Document of The World Bank

Public Disclosure Authorized Report No: ICR00003873

IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-11812)

ONA

GRANT Public Disclosure Authorized IN THE AMOUNT OF US$9 MILLION

TOTHE

REPUBLIC OF SOUTH SUDAN

FORA

PRIVATE SECTOR DEVELOPMENT PROJECT Public Disclosure Authorized

September 10, 201 7

Finance and Markets Global Practice Africa Region Public Disclosure Authorized CURRENCY EQUIVALENTS

(Exchange Rate Effective June 30, 2017)

Currency Unit= South Sudanese Pound (SSP) SSP 1.00 = US$ 0.0088 US$ 1.00 = SSP 113.50

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS

AF Additional Financing BDS Business Development Services BPC Business Plan Competition BSC Business Start-up Competition CEN Country Engagement Note CPA Comprehensive Peace Agreement DO Development Objective GDP Gross Domestic Product EAC East African Community EOI Expressions of Interest FIRST Financial Institutions Reform and Strengthening Initiative FSSL Finance South Sudan Limited GoNU Government of National Unity GoSS Government of South Sudan IDA International Development Agency IMF International Monetary Fund IP Implementation Progress ISN Interim Strategy Note ISR Implementation Status and Results Report KCB Kenya Commercial Bank MCII Ministry of Commerce, Industry, and Investment MDTF-SS Multi-Donor Trust Fund for South Sudan M&E Monitoring and Evaluation MFI Micro Finance Institution MIS Management Information Systems MoFP Ministry of Finance and Economic Planning MoTII Ministry of Trade, Industry and Investment MTR Mid-Term Review NGO Non-Governmental Organization PAD Project Appraisal Document PC Project Coordinator PCU Project Coordination Unit PDO Project Development Objective PFMU Project Financial Management Unit PSD Private Sector Development PSDP Private Sector Development Project SOE State-Owned Enterprise SSBF South Sudan Business Forum SSDP South Sudan Development Plan SSMDF South Sudan Micro Finance Development Facility SSP South Sudan Pound SSTTF South Sudan Transition Trust Fund SUMI Sudan Microfinance TGNU Transitional Government of National Unity TOR Terms of Reference TTL Task Team Leader USAID United States Agency for International Development vc Video Conference WDR World Development Report

Senior Global Practice Director: Ceyla Pazarbasioglu-Dutz Sector Manager: James Seward Project Team Leader: Michael Corlett ICR Team Leader: Michael Corlett REPUBLIC OF SOUTH SUDAN Private Sector Development Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design 1 2. Key Factors Affecting Implementation and Outcomes 1 3. Assessment of Outcomes 2 4. Assessment of Risk to Development Outcome 2 5. Assessment of Bank and Borrower Performance 3 6. Lessons Learned 3 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners 3 Annex 1. Project Costs and Financing 4 Annex 2. Outputs by Component. 5 Annex 3. Economic and Financial Analysis 6 Annex 4. Bank Lending and Implementation Support/Supervision Processes 7 Annex 5. Beneficiary Survey Results : 8 Annex 6. Stakeholder Workshop Report and Results 9 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 10 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders 11 Annex 9. List of Supporting Documents 12 The World Bank (P128239)

A. BASIC INFORMAT.ION South Sudan Private Sector Country: South Sudan Project Name: Development Project Project ID: P128239 L/C/TF Number(s): TF-11812

ICR Date: 08/10/2017 ICR Type: Core ICR GOVERNMENT OF SOUTH Financing Instrument: ERL Borrower: SUDAN Original Total USO 9.00M Disbursed Amount: USO 9.00M1 Commitment: Revised Amount: USO 9.00M

Environmental Category: B

Implementing Agencies: Ministry of Trade, Industry and Investment, Bank of South Sudan

Cofinanciers and Other External Partners:

B. KEV DATES Process Date Process Original Date Revised / Actual Date(s) Concept Review: 08/30/2011 Effectiveness: 09/14/2012 08/01/2012 11/06/2014 Appraisal: 08/31/2011 Restructuring(s): 11/30/2015

Approval: 01/10/2012 Mid-term Review: 09/25/2014 09/25/2014 Closing: 11/30/2014 06/01/2016

C. RATINGS SUMMARY C.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory I Risk to Development Outcome: High

Bank Performance: Moderately Unsatisfactory

Borrower Performance: Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Unsatisfactory Government: Unsatisfactory

1 A refund of ineligible expenditures is currently outstanding and will likely result in a final disbursement of US$7.2 million. The World Bank (P128239)

Implementing Quality of Supervision: Moderately Unsatisfactory Moderately Unsatisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Unsatisfactory Unsatisfactory Performance: Performance:

C.3 Quality at Entry and Implementation Performance Indicators Implementation Indicators QAG Assessments (if any) Rating Performance Potential Problem Project No Quality at Entry (QEA): None at any time (Yes/No): Problem Project at any Quality of Supervision No None time (Yes/No): (QSA): DO rating before Moderately Satisfactory Closing/Inactive status:

D." SECTOR AND THEME CODES Original Actual

Major Sector/Sector Public Administration Public administration - Financial Sector 17 17 Financial Sector Public Administration - Financial Sector 17 17 Other Non-bank Financial Institutions 21 21 Microfinance 31 31 SME Finance 49 49

Payments, settlements, and remittance systems 2 2

Banking Institutions 60 60 Industry, Trade and Services

Trade 1 1 Services 1 1

Major Theme/Theme/Sub Theme Finance

Financial Infrastructure and Access 40 40 MSME Finance 40 40 Private Sector Development

ii The World Bank (P128239)

Business Enabling Environment 19 19

Investment and Business Climate 17 17

Regulation and Competition Policy 2 2

Enterprise Development 40 40

MSME Development 40 40

Jobs 100 100

Regional Integration 1 1

E. BANK STAFF Positions AtlCR At Approval

Regional Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Bella Bird Country Director: Carolyn Turk

Practice Manager: James Seward Michael Fuchs Andres Garcia Task Team Leader(s): Michael Corlett

ICR Team Leader: Michael Corlett

Senior Global Practice Director: Ceyla Pazarbasioglu-Dutz

ICR Primary Author: JohnP. Byamukama

F. RESULTS FRAMEWORK ANALYSIS Project Development Objectives (from Project Appraisal Document) The PDO is to improve access to finance for private sector development and increase employment opportunities in South Sudan. Revised Project Development Objectives (as approved by original approving authority)

(a) PDQ lndicator(s) Original Target Formally Actual Value Achieved Values (from Indicator Baseline Value Revised Target at Completion or approval Values Target Years documents)

iii The World Bank (P128239)

Indicator 1 : Number of jobs generated by enterprises supported by the Business competitons sub• grants Value quantitative or 98 250 1400 n/a Qualitative)

Date achieved 09/30/2011 11/30/2014 06/01/2016 06/01/2016

Comments Not Achieved. Target was adjusted upwards following December 2013 conflict and decision (incl.% to expand scope of business competitions. Due to the late and incomplete disbursement of achievement) funds to business competition Awardees, only 483 businesses received funds out of 1,301 (424 for BSC, 59 for BPC). Furthermore, due to the conflict, MoTII has not been able to measure job creation of those businesses who received the award.

Indicator 2 : Number of people with access to finance through targeted MFls and business competitions Value quantitative or 12,586 (M) and 34,160 14,560 (M) and 36,585 4,440 (M) and 6,660 (F) 1,883 (M) Qualitative) (F) (F) 2,635 (F) Adjusted to 2,616 (M) and 5546 (F) in November 2014 during the restructuring

(see the comments section)

Date achieved 09/30/2011 11/30/2014 06/01/2016 06/01/2016 Comments Not Achieved. During the restructuring on October 2014, the baseline was adjusted and (incl.% tmally revised, due to the fact that the two major MFls (BRAC and RUFI) ceased achievement) operations in South Sudan before project commencement. At project closing, the number of MFI clients was 4,035, down from 9,364 in December 2012 due to the conflict and ensuing economic downturn.

Indicator 3 : Direct Project beneficiaries (Number of businesses supported through Business competitions Value 204 (M)279 quantitative or 20 (M) and 25 (F) 60 (M) and 85 (F) 440 (M) and 660 (F) (F) Qualitative)

Date achieved 09/30/2011 11/30/2014 06/01/2016 06/01/2016 Comments Not achieved. The target covered both the business startup challenges and the business plan (incl.% competition. As noted above, only 483 out of 1,301 Awardees received funds. achievement)

iv The World Bank (P128239)

ac Indicator 4 : Number of people with access to finance through targeted MFls Value quantitative or 12,566 (M) and 14,500 (M) and 4000 (M) and 6000 (F) 1679 (M) Qualitative) . 34,135 (F) 36,500 (F) 2356 (F) The baseline was changed to 3049 (M) and 5,506 (F)

Date achieved 09/30/2011 11/30/2014 06/01/2016 06/01/2016

Comments Not achieved. The baseline value was changed as the two largest MFls (BRAC and RUFI) {incl.% ceased operations in 2012. achievement)

(b) Intermediate Outcome lndicator(s) Original Target Values (from Formally Revised Actual Value Achieved at Indicator Baseline Value approval Target Values Completion or Target Years documents) Indicator 1 : Component 1: Establish Commercially-Viable Microfinance Institutions Number of active loan accounts - M Value quantitative or 9,893 (M) and 12,000 (M) and 6269 in total Qualitative) 24,324 (F) The 26,500 (F) baseline was revised to the following: 6269 in total (2259 (M) and 4010 (F)

Date achieved 09/30/2011 11/30/2014 06/01/2016 06/01/2016 Comments The baseline value was changed as the two largest MFls (BRAC and RUFI) ceased (incl.% operations in 2012. Growth was severely affected during the implementation by the achievement) December 2013 Crisis and the halting of lending by one large MFI (Finance South Sudan). Indicator 2 : Percentage of project-supported institutions that are reporting on this indicator (10 indicator 1) :

Supplemental Indicator Value quantitative or 100 (this baseline 100 100 Qualitative) was revised to 57 during the restructuring in November 2014)

V The World Bank (P128239)

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Date achieved 09/30/2011 06/01/2016 06/01/2016 Comments (incl.% achievement) Indicator 3 : Component 1: Establish Commercially-Viable Microfinance Institutions Portfolio at Risk (past 30 days)- Microfinance Value quantitative or 25 percent 15 percent 2.51% Qualitative) Date achieved 09/30/2011 06/01/2016 6/01/2016 Comments Achieved. Portfolio at risk was very low at closing, but surged following renewal of conflict (incl.% in July 2016. The low PAR at closing is likely due to risk averseness of MFls, which in the achievement) absence of fresh capital, would restrict lending to only best performing customers. Indicator 4 : Percentage of project-supported institutions that are reporting this indicator ( 10 indictor 3) :

Supplemental Indicator Value quantitative or 100 (Baseline was 100 100 Qualitative) revised to 67 during the restructuring in November 2014)

Date achieved 09/30/2011 06/01/2016 Comments Achieved. (incl.% achievement) Indicator 5 : Component 2: Promote Micro-Entrepreneurship Number of ongoing businesses supported through Business Plan Competition (BPC) Value 7 (M) quantitative or 0 (M) and 0 (F) 32 (M) and 48 (F) 40 (M) and 60 (F) 11 (F) Qualitative) Date achieved 09/30/2011 11/30/2014 06/01/2016 12/01/16 Comments Not Achieved. The target was revised due to increase in the number of awards for existing (incl.% businesses. As indicated above, only 18 of the 101 BPC awardees received funds due to achievement) conflict. Indicator 6 : Component 2: Promote Micro-Entrepreneurship Number of startup businesses supported through BPC Value 63(M) quantitative or 20 (M) and 25 (F) 28 (M) and 37 (F) 420 (M) and 625 95 (F) Qualitative) (F) Date achieved 09/30/2011 11/30/2014 06/01/2016 12/01/16

vi The World Bank (P128239)

Comments Not Achieved. The target was revised given coverage increase of the business startup (incl.% challenge. achievement) Indicator 7 : Component 2: Promote Micro-Entrepreneurship Number of businesses supported through BPC still in

operation at the end of the project Value n/a quantitative or 0 40 so Qualitative) Date achieved 09/30/2011 11/30/2014 06/01/2016 12/01/16 Comments Target was revised due to the increase coverage of business plan competition for existing (incl.% business. Although most of the businesses were in operation at closing, an exact number achievement) is not available since most businesses (42/101) had not collected funds from KCB by closing, or during disbursement grace period, as a result of conflict in July 2016. Indicator 8 : Number of MCII staff trained on trade policy and integration Value quantitative or 0 25 75 Qualitative) Date achieved 09/30/2011 06/01/2016 Comments Target surpassed by 50. The training of 75 MCII staff in trade negotiations directly (incl.% supported the GoSS in successful negotiations for acceptance into the EAC achievement) Indicator 9 : Component 3: Mobile Payments and Trade Integration Policy Support The regulatory framework for mobile

banking and payments is completed and presented to Cabinet Value quantitative or No (Unit of Yes Yes Qualitative) Measure: yes/No)

