FOR OFFICIAL USE ONLY Report No: PAD3362 Public Disclosure Authorized

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED GRANT

Public Disclosure Authorized IN THE AMOUNT OF SDR 48 MILLION (US$66 MILLION EQUIVALENT)

(OF WHICH US$20 MILLION IS FROM THE IDA18 REGIONAL SUB-WINDOW FOR REFUGEES AND HOST COMMUNITIES)

TO THE

ISLAMIC REPUBLIC OF

Public Disclosure Authorized FOR A

DECENTRALIZATION AND PRODUCTIVE INTERMEDIATE CITIES SUPPORT PROJECT

MARCH 9, 2020

Urban, Disaster Risk Management, Resilience, and Land Global Practice Africa Region

Public Disclosure Authorized

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

CURRENCY EQUIVALENTS

(Exchange Rate Effective January 31, 2020)

Currency Unit = (MRO) MRO 37.50 = US$1

US$1 = SDR 0.726

FISCAL YEAR January 1 - December 31

Regional Vice President: Hafez M. H. Ghanem Country Director: Nathan M. Belete Country Manager: Laurent Msellati Regional Director: Simeon Kacou Ehui Practice Manager: Sylvie Debomy Farouk Mollah Banna, Abel Bove, Alexandra Le Courtois, Task Team Leaders: Manuel Luengo

ABBREVIATIONS AND ACRONYMS

AFD French Development Agency (Agence Française de Développement) AfDB African Development Bank ADER Agency for the Development of Rural Electrification APAUS Agency for the Promotion of Universal Access to Services (Agence pour la promotion de l’accès universel aux service) ARM Multisectoral Regulatory Authority (Autorité de régulation multisectorielle) CAPPP Public-Private Partnership Support Cell CAPEX Capital Expenditure CDP Communal Development Plan CERC Contingency Emergency Response Component CPF Country Partnership Framework DA Designated Account DECLIC Local Development Support in Mauritania (Programme d’appui de l’AFD au Développement économique local et aux Initiatives communales en Mauritanie) DEME Directorate of Electricity and Energy Management (Direction de l’électricité et de la maîtrise de l’énergie) DEP Project Execution Department DFIL Disbursement and Financial Information Letter DGCT General Directorate for Local Governments (Direction Générale des Collectivités Territoriales) DSPE Delegate for Electricity Public Service (Délégataire du service public d’électricité) EIRR Economic Internal Rate of Return ENABEL Belgian Development Agency ESIA Environmental and Social Impact Assessment ESS Environmental and Social Standard ESCP Environmental and Social Commitment Plan ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan EU European Union FAUS Fund for Universal Access to Services FIRR Financial Internal Rate of Return FM Financial Management FRD Regional Development Fund (Fond regional de développement) GBV Gender-based Violence GDP Gross Domestic Product GHG Greenhouse Gas GIZ German Agency for International Cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit) GoM Government of Mauritania GRM Grievance Redress Mechanism GRS Grievance Redress Service HR Human Resource HRM Human Resource Management ICT Information and Communication Technology

IFMIS Integrated Financial Management Information System IFR Interim Financial Report LG Local Government LGDP Local Government Development Project LMP Labor Management Procedure M&E Monitoring and Evaluation MGM Municipal Grant Manual MoF Ministry of Finance MPEM Ministry of Petroleum, Energy, and Mines NPV Net Present Value OMVS Senegal River Basin Development Organization OPEX Operating Expenditure PCU Project Coordination Unit PDO Project Development Objective PDU Urban Development Project (Projet de développment urbain) PFM Public Finance Management PIU Project Implementation Unit PNIDDLE National Integrated Program for Decentralization, Local Development and Employment (Programme National Intégré pour la Décentralisation le Développement Local et l'Emploi des jeunes) POM Project Operation Manual PPSD Project Procurement Strategy for Development PPP Public-Private Partnership PSC Project Steering Committee PV Photovoltaic RIMDIR Program for Strengthening Productive and Energy Investments in Mauritania for the Sustainable Development of Rural Areas (Programme de Renforcement des investissements productifs et énergétiques en Mauritanie pour le développement durable des zones rurales) RSW Refugee and Host Community Sub-window SCAPP Strategy for Accelerated Growth and Shared Prosperity (Stratégie de Croissance Accélérée et de Prospérité Partagée) SEP Stakeholder Engagement Plan SOMELEC National Mauritanian Electricity Company (Service public d’électricité mauritanien) TA Technical Assistance ToR Terms of Reference UDP Urban Development Program UNDP United Nations Development Programme UNHCR United Nations High Commissioner for Refugees WFP World Food Programme

