Project Appraisal Document
Total Page：16
File Type：pdf, Size：1020Kb
Document of The World Bank
FOR OFFICIAL USE ONLY
Report No: 89569-EG
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED GRANT IN THE AMOUNT OF US$ 4 MILLION
FROM THE MIDDLE EAST AND NORTH AFRICA TRANSITION FUND
TO THE ARAB REPUBLIC OF EGYPT
FOR THE
INCLUSIVE REGULATIONS FOR MICROFINANCE PROJECT
January 9, 2018
Finance and Private Sector Development Group Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. THE ARAB REPUBLIC OF EGYPT
Currency and Equivalent Unit of Currency = Egyptian Pound (LE) US$1 = LE 6.96 (As of February 12, 2014)
Fiscal Year July1st – June 30th
ABBREVIATIONS AND ACRONYMS ABA Alexandria Businessmen Association IMF International Monetary Fund AfDB African Development Bank ISDS Integrated Safeguard Data Sheet AFESD Arab Fund for Economic and Social Development ISN Interim Strategy Note BDS Business Development Services IT Information Technology JICA Japan International Cooperation Agency CBE Central Bank of Egypt M&E Monitoring and Evaluation CGAP Consultative Group to Assist the Poor MENA Middle East and North Africa CPI Consumer Price Index MFI Microfinance Institutions DA Designated Account MSEs Micro and Small Enterprises DANIDA Danish International Development Agency MSMEs Micro, Small & Medium Enterprises DFATD Department of Foreign Affairs, Trade, and Development NBFI Non-Bank Financial Institutions DFID Department for International Development NGOs Non-Governmental Organizations DPL Development Policy Loan NIF Neighborhood Investment Facility EBI Egyptian Banking Institute OM Operational Manual EBRD European Bank for Reconstruction and Development ORAF Operational Risk Assessment Framework EFSA Egyptian Financial Supervisory Authority PDO Project Development Objective EIB European Investment Bank PMU Project Management Unit EU European Union PP Procurement Plan FDI Foreign Direct Investment SECO The Swiss Secretariat of Economic Affairs FM Financial Management SFD Social Fund for Development FMS Financial Management Specialist TA Technical Assistance FS Financial Specialist TF Trust Fund FY Fiscal Year USAID United States Agency for International Development GDP Gross Domestic Product VC Venture Capital GIZ Gesellschaft für Internationale Zusammenarbeit GoE Government of Egypt IBRD International Bank for Reconstruction and Development IFC International Finance Corporation IFR Interim Financial Report
Regional Vice President: Inger Andersen Country Director: Hartwig Schafer Sector Director: Loic Chiquier Sector Manager: Simon C. Bell Task Team Leader: Sahar Nasr THE ARAB REPUBLIC OF EGYPT INCLUSIVE REGULATIONS FOR MICROFINANCE PROJECT
TABLE OF CONTENTS Page
ANNEXES Annex 1: Results Framework and Monitoring…………………………...... 23 Annex 2: Detailed Project Description...... 25 Annex 3: Implementation Arrangements...... 28 Annex 4: Operational Risk Assessment Framework...... 33 Annex 5: Implementation Support Plan...... 37 Annex 6: Ongoing Donor CoordinationMapping………………………………………...... 40 .
PAD DATA SHEET THE ARAB REPUBLIC OF EGYPT (P149677) PROJECT APPRAISAL DOCUMENT . MIDDLE EAST AND NORTH AFRICA MNSF1 Report No.: . Basic Information Project ID Lending Instrument EA Category Team Leader (P149677) Investment Project C Sahar Ahmed Nasr Financing Project Implementation Start Date Project Implementation End Date August 1, 2014 June 30, 2018 Expected Effectiveness Date Expected Closing Date August 15, 2014 October 30, 2018 Joint IFC Joint Level Complementary or Interdependent project requiring Yes active coordination Sector Manager Sector Director Country Director Regional Vice President Simon C. Bell Loic Chiquier Hartwig Schafer Inger Andersen . Recipient: Arab Republic of Egypt Responsible Agency: Egyptian Financial Supervisory Authority (EFSA)
Contact: Dr. Sherif Samy Title: Chairman Telephone No.: (+202) 353-45352 Email: [email protected] . Project Financing Data(in USD Million) [] Loan [ X ] Grant [] Other [ ] Credit [ ] Guarantee Total Project Cost: 4 Total Bank Financing: Total Cofinancing: 4 Financing Gap: 0.00
Financing Source Amount(in USD Million) Recipient 0.00 MENA Transition Fund - 4 Total 4 . Expected Disbursements (in USD Million) Fiscal Year 2015 2016 2017 2018 2019 Annual 1.5 1.5 0.5 0.25 0.25 Cumulative 1.5 3 3.5 3.75 4 . Proposed Development Objective(s) The project development objective (PDO) is to strengthen the regulatory and institutional framework of the microfinance sector in Egypt.
. Components Component Name Cost (USD Millions) Developing the legal and regulatory framework for financial 1.5 inclusion Establishing and operationalizing the microfinance unit 1.5 Promoting accountability, governance and consumer 1 protection. . Institutional Data Sector Board Financial Inclusion Practice . Sectors / Climate Change Sector (Maximum 5 and total percent must equal 100) Major Sector Sector percent Adaptation Mitigation Co-benefits Co-benefits percent percent Finance Microfinance 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. . Themes Theme (Maximum 5 and total percent must equal 100) Major theme Theme percent Financial and private sector development Micro, Small and Medium Enterprise support 100 .
Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] respects? . Does the project require any waivers of Bank policies? Yes [ ] No [ X ] Have these been approved by Bank management? Yes [ ] No [ ] Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ] Does the project meet the Regional criteria for readiness for Yes [ X ] No [ ] implementation? . Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X
. Legal Covenants Name Recurrent Due Date Frequency - EFSA shall establish, and thereafter maintain throughout the No later than two period of Project implementation a months after the Project Management Unit (PMU), Effectiveness Date with qualified staff in adequate numbers and with qualifications and experience and terms of reference satisfactory to the World Bank. - EFSA shall hire an independent external auditor to conduct semi- No later than five annual reviews on the Project IFRs, months after the and conduct audits of the Project’s Effectiveness Date annual Financial Statements before submission to the World Bank, and issue a management letter reporting on any internal control and/or accountability issues
Description of Covenant Name Recurrent Due Date Frequency Safeguards Description of Covenant
Name Recurrent Due Date Frequency
Description of Covenant Name Recurrent Due Date Frequency
. Conditions Name Type
Description of Condition Team Composition Bank Staff Name Title Specialization Unit Sahar Nasr Lead Economist Team Leader MNSF1 Mohammed Khaled Senior Operations Officer, IFC Senior Operations Officer CMEAF Rosamund Grady Senior Financial Sector Consumer Protection FFIMS Specialist Laila Abdel Kader Financial Sector Specialist Financial Sector Specialist MNSF1 Ghada Waheed Ismail Financial Sector Development Financial Inclusion MNSF1 Analyst Peter McConaghy Financial Sector Development Microfinance, SME Finance MNSF1 Analyst Badr Kamel Senior Procurement Specialist Senior Procurement Specialist MNAPC Syed I. Ahmed Lead Counsel Lead Counsel LEGAM Mohamed Yehia Senior Financial Management Financial Management MNAFM Specialist Alaa Ahmed Sarhan Senior Environmental Economist Environmental MNSEE Management/Safeguards Chaogang Wang Senior Social Development Senior Social Development MNSSU Specialist Specialist Wael Elshabrawy Financial Management Analyst Financial Management Analyst MNAFM Alaa Abbassi Senior Legal Advisor Microfinance Expert CGAP Ahmed Kouchouk Senior Economist Senior Economist PREM Yara El Abd Research Assistant Financial Inclusion MNSF1 Nehal Helmy Research Assistant Financial Inclusion MNSF1 Rania Zaky Program Assistant Program Assistant MNCEG Marjorie Espiritu Senior Program Assistant Senior Program Assistant MNSF1 Maiada Kassem Finance Officer Finance Officer CTRLA Mohamed Kandil Environmental Specialist Environmental MNSF1 Management/Safeguards . I. STRATEGIC CONTEXT A. Country Context A.1. With the third anniversary of the January 25th revolution, Egypt continues to undergo major political, economic and social transformations. A grassroots campaign led by the Tamarrod youth movement culminated in massive demonstrations on June 30, 2013, with calls for the earlier elected President Morsi to step down. In the wake of these demonstrations, President Morsi was ousted and a new transition period was ushered in. A.2. A new Cabinet was appointed in July 9, 2013, yet after several labor strikes that took place early in 2014, the government unexpectedly announced its resignation in February 2014. The current interim Cabinet was sworn in on March 1, 2014. The security situation since June 30, 2013 has been volatile, due to sporadic confrontations between security forces and supporters of the banned Muslim Brotherhood and its allies. A new Constitution has been put in place, as per a referendum conducted in mid-January 2014 with almost 39 percent turnout and a 98.1 percent approval rate. The presidential election took place in May 2014, with Marshal Sissi elected as a new president for Egypt. Parliamentary elections are expected after the summer of 2014. A.3. The Egyptian economy has been in a deteriorating tailspin since the January 25th revolution. Real GDP growth reached 2.1 percent in June 2013, which is a slight decline from the previous year’s growth of 2.2 percent. The first quarter of 2014 has also seen modest growth of one percent, due to the heightened political unrest. Real growth is expected to average around 2.7 percent to 2.9 percent for the whole fiscal year, provided that the government swiftly implements its two fiscal stimulus packages which amount jointly to a US$ 8.5 billion. The fiscal deficit has surged to 13.7 percent of GDP in June 2013, which increased from the previous year’s deficit of 10.6 percent in June 2012. The deficit declined during the first half of FY14 (June 2013–December 2013) to 4.4 percent of GDP in December 2013 compared to 5.2 percent of GDP during the same period last year. After decreasing sharply in 2012, inflation reached 11.7 percent in December 2013. This was mainly due to the weaker currency (which depreciated by around 15 percent during the first half of 2013) and food inflation that rose 12- 15 percent during the first half of FY14. A.4. Overall economic and political instability has adversely affected investment and the growth of the private sector. Domestic investment fell to 14.2 percent of GDP while foreign direct investment (FDI) has dropped to 1.1 percent of GDP in June 2013. The business environment and the security situation have also discouraged the establishment of new enterprises. Smaller enterprises were disproportionally affected by the deteriorating business climate and the security situation. Sluggish growth, the fiscal deficit, and the drop in investment have had a negative effect on the creation and growth of such enterprises. A.5. The widening fiscal deficit has also led to the crowding out of private sector credit. Banks have opted for purchasing less risky, high-yield Government bonds and Treasury bills that represent 41 percent of the banking system assets, accounting for 58 percent of GDP, leaving very little loanable funds available. Claims on the government-to-total domestic credit have risen to reach 66 percent, while claims on private business sector credit dropped to 25 percent in January 2014, as opposed to 54 percent and 42 percent in June 2012, respectively (Figure 1).
