10. BRD. The BRD SPIU is staffed with one FM specialist and one accountant, who manage the World Bank- financed project, the Renewable Energy Fund. An induction training will be provided to the FM staff on World Bank Investment Project Financing disbursement guidelines and other FM requirements. 11. MINEMA and District FM staff are not experienced with World Bank-financed projects. FM training will be provided at the project inception and on an as-needs basis. Budgeting Arrangements 12. The project will follow the government’s planning and budgetary processes. MINEMA, the six Districts, and BRD will prepare the project mid-term expenditure framework (MTEF) and annual plan, with the disbursement forecast and procurement plan. MINEMA will consolidate its project planning documents with those received from each District and BRD. These project consolidated planning documents will be shared with the World Bank for review. Each entity shall ensure that estimates are realistic and objectives set are part of the entity performance target. 13. Project expenditures in the budget report will follow the classification for monthly reporting to MINECOFIN: current expenditure, including employee compensation costs and payments of goods and services. Nevertheless, a reclassification per project components and disbursement categories shall also be done in the budget execution report to meet the World Bank need to monitor the project via these line items. 14. Project planning and execution should be done through the IFMIS. The system is not able to consolidate the MTEF, AWP at project level, or to report expenditures by project component and disbursement category. As a result, the consolidation and reclassification are done manually. Upgrading the IFMIS to cater to the latter features is recommended. Accounting Arrangements 15. The project will comply with government accounting policies and the modified cash basis of International Public Sector Accounting Standard, which is considered acceptable. An IFMMIS rolled out by MINECOFIN. MINEMA and the six project Districts are using the IFMIS to produce monthly and annual financial reports. The project will be enrolled into the IFMIS at MINEMA, the six Districts and BRD. Page 76 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 16. Project expenditures are classified following the classification for monthly reporting to MINECOFIN: current expenditure, including employee compensation costs, payments of goods and services. Nevertheless, a reclassification per project components and disbursement categories shall be done to meet the World Bank need to monitor the project via these line items. Upgrading of the IFMIS to cater to the latter features is recommended. Table 5.4: Eligible expenditures Category Amount of the Credit Amount of the Grant Percentage of Allocated (expressed Allocated (expressed Expenditures to be in SDR) in SDR) Financed (inclusive of Taxes) (1) Goods, works, non-consulting 25,100,000 2,800,000 100% from the Credit services, consulting services, until it is fully utilized; training and incremental and 100% from the operating costs for Part 1 of the Grant thereafter project (2) Matching Grants under Part 0 5,800,000 100% 2(a) of the project (3) Goods, non-consulting 0 700,000 100% services, consulting services, training, and incremental operating costs under Part 2(b) of the project (4) Goods, works, non-consulting 0 8,600,000 100% services, consulting services, training and incremental operating costs for Parts 3 and 4 of the project TOTAL AMOUNT 25,100,000 17,900,000 Internal Control and Internal Audit 17. The government’s PFM regulations and financial manuals at MINEMA and the Districts are acceptable and provide for a clear segregation of duties between the Chief Budget Manager, the accountant and the internal auditor. The procedures applied to the budgeting, payment, accounting and reporting chain are well described and adequate. However, the funds flow and financial reporting mechanisms within the project shall be further clarified in the PIM and District Implementation Agreements between the Districts and MINEMA. For grant-related activities that will be implemented by BRD, a grants manual shall be developed to guide beneficiary selection criteria, grant decision-making, monitoring and reporting. This will describe the role and responsibilities of different stakeholders in the matching grants scheme, including BRD, SACCOs, MFIs and BDAs. Page 77 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) 18. Internal controls are supported by a robust IFMIS. The system does not allow any commitment without existing budget allocation and payment is not possible without prior commitment. Payment orders are issued by the IFMIS and processed via online banking at BNR. 19. At MINEMA, all payments are approved by the Chief Budget Manager, which could impede the efficiency of the payment process. As result, for the project transactions, a delegation of authority should be granted jointly to the SPIU Coordinator and the Director of Finance for small amounts under a ceiling to be determined. Periodically, the Chief Budget Manager should post-review transactions for which delegation has been provided. 20. MINEMA has an internal audit unit, which is staffed with one Internal Auditor. Districts should have three internal auditors, but most only have two. The risk-based audit framework is compliant with international practices. However, its effective application is still weak. The scope of internal audit work is not aligned with available resources. The internal auditors are not currently abreast of the project and its specific risks and have not yet included the project in the scope of the internal audit annual plan. At MINEMA, the internal audit function can be strengthened by the recruitment of one internal auditor at the SPIU. The ToRs of the new internal auditor shall be reviewed and cleared by the World Bank. The SPIU internal auditor shall work closely with the MINEMA internal auditor. The project annual internal audit plan shall be discussed with the SPIU Coordinator and the MINEMA internal auditor, the Chief Budget Manager and approved by the Audit Committee. 21. The Audit Committee should be filled with three members of mixed skills (finance, audit) to provide independent oversight and review internal work programs and audit reports. The Audit Committee will meet on a quarterly basis, will review and approve the project internal audit annual plan and implementation performance and ensure that adequate and timely actions are taken on internal audit findings. 