TABLE OF CONTENTS

DATASHEET ...... 1 I. STRATEGIC CONTEXT ...... 7 A. Country Context...... 7 B. Sectoral and Institutional Context ...... 9 C. Relevance to Higher Level Objectives ...... 12 II. PROJECT DESCRIPTION ...... 13 A. Project Development Objective ...... 13 B. Project Components ...... 14 C. Project Beneficiaries ...... 20 D. Results Chain ...... 21 E. Rationale for Bank Involvement and Role of Partners ...... 21 F. Lessons Learned and Reflected in the Project Design ...... 22 III. IMPLEMENTATION ARRANGEMENTS ...... 23 A. Institutional and Implementation Arrangements ...... 23 B. Results Monitoring and Evaluation Arrangements...... 24 C. Sustainability ...... 25 IV. PROJECT APPRAISAL SUMMARY ...... 26 A. Technical, Economic and Financial Analysis ...... 26 B. Fiduciary ...... 28 C. Legal Operational Policies ...... 29 D. Environmental and Social ...... 29 V. GRIEVANCE REDRESS SERVICES ...... 30 VI. KEY RISKS ...... 30 VII. RESULTS FRAMEWORK AND MONITORING ...... 33 ANNEX 1: Implementation Arrangements and Support Plan ...... 43 Annex 2: Spatial Approach to the Country Partnership Framework ...... 48 ANNEX 3: Overview of the refugee situation in Mauritania...... 51 ANNEX 4: Description of the Rural Electrification Subcomponent ...... 55 ANNEX 5: State of Decentralization in Mauritania ...... 61 ANNEX 6: Summary of Support from Technical and Financial Partners to the Decentralization Process and Municipalities ...... 65

ANNEX 7: Financial Management and Disbursement Arrangements ...... 68 ANNEX 8: Gender Analysis, Actions, and Indicators ...... 71 ANNEX 9: Applicability of Environmental and Social Standards ...... 73 ANNEX 10: Map ...... 76

DATASHEET

BASIC INFORMATION BASIC INFO TABLE Country(ies) Project Name

Mauritania Decentralization and Productive Intermediate Cities Support Project

Project ID Financing Instrument Environmental and Social Risk Classification

Investment Project P169332 Substantial Financing

Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [✓] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster

[ ] Alternate Procurement Arrangements (APA)

Expected Approval Date Expected Closing Date

30-Mar-2020 31-May-2025

Bank/IFC Collaboration

No

Proposed Development Objective(s)

The development objectives of this operation are to (i) improve access to local services in selected localities; and (ii) strengthen the capacities of Local Governments to plan and manage local public services.

Components

Component Name Cost (US$, millions)

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Improving Access to Infrastructure and Services for Economic Development 51.00

Strengthening Decentralization and Local Government Capacity 8.00

Project Management 7.00

Contingency Emergency Response Component 0.00

Organizations

Borrower: Islamic Republic of Mauritania Implementing Agency: Ministry of Economy and Industry

PROJECT FINANCING DATA (US$, Millions)

SUMMARY-NewFin1

Total Project Cost 71.00 Total Financing 71.00 of which IBRD/IDA 66.00 Financing Gap 0.00

DETAILS-NewFinEnh1

World Bank Group Financing

International Development Association (IDA) 66.00

IDA Grant 66.00

Non-World Bank Group Financing

Counterpart Funding 5.00

Borrower/Recipient 5.00

IDA Resources (in US$, Millions)

Credit Amount Grant Amount Guarantee Amount Total Amount Mauritania 0.00 66.00 0.00 66.00 National PBA 0.00 46.00 0.00 46.00

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

Refugee 0.00 20.00 0.00 20.00

Total 0.00 66.00 0.00 66.00

Expected Disbursements (in US$, Millions)

WB Fiscal Year 2020 2021 2022 2023 2024 2025 2026

Annual 0.26 3.65 5.64 9.34 16.87 21.57 8.66

Cumulative 0.26 3.91 9.55 18.89 35.77 57.34 66.00

INSTITUTIONAL DATA

Practice Area (Lead) Contributing Practice Areas Urban, Resilience and Land Energy & Extractives, Governance

Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Rating

1. Political and Governance  Substantial

2. Macroeconomic  Substantial

3. Sector Strategies and Policies  Substantial

4. Technical Design of Project or Program  Moderate

5. Institutional Capacity for Implementation and Sustainability  Substantial

6. Fiduciary  Substantial

7. Environment and Social  Substantial

8. Stakeholders  Substantial

9. Other  Substantial

10. Overall  Substantial

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

COMPLIANCE

Policy Does the project depart from the CPF in content or in other significant respects?