7 A.6. All this has contributed to an increase in unemployment and poverty rates. Unemployment is on the rise, reaching 13.4 percent in Q4 2013, up from 8.9 percent in Q4 2010. Unemployment is especially striking among women and youth (aged 20-24 years old) where unemployment rates were 25 percent and 39 percent, respectively. The poverty rate also increased to 26.3 percent in June 2013 up from 25 percent in June 2011 and 21.6 percent in June 2009. Rural Upper Egypt continues to be the most vulnerable region with a poverty rate of 50 percent in June 2013. Not only has economic growth been well below its potential, it has failed to create sufficient job opportunities. Moreover, growth has not been inclusive, creating grievances and unrest among many segments of society. A.7. Besides the anemic macroeconomic environment, governance and transparency remain pressing issues. Egypt is deteriorating in almost all governance indicators. According to the World Bank Worldwide Governance Indicators1, government effectiveness, regulatory quality, and rule of law rankings have all declined in the past two years. Weak governance, privileged lending, lack of a level playing field, weak regulatory framework and unequal access to markets have contributed to limited economic opportunities, an underdeveloped private sector, and have ultimately hindered job creation. Strengthening governance will be crucial to support the transition and enhance the credibility of public institutions. Giving equal access to markets, and opportunities is essential for restoring citizens` confidence. It is critical to move towards a fairer and more competitive economy that utilizes market mechanisms to create economic opportunity and productive jobs. A.8. In that context, the government announced an ambitious program that primarily targets sustainable growth and social equity, with an emphasis on the development and support of smaller enterprises. Included in a ten-pillar program announced on July 17, 2013 is the development of micro, small and medium enterprises (MSMEs) to create jobs, particularly for women and youth. This focus on MSMEs was made in response to the demand for an inclusive system that promotes shared prosperity. B. Sectoral and Institutional Context A.9. Limited access to finance is one of the main obstacles facing Egyptian entrepreneurs. Egypt’s ranking in the 2014 Doing Business Report2 for ‘Getting Credit’ deteriorated from 82nd in 2013 to 86th in 2014. In Egypt, micro and small enterprises (MSEs) account for more than 98 percent of enterprises, generate more than 85 percent of employment in the non-agriculture private sector, and 40 percent of total employment. A.10. Microenterprises suffer disproportionately from low financial intermediation and are offered limited financial products. Only 11.1 percent of microenterprises have bank loans, as opposed to 38.2 percent of large enterprises (Figure 2). On the supply side, banks are reluctant to lend to microenterprises, especially young and new ones, due to the perceived associated risk. Furthermore, banks continue to lend based on collateral as opposed to cash-flow, narrowing the opportunities for these enterprises that often do not have sufficient collateral. Banks in Egypt effectively serve privileged large well established enterprises. A.11. Access to financial services amongst micro businesses and households in Egypt is very low. According to Findex data3, only 10 percent of adults have an account at a formal financial institution (Figure 3), and fewer than four percent of Egyptian adults took a loan from a
1 Data from: Worldwide Governance Indicators: http://info.worldbank.org/governance/wgi/ 2 Data from: Doing Business: http://www.doingbusiness.org/
8 financial institution in the past year. By way of comparison, on average 18 percent of adults in the Middle East and North Africa (MENA) region and 24 percent of adults in lower middle income countries have accounts at formal financial institutions. Only two percent of the working age population are active microcredit borrowers. In Egypt, financial intermediation is very low for microenterprises. A.12. Microenterprises are clustered in low productivity sectors in Egypt (Figure 4). More than half of microenterprises (56 percent) are small trade businesses (retailers) and workshops. Manufacturing represents only 14 percent of microenterprises. Low access to finance and the absence of a robust ecosystem to develop small firms is behind the concentration of these enterprises in low productivity sectors. Most of the microenterprises provide their products and services to local markets, and very few expand to national and international markets. A.13. Most microenterprises are informal in Egypt, implying they do not often have a business license or tax card. Their employees generally lack health and social insurance. Some microenterprises keep regular books and claim to present them to the tax authority. However, most microenterprises do not comply with the necessary requirements for formal businesses, particularly with respect to business registration and payment of taxes. Costly and cumbersome procedures, as well as a lack of incentive to comply cause microenterprises to operate in a “grey zone” between formality and informality. A.14. Gender disparities are also prevalent, with women facing more challenges in accessing finance than men. Traditions, in some cases, give women little control over their own assets, and in many cases they are unable to use them as collateral, being under the guardianship of a male member of the family. Amongst Egyptian women, only 2.7 percent report taking a loan from a formal financial institution, and two percent report taking a loan from a private lender in the past 12 months.4 In addition, banks request more strict collateral requirements when dealing with women investors, as they are perceived as more risky, particularly due to traditions that place them as the key family members responsible for taking care of the household, leaving them with little time for work. Moreover, cultural barriers and norms limit women’s mobility, constraining their entrepreneurship opportunities. In that context, microfinance is considered an important model for gender-inclusive development. A.15. Although Egypt boasts the largest microfinance market in the Arab world in terms of client outreach, with approximately 1,100,000 borrowers, and LE 263 million (equivalent to US$ 36 million) in loans outstanding, the sector is estimated to reach only eight percent of its potential.5 Some non-government organizations–microfinance institutions (NGOs-MFIs) have in recent years had difficulty weathering the ongoing economic and political transition. This instability has exposed the operational weaknesses of some institutions, and caused a deterioration in portfolio quality. The total number of microfinance borrowers is down 18 percent in 2010 from 2008 (1,100,000 versus 1,300,000). However, there has been some recovery since 2011 when the total number of clients served by the industry reached 991,610. The NGOs-MFIs institutional capacity and managing stagnant growth and investment in the broader economy are impeding the sectors potentiality to expand. 3 Data from: Global Financial Inclusion Database (Global Findex):http://datatopics.worldbank.org/financialinclusion/home/ 4 Data from: Global Financial Inclusion Database (Global Findex): http://datatopics.worldbank.org/financialinclusion/home/ 5 Data from: Microfinance Information Exchange (MIX): www.themix.org/ and Sanabel – the MENA regionmicrofinance network.
9 A.16. At the provider level, a critical challenge for the Egyptian microfinance industry is how to expand product offerings and diversify target markets to promote financial inclusion for a broader section of the population. The country’s largest NGOs-MFIs, including the Alexandria Businessmen Association (ABA), are amongst the most sophisticated in the region. They generally offer a suite of non-financial services to their clients, including financial literacy and business development services (BDS). For example, ABA has expanded from traditional group lending to individual lending, micro insurance, livestock leasing, and is in the process of developing Sharia-compliant products. However, smaller NGOs-MFIs need technical assistance to develop programs that diversify their products, improve operational efficiency and sustainability, and expand their geographic outreach. A.17. New providers are beginning to enter the market for financial services to the poor in Egypt. Egypt Post, under its new leadership, has reinvigorated its commitment to be the “bank for the poor” by providing important savings services, payments and insurance. It is also seeking to expand linkages with NGO MFIs for cash-in and cash-out functions for loan disbursement and collection at its more than 3,000 branches across the country. The two finance companies in Egypt serving the microfinance segment (Reefy and Tanmeyah) have continued to expand operations and have both indicated they are on a more financially sustainable footing than during the period immediately after the revolution. Additionally, non-traditional actors have begun providing financial services to low-income segments of the population. For example, Vodafone, after years of working with regulators to fulfill licensing requirements, has begun offering a virtual wallet product which allows for money transfers and payment services. Other mobile network operators are also active in this space, although outreach remains limited as these services are new to the market. A.18. The overall legal and regulatory environment of the microfinance sector in Egypt suffers from various deficiencies that prevent further expansion. There is no clear supervisory responsibility or framework for the microfinance industry. Commercial banks, which have traditionally focused on serving large corporations and medium to high-income individuals, are supervised by the Central Bank of Egypt (CBE). Some of these commercial banks have begun to downscale and cater to microenterprises but these are limited in number. The low-income individuals are mostly served by NGO-MFIs for credit and are monitored by the Ministry of Social Solidarity. The two finance companies in the market (Reefy and Tanmeyah), currently providing microfinance, operate in a legal grey zone. As a result, the current system suffers from a fragmented set of rules, lack of level playing field, and an inadequate regulatory and supervisory framework. Growth of this sector is still constrained by the lack of an enabling microfinance regulatory and legal framework that is essential for strengthening the sector, encouraging its growth and allowing for further outreach. A.19. In response to operational challenges faced by NGOs-MFIs, efforts have been made to improve the enabling environment for financial intermediation and to strengthen financial infrastructure. The payments system was modernized, in terms of operations, policies, and regulations, creating a more supportive institutional framework. CBE issued a Code of Corporate Governance, enhancing transparency and governance in the banking sector. The first private credit bureau, I- score, was established, improving significantly the information on clients’ creditworthiness. Significant investments have been made to operationalize I-score which has helped significantly in retrieving credit information and enhancing information sharing within
10 the microfinance sector. All these efforts to strengthen the financial infrastructure aim at promoting financial inclusion. A.20. The CBE has formed a steering committee led by the Egyptian Banking Institute (EBI) with the participation of all key stakeholders mandated to develop the National Strategy for Financial Inclusion, aiming at identifying the policies and activities needed to help both private (financial service providers) and public (regulators) actors in playing a more active role in enhancing access and usage of formal financial services both internally and across market players. The Chairman of the Egyptian Financial Supervisory Authority (EFSA), a key member of the steering committee, flagged that strengthening the regulatory and legal framework for the microfinance sector is on top of his reform agenda. A.21. Recognizing the importance of its role as a financial regulator and supervisor, EFSA took the decision to develop the regulations of the microfinance sector. A draft Microfinance Law was prepared by EFSA in consultation with stakeholders to address key regulatory gaps, including allowing commercial companies to engage in microfinance and opening a window for NGO MFIs to establish and own shares in microfinance companies. The World Bank has played a central role in facilitating the development of this law, providing technical advice and facilitating, in partnership with EFSA, in stakeholder consultations with NGO MFIs, finance companies, the Egyptian Microfinance Network, microenterprises, CBE, and the Social Fund for Development (SFD). The draft Microfinance Law was approved by the Cabinet on February 20, 2014. It has been transferred in early March 2014 to the Supreme Counsel to be submitted to the President for its issuance. Once effective, the law will help increase the ability of MFIs to operate sustainably through greater leverage and a diversification of their funding base through both debt and equity, and will put in place an improved framework for risk management, including corporate governance, internal controls and consumer protection. A.22. While the development of a sound regulatory framework has been progressing, additional investments are needed to ensure the sector is positioned for sustainable and responsible long- term development. While the Microfinance Law has been approved by Cabinet, the Executive Regulations, which will address the regulatory and operational requirements required for the purposes of implementing and enforcing the Microfinance Law (e.g. specific issues related to NGO- MFIs transformation, capital adequacy ratios, liquidity management functions, and rules and standards for the conduct of microfinance business and complaints review systems), have yet to be developed. Similarly, supervisory functions within EFSA need to be established which requires recruitment and training of key staff in microfinance supervision. Extensive coordination between existing supervisory entities, including EFSA, CBE and the Ministry of Social Solidarity, is needed. At the provider level, technical assistance is needed to ensure compliance with the regulatory requirements outlined in the new Microfinance Law, as well as to assist NGO-MFIs to transform into microfinance companies. Issues related to responsible growth of microfinance under the new regulatory framework, particularly surrounding consumer protection and sectoral stability, must be addressed. A.23. With the objective of attaining a more inclusive financial system, this proposed Inclusive Regulations for Microfinance Project comes at a particularly opportune time. The proposed project aims at developing and implementing the regulatory and institutional framework necessary to promote the growth and expansion of the microfinance sector in Egypt. This proposed project financed by the Transition Fund will be supported by the World Bank Group (IFC and the Bank), in collaboration with the Saudi Fund for Development, and will complement
11 other efforts in scaling up the microfinance sector in Egypt, and attaining broader outreach with better risk management. C. Alignment with Transition Fund Objective A.24. The proposed project is aligned with the overarching goals of the Transition Fund of strengthening governance and public institutions, fostering sustainable and inclusive growth by developing, and advancing country-owned programs through supporting transformational reforms. Specifically, it encompasses three of the four themes, namely: (i) investing in sustainable growth, which will be achieved by creating a more enabling and conducive business environment, through improving the legal, regulatory, and institutional, framework for microfinance, with the ultimate goal of enhancing access to finance; and spurring productive investment; (ii) enhancing economic governance, which will be achieved by providing support to EFSA in drafting and finalizing the executive regulations of the law, as well as operationalizing these regulations and establishing the supervisory unit that will focus on fit and proper requirements, strong governance rules, transparency, disclosure, consumer protection and internal and external controls; and (iii) inclusive development and job creation, by addressing key challenges confronting microenterprises, and expanding the outreach of services to underserved segments (women and youth), as well as integrate lagging regions. D. Higher Level Objectives to which the Project Contributes A.25. Microfinance is critical to expanding private sector development and addressing economic challenges in Egypt. At the microeconomic level, access and use of appropriate financial services improves household welfare and spurs household enterprise activity, offering greater opportunity and choice to low-income households. Access to financial services can help informal home-based businesses grow into formal micro and small enterprises (MSEs).In that context, this project would contribute to ending extreme poverty. A.26. The proposed project will contribute to transforming the underdeveloped microfinance sector to be more efficient, fair, and transparent, promoting a level playing field. It will enhance the accountability and governance of the Egyptian regulatory system, while improving their access to financial services and products, as well as strengthening consumer protection, with the ultimate objective of sustainable private sector-led growth. The multifaceted project will contribute to leveraging funding for microfinance, and will address critical deficiencies in micro financing in Egypt. A.27. At the same time, the consumer protection and financial literacy initiatives under the project will ensure better and fairer access to information and accountability to financial clients, especially the marginalized and small clients who lack financial knowledge and expertise. In addition, strengthening the institutional framework for the implementation of the microfinance regulation will boost the sector’s performance, encouraging its growth and its outreach to underserved clients and Governorates. A.28. Relationship to World Bank Group Strategy and Interim Strategy Note (ISN). The proposed project contributes to the World Bank Group strategic goals. The project is directly in line with the global initiative recently announced by the World Bank Group President Jim Kim to provide universal financial access around the world by 2020. Extending finance to microenterprises is a key tool to combat poverty for poor households, as well as improving the standards of living of their families. Financial inclusion is an enabler and a catalyst for achieving the Bank Group's goals of ending extreme poverty by 2030 and boosting shared prosperity for
12 the bottom 40 percent of the population in all developing countries. Financial inclusion was recently recognized as a vital development priority by the UN High-Level Panel on the Post- 2015 Development Agenda. A.29. The proposed project’s objective is also aligned with the World Bank and IFC Regional Framework and Strategy for MENA, which evolves in response to the events of the Arab Spring and focuses engagement on financial inclusion, and sustainable private sector-led growth. On the regional front, the project contributes to ensuring economic and social inclusion, strengthening governance, and accelerating sustainable growth and job creation. With average unemployment at 10 percent and youth unemployment at 23 percent, MENA has the colossal task of creating four million jobs a year over the next decade to get on par with the global average unemployment rate. According to the IMF, raising access to finance in the MENA region to the world average could boost per capita GDP growth by between 0.3 and almost one percentage point annually. A.30. The proposed project is also closely aligned with the 2012 Interim Strategy Note (ISN) for Egypt (2012−2014), discussed by the World Bank’s Board of Executive Directors on June 28, 2012. The ISN envisions attaining a level playing field and supporting marginalized and underserved enterprises, by strengthening the legal, regulatory and institutional environment for smaller marginalized firms, which the proposed operation aims to achieve. The project addresses the three pillars of the ISN, namely: (i) Improving economic management through strengthening governance, enhancing transparency, and accountability of the financial system by improving EFSA’s governance structure, as well as its information dissemination mechanisms. Moreover, MFIs will be required to disclose and share credit information, which will ameliorate transparency and accountability. (ii) Creating jobs and unleashing entrepreneurial potential by improving the business environment, and enhancing access to finance so that the private sector can function efficiently, fostering economic opportunity, competition, innovation and entrepreneurship with the objective of achieving sustainable private sector-led growth. The importance of microenterprises for low- income households is critical for managing risks during difficult times, responding to shocks. (iii) Fostering inclusion and ensuring broader financial access for disadvantaged segments of the population—women, and youth, as well as, lagging geographical regions. The project will promote economic inclusion through paying special attention to women and youth, and expanding the network of beneficiaries through reaching out to marginalized regions via promoting innovative mechanisms and tools in the microfinance domain.
