FOR OFFICIAL USE ONLY Report No: RES43844 Public Disclosure Authorized
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
RESTRUCTURING PAPER ON A PROPOSED PROGRAM RESTRUCTURING OF THE
UPPER EGYPT LOCAL DEVELOPMENT PROGRAM-FOR-RESULTS
Public Disclosure Authorized (LOAN NO. 86450-EG) APPROVED ON SEPTEMBER 29, 2016
TO THE
ARAB REPUBLIC OF EGYPT
January 25, 2021
Public Disclosure Authorized Urban, Resilience And Land Global Practice Finance, Competitiveness and Innovation Global Practice Middle East And North Africa Region
Regional Vice President: Ferid Belhaj Country Director: Marina Wes Regional Director: Ayat Soliman; Nadir Mohammed
Public Disclosure Authorized Practice Manager: Jaafar Sadok Friaa, Djibrilla Issa Task Team Leader(s): Mohamed Nada, Ellen Olafsen, Sohaib Athar
Official Use The World Bank Upper Egypt Local Development PforR (P157395)
ABBREVIATIONS AND ACRONYMS
APA Annual Performance Assessment CCI Cluster Competitiveness Initiative CG Competitiveness Grant CPSD Country Private Sector Diagnostic DLI Disbursement-Linked Indicator DLR Disbursement-Linked Result DSC District Service Centers E&S Environmental and Social ESSA Environmental and Social Systems Assessment FM Financial Management G2B Government-to-business GoE Government of Egypt GRM Grievance Redress Mechanism ISRR Implementation Status and Results Report IZ Industrial Zone MTR Midterm Review MAC Minimum Access Criteria MSME Micro, Small & Medium Enterprises MoLD Ministry of Local Development MoPED Minister of Planning and Economic Development OHS Occupational Health and Safety PM Performance Metric PCO Program Coordination Office PDO Program Development Objective POM Program Operational Manual PPM Program Procurement Manual PPD Public Private Dialogue TA Technical Assistance WBG World Bank Group
Official Use The World Bank Upper Egypt Local Development PforR (P157395)
DATA SHEET (Upper Egypt Local Development PforR - P157395) BASIC DATA Project ID Financing Instrument IPF Component P157395 Program-for-Results Financing No
Approval Date Current Closing Date 29-Sep-2016 31-Oct-2023
Organizations
Borrower Responsible Agency Ministry of Local Development,Ministry of Trade and Ministry of International Cooperation Industry,Ministry of Planning Monitoring and Administrative
Program Development Objective(s) The project development objective is to improve the business environment for private sector development and strengthen local government capacity for quality infrastructure and service delivery in select governorates in Upper Egypt.
OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing (US$, Millions)
Net Approval Effectiveness Closing Ln/Cr/TF Signing Date Commitment Disbursed Undisbursed Date Date Date
IBRD-86450 29-Sep-2016 06-Oct-2016 14-Mar-2017 31-Oct-2023 500.00 357.50 142.50
Policy Waiver(s) Does the Program require any waivers of Bank policies applicable to Program-for-Results operations? No
Page 1 of 46 Official Use The World Bank Upper Egypt Local Development PforR (P157395)
I. PROGRAM STATUS AND RATIONALE FOR RESTRUCTURING I.I Background and Program Status
1. This Restructuring Paper proposes to: increase the Program scope geographically from two to four governorates in the Upper Egypt region, within the existing budget and design parameters of the Program. The Program Development Objective (PDO) and Program Result Areas will not change. This is the second restructuring of the Program. No adverse impact is expected on Program results or performance in the existing two governorates, and counterparts have committed to maintaining results targets in these governorates. 2. Background: The PDO is to improve the business environment for private sector development and strengthen local government capacity for quality infrastructure and service delivery in select governorates in Upper Egypt. The operation was approved by the World Bank Group (WBG) Executive Directors on September 29, 2016 and declared effective on March 14, 2017. The closing date is October 31, 2023. It supports two governorates in the lagging region of Upper Egypt, namely Qena and Sohag. Subprogram 1 aims to improve business environment and competitiveness in these governorates by providing Competitiveness Grants based on three result areas: i) improved management and utilization of industrial zones; ii) initiated locally-driven sector competitiveness programs; and iii) improved government-to-business (G2B) services. Subprogram 2 provides Performance Grants to governorates to improve local capacity and access to quality infrastructure and services for citizens. 3. Relevance of PDO and Program design: The Bank’s latest implementation support mission (July 2020) and subsequent review of the current status of key social and economic parameters in Minya and Assiut, confirmed the continued relevance of the PDO and Program design in the current context and its alignment with government priorities. Government of Egypt (GoE) considers the Program a priority intervention as part of its development strategy for the Upper Egypt region (namely “Inclusive Economic Development Program for Lagging Regions”). The Program objective and design also remain consistent with the twin goals of the WBG and contributes to the WBG Middle East and North Africa (MENA) Strategy, especially the pillar on renewing the social contract. It contributes directly to all three pillars of the WBG Country Partnership Framework 2015-21, namely improved governance, private sector-led job creation, and social inclusion. It is also aligned with the pathways to inclusive and resilient growth emerging as recommendations from the WBG’s Systematic Country Diagnostic for Egypt conducted in 2020. 4. Likelihood of Achieving PDO and Summary of PDO-level Results Achievement: The Program is achieving good results in the governorates targeted to-date, and implementation progress is now advancing well despite challenges imposed by the ongoing Covid-19 pandemic. The Program is on track to achieve the PDO targets, and progress towards achievement of the PDO and overall implementation progress have been rated Moderately Satisfactory in the latest Implementation Status Report (ISR) dated October 2020. There has been an improvement in the local business environment in the governorates and increased local institutional capacity. Infrastructure and service improvements are estimated to have benefitted about 5 million citizens so far, one-third of the population of the two governorates, with half of these beneficiaries estimated to be women. About 3,300 firms have benefited from Program improvements. The local business environment has improved by 28 percent and 15 percent in Sohag and Qena governorates respectively, compared to the end-target of 30 percent, as per a provisional methodology for a local business environment index developed by the Program. Both governorates have also regularly achieved their target performance scores under the Annual Performance Assessment (APA) and met the Minimum Access Criteria (MAC) for performance grants. 5. Intermediate results achieved include the following: i) increased occupancy rate in industrial zones (IZs) by 20 percentage point in Qena (fully achieving Program target) and 5 points in Sohag; ii) participation of more than 400 firms in the consultative prioritization of investments and public-private dialogue, with eight Cluster Competitiveness Initiatives (CCIs) initiated in both governorates (out of a Program target of 10), four of which about to conclude with Cluster Action
Official Use The World Bank Upper Egypt Local Development PforR (P157395)
Plans that will be incorporated in the governorates’ capital investment plans; iii) reduction in the time to provide government-to-business (G2B) services (construction permits and shop licenses) to local firms by 25 percent in half of the targeted District Service Centers in governorates; and iv) improving local capacity for inter-sectoral, multi-year capital investment planning, project design and implementation, asset management, citizen engagement and environmental and social risk management. Public access to information and transparency has increased with disclosure of previously unpublished documents. 6. Disbursement and Expenditure: 71 percent of the loan (US$357.5 million out of US$500 million) has been disbursed, including a US$125.0 million advance. Disbursement-linked results (DLRs) worth US$231.25 million have been independently verified so far. Expenditure incurred and reported by implementing agencies is US$94.82 million as of June 30, 2020 (unaudited). Expenditure is lower than disbursement by design, since governorates receive Program funds in advance at the start of each fiscal year, upon achievement of verified results, to finance capital investments throughout the year. A substantial portion of the unspent balance is already committed to capital investment projects which are either ongoing, being procured or planned for this fiscal year. The initial advance is also being drawn down to finance investment projects to achieve future DLRs, with approximately US$70 million being the outstanding balance of advance with GoE. 7. Status of Program Action Plan (PAP): The PAP is on track and has supported the achievement of Program results. 13 out of 19 actions in the PAP are completed while 4 are in progress and are of a recurrent nature with satisfactory progress. The remaining 2 actions were not launched on time (these are: i) procurement of technical quality audit firm; and ii) development of governorates’ ICT plans) but are now on track and have a revised expected completion date of June 2021. Annex 2 lists all actions included in the PAP. Performance of Program fiduciary and environmental and social (E&S) systems:
