The World Bank Philippines National Community Driven Development Program (P127741) REPORT NO.: RES29148 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PHILIPPINES NATIONAL COMMUNITY DRIVEN DEVELOPMENT PROGRAM APPROVED ON FEBRUARY 20, 2014 TO REPUBLIC OF THE PHILIPPINES SOCIAL DEVELOPMENT GLOBAL PRACTICE EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Social Development Global Director Louise Cord Sustainable Development Regional Director Benoit Bosquet Country Director: Mara K. Warwick Practice Manager/Manager: Nina Bhatt Task Team Leader: Maria Loreto N. Padua, Ditte Fallesen The World Bank Philippines National Community Driven Development Program (P127741) ABBREVIATIONS AND ACRONYMS BDC Barangay development council CDD Community-driven development CIDSS Comprehensive and Integrated Delivery of Social Services CSI Civil society organizations DILG Department of the Interior and Local Government DSWD Department of Social Welfare and Development KC KALAHI-CIDSS KALAHI Kapit-bisig Laban sa Kahirapan NCDDP National Community-driven Developmet Program MTR Mid-term review PDO Project development objective PTCA Parent, Teacher, Community Association The World Bank Philippines National Community Driven Development Program (P127741) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P127741 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 20-Feb-2014 31-Dec-2019 Organizations Borrower Responsible Agency Department of Social Welfare and Development Department of Social Welfare and Development Project Development Objective (PDO) Original PDO To empower communities in targeted municipalities to achieve improved access to services and to participate in more inclusive localplanning, budgeting and implementation. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-83350 20-Feb-2014 02-Apr-2014 13-Jun-2014 31-Dec-2019 479.00 439.00 40.00 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Philippines National Community Driven Development Program (P127741) The World Bank Philippines National Community Driven Development Program (P127741) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. Background: The objective of KALAHI-CIDDS – National Community Driven Development Project (“project” or “KC- NCDDP”) is to empower communities in targeted poor municipalities to achieve improved access to services and to participate in more inclusive local planning, budgeting and implementation. This would be achieved by (i) strengthening community groups and barangay level institutions to better identify and articulate development needs, and manage public resources, (ii) financing priority small-scale community sub-projects, and (iii) enhancing the capacity of municipal- level government to partner with barangays in responding to priority development needs, and to respond promptly and effectively to an eligible crisis or emergency. KC-NCDDP was approved on 20 February 2014 and became effective on 13 June 2014 for IBRD loan of US$479m (IBRD-83350). This project paper seeks a level 2 restructuring to: (i) extend the closing date by one year from 31 December 2019 to 31 December 2020; and (ii) cancel the amount of USD 40 million with USD 8 million from the disbursement category for Goods, non-consulting services, consultants’ services, Training and Operating Costs _and USD 32 million from the disbursement category for sub-grants. 2. Project Components: The project comprises three components: i. Component 1. Barangay (Community) Sub-Grants for Planning and Investment: It provides two types of grants to participating barangays (villages). Planning grants support the participatory planning processes and activities of local communities, as well as delivery of appropriate technical assistance inputs to ensure proper implementation. Investment grants support proposals made by barangays to implement community projects that respond to community-identified needs. ii. Component 2. Local Capacity Building and Implementation Support: This component supports the cost of services of municipal staff, DSWD’s technical support and capacity building for LGUs and local NCDDP staff, and grievance redress and social accountability activities. The component also provides greater capacity building support to Municipal local governments to enhance local poverty reduction action planning and support national government agencies at sub-national level to enhance their own community-based activities. iii. Component 3. Program Management, Monitoring and Evaluation: This component covers program administration, including two types of activities. The first involves the incremental program management and operational costs of DSWD while the second involves the costs of monitoring and evaluation (M&E). 3. Project Performance: The Tenth Implementation Support Mission (ISM) from 16-28 September 2019, concluded that that the project is on track of achieving its development objectives. The project is well placed to meet or exceed most of its targets and has complied with all legal covenants and audit reporting requirements. As of September 2019, NCDDP has covered a total of 19,647 barangays in 831 municipalities (98 percent of the target), most of which are in the final phase of the Community Empowerment Activity Cycle (CEAC). In implementing CEAC, more than 566,000 volunteers were mobilized and trained, of whom 62 percent are women. The average household participation rate in barangay assemblies is maintained at 80 percent which is beyond the target of 70 percent. NCDDP has financed a total of 27,055 community sub-projects (SPs) benefitting about 5.3 million households. Approximately 94 percent of all SPs have been completed. Access services (e.g., village road, footbridge, footpath) continue to be the leading type of SPs at 37 percent, followed by basic social services (e.g. day care center, classroom, health station) at 35 percent. The SPs implementation provided opportunities to engage 442,033 community workers/labor with a cost of Php1.43 billion (US$28M) for compensation. About 21 percent of those who were involved as community labor were women, which is within target. 