II. PROJECT DEVELOPMENT OBJECTIVE A. Project Development Objectives A.31. The project development objective (PDO) would be to strengthen the regulatory and institutional framework of the microfinance sector in Egypt. B. Project Beneficiaries A.32. The direct project beneficiary would primarily be EFSA in that the project will enable the financial authority to: (i) develop the legal and regulatory framework for financial inclusion; (ii) establish and operationalize the microfinance unit; and (iii) promote accountability, governance and consumer protection that can help enhance the financial infrastructure. The
13 project will also benefit MFIs, which would be able to diversify their products and expand their outreach. Microenterprises and households will benefit from greater supply of quality financial services, improved consumer protection mechanisms, and greater financial literacy resources. C. PDO Level Results Indicators A.33.Progress towards achieving the project’s objectives will be measured by a series of quantitative and qualitative indicators at the PDO, and at the intermediate level (Results Framework is outlined in Annex 1). Key results and indicators at the PDO level, are: (i) new regulatory framework effective for MFIs, including NGOs-MFI; (ii) number of MFIs licensed by EFSA under the Microfinance law; (iii) number of NGOs engaged in microfinance activities (reported by the Microfinance NGOs Oversight Board); (iv) number of microfinance beneficiaries under the Microfinance Law, including percentage of female beneficiaries.
III. PROJECT DESCRIPTION A. Project Components A.34.The proposed project comprises of three main components: (i) developing the legal and regulatory framework for microfinance; (ii) establishing and operationalizing the microfinance unit at EFSA; and (iii) promoting accountability, governance and consumer protection. The total cost of the project is US$ 4 million. A.35.Component I: Developing the regulatory framework for microfinance (US$ 1.5 million). This component will support the establishment of a regulatory framework that is conducive to growth and stability of the non-bank financial institutions (NBFIs) in Egypt. Critical to the success of the draft Microfinance Law are the executive regulations that should be robust and comprehensive and provide clear guidelines for NGO MFIs, finance companies, and other market players to easily comply with the new supervisory framework. The new regulations will adopt light prudential requirements, with a focus on fit and proper requirements, strong governance rules, consumer protection (especially transparency, disclosure), and internal and external controls. A.36.The NGO Microfinance Oversight Board, which will be established as stipulated by the Microfinance Law, will play the role of a “sounding board” responsible for the effective supervision and regulation of NGO-MFIs through coordination and cooperation between EFSA (responsible for regulating and supervising microfinance companies licensed by EFSA) and the Ministry of Social Solidarity (responsible for supervising NGO-MFIs which do not have that status) to make sure the same rules and requirements are applied to both microfinance companies and NGO-MFIs, thus creating a level playing field for all service providers in the market. This would also allow microfinance companies to engage in other non-banking financial services in accordance with the EFSA Law No. 10 of 2009 after getting EFSA’s approval. This would not only be encouraging for the microfinance companies who will be able to engage in other financial services besides microcredit, but can also be an incentive to NGO-MFIs to transform to microfinance companies. A.37.Specifically, this component will support EFSA through four main sub-components: (i) developing and finalizing the Executive regulations, and supervision manuals, stipulating the instructions needed to enforce and implement the law and developing the needed rules and standards to be enforced on NGO-MFIs in accordance with the Microfinance Law; (ii) drafting
14 and finalizing the Directives of the NGO Microfinance Oversight Board6, (iii) conducting study tours on legal and regulatory framework for microfinance institutions ; and (iv) providing advisory services to strengthen the regulatory framework for non-bank financial institutions (NBFIs), aiming at enhancing overall financial inclusion in Egypt. This would include addressing in the regulatory challenges faced by EFSA to play an active role in financial inclusion, notably the securities markets, micro insurance, and leasing as well as microfinance. This would promote a more diversified financial system, enhancing competition and better quality services to the clients. A.38. Component II: Establishing and operationalizing the Microfinance Unit at EFSA (US$ 1.5 million). The objective of this component is to ensure that the Microfinance Unit adopts international best practices and develops the capacity necessary to implement the law and associated executive regulations effectively so as to support the growth of the overall microfinance sector in Egypt. It will support EFSA through the provision of technical assistance and advisory services in establishing and equipping the Microfinance Unit, which would be responsible for operationalizing the executive regulations and policy, enforcing rules, ensuring compliance, and supervising MFIs. This will help EFSA to establish appropriate on-site and off- site monitoring systems and procedures, advice on enforcement mechanisms and training on the operationalization of the Microfinance Law and its executive regulations. The IT system will also allow the compilation of sectoral data to monitor macro prudential indicators, which would allow adequate and timely monitoring of the performance and soundness of microfinance sector and NBFIs. The system will also help in identifying financial inclusion barriers created by some financial institutions (such as minimum balance amounts for opening a bank account). A.39. This component comprises of three sub-components: (i) supporting the establishment of the microfinance unit that is specialized and responsible for licensing, monitoring, oversight, inspection and audit, financial reporting, and consumer protection, and complaints. This support will be provided through the provision of advisory services in relation to issues such as advice on the structure, staffing and reporting lines for the Unit, the development of terms of reference (TORs) for the relevant positions (which TORs will define staff members’ roles, qualifications, responsibilities, accountabilities and performance criteria) and advice as to coordination and communication arrangements with other departments in EFSA and other government agencies; (ii) providing capacity building and training of relevant staff, to be equipped to undertake key operational procedures and strategic functions within the Unit. This include conducting training seminars and workshops and study tours to countries that have well developed systems for microfinance regulations and supervision and on the job training; (iii) strengthening the institutional infrastructure, with the required equipment and IT, both software and hardware, aiming at enhancing the data collection from the financial entities, information dissemination, allow for better monitoring and supervision and ensuring compliance, with the objective of improving transparency, disclosure and overall governance. Experts will be hired to support this. These three sub-components are aimed at ensuring the sustainability of the Microfinance Unit through the provision of the required skills and capacity for effective implementation of the Microfinance Law.
A.40.Component III: Promoting accountability, governance and consumer protection (US$ 1 million). This component will support EFSA in enhancing accountability and governance, as well as developing a robust consumer protection capacity within the microfinance industry, and 6 The Oversight Board comprises representatives from the Ministry of Social Solidarity, CBE, EFSA, SFD, General Federation of NGOs, Egyptian Union for Microfinance (to be established), and financial experts especially in the field of microfinance.
15 in developing financial literacy amongst target population groups. The tasks related to consumer protection will be handled by EFSA’s PMU. A.41.This component comprises three sub-components: (i) enhancing consumer protection and financial literacy through providing (a) advice on consumer protection specific supervisory tools that are likely to be required (such as mystery shopping, monitoring of forms of disclosure and advertising materials, consumer forums etc.); (b) advice on content and review of manuals for processes and procedures for consumer protection supervision; (c) advisory inputs/services for the development of transparent, fair and accessible procedures for the complaint resolution function of the new Unit; (d) assistance in designing and implementing financial literacy training materials and programs relevant to customers of MFIs (the relevant programs might be provided by EFSA or the MFIs themselves); and (e) the design of a public awareness campaign about rights and responsibilities under the new Microfinance Law and the supervisory role of EFSA; (ii) conducting study tours and on the job training in countries which have well developed systems for financial consumer protection; and (iii) building the capacity of the Microfinance NGOs Oversight Board through training seminars and workshops. Within this component particular attention will be placed on comprehensive transparency and disclosure requirements and further business conduct rules. A.42.Gender mainstreaming. An overarching goal of the project is to promote gender-inclusive development of the Egyptian microfinance sector. Under component I, a gender specialist will form part of the team drafting the Executive regulations to help ensure gender mainstreaming. For example, the published supervisory guidelines would be cognizant of the need to track and promote female microfinance clients. Similarly, NGOs specializing in female economic participation and entrepreneurship will form part of the Microfinance NGOs Oversight Board. This will help ensure the concerns and priorities of women are taken into account during the drafting of the Executive regulations and during the implementation of the Microfinance Law. A.43. Under component II, capacity building workshops on gender-inclusive financial inclusion and microfinance development will be delivered to EFSA staff, with particular reference to the role of regulatory agencies in the promotion of gender-inclusive development. This is a frontier area of financial sector development (particularly for the MENA region) and one that Egypt can take a leadership role in. Similarly, study tours to countries that have effectively promoted gender inclusive microfinance sectors will be organized under this component. A.44.Under component III, consumer protection initiatives that specifically target women will be developed and implemented. These programs (centering on fair treatment, timely information, and effective recourse) will be structured and delivered in a manner in which women can successfully access and benefit from services provided. These programs will take into account socio-economic and cultural barriers (for example women ownership of assets) that cause women to be treated differently than men by financial institutions and regulators. Program modules will include topics on transparency (key terms, relevant charges), fees and charges, debt collection, consumer awareness, and sales and marketing practices. They will focus on using delivery channels tailored the needs of female clients. A.45.Overall, enhancing financial consumer protection mechanism will ensure that female clients’ rights are protected and that discriminatory practices are eliminated. Furthermore, through promoting a supportive regulatory and institutional framework the project will facilitate women’s access to finance and encourage them to access the formal financial sector. Gender disaggregated data will be prioritized and tracked throughout project implementation,
16 specifically the percentage of women beneficiaries, and the number of consumer protection initiatives targeted specifically to women. B. Project Cost and Financing A.46.The proposed project is an Investment Project Financing in the amount of US$ 4 million, which will be financed through the MENA Transition Fund. The project cost and financing are outlined in Table 1.