Date achieved 09/30/2011 06/01/2016 6/01/2016 Comments Achieved. Mobile money regulations were adopted by the Bank of South Sudan in December (incl.% 2016. achievement)

G. RATINGS OF PROJECT PERFORMANCE IN ISRs Date ISR Actual Disbursements No. DO IP Archived (USO millions) 0.47 1 11/30/2012 Satisfactory Satisfactory

Moderately 0.58 2 06/26/2013 Satisfactory Satisfactory Moderately 2.08 3 12/25/2013 Moderately Satisfactory Satisfactory

vii The World Bank @ (P128239)

Moderately 6.70 4 06/30/2014 Moderately Satisfactory Satisfactory 6.70 5 11/25/2014 Moderately Satisfactory Satisfactory 6.70 6 05/22/2015 Moderately Satisfactory Satisfactory 6.70 7 12/03/2015 Moderately Satisfactory Satisfactory

Moderately 9.00 8 05/31/2016 Moderately Satisfactory Satisfactory

H. RESTRUCTURING {IF ANY)

I. DISBURSEMENT PROFILE •

C Cl) ::::, C

c::, 0 E <(

0 ' ..,a ~

• ~ Amount

viii 1. Project Context, Development Objectives and Design (this section is descriptive, taken from other documents, e.g., PAD/JSR, not evaluative)

Overview. The Republic of South Sudan is the newest nation in the world having become independent from the Republic of Sudan on July 9, 2011. This followed a referendum of self• determination carried out in January 2011 as part of the implementation of a Comprehensive Peace Agreement (CPA) that was signed in 2005 to end a 20-year civil war between the northern and southern parts of Sudan. South Sudan is also one of the poorest countries in the world and faces significant human development challenges. It has a population of 12.3 million (2015) with some 90 percent of the population earning less than US$1 per day. It has a very young population with 72 percent of the population under the age of 30. The main economic activity is subsistence agriculture, and 83 percent of the population lives in rural areas. South Sudan also has some oil wealth with oil exports accounting for almost all its exports and about 60 percent of its Growth Domestic Product (GDP).

A new conflict erupted in South Sudan in December 2013, and it is undermining the development gains achieved since independence and worsening the humanitarian situation in the country. Over one million people have fled the country and are refugees in neighboring countries (mostly in Uganda and Kenya) and the 2015/16 GDP contracted by 6.3 percent. With oil production disruptions and below-average agriculture production, the economy is expected to contract further in 2016/2017, while fiscal and current account deficits will soar, spiraling domestic prices and the parallel market premium. The extreme poverty rate has increased from 44.7 percent in 2011 to 65.9 percent in 2015 and the annual inflation increased by 661.3 percent from July 2015 to July 2016 and by 730 percent from August 2015 to August 2016. Several attempts by regional bodies to help in resolving the conflict have been unsuccessful so far. Av oiding the protracted crisis will require 1 recommitment to a political settlement and major fiscal adjustment •

1.1 Context at Appraisal (briefs ummary of country and sector background, rationale for Bank assistance)

Country and Sector Background. As a new nation, South Sudan faced the dual challenge of dealing with the legacy of more than 50 years of conflict (with 20 of them under a civil war) and continued instability along with huge development needs. It was experiencing a highly fragile and vulnerable transition, including spurts of violence from breakaway militias and a delicate unresolved situation at its northern border with Sudan. A number of issues were also still being negotiated with Sudan, including the distribution of assets and oil revenue, external debt, citizenship, freedom of movement and the status of the Abyei enclave on the northern border.

The many years of conflict destroyed physical capital, institutions, and the opportunity to learn and develop relevant skills. There were no formal institutions at the signing of the CPA, and they had to be built from a very low base and the capacity of government to formulate policy and implement

1 World Bank website: www.worldbank.org

1 programs was limited, but growing by 2011. During the CPA period, most goods and services were being imported into the country, especially from the neighboring countries. Many Ugandan, Kenyan, Ethiopian, and Eritrean traders quickly established themselves in Juba (the capital) to provide the necessary goods and services, ranging from food items (maize, eggs, cooking oil, beer, soft drinks, and bottled water) to hospitality services, construction materials, and housing.

The emergence of South Sudanese entrepreneurs was less visible. The few local enterprises that were owned by South Sudanese consisted mostly of small and micro enterprises working in low value sectors ( e.g. retail trade and rudimentary transformation of food products). The majority of them were also owned by women. The South Sudanese saw independence as an opportunity to channel their desire for change and transforming them and the new nation into a dynamic partnership for realizing the country's geopolitical and economic potential. They hoped that independence would come with improvements in the existing poor quality human development indicators, more job opportunities, and economic prosperity.

The Government of South Sudan (GoSS) was committed to delivering a peace dividend to its people in the form of jobs, services, and opportunities for fulfilling livelihoods based on their skills and aspirations. Private sector development was set as a constitutional objective of the Government with the hope that a competitive and growing private sector would offer its people the opportunity to extricate themselves from poverty through employment and capital investment. This in turn would generate tax revenues necessary for the Government to improve its service delivery.

At the signing of the CPA in 2005, the GoSS prioritized private sector development and secured funding from a Multi-Donor Trust fund for South Sudan (MDTF-SS) to support a Private Sector Development Project (PSDP) which was implemented by the World Bank starting in May 2007. Its development objective was to: (a) establish the enabling environment for private sector development; and (b) support formal private sector growth.

Following independence, the GoSS formulated an overall strategy for private sector development as outlined in its three-year South Sudan Development Plan (SSDP), 2011-2013. The strategy emphasized the development and regulation of the economy of South Sudan in order to achieve prosperity and facilitation of the private sector. Support for increasing the role of the private sector included improving the invest climate for Private Sector development (PSD) and expanding access to finance so as to improve livelihoods and reduce poverty. The GoSS in 2011 requested the World Bank for a follow-on PSD Project that would build upon and scale up successful components implemented under the MDTF-funded first PSD Project of 2007. The funding for the new proposed project was provided from the then recently approved South Sudan Transition Trust Fund (SSTTF)2. The operations supported under SSTTF were expected to be quick-starting and quick disbursing.

Rationale for Bank Assistance. The project was initiated at a time when an Interim Strategy Note for South Sudan (FY 2013-2014) was being prepared in anticipation of South Sudan becoming

2 The STTF was created to support South Sudan while it was in the process ofbecoming a full member of the International Monetary Fund (IMF) and International Development Association (IDA). Full membership was attained in the Spring of 2012. IDA acted as administrator ofSSTTF.

2 a full member of the World Bank Group and IMF by mid-2012. The GoSS had applied for membership in April 2011. However, the Bank had also been extensively involved in South Sudan since 2005 as a member of the Joint Assistance Strategy team and manager of the MDTF for South Sudan (MDTF• SS). The Bank already had a robust knowledge and analytical program, a strong field presence in the World Bank's Juba Office and an active role in partnerships and donor coordination efforts.

The proposed activities were also consistent with the Interim Strategy Note (ISN) developed for South Sudan in April 2008 while it was still part of Sudan. The main objective of this ISN was to support the Government of National Unity (GoNU) and GoSS to sustain peace and help reduce conflict by meeting the commitments contained in the CPA,.Darfu r Peace Agreement, and Eastern Sudan Peace Agreement, particularly in the areas of governance, basic services, and pro-poor economic growth; especially in the war-affected and marginalized areas. Fostering private sector growth was a key activity of this agenda.

In preparing the ISN of2013/2014, the Bank drew on: (i) lessons from its ongoing engagement in South Sudan; (ii) the framework and insights articulated in the 2011 World Development Report (WD R): Conflict, Security, and Development; (iii) the new World Bank Strategy for Africa (two core areas of competitiveness and employment, and vulnerability and resilience); and (iv) advice and support from the Nairobi Hub on conflict and fragility. The Bank knew that there was broad agreement within South Sudan, and among development partners, that the immediate post-independence efforts must focus on a limited set of key priorities while also pursuing some quick-starting activities that could show early results and help create inclusive-enough domestic coalitions. The strategy was thus elaborated around a number of cross-cutting priorities for South Sudan: )"' The need to continue efforts to improve governance across the public sector; )"' The need to diversify the economy, in the medium term, away from oil with particular focus on developing the considerable agricultural potential and increasing connectivity; )"' Addressing the employment agenda; focusing on developing the private sector and investing in labor-intensive rural infrastructure and connectivity; )"' The need for the GoSS to focus on basic service delivery to the population and move away from the humanitarian and NGO-driven approach; and )"' Working with and strengthening the capacity of state and local governm ents so as to avoid a Juba-centered development model.

As mentioned above, the MDTF-SS-funded PSD Project had registered some early successes during the CPA period despite operating in a difficult post-conflict environment. These successes notwithstanding, there was still a huge unmet demand for support to the private sector in South Sudan. Since 2005, more than two million people had come back to South Sudan looking for opportunities, and it was expected that many more people, including youth, ex-combatants and women, would come back after independence looking for jobs, including those relocating from Sudan. The Bank took into consideration a number of factors in providing funding for this new project from the newly approved SSTTF: )"' Private sector development (supporting new entrepreneurs and access to microfinance) was one of the priorities agreed with the GoSS;

3 ~ The proposed project was in line with the 2011 WDR recommended interventions; and ~ The scale up of the successful activities of the MTDF-SS funded project would be quick• starting and quick-disbursing and could allow for a smooth transition from trust-funded to regular projects and programs.

1.2 Original Project Development Objectives (PDO) and Key Indicators

The project development objective (PDO) was to improve access to finance for private sector development and increase employment opportunities in South Sudan.

The Key PDO Indicators included:

1. PDO 1: Number of jobs generated by enterprises supported by the Business Plan Competition (BPC) sub-grants (Target: 250).

11. PDO 2: Number of people with access to Finance through targeted MFis and BPC (Target: 15,550 Male and 36,585 Female).

m. PDO 3: Direct project beneficiaries (Number of businesses supported through BPC) (Target: 60 male; 85 Female).

1v. PDO 4: Number of People with access to finance through targeted MFis (Male 14,500 Male; 36,500 Female)

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification

The PDO was not revised. However, following the change in the BPC activities and the exit of the two largest micro finance institutions from South Sudan, the Key PDO Indicators were revised and included the following:

1. PDO 1: Number of jobs generated by enterprises supported by the BPC and BSC sub-grants (Target: 1,400).

u. PDO 2: Number of people with access to finance through targeted MFis and BPC (Male) (Target: 4,440).

u1. PDO 3: Number of people with access to finance through targeted MFis and BPC (Female) (Target: 6,660).

1v. PDO 4: N1.1;mber of businesses supported through BPC (Male) (Target: 440).

v. PDO 5: Number of businesses supported through BPC (Female) (Target: 660).

v1. PDO 6: Number of people with access to finance through targeted MFis (Male) (Target: 4,000).

4 v11. PDO 7: Number of people with access to finance through targeted MFis (Female) (Target: 6,000).

1.4 Main Beneficiaries,

The primary target group was the general South Sudanese population including new and existing entrepreneurs, clients of microfinance institutions, mobile money transfer clients, and government officials responsible for trade integration policy. Other organizations that were expected to benefit from the project were the South Sudan Microfinance Development Facility (SSMDF) which would receive operating costs in order to implement Component 1, MFis which would receive Technical Assistance to strengthen their financial and institutional capacity, and the SSBF which would continue to facilitate public-private dialogue around the formulation of policy agenda affecting both the public and private sectors.

1.5 Original Components

Component 1: Establish Commercially-Viable Microfinance Institutions (US$2.8 million). There were two sub-components under this component. The first sub-component was to provide technical and financial support to MFis, promoting start-up and expansion of microfinance providers and services throughout South Sudan. The amount of US$1.9 million was allocated for the sub-component (US$1.5 million for loan capital and US$0.4 million for technical assistance for MFis). The MFis were to provide micro-lending to micro-borrowers for various commercial activities 3 concentrated on trade and agriculture . Technical and financial support was to be provided to strengthen the institutional and financial capacity of microfinance providers who had the potential to operate on a sustainable basis. Funding would be provided for institution building and delivery of microfinance services, training, as well as technical consulting services, Management Information Systems (MIS) for MFis and other capacity building activities.

The second sub-component was to support the operating costs of the SSMDF for a period of three years in an amount ofUS$0.9 million. The SSMDF is a microfinance apex institution established in 2009 under the MDTF-SS-funded PSD Project with a corporate structure equivalent to a state• owned-enterprise (SOE) and serves as a wholesale microfinance body in South Sudan.