[ ] Yes [✓] No

Does the project require any waivers of Bank policies?

[ ] Yes [✓] No

Environmental and Social Standards Relevance Given its Context at the Time of Appraisal

E & S Standards Relevance

Assessment and Management of Environmental and Social Risks and Impacts Relevant

Stakeholder Engagement and Information Disclosure Relevant

Labor and Working Conditions Relevant

Resource Efficiency and Pollution Prevention and Management Relevant

Community Health and Safety Relevant

Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant

Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources

Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities

Cultural Heritage Relevant

Financial Intermediaries Not Currently Relevant

NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS).

Legal Covenants

Sections and Description Financing Agreement, Schedule 2, Section I.A.1 (a). The Recipient shall not later than three (3) months after the

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Effective Date, establish and thereafter maintain, throughout the Project implementation period, with composition, mandate and resources satisfactory to the Association, a steering committee, to be comprised of representatives of the Recipient’s (i) Ministry in charge of Decentralization; (ii) Ministry of Economy and Industry; (iii) Ministry of Finance; (iv) Ministry in charge of Urban Planning; (v) Ministry of Oil, Energy and Mining; (vi) Ministry of Environment and Sustainable Development; and (vii) one representative of all the selected Municipalities (“Project Steering Committee”). To this end, the Recipient will adopt an Order (Arrêté) establishing the composition, mandate and presidency of the Project Steering Committee.

Sections and Description Financing Agreement, Schedule 2, Section I.A.2 (d). The PCU shall not later than four (4) months after the Effective Date, recruit and thereafter maintain at all times during Project implementation the following additional staff: (i) a field coordinator; (ii) a technical specialist; (iii) a social safeguards specialist; (iv) an environmental safeguards specialist; (v) a decentralization specialist posted in the Ministry in charge of Decentralization; and (vi) an external auditor; each with terms of reference, experience and qualifications satisfactory to the Association.

Sections and Description Financing Agreement, Schedule 2, Section I.A.3 (b). Not later than four (4) months after the Effective Date, the Recipient shall cause the PCU to recruit and thereafter retain within SOMELEC (i) an environmental safeguards specialist; (ii) a social safeguards specialist; and (iii) an owner’s engineer, each with terms of reference and qualifications satisfactory to the Association

Conditions

Type Description Effectiveness Financing Agreement, Article V, 5.01 (a). The Association is satisfied that the Recipient has an adequate refugee protection framework.

Type Description Effectiveness Financing Agreement, Article V, 5.01 (b).The Recipient has adopted, and disseminated to the entities involved in the implementation of the Project, the Project Operation Manual as referred to in Section I.C.1 of Schedule 2 to the Financing Agreement, in form and substance satisfactory to the Association.

Type Description Effectiveness Financing Agreement, Article V, 5.01 (c).The Implementation Agreement has been executed and delivered between the Recipient and SOMELEC, and all conditions precedent to its effectiveness have been fulfilled.

Type Description Effectiveness Financing Agreement, Article V, 5.01 (d).The Recipient has recruited the following key staff for the Project Coordination Unit, each on the basis of terms of reference, qualifications and experience satisfactory to the Association and in accordance with the provisions of Section I.A.2 to Schedule 2 to the Financing Agreement to be posted in the Project Coordination Unit: (i) a Project coordinator; (ii) a financial management specialist; and (iii) a procurement specialist.

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Type Description Disbursement Financing Agreement, Schedule 2, Section III.B.1 (a). Notwithstanding the provisions of Part A above, no withdrawal shall be made: (a) for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed one million and one hundred thousand (1,100,000) SDR may be made for payments made prior to this date but on or after June 19, 2019 for Eligible Expenditures under Categories (1) and (3).

Type Description Disbursement Financing Agreement, Schedule 2, Section III.B.1 (b). Notwithstanding the provisions of Part A above, no withdrawal shall be made: (b) under Category (3) unless evidence has been submitted to the Association that: (i) the Recipient has adopted the Municipal Grant Manual in form and substance satisfactory to the Association; (ii) the Recipient has entered into one Municipal Grant Agreement with the selected Municipality for that one Municipal Grant.

