Document of The World Bank

Public Disclosure Authorized Report No: ICR00001456

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-40420 IDA-H1480 TF-55387 TF-56638)

ON A

CREDIT/GRANT

Public Disclosure Authorized IN THE AMOUNT OF (SDR 5.6)(SDR 3.7) MILLION (US$8.4) (US$5.6) MILLION EQUIVALENT)

TO THE

REPUBLIC OF

FOR A

POST-TSUNAMI RECOVERY AND RECONSTRUCTION PROJECT

Public Disclosure Authorized June 23, 2010

Human Development Sector South Asia Region

Public Disclosure Authorized

CURRENCY EQUIVALENTS (Exchange Rate Effective June 15, 2010)

Currency Unit = Rufiyaa (Rf.) US$1.00 = MRf. 12.8

FISCAL YEAR January 1 – December 1

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank BML Bank of Maldives EU European Union FAO Food and Agriculture Organization GDP Gross Domestic Product GoM Government of Maldives JSDF Japan Social Development Fund MoFT Ministry of Finance and Treasury NDMC National Disaster Management Corporation PAS Public Accounting System

Vice President: Isabel Guerrero Country Director: Naoko Ishii Sector Manager: Mansoora Rashid Project Team Leader: Qaiser Khan ICR Team Leader: Qaiser Khan ICR Author: Richard Scurfield

COUNTRY Project Name

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 ...... 3 3. Assessment of Outcomes ...... 6 4. Assessment of Risk to Development Outcome ...... 8 5. Assessment of Bank and Borrower Performance ...... 8 6. Lessons Learned ...... 11 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ...... 12 Annex 1. Project Costs and Financing ...... 13 Annex 2. Outputs by Component ...... 14 Annex 3. Economic and Financial Analysis ...... 17 Annex 4. Bank Lending and Implementation Support/Supervision Processes ...... 18 Annex 5. Beneficiary Survey Results ...... 18 Annex 6. Stakeholder Workshop Report and Results ...... 20 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ...... 21 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ...... 22 Annex 9. List of Supporting Documents ...... 23 MAP

A. Basic Information Post Tsunami Country: Maldives Project Name: Emergency Relief and Reconstruction Project IDA-40420,IDA- Project ID: P094193 L/C/TF Number(s): H1480,TF-55387,TF- 56638 ICR Date: 06/30/2010 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: ERL Borrower: THE MALDIVES Original Total XDR 9.3M Disbursed Amount: XDR 9.3M Commitment: Revised Amount: XDR 9.3M Environmental Category: A Implementing Agencies: Ministry of Finance and Treasury Cofinanciers and Other External Partners:

B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 01/10/2005 Effectiveness: 04/04/2005 04/04/2005 Appraisal: 02/07/2005 Restructuring(s): Approval: 03/15/2005 Mid-term Review: 02/01/2007 01/15/2007 Closing: 12/31/2008 12/31/2009

C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Highly Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance:

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

D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 3 4 General education sector 36 36 Other social services 61 60

Theme Code (as % of total Bank financing) Natural disaster management 40 40 Rural markets 20 20 Social safety nets 40 40

E. Bank Staff Positions At ICR At Approval Vice President: Isabel M. Guerrero Praful C. Patel Country Director: Naoko Ishii Alastair J. McKechnie Sector Manager: Mansoora Rashid Mansoora Rashid Project Team Leader: Qaiser M. Khan Qaiser M. Khan ICR Team Leader: Qaiser M. Khan ICR Primary Author: Richard G. Scurfield

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The project objectives are to support the efforts of the Government of the Maldives to carry out a program of rehabilitation and reconstruction related to the damages caused by the tsunami of December 26, 2004.

ii Revised Project Development Objectives (as approved by original approving authority) The Project Development Objectives were not revised.

(a) PDO Indicator(s)

Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Number of beneficiaries receiving cash grants Value Not applicable due to quantitative or 50,000 58,370 nature of project Qualitative) Date achieved 04/04/2005 12/31/2008 12/31/2009 Comments (incl. % Target exceeded achievement) Indicator 2 : Number of farmers receiving compensation Value Not applicable due to quantitative or 2,000 5,836 nature of project Qualitative) Date achieved 04/04/2005 12/31/2008 12/31/2009 Comments (incl. % Target exceeded achievement) Indicator 3 : Constuction of additional classrooms in schools Value Not applicable due to quantitative or 200 classrooms 40 schools 38 schools nature of project Qualitative) Date achieved 04/04/2005 12/31/2008 12/31/2008 12/31/2009 Comments (incl. % Goverment adjusted priorities during course of the project achievement) Indicator 4 : Number of small businesses receiving grants/loans Value Not applicable due to quantitative or 800 950 nature of project Qualitative) Date achieved 04/04/2005 12/31/2008 12/31/2009 Comments (incl. % Target exceeded achievement)

iii (b) Intermediate Outcome Indicator(s)