Component 2: Promote Micro-Entrepreneurship (US$4.4 million). This component was designed to catalyze entrepreneurship in South Sudan through a Business Plan Competition (BPC) for at least 80 existing businesses and 20 start-ups. Large numbers of South Sudanese men and women, including returnees, were facing an employment market with limited absorption capacity. The program would address this challenge through entrepreneurship awareness creation, running a BPC for new and active entrepreneurs, including youth, ex-combatants and women, to compete for business support funds, and providing relevant training in business development skills. A total of US$3 million was earmarked to support at least 100 entrepreneurs with sub-grants in the amount up to US$20,000

3 This component included a line of credit and complied with the World Bank's policy on financial intermediary lending (OP 8.30).

5 each, to be used as a block collateral for loans provided by commercial banks. The loans for the BPC were to be used to finance activities across different sectors such as light manufacturing, services, poultry farms, and agriculture. The remaining US$1.4 million was allocated for the preparation, technical assistance, and Monitoring and Evaluation (M&E) for the BPC.

Component 3: Mobile Payments and Trade Integration Policy Support (US$0.3 million). This component was to support the development of a regulatory framework for mobile banking and payments and provide long term advisory services on trade harmonization for South Sudan, including consideration of South Sudan's potential membership to the East African Community (EAC).

Component 4: Institutional Strengthening of the South Sudan Business· Forum and · Project Management (US$1.5 million). This component was to finance the activities of and operating costs of the Project Coordination Unit (PCU) which is responsible for coordinating and monitoring activities implemented by the project. It was also designed to support technical assistance and training to build institutional capacity of the Ministry of Commerce, Industry, and Investment (MCII), later renamed Ministry of Trade, Industry and Investment (MoTII) staff responsible for the development of the private sector in South Sudan. The component was also to cater for the operating and staffing costs of South Sudan Business Forum (SSBF), established in 2009 under the MDTF-SS PSD Project. IFC provided technical and financial assistance to SSBF.

1.6 Revised Components

Following the political and military crisis in December 2013, its impact, and the ensuing military clashes in the Northern states, the BPC was redesigned, through discussions between the Bank and the South Sudan Authorities, and would cover only six states that were easily accessible and not affected by the conflict. It was decided to use the BPC as a tool to improve economic recovery and generate opportunities for a larger number of South Sudanese. The BPC component would target two different groups in South Sudan. The first group would consist of 1,200 beneficiaries wanting to start new businesses (business start-ups), the Business Start-up Competition (BSC), and the second group would consist of 100 beneficiaries of ongoing businesses wanting to expand their businesses or the BPC, with at least 60 percent of beneficiaries being women. Under the new arrangements, the BSC awardees would each receive the South Sudan Pound (SSP) equivalent of US$1,000 and the ongoing businesses awardees would each receive the SSP equivalent US$15,000.

6 1. 7 Other significant changes

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their mitigations identified, and adequacy ofp articipatory processes, as applicable)

The PSDP was processed under the World Bank's OP/BP 8.00 (rapid response to a crisis or emergency), and prepared during the final year of implementation4 of the MDTF-SS funded PSD Project, which at the time was proving to be a successful model for private and financial sector development in a post-conflict environment. Despite the important achievements of MDTF, a large unmet demand for support to the private sector persisted, and Government continued to prioritize support for the private sector. Given the original project's success, and the SSTTF mandate to prioritize quick-starting activities that could show early results, the project built upon and scaled up successful components implemented by the MDTF-SS funded Private Sector Development Project under implementation since May 2007. The project made one significant change over the original design as it hired an international firm to conduct the business competition. This was seen as necessary to avoid political capture in terms of selecting candidates. It also followed the same implementation arrangements including carrying over some staff to the new project. The expectation was that these factors would facilitate speedy implementation for this emergency project of only 2 years and 8 months. Further, given the carry over in implementation arrangements and project components, project design was considered realistic despite risks to implementation, which were adequately reflected in project paper.

2.2 Implementation

The PSD Project in the amount of US$9 million was approved on January 10, 2012 and became effective on August 1, 2012 (one year after South Sudan attained its independence from the North), with a closing date of November 30, 2014. The project was restructured twice during its lifetime: (i) a Level 2 restructuring in November 6, 2014 to revise the results framework and extend the closing date to December 1, 2015; and (ii) a Level 2 restructuring in November 2015 to extend the closing date to June 1, 2016.

There were five months between project approval and effectiveness. Due to turnover of critical staff, the Project Coordination Unit (PCU) was not fully constituted until end 2012. The project coordinator from the MDTF project resigned on May 31, 2012 (before effectiveness), and recruitment of of a new Project Coordinator (PC) was completed more than six months after the project became 5 effective • Similarly, the team leader of SSBF resigned in April 2012 to pursue studies, and the Credit

4 South Sudan MDTF (P102319) closed on June 30, 2012

5 In the interim period, the Finance Officer served as acting Project Coordinator.

7 and Risk manager was selected as a replacement. Recruitment of the new Credit and Risk manager was completed by the end of 2012. The project also started off with weak capacities in Financial Management and Procurement which caused significant implementation delays in the first year of implementation.

A significant event occurred around the time the project became effective with BRAC and SUMI, the two leading providers of microfinance in South Sudan, exiting the sector. BRAC which had 25,000 clients exited following the collapse of Nile Commercial Bank which was handling its (BRAC's) deposits. SUMI collapsed when its largest donor, USAID, exited the country. This led to a sizeable drop in the number of people with access to microfinance6 and consequently, the targets proposed during project design and appraisal had to be revised downwards to reflect the reality on the ground at project effectiveness.

The initiation of the activities under the BPC ran into initial delays after the GoSS challenged the Bank team on the rationale for hiring a firm to run the Business Plan Competition rather than using a selection committee composed of government officials to decide on the winners of the competition. The Government had concerns on implications on the ownership and control of the project. This is something that the GoSS had not raised during Appraisal and Negotiations of the project. The team quickly provided an explanation to the effect that this was the same modality used during the previous PSD project and was necessitated by the need to provide BDS to the business competition awardees so that they could be better prepared and be able to establish networks. The hiring of the firm had to wait for the MCII Minister's agreement to the provided explanation and was initiated around April 2013.

A Mid-Term Review (MTR) had been planned for end of October 2013, but due to the slow pace of implementation in the first year, the MTR was postponed to May 2014. However, with the break out of hostilities in South Sudan in December 2013, implementation ofkey activities in the BPC (Component 2) stalled for three months and the MTR was carried out September 2014 after the closing date had been extended to December 1, 2015.

The Bank team noted in the first ISR (Seq. No. 1, dated November 30, 2012) that some baselines and targets for performance indicators proposed at appraisal with relation to the microfinance sector needed to be revised in view of the exit ofBRAC and SUMI from the sector. The Results Framework was revised in an October 2014 restructuring, and though delayed by the conflict, it is evident through ISRs and Aide Memoires that the Bank team did regularly monitor performance of the remaining MFis.

Project implementation suffered significantly from unforeseen circumstances that were beyond the control of the project. In the first year of implementation, the MCII, which housed the PCU, lost power for nearly a month and this caused delays in a number of project activities, such as the evaluation of Expressions of Interest (EOI) for the firm to run the BPC. The project had to procure a new generator to address the issue of power outages.

6 The number of people with access to finance through MFI' s declined from 46,700 in September 2011 to 10,680 in September 2012.

8 As mentioned earlier, a political and military conflict broke out in South Sudan in December 2013 which affected project activities for about three months, mostly in the microfinance sector (Component 1) and the BPC (Component 2). The SSMDF had just disbursed about US$0.5 million as loans to five MFls, but most of the MFis could not disburse to their clients in December 2013 and January 2014 due to the uncertainty caused by the conflict. The launch of the BPC which had been planned for February 2014 was suspended, as the firm running the competition (PWC Rwanda) had been evacuated in December 2013 and did not get clearance to return to Juba until May 2014. The BPC was finally launched in September 2014. Even when overall project implementation resumed in April 2014, some of the northern states where fighting persisted could no longer participate in project activities; the BSC and BPC ended up covering only six out of the 10 states in South Sudan.

The political and military crisis resulted in an economic downturn in South Sudan that significantly affected the microfinance sector and the funding for the BSC and BPC. Finance South Sudan (FSSL), the largest MFI in the country, stopped lending in mid 2014, and its portfolio at risk (PAR) soared to nearly 60 percent and its market share declined from 39 percent to 16 percent in a period of six months. This in tum increased the overall portfolio at risk for the sector to about 19 percent (December 2014). The latest available figure for the PAR in September 2016 was 21 percent, a huge increase from the 2.2 percent figure measure at closing.

The economic downturn also resulted in a rapid depreciation of South Sudanese Pound (SSP)7 which forced the Bank team and the MoTII to delay disbursements of funds to the BSC and BPC awardees for several months as the value of the awards (which were previously set at the official exchange rate of3.1 SSP to US$1) had been significantly eroded. By the end of 2014, the black market exchange rate diverged greatly from the official rate. There were also some industrial actions issues at the Kenya Commercial Bank (KCB), the financial institution that had been selected to handle the BPC funds. These were all constraints that were beyond the control of the project. Economic difficulties, including high and rising inflation, placed stress on project operation budgets, and resulted in cuts to key activities including visits to business competition awardees, which reduced effectiveness of Monitoring and Evaluation (M&E) system.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

M&E Design. The M&E system was generally sound, but turned out to be underfunded due to project extensions (total of 18 months), increase in scope of business competitions and inflation, which increased transport costs. The Project Coordinator was responsible for the M&E function of the PSDP, in liaison with the relevant PIUs (SSMDF for Component 1 and international consultant and MoTII for Component 2). The PIU had their own dedicated monitoring systems, which were to provide more detailed information for assessing sub-component implementation progress and performance. This dedicated monitoring system (financed under MDTF project) was intended to function primarily through systematic field visits for targeted MFis and Business competition beneficiaries serve as the source of information on sub-program implementation progress and performance monitoring indicators. The Results Framework (RF) was also strong, with appropriately

7 By April 2016, annual inflation was 270 percent (IMF 2016 Article IV Consultation)

9 selected PDO-level and intermediate indicators that allowed for tracking of implementation progress. The monitoring system was sufficient to collect necessary data to regularly update RF and inform management of progress. For example, for Component 1, MFis were to submit monthly reports on performance, combined with periodic M&E field visits to microfinance institutions to assess performance. SSMDF has installed an integrated system for accounting and loan tracking, supplied by FERN SOFWARE based in Northern Ireland, and has developed a sub-loan monitoring tool to track the clients of the Partner MFis in order to create a basis for assessing the impact of microfinance on the clients. For Component 2, the Project Implementation Manual envisioned support for a diligent M&E system that could provide technical support to BPC award winners during implementation of their business plans. The project hired an independent consultant/firm to develop the criteria for the BPC, provide training in the preparation of the business plans, and follow up with the winners providing technical support and monitoring outcomes, especially job creation. Further, the MOU between MoTII, the local commercial bank (mandated to administer disbursement of loans and loan service), and business competition awardees provided for submission of monthly reports to track progress.

M&E Implementation: The M&E system was implemented in accordance with design, but serious challenges emerged due to outbreak of conflict and ensuing economic and security deterioration that limited its effectiveness. For example, SSMDF carried out regular monitoring field visits in 2014 to assess the progress of micro-finance institutions, but rising transport costs and heightened security concerns limited monitoring visits in 2015 through project closure. MFis submitted monthly monitoring reports to SSMDF and Project management, though with significant gaps due to the lack of a robust Management Information Systems for most of the MFis. For Component 2, the M&E system functioned relied heavily on the international consulting firm, whose ability to travel outside Juba was suspended following the December 2013 conflict. The project carried out business training workshops for awardees in all six states, and conducted Training of Trainers for the provision of post-award business development services in each of the states. The commercial bank, contracted to administer the business competition awards, also played a key role in the M&E system through its monitoring of businesses. However, frequent turnover of staff assigned to the project caused critical delays in finalizing disbursement arrangements, which contributed to incomplete disbursement of the business competition funds. The project trained approximately 30 civil servants from MoTII on M&E to ensure sustainability of the M&E function post closure. However, the outbreak of conflict in July 2016 effectively halted implementation of the business competitions and limited MoTIIs ability to track beneficiaries.

M&E Utilization: Data collected by the M&E systems was evaluated and used for decision making on certain activities. M&E indicators were closely followed in ISRs and Aide-Memoires, and the project restructuring included revisions in results framework to account for new baseline in Component 1 and the expansion of scope of Component 2.

2.4 Safeguard and Fiduciary Compliance

Overall, safeguard and fiduciary compliance was satisfactory during the project period, and no major issues affected project implementation.

10 2.5 Post-completion Operation/Next Phase

By the time the project closed in June 2016, it was fully disbursed from the Bank side but the Government had not yet expended most of the money earmarked for the BSC and BPC winners. The Bank has requested the GoSS to refund all the funds that had not been disbursed to the BPC winners 8 by the end of the disbursement grace period (December 1, 2016) . As a result of the difficult operating environment, the team dropped the Business Development Services (BDS) activity which was to . support the implementation of business plans and follow up with the winners to monitor their outcomes, especially measuring jobs generated. This will have a negative impact on many businesses as the government does not have the capacity to finance the BDS, and also reduce the Government's ability to track businesses for M&E purposes.