Type Description Disbursement Financing Agreement, Schedule 2, Section III.B.1 (c). Notwithstanding the provisions of Part A above, no withdrawal shall be made: (c) under Category (4) unless and until the Association is satisfied, and notified the Recipient of its satisfaction, that all of the following conditions have been met in respect of said expenditures: (i) the Recipient has determined that an Eligible Crisis or Emergency has occurred, has furnished to the Association a request to include the proposed activities in the CERC in order to respond to said crisis or emergency, and the Association has agreed with such determination, accepted said request and notified the Recipient thereof; (ii) the Recipient has ensured that all safeguard instruments required for said activities have been prepared and disclosed, and the Recipient has ensured that any actions which are required to be taken under said instruments have been implemented, all in accordance with the provisions of Section I.E of this Schedule; (iii) the entities in charge of coordinating and implementing the CERC have adequate staff and resources, in accordance with the provisions of Section I.G of this Schedule, for the purposes of said activities; and (iv) the Recipient has adopted the CERC Manual, in form and substance acceptable to the Association, and the provisions of the CERC Manual remain - or have been updated in accordance with the provisions of Section I.G of this Schedule so as to be - appropriate for the inclusion and implementation of the CERC.

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I. STRATEGIC CONTEXT

A. Country Context

1. Mauritania is an arid country in West Africa, with a complex set of developmental challenges. Its population of 3.98 million (2018)1 has grown at 2.8 percent per annum since 2000. Nomadism, once prevalent, is all but disappearing, with half of the country’s population made up of former nomads who have settled in recent decades. The urban share of the population (51 percent in 2018) is growing fast and Mauritania now has the second most rapid urbanization rate in Africa. The capital, , comprises 1,155,000 people (57 percent of the urban population). Rural areas make up 49 percent of the population and are comprised of mostly recent settlements (more than 8,100 to date) that are sparsely populated (60 percent of rural settlements comprise fewer than 150 people).2

2. Despite a decade of growth, a key challenge for Mauritania is diversification in sectors creating jobs. Stability in Mauritania has been correlated with accelerated economic growth culminating with a gross domestic product (GDP) increase of 3.6 percent in 2018. Economic growth has been mainly driven by the extractive and mining industry, fisheries, and the construction sector. The underlying drivers of growth were the increase in iron, gold, and copper international market prices, as well as significant government investments in public infrastructure. Mauritania’s exports are largely dominated by extractives (53 percent) and fishery (45 percent), sectors not prone to large job creation yet. The unemployment rate is still high at 30–31 percent of the active population, with even higher rates of unemployment among women and youth.3

3. Even though Mauritania has made positive Figure 1. Difference between Rural and Urban strides in reducing spatial inequality in the past, cities Welfare (World Bank 2019) tend to have better outcomes in poverty alleviation

6 Distribution of household welfare in Mauritania 0 - e 0 0 0 . and while the national poverty rate decreased 5 6 0 - e 0

steadily, poverty remains a challenge in rural areas. 0 0 . 4 6 0

Despite a substantial drop between 2008 and 2014 from - e 0 0 y 0 . t 3 i s

44.5 to 33 percent, rural poverty remains high. This n 6 e 0 - e D 0 0 0 . recent decline arose principally from temporary relative 2 6 0 - e 0 0 0 price changes in primary commodities. More than half . 1

of all the poor (54 percent) live in four southern rural 0

0 200000 400000 600000 800000 1000000 wilayas: Brakna, Gorgol, Hodh Ech Chargui, and Assaba Per capita food & non-food consumption expenditure (annual) where unequal access to quality social services and rural areas urban areas

inequitable labor markets prevent them from becoming kernel = epanechnikov, bandwidth = 1.7e+04 a healthy, educated, and productive workforce. In contrast, urban areas registered fewer gains in poverty reduction and Nouakchott witnessed an increase in poverty. Yet, welfare differences between rural and urban communes remain sizeable, with higher performance cities. Poverty also holds a gender unbalance as women tend to be more exposed to poverty and economic shocks: men hold three jobs in every four, even though women represent 55 percent of the

1 Source: National Statistical Office (NSO) – Demographic Forecasts 2013-2043 (May 2016). NSO considers as urban the population living in district (moughatas) capitals and in centers of more than 5,000 inhabitants. Areas with a population of fewer than 5000 people are considered rural. 2 Source: NSO – 2013 Population Census. 3 World Bank Group, Mauritania Country Partnership Framework (CPF) Report 125012-MR

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working-age population. The gender gap increases with the level of education: boys are nearly 50 percent more likely to complete secondary education than girls. Insecure access to land also hits women, who account for just 8 percent of those holding land titles, harder.