8. Procurement: Procurement performance is rated as moderately satisfactory. The Program Procurement Manual (PPM) (a part of the POM) has recently been updated based on feedback provided by the World Bank, and the changes have been agreed with the Bank. The new national Procurement Law and its Executive Regulations were recently issued by GoE (the law being issued in October 2018) which are aligned with international good practice. Noticeable improvements have taken place in Program agencies in procurement functions particularly in applying the Program Procurement Manual (PPM) (a part of the POM) and gradual improvement of capacity of local staff, resulting in increased level of competitive procurement. The PPM has been recently been recently updated based on feedback received from implementation performance, with the changes agreed with the Bank. There is a dedicated procurement specialist at the Program Coordination Office (PCO) at the Ministerial level who handles PCO procurement and supervises / monitors procurement by governorates. The Bank continues to provide close handholding and technical support on procurement. 9. Financial Management (FM): FM arrangements continue to operate satisfactorily in most aspects, with the performance of fiduciary systems rated as Moderately Satisfactory in the latest ISR. Annual investment plans are reflected in budget allocations to Program activities. Expenditures are being tracked and reflected in financial statements that are subject to annual audits. Expenditure controls are subject to government accounting procedures and are aligned with the Program Operational Manual (POM). As of October 2020, there are no overdue or pending audit reports and the upcoming annual audit is expected by March 31, 2021. Program audits so far have featured unmodified (clean) opinions. 10. E&S systems: Each proposed investment project under the Program is screened for eligibility from an E&S perspective using criteria specified in the POM, and is subject to verification by the PCO and additional periodic reviews and spot-checks by the Bank. This process and application of eligibility criteria has improved during implementation and is based on field investigations, interviews with owners/users of land and other verification methods as well as preparation of E&S instruments in accordance with national regulations. Implementation of E&S instruments has improved significantly since inception, specifically on occupational health and safety (OHS) aspects and information sharing. A systematic process for regular field-based monitoring of investment project during the construction stage is being
Official Use The World Bank Upper Egypt Local Development PforR (P157395) implemented and is informed by technical assistance (TA) provided by the Bank. Some recent gaps identified in E&S aspects include: weak capacity in preparation of Social Impact Assessments and application of E&S measures as outlined in POM to investment projects in IZs. Measures to address these challenges are under implementation, including the provision of TA by the Bank on preparation of E&S impact assessments, consultations with local communities and stakeholders and sytematic management of E&S risks. The POM has been updated to strengthen these aspects. 11. Citizen Engagement and Gender: The Program has institutionalized strong measures on citizen engagement. Citizens, including women and youth, are actively involved in the prioritization of capital investments through regular local consultations and feedback. Almost 5,000 citizens have participated in these consultations and their inputs have informed the identification of investment projects. Only one-tenth of citizens consulted so far are women, due to substantial cultural barriers in Upper Egypt. To substantially increase participation of women in consultations, governorates are conducting separate, dedicated participatory consultation sessions with women facilitated by local women leaders in convenient locations. Assessments are also planned to assess constraints faced by women in Upper Egypt more broadly and identify activities to address them. A robust Grievance Redress Mechanism (GRM), which provides for virtual submission of complaints, is functional and reporting on Program-specific and general grievances on citizen services. 12. Program Risks: The overall risk of the Program is Substantial. There is no change in any risk rating since the last ISR dated October 2020. The following risks are rated as Substantial: Political and Governance; Macroeconomic; Technical design of Program; Institutional capacity for implementation and sustainability; Fiduciary and Environment and Social. All other risks are rated as Moderate. Mitigation measures identified at Approval stage are being implemented and will be extended to the two new Governorates. I.II. Rationale for Restructuring
13. GoE request: GoE has requested the Bank on June 29, 2020 to support the geographic expansion of the Program to two additional governorates in the Upper Egypt region, namely Assiut and Minya, through a restructuring within the current financial envelope and Program design. The request is to reallocate 10 percent of the loan amount from Sohag and Qena to Minya and Assiut (the two new governorates), along with matching GoE contribution for the Program, to support Assiut and Minya in dealing with the economic impacts of the Covid-19 pandemic, and to prepare these governorates for full program implementation in the future. 14. Program relevance to Assiut and Minya: At entry, the key challenges the Program was designed to address included: i) limited empowerment, effectiveness, and accountability of governorates; ii) low levels of access to, and quality of, infrastructure and services for citizens and businesses; iii) weak investment climate and weak economic factors supporting development of value chains; and iv) information gaps on competitiveness of firms. The WB team has verified that these challenges also exist in Minya and Assiut governorates. These have been documented in the updated Technical Assessment of the Program (Annex 3). 15. Assiut and Minya are predominantly rural governorates in the Upper Egypt region with very low productivity and high poverty rates.1 Assiut governorate has the highest poverty rate in the country, with two-thirds of its population living below the poverty line (CAPMAS 2019). Even in Minya, more than half (55 percent) of the population lives below the poverty line. Gross Value Added (GVA) per capita is very low in both, being almost one-tenth that of Cairo governorate. This makes Minya the fourth lowest and Assiut the fifth lowest productive governorates in Egypt. Importantly, however, there is not a lack of value-adding growth opportunities; Minya and Assiut show comparative advantages for the development of agro-processing, resource-based manufacturing (including petroleum-derived products), and light manufacturing. All governorates of Upper Egypt region were screened during Program preparation in 2016 on criteria
1 Egypt has a total of 27 governorates.
Official Use The World Bank Upper Egypt Local Development PforR (P157395) including population size, poverty, geographic contiguity, economic potential and access to basic services. Assiut met several of these selection criteria along with Sohag and Qena, but was not chosen for inclusion in the initial Program as it was considered to have a slightly higher number of economic sectors with concentrations of employment and marginally better industrial infrastructure and support institutions than Qena. Qena is also part of GoE’s Golden Triangle master plan, which provided an opportunity to catalyze development in that governorate by inclusion in the Program then. 16. The advent of COVID-19 has accentuated the need for an integrated program that addresses the governance and socio-economic needs of Assiut and Minya. Data on COVID-19 impact on firms in Egypt is limited, especially at the level of governorates. That said, as social distancing measures and temporary suspension of air traffic were introduced, economic activity slowed. The Purchasing Managers’ Index (PMI) declined to 38.3 during the period April to June 2020, its lowest level on record. It has since recovered some, but given the second wave of COVID-19 now striking countries across the world, it is likely that a decline in the index will reoccur, signaling contraction of firms. The number of employed individuals declined by 2.7 million during April to June 2020, pushing unemployment to 9.6% from 7.7% the previous quarter, with job losses, especially among informal workers, reported mainly in retail and wholesale trade, manufacturing, tourism, transport and construction. 17. GoE has initiated a number of actions nationwide to mitigate the impact of COVID-19 on citizens and businesses. These include increases in pensions, social cash transfers and healthcare, as well as tax credits, interest rate cuts, MSME lending programs, and initiatives to increase the attractiveness of digital financial services. GoE actions to mitigate the impact of COVID-19 on the poorest focus primarily on cash transfers. The GoE has extended the coverage of the national cash transfer program Takaful and Karama to reach a total of 3.6m households nationally; an exceptional monthly grant of EGP500 is offered to around 2m informal workers for 3 months, and around 200,000 households will benefit from one- off cash payments for 3 months, with priority to elderly, orphans, disabled and female-headed households. 18. Actions to mitigate the impact of COVID-19 on firms fall primarily in the categories of easing loan terms and tax obligations, and enhancing the conditions for more digital payments to occur. The perception of the business community is that many have benefitted from the reduction in electricity tariffs and postponement of tax obligations and interest installments, but that few have benefitted from the reduced interest loans announced by government, and very few are aware of the support programs available to small and medium enterprises. 19. The WBG’s COVID-19 pandemic response globally aims to support client countries with immediate relief efforts and with strategies to achieve resilient, inclusive and sustainable recovery. The Program is well positioned to complement the current set of interventions initiated by the WBG and GoE, most importantly by empowering governorates to take actions that address local needs. The Program supports actions in all phases of the pandemic response, including emergency support and social and economic response covering relief, resilience and recovery aspects. Figure 1 illustrates how the Program enables governorates to complement other GoE initiatives to mitigate the effect of COVID-19 on private sector survival and growth. The actions initiated by government to-date are colored orange, while the actions colored blue indicate the actions UELDP supports. The gray actions are additional options that Egypt has not yet pursued, but that many countries are pursuing as part of their COVID response. Annex 3 illustrates how the Program is aligned with the overall WBG support to GoE on a comprehensive response to the pandemic.