The Government had requested for Additional Financing (AF) in the amount ofUS$3 million in October 2015 to sustain the microfinance sector and ensure the sustainability of select activities under the project, including support for the South Sudan Business Forum and BDS. In March 2016, the Bank rejected this request due to the delays in the implementation of the August 2015 Peace Agreement by the two sides in the conflict which in tum delayed the preparation of the Bank's New Country Engagement Note (CEN). The CEN was supposed to spell out the priority initiatives requiring funding support for South Sudan. The ceasefire agreed in 2015 was shattered in July 2016, and armed conflict has flared up since and it is not clear if or when the 2015 Peace Agreement will be revived.

Following the closing of the project on June 1, 2016, a number of development results have been at risk. The South Sudan Microfinance Development Facility, which had continued to operate in a scaled-back fashion post-closure, based on reflows of previous loans, started facing financial difficulties and finally stopped operations at the end of March 2017. Its staff had not been paid since January 2017, and there were no prospects of paying them the arrears and future salaries. The South Sudan Business Forum also lacks a funding source, and the Government is having difficulties in monitoring the few business competition awardees who received their loan funding. In addition, future support to the Central Bank, which is leading the roll out of mobile money, is also in question.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

The relevance of the project development objective is high. The issues of unemployment, especially among the youth and women, and lack of access to financial services are still relevant in South Sudan today as they were at the beginning of the project. The project was a follow-up to an initial PSD project focusing on scaling up on the successful activities under the initial project. The issues that the project was meant to solve have been made more acute following the over three-year conflict which has negatively affected the achievements realized under this project. There has been

8 At the completion of the ICR, the refund of ineligible expenditures remains outstanding and is subject to ongoing discussions with Government. It is expected that approximately U$1.8 million will be refunded.

11 massive internal and external displacement of South Sudanese, and the problems of unemployment and access to finance will still need to be addressed when stability is restored to the country again. The GoSS does not have a current Development Plan and the Bank suspended preparation of its 9 Country Engagement Note in 2016 , however, the issues raised in previous documents (the South Sudan Development Plan 2011-2013 and the World Bank Interim Strategy Note for South Sudan 2013/2014 are still relevant today.

The SSMDF, which had been providing both lines of credit and technical assistance for institutional development to MFis, has run out of funding and will need to be resuscitated to continue performing its role once economic activity returns to normal in South Sudan. Most awardees of the BSC and BPC were not able to access their loans because of the insecurity prevailing in the country and the closing of the project in June 2016. South Sudan became a member of the East African Community (EAC) and will still need its civil servants to participate in trade negotiations and discussions on other EAC matters with other partner countries. With the negative effect of the conflict on the outreach of the commercial banks, mobile money could take on a more significant role in money transfers and payments and the mobile money regulations developed for the central bank will come in handy in future.

The relevance of design and implementation is high as it contributed to the SSDP overall objective of building a united and peaceful new nation, with strong foundations for good governance, economic prosperity, and enhanced quality of life for all. Economic prosperity is premised on a diversified private sector-led economic growth and sustainable development which improves livelihoods and reduces poverty. The private sector thus has a critical role to play in contributing to a lasting peace by providing alternatives to violence through job creation. The Bank's implementation assistance was responsive to unforeseen circumstances when SUMI and BRAC existed the microfinance sector in the latter part of2012 and the project was restructured to change the targets for performance indicators related to the sector. Also, the BPC activities were redesigned to respond to the new employment challenges resulting from the December 2013 political crisis and the project closing date was extended twice to compensate for the time lost at the beginning of the crisis and to allow additional adequate time to complete outstanding project activities.

3.2 Achievement of Project Development Objectives

Rating: Modest

The project development objective (PDO) is to improve access to finance for private sector development and increase employment opportunities in South Sudan. Two project components directly contributed to the PDO: Component 1: Establish commercially-viable microfinance institutions (improve access to finance), and Component 2: Promote Micro-entrepreneurship (improve access to finance and increase employment). While activities under Component 1 were fully completed, as SSMDF disbursed a total of US$ l .2 million in lines of credit and provided US$0.2 million in technical assistance to five eligible MFis, and made measurable contributions to

9 A new CEN is currently under preparation.

12 achievement of PDO (improve access to finance), only 483 business competition awardees out of a total of 1,301 collected their funds by the end of the disbursement period.

Though the project fell well short of targets related to improving access to finance for private sector development, it made positive contributions, primarily through the microfinance Apex, which in its absence the microfinance sector may have collapsed. The principal contributor to this aspect of the PDO was Component 1. By project closing, MFis supported by SSMDF had 4,963 active borrowers, of which 59 percent were women, compared to a target of 10,000. The number of active borrowers fell steadily throughout project implementation due to the December 2013 conflict, and this decline accelerated post closing after the resumption of conflict in July 2016. Though project support did not account for the entirety of MFis outstanding loan portfolios, its contribution to sector performance through line of credit and technical assistance was substantial, particularly given slowdown in sector following December 2013 conflict. Without the project's interventions, it is likely that the sector would have collapsed entirely, as little new capital entered the market following the conflict. Furthermore, the project support for SSMDF, the apex institution, helped to create a more favorable environment for outside investment in the sector. For example, CORDAID, a international NGO, made investments, in the form ofloans and capacity building, in the two leading microfinance institutions (FSSL and RUMI). As noted, the business competitions' contribution to improving access to finance was marginal, as only 483 awardees (out of expected 1,301) received funds.

The project did not achieve its other objective of increasing employment opportunities in South Sudan largely because of the disruption to economic activity caused by the 2013 political crisis, something that was beyond the control of the project. Despite a slow start to the micro• entrepreneurship component, business plan competitions were launched in late 2014 and 1,301 winners were selected and trained by June 2015. However, the economic downturn and resultant hyperinflation eroded the value of the SSP and made it unrealistic to disburse the funds to the awardees in SSP. By the time the issue of the rapid depreciation of the SSP was addressed and the funds for the awardees were transferred to the Kenya Commercial Bank (KCB), the project was reaching its closing date, and only 483 of the 1,301 awardees had collected their loans. Moreover, many of the awardees were displaced by the conflict and their whereabouts could not be traced. The GoSS has been requested to refund to the Bank the balances that were still held by KCB at the expiration of the grace period for disbursements. Furthermore, plans to measure job creation, spearheaded by consultant firm . with support of MoTII officials who had received training in M&E, did not come to fruition due to the late and incomplete payment of funds to the awardees'".

The project also supported additional activities that contributed to the achievement of the PDO. Mobile money regulations, developed with project support, were adopted by the Bank of South Sudan, the central bank, and which will be useful once the mobile money platform has been rolled out. Additionally, the training of 75 MCII staff in trade negotiations directly supported the GoSS in successful negotiations for acceptance into the EAC. The South Sudan Business Forum (SSBF), which benefitted from project funding to cover operational costs and IFC technical assistance, served to

10 Though, as documented in Government's evaluation report (see Annex 7), some job creation was confirmed even before payment of funds to awardees, as businesses planned for capital injection.

13 foster dialogue towards creating an enabling business and regulatory environment. SSBF coordinated the activities of 5 thematic working groups (land and agriculture, tax, SMEs, access to finance). SSBF generated policy documents, including the Impact of the Conflict on the Private Sector. It also hosted an investor's conference in 2013, weeks before the outbreak of conflict.

3.3 Efficiency Rating: Modest

The efficiency of the project is rated modest. Despite a slow start at implementation and the delays caused by the December 2013 political crisis and the subsequent economic downturn, the project completed most of the activities envisioned at appraisal. The total allocated amount of US$9 million was disbursed to support project activities as planned, although delays in disbursement of loans to awardees under the micro-entrepreneurship component mean that about US$1.8 million will 11 have to be refunded to the Bank • The exit of donors and NGOs (SUMI and BRAC) from the microfinance sector at the start of implementation reduced the amount of funds available for loans, which increased the importance of the SSMDF's financial support to the sector. However, the amount of funds allocated to the line of credit was insufficient to satisfy the available demand for micro loans.

The project was prepared under OP 8.0 to address the immediate reconstruction needs of South Sudan in a post-conflict situation and an environment that lacked basic economic date, and no economic analysis was done for the project at appraisal. While it has still been difficult to get data for a number of activities, it is clear that the economic efficiency of key project activities was impacted by the tremendous deterioration in economic conditions during project implementation.

3.4 Justification of Overall Outcome Rating

Rating: Moderately Unsatisfactory

The overall outcome is rated Moderately Unsatisfactory. The project had two main objectives that were and are still relevant to the country's development priorities. The objective of increasing access to finance for private sector development was not achieved, but the contributions of the project to the microfinance sector were instrumental to ensuring survival of the sector after the unforeseen exit of major players from the microfinance sector at the beginning of the project. Furthermore, the poor performance was highly impacted by deteriorating economic conditions following outbreak of conflict. The second objective of employment creation was not met due to circumstances beyond the control of the project, but most of the basic activities to support this objective were carried out despite the difficult political and economic environment during most of the project's life. While there was a shortcoming in this objective and time run out before the 1,301 awardees could get their loans, 1,500 South Sudanese entrepreneurs were trained in entrepreneurship and business skills.

The PDQ indicators associated with the access to finance agenda fell well short of targets, although this should be put in the context of exogenous factors including political conflict, the severe drop in international oil prices, and the associated economic downturn.

11 Consultations with Government are on-going at the time of ICR review meeting.

14 3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

The poverty reduction impact of the project was modest as a total of 4,963 MFI clients ( of whom 59 percent were women) had access to finance through MFis financed under the project at the closing of the project compared to the initial target of 51,000 clients at appraisal. This was mostly because of the exit of SUMI and BRAC from the sector who between them accounted for about 36,000 clients. The poverty reduction benefits from the other activities are most likely to be realized in the years following the project closing and if the political and economic situation in South Sudan can be brought back to normal. These include the 1,301 South Sudanese trained in entrepreneurship and business skills who can start businesses and create employment and the benefits that would accrue to the general population from the introduction of mobile money banking and transfers by the central bank.

(b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development) The project made important contributions to institution and capacity building in project supported agencies. PSDP continued to build the capacity of the apex Microfinance institution, the South Sudan Microfinance Development Fund, including support for the development of a strategic plan, though subsequent to project closure the institution has ceased operations due to lack of funds. Similarly, the project supported operations of the South Sudan Business Forum, which played an instrumental role in facilitating dialogue between the private sector and Government, but SSBF is also facing funding constraints. The business competition promoted skill transfer in M&E, entrepreneurship to over 30 MoTII officials, and 75 MoTII staff received training in trade negotiations to directly support the GoSS in successful negotiations for acceptance into the EAC. Finally, officials from the Central Bank, Ministry of Communications, and MoTII developed capacity related to introducing mobile money, which should facilitate the rollout of mobile money when conditions permit.

(c) Other Unintended Outcomes and Impacts (positive or negative)

Not Applicable

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

Not Applicable

4. Assessment of Risk to Development Outcome

Rating: High

The risk to the sustainability of the development outcomes is rated as High. There is no end in sight to the conflict that erupted in South Sudan in December 2013. The conflict together with falling oil proceeds led to an economic downturn that has severely impacted the performance of both the Government and private sector institutions. The Transitional Government of National Unity (TGNU) that was formed in late April 2016 quickly unraveled in July 2016 and fighting was reignited, thereby

15 destroying all hopes of restoring macroeconomic stability in order to restore economic growth. Large sections of the population have been displaced from their homes. The country is facing security challenges, a humanitarian emergency, and an economic crisis.

The gains that had been achieved by the project are slowly unravelling. The SSBF and SSMDF which were providing a valuable service have run out of funding and are on the verge of closing down as the GoSS does not have the resources to sustain them. MFis which were relying on the SMDF for loan funds and Technical Assistance for their capacity building activities have been left on their own. Most of the BSC and BPC winners were not able to pick their grants due to the conflict which displaced a big section of the population. And there is no efficient mechanism to mentor and monitor the performance of the few winners who received their funds.

The GoSS had requested for Additional Financing to further support the various institutions that had been created under the two PSD Projects. However, the Bank did not agree to this request because it was not possible to carry out a new CEN due to the existing uncertain political environment.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Rating: Moderately Unsatisfactory

The new PSD Project was a follow-up to the MDTF-SS funded PSD Project and was mostly meant to scale up the successful aspects under the original project. Its design was thus largely similar to the original PSD Project. The simplified design followed the dictates of the SSTTF, which was meant to finance quick delivering operations. Given the successes of the original PSD Project, the new PSD Project was designed to use similar institutional arrangements and projects assets for its implementation, and as such the Bank deemed the short implementation period to be sufficient. However, project design was more complex in one key aspect, the utilization of an international firm to carry out business competition, which led to significant delays due to travel restrictions. While South Sudan was still operating in a weak capacity environment, there was still strong ownership and commitment to the private sector development program by the authorities. However, the design of the project did not adequately address the fact that with the phasing out of the MDTF-SS funding, support for financial management by the Monitoring Agent and the Project Financial Management Unit (PFMU) at the Ministry of Finance and Economic Planning (MoFEP) would only be short lived. The design acknowledged that there were still capacity challenges in financial management in the Ministry of Commerce and that after the first year of implementation, the MoFEP would take over financial management functions from the PFMU. However, there were no concrete plans identified on how this transition would take place.