4. The project registered the following accomplishments in terms of its key performance indicators: i. An average of 8 percent increase in access and utilization of major investments in covered municipalities, across different types of community sub-projects, which is 2 percentage points near the end target of 10 percent; ii. Participation of households in barangay assemblies is at 80 percent which is beyond the target of 70 percent, indicating broad-based decision making; iii. Marginalized groups (women and IPs) in villages registered an average of 63 percent participation rate in regular Barangay (villages) assemblies with and end target of 50% (57% participation rate for IPs households, 60% among women and 74% among grantees of the conditional cash transfer program (i.e., 4Ps), representing the poorest in the villages.) iv. 5.3 million direct project beneficiaries with an end target of 8.4 million. The World Bank Philippines National Community Driven Development Program (P127741) 5. Based on the abovementioned accomplishments, the project remains relevant and is aligned with the current Philippine Development Plan 2017-2022 which emphasizes good governance and citizens’ empowerment as one of the pillars for inclusive growth. The project has performed consistently well and consecutive ISRs have rated the progress towards the achievement of its Development Objectives as Satisfactory. The project is on target to achieve its intended objective and final targets; and is considered effective. In terms of efficiency, an economic analysis carried out during the mid-term review for a sampling of Sub-Projects (SPs) indicates a healthy Economic Internal Rate of Return. In addition, according to a cost-benefit analysis conducted, most of the community sub-projects are considered economically viable. Taking into consideration available evidence at present, the 9th ISR mission assessed the risk to achieving the PDO as Moderate. Furthermore, the project does not have any unresolved fiduciary or safeguard compliance issues and complies with all of the Bank’s fiduciary and safeguard requirements. 6. While the Project has registered good performance throughout its implementation, there are two deliverables that would require more time to accomplish: (i) the completion of the 4th round of community empowerment activity cycle (CEAC)1 in about 150 poor municipalities in accordance with the NCDDP design; and, (ii) institutionalization of CDD. The completion of the CEAC in some municipalities was delayed since the first 2 years of implementation was re-focused on municipalities which were affected by Typhoon Haiyan, as agreed with Government thus NCDDP started implementation in these areas only in latter part of 2016. On the other hand, effort to institutionalize CDD more broadly within the government systems has slowed down due to changes in leadership. During the mid-term review 2017, the World Bank Team has recommended that DSWD redefines its strategy for CDSS institutionalization. Under the current management (which assumed position in 2018), the DSWD has taken more strategic initiatives to institutionalize CDD, involving three distinct but mutually-reinforcing tracks or entry points: (i) integrating CDD elements in local development process (LDP); (ii) harmonizing CDD as a core approach of key national programs/services for poverty reduction; (ii) re-establishing KALAHI-CIDSS as a regular program of DSWD and DILG through legislative issuance. B. RATIONALE FOR RESTRUCTURING 7. Per letter of request from the Department of Finance (DOF), dated December 11,2019 , the Borrower requested the Bank for following restructuring: a. a one-year extension of the NCDDP closing date. The extension period shall be for purposes of implementing the last round of CEAC in about 150 municipalities, the completion of which has been delayed as explained in paragraph 6. The Borrower has likewise requested for the preparation of an additional financing operations for NCDDP, which would be processed and finalized during the one-year extension period. b. Cancellation of the remaining loan proceeds in the amount of US$40M since the NCDDP has already withdrawn the peso-equivalent of its financing requirements and has achieved most of its project deliverables. The balance or unwithdrawn loan proceeds is due to foreign exchange gains. II. DESCRIPTION OF PROPOSED CHANGES 8. Extension of closing date would be for completion of last cycle of CEAC in about 150 municipalities. This is the first extension for the Project. 1 CEAC or community empowerment activity cycle refers to the CDD process implemented by KC which involves four major stages from participatory situation analysis; community-led project identification, prioritization and approval for funding; community-managed sub-project implementation; and community-based monitoring. Each cycle corresponding to the annual local planning, execution and monitoring and is undertaken in 4 rounds that build upon the results of the previous one. From the first cycle, the LGU designates a local team who participate in the implementation of CEAC and gradually assumed full responsibility for its implementation by the fourth cycle (called Makamasang Tugon of LGU-led CDD). The World Bank Philippines National Community Driven Development Program (P127741) 9. Cancellation of an unused loan amount of USD 40 million of which USD 8 million will be from the disbursement category for Goods, non-consulting services, consultants’ services, Training and Operating Costs and USD 32 million from the category for Sub-grants. The cancellation is not expected to impact the project’s achievement of PDO and results given that the cancellation amount comes from project savings and does not affect the completion of project activities. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank Philippines National Community Driven Development Program (P127741) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-83350 Effective 31-Dec-2019 31-Dec-2020 31-Dec-2020 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' S REQUEST IBRD- Disburs 479,000,000.0 439,000,000.0 USD 40,000,000.00 31-Dec-2019 FOR 83350-001 ing 0 0 COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-83350-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: Gds, NCS, CS, Trng, OC 97,610,000.00 89,081,567.60 89,610,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Sub-grants under P1a 380,192,500.00 319,584,710.44 348,192,500.00 100.00 100.00 Total 477,802,500.00 408,666,278.04 437,802,500.00 The World Bank Philippines National Community Driven Development Program (P127741)