4OFFICIAL S 'Upplemental Letter No. 2 GEORGIA March 28, 2016 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 8595-GE (National Innovation Ecosystem Project) Performance Monitoring Indicators Dear Sirs and Mesdames: This refers to the provisions of Section II.A of Schedule 2 to the Loan Agreement of this date between the International Bank for Reconstruction and Development and Georgia (Borrower) for the above-captioned Project. The Borrower hereby confirms to the Bank that the indicators set forth in the attachment to this letter shall serve as a basis for the Borrower to monitor and evaluate the progress of the Project and the achievement of the objectives thereof. Very truly yours, GE mGIA By AuthoriZ6d "presentative Attachment Attachment to Supplemental Letter No. 2 GEORGIA: National Innovation Ecosystem Project Performance Monitoring Indicators Project Development Objectives PDO Statement The project development objective is to increase innovative activities of firms and individuals in the Borrower's territory and their participation in the digital economy. These results are at Project Level Project Development Objective Indicators Cumulative Target Values Indicator Name Baseline YRI YR2 YR3 YR4 End Target New/improved products or services introduced to new or existing markets by Project 0 0 30 70 130 200 beneficiaries (Number) Start-ups launched by Project beneficiaries 0 0 60 140 240 340 (Number) Access to broadband Internet (number of 39 40 41 43 46 50 subscribers per 100 people) (Number) Beneficiary MSMEs selling via e-commerce 0 50 100 200 300 400 platforms (Number) Intermediate Results Indicators Cumulative Target Values Indicator Name Baseline YRI YR2 YR3 YR4 End Target Direct project beneficiaries 0 2,500 11,900 25,600 44,500 64,000 (Number) - (Core) Female beneficiaries N/A 15% 15% 15% 20% 20% (Percentage - Sub-Type: Supplemental) - Core Component 1: Innovation Infrastructure RIHs established, equipped, and operational 0 3 5 6 7 8 (Number) CICs established, equipped, and operational 0 10 20 30 40 50 (Number) Visitors to CICs and RIHs 0 0 12,500 40,000 85,000 150,000 (Number) Female visitors to CICs and RIHs (Percent of N/A N/A 15% 15% 20% 20% total - Sub-Type: Breakdown) New household and MSME broadband subscriptions catalyzed 0 1,800 7,200 14,400 25,200 33,000 (Number) Component 2: Innovation Services Innovation competitions and exhibitions 0 25 65 125 200 275 supported by Project (Number) Participants in innovation competitions and 0 350 850 1,900 3,000 4,400 exhibitions supported by the Project (Number) Recipients of basic digital literacy training 0 1,500 6,500 14,000 25,000 30,000 (Number) Individuals completing structured training 0 400 1,700 3,900 6,800 10,000 modules and programs (Number) Females completing structured training modules and programs (Percent of total - Sub- N/A 15% 15% 15% 20% 20% type: Breakdown) Beneficiaries of coaching, mentoring, and 0 20 60 100 140 180 technical consulting (Number) Component 3: Innovation Financing Private financing mobilized through matching grant programs 0 0 650,000 1,300,000 1,950,000 1,950,000 (USD) Enterprises and start-ups financed through 0 0 52 104 156 156 matching grants (Number) Component 4: Project Implementation Support Government and associated professionals/staff receiving capacity building through trainings, 0 15 30 45 60 75 workshops, study visits, etc. (Number) Citizen engagement: user feedback collected 0 100 500 2,000 3,500 5,000 from Project beneficiaries (Number) Indicator Description Project Development Objective Indicators D)ata Source / Responsibility for Indicator Name Description (indicator definition etc.) Frequency Meth Dat Collectio Methodology Data Collection New/improved products or A product innovation is the market introduction of a new or Semi- GITA GITA services introduced to new or significantly improved good or service with respect to its annual monitoring existing markets by Project capabilities, user friendliness, components or sub-systems. system beneficiaries Process innovation, meaning the implementation of a new or significantly improved production process, distribution method, or supporting activity, will also be counted here if it impacts a product or service on the market. Start-ups launched by Project Number of start-up firms that were created or grew from a Semi- GITA GITA beneficiaries nascent stage by beneficiaries of Project services or matching annual monitoring grants. system Access to broadband Internet Number of people who pay for access to the broadband Quarterly GNCC GITA (number of subscribers per 100 Internet per 100 people in a given country. people) Beneficiary MSMEs selling via Number of MSMEs receiving Project support that sell at least Annual GITA GITA e-commerce platforms GEL 2,500 worth of goods