(b) Quality of Supervision

Rating: Moderately Unsatisfactory

16 The supervision of the project benefitted from the Bank's past experience in South Sudan under the MDT-SS funded PSD Project. The composition of the Bank team was stable with the project having only two TTL regimes throughout its life and with a PSD short term consultant stationed in Juba in the first two years of the project to support the PCU. There were regular supervision missions, despite eruption of the political conflict in December 2013, and detailed Implementation Status and Results Reports (ISRs) were filed in a timely manner.

When the political crisis led to a deterioration in the macroeconomic situation resulting in high levels of inflation, this had a significantly negative impact on the value of the grants to the Business Plan Competition winners which were to be disbursed in SSP. The Bank team proactively engaged with the Authorities and Bank Management in search of a viable response to the unexpected adverse macroeconomic situation and eventually suspended disbursement of the grants to the beneficiary until the Government addressed the issue of the US Dollar/SSP exchange rate in early 2015. The Bank team also agreed with the Government to change the design of the BPC following the eruption of the political crisis in December 2013 so as to use the BPC as a tool to support economic recovery and generate economic opportunities for a larger number of South Sudanese. However, the Bank and Government should have considered simplifying the implementation of the business competition, for example by converting it to grants given the added challenges caused by the conflict.

There was a short time at the beginning of implementation of the project when the Bank team did not provide adequate guidance to the PCU. The set up of the PCU took long due to unanticipated staff turnover. The lack of a fully constituted PCU led to implementation delays in the first year of implementation, as there was limited understanding of Bank procurement procedures (procurement guidelines and assembling of evaluation teams for the contracts of the micro finance sector Technical Needs Assessment and the BPC consultant). There were also financial management challenges in 2013 on internal controls once the PFMU stopped supporting the financial management function of the project.

The Bank team was proactive in addressing identified implementation constraints within its control in a timely manner, but project ratings did not reflect the clear risks to achievement of PDO which were evident from early on in implementation. With the deteriorating security situation in South Sudan, the Bank team supplemented the normal supervision missions with weekly Video Conferences (VC) so as to keep in regular touch with the PCU on implementation issues. The team also took the decisive action to delay disbursement of business competition awards due to deterioration in exchange rate in order to protect value of awards. Despite the multiple delays with implementation of the business competition, which clearly posed risks to achieving PDO, both the Development Objective (DO) and Implementation Progress (IP) ratings were rated either Satisfactory or Moderately Satisfactory throughout the life of the project.

(c) Justification of Rating for Overall Bank Performance

Rating: Moderately Unsatisfactory

The overall Bank performance is rated as Moderately Unsatisfactory on account of the weaknesses associated with the design stage and early stages of implementation and the unsatisfactory performance exhibited by the team in the latter stages of the project, particularly the last six month

17 period. The assessment also takes into account the fact that the project was carried out in a post• conflict and, later, a conflict afflicted environment which the team had to cope with.

5.2 Borrower Performance

(a) Government Performance

Rating: Unsatisfactory

Following the successes of the MDTF-SS funded initial PSD Project, the Government showed strong support and ownership of the project during the design stage. There were some delays in putting together the Negotiations team, but this was understandable given that this was a newly formed Government following the attainment ofindependence in July 2011 and this was the first Bank project it was undertaking. However, this ownership wavered early on during implementation when the Minister of MCII queried the design of the implementation of the BPC which had actually been adopted from the original PSD Project. This led to some delays in the initiation of activities for this Component.

The Government's role in the December 2013 political conflict contributed to an unsuitable environment that could not allow the project to achieve its development objectives. This was further aggravated by the delays in implementing the August 2015 Peace Agreement. A number of states in the north of the country were no longer accessible and had to be left out of project activities and the disruption of the implementation of the BPC activities meant that either a few BPC winners got their grants late towards the closing of the project or many of the BPC winners never received their grants at all. The renewal of the conflict in July 2016, accompanied by a worsening macroeconomic environment also had adverse effects on the microfinance sector.

(b) Implementing Agency or Agencies Performance

Rating: Unsatisfactory

Project implementation started at a slow pace partly due to a PCU that was not fully staffed. However, once the PCU was fully staffed, the pace of implementation picked up, especially for those activities which were concentrated in the capital, Juba (for Components 3 and 4). The first disbursement ofUS$533,000 by the SSMDF to MFis had taken place by early December 2013, and the amount grew to US$900,000 by mid-2014. Also by mid-2014, the SSBF was actively engaging in public-private dialogue on the impact of the conflict on the. private sector, work on drafting the regulatory framework for mobile payments and banking was ongoing, and training had been conducted for government officials on understanding, negotiating and evaluating regional integration (East African Community) policies. The BPC was launched in September 2014. However, the Implementing Agency could have more proactively faced challenges related to payment of business competition awardees during the last six months of project implementation. For example, it should have sought high level Government support to resolve issues with the commercial bank to ensure that all awards were paid before closure.

Notwithstanding, the Implementing Agency demonstrated a strong commitment to the project which did not waver in the face of conflict and deteriorating economy, both which presented severe

18 challenges. The expansion in scope of the business competitions, and the no-cost extensions of 18 months, presented acute budgetary challenges, which MoTII managed effectively in order to complete project activities. Although the Implementing Agency did not address the implementation constraints as fast as would have been desirable, it was constantly in touch with the Bank team and was able to eventually address the capacity and fiduciary issues identified by the Bank in its implementation support missions and VCs.

( c) Justification of Rating for Overall Borrower Performance

Rating: Unsatisfactory

The overall Borrower performance is rated as Unsatisfactory. The renewal of conflict in July 2016 adversely impacted project performance and ultimately prevented business competition winners from collecting their awards and launching businesses. Furthermore, the microfinance sector is in dire straits due to the ongoing conflict and severely deteriorated economic conditions. US$1.2 million were disbursed to 5 eligible MFis, mobile money regulations were adopted by the Central Bank of South Sudan in December 2015, BPC were completed and 1,301 winners selected and trained, and 75 government officials were trained in trade negotiations, directly supporting negotiations in South Sudan's ascension to the East African Community.

6. Lessons Learned

Designing Business Plan Competition awards as a collateral for a quasi-loan could help make some winners bankable, but it also introduces implementation challenges in a low capacity, fragile environment. The original design of the BPC was meant to provide a grant to the awardee but by changing the award to a collateral for the awardee to open an account and get a loan from a commercial bank enables the awardee to build a banking relationship with the commercial bank. Moreover, if the awardee pays back the loan, he/she would get an extra loan or take out the award to increase the equity in their business. Unfortunately, the unseen adverse political circumstances did not allow for the implementation of the component to be finalized. The innovative design introduced complexities to implementation that caused long delays in the processing of loan accounts for beneficiaries. The project team incurred high transaction costs in dealing with the commercial bank, which experienced high turnover of staff assigned to the project. As such, simpler options to incentivize firm level innovation should be considered in low capacity fragile environments.

In a conflict-afflicted environment, the design should allow for flexibility in order to be able to respond to unexpected occurrences in a timely and effective manner. The lesson from the first PSD project was that reliance on international consultants can negatively affect implementation as it is difficult to attract good quality consultants in a conflict-afflicted country. The current PSD Project tried as much as possible to attract national and regional experts to carry out its activities. Consultants from neighboring countries like Kenya, Uganda and Rwanda have a better understanding of the South Sudan situation and are easier to attract to live and work in Juba. The team was also able to change the design of the BPC in order to respond to the new employment challenges to vulnerable sections of the population as a result of the December 2013 political conflict.

19 In an FCV environment, the team should prepare for the worst, while hoping for the best in terms of the security situation in the country. When implementation was stalled following the political conflict, the team had a few implementation support meetings with the PCU in Nairobi to agree on the activities to focus on when implementation resumed. After implementation had resumed in 2014, the team increased its support to the PCU through regular Videoconferences which made it possible to address many implementation issues in a timely manner.

Similarly, in FCV environments it is important to reflect on the level of understanding of the political economy dynamics in the country prior to the design of the project and during mid-term review and seek to develop a more conflict-sensitive design and implementation plans based on risk• based supervision, which primarily focuses on areas where the project was the most vulnerable. Generic supervision does not always work in such conflict environments and it is important for both the design of the project and the supervision to be based on the risk-realities (risk-based design and risk-based supervision) on the ground and the flexibility to make the necessary adjustments.

Investments in Apex Microfinance Institutions can make positive contributions to increasing financial inclusion in fragile environments. Despite SSMDF's failure post-closing, which was due to ongoing conflict and ensuing economic collapse, the model had achieved notable successes and demonstrated the ability to intermediate finance to micro-entrepreneurs. Created under the MDTF project, and initially managed by Frankfurt School, the SSMDF grew into a locally-run institution that contributed to the professionalization of the sector via the technical assistance and lines of credit provided to South Sudan's microfinance institutions. It never achieved adequate scale, but during its existence served thousands of clients who otherwise had no access to financial services.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies See Annex 7. The Implementing Agency submitted its own evaluation included in Annex 7: Summary of Borrower's ICR and/or Comments on Draft ICR, and provided brief comments on the draft ICR, which were supportive of the storyline presented.

(b) Cofinanciers

Not Applicable

(c) Other partners and stakeholders

Not Applicable

20 Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions)

Total Baseline Cost 9.00 9.00 100.00 Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.00 0.00 0.00 Total Project Costs 9.00 9.00 Front-end fee PPF 0.00 0.00 .00 Front-end fee IBRD 0.00 0.00 .00 Total Financing Required 9.00 9.00 100.00

(b) Financing T Appraisal Actual/Latest Type of . t E tim t Percentage of Source of Funds E s tima e s a e . Co financing (USD millions) (USD millions) Appraisal Borrower 0.00 0.00 .00 t Special Financing 9.00 9.00 100.00

21 Annex 2. Outputs by Component

22 Annex 3. Economic and Financial Analysis (including assumptions in the analysis) ·

23 Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members Responsibility/ Names Title Unit Specialty Lending Task Team Leader Andres F Garcia Economist AFTFE (TTL) Alwaleed F. Alatabani Senior Financial Sector Specialist AFTFE Team Member Consultant; Private Sector Development Dorothy Matanda AFTFE Team Member Specialist Bedilu Amare Reta Environmental Specialist AFTN3 Team Member Yasmin Tayyab Senior Social Development Specialist AFTCS Team Member Adenike Oyeyiola Senior Financial Management Specialist AFTME Financial Management Rajiv Sondhi Senior Finance officer CTRLA Project Disbursements Prosper Nindorera Senior Procurement Specialist AFTPE Procurement Evarist Baimu Senior Counsel LEGAM Legal Y eshareg Dagne Team Assistant AFTFE ACS Team Support Lucy Paul Ofere Team Assistant AFMJB ACS Team Support

Supervision/IC R Andres F. Garcia Economist AFTFE TTL Michael Corlett Senior Operations Officer GFMDR Co-TTL Yoko Doi Senior Financial Sector Specialist GFMDR Co-TTL Y eshareg Dagne Program Assistant AFTFE ACS Team Support Yasmin Tayyab Senior Social Development Specialist AFTCS Team Member Adenike Sherifat Oyeyiola Senior Financial Management Specialist AFTME Financial Management Evarist Baimu Senior Counsel LEGAM Legal Anjani Kumar Senior Procurement Specialist AFTPE Procurement Consultant; Private Sector Development Dorothy Matanda AFTFE Team Member Specialist Cornelia Jesse Operations Officer AFTEE Team Member Francesco Strobbe Financial Economist AFTFE Team Member Akwii Anne Kennox Team Assistant AFMJB ACS Team Support Benqing Jennifer Gui Information Officer IMTBU Team Member Bedilu Amare Reta Environmental Specialist AFTN3 Team Member Siobhan Mclnerne-Lankford Senior Counsel LEGAM Legal Eri Mukae Private Sector Development Specialist AFTFE Team Member Florence Poni Team Assistant AFMJB ACS Team Support Nyabicha Omurwa Onang'o Financial Management Specialist GGODR Financial Management Cary Anne Cadman GENDR Team Member Dorothy Morrow Akikoli Team Assistant AFMJB ACS Team Support Nadia Selim AFCE4 Team Member Nevena Ilieva GENDR Team Member Carlos Leonardo Vicente GFM0l Team Member John Bryant Collier Environmental Specialist GEN0l Team Member Christiaan Johannes Nieuwoudt WFALA Project Disbursements Nikolai Soubbotin Counsel LEGLE Legal

24 Ocheng Kenneth Kaunda Odek Procurement Specialist GGODR Team Member V aralakshmi Vemuru Safeguards Specialist GSU07 Team Member

John P. Byamukama Operations Officer GFM07 ICRAuthor Magalie Pradel Program Assistant GFM07 ACS Team Support Andrea Vasquez-Sanchez Senior Program Assistant GFM07 ACS Team Support

25 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY12 25.4 100.46 Total: 25.4 100.46 Supervision/I CR FY12 1.0 39.94 FY13 24.40 197.73 FY14 11.21 162.05 FY15 23.11 145.58 FY16 20.80 99.98 FY17 20.74 86.47 Total: 101.26 731.75

26 Annex 5. Beneficiary Survey Results (if any)

27 Annex 6. Stakeholder Workshop Report and Results (if any)

28 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

Republic of South Sudan

Ministry of Trade and Industry

DRAFT FINAL COMPLETION REPORT

Private Sector Development Project (PSDP)

South Sudan Transitional Trust Fund

(SSTTF)

Project ID: P128239 Grant No.: TF011812

The Overall Project Development Objective (PDO) is to improve access to finance for private sector development and increase employment opportunities in South Sudan.

