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World Bank Document 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
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