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

G. Ratings of Project Performance in ISRs

Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 05/24/2005 Satisfactory Satisfactory 3.81 2 12/03/2005 Moderately Satisfactory Moderately Satisfactory 7.57 3 03/23/2006 Moderately Satisfactory Moderately Satisfactory 7.57 4 06/16/2006 Moderately Satisfactory Moderately Satisfactory 7.57 5 11/27/2006 Moderately Satisfactory Moderately Satisfactory 10.56 6 05/10/2007 Moderately Satisfactory Satisfactory 11.04 7 11/15/2007 Satisfactory Satisfactory 11.66 8 05/13/2008 Satisfactory Satisfactory 13.84 9 06/20/2008 Satisfactory Satisfactory 13.84 10 12/03/2008 Satisfactory Satisfactory 13.84 11 05/20/2009 Satisfactory Satisfactory 13.84 12 11/19/2009 Satisfactory Satisfactory 14.12

H. Restructuring (if any) Not Applicable

iv I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

The tsunami and its impact. The tsunami reached Maldives at 9:20 a.m. on December 26, 2004. Tidal waves ranging from 4 to 14 feet were reported in all parts of the country. More than 100 were confirmed dead and more than 1300 people suffered injuries. Unlike other countries affected by the tsunami, Maldives experienced a disaster of national proportions. Thirty-nine islands were significantly damaged and nearly a third of the Maldives’ 300,000 people were severely affected. More than 12,000 people were displaced from their islands for an extended period, and another 8,500 people were temporarily relocated on their own islands.

The reconstruction program. Immediately after the tsunami, the Government of the Maldives launched the preparation of a tsunami reconstruction program based on a damage assessment prepared jointly with the World Bank, the Asian Development Bank (ADB) and the UN system. Total damages were estimated to be about US$470 million, close to 62 percent of GDP. The largest source of direct damages was to the housing sector and the largest source of indirect damage was to the tourism sector, stemming from a sharp drop in tourist arrivals. The cost of restoring the economy to pre-tsunami levels was estimated as US$406 million.

1.2 Original Project Development Objectives (PDO) and Key Indicators

The project objective was “to support the efforts of the Government of the Maldives to carry out a program of rehabilitation and reconstruction related to the damages caused by the tsunami of December 26, 2004”.

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

There were no changes to the project objectives during the course of the project’s implementation.

1.4 Main Beneficiaries

The main beneficiaries were the Maldivian communities affected by the tsunami.

1.5 Original Components

The Bank’s assistance was for a total of SDR 9.3 million (US$14.0 million equivalent) of which SDR 3.7 million was in the form of an IDA grant and SDR 5.6 million was an IDA credit. IDA routed its support through the government’s Tsunami Relief and Reconstruction Fund (TRRF) established immediately after the disaster under the aegis of the Ministry of Finance and Treasury with a view to increasing the transparency of the use of funds. The project was designed with three components:

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Component 1: Restoration of Livelihoods (US$8.6 million). As originally designed, this component included two sub-components, designed to help restore the livelihoods of households and businesses affected by the tsunami: (a) Cash Grants (safety net payments) to the persons affected by the tsunami; and (b) Sub-grants to finance the restoration of lost or damaged assets of affected micro and small-scale enterprises.

(a) Safety net cash grants to households affected by the tsunami (US$5.6 million). As an immediate response to the tsunami, the Bank agreed to retroactively finance cash grants paid out by the government to affected families immediately after the disaster. It distributed grants of Rf. 1,500 (US$117) per capita to families whose houses were completely destroyed; Rf. 1,000 (US$78) per capita to families whose houses were partially damaged; and Rf. 500 (US$39) per capita to families whose houses are intact but household items swept away.

(b) Restoration of Assets (US$3.0 million). The Bank agreed to provide urgent support to restore small businesses. Specifically it was intended that this program would provide sub-grants for restoration of assets (e.g., fishing vessels, fishing gear, fish-processing equipment, agricultural tools, and other equipment). It would also target small-scale enterprises in the affected islands that lost or suffered damages to their income generating assets and provide grants to help enterprises restart their businesses.

Component 2: Increase school capacity on islands receiving population displaced by the tsunami (US$5.0 million). The tsunami had made some islands uninhabitable. The population displaced from these islands needed to be resettled immediately. The receiving islands were envisaged to need additional schools and facilities to accommodate the increasing student population. This component was designed to support the construction and rehabilitation of education facilities through the provision of goods and technical advisory services, and the carrying out of works.