4. The presence of refugees adds another dimension to Mauritania’s development challenges, with a concentration along the south-east border with Mali. The two eastern regions, Hodh Ech Chargui and Hodh El Gharbi, host most of the refugee population living in Mauritania.4 By mid-2019, 56,000 Malian refugees lived in and around the M’bera Camp, located a few kilometers from the city of Bassikounou. Another thousand Peulh from Central Mali may have come in the Hodh El Gharbi along the Malian border since 2017, though they are reluctant to register as refugees and hence are not accounted for. Those refugees put pressure on the already scarce resources with competition over basic resources such as water, firewood, and pastures for livestock, causing environmental damages and strained basic services, in particular in the Bassikounou Moughataa where they account for almost half of the population. Humanitarian agencies, led by the United Nations High Commissioner for Refugees (UNHCR) and the World Food Programme (WFP), have provided the bulk of assistance and improved the provision of services to refugees, eventually creating a negative unbalance for the host communities. Conscious of the likely prolonged nature of forced displacement in the country, the UNHCR developed a 2018–2022 strategy to strengthen host communities and refugees’ livelihood in the Bassikounou Moughataa to improve the resilience of the population, strengthen the social cohesion, and prevent extremism. The strategy puts a large emphasis on local economic development, in particular through improved access to markets for the agriculture and livestock sector and economic diversification.

5. Supportive of a coherent and sustainable response to the inflow of Malian refugees, the Government of Mauritania (GoM) is committed to ensuring the protection of refugees while promoting their increased self-reliance and the resilience of host communities5. In 2018, the UNHCR assessed that the GoM provided an adequate framework for the protection of refugees.6 In December 2019, the new Government reaffirmed its engagement to the global pact for refugees and has committed to adopt a law for asylum seekers, allowing refugees to be properly registered in national systems starting with the national registry, align access to health services for refugees with national citizens, and offer the refugees the same access conditions to the job market as national citizens.7

6. The Government has set economic diversification and regional development as priorities to foster job creation, reduce poverty, and improve refugee and host communities’ environment. As a response to the poverty challenge mostly concentrated in rural southern regions and support the economic development of the country, currently mostly concentrated in Nouakchott, Nouhadibou, and around the few mines, the Government is promoting a regional development agenda. This agenda combines strengthening the state’s presence for service delivery through decentralization with increased transfers of responsibilities to regions and investing in sectors with high potential for job creation, including in agriculture.8 The development of southern corridors will be critical to improve mobility and

4 As referred by the UNHCR, the urban refugees and asylum seekers are those located in Nouakchott and Nouhadibou, which is close to 3,000 people. 5 Agriculture and livestock account for 80 percent of the jobs in the Bassikounou Moughataa. 6 The adequacy is determined based on adherence to international or regional instruments such as the 1951 Refugee Convention or its 1967 Protocol or the adoption of national policies and/or practices consistent with international refugee protection standards. 7 In January 2020, the UNHCR was conducting an update of the Mauritanian protection framework. 8 Government of Mauritania. 2019. Discours de Politique Générale.

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access to markets in remote areas, including remote cities, in particular the two Hodh where refugees and host communities live.

B. Sectoral and Institutional Context

Access to Services and Urbanization in Southern Mauritania

7. Access to basic services is uneven with much lower access to services along the southern border, where population is concentrated. On average, population access to primary education (63.5 percent) and drinking water supply (62.1 percent) is relatively high, as is access to telephone services (66.4 percent). Yet, transit connectivity is poor—on average only 42.6 percent have access to public transportation, and this nears zero in areas outside Nouakchott and Nouhadibou—affecting the economic development of high potential growth area. The low level of basic services is even more prevalent in the two Hodh that host the refugee population.9 Important investments were made in the past 20 years in water and road infrastructure, though the two wilayas continue to be underserved, particularly with respect to energy and water. The M’bera Camp though tends to be slightly better off with regard to some services (education, health, water, and energy) compared to the rest of the Moughataa owing to humanitarian investments since 2012.

8. Additionally, climate change shocks are particularly affecting the southern and eastern regions, especially urban areas. Mauritania is exposed to recurrent droughts, floods, and coastal erosion that are exacerbated by climate variability. The livelihoods and food security of most of the poor living in the southern regions in remote areas are particularly affected. Rising temperatures, desertification, drought, floods, soil erosion, and decreasing availability of arable land contribute to drive migrations to the closest urban areas or to Nouakchott and Nouhadibou, which have grown at a sustained pace. But cities are also particularly vulnerable to flash floods, with recurrent events in the southern intermediate cities, the latest in Selibaby in August 2019, creating important economic losses in the housing sector and productive activities.