22. BRD procedures provide a clear segregation of duties between the chief budget manager, accountant, and internal auditor and describes well the procedures applied to budgeting, accounting, and reporting chain. The internal control environment is characterized by a generally low risk of collusion. The World Bank’s disbursement guidelines will complement the existing BRD regulations and procedures. The internal control will be further clarified and reinforced in the PIM. 23. The BRD’s internal audit is adequately staffed and is using a risk-based internal audit methodology. The internal audit regulatory framework is based on internal and best practices. The alignment of the internal audit’s three-year plan and annual plan with identified risk is an area for improvement. The internal audit function is mostly focused on financial audit and shall also emphasize more on performance and value-for- money audit. This move will require enhanced capacity building supported by an appropriate level of financing. The awareness of the risk profile of the World Bank-supported project is low or moderate, resulting in an adequate three-year plan and annual audit plan. An induction training of key risk areas of World Bank-financed projects shall be organized for the attention of the internal audit function. Funds Flow Arrangement 24. The proceeds of the financing will flow from the World Bank through the MINEMA to beneficiaries. Page 78 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Disbursement from the World Bank to the DA will be IFR-based, covering six-month forecasts of cash flow needs. The DA in US dollars will be opened at the National Bank of Rwanda and managed by MINEMA. The signatories of the DA will be communicated to the World Bank by MINECOFIN. Figure 5.1: Fund Flow Arrangements World Bank MINEMA. (DA at BNR in USD) BRD and Districts Project accounts in RWF at BNR Suppliers and other beneficiaries Beneficiaries Legend Funds flow Reporting, documentation, invoices 25. For activities implemented at the BRD, MINEMA will disburse funds in a separate project account in RWF opened at the BNR and managed by the BRD. Funds will be disbursed as per modalities stipulated in PIM, which will include at a minimum an approved annual work plan, MTEF and cash flow plan. Subsequent requests will be based on modalities defined in the PIM and include at least financial reporting on the use of the funds received and expressed cash flow need for the following Quarter. 26. For activities implemented at the District level, MINEMA will disburse funds directly to the districts in a separate project account in RWF opened at the BNR and managed by the Districts. Funds will be disbursed as per modalities stipulated in the District Implementation Agreements, which will include at a minimum an approved annual work plan, MTEF and cash flow plan prepared by Districts. Subsequent requests will be based on modalities defined in the PIM and include at least financial reporting on the use of the funds received and expressed cash flow needs for the following Quarter. Financial Reporting Arrangements 27. MINEMA SPIU will prepare a monthly consolidated financial report as per government requirements but a semester consolidated financial report will be submitted to the World Bank within 45 days of the end of the calendar semester. The format of the financial report is attached to the Disbursement and Financial Information Letter. Reports shall include: • Consolidated Sources and Uses of Funds (revenues and expenditures statement) • Consolidated Financial Position statement Page 79 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) • Consolidated Cash flow statement • Consolidated Budget execution report • DA activity statement • Notes on accounting policies • Appendices 28. Financial statements shall be prepared in accordance with GoR accounting policies, which operate on the modified cash basis of IPSAS. Each District and BRD will prepare its individual project financial statement, and MINEMA-SPIU will prepare the financial statement for activities directly managed by MINEMA. The MINEMA-SPIU shall then consolidate all financial statements by adding line items transactions and eliminating inter-entities transactions such as transfers to reporting entities as Districts and BRD. 29. The fiscal year of the project complies with the Government of Rwanda fiscal year which is currently July to June. 30. The project annual consolidated financial statement shall be prepared at the latest one month after the fiscal year and transmitted to the OAG and the Accountant General. External Auditing Arrangements 31. The Supreme Audit Institution (SAI) – OAG – provides external audit of Government revenues and expenditures and also World Bank projects. The audits are undertaken in accordance with International Standards on Auditing (ISSAI). The OAG has displayed reasonable assurance of independence and provided satisfactory audited reports for World Bank financed projects. The audit opinion shall be provided on the project consolidated financial statements and should be submitted to the World Bank within six months following the end of the fiscal year. 32. The audit report shall include a management letter (opinion on compliance) setting out any internal control weaknesses. The audit will involve, on a sample basis, beneficiary satisfaction with service provided at the District level. The audit shall include value for money and physical verification aspects in the use of the project expenditures. 33. In line with the access to information policy of July 2010, the project will comply with the World Bank disclosure policy of audit reports (e.g., make publicly available, promptly after receipt of all final financial audit reports.) Table 5.5: FM actions Action Due Date Responsible Entity Recruit one Financial Management Specialist, one Not later than 3 months after MINEMA Financial Compliance and Capacity Building effectiveness Specialist, one accountant and one Internal auditor Develop additional FM guidelines in the PIM Not later than 3 months after MINEMA effectiveness Develop grant management manual as part of Disbursement condition on grant BRD the PIM Page 80 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) Action Due Date Responsible Entity Provide training to MINEMA and District FM staff Project inception and on as MINEMA/World needs basis Bank 34. Conclusions of the FM Assessment: The overall residual FM risk is considered substantial. The proposed FM arrangements for this project are considered adequate and meet the World Bank’s minimum fiduciary requirements. Implementation Support and Supervision Plan 35. Financial management implementation support intensity and frequency will be in line with a risk-based approach and will involve a collaborative approach with the entire Task Team. The first implementation support mission will be performed three months after project effectiveness. Afterwards, missions will be scheduled by using the risk based approach model and will include the following: (i) monitoring of the FM arrangements during the supervision process at intervals determined by the risk rating assigned to the overall FM Assessment at entry and subsequently during implementation; (ii) review of IFRs; (iii) review of audit reports and management letters from the external auditors and follow-up on material accountability issues by engaging with the task team leader, Client, and/or Auditors; the quality of the audit (internal and external) is to be monitored closely to ensure that it covers all relevant aspects and provides confidence on the appropriate use of funds by recipients; and; (iv) other assistance to build or maintain appropriate FM capacity and an efficient internal control system. The FM Specialist will perform periodic field missions to review FM performance and risk and provide advice and recommendations. Monthly FM meetings will be organized to follow up progress. Page 81 of 82 The World Bank Socio-economic Inclusion of Refugees & Host Communities in Rwanda Project (P164130) ANNEX 6: Map Page 82 of 82