or services online, through any e- monitoring commerce platform. system Intermediate Results Indicators t m Data Source / Responsibility for Indicator Name Description (indicator defintion etc.) Frequency Methodology Data Collection Direct Project beneficiaries Includes recipients of broadband connections under Semi- GITA GITA component 1.3; participants in innovation competitions; annual monitoring participants in structured training modules; recipients of system digital literacy training (excluding those through component 1.3), beneficiaries of coaching, mentoring, and technical consulting; enterprises and individuals financed through the Project's matching grants program; and government and GITA staff receiving Project training/capacity building. It excludes general visitors to RIHs and CICs. Female beneficiaries Percentage of the direct project beneficiaries that are female. Semi- GITA GITA annual monitoring system Component 1: Innovation Infrastructure CICs and RIHs established, Number of Community Innovation Centers and Regional Semi- GITA GITA equipped, and operational Innovation Hubs supported directly by the Project that are annual monitoring established, equipped, and operational. system Visitors to CICs and RIHs Number of visitors to CICs and RIHs supported by the Semi- GITA GITA Project. This refers to the number of entries into CICs and annual monitoring RIHs, rather than distinct individuals. For instance, if the system same person users a CIC or RIH on 5 separate occasions, this is counted as 5 visitors. The number includes visitors coming to receive training and participate in innovation competitions. Female visitors to CICs and Percentage of total visitors that are female. Semi- GITA GITA RIHs annual monitoring system New households and MSME Subscriptions directly resulting from use of installation and Semi- GITA GITA broadband subscriptions training voucher financed through GITA's BfD program. annual monitoring catalyzed system Component 2: Innovation Services Innovation competitions and This includes competitions such as hack-a-thons, make-a- Semi- GITA GITA exhibitions supported by the thons, and create-a-thons, as well as exhibitions hosted by annual monitoring Project GITA to connect businesses with innovators. system Participants in innovation If a person participates in multiples competitions or Semi- GITA GITA competitions and exhibitions exhibitions, this is counted multiple times. annual monitoring supported by the Project system Recipients of digital literacy This includes those who receive training (predominantly at the Semi- GITA GITA training RIHs and CICs) using their voucher from the purchase of annual monitoring broadband internet (Component 1.3) and those who are system trained at the RIHs and CICs independently of the BfD program. Individuals completing This includes participants in the longer-term dedicated ICT Semi- GITA GITA structured training modules and training program, shorter on-demand training classes at the annual monitoring programs (Number) innovation centers, e-learning modules, and e-commerce system training delivered through the BfD program. If the same person participates in multiple training courses or modules, this is counted multiple times. Females completing structured Female percentage of total individuals completing structured Semi- GITA GITA training modules and programs training programs and modules. annual monitoring (Percent of total - Sub-type: system Breakdown) Beneficiaries of coaching, Each coaching, mentoring, or technical consulting Semi- GITA GITA mentoring, or technical arrangement is counted once, even if multiple sessions are annual monitoring consulting involved. system Component 3: Innovation Financing Private financing catalyzed Private financing committed by participants in the start-up and Semi- GITA GITA through matching grant innovation matching grant programs operated by GITA. annual monitoring programs system Enterprises and start-ups Number of enterprises and start-ups financed by GITA's Start- Semi- GITA GITA financed through matching up and Innovation matching grants programs. annual monitoring grants system Component 4: Project Implementation Support Government and associated This refers to capacity building events organized by GITA. If Semi- GITA GITA professionals/staff receiving the same individual participates in multiple trainings, annual monitoring capacity building through workshops, etc., this is counted multiple times. system trainings, workshops, study visits, etc. Citizen engagement: user Number of user feedback forms completed by CIC and RIH Semi- GITA GITA feedback collected from Project users, training recipients, participants in innovation annual monitoring beneficiaries competitions, and matching grants beneficiaries. system