9. Past public investments have been disproportionally overlooked in the southern regions of the country. The financial resources allocated by international partners over 2010–2018 show a preference for the large cities along the western coast. Out of a portfolio of US$2.2 billion that was geographically tagged, only 28 percent was invested in the south, which accounts for 63 percent of the total population. Past World Bank—and other partners’—operations were intended to better balance those investments. About US$35 million of IDA allocation (out of 70) of the Urban Development Project (UDP-P069095)10 was injected into 12 regional cities. The Local Government Development Project (LGDP) then financed US$40 million worth of infrastructure in 100 rural and department communes. The French Development Agency (Agence Française de Développement, AFD) also funded a local development project (VAINCRE) in all the

9 The eligibility note for Mauritania (the Mauritania Assessment of Eligibility for IDA18 Regional Sub-Window for Refugees and Host Communities) considers both Hodh Ech Chargi and Hodh El Gharbi as a coherent host area for refugees who brought, for the main part, their animals when they fled to Mauritania. Indeed, the transhumance roads for pastoralists cut across the two administrative areas and similar communities live in the area as well as across the Malian border. While most of the refugees have settled in and around the Mbera Camp, pastoralism (either as an employee or animal owner) continues to be the main professional activity of refugees. In addition, while Bassikounou offers some important services, both social and economic, some services continue to be delivered only in Nema, such as hospitals and some administrative functions. 10 The PDU was implemented between 2001 and 2012 to support Mauritania's central and local governments (LGs) to (a) improve living conditions and employment opportunities in the main cities of Mauritania, especially in slums, and (b) strengthen the institutional framework and capacity for urban and land management.

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communes of the three poorest wilayas, all three in Southern Mauritania. But those have proved to be still insufficient to bridge the infrastructure gap and improve access to services to levels of Nouakchott and Nouhadibou.

10. Bridging the infrastructure gap in southern intermediate cities would enable them to play a significant role in job creation and economic development along the southern corridor. The urbanization rate in southern regions is low, ranging from 23 percent to 29 percent at most. Over time, several cities have grown to a population of 10,000 to 60,000 inhabitants. Among them, the most important are , , Kaedi, and Bassikounou. But despite the proven central roles of cities in facilitating access to markets for agriculture-led regions and offering better access to services than among rural localities, their growth has been relatively modest. In fact, most of the economic mobility has been attributed to Nouakchott or Nouhadibou, especially driven by young male migrants.11 Additional investments for improving domestic and regional connectivity, as well as access to electricity and water, have the potential to spur a new dynamic for private sector development and transform the existing intermediate cities into vibrant secondary cities that would provide better livelihoods and living standards and ultimately contribute to poverty reduction.

Access to Electricity, Key to Local Growth

11. Bridging the gap in access to electricity will have a catalytic effect on service delivery and private sector development. The electricity access rate in Mauritania, at 38.8 percent, is low and comparable to the average in Sub-Saharan Africa. In addition, significant disparities exist between urban and rural areas. While 76.9 percent of urban households have access to electricity, only 6 percent of rural households benefitted from electricity in 2015. In terms of coverage, out of 828 localities with more than 500 inhabitants, only 95 localities have access to electricity.12 The Government’s strategy for accelerated growth and shared prosperity (Stratégie de Croissance Accélérée et de Partage de la Prospérité, SCAPP) includes electrification and sets an ambitious target of 85 percent national access rate with universal access in urban areas and 80 percent access rate in rural areas by 2030.

12. The uptake of rural electrification remains low despite the Government’s engagement in rural electrification programs for 15 years. The initiatives include electrification through multifunction solar platforms financed by the United Nations Development Programme (UNDP) and the state diesel-powered mini-grids managed by private operators. The current regulatory framework defines the boundary of concession areas usually limited to villages. The main barriers to access to electricity in rural Mauritania include (a) the geographical spread of the country and low population density, which limit the possibility for grid extension requiring high costs of supplying rural and peri-urban households; (b) limited capacity of households to pay for electricity services coupled with low energy consumption, which make private investments in rural electrification unattractive; and (c) weak institutional and regulatory framework and lack of systematic planning of electrification options, which increase the perceived risks and limit the efficiency of public investments.

13. The Government has initiated an energy sector reform to improve the efficiency of the sector. The revision of the Electricity Code13 is ongoing with the aim to clarify the roles of different institutions

11 World Bank. 2019. Mauritania Country Economic Memorandum, Towards a More Diversified and Structured Urban Growth. 12 MPEM (Ministry of Petroleum, Energy, and Mines). 2018. Note sectorielle novembre. 13 Electricity Code (Law 2001-19).

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and support sector efficiency. The Electricity Code allows third-party generation and private sector participation in the distribution segment, particularly for off-grid areas.