At project preparation, government envisaged that the reconstruction program would allow it to advance its long discussed policy for population consolidation. It was believed that the tsunami damage lent new urgency to the policy of population concentration. Implementation of this policy would permit greater protection against sea- level rise on the islands where the population would be concentrated while also reducing the diseconomies of scale in service provision.

Component 3: Implementation Support to the Post-tsunami Reconstruction Program (US$0.4 million). This component was designed to help the government finance the temporary staff required to manage and implement the post-tsunami reconstruction program.

1.6 Revised Components

The first component of the project was refined to include cash grants to agriculturalists (households whose agricultural operations were affected by the tsunami. In addition, the component was modified to include the provision of loans to small businesses (US$3.0 million). Following the initial distribution of cash grants to households, the government

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requested the Bank’s approval to include this provision. In order to reduce the pressures created by the provision of cash grants, it wished to use the available funds to provide small loans to small businesses. The Bank agreed to this proposal and the legal agreement was amended accordingly. These funds were distributed through the Bank of Maldives (BML). Loans were made available to 950 tsunami- affected small businesses, mainly for fish-processing activities, and some for agriculture and trading purposes.

1.7 Other significant changes to the design and scope of the project:

There were no other significant changes to the project itself. However, it must be noted that, in parallel, both the Japan Social Development Fund (JSDF) and the European Union (EU) entrusted the Bank with the implementation of tsunami reconstruction projects in the Maldives under two trust funds. While both were prepared in the 2005, the JSDF grant was signed only in June 2006 and the EU grant was signed in October 2006. The main reason for the delay was government’s desire to fine-tune its reconstruction program following the initial round of agreements reached with a broad range of donors very soon after the disaster, including the World Bank.

The JSDF funds (TF055387) (US$1.96 million) were used to directly extend the livelihood components of this project, providing additional funds to compensate agriculturalists, fishermen and small businesses. This trust fund closed on December 31, 2009. The EU funds (TF056638) (US$17.1 million) were used to fund a Public Accounting System (to allow more efficient management of the reconstruction funds), the provision of additional education and health facilities, and the development of a solid waste management component for the Maldives on tsunami affected islands. This trust fund closed on January 31, 2010.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

The quality at entry was satisfactory. The project was prepared very rapidly after the tsunami hit. The Bank team worked in very close consultation with government provided critical in the preparation of its tsunami reconstruction program, together with ADB and the UN. The design of the project reflected the urgent needs on the ground at that time.

2.2 Implementation

Understandably, in the years immediately following the disaster, the government of the Maldives struggled to manage the sudden increase in volume of funds made available to it after the disaster. Over this period, donor fund flows increased from around US$30 million per year before the disaster to over US$100 million per year. Even though a large proportion of the projects was implemented by the funding agencies, including the Red Cross societies and the UN system, the government still had difficulty fulfilling the administrative tasks that only it could complete and to implement the projects it had agreed to implement, including those funded through the World Bank, JSDF, and the EU.

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The reconstruction program also put the contracting industry under great pressure, leading to delays and cost increases as some donors were willing to pay any price. Adding to the pressure on government was the decisions of some donors to hire key technical staff in the government to run their own programs. In a country with a limited base of technical staff this was a major constraint.

Given this background it is not unexpected that following a very enthusiastic start, project implementation was only rated as moderately satisfactory until the mid-term review mission held in January 2007, just two years after the disaster. Civil works, in particular, were slow to take off as the large contractors who won most of the bids had taken on too much work overall. As a result the project closing date had to be extended by one year. However, after the initial delay the overall implementation rating improved to satisfactory. The bulk of the funds was disbursed before the middle of 2008 (US$13.84 million out of a total of US$14.00 million).

As noted above, at project preparation, government was keen to promote its policy of population consolidation, and accordingly planned this project’s education component (Component 2) around this objective. It saw the future of the Maldives involving consolidation of its population on a smaller number of larger islands that could be protected more effectively from sea level rise, and where services could be delivered more effectively and at a lower cost. However, as the reconstruction program was implemented, some of the potential difficulties of implementing such a program became apparent. Communities are very attached to their home islands, are reluctant to relocate, and pressures were often quick to emerge between relocated and host communities. Nonetheless, some population consolidation did take place. For example, the entire population of an island in Dhaal atoll, Gemendhoo, moved to the atoll capital of , first to temporary housing and then to permanent housing. The islanders from a second island in the same atoll, Vaanee, also moved to Kudahuvadhoo.1 Also, the population from the island of , in , moved to the larger island of Maamigilli in Alifu Dhallu atoll.