Official Use The World Bank Upper Egypt Local Development PforR (P157395)
FIGURE 1: GOE COVID RELIEF AND RECOVERY SUPPORT TO THE PRIVATE SECTOR
II. DESCRIPTION OF PROPOSED CHANGES
20. Summary of changes: There are no changes in the PDO, Program Result Areas, Program closing date, technical method, risks (SORT), E&S aspects, and implementation schedule. No new Disbursement-linked Indicators (DLI), legal covenants and PDO-level result indicators have been added. The following aspects have been changed: i) increase in the geographic scope of the Program from two to four governorates in Upper Egypt within the existing budget and technical design; ii) reallocation of US$50.0 million of the Loan amount between and within existing DLIs, from the allocation of Sohag and Qena governorates to Assiut and Minya governorates, and new DLRs for central government-level actions; iii) change in Program expenditure framework to reflect the addition of two new governorates and associated re-allocation of financing; iv) changes to results framework, with end-targets for two PDO-level indicators revised and changes in intermediate-level indicators to better reflect the updated scope especially in new governorates; v) update to Program assessments based on the revised geographic scope, and addition of several actions to the PAP pertaining to the new governorates. No adverse impact is expected on Program results or performance in the existing two governorates, and GoE has committed to maintain result targets in these governorates despite the slight reduction in their funding allocation (equivalent to 10 percent of original allocation). Changes in Program Scope and DLIs
21. Program scope in new governorates: The Program is being expanded geographically to include two additional governorates in the Upper Egypt region, namely Assiut and Minya, within the overall scope of the existing government program. This will double the number of governorates within the Program from two to four. The Program Result Areas will be similar, and scope of activities in new governorates will be similar to, but less than, activities in Sohag and Qena given the much shorter implementation period and budget allocation in the new governorates. The results targets for Assiut and Minya are accordingly also lower. The reduced scope in the new governorates is aligned with the findings of the Bank’s updated technical assessment covering the new governorates, and has been assessed to be proportional to,
Official Use The World Bank Upper Egypt Local Development PforR (P157395) and adequate for, the implementation period and funding allocation. As the government program already covers all these governorates, the updated scope is assessed to be within the Government program which remains unchanged. 22. The existing technical design will be replicated in the new governorates, namely the provision of grants to the governorates on achievement of performance criteria. Two types of grants will be provided to the new governorates: i) Competitiveness Grant (DLI-7, Subprogram 1) to improve local business environment and competitiveness; and ii) Performance Grant (DLI-5, Subprogram 2) to improve local capacity and access to quality infrastructure and services for citizens. There will be no change in the Annual Performance Assessment (APA) and DLI verification process. Achievement of performance criteria (i.e. MAC and Performance Measures (PM)) by the new governorates will be determined by APAs, conducted concurrently for the two grant types to determine grant funding allocations. These performance criteria to be assessed for both grants have been agreed with GoE and are similar to those for existing governorates with reduced scope to account for the reduced implementation period and funding. These criteria have been included in the POM which has been updated. The APAs will be conducted by the same qualified private firm (hired by the PCO) which is assessing the existing governorates and has substantial experience with the Program. 23. Reallocation between and within existing DLIs: As per the GoE request, US$50.0 million of the Loan amount (equivalent to 10 percent) has been reallocated from the allocation of Sohag and Qena governorates to Assiut and Minya governorates. No new DLI is added, and the reallocation is done through the following: i) reducing allocation to DLI-6 by US$18.0 million and reallocating this amount to DLIs 5 and 7 which finance the two grants under the Program; and ii) modifying existing DLRs and adding new DLRs within DLIs 5 and 7 to adjust allocations between the governorates. GoE has also committed to contribute at least an additional US$50.0 million to the new governorates under the Program. Table 1 shows the revised allocations for each DLI, allocations for new and existing governorates and the status of DLRs achievement until now. Annex 1 provides the updated details on DLIs. a. Within DLI-8, funding has been re-allocated to new DLRs to incentivize central government-level actions to improve Program performance and sustainability and implement reforms for improved local-level capital investment planning. One new DLR is added for the PCO to recruit an Implementation Support Consultant for CCIs in a timely manner to support governorates. Four DLRs are added for the Ministry of Planning and Economic Development and Ministry of Local Development (MoLD) to implement reforms for improved local- level capital investment planning, including: communicating capital budget allocations to governorates in a timely manner; issuing guidelines for prefeasibility studies of investment projects; clarifying mandates and functions of tiers of local administration for local development; and aligning their electronic systems for local capital budget plans with the revised functions. b. For DLIs 1-4 which have been already fully achieved with no remaining allocation, some existing DLRs which show funding allocation have been revised to zero, as no further DLR achievement and disbursement will take place under DLIs 1-4. This is to improve clarity of Loan allocation among DLIs and DLRs.
TABLE 1. ALLOCATIONS FOR DLI, NEW AND EXISTING GOVERNORATES AND STATUS OF DLRS ACHIEVEMENT UNTIL NOW (FIGURES IN US$ MN)
Allocation for DLRs Sr. Remaining DLI Achieveme No. Total Sohag & Assiut & DLRs Program Qena Minya nt until now Increase in Occupancy Rate in industrial zones in each of Qena 1 Governorate and Sohag Governorate Number of industrial zones in each of Qena Governorate and 81.25 81.25 0.0 81.25 0.0 2 Sohag Governorate implementing their respective Industrial Zone Modernization Plan
Official Use The World Bank Upper Egypt Local Development PforR (P157395)
Allocation for DLRs Sr. Remaining DLI Achieveme No. Total Sohag & Assiut & DLRs Program Qena Minya nt until now Number of Cluster Competitiveness Initiatives launched and 3 implemented in each of Qena Governorate and Sohag Governorate Number of district service centers that reduced by at least 25% processing time (in days) for issuing operating licenses and 4 construction permits to businesses calculated on the basis of a methodology set out in the POM Minimum Access Criteria met and Performance Score achieved 5 277.0 244.0 33.0 150.0 127.0 by Program Governorates to receive Performance Grants Cumulative value [EGP] of infrastructure and services investment expenditures paid by each of Qena Governorate and Sohag 6 42.0 42.0 0.0 0.0 42.0 Governorate under the Program that has been subject to technical audit and certified acceptable by technical auditor
Minimum Access Criteria met and Performance Score achieved 7 on competitiveness by Program Governorates to receive 95.0 78.0 17.0 0.0 95.0 Competitiveness Grants Timely conduct of Annual Performance Assessment, timely 8 procurement of implementation support, and local investment 3.5 0.0 0.0 0.0 3.5 planning reforms Total Program, excl. Front-end fee (US$1.25 Mn) 498.75 445.25 50.00 231.25 267.50 24. Program expenditure framework: With two new governorates added and associated re-allocation of financing, the expenditure framework is modified by reducing US$100.0 million (50 percent Bank and GoE contribution each) from Sohag and Qena governorates and adding the same amount to the new governorates. These governorates were already part of the larger government program. The categories of expenditure, and the relative allocation of funding between categories, for the new governorates is the same as the existing ones. The revised expenditure framework has been included in the POM. 25. Implementing Entities: In line with the additional scope, Assiut and Minya governorates will be added as new implementing entities, with the same implementation arrangements as the existing governorates. A Local Implementation Unit (LIU) will be established in each, with functions and staffing identical to LIUs in the existing governorates. The Bank has assessed the institutional setup and capacity in the new governorates and found it is similar to Sohag and Qena at early stages of the Program. Gaps identified will be addressed through the following measures: i) adding measures in the performance criteria under the Program grants, achievement of which determines funding allocation; ii) provision of technical assistance and capacity building by the PCO, in line with the process being followed in existing governorates; and iii) adding actions in the PAP. 26. Definitions and other relevant paragraphs in the Loan Agreement are amended to include reference to the new Program governorates and revised geographic scope. Results Targets
27. Changes to Results framework: The end-targets and measurement methodology for PDO-level results indicators remain unchanged for 3 out of 5 PDO-level indicators. For one PDO indicator (PDO indicator #3: “number of people and business beneficiaries”), the end-target has been increased to account for the increased geographic scope to new governorates. For the remaining PDO indicator (PDO indicator #2: “Infrastructure and service performance targets met in
Official Use The World Bank Upper Egypt Local Development PforR (P157395)
Program governorates”), the end-target is slightly reduced (from 80% to 70%) to account for the impact of new governorates, with much lower current capacity, on overall Program average - as the new governorates are not expected to achieve similar score on the APA as the existing governorates, and thus will reduce the overall average. Some adaptations have been made to the intermediate level indicators to better capture results in new governorates. An existing indicator on Citizen Engagement (being a simple Yes/No indicator) has been replaced with a more substantial indicator which measures the impact of citizen consultations on governorates' annual capital budgets, as a measure of responsiveness to citizen needs. This will apply to all Program governorates and is based on implementation experience. A set of new intermediate level indicators are also added for the new governorates to better measure progress towards achieving the PDO. Annex 1 shows the changes. Updated Program Assessments and PAP
28. All three Program assessments have been revised to cover the updated Program scope. The revisions are summarized as follows, with Annexes 3, 4 and 5 providing more detail. 29. Technical Assessment: A review was carried out to ensure continued relevance and feasibility of the Program Result Areas and actions in Minya and Assiut, particularly in the COVID-19 context. This included an assessment of the institutional capacity to implement the Program in accordance with all applicable policies and guidelines. The Assessments also reviewed the continued value added of Bank support vis-à-vis that of other cooperating partners. 30. Sub-Program (SP) 1: SP1 includes three type of Program Activities, notably (a) G2B services; (b) sector competitiveness programs (implemented through CCIs); and (c) industrial zone management and services. While all Result Areas and Program activities remain relevant, lessons from implementation in Qena and Sohag indicate that not all Program activities are feasible in a short time span. With only a 2 year+ implementation period, the team found that a) it is not feasible to include the “industrial zone management and services.” Rather, it is proposed to add an explicit Program activity on COVID response targeting MSMEs; b) lessons learned from implementation indicates significant dependence on national agencies to make fundamental improvements in G2B services. This can however not be adequately addressed without Additional Financing and DLIs to incentivize central government actions in G2B services. Therefore, activities in Minya and Assiut will focus on incentivizing the strengthening of institutional capacity within governorates to deliver G2B services and design and implement local economic development programs, and to demonstrate results in delivery of one permit (G2B service), and two clusters in each governorate, as well as to carry out a COVID-19 mitigation and resilience campaign targeting MSMEs in the governorates. Further details are provided in Annex 3. 31. Subprogram 2: Institutional structures and processes for infrastructure and service delivery in the new governorates are weak. There is considerable scope for improving the effectiveness of capital investment planning and execution, asset management, citizen engagement and transparency in these governorates. They are structured and administered similarly as Qena and Sohag were prior to the Program, and have similar population and poverty profile. Most salient features of, and weaknesses associated with, institutional processes identified during the earlier assessments of Qena and Sohag apply to Minya and Assiut. Thus, including both governorates in the Program is consistent with the PDO. Program grants are expected to be large enough to incentivize reforms, but not so large to overwhelm absorptive capacity. They are projected to be 14 and 30 percent of Minya’s forecast capital budgets for FY21/22 and FY22/23 (respectively) and 10 and 21 percent of Assiut. On a per-capita basis, this is about EGP24 in FY21/22 and EGP56 in FY22/23. Per-capita allocation is similar for both governorates since the grant allocation is based on governorate population. 32. Environmental & Social Systems Assessment (ESSA): The addendum to the ESSA was publicly disclosed on the websites of both new governorates (including its summary in Arabic language) and consulted upon with local stakeholders (including representatives of local community and civil society) in both governorates on November 11-12, 2020, with the consultation having representation of youth, women, civil society / NGOs and private sector investors. The consultation was facilitated by the Bank team and PCO. Feedback from the consultation has been incorporated in the ESSA addendum.