14. To bridge the access to electricity gap, the Government provides financial support to private service providers by buying down the cost through the fund for universal access to services (FAUS). Formerly administered by APAUS (Agence pour la Promotion de l’Accès Universel aux Services), the FAUS is now managed by the Ministry of Economy and Industry. The FAUS is financed through levies collected from telecom, water, and energy operators; information and communication technology (ICT) providers; provisions of the state budget; contributions from development partners; and the poverty alleviation fund, as well as revenues and surpluses from its own operations and investments. This fund is used to subsidize tariff gaps of mini-grids managed by private operators, as well as for replacement and renewal of electrification systems.

New Momentum for Decentralization

15. The Government is committed14 to accelerate the decentralization process as a means to improve service delivery and foster local growth inside the country, as well as support the social cohesion of refugees and host communities. Decentralization was slow until the creation of the Regional Development Fund (Fond Regional de Développement, FRD) in 2001. The IDA-funded Programme National Intégré pour la Décentralisation le Développement Local et l'Emploi des jeunes (PNIDDLE-P127543) in 2014–2019 helped reinforce the role of municipalities15 in local governance and service delivery, but systemic challenges remained at the end of the project to maintain adequate local capacities and resources.16 Decentralization and local governance are priorities of the Sahel Alliance to enhance the stability in the Sahel region. In the , citizen engagement mechanisms are needed to foster social cohesion between refugees and host communities.17 Considering the large distances at stake in the wilaya, 1,200 km between Nema (the regional capital city) and Nouakchott and 250 km between Bassikounou (the farthest wilaya) and Nema, it is critical to create strong and efficient local public authorities who can coordinate implementation of the government development strategy and create a framework for citizen engagement and accountability.

16. Increased dialogue between public and economic stakeholders at the regional and local level has the potential to optimize public investment for local growth. The municipalities’ main areas of interest have been mostly in social services, solid waste in cities, and agriculture in rural areas. Local Governments (LGs) have limited framework for collaboration and dialogue with economic actors, and the latter have limited collective action, in particular urban informal economic actors.18 Improving the

14 2016–2030 SCAPP and in the Discours de Politique Générale du Gouvernement (Septembre 2019) 15 LGs include municipalities and regional councils. City refers to an urban center, while a municipality usually includes an urban center surrounded by a set of rural localities, sometimes disseminated on a large territory. 16 The LG Development Project (in support of PNIDDLE) with US$25 million IDA and US$50 million from the GoM, financed infrastructure and capacity building of 100 municipalities from 2014 to 2019. It was the first operation empowering municipalities to manage their allocations, from planning to execution, and to implement an innovative approach based on performance. 17 For example, village committees were established to facilitate the dialogue between refugees and host communities when a market was created in the refugee camp, cutting economic activities of the host community. 18 World Bank (ongoing) study on urbanization in Southern Mauritania.

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dialogue between economic actors and LGs will inform public investment planning, thus fostering local private sector growth.

17. Improving municipal financial management (FM) efficiency would contribute to improve local service delivery and local growth. In 2019, the Ministry of Finance (MoF) developed a budget accounting software, connected to the Treasury,19 that could be extended into an Integrated Financial Management Information System (IFMIS) for LGs. Also, country experiences showed the potential for municipalities to increase local tax recovery despite capacity constraints.20 Scaling up could increase LGs’ capacity in FM, as well as accountability and control, setting the foundations for increased transfers to LGs.

18. The creation of regions is both an opportunity and a challenge for locally driven development. So far, the transfer of responsibilities by sector ministries to LGs has been limited. The creation of regions introduced a new layer for coordination for local development, between deconcentrated services at regional and district levels, municipal councils, and regional councils. Clarifying the modalities of the transfer of responsibilities and coordination will be key to local development.

19. This project aims to foster local growth along the southern corridor by bridging the infrastructure gap in intermediate cities, leveraging the economic potential of refugee migrations, and supporting decentralization. In the main southern cities, the project will improve infrastructure and services that can serve in priority economic actors including access to electricity while strengthening LGs to deliver services and foster a dialogue with economic actors. The project is designed in synergy with the AFD’s electrification and decentralization projects (RIMDIR21 and Local Development Support in Mauritania [DECLIC] 1 and 2)22 and other projects supporting rural development (AFD- and IDA-funded projects), water access both urban and rural (IDA), optic fiber (IDA), health (IDA), and decentralization (GIZ). Social support projects will also add to the spatial approach for local development, with social safety nets and employability (IDA).