Key Dates

29 Project Approval: January 10, 2012

Grant Agreement signed: March 14, 2012

Effectiveness Date: August 01, 2012

Closing Date: November 30, 2014, December. 1, 2015, June 1, 2016

Total Project Cost: US$9,000,000

PSDP Project Completion Report (2012 - 2016)

INTRODUCTION In the year 2012, the Government of the Republic of South Sudan received a Grant financed by the World Bank under the South Sudan Transitional Trust Fund to support implementation of the South Sudan Private Sector Development Project of the Ministry of Trade and Industry, after final process of approval, the project became effective in August, 2012. and was officially launched on November, 2012. The International Development Association (IDA) is acting as administrator of these funds.

THE OVERALL OBJECTIVE The overall objective of this report is to inform all the stakeholders of the project implementation and completion so as to share the successful achievement of the project's outputs, challenges and lessons learned which would have impacted to the overall economic development of south Sudan. The report highlighted successes and recommendations for further improvement in any suggested future engagements on similar organic initiatives projects and partnership.

THE PROJECT BACKGROUND The private sector development project is a funded US $9.0 million project, a more than three years implemented project financed under the south Sudan transitional trust fund grant from the World Bank. The project builds upon a successful pilot project components funded under the then multi-donor trust fund for south Sudan seeking to improve access to finance for private sector development, develop entrepreneurial skills ( create jobs) for potential entrepreneurs in south Sudan, strengthen public-private institutions and enhance sector specific working groups dialogue to improve their hands-on business environment in the country through private-public engagements to addressing policy constraints.

PROJECT DEVELOPMENT AGENDA The funded south Sudan private sector development project under the transitional trust fund was formulated in the context of south Sudan's overall strategy for private sector development. The strategy emphasizes the development and regulation of the economy of south Sudan in order to achieve prosperity and facilitate and increase the role of private sector to improve the investment climate for private sector development as well as to expand access to finance aimed at improving citizenry livelihoods, create employment opportunities to the potential entrepreneurial youth and reduce poverty in the country.

The project was formulated under four components that are designed to support the role of the private sector development through the provision of access to finance program to support potential and existing entrepreneurs in south Sudan. The components are designed to support establishment of commercially-viable microfinance institutions, promoting micro-entrepreneurship development, supporting the development of mobile payments and

30 money banking framework development and trade integration policy as well as strengthening the south Sudan business forum and project management team, an organic structure charged with the overall responsibility of implementing the project, identify and support key high value-added initiatives support to the ministry of trade and industry, directorate of private sector development in the country.

Component 1: ESTABLISHING COMMERCIALLY-VIABLE MICROFINANCE INSTITUTIONS

The component funded South Sudan Microfinance Development Facility programs as the apex institution in South Sudan. The facility is a non-profit-making organization supervised by a board of directors nominated from the public sector, private sector and civil society institutions supported and funded by the project funds from the Ministry of Trade and Industry. The project funds financed the existing and new microfinance institutions as well as supporting the downscaling banks through provision of best practices, capacity-building and trainings, financing and managing donor resources.

The project provided financial support to eight existing micro-finance institutions, savings and credit cooperatives society through microfinance establishment in the ministry which has emerged as the solitary source of hope and confident building in at least seven designated states that empowers young entrepreneurs in South Sudan. Secondly, the project supported the expansion of existing microfinance service providers with technical assistant in the country through capacity building and training facilitations of facility board members and staffs, financial institutions senior management in the areas of monitoring and evaluation, domestic and foreign microfinance development summits as well as exposure visits overseas. The program achieved milestones, empowered staffs, support partners and stakeholders through training.

Through own resources, the facility acquired assets including land to construct new offices in the tune ofSSP275,000 and a new land-cruiser hard-top vehicle for office us at SSPl 75,000 to support their only serviceable vehicle acquired during the first phase of funding.

Achievements under component 1; 1. Disbursed US$ l .2 million in loans to micro-finance institutions and Savings and credit cooperatives society, helping to mitigate the impact of the conflict/economic downturn on micro-businesses, at a time when most funding sources fled the country; 2. Conducted regular monitoring and evaluation field visits to microfinance institutions to assess progress in utilization of technical assistance and fund disbursed; 3. Sixteen ( 16) micro-finance institutions and Savings and credit cooperatives society registered and benefited fromthe project funded programs (Loans Capital and Technical Assistance); 4. Fifteen thousands (15,0000) individual entrepreneurs funded and supported countrywide with 60 percent women beneficiaries and 40 percent men beneficiaries; 5. Strengthen the capacity of facility Staffs and micro-finance institutions and Savings and credit cooperatives society management team through training in the identified areas of needs and trained 41 management staffs of micro-finance institutions and Savings and credit cooperatives society on financial analysis, internal control and fraud prevention; 6. Participated in the 17th Microcredit summit to share experience with various stakeholders in the industry; 7. Carried out an exchange visit to MSC and MESPT in Uganda and Kenya to learn from their experience of SME loan product; 8. Developed a five years strategic plan (2015 - 2019) for South Sudan Microfinance Development Facility.

School of African Micro-finance Training; representatives from the South Sudan micro-finance development facility and six benefiting partnering institutions participated in the SAM training in Mombasa, Kenya from I" - 13th September, 2014.

Financial Analysis Training for Microfinance Institutions; as a Technical Assistance support to its Partnering Organizations (PO), the facility organized and facilitated a five days training in Juba, South Sudan for twenty one (21) microfinance institutions fiducial management staffs centred on areas of"CGAP financial analysis module of

31 2009" in October, 2014 aimed at assisting the institutions to master useful tools needed to understand the financial position so as to determine the PROFIT ABILITY and SUSTAINABILITY of their institutional knowledge to improve individual institution's sustainability.

Internal Control and Fraud Prevention Training; the project recruited a Micro-enterprise Support Programme Trust (MESPT) training consultant to train twenty (20) managers from various microfinance institutions for five days from 24th - 28th November, 2014 in Juba, South Sudan on the aspects related to internal control and fraud prevention from 24th - 28th November, 2014 in Juba, South Sudan. The training focused on key areas of institutional values and development, introduction financial risks management accountability and business culture, overview of internal control systems, overview related to local and international act of fraud exhaled in micro finance institutional practices i.e., the human factors, preventive controls, systems and processes, modem use of information technology and systems, management of information systems, detective controls and internal audit.

Monitoring and Evaluation; the project management team carried out regular monitoring field visits to assess the progress of financial institutions and identify trends, strengths and areas of needs for improvement as an avenue of guidance to microfinance industry as viable microfinance institutions. The institutions visited includes Dawn of Hope microfinance in Jonglei from 25th -26th September, 2014, amat-wuot community bank in Warrap state from l 0th - 13th August, 2014, the frontiers micro finance in Eastern Equatoria from 23rd - 25th September, 2014 and green farmers microfinance cooperative union from 29th September to 3

Exchange visit and participation in the J 7'h Microcredit summit; five ( 5) representatives from South Sudan micro• finance apex and benefiting institution, central bank of South Sudan, private sectors and microfinance institutions participated in a three days high-level government officials, private sector practitioners and multinational corporations from around the world attended the 17th micro-credit summit organized by a micro-credit summit campaign and Mexico's ministry of economy through the national micro-enterprise financing program (PRONAFIM) from the 3rd - 5th September, 2014 in Merida, Mexico aimed and discussed the "next generation" of microfinance challenges and opportunities associated with the growth and transformation of the sector, especially through innovative and best practices that accelerates the steps to reach full financial inclusion in the sector. This was a sharpened knowledge comparative advantage and experience good enough for South Sudan Microfinance development facility's future avenue in the development of viable microfinance industry in South Sudan:.

The 2014 East Africa Microjinance Institutions Chief Executive Officers Round Table Meeting; the facility management team attended a round table conference organized by the East African Microfinance Network (EAFMNET) organized for the regional chief executives of microfinance institutions in East Africa Region to discuss ways of improving the sector in the East African Community (EAC) bloc. The regionalization of microfinance issues in the bloc proposed regional common parameters in managing microfinance sub-sector, preparations for the 2015 microfinance investors summit for EAC countries held in Nairobi which discussed what need to be done for the roaring financial institutions in member countries including South Sudan to nurture its' trade and competitiveness advantage for financial inclusion and policies, review regional microfinance statistics and discussed proposals for the establishment of regional microfinance statistics records and microfinance industry reports, methods of data collection and financial insinuation and opportunities emerging from digital financial services to traditional microfinance services, strategies and action plan to address challenges emerging from the new service to traditional service providers.

The two days summit from 8th -9th, 2014 was the first of its kind in the region held in Kigali, Rwanda under the theme, "The role of microfinance in EAC economic integration." EAFMNET is a network of microfinance associations from Rwanda, Uganda, Tanzania, Burundi and Kenya.

Board members meetings; regular board meetings discussed issues affecting the institution including continuity and the sustainability of South Sudan Microfinance Development Facility as the apex institution in the Country. The strengthening of the board's technical capacity through trainings and exposure visits overseas continued throughout the project cycle in the interest of the program.

32 The facility is managed by a team of five staffs comprising of a team leader, capacity building coordinator, portfolio risks manager, finance manager, assistant finance manager and a diver being core management team guided by a strong board of directors. Component 2: PROMOTION OF ENTREPRENEURSHIP DEVELOPMENT The component is to strengthen, promote and build micro-entrepreneurship skills in South Sudan. The component focused simultaneously on two distinct groups; one consisting of 1200 potential entrepreneurs wanting to start a new venture (start-ups) and the other of 100 existing entrepreneurs wanting to expand their businesses. Both groups were subjected to competition for different amount of cash resources under the concepts of business startups challenge and business plan competition. The program was formally launched and graced by the Minister of Finance and th Economic Planning on September 25 , 2013 and thereafter, the activities took a centred stage of implementation.

th Preparation Phase; the implementation phase began on September 30 , 2013. preparation of inception documents developed including inception report, operation manual, environmental and social management policy and marketing and communication strategy. However, due to the political unrest in December 2013, the project was interrupted and only resumed in May 2014 resulting into further delay occasioned by change in scope to include a new concept of Business Startup Challenge targeting new entrepreneur.

Initially the project envisaged to support 20 percent of new entrepreneurs and 80 percent of the existing businesses for the planned competition and financing but the scope and design changed due the ongoing political unrest and that resulted to increase in the target of new program beneficiaries from 20 to 1200 awardees for business startup challenge and 100 existing business entrepreneurs from 80 awardees for business plan competition. The change resulted realignment and review of the entire program to incorporate the new concept in the scope of activities.

National Awareness Campaign; the campaign consisted of media campaign and outreach activities in six participating states with the aim of creating awareness at different levels and potential participants. Besides the campaign served as a recruitment tool for the competitions and was also designed to create awareness on the importance of entrepreneurship throughout the country.

Selection, Training and Access to Finance Phase; following the successful awareness campaign and the receipt of applications for both competitions, a process of selection was objectively designed in a transparent way for both applicants. After shortlisting in March 2015, the successful applicants then received training in business skills, entrepreneurship and business planning tailor designed for each category of startups and existing businesses from April to May 2015.

The project developed a monitoring framework a "dashboard" an in-depth data for use in monitoring relevant indicators requisite for businesslike decision making process and reporting. On skills transfer initiatives, the project trained civil servants from the ministry of trade and industry on monitoring and evaluation, reporting and report writing to equip government with know-how so that they take charge of monitoring and evaluation functions for sustainability of the program at the end of cycle.

1st Business Development Support Phase. the first follow-up business development support involved provision of support services to the entrepreneurs. The activity started with the recruitment of service providers who received a five-day training in August, 2015. The services providers visited each of the awardee to provide them with mentoring, coaching and business counseling in the areas of practical application adoption, marketing and market linkages, business information and record-keeping among others.