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It has also been publicly disclosed on the Bank’s external website along with the Arabic language summary.2 The ESSA and consultations showed that the existing situation in the two new governorates is very similar to the baseline in the existing two governorates. Mitigation measures to address existing gaps and risks have been identified, the most critical of which are included as new actions in the updated PAP. Mitigation measures identified in the addenda can be grouped into three categories: a) staffing and capacity strengthening; b) mainstreaming E&S assessment management and monitoring; and c) mainstreaming citizen engagement activities. Specific actions have been included in the PAP for each of these aspects. Further details are provided in Annex 4. 33. Integrated Fiduciary Systems Assessment: Procurement and expenditure controls in the new governorates follow national rules and practices including the new procurement law, ex-ante reviews of payment packages and verifying completeness of supporting documents. Quarterly financial reports are prepared by each governorate and annual final accounts are audited by the Central Audit Agency. Overall fiduciary rules and procedures governing the operations of the two new governorates are largely similar to those applicable to the two existing governorates currently implementing Program activities. Accordingly, the Program design associated with this geographic expansion will adopt fiduciary arrangements similar to those under the current Program. The overall residual fiduciary risk rating is assessed to be substantial. Mitigation measures have been identified, the most critical of which are included as new actions in the updated PAP. Further details are provided in Annex 5. 34. Changes to Program Action Plan (PAP): Based on the findings of the updated assessments, 17 new actions are added to the PAP. These actions are required to ensure that Program systems are set up in Assiut and Minya governorates in a timely manner and are able to perform adequately, and are thus deemed essential for successful Program expansion. Most of these actions are similar to those already completed or ongoing in the existing PAP, which covered Sohag and Qena governorates. The actions in the updated PAP have been agreed with GoE. Annex 2 describes the updated PAP.
2 The Arabic version of the full document is being prepared and will be disclosed on the Bank website.
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III. SUMMARY OF CHANGES
Changed Not Changed
Change in Program Scope ✔
Change in Results Framework ✔
Reallocation between and/or Change in DLI ✔
Change in Disbursements Arrangements ✔
Other Change(s) ✔
Change in Implementing Agency ✔
Change in Program's Development Objectives ✔
Change in Loan Closing Date(s) ✔
Change in Cancellations Proposed ✔
Change in Disbursement Estimates ✔ Change in Systematic Operations Risk-Rating Tool ✔ (SORT) Change in Safeguard Policies Triggered ✔
Change in Legal Covenants ✔
Change in Institutional Arrangements ✔
Change in Implementation Schedule ✔
IV. DETAILED CHANGE(S)
OPS_DETAILEDCHANGES_COMPONENTS_TABLE
OPS_DETAILEDCHANGES_EA_TABLE
.
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ANNEX 1: RESULTS FRAMEWORK .
. Results framework
Program Development Objectives(s) The project development objective is to improve the business environment for private sector development and strengthen local government capacity for quality infrastructure and service delivery in select governorates in Upper Egypt.
Program Development Objective Indicators by Objectives/ Outcomes
RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target
PDO Level Results Indicators 1 a) Percentage improvement in business environment at the 100.00 130.00 governorate level in Qena (Percentage) 1 b) Percentage improvement in business environment at the 100.00 130.00 governorate level in Sohag (Percentage) 2) Infrastructure and service performance targets met in 0.00 70.00 Program governorates (Percentage)
Rationale: The end target is revised downward slightly from 80 to 70 (out of 100) due to addition of 2 new governorates, as the new governorates cannot be expected to achieve similar high score on the APA as the existing governorates. This will reduce the Action: This indicator has been Revised overall Program average APA score, as the average for the new governorates is expected to be lower, while the average for the old governorates is expected to be higher, than the revised target.
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Official Use The World Bank Upper Egypt Local Development PforR (P157395)
RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target
3) Number of people and businesses benefiting from improved access to quality infrastructure and services (of which percentage 0.00 6,507.00 women) in Program governorates (Number (Thousand))
Rationale: Action: This indicator has been Revised End target increased due to the addition of 2 new governorates.
# of people benefiting in Program governorates (Number 0.00 6,500.00 (Thousand))
Rationale: Action: This indicator has been Revised End target increased due to the addition of 2 new governorates.
% Female citizen beneficiaries (Percentage) 0.00 50.00 # of businesses benefiting in Program governorates (Number 0.00 7.40 (Thousand))
Action: This indicator has been Revised 4) Percentage of people expressing satisfaction with quality of infrastructure and services provided in Program governorates 0.00 70.00 (Percentage)
Action: This indicator has been Revised
Qena (Percentage) 0.00 70.00
Sohag (Percentage) 0.00 70.00
Menya (Percentage) 0.00 70.00
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RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target
Action: This indicator is New
Assiut (Percentage) 0.00 70.00
Action: This indicator is New 5) Percentage of businesses expressing satisfaction with quality of infrastructure and services provided in Program governorates 0.00 70.00 (Percentage)
Action: This indicator has been Revised
Qena (Percentage) 0.00 70.00
Sohag (Percentage) 0.00 70.00
Menya (Percentage) 0.00 70.00
Action: This indicator is New
Assiut (Percentage) 0.00 70.00
Action: This indicator is New PDO Table SPACE
Intermediate Results Indicators by Result Areas
RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target
Improving the business environment and competitiveness 1 a) Increase in occupancy rate in industrial zones in Qena 14.00 39.00 (Percentage)
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RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target
1 b) Increase in occupancy rate in industrial zones in Sohag 34.00 49.00 (Percentage) 2 a) Number of IZs in Program governorates that have committed 0.00 4.00 75% of works under their IZ modernization plan (Number)
Qena (Number) 0.00 2.00
Sohag (Number) 0.00 2.00 2 b) Number of IZs in Program governorates that have completed 0.00 4.00 50% of works under their IZ Modernization Plan (Number)
Qena (Number) 0.00 2.00
Sohag (Number) 0.00 2.00
3 a) Number of CCIs launched in Program governorates (Number) 0.00 14.00
Action: This indicator has been Revised
Qena (Number) 0.00 5.00
Sohag (Number) 0.00 5.00
Menya (Number) 0.00 2.00
Action: This indicator is New
Assiut (Number) 0.00 2.00
Action: This indicator is New 3 b) Number of Cluster Action Plans approved in Program 0.00 14.00 governorates (Number)
Action: This indicator has been Revised
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RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target
Qena (Number) 0.00 5.00
Sohag (Number) 0.00 5.00
Menya (Number) 0.00 2.00
Action: This indicator is New
Assiut (Number) 0.00 2.00
Action: This indicator is New 4 a) Number of district service centers in Program governorates that reduced by at least 25% their average processing times (in 0.00 14.00 days) for issuing operating licenses and construction permits (Number)
Action: This indicator has been Revised
Qena (Number) 0.00 6.00
Sohag (Number) 0.00 8.00
5) GAFI OSS established for Program governorates (Yes/No) No Yes
Qena (Yes/No) No Yes
Sohag (Yes/No) No Yes 6) Number of investment opportunities identified and promoted 0.00 20.00 for Program governorates (Number)
Action: This indicator has been Revised
Qena (Number) 0.00 9.00
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RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target
Action: This indicator has been Revised
Sohag (Number) 0.00 9.00
Action: This indicator has been Revised
Menya (Number) 0.00 1.00
Action: This indicator is New
Assiut (Number) 0.00 1.00
Action: This indicator is New 7a) Number of firms benefiting from Program-financed business development services or cluster development activities in 0.00 1,000.00 Program governorates (Number)
Action: This indicator has been Revised
# of beneficiary firms in Qena (Number) 0.00 400.00
Action: This indicator has been Revised
# of beneficiary firms in Sohag (Number) 0.00 400.00
Action: This indicator has been Revised
# of beneficiary firms in Menya (Number) 0.00 100.00
Action: This indicator is New
# of beneficiary firms in Assiut (Number) 0.00 100.00
Action: This indicator is New 8) Percentage of beneficiary firms that demonstrate increased 0.00 25.00 formal and informal jobs (Percentage)
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RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target
% of Qena beneficiary firms that demonstrate increased 0.00 25.00 formal and informal jobs (Percentage) % of Sohag beneficiary firms that demonstrate increased 0.00 25.00 formal and informal jobs (Percentage) 3 c) Number of government staff trained in the Cluster 0.00 30.00 Competitiveness Initiatives methodology (Number)
Action: This indicator is New
Percentage of government staff trained that report increased knowledge of how to conduct effective public-private 0.00 70.00 dialogue and develop cluster action plans (Percentage)
Action: This indicator is New
Number of governorate level staff trained (Number) 0.00 24.00
Action: This indicator is New 4 b) Number of targeted District Service Centers that issue fully 0.00 8.00 automated shop licenses (Number)
Action: This indicator is New
Menya (Number) 0.00 4.00
Action: This indicator is New
Assiut (Number) 0.00 4.00
Action: This indicator is New 4 c) Number of G2B services advertised on the Menya 0.00 5.00 governorate portal (Number)
Action: This indicator is New
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RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target
4 d) Number of G2B services advertised on the Assiut 0.00 5.00 Governorate portal (Number)
Action: This indicator is New
3 d) Number of reforms identified and promoted through Cluster 0.00 2.00 Competitiveness Initiatives (Number)
Action: This indicator is New
Menya (Number) 0.00 1.00
Action: This indicator is New
Assiut (Number) 0.00 1.00
Action: This indicator is New 7 b Increase in MSME awareness of how to prevent COVID-19 0.00 20.00 disease (percentage) (Percentage)
Action: This indicator is New
7 c. Increase in MSME awareness of the COVID-19 government 0.00 20.00 support programs (Percentage)
Action: This indicator is New
3 d) Cluster implementation manual has been adopted by the No Yes governorate administration in Menya (Yes/No)
Action: This indicator is New
3 e Cluster implementation manual has been adopted by the No Yes governorate administration in Assiut (Yes/No)
Action: This indicator is New
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RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target
Improving access to quality infrastructure and services 9) Percentage of Program-financed capital investment projects for which pre-investment feasibility studies are conducted 0.00 80.00 (Percentage)
Rationale: The end target is revised downward slightly from 95% to 80% due to addition of 2 new governorates, as the new governorates cannot be expected to achieve similar high achievement on this indicator as the existing governorates. This Action: This indicator has been Revised will reduce the overall Program average , as the average for the new governorates is expected to be lower, while the average for the old governorates is expected to be higher, than the revised target.