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

Given the emergency nature of this project and the fact that project development objectives were to support the rehabilitation and reconstruction efforts, performance indicators for the project were defined as outputs rather than outcomes. The targets set were as follows:

 Component 1a. Livelihoods restoration—cash payments to 50,000 households  Component 1b. Restoration of assets—cash payments to 2000 agriculturalists and 800 businesses

1 Department of Planning, Ministry of Finance and Treasury, Maldives-4 years after the tsunami—progress and remaining gaps, July 2009.

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 Component 2. Increase in school capacity—2000 classrooms, later amended to 40 schools

The Government monitored the implementation of the program carefully and these targets were achieved, and indeed, surpassed for two of the above indicators.

2.4 Safeguard and Fiduciary Compliance

No safeguards were triggered by the project. However, procurement and financial management were both foci for the government and the Bank throughout the project implementation period.

Procurement was rated as either satisfactory or moderately satisfactory throughout the implementation period. A procurement audit conducted in mid-2008 concluded that while there were no major issues, there were a number of smaller issues that needed to be attended to so as to strengthen public procurement practices in the Maldives. Also, in parallel, a technical assistance grant was provided to government to help build the required institutional capacity to improve procurement capacity.

Financial management (FM) was rated as moderately satisfactory when the project closed. Although during implementation there were no issues with respect to WB-funded activities, there was concern with respect to government-funded expenditures. Even when the project closed, action had not been taken to complete the audit of government- funded tsunami expenditures for 2006, 2 funded through TRRF as required by the financing agreement. There were also delays in providing responses to audit reports and there was delay in the completion of internal audits beyond December 2006.

The project’s FM arrangements were of variable quality throughout the implementation period due to lack of capacity and the rapid turnover of FM staff. For example, there was no Director General for the Public Finance Division during the six months prior to the closure of the project. Also, although payments and accounting was centralized at TRRF, other supporting documents were kept by line departments. As a result, substantial coordination was required before accounts could be prepared. In sum, the preparation of the necessary project accounts proved a challenge for government throughout the project implementation period.

2.5 Post-completion Operation/Next Phase

The only project component requiring an on-going management and maintenance is the schools component. These buildings will have to be maintained by the Ministry of Education along with all their other school buildings. Potentially, these on-going commitments will be more difficult to manage at a time of fiscal stringency although a technical audit conducted in June 2008 noted that the maintenance program for school

2 The audit report for government share funded tsunami expenditures for 2005 had raised several concerns that MoFT and other departments had never fully addressed.

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buildings was running smoothly and Parent-Teacher associations had made significant contributions to equipping the buildings.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

The project directly addressed the needs of the country after the tsunami. It was prepared in parallel with the government’s tsunami reconstruction program. Both the project objectives and content were firmly founded in it.

3.2 Achievement of Project Development Objectives

The development objectives of the project as originally defined were fulfilled. It provides in full the agreed level of support to help the Government of the Maldives carry out its own program of rehabilitation and reconstruction related to the damages caused by the tsunami.

Cash grants were made available to affected households, agriculturalists, fishermen and business-persons, as originally intended. However, it is noted that there were no surveys to measure the resulting impacts or outcomes. All the original targets were equaled or exceeded as described below:

 Immediately after the tsunami cash grants were distributed to 58,370 as compared to the target of 50,000 households  Cash grants were distributed to 5836 agriculturalists plus a small number of fisherman, while 950 loans were provided to small businesses, against targets of 2,000 agriculturalists and fishermen, and 800 businesses

Additional classroom space was provided at 38 schools compared to the target of 40 on islands where it was expected that persons would be relocated after the disaster. However, the outcomes of this activity were not entirely as envisaged because of the decline in school-age population and the government’s reluctance to implement its school rationalization policy. It appears that the government’s enthusiasm for population consolidation also waned during project implementation. This is perhaps not surprising given both the intra- and inter-community tensions that arose during implementation as government sought to relocate populations displaced by the tsunami.

Despite this change, all the new classrooms provided are in use even though the number of children enrolled in the schools has actually decreased by about 25 percent nationwide during the project period. This change is attributed to the reduction in birth rates and the resulting change in the age profile of the Maldives’ population. An additional and important outcome is that with the smaller number of children and the additional classrooms paid for through the project, it has been possible for schools on many islands to move to operating a single session each day, compared to the previous practice of operating two sessions.

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3.3 Efficiency

The initial distribution of cash grants to householders was handled very efficiently and could be considered a model of its kind. Also, the distribution of funds to pay for the repair of fishing boats was handled efficiently, with the initial damage assessments being prepared with the help of experts funded by the FAO. However, the distribution of the remaining cash grants to agriculturalists was delayed by some months. The start of construction of the schools was also delayed. However, in the circumstances following the tsunami this may be understandable, given the limited capacity of the domestic construction industry in the Maldives.