Table 1: Project Cost and Financing
Cost by Component Transition Fund Funding (US$) %
Component 1: Developing the legal and regulatory Framework 1,500,000 100 for financial inclusion • Sub-component 1.1: Technical assistance to EFSA in finalizing 250,000 the Microfinance Executive regulations and supervision manuals. • Sub-component 1.2: Technical assistance in forming the NGO 250,000 Oversight Board and drafting and finalizing its Directives • Sub-component 1.3: Conducting study tours on legal and 250,000 regulatory framework for Microfinance Institutions • Sub-component 1.4: Advisory services to strengthen the 750,000 regulatory framework for NBFIs, aiming at enhancing financial inclusion
Component 2: Establishing and operationalizing the 1, 500,000 100 Microfinance Unit at EFSA • Sub-component 2.1: Establishing the Microfinance Unit, and 900,000 capacity building and training of key staff • Sub-component 2.2: Strengthening the institutional 600,000 infrastructure, with the required equipment and IT, both software and hardware.
Component 3: Promoting accountability, governance and 1,000,000 100 consumer protection • Sub-component 3.1: Enhancing Consumer protection, financial 400,000 literacy, and public awareness campaigns • Sub-component 3.2: Conducting study tours 100,000 • Sub-component 3.3: Training and capacity building of the Microfinance Oversight Board 500,000
Total Project Cost 4,000,000
17 C. Analytical Underpinnings and Lessons Learned and Reflected in the Project Design A.47. The project design fully reflects lessons learnt from recent, ongoing, and completed World Bank Group activities, as well as, donor and development partner projects, and international best practice in the microfinance area. This includes, lessons learnt from similar operations in Jordan, India, and other developing and emerging economies. A.48. The design of the project is underpinned by extensive analytical, advisory and diagnostic work undertaken over the past years. The project is informed by analytical documents including Financial Development and Inclusive Growth: Attaining Shared and Sustainable Prosperity in Egypt (2013), which flagged the challenges confronting the Egyptian microfinance sector, including the weak legal and regulatory framework. The project design also benefits from the findings of Egyptian Women Workers and Entrepreneurs: Maximizing Opportunities in the Economic Sphere (2010); and the Opening Doors: Gender Equality and Development in MENA (2013) in identifying the main economic and social obstacles facing women, and means of addressing them. The design of the project especially tapped on the findings of the impact evaluation of the Egyptian Women Leadership in MSEs Project, which was conducted on April, 2013 to evaluate the impact of the project on gender empowerment, job creation, and poverty alleviation through enhancing finance for MSEs. This evaluation highlighted the need to expand the microfinance sector.7 The recent IFC Sub-national Doing Business (2014) flagged the importance to reaching out to the marginalized areas and Governorates, improving their access to finance, which a more developed and diversified financial system would be essential. A.49. Key lessons learned from previous operations are summarized as follows: A.50. Implementing entity’s accountability and ownership is essential for the successful execution of the project. The project’s main counterpart EFSA, is a prominent and credible institution with a competent Board, strong management capacity, market knowledge and a good governance structure, and as such, has been assigned a clear responsibility for project implementation. The new Chairman of EFSA is reform oriented and committed to the financial inclusion agenda. He has been appointed for a four year term promoting sustainability of reforms. A.51. Effective donor coordination is a key requirement to ensure synergies in approach and guidelines and for the success of project implementation. This proposed project is done in partnership between the World Bank, IFC and the Saudi Fund for Development, and will be implemented in coordination with other donors active in microfinance development to take advantage of synergies between different donor-funded activities. During implementation, the team will continue to undertake consultations with donors and development partners active in MSME financing in Egypt to coordinate efforts and better identify the project's value added (AFESD, USAID, DFID, AfDB, EBRD, EIB, GIZ, and EU). A.52. Adequate supervision of the project should include clearly defined and transparent indicators for monitoring the implementation progress and measuring the overall impact. Clear project indicators have been defined in the Results Framework. Monitoring and
7 The analysis relied on more than one methodology to ensure robust results for plausible and applicable policy recommendations to enhance finance to MSEs in Egypt. These methodologies are in-depth interviews with main stakeholders, data analysis of intermediaries (SFD, banks, MFIs and NGOs), and surveys covering more than 400 small and micro enterprises in different Governorates depending on the share of these governorates of the loan. Large Governorates, such as Cairo and Giza; Upper Egypt Governorates, such as Fayioum and Asyut, and Lower Egypt, such as Al-Sharqia, were included and covered in the sample.
18 evaluations will be an important aspect of the project. The regular monitoring indicators will help serve as an early warning system indicating the potential need for any modifications. Most important it will push forward the legal and regulatory reforms, with the clear timeline and the prioritization of tasks. D. Links with other World Bank Group Activities A.53. The proposed project complements on-going World Bank Group activities, ranging from IBRD investment, to advisory services and technical assistance under the Regional World Bank- IFC MENA MSME Facility; IFC advisory services; and the Consultative Group to Assist the Poor (CGAP) technical assistance, as well as, the Gender Development Unit Programs, gender mainstreaming efforts. The Bank is ensuring complementarity between these diverse activities to ensure synergies and effective results on the ground. A.54. Lending. The proposed project will complement the US$ 300 million World Bank- financed Promoting Innovation for Inclusive Financial Access Project for Egypt (P146244), which aims at expanding access to finance for MSE in Egypt, using innovative financing mechanisms, with a special focus on youth and women, as well as underserved regions. A key objective of this project is to expand the microfinance sector. This has been scaled up by a parallel line of credit from the Saudi Fund for Development (US$ 200 million) which is fully dedicated to supporting the microfinance sector. Both these investment loans provide lines of credit to financial intermediaries, including NGOS-MFIs. The proposed project will ensure effective implementation of the lines of credit through developing the legal, regulatory and institutional financial infrastructure to promote the expansion of the microfinance sector. It provides critical non-financial support to ensure the line of credit can be effectively used by MFIs in the sector. A.55. World Bank-IFC MENA Regional MSME Technical Assistance Facility.8 The proposed operation will complement the joint World Bank-IFC MSME Facility, a multi-donor trust fund, which provides technical assistance and advisory services under three pillars, namely: (i) developing the enabling environment for MSMEs; (ii) providing advisory services to financial institutions that serve MSMEs; and (iii) building the capacity of MSMEs through entrepreneur networks, mentoring, and business incubator-type services. This will ensure that adequate capacity and resources are in place through adopting global best practices in microfinance and entrepreneurial skills development. A.56. It is also worth noting that the remaining funds under the Egypt MSME Facility, Pillar I— developing the enabling environment, are not sufficient to finance the extent of legal and regulatory reforms called for under this operation. In addition, being a client-executed operation, this Transition Fund will further complement the Bank and IFC-executed MSME Facility. The Transition Fund will support the drafting of the Executive regulations, and the Directives of the Microfinance NGO Oversight committee, which the Bank and the IFC cannot contribute in drafting through the MSME Facility to avoid any issues of conflict of interest. The proposed Transition Fund will also support EFSA in getting resident advisors and experts to support the establishment of the Microfinance Unit, and the Consumer Protection Department—activities that cannot be financed under the MSME Facility. In addition this project will finance software
8 MENA MSME TA Facility is supported by UKAID (DFID), the Swiss State Secretariat for Economic Affairs (SECO), Foreign Affairs, Trade, and Development, Canada (DFATD), the Japanese International Cooperation Agency (JICA), the Danish International Development Agency (DANIDA).
19 and hardware that cannot be finance by the World Bank Group-executed trust funds. Moreover, a recipient-executed project supports the fostering of home-grown country-led reforms, which will ensure sustainability, ownership, as well as capacity building. A.57. Overall, this operation should be seen as part of a package of parallel assistance that helps in strengthening the legal and regulatory framework and complements the lines of credit provided by the World Bank and the Saudi Fund for Development and other development partners. Such a design is in line with what has been done in other countries and is considered to be a technically-sound all-inclusive package of assistance to address microfinance sector development. The technical assistance provided will complement and not duplicate the activities supported by other donors. E. Collaboration with Development Partners A.58. This project is prepared in collaboration with the Arab and Islamic funds both in terms of financial and technical support, where Egypt is a priority country. The operation is also done in collaboration with other international financial institutions and bilateral donors active in the domain of the Microfinance sector development. A.59. The World Bank’s line of credit has also been scaled up by several other Arab and Islamic funds. This includes the line of credit from the Saudi Fund for Development (US$ 200 million) targeted to the microfinance sector. The Arab Fund for Economic and Social Development (AFESD) is also providing a line of credit, amounting to US$ 50 million as part of the MSME Special Account, that was launched at the Arab Economic and Social Summit held in Kuwait in January 2009.9 In addition, in December 2013 the Khalifa Fund for Enterprise Development of the United Arab of Emirates (UAE) provided parallel financing, amounting to US$ 200 million for MSMEs. The Islamic Bank for Development is also providing a line of credit amounting to US$ 50 million, as well as technical assistance to financial intermediaries with a focus on Sharia’s compliance finance. The proposed Transition Fund would complement these lines of credit by creating an enabling environment for financial inclusion. A.60. The project team has been coordinating and undertaking consultations with other donors and development partners active in Microfinance sector development in Egypt, including Agence Francaise de Development, GIZ, and UNIDO. The Bank has also been working closely with the USAID that is leading the drafting of the National MSME Strategy in Egypt. All this has been done in synergy with the Regional MSME Facility which is supported by DFID, SECO, DANIDA, JICA, and DFATD, which supports financial inclusion. A.61. In response to the political transformations underway in MENA countries, the Deauville Partnership was launched at the G8 Summit in May 2011. The aim is to provide a coordination framework that would help transition countries implement reforms, where MSE development is a key component within the context of the governance pillars. In that context, an SME Policy, Entrepreneurship and Human Capital Development Committee was formed, dedicated to enhancing the role of MSEs in creating jobs, and preparing country-specific action plans, where Egypt was one of the key countries benefiting from such support.
9 This is an initiative led by H.E. Amir of Kuwait to provide US$ 2 billion to support MSMEs development in the Arab countries. The number of participating countries reached 17 by July 2013, where total contribution reached US$ 1.3 billion (with Saudi Arabia and Kuwait being the largest contributors, each US$ 500 million), of which US$ 940 million has been paid out of the total of pledged amount. Loans approved as of July 2013, amount to US$ 333 million through 13 financial intermediaries and apex institutions, known for their active operations in the MSME sector.
20 F. Stakeholders’ Consultation A.62. Consultations were undertaken with stakeholders, comprising the relevant government agencies, including the Ministry of Social Solidarity, Ministry of Trade and Industry and Investment, SFD, Ministry of Finance, CBE, NGO-MFI, microenterprises and other donors that are actively involved in the development of the microfinance sector. Throughout the project preparation phase, EFSA discussed with all relevant stakeholders, the design and details of the proposed project. The consultations with numerous stakeholders will continue throughout project implementation to ensure continued stakeholders buy-in and ownership.