10) Cumulative value (EGP) of infrastructure and services investment expenditures paid by governates under the Program 0.00 2,100,000,000.00 that has been subject to technical audit and certified acceptable (Number)
Qena (Number) 0.00 1,050,000,000.00
Sohag (Number) 0.00 1,050,000,000.00 11) Percentage of O&M plans that have corresponding budget 0.00 80.00 allocated for Program governorates (Percentage) 12) Percentage of Program-financed investments emerging from / in alignment with needs assessment consultation sessions 0.00 30.00 involving citizens (Percentage)
Rationale: The existing indicator 12) for citizen engagement is a simple Yes/No indicator which is being replaced by this indicator Action: This indicator is New which is more substantial, as it measures the impact of citizen consultations on the governorates' annual budgets, as a measure of responsiveness to citizen needs.
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RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target
Citizen and business engagement 12) Citizen participation integrated into annual planning process No Yes for Program governorates (Yes/No)
Action: This indicator has been Marked for Deletion
13) Percentage of complaints resolved through upgraded GRM 0.00 55.00 system for Program governorates (Percentage)
Rationale: The end target is revised downward slightly from 60 to 55 (out of 100) due to addition of 2 new governorates, as the new governorates cannot be expected to achieve similar high results on this metric as the existing governorates. This will reduce Action: This indicator has been Revised the overall Program average , as the average for the new governorates is expected to be lower, while the average for the old governorates is expected to be higher, than the revised target.
14) Percentage achievement of performance score on public 0.00 80.00 access to information for Program Governorates (Percentage)
Rationale: The end target is revised downward slightly from 100 to 80 (out of 100) due to addition of 2 new governorates, as the new governorates cannot be expected to achieve similar high results on this metric as the existing governorates. This will reduce Action: This indicator has been Revised the overall Program average, as the average for the new governorates is expected to be lower, while the average for the old governorates is expected to be higher, than the revised target.
IO Table SPACE
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Disbursement Linked Indicators Matrix
DLI IN00904390 ACTION DLI 1 DLI-1) Increase in occupancy rate in industrial zones in Program governorates
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Outcome Yes Text 31,250,000.00 100.00 Period Value Allocated Amount (USD) Formula Baseline 14% Qena, 34% Sohag
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
FY2019/20 0.00
FY2020/21 Qena 34% Sohag 39% 31,250,000.00
FY2021/22 0.00
FY2022/23 0.00
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DLI IN00904391 ACTION DLI-2) Number of industrial zones in Program governorates implementing their respective Industrial Zone Modernization DLI 3 Plan
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Outcome Yes Text 6,000,000.00 100.00 Period Value Allocated Amount (USD) Formula Baseline Zero
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
IZMP developed and adopted for Program FY2019/20 6,000,000.00 3.0 Mn per governorate governorates
FY2020/21 0.00
FY2021/22 0.00
FY2022/23 0.00
DLI IN00904392 ACTION DLI 5 DLI-3) Number of CCIs launched in Program governorates
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Outcome Yes Number 32,000,000.00 100.00 Period Value Allocated Amount (USD) Formula
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Baseline 0.00
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
FY2019/20 8.00 32,000,000.00 4.0 Mn per CCI launched
FY2020/21 0.00
FY2021/22 0.00
FY2022/23 0.00
DLI IN00904393 ACTION DLI-4) Number of DSCs that reduced by at least 25% their average processing times for issuing operating licenses and DLI 7 construction permits to businesses in Program governorates
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Outcome Yes Number 12,000,000.00 100.00 Period Value Allocated Amount (USD) Formula Baseline 0.00
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 2.00 4,000,000.00 2.0 Mn for each DSC
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FY2019/20 4.00 8,000,000.00 2.0 Mn for each DSC
FY2020/21 0.00
FY2021/22 0.00
FY2022/23 0.00
DLI IN00904394 ACTION DLI-5) Minimum Access Criteria met and Performance Score achieved by Program Governorates to receive Performance DLI 9 Grants
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Number 267,000,000.00 56.18 Period Value Allocated Amount (USD) Formula Baseline 0.00
Jan-June 2017 30.00 30,000,000.00 As per PAD
FY2017/18 30.00 60,000,000.00 As per PAD
FY2018/19 0.00
FY2019/20 70.00 60,000,000.00 As per PAD
{[(5.5 Mn x Performance Score of Qena) + (8.5 Mn x Performance Score of FY2020/21 75.00 20,000,000.00 Sohag)] / 75} + 6.0 Mn for achievement of MAC {[(11.0 Mn x Performance Score of FY2021/22 80.00 40,000,000.00 Qena) + (17.0 Mn x Performance Score
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of Sohag)] / 80} + 12.0 Mn for achievement of MAC {[(16.0 Mn x Performance Score of Qena) + (24.0 Mn x Performance Score FY2022/23 85.00 57,000,000.00 of Sohag)] / 85} + 17.0 Mn for achievement of MAC Action: This DLI has been Revised. See below.
DLI IN00951494 ACTION DLI-5) Minimum Access Criteria met and Performance Score achieved by Program Governorates to receive Performance DLI 9 Grants
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Number 277,000,000.00 54.15 Period Value Allocated Amount (USD) Formula Baseline 0.00
Jan-June 2017 30.00 30,000,000.00 As per PAD
FY2017/18 30.00 60,000,000.00 As per PAD
FY2018/19 0.00
FY2019/20 70.00 60,000,000.00 As per PAD
FY2020/21 75.00 26,600,000.00 As per Amended LA
FY2021/22 80.00 50,500,000.00 As per Amended LA
FY2022/23 80.00 49,900,000.00 As per Amended LA
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DLI IN00904395 ACTION DLI-6) Cumulative value (EGP) of infrastructure and services expenditures paid by each of Qena and Sohag Governorates DLI 11 under the Program that has been subject to technical audit
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Output Yes Text 60,000,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
FY2019/20 0.00
FY2020/21 0.00
$2.857 for each new EGP 100 FY2021/22 EGP1.05 Bn equivalent for Program governorates 30,000,000.00 equivalent certified by technical audit $2.857 for each new EGP 100 FY2022/23 EGP1.05 Bn equivalent for Program governorates 30,000,000.00 equivalent certified by technical audit Action: This DLI has been Revised. See below.
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DLI IN00951460 ACTION DLI-6) Cumulative value (EGP) of infrastructure and services expenditures paid by each of Qena and Sohag Governorates DLI 11 under the Program that has been subject to technical audit
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Output Yes Text 42,000,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
FY2019/20 0.00
FY2020/21 0.00
EGP750 Mn of capital spending has passed Technical $2.0 for each new EGP 100 equivalent FY2021/22 15,000,000.00 Audit certified by technical audit EGP1.350 Bn of capital spending has passed $2.0 for each new EGP 100 equivalent FY2022/23 27,000,000.00 Technical Audit certified by technical audit
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DLI IN00904396 ACTION DLI-7) Minimum Access Criteria met and Performance Score achieved on competitiveness by Program Governorates to DLI 7 receive Competitiveness Grants
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Number 87,000,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
FY2019/20 0.00
1) $3.0 Mn per govenorate for achieving MAC; 2) $750,000 x FY2020/21 38.00 34,500,000.00 [Performance Score on competitiveness achieved by governorate] 1) $3.0 Mn per govenorate for achieving MAC; 2) $750,000 x FY2021/22 32.00 30,000,000.00 [Performance Score on competitiveness achieved by governorate] $750,000 x [Performance Score on FY2022/23 30.00 22,500,000.00 competitiveness achieved by governorate]
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Action: This DLI has been Revised. See below.
DLI IN00951477 ACTION DLI-7) Minimum Access Criteria met and Performance Score achieved on competitiveness by Program Governorates to DLI 7 receive Competitiveness Grants
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Number 95,000,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
FY2019/20 0.00
FY2020/21 36.00 32,800,000.00 As per formula in Amended LA
FY2021/22 32.00 35,500,000.00 As per formula in Amended LA
FY2022/23 32.00 26,700,000.00 As per formula in Amended LA Rationale: As noted in Restructuring Paper text
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DLI IN00904397 ACTION DLI-8) Timely conduct of Annual Performance Assessment and timely communication to Program governorates of indicative DLI 8 allocation of Performance and Competitiveness Grants
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Process No Yes/No 3,500,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
FY2019/20 0.00
FY2020/21 Yes 1,500,000.00 Yes/No
FY2021/22 Yes 1,500,000.00 Yes/No
FY2022/23 Yes 500,000.00 Yes/No
Action: This DLI has been Revised. See below.
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DLI IN00951478 ACTION DLI-8) Timely conduct of Annual Performance Assessment, timely procurement of implementation support, and local DLI 8 investment planning reforms
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Process No Yes/No 3,500,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No
Jan-June 2017 0.00
FY2017/18 0.00
FY2018/19 0.00
FY2019/20 0.00
FY2020/21 Yes 400,000.00 Yes/No
FY2021/22 Yes 1,950,000.00 Yes/No
FY2022/23 Yes 1,150,000.00 Yes/No
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ANNEX 2: PROGRAM ACTION PLAN
.