3.4 Justification of Overall Outcome Rating

Rating: Satisfactory

While there were some early delays in the implementation of the project, all the project components were essentially completed by the end of 2008, and the outcomes of the project were net with the important exception that the school populations have not always increased on all the islands where the additional classrooms have been provided.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development There were no surveys that specifically targeted the recipients of cash grants. However, interestingly, a Tsunami Impact Assessment, commissioned by the government six months after the disaster, suggested that despite the widespread disruption caused by the disaster, people across the country were better off than they were six months prior to the disaster. It stated that:

“Surprisingly perhaps, the tsunami did not have a serious impact on incomes or poverty. Indeed for most people the progress of previous decades appears to have continued uninterrupted. Before the tsunami, there had been impressive growth in household incomes – which between December 1997 and July 2004 increased by more than 35 percent. And despite the tsunami they continued to rise: between September 2004 and June 2005, average per capita household income increased by a further 7 percent”.3

This was the third in a series of Poverty and Vulnerability studies. The second was undertaken six months before the disaster, allowing an accurate assessment to be made of the impact of the tsunami. It attributed the quick recovery to a mix of factors including, donor support, the employment generated by the reconstruction activities, and the large

3 Republic of the Maldives (2006), “Tsunami Impact Assessment 2005”, Ministry of Planning, prepared with assistance of UNDP.

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increase in government salaries at the end of 2004. Despite this positive outcome, it also suggested that the people of the Maldives still faced a series of long-standing challenges including: the disparity in incomes between Male and the other Atolls, lack of employment opportunities (particularly for young people), and poor access to reliable sources of drinking water.

(b) Institutional Change/Strengthening

The institutional development component of this project was the foundation for the much larger intervention by the EU to help the government implement a Public Accounting System (PAS). This is already functioning and will have a lasting impact on public administration in the Maldives.

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

There were no unintended outcomes or impacts other than those discussed elsewhere in the text of this report.

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

While no beneficiary surveys were undertaken, Bank staff made a point of talking with beneficiaries when visiting islands where projects financed by the Bank had been undertaken. Unsurprisingly, the new school buildings were widely appreciated. Parents were also happy with their schools operating a single session each day; a change facilitated in part by the creation of extra classrooms through the project. However, there were also complaints about non-project issues, including the shortage of laboratory equipment, text books and at some schools the quality of the expatriate teaching staff was a major concern.

4. Assessment of Risk to Development Outcome- Rating: Moderate

The risks to the development outcomes of the project are rated as moderate. The current weakness of the economy in the Maldives could negatively affect both the communities and individuals that benefited from the support provided through the project. In addition it is possible that the country’s poor fiscal position could adversely affect how intensively the school buildings funded through the project are used and maintained.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Highly Satisfactory

The project was prepared very quickly and in close consultation with the government, and other donors active in the Maldives immediately after the tsunami struck the

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Maldives. It was tightly focused and designed to meet the immediate needs of the country. It was approved by the Board less than three months after the disaster.

(b) Quality of Supervision Rating: Satisfactory

The Bank supervised the implementation of this project in tandem with the supervision of the activities funded through the EU Trust Fund and JSDF Trust Fund. It supervised all activities very actively up until the end of 2007 and was very active again throughout 2009. However, in 2008 the Bank’s own supervision activities were adversely affected by the disruption caused by the country’s first democratic elections, and the subsequent arrival of a new government. As a result, implementation of components financed by all three funding sources was adversely affected. While regular supervision of the project proved difficult, the Bank commissioned a technical audit of all construction activities financed by both IDA and the EU, as well as a post-award review of government managed procurement activities. The audit concluded that with minor exceptions, the quality of construction was generally satisfactory. The procurement review also did not identify any major issues.

(c) Justification of Rating for Overall Bank Performance

Rating: Satisfactory

The Bank’s overall performance is rated as Satisfactory because it delivered a project that was directly relevant to the country’s recovery efforts and generally supervised its implementation effectively.

5.2 Borrower Performance (a) Government Performance

Rating: Satisfactory

The government’s performance in the days and months immediately after the disaster was highly satisfactory. During implementation it struggled at times to complete activities in a timely fashion. However, project funds were almost all fully disbursed by the end of 2008 and the project closed after a one year extension at the end of 2009.

With respect to the overall reconstruction program throughout the implementation period, the donors would have liked government to put in place a stronger executive management framework. While appropriate measures to coordinate the program were implemented, a strong executive was never appointed. As a result, it was sometimes difficult to resolve disagreements between implementing units and between government and community groups.