I. IMPLEMENTATION A. Institutional and Implementation Arrangements A.63. The methodology to be adopted by this project will seek to integrate established evidence-based diagnostic work conducted by the World Bank Group—WB and IFC, with a robust stakeholder engagement, and effective coordination with development partners. The project would follow the World Bank guidelines related to procurement, financial management, and social and environmental safeguards. A.64. EFSA is the implementing agency for the project and will be responsible for coordinating and managing the overall project. EFSA was selected as the implementing agency because it is by law the entity responsible for regulating and supervising the non-banking financial institutions (NBFIs) in Egypt. The proposed project will help accelerate its reform program. The project comes at an opportune time where the leadership of EFSA is pushing for transformational and regulatory reforms. A.65. The Project Management Unit (PMU) at EFSA will oversee and manage this project. The PMU mandate will be to implement policies and procedures outlined in this document and it will report directly to the Chairman of EFSA. The PMU will be responsible for all steps regarding procurements procedures. EFSA has experience in World Bank procedures, having previously implemented projects with Bank support. A.66. EFSA has prepared an Operational Manual with guidance from the World Bank, which includes financial management and procurement arrangements and describes the roles and responsibilities for project implementation, the institutional and implementation arrangements, financial management, and safeguards, as well as disbursement and procurement procedures. A.67. The World Bank will be responsible for the provision of implementation support to the project, in partnership with the Saudi Fund for Development, where joint missions will take place to ensure coordination and effective implementation of these activities with the objective of ensuring that the services provided are addressing all institutional and regulatory reforms needed to complement the line of credit to have an impact on the ground. Distribution of responsibilities is done based on expertise, comparative advantage, and previous engagement. However, team members and experts from each institution will contribute and provide support wherever necessary based on required knowledge and expertise. To ensure effective coordination and implementation on the ground, periodic joint supervision missions will be led by the Bank and the Saudi Fund for Development, with the active participation of IFC these would take place at least once every six months. A.68. A robust system to monitor and evaluate (M&E) progress is crucial to the project success, and will be implemented based on the agreed results framework, monitoring arrangements and
21 indicators. A strong M&E framework to track inputs, outputs, and outcomes in a systematic and timely fashion has been discussed, and agreed on with EFSA during the preparation phase. M&E will be based on clearly identified benchmarks and output indicators that feed into the project indicators (Annex 1). B. World Bank—Saudi Fund for Development Partnership. A.69. The project will be conducted in partnership with the Saudi Fund for Development. The technical assistance and advisory services that would be offered under this project is critical for the effective and successful implementation of the lines of credit provided by both the World Bank, and the Saudi Fund for Development. The World Bank-financed Promoting Innovation for Inclusive Financial Access Project (US$ 300 million) is complemented up by a US$ 200 million line of credit from the Saudi Fund for Development that was approved in February 2014. In addition to ensuring effective execution of the lines of credit, the partnership will ensure synergies and consistency in terms of pushing the right policies and regulatory reforms by two major players in the microfinance sector in Egypt. The Saudi Fund for Development is solely targeting microenterprises, using the design, the eligibility criteria and the implementation arrangements of the Bank’s operation. A.70. This project would also strengthen further the strategic partnership between the Bank and the Saudi Fund for Development. The Saudi Fund for Development will bring in their extensive knowledge of the region, especially with regards to Islamic finance regulations. It has also been providing lines of credits to the Arab countries, and has experience in dealing with regulatory bodies, microfinance institutions and financial systems. The Saudi Fund for Development with its competent and experienced leadership has great credibility in Egypt, and is entrusted by the authorities to develop the microfinance sector. The World Bank will play a coordinator role, to ensure the most effective use of resources, prudent allocation of funds that are not distortive to the market, tapping on the comparative advantage and expertise of the different institutions and international best practices. C. Sustainability A.71. Key elements in the sustainability of the proposed project are the high quality of EFSA in carrying out the project, the Government’s strong commitment to sound financial policy and increasing access to finance reflected in making MSMEs development a priority in the reform program, and the commitment to reform and improve the legal and institutional capacity of the microfinance sector in Egypt. A.72. Project sustainability will be facilitated by the strong partnership that has been established between the World Bank Group and the Egyptian authorities over the past years through an integrated work program, reflected in an effective policy dialogue, analytical work, technical assistance, and key operations. The World Bank Group and the Saudi Fund for Development have had a strong and professional policy dialogue with EFSA, where commitment to financial sector reform was evident. Moreover, the Bank and IFC will provide technical assistance to the EFSA through the MENA TA Facility leading to enhancing the outcome and the impact of the proposed project.
II. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Risk Rating Risk Rating
22 Project Stakeholder Risks Moderate Project Risks Low Stakeholder Risk Moderate Design Low Social and Environmental Low Program and Donor Moderate Delivery Monitoring and Sustainability Moderate Implementing Agency (IA) Risks (including Fiduciary Risks) Capacity Low Governance Moderate Overall Preparation Risk Moderate Overall Implementation Risk Moderate
B. Overall Risk Rating Explanation A.73. The operation could be confronted with various risks with regards to stakeholder involvement level, operating environment, implementation, and sustainability. These risks were carefully analyzed and mitigation measures were drafted. The overall project risk is rated as moderate, and will not have major implications on the project achieving results, taking into account the mitigating measures, which are detailed in the Operational Risk Assessment Framework (ORAF) in Annex 4. A.74. Project stakeholder risks include principal risks that could come from a delay or reversal of policy commitment. Implementing agency risks, include insufficient capacity to implement the project that may cause delays. An important risk is the lack of sufficient funding to maintain the required human capacity once the grant closes. This will be mitigated through ensuring that EFSA will raise sufficient funds to cover its institutional and human capacity to establish and maintain s sustainability. A.75. Project risks include risks associated with project design, such as the risk of lack of expertise on relevant technical subjects and time needed to digest new concepts, and reaching consensus of changes. These risks may delay the project implementation. These risks are mitigated through the focused project design and the duration of the project (four years), which allows for sufficient time for effective and smooth implementation. There are no major social or environmental concerns because the proposed project activities are limited to advisory services and technical assistance. This project is a Category C. Means of mitigating these risks are outlined in Annex 4.
III. APPRAISAL SUMMARY A. Economic and Financial Analyses A.76. Project Development Impact. The proposed operation will foster a more prudent legal, institutional and regulatory framework to lend to microenterprises in Egypt. The project will provide necessary support to EFSA on the issuance, enforcement and implementation of the Microfinance Law and its Executive regulations based on international best practice. This will help ensure an adequate regulatory framework and help prepare the sector for expansion and further outreach to underserved communities across Egypt. As EFSA is not yet institutionally prepared for implementation of the Microfinance Law, technical assistance will also be provided to ensure effective implementation and enforcement of the law through establishing and providing capacity building and training to the EFSA staff to enable them to ensure compliance
23 of the Law. A.77. This project will also be assisting EFSA in providing support and capacity building to NGOs interested in transforming into microfinance companies under the new law, which requires, among other things, legal and accounting adjustments, in addition to building consensus and synergy among the various market players on the best approach to help the sector expand and grow. Consumer protection will ensure better and fairer access to information and accountability to financial clients, especially for poor and vulnerable clients who lack robust financial knowledge and expertise. A.78. Overall, strengthening the regulatory and institutional framework for the microfinance sector will promote its expansion and its growth in a sustainable way. There will be substantial benefits for clients, providers, and public authorities to regulate and oversee all similar financial activities under a consistent rather than fragmented set of rules. For example, top-performing microcredit NGOs should typically be able to transform, as they grow and need to raise more capital. The new regulations will have a positive impact on the soundness of MFIs, and their ability to diversify and deepen their funding sources and on-lend to microenterprises. This will also increase the numbers of MFIs and their client base, which will contribute in alleviating poverty and inequality, particularly in underdeveloped Governorates and amongst women and youth. A.79. Value Added of Bank’s Support. The World Bank Group will bring forward its cross country experience and regional knowledge, as well as international best practices. There has been extensive work done in the area of MSME development, ranging from IBRD policy lending, to advisory services and technical assistance under the World Bank-IFC MENA MSME Facility, as well as the work done by the IFC technical support across a number of key priority areas to this project. IFC’s extensive experience in supporting reform initiatives and their links to a wide network of international practitioners is key in supporting EFSA as part of the collaboration on this initiative. A.80. A major value added of this project is that it will complement the lines of credit for microfinance, and help leverage parallel financing from other development partners, especially from the GCC countries that provided significant financial support to Egypt during the transition period. The technical assistance provided through this project will tap on the bank’s international experience and bring industry-leading knowledge to EFSA and key project partners. C. Technical Analysis A.81. Setting the legal and regulatory framework that is conducive to growth and stability of the microfinance sector would also allow microfinance companies to engage in other non- banking financial services in accordance with the EFSA Law No. 10 of 2009 after getting EFSA’s approval. Establishing and operationalizing the Microfinance Unit at EFSA will ensure that the microfinance unit adopts international best practices and develops the capacity necessary to implement the law and associated executive regulations, supporting the growth of the microfinance sector in Egypt. It will strengthen the institutional infrastructure, which would enhance the information dissemination mechanisms internally and externally aiming at improving the governance structure and transparency. Support to EFSA in enhancing accountability and governance, and developing a robust consumer protection capacity within the industry, will center on fair treatment, transparency, and effective recourse.
24 D. Financial Management A.82. The EFSA capacity was assessed and found satisfactory to conduct the FM aspects of the project including the accounting, reporting and project external audit arrangements. The PMU, will be located at EFSA, and will be mandated to follow up on project activities. A Project Manager will be assigned the PMU and an agreement has been reached with the EFSA to assign a Financial Management Specialist and an Accountant (from EFSA) as part of the PMU. The selected staff will possess adequate experience to conduct the project activities. A.83. EFSA has a previous experience in implementing the Bank’s project namely the “Enhancing Capital Market Authority Monitoring Capacity (P105337- TF90813)”. The project’s overall outcome performance was rated as satisfactory both for the Bank and recipient performance. The relevance, efficacy and outcome performance of the Grant as a whole were rated as Satisfactory. A.84. A Financial Management Manual of procedures which is a part of the Operation Manual of Procedures, defines the controls and the flow of information, including the auditing arrangements under the project. Given the straightforward nature and the relatively small size of the Grant, the Project, through the PMU, will issue on a semi-annual basis, interim un-audited financial reports (IFRs). These reports will reflect the project sources and uses of funds, contract expenditures, and uses of funds by project component, and will be submitted to the Bank within 45 days following the end of each semester, starting from the semester where the first disbursement from the grant takes place. The Financial Management Specialist at the PMU will be responsible for the preparation of the IFRs and sending them on a timely basis to the World Bank. A.85. To ensure that funds are readily available for Project implementation, a US Dollar Designated Account (DA) will be opened and operated by the EFSA. The account will be opened at bank acceptable to the Bank. An independent external auditor will be hired to audit, on an annual basis, the Project financial statements and payments made on SOE basis. To successfully implement the FM arrangements for the project, the FM Manual, which is a part of the Operation Manual of Procedures, has been finalized prior to Negotiations. This Manual will define the FM and Disbursement procedures under the project. An external auditor must be contracted within three months of Project effectiveness. The TORs for the auditor, as well as the selected auditor should be acceptable to the Bank. E. Procurement A.86. Procurement of Goods and Non-Consulting Services shall be carried out in accordance with the World Bank “Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011. For the selection of consultants, the World Bank “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011 shall be used. Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised January 2011, shall apply to the Project. A.87. The overall responsibility for Project procurement will rest with the PMU, which will act as the World Bank's main counterpart for all procurement aspects of the Project. A PMU will be established within EFSA and will be composed of EFSA staff, and consultants in various fields, to manage the overall implementation of the Project. The PMU will manage the procurement
25 process and will be responsible for contract management. A.88. An Assessment of EFSA Procurement Capacity (PCA) was carried out during project preparation. It concluded that EFSA has qualified procurement staff with experience in National Competitive Bidding and Shopping procedures in accordance with Egypt Public Procurement Law no. 89/98, however, EFSA staff have limited experience in Selection of Consultants and Bidding Documents in languages other than Arabic. Also, the PCA noted that EFSA staff have not been previously exposed to International Finance Institutions (including World Bank) procurement procedures. Given the nature of this Project which requires Selection of Consultants and issuance of an International Competitive Bidding for IT Equipment and Software under Component 2, this may present a potential challenge that could delay Project procurement and implementation. A.89. To ensure efficient implementation of Procurement under the Project, the detailed responsibilities and procedures of the procurement related activities are clearly defined in the Project Operations Manual (POM), which outlines the processing steps for the various procurement/selection methods and for contract administration. Training on procurement and contract management will be provided to the staff of the PMU and designated officials of EFSA. The TORs for the critical consultancy assignments, to be implemented during the first 18 months of Project implementation, were prepared and submitted for Bank’s review; and these were cleared during appraisal. A.90. The World Bank’s Procurement Prior Review (PPR) thresholds were set based on the bases of existing procurement capacity and identified procurement risks. The first three activities for Procurement of Goods and Selection of Consultants will be subject to PPR. In addition to PPR, the World Bank will carry out four Procurement Implementation Support Missions during the first year and at least two per year for the following years during which support to the PMU and follow up of procurement matters will be maintained. A.91. A Procurement Plan (PP) for the first 18 months of project implementation was prepared by EFSA and agreed with the Bank. Procurement packages planned during the first 18 months of project implementation are reflected in Annex 3. A.92. The Residual Procurement Risk rating for the project is “Moderate”. D. Social and Environmental Safeguards A.93. The proposed project is a Category C, as it is likely to have no adverse environmental impacts. The project will not finance any civil works. Thus, the Bank OP 4.01 on Environmental Assessment does not apply. If a need arises during implementation for the financing of goods or any civil works, the Bank may reassess the application of OP 4.01 and require further environmental assessment. A.94. The Bank’s OP 4.12 policy on Involuntary Resettlement and Land Acquisition does not apply. The project will not entail any investments that will trigger the policy since the project components are focused on developing the legal and regulatory framework for financial inclusion; establishing and operationalizing the Microfinance Unit at EFSA; and promoting accountability, governance and consumer protection. The total cost of the project is US$ 4 million. This project does not include civil works, relocation of populations, impacts on livelihoods nor restriction of access to resources. However, social impacts are likely to be positive. Project activities of technical assistance, capacity building, and study tours will
26 enhance individuals, and institutional reforms will support small private sector entities. A.95. No environmental and social safeguards instruments other than the Integrated Safeguards Data Sheet (ISDS) need to be prepared for this project.
