The World Bank Special Financing Facility for Local Development (P156257) REPORT NO.: RES31398 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SPECIAL FINANCING FACILITY FOR LOCAL DEVELOPMENT APPROVED ON JANUARY 11, 2016 TO MINISTRY OF FINANCE SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE AFRICA Regional Vice President: Makhtar Diop Country Director: Bella Bird Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Bernice K. Van Bronkhorst Task Team Leader: Zishan Faiza Karim, Bernard Harborne The World Bank Special Financing Facility for Local Development (P156257) ABBREVIATIONS AND ACRONYMS FGS Federal Government of Somalia FMS Federal Member States GFR Grant Funding Request IPF Investment Project Financing NGO Non-governmental Organization MPF Multi-Partner Fund MTR Mid-term Review MS Moderately Satisfactory PDO Project Development Objective SFF-LD Special Financing Facility for Local Development SPF State and Peacebuilding Trust Fund TF Trust Fund The World Bank Special Financing Facility for Local Development (P156257) BASIC DATA Product Information Project ID Financing Instrument P156257 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 11-Jan-2016 31-Aug-2018 Organizations Borrower Responsible Agency Ministry of Finance Ministry of Finance Project Development Objective (PDO) Original PDO To support the construction and reconstruction of infrastructure and the development of public service delivery capacity in targeted areas of Somalia and support the Federal Government and Interim Administration capacity to respond to an eligible crisis or emergency. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A4904 12-Apr-2017 25-Jul-2017 25-Jul-2017 31-Dec-2017 2.80 0 2.80 TF-A1715 11-Jan-2016 25-Jan-2016 25-Jan-2016 31-Aug-2018 6.00 2.74 3.26 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Special Financing Facility for Local Development (P156257) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Background 1. The Special Financing Facility for Local Development (SFF-LD) has been effective since January 25, 2016 and is financed by the Somali Multi Partner Fund (MPF) (TF0A1715) (US$ 6 million) and the State and Peacebuilding Trust Fund (SPF) (TF0A4904) (US$ 2.8 million). Of the MPF funds, US$ 2.7 million has been disbursed representing a 40% disbursement rate as of January 26, 2018. The closing date of this MPF Grant was extended from December 31, 2017 to August 31, 2018. The SPF funds for activating the project’s emergency component in response to the 2016 drought was approved in April 2017 and a Grant Agreement signed on July 10, 2017 with a closing date of December 31, 2017. The actual funds from the SPF for this component however were not transferred until December 31, 2017, the same date as the TF closing date. This restructuring is therefore seeking a retroactive extension of TF0A4904 to bring the closing date of this SPF Grant in line with the overall closing date of the project which is August 31, 2018. 2. The objective of the overall SFF-LD project is to support construction and reconstruction of infrastructure and the development of public sector infrastructure capacity in targeted areas of Somalia and support the Federal Government and Regional Administrations’ capacity to respond to an eligible crisis or emergency. The project finances small-scale local development activities through grants provided to pre-1991 regions in the Federal Government of Somalia (FGS). The SFF-LD also includes a provision for an emergency component in order to respond to such natural disasters as the project is well positioned to absorb additional funds to target critical gaps in a government response to emergencies. 3. By early 2017, successive episodes of drought in Somalia and consecutively failed harvests and depleted livestock, combined with conflict and insecurity, had resulted in a crisis and emergency food security conditions for an estimated 3 million people (about quarter of the population). An SPF grant of US$ 2.8 million was sought and approved in April 2017 in order to trigger the SFF-LD’s emergency component and support a government response to the drought emergency. The Grant Agreement for this amount was signed on July 10, 2017. 4. The SFF-LD drought emergency component will be supporting five of the most affected districts in Somalia and will support (i) community water storage (e.g. water bladders) to help cope with influxes of people and animals ‘chasing’ areas; and (ii) water trucking, a common response to supplying pastoralists in such areas. Depositing water in these water storage facilities can greatly help communities manage their water supply and allow for these facilities to later be linked up to water-source development (small dams or boreholes). Other more medium-term interventions such as borehole rehabilitation have also been included. These activities combined would help bring down the cost of emergency water management, expand access, and build infrastructure for longer term solutions. These activities all fall within the mandate of the SFF-LD as originally designed. B. Project Status 5. Implementation progress in the overall project is rated Moderately