(b) Implementing Agency or Agencies Performance

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For the key agencies responsible for the management and implementation of the IDA- funded program, the performance ratings are assessed as follows:

Ministry of Finance and Treasury. Moderately Satisfactory

MOFT was the signatory of the Bank loan, was the manager of the TRRF through which the loan was passed within the Maldives and also had an important role in coordinating and managing the government’s reconstruction program. As manager of the TRRF, its performance has not been completely satisfactory. For example, there were residual audit issues throughout the life of the project.

Ministry of Fisheries and Agriculture. Moderately Satisfactory

While the small component to reimburse fisherman for the damage to their boats was handled admirably, the Ministry’s efforts to manage the distribution of cash grants to agriculturalists were delayed. Their efforts to prepare and get agreement to the short lists were less effective although it has to be said the bulk of the funds allocated through this project were distributed before the mid-term review of January 2007. In contrast, funds provided through a parallel JSDF grant, effectively extending the list of eligible recipients, took much longer to distribute.

Ministry of Education. Satisfactory

There were some initial delays to the implementation of the component managed by this Ministry. However, the construction of all but four (out of a total of 38 schools) was complete by the end of 2008, the original closing date for the project. A technical audit completed in mid-2008 concluded that the quality of these projects was generally satisfactory. It should also be noted that there was a shortage of both contractor capacity and construction materials for long periods in 2007 and 2008 and this, at least in part, explains the delays affecting school construction.

Bank of the Maldives. Moderately Satisfactory

Once instructed by the government, BML distributed the funds allocated through this project with commendable efficiency. However, the very high percentage of non- performing loans should be of concern for both BML and the government.

(c) Justification of Rating for Overall Borrower Performance

Rating: Satisfactory

The government’s immediate response after the tsunami was highly commendable. Also, it made immediate efforts to prepare, with donor assistance, a credible reconstruction plan. Despite some weaknesses with respect to the implementation of this project, overall the performance of both the central government and line agencies is rated as satisfactory. The bulk of the funds had been implemented within three years before the original closing date of December 31, 2008.

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6. Lessons Learned

Five years after the disaster, the government has essentially completed its reconstruction program and most of the donors have left the Maldives. However, a number of lessons can be learnt from this project that could have improved the implementation of the reconstruction program and could improve the design of future reconstruction programs in other countries. These have been grouped under three headings: preparation of the reconstruction program, project design and project implementation.

Preparation of the reconstruction program

 This project demonstrated once again the importance of governments preparing solid and reliable damage assessments and reconstruction plans. In this case, the government’s damage assessment was completed very quickly, effectively and efficiently with assistance from the World Bank, the ADB and the UN system.

 The availability of credible lists of beneficiaries that were prepared very soon after the disaster and were broadly accepted by the community ensured the success and efficiency of the first round of distribution of cash grants to households.

Project design

 The willingness of the Bank to adjust the precise contents of individual components during implementation was very much appreciated by the implementing agencies. Even in the context of an emergency reconstruction, many other donors were less accommodating.

. Despite the emergency character of the project, it should include some kind of evaluation of results. Even a simple qualitative study on the use of funds, would have allowed both the government and IDA to collect valuable lessons for government’s future handling of disasters.

Project implementation

 Implementation of other activities included in the government’s reconstruction, and financed by other donors, did suffer because of the absence of reliable beneficiary lists prepared in a timely fashion. For example, it impacted the implementation of the housing reconstruction programs on several islands. To fill this gap, donors should consider giving more active financial support and technical assistance for the preparation of these lists.

 Medium and small contractors may sometimes be better able to deliver in the aftermath of a disaster when large contractors are typically over-extended. Procurement processes should take greater account of the overloading of contractors.

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 Government should consider providing support to medium and small contractors to complete the necessary paperwork to meet the Bank’s requirements as their work was often more satisfactory and timely in instances where they were able to participate in the bidding.

 Governments need to place greater emphasis upon the management of both procurement and financial management functions, even when its resources are stretched by an emergency.

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

(a) Borrower/implementing agencies

(b) Cofinanciers

(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)

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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) 1. Restoration of livelihoods:

1 (a) Safety net cash grants to 5.60 5.50 98 households affected by the tsunami 1 (b) Restoration of Livelihoods 3.00 3.00 100 Program (RLP) 2. Increase school capacity on islands receiving the population 5.00 5.00 100 displaced by the tsunami 3. Implementation Support to the Post-tsunami Reconstruction 0.40 0.50 125 Program.