. PAP_CHANGE_TBL Action Completion Description Source DLI# Responsibility Timing Measurement Action
POM, including Other Client Due Date 14-Apr-2017 POM with details No Change PGM and CIM, is on all program adopted operational aspects is developed
PCO and LIU staff Other Client Due Date 14-Jun-2017 Training plan for No Change trained on overall the PCO and LIUs Program as defined in the implementation POM developed aspects and staff trained
ICT plans Technical Client Due Date 30-Jun-2021 ICT plans and No Change developed for technical Sohag and Qena specification documents developed [New Revised date]
Contracting of Technical Client Due Date 14-Jun-2017 Implementation No Change implementation support support consultants consultants contracted
Annual capacity- Other Client Recurrent Yearly Annual capacity- No Change building plan building plan for developed and all key program implemented implementation aspects developed and implementation has begun
Establish a Public Technical Client Due Date 29-Sep-2017 Framework for No Change Private Dialogue PPD created and (PPD) forum implemented within the governorates
Prepare a Technical Client Due Date 31-Dec-2020 Completed No Change strategic strategic economic study economic study for each for each governorate governorate
Design the Technical Client Due Date 29-Dec-2017 Framework No Change framework for document industrial zone prepared and management agreed by the Industrial
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Development Authority with each governorate
Design cluster Technical Client Due Date 30-May-2020 Additional No Change development and guidance in line firm level with the assistance Competitiveness programs, Manual tailored to the (Technical needs of Sohag Volume to POM) and Qena prepared and implemented [Completed]
APA assessor Technical Client Due Date 14-Jun-2017 Assessor No Change recruited in line recruited and with the POM contracted
Technical quality Technical Client Due Date 31-Dec-2020 Technical quality No Change audit firm audit firm contracted in line contracted [New with the POM Revised date]
GRM upgrading Environmental and Social Client Due Date 30-Jun-2020 Plan for No Change plan developed Systems harmonization and integration of multiple grievance mechanisms at the governorate level developed and is currently being implemented. [Completed]
Citizen report Other Client Recurrent Yearly Annual No Change card surveys publication of administered citizen report card survey report and data
Fiduciary Fiduciary Systems Client Due Date 14-Apr-2017 Fiduciary No Change Implementation Implementation Manual, which is Manual part of the POM, developed including training material and SBDs for procurement, adopted
Develop and Fiduciary Systems Client and World Due Date 21-Oct-2019 Training and No Change implement Bank capacity-building training and plan developed capacity building and implemented
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plan on fiduciary by the PCO and implementation the LIUs in the issues two governorates and training provided.
Open Program Fiduciary Systems Client Due Date 30-Jun-2017 Bank accounts No Change bank accounts in are opened both governorates to receive the Program funds
Annual Fiduciary Systems Client and World Recurrent Yearly Verification that No Change procurement Bank the procurement plans discussed plan and all and approved at relevant the governorate information are level and all being published bidding in the GoE opportunities, procurement BDs, and bid portal evaluation results,including on direct contracting, estimates, original and final contract amounts, are advertised in GoE e-portal
Environmental Environmental and Social Client Due Date 14-Apr-2017 Environmental No Change and Social Systems and Social Implementation Implementation Manual, part of Manual the POM, developed including different measures to bridge identified gaps, adopted
Develop and Environmental and Social Client Recurrent Continuous Training and No Change implement Systems capacity-building training and plan developed capacity building and being plan on implemented. environmental and social issues
Local Technical Governorates Due Date 30-Apr-2021 An LIU is officially New Implementation established via a Units established governor’s decree in new and is fully governorates in staffed and
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accordance with functional. POM
Economic Technical Governorates Due Date 31-May-2021 Economic New Councils Councils are established in established and new governorates are assuming in accordance their functions in with POM accordance with POM
Scope of Technical PCO Due Date 30-Jun-2021 All Consultant New Implementation firms have Support effective Consultants and contracts to other Program provide needed consultant firms support to new expanded to new governorates as governorates specified in POM
Technical Technical Governorates Due Date 31-May-2021 All staff required New expertise to to work on CCIs, ensure effective G2B and COVID delivery of CCIs, support to G2B services and businesses as COVID support to described in POM MSMEs, as have contracts described in and have started POM, are in place work
Governorate Technical Governorate Due Date 31-Oct-2021 Governorate New website updated and DSCs websites and with information electronically on G2B services generated report and digitized monitoring system implemented in participating DSCs to monitor time to issue business licenses and permits that are under the purview of DSCs
8 public servants Technical Governorates Due Date 31-Oct-2021 Participation New working in and PCO certificate issued governorates by training have participated provider in cluster competitiveness courses delivered as per POM
1 cluster action Technical Governorates Due Date 31-Oct-2021 Cluster Action New plan delivered Plan as per the
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and approved by and PCO POM and minutes Governorate of Council Economic Council meeting in accordance with POM
Data on SME Technical Governorates Due Date 31-Oct-2021 Note on SME New business and PCO business performance in performance and the context of minutes of COVID-19 Council meeting collected, analyzed and presented to Governorate Economic Council
Phase 1 of COVID- Technical Governorates Due Date 30-Jun-2021 Communications New 19 MSME and PCO materials and awareness summary of campaign plan outreach implemented campaign as per POM
Program bank Fiduciary Systems Governorates Due Date 30-Jun-2021 Bank accounts New accounts is and MoF are opened opened for new governorates to receive Program funds
Training and Fiduciary Systems PCO Due Date 31-Jul-2021 Training and New capacity- building capacity-building plan on fiduciary plan developed implementation and implemented issues developed and implemented in new governorates
Annual Fiduciary Systems Governorates Recurrent Yearly Verification that New procurement procurement plans discussed plans are being and approved at published in the governorate level GoE procurement and advertised in portal the GoE public procurement e- portal
Training and Environmental and Social Governorates Recurrent Semi-Annually Training and New capacity-building Systems and PCO capacity-building plan on plan developed environmental, and trainings social, citizen provided to engagement and governorates occupational
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health and safety issues developed and implemented in new governorates
E&S monitoring Environmental and Social Governorates Due Date 30-Sep-2021 E&S monitoring New framework, with Systems framework is clear roles and functional and responsibilities, being executed in adopted in new accordance with governorates POM
GRM upgrading Environmental and Social Governorates Due Date 30-Sep-2021 GRM upgrading New plan developed Systems plan developed and adopted in and adopted in new governorates new governorates in accordance with POM
Local Environmental and Social Governorates Recurrent Yearly Local New Development Systems Development Forums Forums are operationalized in assuming their new governorates functions in in accordance accordance with with POM POM
POM updated to Environmental and Social PCO Due Date 31-May-2021 POM updated New include Systems recommendation s of ESSA Addenda
.