The phase also included the development of marketing materials to highlight the objectives of the competitions, assessed the nature of existing entrepreneurship in South Sudan and the selection, training and document action points for phase two field monitoring visit to highlight progress made by each individual entrepreneur after the trainings, the capacity building needs and knowledge transfer to the entrepreneurs, their accomplishments and challenges.

33 2nd Business Development Support Phase; the second follow-up business development support phase, monitoring and evaluation report was to summarize activities carried out during the entire project business startup challenge and business plan competition under the project component four so as to document lessons learned and highlighting the existing capacity and knowledge transfer for the ministry staff, the profiles of the startup and competitions awardees and compile some success stories. However, this milestone of activities was cut short by lack of finances to fund the shortfall in the project including keeping the consulting firm engage with the implementation process to the final deliverable as per the agreed terms of reference. Hence, the reason for not carrying out the second field monitoring and evaluation visits, conduct the needed entrepreneurial training to the awardees.

Key milestones 1. 25th September, 2013 launched of business startup challenge and business plan competition program; 11. October, 2013 to January, 2014 rolled out the campaigned in the six states of former eastern, central, western equatorial, lakes, western and northern bahr el ghazal; 111. April, 2015 - May, 2015, completed sorting, vetting and random selection of successful 1200 final for startup challenge awardees, carried out training on business development services in the states. 1v. May, 2015, training on business development services and financial management commenced for 256 plan competition applicants and committee of expert selected 101 finalist for the awards; v. Hired fourteen (14) local consultants and provided training on business development service providers to support the program beneficiaries in revitalizing their enterprises; vi. Thirty civil servants from the ministry trained on monitoring, evaluation, reporting and report writing. The program provided knowledge and skills transfer through training on entrepreneurship, training of Trainers and Business Development Support; vu. October, 2015, finalized and signed a memorandum of understanding and tripartite agreement with Kenya Commercial Bank, South Sudan limited (KCB SS Ltd.); viii. November - December 2015, disbursed KCB SS Ltd., US$2,715,000 for financing the awardees; 1x. April, 2016, KCB SS Ltd., commenced disbursement to the awardees kicked off for both competitions; x. The project successfully carried out business development services and monitoring. field visits to the entrepreneurs in the targeted states; x1. 10 of the finalists were able to expand their businesses beyond their boma, 27 beyond their payam and 33 beyond their county after receiving the training. Number of people directly employed by business plan competition awardees increased by 14 percent from 344 to 392 after receiving the training, most businesses improved and expand as a result of training and financing though in harsh business operating environment; xu. December 2013 and July 2016 conflicts and armed fighting destroyed awardees hope of doing business in the country where most entrepreneurs lost businesses and opted to take refuge in the neighbouring countries for safety of their families and ventures.

T a bl e 2 a: R ezi. ona 1 an d G en d er 0-I S triIb U ti on o r asc wtm ners / B ene fir ci. artes. S/No. Name of State No. Women No. Men Total No. of Clients 1 Central Equatoria 120 80 200 2 Eastern Equatoria 120 80 200 3 Western Equatoria 120 80 200 4 Western Bahr el Ghazal 120 80 200 5 Northern Bahr el Ghazel 120 80 200 6 Lakes 120 80 200 Total 1200

T a bl e 2b : R ezi. ona an d Ge n d er 0-I S triIb U ti ODO r arc wrin ners / B ene fir ci. arres. S/No. Name of State No. Women No. Men Total No. of Clients 1 Central Equatoria 12 17 29 2 Eastern Equatoria 5 8 13 3 Western Equatoria 13 5 18 4 Western Bahr el Ghazal 1 7 8 5 Northern Bahr el Ghazel 9 1 10 6 Lakes 20 2 22 Total 101

34 Table 2c: Disbursement for BSC and BPC Winners/ Beneficiaries. Overall Reported Prozress DSC BPC No. of Clients

Overall Reported Progress

Approved and disbursed 158 18 176 Approved pending disbursement 264 31 295

Overall Status of Application in KCB

Applications received and vetted bv KCB 666 78 744 Aoalications not received and vetted bv KCB 534 23 557

Disbursement process started well before the onset of political crisis in the country. The PwC Rwanda Ltd firm delivered the final project output report for review for final validation and acceptance before the final payment is made to PwC Consultancy. For the last three months or so several consultative meetings with KCB SS management were made a final review of disbursement status was submitted to the project coordinator for final completion report as requested by the ministry.

Component 3: MOBILE PAYMENTS AND TRADE INTEGRATION POLICY SUPPORT

The objective is to support the development of a regulatory framework for mobile banking and payments and advisory services on Trade Integration Policy.

The development of mobile money and payments policy regulatory framework has been completed and submitted to the Bank of South Sudan in October 2015 awaiting for the regulatory authorities to officially launched and operationalized; a team carried out familiarization visit to Rwanda, Malawi and Tanzania on study of mobile payment and banking operations in selected regional countries.

South Sudan as a country joined the regional bloc as the sixth member of East African Community which included Uganda, Kenya, Tanzania, Rwanda and Burundi. The project funded and trained 7 5 Senior Civil Servants on regional integration policy issues and negotiation techniques for South Sudan Accession onto EAC block in July, 2014 and October, 2014 and South Sudan officially joined membership of East African Community in April, 2016. South Sudan acceded and attained full membership of regional countries to adhere to full tenets of democracy and good governance as enshrined in the Treaty.

The country is currently at war with itself and is required to adherence to the fundamental principles governing the members states including mutual trust, political will and sovereign equality; peaceful co-existence and good neighbourliness; and peaceful settlement of disputes, good governance, principles of democracy, the rule of law, accountability, transparency, social justice, equal opportunities, gender equality, recognition, promotion and protection of human and people's rights in accordance with the provisions of the African Charter on Human and Peoples' Rights.

Component 4a: INSTITUTIONAL STRENGTHENING OF THE SOUTH SUDAN BUSINESS FORUM

Private sector cannot function without effective support institutions that can develop the common interest on issues affecting the growth and efficiency of the sector; represent its interests and perspectives in the formulation of strategic policies and provide services to its constituencies. This sub component strengthens the capacities of these private sector support institutions serving the formal and the informal sectors. It also strengthen its capacity to define common interests of the business community as an effective partner to the government in the formulation of industrial strategy, policies and legislation, as well as promotion of investments.

The development of a strong network of support institutions will eventually facilitate the decentralized implementation of changes in the policy and regulatory framework. To achieve this objective, the business forum in its joint initiative of the government of South Sudan and chamber of commerce, industry and agriculture facilitated

35 dialogues and advocacy to address constraints affecting business growth and lobbying for opportunities that will allow public and private sector to contribute in the country's policies and regulations. Fundamentally, it strives to improve the competitiveness of the country in order to increase investment flows, enhance the capacity of locally operating enterprises and improve South Sudan's image in doing business. To date, a number of specialized working groups have been formed with clear membership and terms of references to operate.

Established a functioning board of directors tasked with oversight roles and responsibilities to strengthened existing functioning functioning public-private dialogue forum mechanisms and supported the implementation of economic reforms to safeguard safer economic policies zones and facilitate constructive consultations for economic prosperity; established nine functioning sector working groups and signed a memorandum of understanding between the public and private sector in the country.

Despite its official status the institution lacks human and financial resources capacity for sustainability. Lack of competent skills and knowledge deficiency of its secretariat plumbed the forum and its oversight body resulted in the institution not taking initiative to raise funds to support its expansion programs. The activities have been severely constrained by lack of knowledge and innovation in the secretariat and over reliance on the project coordination unit to continue funding the program. Fiduciary Management

Table 4: Project cumulative financial performance Details ofA ctivities Project Cost Project Project US$ Commitments Disbursement US$ US$ Component 1 Establishing Viable-Microfinance Institutions 2,800,000.00 2,800,000.00 2,800,000.00 Component 2 Promote Micro-Entrepreneurship Development 4,400,000.00 4,400,000.00 4,400,000.00 Component 3 Mobile Payments and Trade Integration Policy Support 300,000.00 300,000.00 300,000.00 Component 4 Institutional Strengthening of South Sudan Business Forum and Project Management 1.500,000.00 1,500,000.00 1,500,000.00

Total 9,000,000.00 9,000,000.00 9,000,000.00

CUMULATIVE FINANCIAL AUDIT REPORTS as of November, 2012 -June, 2016

MINISTRY OF TRADE AND INDUSTRY - PRIVATE SECTOR DEVELOPMENT PROJECT

Descriptions Bank Charges Component 1 Component 2 Component 3 Component4 Cumulative SSTTF FUNDS

US$ US$ US$ US$ US$ US$ US$

(a) Received SSTTF Funding (Project DA a/c) 6,701,8S9.3

30.06.2016 - Audit No. 4 4,007.71 358,245.26 946,780.47 139,543.22 289,598.81 1,738,175.47 4,963,683.9

30.06.2015 - Audit No. 3 12,262.88 829,288.13 850,765.71 208,884.17 427,906.73 2,329,107.62

30.06.2014 - Audit No. 2 8,286.62 1,529,246.00 117,529.00 3,200.00 467,018.74 2,125,280.36

30.06.2013 - Audit No. 1 5,378.88 143,214.73 360,702.31 509,295.92

Project Expenditure/Disbursement 29,936.09 2,859,994.12 1,915,075.18 351,627.39 1,545,226.59 6,701,859.37

Direct transfer from Donor to KCB SS Ltd a/c

Total Grant

(a+c)-d Balance as of 31" June 2016

36 Procurement of Goods and Services

Sn. Components Output Consultant Firm/Consultant Deliverables Remarks. I I. I-Establishment of viable- Individual Consultants 1- Technical Needs Assessment ofMFis and SACCOs Carried out due diligence for all the active financial microfinance institutions. 2- Recommended seven (7) MFis and (one) I SACCO as legible to institutions to ascertain lending and institutional receive grant and Technical Assistance. capacity. 3- Capacity building training to MFis • Financial management and accounting . • Fraud Prevention and Internal Control systems . Support over eight (8) Microfinance Institutions which on return supported over 5,000 clients. 2 Promote Micro- PwC Rwanda Ltd., Consultancy Firm 1,200 Business Startup Challenge were trained and grantee, $1,000 each Entrepreneurship. through KCB SS LTD.

1,200 Business Plan Competition Awardees were trained and grantee, $15,000 each through KCB SS LTD.

15 including 4 Civil Servants trained on Business Development Services.

Over 30 Civil Servants trained on monitoring and evaluation reporting and report writing skills. 3a Mobile Money and Payments Individual Consultant Regulations development and submitted and approved by Central Bank of Document awaiting final launching by the Regulatory Framework South Sudan stakeholders for enactment. 3b East · African Trade EAC Regional Integration Training 77 Senior Civil Servants trained on negotiation skills and EAC protocols. South Sudan attained membership of EA Regional Integration policy Support Institute Nairobi, Kenva Bloc. 4 Institutional Capacity of Project management Unit. I. Purchased two project vehicles for program and a generator for Project management power supply for the project offices. 2. Procured office furniture, equipments and Internet services for the project offices and the directorate. 3. Procured furniture, office equipments and services for National Audit Chamber office. 4. Completed procurement of goods and services for the project; 5. Regular WB fiduciary review missions conducted for compliance; 6. Project mid term audit conducted and auditors recommendations implemented; 7. Recruited and Managed 17 project staff and staffing; 8. Procured individual consultancy and consultancy firms and managed contracts; 9. Submitted regular progress reports;

37

PROJECT MANAGEMENT

Project staffing; the project coordination and management consists of core team which includes, project coordinator, project finance officer, project procurement officer who also acts as an administrative assistant. The complete level of staffing has greatly contributed to improved performance in contract management and more timely communication between the PCU and the World Bank. The PCU continues to coordinate the activities in the four components throughout the implementation period. s ummary o f responsii bi1 limti es b> Y component an d su b -component Component Code Component/Sub-Component activity Aeency /Institution( s) I Establish Commercially viable MFis SSMDF 2 Promote Micro-Entrepreneurship MoTI/PCU 3.1 Mobile Payments Regulatory Framework Bank of South Sudan/PCU 3.2 Trade Integration Policy Support MoTI/PCU 4 Institutional Strengthening and Project Management SSBF/PCU

Project coordination overall responsibility; the project coordinator roles and responsibilities included but not limited to the strategic planning and performance monitoring, project cycle management, management of coordination unit staff, procurement and financial management, co-ordination and communication, prepared project's monthly implementation progress, quarterly implementation progress, annual progress, regularly provided needed technical support to the ministry and the directorate of private sector development when requested to ensured effective coordination with institutions responsible for the implementation of project components. Directly report on regular basis to the project director on implementation progress including components reports collated by the implementing units, financial reports and project accounts, and all other relevant data on time and the results synthesized and timely provided clear explanations of project performance and variations against plans (including causes and possible remedies), in relation to achievement of defined milestones, targets, results and outcome indicators, together with budgets and project completion report and

Project financial management It is the responsibility of project management established within the project coordination unit to prepare payment requests for goods and services, confirm accuracy of all related expenditures in compliance with required standard practices and submit reports to the project tasks team leader.