27 ANNEX 1 RESULTS FRAMEWORK AND MONITORING
PROJECT DEVELOPMENT OBJECTIVE: The project development objective (PDO) is to strengthen the regulatory and institutional framework of the microfinance sector in Egypt
Responsibili Data Source/ C Cumulative Target Values Frequency ty for Data o Unit of Methodology PDO Level Results Indicators Baseline Collection r Measure e YR 1 YR 2 YR 3 YR 4
New regulatory framework effective for MFIs, including NGOs- Yes/No No No Yes Yes Yes Annual EFSA EFSA MFIs
Number of MFIs licensed by EFSA under the Microfinance Law Number 0 2 4 6 10 Annual EFSA EFSA
Number of NGOs engaged in microfinance activities (reported by Number 0 3 7 10 14 Annual EFSA EFSA the Microfinance NGOs Oversight Board)
Number of microfinance beneficiaries under the Microfinance Law Number 0 5,000 10,000 15,000 20,000 Annual EFSA EFSA
Female MFI beneficiaries of microfinance loans Percentage 0 25 27 30 35 Annual EFSA EFSA
INTERMEDIATE RESULTS
Component I: Developing the Legal and Regulatory Framework for Microfinance
Issuance of the Microfinance Executive Regulations by EFSA Yes/No No Yes Yes Yes Yes Annual EFSA EFSA
Frequency of meetings of the Microfinance NGOs Oversight Board Number 0 2 6 12 16 Annual EFSA EFSA
Component II: Establishing and Operationalizing the Microfinance Unit at EFSA
Microfinance Unit established and operational at EFSA Yes/No No Yes Yes Yes Yes Annual EFSA EFSA
Number of staff of MFIs trained Number 0 3 6 12 16 Annual EFSA EFSA
Microfinance sector reports disclosed by EFSA Number 0 2 6 12 16 Quarter EFSA EFSA
Number of training programs for Microfinance Unit staff Number 0 3 8 11 13 Annual EFSA EFSA
Component III: Promoting accountability, governance and consumer protection
28 Number of staff and clients trained—workshops, study tours, and Number 0 2 6 10 14 Annual EFSA EFSA capacity building events
Number of awareness and consumer protection initiatives launched Number 0 2 6 12 16 Annual EFSA EFSA and implemented by EFSA
29 ANNEX 2
DETAILED PROJECT DESCRIPTION
A.1. The proposed project comprises of three main components: (i) developing the legal and regulatory framework for microfinance; (ii) establishing and operationalizing the microfinance unit at EFSA; and (iii) promoting accountability, governance and consumer protection. The total cost of the project is US$ 4 million. A.2. Component I: Developing the regulatory framework for microfinance (US$ 1.5 million). This component will support the establishment of a regulatory framework that is conducive to growth and stability of the non-bank financial institutions (NBFIs) in Egypt. Critical to the success of the draft Microfinance Law are the executive regulations that should be robust and comprehensive and provide clear guidelines for NGO MFIs, finance companies, and other market players to easily comply with the new supervisory framework. The new regulations will adopt light prudential requirements, with a focus on fit and proper requirements, strong governance rules, consumer protection (especially transparency, disclosure), and internal and external controls. A.3. The NGO Microfinance Oversight Board, which will be established as stipulated by the microfinance Law, will play the role of a “sounding board” responsible for the effective supervision and regulation of NGO-MFIs through coordination and cooperation between EFSA (responsible for regulating and supervising microfinance companies licensed by EFSA) and the Ministry of Social Solidarity (responsible for supervising NGO-MFIs which do not have that status) to make sure the same rules and requirements are applied to both microfinance companies and NGO-MFIs, thus creating a level playing field for all service providers in the market. This would also allow microfinance companies to engage in other non-banking financial services in accordance with the EFSA Law No. 10 of 2009 after getting EFSA’s approval. This would not only be encouraging for the microfinance companies who will be able to engage in other financial services besides microcredit, but can also be an incentive to NGO- MFIs to transform to microfinance companies. A.4. Specifically, this component will support EFSA through four main sub-components: (i) developing and finalizing the Executive regulations, and supervision manuals, stipulating the instructions needed to enforce and implement the law and developing the needed rules and standards to be enforced on NGO-MFIs in accordance with the Microfinance Law; (ii) drafting and finalizing the Directives of the NGO Microfinance Oversight Board10, (iii) conducting study tours on legal and regulatory framework for microfinance institutions ; and (iv) providing advisory services to strengthen the regulatory framework for non-bank financial institutions (NBFIs), aiming at enhancing overall financial inclusion in Egypt. This would include addressing in the regulatory challenges faced by EFSA to play an active role in financial inclusion, notably the securities markets, micro insurance, and leasing as well as microfinance. This would promote a more diversified financial system, enhancing competition and better quality services to the clients. A.5. Component II: Establishing and operationalizing the Microfinance Unit at EFSA (US$ 1.5 million). The objective of this component is to ensure that the microfinance unit adopts international best practices and develops the capacity necessary to implement the law
10 The Oversight Board comprises representatives from the Ministry of Social Solidarity, CBE, EFSA, SFD, General Federation of NGOs, Egyptian Union for Microfinance (to be established), and financial experts especially in the field of microfinance. 30 and associated executive regulations effectively as to support the growth of the overall microfinance sector in Egypt. It will support EFSA through the provision of technical assistance and advisory services in establishing and equipping the Microfinance Unit, which would be responsible for operationalizing the executive regulations and policy, enforcing rules, ensuring compliance, and supervising MFIs. This will help EFSA to establish appropriate on-site and off-site monitoring systems and procedures, advice on enforcement mechanisms and training on the operationalization of the Microfinance Law and its executive regulations. The IT system will also allow the compilation of sectoral data to monitor macro prudential indicators, which would allow adequate and timely monitoring of the performance and soundness of microfinance sector and NBFIs. The system will also help in identifying financial inclusion barriers created by some financial institutions (such as minimum balance amounts for opening a bank account). A.6. This component comprises of three sub-components: (i) supporting the establishment of the microfinance unit that is specialized and responsible for licensing, monitoring, oversight, inspection and audit, financial reporting, and consumer protection, and complaints. This support will be provided through the provision of advisory services in relation to issues such as advice on the structure, staffing and reporting lines for the Unit, the development of terms of reference (TORs) for the relevant positions (which TORs will define staff members’ roles, qualifications, responsibilities, accountabilities and performance criteria) and advice as to coordination and communication arrangements with other departments in EFSA and other government agencies; (ii) providing capacity building and training of relevant staff, to be equipped to undertake key operational procedures and strategic functions within the Unit. This include conducting training seminars and workshops and study tours to countries that have well developed systems for microfinance regulations and supervision and on the job training; (iii) strengthening the institutional infrastructure, with the required equipment and IT, both software and hardware, aiming at enhancing the data collection from the financial entities, information dissemination, allow for better monitoring and supervision and ensuring compliance, with the objective of improving transparency, disclosure and overall governance. Experts will be hired to support this. These three sub-components are aimed at ensuring the sustainability of the Microfinance Unit through the provision of the required skills and capacity for effective implementation of the Microfinance Law.
A.7. Component III: Promoting accountability, governance and consumer protection (US$ 1 million). This component will support EFSA in enhancing accountability and governance, as well as developing a robust consumer protection capacity within the microfinance industry, and in developing financial literacy amongst target population groups. A separate division will be solely responsible for consumer protection. A.8. This component comprises three sub-components: (i) enhancing consumer protection and financial literacy through (a) advice as to the consumer protection specific supervisory tools that are likely to be required (such as mystery shopping, monitoring of forms of disclosure and advertising materials, consumer forums etc.); (b) advice on content, and review, of manuals for processes and procedures for consumer protection supervision; (c) advisory inputs/services for the development of transparent, fair and accessible procedures for the complaint resolution function of the new Unit; (d) assistance in designing and implementing financial literacy training materials and programs relevant to customers of MFIs (the relevant programs might be provided by EFSA or the MFIs themselves); and (e) the design of a public awareness campaign about rights and responsibilities under the new Microfinance Law and the supervisory role of EFSA; (ii) conducting study tours and on the job training in countries which have well
31 developed systems for financial consumer protection; and (iii) building the capacity of the Microfinance NGOs Oversight Board through training seminars and workshops. Within this component particular attention will be placed on comprehensive transparency and disclosure requirements and further business conduct rules. A.9. Gender mainstreaming. An overarching goal of the project is to promote gender-inclusive development of the Egyptian microfinance sector. Under component I, a gender specialist will form part of the team drafting the Executive regulations to help ensure gender mainstreaming. For example, the published supervisory guidelines would be cognizant of the need to track and promote female microfinance clients. Similarly, NGOs specializing in female economic participation and entrepreneurship will form part of the Microfinance NGOs Oversight Board. This will help ensure the concerns and priorities of women are taken into account during the drafting of the Executive regulations and during the implementation of the Microfinance Law. This is particularly critical given the ongoing political and economic volatility in Egypt and the recent prioritization of citizenship feedback in Egyptian public policy. A.10. Under component II, capacity building workshops on gender-inclusive financial inclusion and microfinance development will be delivered to EFSA staff, with particular reference to the role of regulatory agencies in the promotion of gender-inclusive development. This is a frontier area of financial sector development (particularly for the MENA region) and one that Egypt can take a leadership role in. Similarly, study tours to countries that have effectively promoted gender inclusive microfinance sectors will be organized under this component. A.11. Under component III, consumer protection initiatives that specifically target women will be developed and implemented. These programs (centering on fair treatment, timely information, and effective recourse) will be structured and delivered in a manner in which women can successfully access and benefit from services provided. These programs will take into account socio-economic and cultural barriers (for example women ownership of assets) that cause women to be treated differently than men by financial institutions and regulators. Program modules will include topics on transparency (key terms, relevant charges), fees and charges, debt collection, consumer awareness, and sales and marketing practices. They will focus on using delivery channels tailored the needs of female clients. A.12. Overall, enhancing financial consumer protection mechanism will ensure that female clients’ rights are protected and that discriminatory practices are eliminated. Furthermore, through promoting a supportive regulatory and institutional framework the project will facilitate women’s access to finance and encourage them to access the formal financial sector. Gender disaggregated data will be prioritized and tracked throughout project implementation, specifically the percentage of women beneficiaries, and the number of consumer protection initiatives targeted specifically to women.
32 ANNEX 3
IMPLEMENTATION ARRANGEMENTS
A. IMPLEMENTING AGENCY A.1. EFSA is the entity responsible for regulating the non-bank financial service industry in Egypt including, capital markets, derivative markets, commodities, insurance, mortgage finance, financial leasing, factoring and securitization. EFSA will be the main counterpart, responsible for coordinating and managing the overall project. The new Constitution issued on January18, 2014, has made EFSA an independent regulatory and supervisory entity, reporting directly to the President. In terms of legal and regulatory reforms, the Minister of Investment is the responsible Minister for presenting the required legal reform to the Cabinet, and ensuring its ratification. A.2. EFSA, under the leadership of its new Chairman appointed in August 2013. To ensure his independence, the Chairman was appointed for a four-year term which will ensure sustainability and continuity of the reforms. EFSA currently has a strong professional cadre at the Board, the senior management and officer levels. EFSA was the main counterpart of a number of World Bank projects (three Financial Sector Reform DPLs, amounting to US$ 1.5 billion). A.3. Arrangements will be put in place to ensure adequate project implementation support, covering fiduciary and safeguards aspects, with semi-annual implementation support missions. The implementation support team will draw on expertise from the Bank as well as, external experts, where necessary.