Total Baseline Cost 14.00 14.00 100 Total Financing Required 14.00 14.00 100

(b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower and other donors 0.00 0.00 International Development 8.40 8.40 100 Association (IDA Credit)

IDA GRANT 5.60 5.60 100

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Annex 2. Outputs by Component

The IDA-funded activities were implemented as follows:

Component 1. Restoration of livelihoods (US$8.5 million). This component was fully and successfully implemented. As implemented, it had four sub-components.

a1). Cash grants to affected households (US$4.0 million). The distribution of cash grants to households seriously affected by the tsunami with full or partial loss of houses and/or household goods was completed as planned. The funds were fully disbursed to 58,370 beneficiaries. Bank missions vetted the implementation of the component and commented on the precision in the identification of beneficiaries by the Ministry of Social Security and the timely distribution of the grants.

a2). Cash grants to agriculturalists (US$1.4 million). Cash grants were also distributed to households whose agricultural operations were affected by the tsunami. The Ministry of Fisheries and Agriculture prepared a list of 5,868 applicants to receive grants under this sub-component. In addition, the Ministry prepared a second (additional) list of beneficiaries, for financing under grant from the Japan Social Development Fund (JSDF) (as described above).

b1). Repair of fishing boats (US$0.1 million). Cash grants were distributed for the restoration and repair of large fishing vessels. The identification of beneficiaries under this component was highly satisfactory, largely because each vessel had a registered number and could be verified for damages prior to granting assistance. The damage assessments were prepared with the help of specialists hired by the FAO. Additional funds provided through the JSDF allowed additional compensation to be paid for other equipment losses by fishermen.

b2). Loans to small businesses (US$3.0 million). Following the initial distributions of cash grants to households, the government requested the Bank approval to use project funds to provide small loans to small businesses so as to reduce the pressures created by the provision of cash grants. It proposed that these loans should be distributed through the Bank of Maldives (BML). The Bank agreed to this proposal and the financing agreement was amended accordingly.

Using these funds, BML issued business loans to 940 tsunami- affected families, mainly for fish processing activities, and some for agriculture and trading purposes. Due process was followed when making the loans, including clearing the beneficiary lists with the National Disaster Management Corporation (NDMC) and using the Bank’s loan officers to formally evaluate the loans. Regrettably, BML’s completion report to the Government noted that the default rate for these loans was 76 % against a current average of 24%4 percent for the rest of its portfolio. The report suggested that because the loans were

4 This is significantly higher than the Bank of Maldives’ historic single digit overdue rate and is a result of the recent economic downturn.

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associated with tsunami relief, beneficiaries were treating the loans as grants. It suggested that further clarification was needed from Government if they were ever to be repaid.

Component 2: Increase school capacity on islands receiving population displaced by the tsunami and rehabilitate damaged schools (US$5.0 million). Thirty-eight schools (listed below) were successfully constructed, rehabilitated, or expanded. All works contracts (comprising 31 small value school upgrading works) were completed prior to the project closing date and all but four before the end of 2008. A technical audit report in mid-2008 concluded that the quality of work was satisfactory overall. However, it was lower than the quality of the EU-funded schools where construction was more intensively supervised by both local and international consultants.

The school age population in the Maldives has been decreasing steadily since 2002 when it peaked at 106,220. This population stood at 97,131 in 2007 and is estimated to be only 73,798 in 2009.5 Meanwhile the GoM has not implemented its school rationalization policy6 or the focus island policy7 discussed at the time of project preparation. While not an issue at this time, as additional buildings have been typically built in crowded multi- session schools.

Component 3: Technical skills for implementing the Post-Tsunami Reconstruction Program (US$0.5 million)

As envisaged, the government/MOFT used this component to finance temporary staff and an expatriate accountant to assist with the management of the TRRF.

5 Data from the Ministry of Education website.

6 Reserving high schools for islands with sufficiently large high school populations.

7 Developing viable (islands) where populations could be shifted from smaller islands.

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Detailed list of school facilities funded through the project