Project fiduciary arrangements; all fiduciary aspects of the project were managed in consultation with the project director as accounting officer responsible for the overall financial management including project accounts, payments, disbursements of funds, project budgeting and auditing, procurement, monitoring of project progress and evaluation of results; and reporting to the stakeholders. Work plans (in tandem with each unit); periodically prepare fiduciary plan for approvals; submitted regular progress reports by components. ·

Reporting and oversight roles guided the implementing units based on monitoring and reporting systems. The coordination unit managed regular supervisions and review of periodic progress reports to ensure project implemented satisfactorily. The responsibilities includes; • Strong coordination; coordination was responsibly carried out between the World Bank, the implementing Units and the technical Assistants (Firms/Individuals) to ensure the success. • Financial management and procurement; submitted quarterly interim financial and procurement reports, audited and unaudited financial statements and acted on audit reports and carried out onsite regular risk-based financial management supervision at appropriate intervals based on assessed risk(s). • Monitoring and Evaluation; updated result framework quarterly, assessed deviations to identify areas of need.

39 Component 1, 2 and 3 activities effectively responded to its objectives though challenged by the ongoing crises of armed conflict in the country. The program is relevant to enabled the entrepreneurs improve their businesses. The project monitoring indicators from the beneficiaries shows more than 20 percent of the businesses are now operating and expanded beyond their initial capacity compared to none when they received training and financing from the ministry of trade and industry. Despite changes in the program scope and design the potential business owners got an opportunity to exercise their creativity in generating business ideas and synchronized them into quality business plans, increased participation and growth of women owned enterprises.

Though with challenges, the program achieved and noted some milestones as follows; a. Business skills acquisition - Entrepreneurs in the first field visit reported that the program has imparted valuable and skills for them to do business. As a result of the BPC training they reported improved skills in the areas of planning, marketing, financial and time management, business communication skills and records keep ing. For example, most of the businesses have cash in-cash out records and a semblance of nominal accounts. b. Business Expansion - the entrepreneurs were able to expand to other areas in their state and counties. Overall, 27 percent of the businesses were able to expand their businesses to other areas within their localities and make further investments in assets for growth, installed solar panels to enable business operate for longer hours and acquired sewing machines after the training as _ compared to 6 percent prior to training. c. Business Resilience - The majority of businesses are still in existence since engaging with the BPC program despite the harsh business environment caused by incidents of theft of goods, insecurity and delayed disbursement of funds by the project. d. Networking Activities - 52 percent of the entrepreneurs joined the network of traders at the chamber of commerce and benefit from networking activities at both the state and national levels. e. Employment Creation - The total number of employees directly employed by the BPC finalists after the training and before financing increased from 344 to 392 between January and November 2015, a 14 percent over the period and many operating shops and workshops were able to take on more employees and provided on job business management training trickle-down effect. f. Increased Margins - The entrepreneurs were able to increase their customer base as they were able to purchase goods in the market at wholesale prices and sell the products to their customers at reasonable prices thus increasing their profit margins as a result of BPC program imparted value and skills to their businesses.

Operational challenges g. High but floating exchange rates as compared to initially when it was trading had negatively affected entrepreneur awardees as most of goods and inputs are imported from the neighbouring countries. h. Limited sources and access to affordable credit facilities to the entrepreneurs; The late disbursement of the loans to the BPC Winners is also a concern to the entrepreneurs, as the prices they had budgeted for in their plans had drastically increased by the time they received the financing. 1. Poor road infrastructure especially in the outside Juba made the transport costs very high and more so during the rainy season; entrepreneurs cited inaccessible due to bad terrain coupled with insecurity. This has made it difficult for movement of goods and people from one location to another and as a result the cost of doing business increased. J. Continues insecurity in most part of the country has affected business operations; lack of constant supply of commodities such as food, fuel and basic items across the country had affected the operations of the business. Entrepreneurs continued witnessing greatest security challenges in towns, villages and roads, a large number of businesses being looted and destroyed and most had to close down or relocated to new relatively stable areas.

40 k. Multiple and high taxation at the border points was cited as a challenge to doing business; making one trip to import goods would incur heavy levy from the revenue authority, the commerce and supply, monthly security charges, city council and loading-offloading of bags charged per bag. 1. Most if not some Business startup and plan competition awardees business premises looted and destroyed during the crisis particularly in most parts of greater Equatoria Region and Wau State in Bahr el Ghazal region. Hence, business climate doesn't allow business sales. m. Most beneficiaries are refugee in the neighbouring countries and some within displaced camps in South Sudan. Hence, it has been noted with concern that program beneficiaries diverted the funds to relocate their defendants for safety after July, 2016 crisis.

Overall Challenges/Success, Impacts and Recommendations

Challenge/Success Impact Recommendation

The changed scope led to increased costs for the The change of scope should have been accompanied by an in Change of scope project and almost tripled the duration for project funding to cater for this component to maintained the quality o1 implementation the project.

Political Crisis of The political crisis interrupted the The project adapted to deal with the challenges and exertec December 2013 and implementation of the project for more than 11 efforts to succeed is a rare commitments though voidable. July 2016 months.

Delay in launching of The launch was not timely done and caused a In future, the beginning of the program should not be tied to the the program delay in implementation. launch event as activities could continue and the event organized at convenience.

The roles and Many of the tasks that were to be carried out by The roles and responsibilities of all project team members responsibilities matrix the enterprise unit in the Ministry with regard to should be better explained and outlined at the beginning of the was not followed approvals and coordination with state officials project so as to ensure that all team members understand their were not satisfactorily fulfilled. Most tasks were roles and participate fully to minimized time wastage. left with most tasks being left to the consultant and the project coordination unit.

Procurement delays The requests for quotations from suppliers was Procurement of goods and services should be done and not often left to the last min~te after prior approvals necessarily just before the goods or services are required. This resulting to delays for calls for applications and will ensure that inevitable delays during procurement do not interviews for various consultants. delay program activities.

Delays in Field Mission There were extensive delays in field missions due The project should ensure availability of funding needed to to logistical issues related to insecurity and facilitate program activities in good time to avoid unnecessary limited commercial air transports forcing the delays. project to use chartered flights.

Outreach report back Though the outreach activities were a key Back to office reports for all field missions should be made component, reports from the outreach activities mandatory as part of the accountability of the project. were not shared to enable proper documentation of challenges, achievement and learning.

Involvement of state The officials at the state level left out of program The state government should be involved from the beginning of officials activities as they were not involved in a timely the program and time and resources need to be invested in the manner and compromised the implementation outreach activities to allow ministry staff to spend more time in and sustainability of project goals the states and visit more program areas.

Poorly filled The application forms were not well filled with Future programmes could have sessions in which the interested application forms many of the applicants soliciting the services of candidates are taken through the form and assisted in filling it a third party (who did not do a good job either) during the outreach activities. to fill in the form.

41 Incomplete BSC lists Due to the coupling of the baseline survey to the The baseline survey was decoupled from the BSC so as to for most states BSC programme, the initial lists of those selected ensure that the BSC meets its target of 1,200 applicants trained contained less than 200 applicants for most and financed. states.

Delay m baseline The baseline survey carri ed out on 2,400 BSC The baseline survey should be conducted more efficiently by survey applicants delayed the start of BSC training and ensuring adequate staff to conduct it within the specified time also made the calling of participants less efficient frame. as limited time was left call the selected applicants before the scheduled of training.

Sourcing of training Despite discussions on the need to procure An advance team was sent to the states a few days before the venues venues for the BSC training early enough, this training to procure the venues. However, in future this may was not done until the last minute and only an need to be done even earlier so as to get the best value for insufficient number of venues were secured in money. some states.

Low literacy and Though the application forms showed that more The training was designed to be accessible to people with low numeracy levels than 50 percent of the applicants had a secondary literacy using graphics and group exercises. or post-secondary education, over 85 percent could not read and write.

Language Participants in some states were not able to Special classes were created for groups who only spoke understand English and only spoke Juba Arabic. particular languages and trainers fluent in these languages were A small number did not speak either and could assigned to the classes. only understand their vernacular.

Transfer of funds The transfer of funds to KCB was timely though Funds should be transferred to the project account early on in delayed the project by two months and has the project so as to avoid the delays associated with contributed greatly to the delay in disbursement international transfers. of funds to the beneficiaries.

KCB Delays KCB took more than six months to begin Meetings with the selected bank should involve all the senior disbursement despite having agreed in the MoU representatives from all the relevant departments so as to avoid to finalize disbursement within two weeks. delays in disbursement. Though lengthy discussions had been had with KCB, their internal systems to disburse the funds were not in place.

Many activities did not The various workplans developed during the Workplans should as much as possible be followed and only take place as per the project period were often not followed with many adjusted when inevitable. A project wide change procedure workplan activities being run consecutively rather than in should also be adopted so as to ensure that project schedule parallel. changes are well managed

Some delays Delays in training after the launch, disbursement To enable the team plan activities better, it is important for the experienced from KCB after the training and transfer of funds to KCB cause and expected duration of the delay to be clearly indicated went unexplained to the were not adequately explained to the project team and communicated to all stakeholders by KCB management. project team and to or to stakeholders. stakeholders.

Overall Itemized The budget for all the activities in the entire Budgets for all trainings, field missions and consultants should Project budget was not project was not done in sufficient detail at the be prepared at the start of the project in order to ensure adequate developed at the start of the project which led to delays or redesign financing for all project activities and allow the program to beginning of the project of program activities during implementation adapt in light of challenges including currency fluctuations.

Lack of Additional The ministry requested for additional financing The additional financing would have allowed the project to Funding to complete the remaining activities as the project complete the remaining running activities to the closure and implementation supersedes it cycle due to the avoid last minute conveniences of closing the project. crisis which engulfed the country unexpectedly. Ministry staff assigned Enterprise unit and a few staff from the Civil Servants should be motivate with incentives agreed upon to the project showed directorate of private sector development right from the inception and project design to avoid any

42 lack of motivation and interference in the project· management as a unnecessary misunderstanding with the project staff This will considers the project resulted conflict of interest with the project staff. allow sense of of ownership for sustainability of future program and its staff a World Therefore, the staff from the ministry did not funded on a similar way .. Bank project. consider the project a ministry program but world bank initiative.

Summary and Lessons Learnt

South Sudan Transitional Trust Fund, private sector development project performed to the expectations and achieved results in extraordinarily circumstances to revitalize the growth of private sector go to scale and create jobs across South Sudan geographical targets though continued to operate amid the ongoing insecurity in many parts of the country. Changed in scope of the project with no-cost extensions burdened the project and affected budget lines; funding of the project was challenged and reduced outreach of the project. Inflation delayed the disbursement to beneficiaries and increase the cost of operations. Establishment of project oversight committee to guide the project management stalled due to ongoing uncertainty in the country leaving the project team to operate in a limited capacity and guidance on major decisions needed in the project. Delays in approval of requests for no-objection and complicated procedures affected progress of the project. Lack of motivations to civil servants assigned to support the project generated disincentives among the local team which resulted to lack of close follow-up and project ownership by the government and lack of additional financing created funding deficit resulting to the inability of project to complete the remaining deliverables.

The project has exceptionally performed the tasks using its local staff in project, financial and procurement management to the required standards and is worth commendations with a systemic analysis for considerations. Strategic working environment constraints continued to challenge progress in a more systematic way including delay in reporting and financial accountability though the project post closure is challenged at the end of the project cycle due unclear exit strategy in the document.

The project has created a reservoir of medium, small micro enterprise practitioners with requisite skills and knowledge to promote entrepreneurship home-grown skills. Some of the skills imparted include monitoring, evaluation and reporting; business management training, business plan assessment and judging and business development support service provision.

The concept of doing business is necessary in revitalizing private sector development initiatives. The program is still relevant and practical and is key to the growth and success of private sector given that the entrepreneurs have managed to improved their businesses after acquiring the business management skills even before and after financing showing the impact of doing business would have been even greater had they received the financing on time;

1sT DRAFT

THOMAS SERAFINO OHURE COORDINATOR, PRIVATE SECTOR DEVELOPMENT PROJECT MINISTRY OF TRADE AND INDUSTRY

43 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders

Not Applicable

44 Annex 9. List of Supporting Documents

1. Project Appraisal Document; Report No.: 65802-SS; January 3, 2012 2. Restructuring Paper; Report No.: RES16609; October 28, 2014 3. Restructuring Paper; Report No.: RES21384; November 11, 2015 4. Implementation Status and Results Reports; Sequences 1 to 8 5. Implementation Support Mission Aide Memoires (various dates) 6. South Sudan Transition Trust Fund Grant Agreement; March 14, 2012 7. South Sudan Interim Strategy Note; Report No.: 74767-SS; January 30, 2013 8. South Sudan Development Plan 2011-2103; Realising Freedom, Equality, Justice, Peace and Prosperity for All; August 2011 9. IMF 2016 Article IV Consultation for South Sudan; May 31, 2016

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