B. FINANCIAL MANAGEMENT A.4. A financial management assessment of the implementing agency was conducted and it was found that the implementing agency has previous experience in managing World Bank funds; during the preparation and implementation of a previous project “Enhancing Capital Market Authority Monitoring Capacity (P105337- TF90813)” that is completed. The assessment concluded that the EFSA financial management arrangements satisfied the minimum requirements. A.5. EFSA is a public Authority, having a legal status, established in accordance to Law 10 of 2009. EFSA is responsible for supervising and regulating non-banking financial markets and instruments, including the Capital Market, the Stock Exchange, and all activities related to Insurance Services, Mortgage Finance, Financial Leasing, Factoring and Securitization. EFSA's role is to regulate the market and ensure its stability and competitiveness to attract more local and foreign investments “The mandate of the Authority also includes limiting inconsistency risks and addressing problems arising from applying different supervisory rules". A.6. Also, EFSA is considered the concerned administrative body entitled to apply the Financial Leasing provisions promulgated by Law no. 95 of 1995. A.7. Risk Assessment and Mitigation:
Inherent Risks Risk Before Mitigating Measures After MM MM 33 - Designate FM staff from - The current staffing within EFSA to the PMU, structure of EFSA is not preferably with previous designed to accommodate experience in donors the nature of the project S M financed activities, to be activities and the Bank responsible for the TF fiduciary requirements. recording and reporting.
Inherent Risk Before MM S Inherent Risk after MM M Control Risks Budgeting - The PMU will prepare a - Budgeting capacity to plan, comprehensive budget for execute and monitor the all project activities. The grant funds. projected disbursements S will be revised on a Semi- M annual basis and reported in the corresponding Semi- annual IFR. Internal Control - Separate filing will be made for the TF proceeds and expenditures supporting documents and all original supporting documents will be maintained in a traceable - Adequacy of internal and organized manner by the TF accountant within control structure to enable the EFSA Finance segregation of duties and Department. efficient management of the S M grant funds. - A financial manual will be prepared before effectiveness by the Financial and Administrative Manger depicting the controls that will be applied over the use of funds
Flow of funds - The PMU will open a designated account in a bank acceptable to the - Grant funds are not World Bank for the sole purpose of managing the segregated resulting in lack grant activities. of traceability of World S M Reconciliation between the Bank funds. Grant financial records and the designated account will be prepared on a monthly basis.
Accounting and Reporting
34 - All project-related transactions would be recorded in the ORACLE automated books of - Availability of timely and accounts and supporting documents will be kept at sufficiently detailed the PMU level (audit trail). financial information with S M the current accounting - Funds received would be system in place. identified separately and reflected in the project accounts, semi-annual IFR, and annual Financial Statements.
Audit - A private external auditor acceptable to the Bank will be hired by the EFSA to conduct review of the project’s semi-annual IFRs and audit of the project’s - The project annual reports annual Financial will have to be audited in Statements. accordance with the World S M Bank policies. - Also the independent external auditor will be required to issue a Management Letter reporting on any significant internal control and/or accountability issues.
Control Risk Before MM S Control Risk after MM M
A.8. Staffing: The project will be managed by a Project Management Unit (PMU) which will be established within EFSA and will have overall responsibility for the project’s financial management function for all components. The financial management and accounting of the project will be composed of two staff (both appointed from EFSA), Financial Management Specialist (FMS) and an Accountant with clear responsibilities as described in the financial procedures manual which was prepared by the PMU. The Financial Management Specialist will be responsible for the review of the Accountant recording of journal entries in the accounting system, coordination in regard to financial matters with Central Department for Financial and Administration Affairs in EFSA, reviewing the Withdrawal Applications (WAs) in addition to reporting on the financial performance of the Project to the World Bank. The Accountant will be responsible for the day to day transactions including recording the journal entries in the accounting system. Also, the Accountant will be responsible for preparing the Withdrawal applications, submitted to the World Bank. A.9. Accounting and Record Keeping: EFSA utilizes ORACLE system for recording and reporting purposes which is capable of generating the semiannual IFRs and annual Financial Statements which will be required under the Grant Agreement. Also, it permits segregation of duties among different users. A.10. The format and content of the project reports was shared and agreed with EFSA. Aunique code on the ORACLE system will be created for the sole purpose of recording and reporting the project’s financial activities. This system should allow the generation of the overall project
35 financial reports on a timely basis. A.11. The FM Team prepared and delivered to EFSA an IFR Excel Template which includes sample i) Sources and Uses of Funds, ii) Disbursements by component, iii) Bank Reconciliations and iv) Cash Forecast. Also, it was agreed with EFSA that the semi-annual IFR package will include reporting on the commitments established by the PMU i.e. (i) Commitments Value, (ii) Disbursed Amount and (iii) Committed not yet Paid Amount A.12. Flow of funds: A designated account (DA) will be opened in a bank acceptable to the World Bank where an advance will be made. The DA will be maintained by the assigned accountant within the PMU. Replenishments will be made through Withdrawal Applications (WAs) which will be signed by the authorized signatories communicated officially to the Bank. A.13. Internal Controls and filing: Separate filing will be made for the TF proceeds and expenditures supporting documents and all original supporting documents will be maintained in a traceable and organized manner by the Grant FM Specialist. A.14. The EFSA developed an Operational Manual which includes the Internal Controls and a Financial Management Chapter. This manual will aim at standardizing the project activities and assist PMU employees in consistently implementing control procedures. For fixed Assets to be purchased, the FM Specialist will establish a Fixed Asset Register that is intended to improve accuracy of the accounting records for fixed assets and improved control over each asset (location, custodian, etc.). A.15. Reporting and Auditing: The EFSA will hire the project’s external auditor within three months after project effectiveness. The external auditor will conduct Semi-annual reviews on the project IFRs and audit of the project’s annual Financial Statements before submission to the Bank. (i) Semi-annual IFRs. The format and content of the IFR, which will be produced 45 days from each semester closing date, were discussed to include the receipts and expenditures of the Grant funds by component and category as well as the coming 6 months disbursements forecast. Also, the IFRs will include a detailed reconciliation of the DA receipts and disbursements. (ii)Audited FS. The audit of the grant will be conducted by independent private auditor and will cover the grant’s sources and uses of funds, reconciliation and use of the DA and will be submitted to the Bank within six months after the closing date of each fiscal year.
C. PROCUREMENT ARRANGEMENTS A.16. Procurement for the Project shall be carried out in accordance with the World Bank “Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011, for Goods and Non-Consulting Services, the World Bank “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011, for Consultants’ Services, the accompanying standard bidding documents/standard request for proposal and the Grant Agreement. Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011, shall also apply to the project. A.17. The overall responsibility for Project procurement will rest with the PMU, which will act as the World Bank main counterpart for all procurement aspects of the Project. A PMU will be established within EFSA and will be composed of EFSA Staff and consultants in various fields,
36 to manage the overall implementation of the Project. The PMU will manage the procurement process in all steps of the procurement process: preparation of BDs/TORs/RFPs, bid/proposal opening, bid/proposal evaluation, contract negotiations and contract award. Further, the PMU, will also be responsible for contract management including the review and approval of consultants’ deliverables and the receipt/inspection and acceptance of goods, and for the release of funds to the consultants/suppliers in accordance with the signed contracts. A.18. An Assessment of EFSA Procurement Capacity (PCA) was carried out as part of project appraisal. The PCA evaluated the institutional capacity of EFSA to implement procurement for the Project activities to be financed under World Bank Procurement Guidelines. Furthermore, the assessment evaluated procurement risks and made recommendations on mitigation measures for efficient procurement under the Project. The following is a summary of the identified procurement risks and mitigation measures: A.19. Identified Risks: a. Staffing
Shortcoming in procurement under ICB procedures and Selection of Consultants may present a potential challenge that may delay Project procurement and accordingly Project implementation.
Having to deal with documents in English while staff English language skills is poor constitute a high risk during procurement processing.
Improper implementation of procurement activities under the project (in terms of efficiency, competition, transparency).
Implementation delays and poor quality of contract deliverables. b. Procurement Planning
Poor quality procurement and outcomes due to limited procurement and contract administration capacity of Agency.
Delay to project processing and implementation due to lack of proper planning. c. Bidding documents,(pre-)qualification, shortlisting, and evaluation criteria.
Project delays due to unfinished bidding documents/RFPs.
Technical specifications/TORs are vague.
Lack of English Language skills while having to deal with documents in English may cause all sorts of confusion and delays. d. Review of Procurement Decisions and Resolution of Complaints
Disincentive to competition due to lack of system to resolve complaints.
A.20. Mitigating Measures:
37 (a) A Procurement Plan (PP) for the first 18 months was prepared by EFSA and reviewed; and agreed upon between the Bank and the Project Team at appraisal. This plan will be updated in agreement with the PMU, at least twice annually (in preparation for the Bank Implementation Support Missions) or as required to reflect the actual project implementation needs and improvements in institutional capacity;
(b) To ensure Project readiness for implementation, immediately after effectiveness, TORs for the main/critical TA/consultancy assignments, to be implemented during the first 18 months of Project implementation, were prepared and submitted for Bank’s review and clearance.
(c) To ensure efficient implementation of Project procurement, the project implementation structure was established and the detailed responsibilities of the various entities is defined in the POM, which outlines the processing steps for the various procurement/selection methods and for contract management and administration.
(d) Training on procurement and contract management will be provided to the staff of the PMU and designated officials of EFSA. The training, which will take place immediately after effectiveness, will be carried out by Bank Team and will focus on the Project procurement arrangements as indicated in the POM and will provide a detailed explanation on the critical steps of the procurement and contract management process.
(e) The World Bank’s Procurement Prior Review (PPR) thresholds were set based on the bases of existing procurement capacity and identified procurement risks. The first three activities for Procurement of Goods and Selection of Consultants will be subject to PPR. In addition to PPR, the World Bank will carry out four Procurement Implementation Support Missions during the first year and at least two per year for the following years during which support to the PMU and follow up of procurement matters will be maintained.
(f) Heavy WB procurement supervision during the first year of implementation.