Satisfactory (MS) and the Project Development Objective (PDO) remains achievable. The MS rating is based on the delays in implementation progress which required the project closing date to be extended from December 31, 2017 to August 31, 2018. A mid-term review mission (MTR) for the project in early October 2017 found that considerable progress had been made in the Phase I civil works in four urban areas (Baidoa, Jowhar, Kismayo, Mogadishu) with a total contract value of US$ 3 million which are now near completion. Technical designs and bidding documents for Phase 2 civil works in 5 urban areas (Galkayo, Bandiradley, Burtinle, Garbaharey and Xudur) have been completed and procurement for these contracts are at an advanced stage. The project has also procured an NGO consortium for implementation of the US$ 2.8 million drought The World Bank Special Financing Facility for Local Development (P156257) component and activities under this component as outlined in para 4 above are underway, with pre-financing from the NGOs based on the signed Grant Agreement for this funding. 6. The MTR independent assessment, undertaken by a third-party firm, found that there has been clear progress in implementation of the civil works under the project, representing tangible achievements for the Federal Government of Somalia (FGS). This progress is visible to communities and helps strengthen intergovernmental relationships between the FGS and Federal Member States (FMS). The assessment also found that the timelines in the original design of the project were overly ambitious and would need to be adjusted in subsequent phases. Finally, the review suggested a number of improvements in project management and processes that could help ensure the SFF-LD is able to meet its scale-up ambitions going forward. C. Rationale for Restructuring 7. This restructuring proposes to (i) revise the results framework of the project to reflect the end of project target date of August 31, 2018, no other changes are being made to the RF; (ii) reflect the US$ 2.8 million from the SPF grant in Component 3 – Emergency Contingency Component; and (iii) request a retroactive extension for the SPF Grant - TF0A4904 - to bring it in line with the closing date of the overall project. This project has undergone two restructurings to date, once in July 2017 to process the US$ 2.8 million and again in October 2017 to extend the overall project closing date from December 31, 2017 to August 31, 2018. 8. The SPF grant (TF0A4904) was signed on July 10, 2017 but the activities under the emergency component have taken over six months to prepare as negotiation between the Federal Government of Somalia (FGS, the Recipient) and a Non-Governmental Organization consortium (the implementers of the grant) took much longer than anticipated, even with significant Bank staff hand-holding. The contract between the NGO consortium and the FGS was signed in late December 2017 and the work has now commenced. Due to the delays faced in preparation of this grant activity, the SPF funds were not allocated to TF0A4904 until December 31, 2017, the same date as the TF closing date, following an approval by the SPF secretariat. An extension from December 31, 2017 to August 31, 2018 would ensure this TF is in line with the closing date of the overall SPF project. 9. The Grant Funding Request for this TF provided a very short implementation timeframe of eight months given this was for an emergency response and a protracted contract negotiation process between the NGO consortium and the federal government was not foreseen. The experience of financing a recipient executed grant in an emergency in Somalia for civil works has considerable lessons that will be documented by the team. A faster route could have been through a UN agency but this would then have undermined the urgent need to also help build up government capabilities. 10. While the 2017 drought emergency has passed, Somalia experiences cyclical natural disasters which result in large scale displacement of the population and increased risk of food insecurity and famine. These cyclical shocks generally result in large numbers of people moving to urban areas in search of food, water and shelter. On December 5, 2017 the government of Puntland has already declared another drought emergency and it is uncertain if the rainy season of 2018 (April to June) will be sufficient to meet farming and pastoral needs. 11. Both the Grant Agreement between the World Bank and the FGS and the contract between the FGS and an NGO consortium have been signed; dropping this grant would therefore result in reputational risks for both the government and the World Bank. Consultations on the grant financed activities have also been undertaken in the five selected districts The World Bank Special Financing Facility for Local Development (P156257) and community expectations raised. In a fragile context, such as Somalia, it would be important to follow through on these commitments. II. DESCRIPTION OF PROPOSED CHANGES D. Proposed Changes 12. As mentioned above, this restructuring proposes to (i) revise the results framework of the project to change the end of project target dates to August 31, 2018, in line with the revised project closing date; (ii) reflect the US$ 2.8 million from the SPF grant in Component 3 – Emergency Contingency Component; and (iii) request a retroactive extension for the SPF Grant - TF0A4904 - to bring it in line with the closing date of the overall project. 