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ANNEX 3: Summary of Update to Program Technical Assessment
Subprogram 1: Improving Local Business Environment:
1. In summary, Minya and Assiut have significant opportunities to solve development challenges through private sector development. However, the key constraints identified at the UELDP program design stage are still present today, and as such the UELDP program design remains relevant. Minya and Assiut are leading producers in a diverse set of agricultural crops; they show comparative advantages for the development of agri-processing, resources-based manufacturing and light manufacturing; and they each have a rich endowment of recognized and widely diverse cultural heritage sites distinct from other areas of Egypt, which offer potential for the development of the tourism sector. That said, Minya and Assiut also experience more significant barriers to private sector development than in other parts of the country, notably business licenses and permits and access to finance remain a significantly higher constraint in Upper Egypt compared to the national average. Additionally, while Minya and Assiut are relatively well connected to population centers and ports, key logistics constraints remain, and fully serviced industrial land is difficult to secure. Minya and Assiut further offer good access to skilled labor, but initiatives to upgrade firm-level capability appear scarce. 2. The UELDP design lends itself to support the core recommendation from the Country Private Sector Diagnostic (CPSD) to ensure inclusive participation from the private sector in setting the reform agenda; one of the critical contributions of UELDP is to build local capacity within the governorates to conduct public-private dialogue and on that basis articulate reform and investment priorities. This is done through the Cluster Competitiveness Initiatives (CCIs), which is a sector specific approach. UELDP is thus further well positioning to support the 5th CPSD recommendation, notably that related to sector-specific priority actions. Similarly, the end goal of UELDP is further aligned with the “pathways” proposed in the SCD, notably “boost private sector investment, firm growth and productivity,” “increase opportunities for good quality employment,” and “ensure resilience (macro and micro).” 3. Clearly, the original UELDP design could not have envisioned the outbreak of the COVID pandemic, and it was thus not designed as a COVID-19 support program. That said, the nature of the Program design lends itself to supporting Governorates with business resilience and recovery measures. A discussion of emerging international practice for COVID- 19 support to businesses, the GoE’s response to-date, the WBG response to-date, and a suggested way forward leveraging UELDP is provided in the SP1 Technical Assessment. In summary, there appears to be an opportunity for the Governorates to complement the Relief and Recovery programs of the central government by 1) launching a governorate level COVID- 19 awareness campaign to increase MSME’s awareness of a) disease prevention measures and b) COVID-19 MSME support programs available; 2) monitoring MSME business performance in light of COVID-19 and their uptake of GoE support programs; and 3) invest in digitizing G2B services, upgrading SME support programs, and developing and implementing cluster action plans that re-activate domestic and regional trade flows and value chain participation. Interventions 1 and 2 require a new UELDP result area, while intervention 3 is what the current result areas are already aiming to do. 4. The most critical constraint for UELDP implementation in Minya and Assiut is time. Lessons from UELDP implementation in Sohag and Qena suggest that given the time available for implementation, a reduced scope of activities should be pursued in Minya and Assiut. The scope of G2B services the governorates have control over is quite limited and significant progress on G2B requires strong coordination with central agencies, which takes time. Therefore, the suggested G2B activities for Minya and Assiut have been limited to those under direct control of the Governorate administration only. With regard to clusters, lessons from Sohag and Qena indicate that it is relatively straight forward to include CCIs in the Minya and Assiut program scope, and the target number of Cluster Competitiveness Initiatives (CCIs) for Minya and Assiut has been set based on lessons from Sohag and Qena. With regard to industrial zones, after UELDP effectiveness, the responsibility for industrial zones was shifted by law to the Industrial Development Agency (IDA). Therefore, progress with regard to zones depend on negotiation and interagency agreements with IDA. Further, the
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experience in Sohag and Qena indicate that IDA has limited capacity. Therefore, zone activities have not been included in the proposed scope of activities. 5. Given the limited time available for implementation under this initial expansion to Minya and Assiut, progress at PDO level will be limited within the timeline of the Project. Therefore, the team has expanded the number of intermediate targets to be measured in the Minya and Assiut, such that it is possible to measure progress made along the results chain during the life-time of the Project. The original PAD did not include a results chain, but one has been reconstructed and is reflected in the SP1 Technical Assessment. Subprogram 2: Improving Local Capacity for Access to Infrastructure and Services
6. In general, the findings of an institutional and technical assessment of Minya and Assiut governorates are similar to and broadly consistent with those of Qena and Sohag governorates undertaken during Program preparation in 2015/16. The “new” Governorates are structured and administered in much the same ways as Qena and Sohag (prior to Program) and are also similar to Qena and Sohag in terms of their population sizes and poverty profiles. Most salient features of public sector processes identified during the assessments of Qena and Sohag apply equally to Minya and Assiut. There is considerable scope for improving the effectiveness of public sector structuring and organization, investment planning, asset management, citizen engagement, and governance in both Minya and Assiut. Including both Governorates in the Program is thus consistent with the PDO. 7. Like Qena and Sohag, Minya and Assiut are among the poorest of Egypt’s Governorates. Infrastructure and service delivery needs are high in both Governorates. The geographical extension of the Program to these Governorates is thus consistent with the focus on providing finance for the historically poorer areas of Egypt. The administrative structure and socio-demographic characteristics of Minya and Assiut are summarized in Table 2. Organizationally, Minya and Assiut are structured similar to other Governorates: the diwan, or core administration, is responsible for the local development sector, headed by the Governor and made up of several departments. Associated with the diwan are the service directorates, de-concentrated arms of line ministries. Although prescribed by the prevailing local administration law for both the Governorate and district levels, elected local councils are not in place.
TABLE 2. GOVERNORATES’ ADMINISTRATIVE AND SOCIO-DEMOGRAPHIC STRUCTURE
Minya governorate Assiut governorate Total population 5,497,095 4,383,289 Urban population (as % of total population) 18.0% 25.9% No. of markaz (districts) 10 12 Largest markaz (population) Mallawy 927,386 Assiut 974,993 Smallest markaz (population) Minya El Gidida 15,036 Assiut El Gidida 8,003 Most urbanized markaz Minya El Gidida 100% Assiut 47% Least urbanized markaz El Edwa 8% El Fatah 6%
8. Infrastructure and service delivery structures, processes and outcomes in the two Governorates are weak and sub-optimal. There is no clear and formal assignment of functional responsibilities (Functional assignments) between the Diwan level (governorate) and districts, with the same applying to sector directorates. Socio-economic (or capital investment) planning is characterized by, inter alia, a lack of long term planning; absence of clear, well-grounded or transparent hard budget ceilings; lack of integrated and inter-sectoral planning; unclear processes for the prioritization of investment projects; limited citizen participation in the planning process and limited consultations with the local business community; Diwan- and district-level investment projects not being subject to feasibility or appraisal studies; very little active and evidence-based asset management for capital assets; and almost non-existent processes for transparency and grievance management.
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9. Expenditure pattern: Governorate-level spending in Minya and Assiut is dominated by payroll expenditure, which accounts for about 85-90% of total spending. Most capital expenditure is in the local development sector, with sector directorates having very limited capital budgets. Within the local development sector, roads infrastructure is the largest sub-sector. Total annual expenditure per capita in both governorates is just under EGP 1,000, with capital expenditure per capita being EGP 230.0 in Assiut and EGP 154.0 in Minya in the ongoing FY 2020/21. Minya has slightly larger population than Assiut, but the size of the investment budget is much larger in Assiut, because of which allocations on per capita basis are significantly higher in Assiut. 10. Fiscal impact of Program grants: Program grants to Assiut and Minya are expected to be large enough to incentivize reforms, but not so large to overwhelm absorptive capacity. Program grants are projected to be 14 and 30 percent of Minya’s forecast capital budgets for FY 21/22 and FY 22/23 (respectively) and 10 and 21 percent of Assiut’s budget for the same years. On a per-capita basis, this is about EGP 24.0 in FY21/22 and EGP 56.0 in FY22/23. Per-capita allocation is similar for both governorates since the grant allocation is based on governorate population.
Program Grants and GoE capital budget allocations Program Grants as % of GoE capital budget (forecasted) allocations (forecasted)
1,500
1,250 FY 22/23 21% EGP Millions 1,000
750 FY 21/22 10%
500 FY 22/23 30% 250
- FY 20/21 FY 21/22 FY 22/23 FY 20/21 FY 21/22 FY 22/23 FY 21/22 14% Minya Assiut GoE Chap 6. Allocation Program Grants
Cross-cutting Aspects: Institutional Capacity and Alignment with WBG Covid response
11. An institutional capacity assessment was completed which showed that the level of institutional capacity in Minya and Assiut is similar to that in Sohag and Qena at baseline. It is a relatively new phenomenon that Governorate administrations have local economic development staff, and it appears that Minya has a stronger local economic development team than Assiut. Minya is in better position to meet the institutional capacity requirements of the Program before its first annual assessment. The expansion to Minya and Assiut will imply a greater program management burden on the PCO. As such it is critical that the PCO is strengthened and implementation consultants are in place to manage the increased workload. Actions to achieve this have been incorporated into the PAP. 12. Alignment with WBG Covid-19 response: Table 3 illustrates how the Program is aligned with the overall WBG support to GoE on a comprehensive response to the pandemic.
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TABLE 3: ALIGNMENT OF PROGRAM WITH WBG SUPPORT TO EGYPT FOR COVID-19 RESPONSE
WBG COVID Response Framework WBG COVID Response in Egypt The Bank is financing Egypt’s COVID Response Project ($50m) UELDP complements this intervention by: o making financing available to governorates to respond to urgent needs of the Emergency support to health pandemic and coordinate local response in collaboration with relevant Ministries. interventions for saving lives Governorates are using Program funds to finance purchases of required threatened by the virus. equipment at local level, in coordination with Ministry of Health, and expenditures on sanitizing / disinfecting public and common spaces, facilities and buildings. o ensuring that basic services are not disrupted during the pandemic emergency, and that water, sanitation, electricity and solid waste management are accessible.
Relief The Bank is providing Additional Financing for Egypt’s Social Safety Net Program.
Social response for protecting Resilience and Recovery poor and vulnerable people from The Bank is financing: i) Sustainable Rural Sanitation Program targeting the Nile Delta the impact of the economic and ($850m); ii) phase 1 of Egypt’s Universal Health Insurance System targeting Port Said, Suez, social crisis triggered by the Ismailia, South Sinai, Luxor, and Aswan governorates; iii) Education Reform Project ($500m). pandemic. UELDP complements these interventions by providing support to governorates on local community mobilization using community institutions, youth groups etc. especially to disseminate messaging on preventative measures; all in collaboration with Ministry of Health. Relief IFC is providing emergency liquidity support under IFC’s COVID-19 Fast Track Facility: US$100mn and US$50mn working capital facilities to CIB and NBK Egypt respectively. UELDP complements this intervention by increasing Upper Egypt MSME’s awareness of disease prevention measures, COVID support programs, and digital platforms. Resilience and Recovery Economic response for saving livelihoods, preserving jobs, and The Bank is: i) financing the “Catalyzing Entrepreneurship for Job Creation” project, which ensuring more sustainable provides $150m in credit lines to microfinance institutions and SME banks; ii) preparing business growth and job creation Country Private Sector Diagnostic (CPSD) which identifies current constraints and reforms needed to unlock the potential of the private sector. by helping firms and financial institutions survive the initial crisis UELDP complements these interventions by: shock, restructure and recapitalize o boosting the productive capacity of the private sector in Upper Egypt through to build resilience in recovery. integrated Cluster Competitiveness Initiatives and upgrading of industrial land and investor services o making financing available to governorates for labor-intensive local civil works to generate short-term localized employment. Dozens of civil works subprojects are ongoing in the governorates in a variety of sectors. o providing flexibility to governorates, within the Program design, to implement other interventions to address emerging economic impacts and restoration of business activity as needed.
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WBG COVID Response Framework WBG COVID Response in Egypt The Bank is discussing with the GoE a new policy lending operation that will strengthen national-level policy reforms for the immediate COVID-19 response, and structural reforms Strengthening policies, for longer term economic recovery. institutions and investments for UELDP complements this intervention by building institutional capacity in resilient, inclusive and sustainable governorates to make better investment decisions; deliver more efficient and effective recovery by Rebuilding Better. government-to-citizen and G2B services; resolve bottlenecks to inclusive and sustainable private sector development and service delivery in governorates; and respond better to similar emergencies in future and future waves of the pandemic.