Island School Scope of Work Total Project Project End Date cost (MRf) Hdh.Afeefuddin School Hall (1 Hall, 1 Common room) 6,447,856.03 28-02-2009 HDh.Naivaadhoo School 3 classroom 823,829.45 14-11-2006 HDh.Nellaidhoo School 3 classroom 825,329.45 14-11-2006 Sh.Atoll Education Centre Hall (1 Hall, 1 Common room) 7,441,038.89 12-02-2009 N. School 3 classroom, toilet block 918,733.20 27-11-2006 N. School 3 classroom 762,189.45 27-11-2006 R. School 4 classroom, library, 2 labs, store 4,787,207.01 31-05-2008 room R. Hulhudhuffaaru School 3 classroom, 2 labs, library, Store 3,918,523.10 08-09-2008 room B. School 4 classroom 1,060,080.11 26-12-2006 B. School Boundary Wall 343,939.88 25-03-2007 B. School 4 classroom, toilet block 1,272,289.09 21-12-2006 Lh. Atoll Education Centre Hall (1 Hall, 1 Common room) 6,367,527.31 28-02-2009 K. School 2 classroom, boundary wall 1,098,246.15 18-02-2007 K. School 2 classroom 524,409.29 02-06-2007 K. School 3 classroom 819,449.00 03-08-2007 A.A. Bodu Folhudhoo School 3 classroom, toilet block 1,078,383.47 18-01-2007 A.A. Himandhoo School 3 classroom 768,637.89 29-12-2006 A.A.Mathiveri School 3 classroom 815,692.98 29-12-2006 A.Dh. Kun'burudhoo School 3 classroom 752,519.61 12-05-2006 A.Dh.Atoll School 6 classroom 2 storey building 2,218,509.26 19-01-2008 M. Atoll School Boundary Wall 753,420.50 01-02-2007 M. School 4Classroom hall 1,099,208.95 03-03-2007 M. Maduvvari School 3 classroom, boundary wall 1,207,767.56 31-01-2007 F. School 2 classroom, boundary wall 730,655.84 02-09-2007 Dh. Hulhudheli School 2 classroom 525,487.75 02-09-2007 Dh.Maen'boodhoo School 2 classroom 545,564.85 19-11-2006 Th. Kin'bidhoo School 2 classroom, boundary wall 1,010,506.75 13-02-2007 Th. School 2 classroom 568,567.60 11-05-2006 Th. Madifushi School Boundary Wall 514,554.17 14-01-2007 L. Atoll Education Centre Hall, Library, classrooms, labs 7,374,236.64 30-07-2009 L. School 3 classroom 812,705.05 29-10-2006 L. Isdhoo-Kalaidhoo School 2 classroom 542,888.50 29-10-2006 L. School 2 classroom 532,633.20 26-12-2006 G.A. School 6 classroom 3,688,807.30 31-07-2008 G.A. School 2 classroom 565,867.60 13-11-2006 G.A. School 3 classroom, boundary wall 1,139,590.45 16-01-2007 G.Dh. School 3 classroom, boundary wall 1,479,261.33 16-01-2007 G.Dh. School 3 classroom 776,559.94 16-01-2007

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Annex 3. Economic and Financial Analysis

Not applicable for an emergency project.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Qaiser Khan Lead Human Development Specialist SASHD Laura Kiang Senior Operations Officer SASHN Ghada Youness Counsel LEGMS Rajat Narula Sr. Financial Management Specialist SARFM Manoj Jain Sr. Financial Management Specialist SARFM Deepal Fernando Sr. Procurement Specialist SARPS Thao Le Nguyen Senior Finance Officer LOAG2 Rasmus Heltberg Social Protection Economist SASHD Gertrude Cooper Program Assistant SASHD Shehenaz Abdulla Consultant SACMV Harsha Aturupane Senior Economist SASED Jayshree Balachander Consultant SASHD Deepal Fernando Senior Procurement Specialist SARPS Savinay Grover Financial Management Analyst SARFM Shawkat M.Q. Hasan Senior Procurement Specialist AFTPC Ali Hashim Consultant SASDA Manoj Jain Sr Financial Management Spec. SARFM Krishna Pidatala Senior Operations Officer CITPO Gandham N.V. Ramana Lead Health Specialist AFTHE Richard Scurfield Consultant (ICR) SASHD Kalanidhi Subbarao Consultant SASHD Supul Chamikara Wijesinghe Financial Management Specialist SARFM Miriam Witana Procurement Specialist SARPS

(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 FY05 16 104.56

Total: 16 104.56 Supervision/ICR FY05 11 67.66 FY06 13 70.53 FY07 17 95.56 FY08 10 90.59 FY09 10 61.80 FY10 10 86.60

Total: 71 472.74

Annex 5. Beneficiary Survey Results

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There were no beneficiary surveys.

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Annex 6. Stakeholder Workshop Report and Results

There were no stakeholder reports or workshops.

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

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders

There were no co-financiers for this project.

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Annex 9. List of Supporting Documents

Aide Memoires, 2005 – 2010

Back-to-Office Reports, 2005-2009

Department of Planning, Ministry of Finance and Treasury, Maldives-4 years after the tsunami—progress and remaining gaps, July 2009.

Government of the Maldives, Tsunami: Impact and Recovery (2005)—Joint Needs Assessment, prepared with assistance of the World Bank, Asian Development Bank and the UN System.

Ministry of Planning, Maldives (2006), “Tsunami Impact Assessment 2005”, prepared with assistance of UNDP.

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MAP

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