A.21. The overall residual procurement risk rating for the project is “Moderate”. Procurement Plan:
A.22. Procurement for Goods, and Non-Consulting Services: International Competitive Bidding (ICB) will be the default method to be used under the Project. The Grant shall use the National Competitive Bidding and Shopping procedures that include: (a) explicit statement to bidders of the evaluation and award criteria; (b) local advertising or through EFSA website, allowing bidders not less than 14 days to prepare and submit quotations and 30 days to prepare and submit Bids; (c) award to lowest evaluated Supplier/Bidder; and (d) foreign bidders would not be precluded from participation. Whenever justifiable, Direct Contracting can also be used. 23. Consultants’ Services: Quality and Cost Based Selection will be the default method to be used for selection of Consultant Firms under the Project. Other methods as seen appropriate to the assignments such as Least Cost Selection method for the selection of the Independent External Auditor will be used. Individual consultants’ method shall be used as well. Whenever justifiable, single sourcing of firms and of individuals can also be used. 38 24. A Procurement Plan (PP) for the first 18 months of project implementation was prepared by EFSA and agreed with the World Bank and summarized below. The PP specifies the procurement packages/consultancy assignments, estimated cost, methods and activity dates, taking into consideration the Project implementation schedule. The PP will be updated at least twice annually (in preparation for the Bank Implementation Support Missions) or as required to reflect the actual Project implementation activities, needs and improvements in institutional capacity
Summarized Procurement Plan;
A.23. Below are the summarized procurement activities to be carried out during the first 18 months of project effectiveness and the prior review threshold. A.24. Goods and Works and non-consulting services. a. Procurement Method and Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement:
Procurement Category Prior Review Threshold (USD) Comments >= 1 million, First 3 packages regardless Based on Substantial Goods of value and any direct contract regardless Risk rating of of value. Implementing Agency >= 1 million, First 3 packages regardless Based on Substantial Non-Consultant Services of value and any direct contract regardless Risk rating of of value. Implementing Agency
b. Summary of the Procurement Packages planned during the first 18 months after project effectiveness (including those that are subject to retroactive financing and advanced procurement)
1 2 3 4 6 7 Description Estimated Procurement Review Invitation to Ref. No. Cost Method by Bank Bid Date US$ Several IT equipment packages for establishing ICB/NCB/ December G.Several 1.35 million Prior/Post Consumer Department Shopping 15, 2014 and Microfinance Unit
A.25. Selection of Consultants. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants:
Prior Review Threshold Selection Method Comments (USD) 1 Quality & Cost Based and Other Competitive 0.5 million Based on Substantial
39 Selection Methods (Firms) Risk rating of Implementing Agency 2 Single Source (Firms and Individuals) All
3 Individual consultant 0.2 million Based on Substantial Risk rating of Implementing Agency a. Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than US$300,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
b. Consultancy Assignments with Selection Methods and Time Schedule
1 2 3 4 5 6 Description of Review Ref. No. Estimated Selection Issue RFP Assignment by Bank Cost US$ Method date
Enhance consumer December C.QCBS.2 0.35 million QCBS prior protection mechanism 2014 Several Contracts supporting development Individual September C.IND.Several of the institutional 0.25 million Prior/post Consultants 15, 2014 framework for microfinance
Frequency of Procurement Supervision
A.26. The World Bank’s procurement prior review thresholds were set based on the existing procurement capacity and the identified procurement risks. In addition to prior review, the World Bank will carry out four Procurement Implementation Support Missions during the first year and at least two per year for the following years during which support to the PMU and follow up of procurement matters will be maintained. A Procurement Post Review (PPR) of contracts which are not subject to the above prior review requirements shall be conducted at least once a year. The procurement post reviews should cover at least 20 percent random sample of contracts subject to PPR. Procurement Records
A.27. Complete procurement documentation for each contract, including RFPs/bidding documents, advertisements, proposals/bids received, proposal/bid evaluations, letters of acceptance, contract agreements, securities, related correspondence etc., will be maintained by EFSA-PMU in an orderly manner, readily available for audit.
40 ANNEX 4 -OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Inclusive Regulations for Microfinance
1. Project Stakeholder Risks 1.1. Stakeholder Risk Rating Moderate Description: Risk Management: EFSA- Principal risks come from Risk Management: EFSA a delay or reversal of policy Developing the legal, regulatory and institutional financial infrastructure to promote the expansion commitment to develop the legal, of microfinance sector has been an important component of the Government agenda. EFSA is regulatory and institutional responsible for regulating the non-bank financial service industry in Egypt. The Bank has an financial infrastructure of non- extended and sustained program with EFSA and found it a reliable counterpart from technical and bank financial services due to implementation stand point. Moreover, MSME development has remained a consistent priority for turnover of leadership. Another EFSA. Taking this into account, it’s not anticipated that the Government would reverse its support risk is the lack of sufficient for the objectives and activities proposed above for the project. funding to maintain the required Moreover, continued close consultation with key government stakeholders and coordination with human capacity once the grant private sector and other major donor partners active in this policy domain will enable the project closes. team to maintain a ready awareness of any possible policy changes that might impact the government priorities during the project preparation phase.
To ensure sustainability of the Microfinance Unit, after the closing of the trust fund, EFSA will raise funds (through fees, charges, etc.) that would allow it to maintain its institutional capacity and staffing of the required skills. Resp: Stage: Recurrent: Due Date: Frequency: Status: Completed Bank/EFS Prep. March 31, A 2014 2. Implementing Agency Risks (including fiduciary) 2.1. Capacity Rating Low Description: EFSA has the Risk Management: EFSA is the principal government body regulating and facilitating non-bank required capacity to implement the financial services in Egypt. EFSA currently has a strong professional cadre at the senior operation. management and officer levels. EFSA has a good track record with the World Bank which showed that it has adequate capacity to implement, coordinate and manage the operation. Moreover, the project will be providing capacity to the implementing entity, and developing a clear institutional framework for execution to streamline the process and ensure successful completion of tasks. In addition, the MENA TA Facility will be investing in the capacity building of EFSA to manage and implement projects. Resp: Bank/ Stage: Recurrent: Due Date: March 25, Frequency EFSA Prep. 2014 : 2.2. Governance Rating Moderate Description: EFSA is financially Risk Management: Close attention will be paid to key governance factors in consultation with and administratively independent, EFSA as the preparation work proceeds and ORAF will be updated accordingly. and operates under a mandate established under law. There is no significant governance risks associated with the key implementing partner (EFSA) as such.
41 Resp: Stage: Recurrent: Due Date: March 25, Frequency: EFSA/Bank Prep. 2014 3. Project Risks 3.1. Design Rating Low Description: Lack of Risk Management: Longer-term consultants and capacity building and training to EFSA staff to provide expertise on relevant support from the onset and during project implementation will build sustainable capacity and minimize technical subjects may this risk. delay the project implementation. Resp: EFSA Stage: Impl. Recurrent: Due Date: March 31, Frequency: /Bank 2014 3.2. Social and Rating Low Environmental Description: Social and Risk Management: The proposed project is classified as a Category C, as it is likely to have minimal or environmental risks are no adverse environmental impacts. No environmental safeguards instruments other than the ISDS need to minimal due to this being a be prepared for this project. technical assistance project to improve regulatory framework Resp: Bank/EFSA Stage: Recurrent: Due Date: March 31, Frequency: Prep. 2014 3.3. Program and Donor Rating Moderate Description: Inadequate Risk Management: The World Bank is working closely and liaising with donors active in the technical assistance Microfinance sector, from the scoping stage onwards in an effort to harmonize and streamline the efforts provided by donors and of all institutions. No additional risk mitigation requirements anticipated. government entities. Resp: Bank Stage: Prep. Recurrent: Due Date: March 31, Frequency: 2014 3.4. Delivery Monitoring Rating Moderate and Sustainability Description: Ability to Risk Management: Staff from the local country office are core team members involved in project exercise adequate level of preparation and will be involved in the project ongoing supervision. The country team also draws upon project supervision in view financial inclusion experts based in headquarters. of the current uncertainties in the region. Description: EFSA lack of Risk Management: One of the main project components is providing training and capacity building to technical and institutional EFSA staff to ensure technical and institutional capacity. capacity to maintain project initiatives (new functions on MFI regulation ) after project completion Resp: Stage: Prep. Recurrent: Due Date: March 31, Frequency: Bank/EFSA 2014 4. Overall Risk Preparation Risk Implementation Rating: Rating: Moderate Moderate
42 Comments: The overall preparation risk is Comments: The project is implemented in parallel with activities being financed by moderate given that a PMU will be established the MENA MSME TA Facility. This is complementary to the Project. and fully staffed with caliber members.
43 ANNEX 5
ONGOING DONOR COORDINATION MAPPING
Macro Level: Implementing Legislation, Activity Agency/TA Description/Focus Beneficiaries Funding Source/Donor Status Regulation, and Provider Supervision TA to Egyptian Financial Reviewing the IFC World Bank MSME World Bank EFSA Completed Supervisory microfinance law TA Facility Authority (EFSA)
TA to EFSA in Financed consultant developing new GIZ reviewing elements of EFSA GIZ Completed microfinance law new microfinance law
Micro Level: Support to Central Developing a credit IFC World Bank MSME Support Services Bank of Egypt World Bank guarantee facility for CBE Ongoing TA Facility and (CBE) MSME financing Infrastructure Establishment of M&E, TA to Social Fund Innovation, and Gender IFC World Bank MSME for Development World Bank SFD Ongoing Units; Gender TA Facility (SFD) entrepreneurship work
TA to Egypt Post World Bank Product development, Egypt Post IFC World Bank MSME Ongoing MFI partnership, risk TA Facility management and Islamic financial services
44 National financial CGAP Market inclusion strategies, data Building needs, regulatory Providers and CGAP Donor Funds / CGAP Ongoing Workshops frameworks; Supports government GIZ Cross Funding (periodic) institutional TA requirements.
World Bank in Development of Conjunction Objective is to build the Venture Capital Market players with the ecosystem necessary for IFC World Bank MSME and Early Stage (regulators, Completed University of early stage innovation TA Facility Innovation providers, donors) California at financing Financing Berkeley
Design of new financial Egyptian Banking products, strengthening Micro Level: Institute (EBI) to Banque Misr, Alex IFC World Bank MSME IFC corporate governance, Ongoing Financial Service MSME banking Bank TA Facility and improving credit Providers departments information systems
Focusing on IFC in governance, financial partnership with Dakahleya, Al- management, and better IFC World Bank MSME TA to NGO-MFIs the Egyptian Tadamun, Lead Ongoing serving women/youth TA Facility microfinance Foundation via product and delivery network channel development
TA on Islamic Egyptian World Bank MNSFP in Islamic finance product Finance Product Banking conjunction with Islamic Ongoing development Development Institute Development Bank
TA to Lead Foundation on Women's World Gender-responsive Lead Foundation Core Funding Ongoing Product Banking credit products Development
45 Clients and Trainings focused on Research business planning, Women Groups in Entrepreneurship World Bank; feasibility studies, Alexandria and IFC World Bank MSME Training to Ongoing SFD access to finance, and underserved TA Facility Women linking startups to governorates mentors and incubators
Ongoing MSME Line of credit to banks Financial Institutions, World Bank investment (2010- Development SFD and MFIs to encourage MSMEs lending loan December Project ($200 mn) downscaling 2015)
Line of credit to banks, MFIs, leasing Preparation- Promoting World Bank companies, venture Financial institutions, Micro, Small, and board Innovation for Supervises; capital companies; new MSMEs through World Bank investment Medium-Sized approval Inclusive SFD financial products for greater access to lending loan Enterprise planned Financial Access Implements MSEs (financial leasing, finance Support Work April 1 2014 (Financial and factoring, venture Non-Financial) capital); MSME Line of credit to banks Financial institutions, African Development development SFD and MFIs to encourage Ongoing MSMEs Bank project ($300 mn) downscaling
Line of credit to banks MSME Arab Fund for Economic and other financial Financial institutions, development and Social Development Ongoing institutions to encourage MSMEs project ($50 mn) (AFESD) downscaling
Line of credit to banks MSME and other financial Financial institutions, development Khalifa Fund Planned institutions to encourage MSMEs project ($50 mn) downscaling
46 Line of credit to banks MSME and other financial Financial institutions, Islamic Development development institutions to encourage MSMEs Bank project ($50 mn) Islamic Finance development
47 ANNEX 6
IMPLEMENTATION SUPPORT PLAN 1. The World Bank will support the implementation of the project and provide the technical advice necessary to facilitate the achievement in the PDO. 2. The World Bank’s FM team will support EFSA to enhance their knowledge on FM Bank procedures and guidelines by providing workshops on FM and disbursement. 3. There will be a subsidiary agreement signed between the World Bank and EFSA whereby the Recipient makes the funds of the grant available to EFSA for implementation of the project. 4. Through the project duration the World Bank team will closely monitor the project on semi-annual supervision missions. During the supervision mission, the World Bank will ensure that the financial arrangements agreed on are respected and will assess if any additional training or support is needed. The World Bank team will review and clear the audit TOR, review the audit reforms and IFRs received and provide its feedback on a timely manner. 5. The main focus in terms of implementation during: Time Focus Skills needed Resource estimate First twelve Developing the Financial Specialist, MSME $100,000 months regulatory and specialist, Finance Operations institutional framework Officer, Principal Operations Officer, for Microfinance Legal Advisor and Microfinance institutions. Expert, Procurement Specialist, Financial Management Specialist, Financial development analyst 12-48 months Enhancing the Banking and MSME Finance expert, $200,000 per Microfinance unit and Financial specialist, MSME year NGO microfinance specialist, Finance Operations Oversight Board Officer, Microfinance Expert 6. Skills Mix Required: Skills Needed Number of Staff weeks Number of Trips Financial Specialist, MSME specialist, 60 weeks 7 trips Finance Operations Officer, Principal Operations Officer, Legal Advisor and Microfinance Expert, Procurement Specialist, Financial Management Specialist, Financial development analyst, Banking and MSME Finance expert, Financial specialist 7. Partners: Institution Role The Saudi Fund The World Bank will provide implementation support to the project and the Saudi Fund will participate in missions for coordination of this activity with other related activities
48 49