13. Overall, the PDO of SFF-LD remains achievable and the Project Implementation Unit performance is satisfactory. The US$ 2.8 million for the drought component and the remaining US$ 3.26 million is likely to be disbursed by the closing date of August 31, 2018. The team has agreed with the borrower on an action plan for completing existing project activities which is attached. There are no overdue audit reports for this project. III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Change in Disbursement Estimates ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Systematic Operations Risk-Rating Tool ✔ (SORT) Change in Safeguard Policies Triggered ✔ The World Bank Special Financing Facility for Local Development (P156257) Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Change in Implementation Schedule ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Direct project beneficiaries Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 36099.00 400000.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Female beneficiaries Unit of Measure: Percentage Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action The World Bank Special Financing Facility for Local Development (P156257) Value 51.00 50.00 51.00 Revised Financed sub-projects that are functioning/ delivering services to communities three months after completion (#) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 1.00 3.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Perceptions of Regional Administrations or federal government performance on sub-project activity (%) Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 0.00 60.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Sub-projects for which community/ or local authority engagement in post-project sustainability and/ or O&M plan is established (#) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 0.00 5.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Beneficiaries under the activated crisis response component (#) Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 0.00 860,000 Revised e Date 09-Nov-2015 30-Oct-2017 31-Aug-2018 The World Bank Special Financing Facility for Local Development (P156257) Intermediate Indicators IO_IND_TABLE Local Project Oversight Committees established (#) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 2.00 5.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Grievances registered related to project are addressed (%) Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 90.00 100.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Interim Regional Administrations accompanying project design and implementation (consultation, identification, procurement and implementation processes) (#) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 5.00 5.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Roads rehabilitated, Non-rural Unit of Measure: Kilometers Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 14.00 30.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 The World Bank Special Financing Facility for Local Development (P156257) Sub-projects completed as planned and within budget (#) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 2.00 5.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Government officials participating in capacity building measures under the project (#) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 40.00 100.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Work days created for short term employment in the sub-projects (of which female) (#) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Valu 0.00 76.00 150.00 Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Work days created for short term employment in the sub-projects for women (%) Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 0.00 0.00 20.00 Revised Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 Specific Project Operation Manual for the contingency component (Component 3) has been adopted Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action The World Bank Special Financing Facility for Local Development (P156257) Valu No Yes Yes Revised e Date 09-Nov-2015 16-Feb-2018 31-Aug-2018 COMPONENTS Current Proposed Current Proposed Cost Action Cost Component Name Component Name (US$M) (US$M) Small-Scale Infrastructure 3.90 No Change Small-Scale Infrastructure 3.90 Program Operations, Capacity Program Operations, Capacity 2.10 No Change 2.10 Building, and Contingencies Building, and Contingencies Emergency Contingency Emergency Contingency 0.00 Revised 2.80 Component Component TOTAL 6.00 8.80 LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications TF-A1715 Effective 31-Dec-2017 31-Aug-2018 31-Aug-2018 31-Dec-2018 TF-A4904 Closed 31-Dec-2017 DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2016 200000.00 200000.00 2017 5458772.18 2700000.00 2018 341227.82 5900000.00