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ANNEX 4: Summary of Update to Environmental and Social Systems Assessment
1. An Addenda has been prepared for the Program ESSA aimed at addressing the environmental and social effects related to the geographic expansion in Minya and Assiut Governorates. The addenda has assessed the progress achieved in implementation of measures recommended in the ESSA; identified the risks, impacts and benefits of activities expected in the geographical extension; relevant legislative and procedural changes since the ESSA in 2016; systems, procedures and capacities of the teams in the two new Governorates in managing the environmental and social risks; and has recommended measures to strengthen the environmental and social system. The Addenda was prepared during the COVID-19 pandemic and thus virtual interviews and consultations were conducted for its preparation. Several focus group discussions / consultations were arranged with local stakeholders, including community development associations (CDAs), non-governmental organizations (NGOs) and young entrepreneurs. Discussions and information were collected about current practices for social and citizen engagement, mechanisms for acquiring land, and handling grievance and complaints. The baseline described in ESSA for existing governorates has substantial similarities to Minya and Assiut. Environmental Assessment:
2. The environmental system described in the ESSA is applicable to the existing Program and to the geographical expansion in terms of laws, regulations, standards, and procedures as well as actual implementation of those laws and standards. The exceptions to this are the following main changes, which have been introduced during the Program implementation period: i) New Classification of the projects according the Ministry of Environment Decrees in 2017, which classify the projects into 4 categories (A, B, Scoped B and C), where “C” represents the projects with significant adverse environmental impacts; and ii) Law 15/2017 for Industrial Zones (IZs) was issued. Articles 19 to 21 of the law stipulate that the environmental assessment required by the national environmental law is not applicable to the industrial establishment (privately owned) that are categorized low or moderate according to law 15/2017. 3. Overall environmental impacts of the geographic expansion to the new Governorates are positive. Positive impacts of the geographic expansion to the new governorates from an environmental perspective are: provision of better infrastructure and services to reduce existing environmental pressures; better solid waste management, water supply and sanitation; and indirect benefits through improvement of roads to reduce traffic congestions (with associated air pollution, noise and emissions) and accidents and improve roads safety. 4. The main risks/impacts remain related to the geographical expansion are change of land use, impacts on air quality resulting from different sources, risk of improper handling of solid and hazardous waste generated from new industrial facilities, risk of discharging noncomplying effluent from water and wastewater treatment plants, risk of affecting groundwater quality from sub-projects through leaching, risks to the safety of workers and neighboring communities, occupational risks at workplaces and construction sites, risks of improper handling of chance find. In general, the environmental impacts on land, air and water are considered of low to moderate significance and the ESIA process willy typically include mitigation measures to avoid and minimize such impacts. Capacity of the new governorates are very close to the capacities of Qena and Sohag Governorates at Program inception stage. Therefore, the main capacity gaps identified in the ESSA applies to the new governorates. These include lack of experience in preparing or reviewing Environmental and Social Impacts Assessments (ESIAs), supervising environmental management of construction sites and supervising Occupational Health and Safety (OHS) aspects. However, the improvement achieved in building capacity of Qena and Sohag governorates is expected to give strong momentum to building the capacity of the new governorates for addressing those gaps. Environmental teams in both new governorates and in EEAA regional branch are assessed to have adequate technical and managerial capacity to manage environmental and occupational health and safety risks. Social Assessment:
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5. The Program has significantly improved the management of the social risks and strengthening citizen engagement in the existing two governorates This includes establishing and operating project-level GRM, establishing system and preparing Social Impact Assessments (SIA), public disclosure protocols, participatory planning, applying the eligibility screening tools with the aim of avoiding social risks, establishing systems for citizens feedback, etc. 6. Geographic expansion to the two new Governorates is anticipated to result in very similar benefits and positive social impacts to those being experienced in Qena and Sohag Governorates under the Program. This includes but is not limited to improving coverage and quality of service delivery, improving level of citizens participation, improving local government responsiveness and accountability to citizens, communities’ wellbeing and improved connectivity, creation of economic opportunities, with special benefits to youth. This is due to the nature of targeted communities, implementing agency and planned intervention being of very similar nature. Special attention will be given to mitigate negative impacts of the COVID-19 crisis and to support governorates in dealing with its negative social and economic implications. Likewise, most of the identified social risks for the Program still apply in the two new Governorates. The most important risks include land-related risks, risk of damages associated with construction activities, cultural challenges for engaging with women and youth, risks related to fragmented grievance redress systems, risk of social discontent as a result of excluding certain communities, limited level of capacities on the local level to handle social issues. The relatively limited level of capacity in the new governorates, particularly in areas related to citizen engagement and social risk management, has been assessed to be a key risk. Overall capacity of the teams of the two new governorates is very close to the capacity of the teams of Qena and Sohag Governorates before the commencement of the Program. 7. Most of the identified social system related legislations under the ESSA are still applicable to the new Governorates, including all the laws that regulate labor issues and social assessment. There have been some changes in the laws that regulate land expropriation for public interest projects as well as those dealing with encroachers and informal users of state-owned land. On the former, Law 24/2018 as well as Law 187/2020 came as amendments for Law 10/1990 and entailed most importantly increase for the value of the compensation to include additional 20 percent above the prevailing market price for the interest of the affected persons (landowners). On the level of dealing with illegal uses on state-owned land there has been a nationwide campaign under of Law 144/2017 to restore the vast spaces of state-owned land that were encroached on. The Reconciliation Law 17/2019 and Law 1/2020 were also issued to deal with the violations and irregularities against the Building Law No.119/2008. 8. Community engagement and GRM: The institutional and procedural capacity of the new governorates in this area is similar to Sohag and Qena at the time of Program inception. There are also similarities in the platforms being used in engaging communities. No systematic approach exists for engaging with citizens and other local stakeholders in Assiut and Minya for the development of investment plans. However, electronic platforms in these governorates are playing more active role in engaging with citizens (e.g. use of social media and WhatsApp). They are also heavily relying on the two established national systems for receiving and dealing with complaints, most importantly, the national electronic portal under the Prime Minister and the electronic platform “Your Voice is Heard” (“Sotak Masmoa”) which was developed with a leading role from the PCO and is currently playing an active role in different governorates and is managed by MOLD. The new governorates have several NGOs working at the grassroots level and collaborating with GoE on different areas, ranging from social solidarity support to more substantive role in communities’ empowerment. 9. Recommendations: Recommendations of the addenda focus on the following main three areas: staffing and capacity strengthening; mainstreaming E&S assessment management and monitoring; and mainstreaming citizen engagement activities. The most critical of these recommendations are included as new actions in the updated PAP.
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ANNEX 5: Summary of Update to Integrated Fiduciary Systems Assessment
1. The Bank fiduciary team conducted a desk review and virtual meetings with counterparts in Assiut and Minya governorates. Procurement as well as expenditure controls in both governorates follow the national rules and practices including the new procurement law, the use of “Form # 50” to authorize payments, ex-ante reviews of payment packages and verifying completeness of supporting documents. Ex-post controls are also applied by financial inspection teams as well as external auditors. Several budget directorates indicated that they estimate their annual budgets based on the actual expenditures in the previous fiscal year, especially for chapters 1, 2, 4 and 5, but without elaborating on a Procurement plan as requested by Article 9 of the new procurement law 182 of year 2018. Quarterly financial reports are prepared by each governorate and annual final accounts are audited by the Central Audit Agency. A weakness was noted that is related to non-availability of standard procurement documents that should be prepared by GAGS and both Governorates need to submit the procurement document to Fatwa department in Cairo for approval. Such approval usually takes around three months. 2. For activities financed by the governorates and implemented by executing agencies such as the water and sanitation companies, special protocols/agreements models are used, under which the executing agency usually opens a separate bank account, maintains accounting records and applies the respective financing conditions (including procurement and safeguards rules). Although financing from governorates is not very common for the water companies, those companies have implemented several projects financed either by the Social Fund for Development (and its successor) or by government initiatives coordinated by the Ministry of Housing and Utilities. 3. Overall fiduciary rules and procedures governing the operations of the two new governorates are largely similar to those applicable to the two existing governorates currently implementing Program activities. Accordingly, the Program design associated with this geographic expansion will adopt fiduciary arrangements similar to those under the current Program. 4. A review of governorates’ websites did not identify publishing of budgets, financial statements and other financial information. While Minya governorate website had some detailed information on government services and investment opportunities, it did not have similar information on budget allocations or sectoral/districts allocations or spending. For Assiut governorate, its website also included information on investment opportunities and other services, but it lacked budget information; the link to investment plan had outdated information that belongs to FY 2016/2017. The Program will introduce transparency requirements in these governorates as part of the MAC and PMs for the Performance Grant. 5. Regarding Program performance to date, annual financial statements are audited by an independent private external audit firm. Audit reports for the first two financial years of the Program have included unmodified (clean) audit opinions. Annual investment plans are prepared, but better alignment between achieved results, verification and funding was sought and agreed under the latest Program restructuring. Expenditures are being tracked and reflected in the financial statements, despite some issues with timeliness. Expenditure controls are subject to government accounting procedures and are aligned with the POM. As of November 2020, there are no overdue or pending audit reports. The upcoming audit is due by December 31, 2020. 6. Based on the above, the overall residual fiduciary risk rating is assessed to be substantial. Mitigation measures have been identified, the most critical of which are included as new actions in the updated PAP.
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