C. Relevance to Higher Level Objectives

20. The project contributes to the World Bank Group’s twin goals of ending poverty and promoting shared prosperity by reducing spatial inequality in access to basic infrastructure and services between the rural where the poverty rate is the highest and the two main cities of Nouakchott and while focusing on opportunities for economic development and job creation. This operation is in line with the World Bank Group’s FY18–FY23 Country Partnership Framework (CPF) in particular Pillar 1, accelerating inclusive growth and creating employment, and Pillar 2, improving service delivery. The proposed project is also consistent with the World Bank’s commitment to the Sahel

19 The IFMIS is called Elkhazin-Elbeledi. 20 For example, PNIDDLE (pilot in ) and the German Agency for International Cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit, GIZ) pilot. 21 RIMDIR = Program for Strengthening Productive and Energy Investments in Mauritania for the Sustainable Development of Rural Areas (Programme de Renforcement des investissements productifs et énergétiques en Mauritanie pour le développement durable des zones rurales) 22 A joint vision note has been prepared between the World Bank and AFD to harmonize the approaches and articulate the activities in the electrification and decentralization sectors.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

Alliance23 to deliver multisectoral infrastructure and services and reinforce local governance in the south and east of Mauritania where the poverty rate and the level of vulnerability are the highest. Finally, corporate objectives of the World Bank will be supported. The proposed project also applies the maximizing finance for development approach with the use of PPPs for the provision of electricity services in rural areas. Whenever possible, partnership with private investors will also be established to build and operate some infrastructure, such as markets. Cross‐cutting emphasis on gender will be adopted to bridge the gaps that limit the economic and political empowerment of women and girls in the country.24 The project will also contribute to address climate mitigation and adaptation, through climate-informed infrastructure investments and urban planning as well as investments that reduce the emission of greenhouse gases (GHGs).

21. The World Bank Board of Executive Directors, in consultation with the UNHCR, determined that Mauritania met both the quantitative and qualitative eligibility criteria for the IDA18 Refugee and Host Community Sub-window (RSW)25 and approved Mauritania’s eligibility for the IDA18 RSW in November 2018. Aiming to both reduce the infrastructure gap between refugees and host communities with a focus on local economic development and between the host regions26 (with access inclusive of refugees) and the rest of the country and improve local governance, the project is also aligned with the objectives of the IDA18 RSW, including (a) mitigating the shocks caused by an inflow of refugees and creating social and economic development opportunities for refugees and host communities; (b) facilitating sustainable solutions to protracted refugee situations, including through the sustainable socioeconomic inclusion of refugees in the host country; and (c) strengthening preparedness for increased or potential new refugee flows.

II. PROJECT DESCRIPTION

A. Project Development Objective

PDO Statement

22. The development objectives of this operation are to (i) improve access to local services in selected localities; and (ii) strengthen the capacities of Local Governments to plan and manage local public services.

PDO Level Indicators

• People provided with improved access to services through the project, disaggregated by women and by refugees (number)

23 The Sahel Alliance, which was announced in Paris on July 13, 2017, aims to increase financial and technical support to the G5‐ Sahel countries—Mauritania, Chad, Burkina Faso, Niger, and Mali—over the next five years. The World Bank Group is a founding member of this Alliance, along with the African Development Bank (AfDB), European Union (EU), France, Germany, and UNDP. The Alliance has since been enlarged to include Italy, Spain, and the United Kingdom. Initial focus areas for the Sahel Alliance are (a) youth employment, education, and training; (b) agriculture and food security; (c) energy access and renewable energy; (d) governance, including judicial systems and countering corruption; (e) provision of basic services and support for decentralization; and (f) security. 24 CPF, page 23. 25 World Bank. 2018. Mauritania Assessment of Eligibility for IDA18 Regional Sub-Window for Refugees and Host Communities. 26 The eligibility note refers to both Hodh Ech Chargi and Hodh El Gharbi as host regions of Malian refugees.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

• Beneficiary local businesses in targeted localities positively impacted by the infrastructures financed by the project, disaggregated by women-owned businesses, and by refugee-owned businesses (percentage) • Electricity connections created as a result of the project, including for refugee and host communities (number) • Increase in Annual Investment Budget execution of targeted municipalities (percentage). B. Project Components

23. This project will support the Government’s efforts to foster the local economy of intermediate cities of southern Mauritania through productive investments and institutional support to local authorities to deliver those services in line with the decentralization agenda. Investments will be concentrated in a small number of urban centers and, when relevant, their surrounding rural localities, to seek higher impacts. In particular, it aims to deliver higher-quality services to social and private economic actors, including in refugees and host communities of Hodh Ech Chargui and Hodh El Gharbi, through a concentration of high impact investments in a few dynamic cities suffering from an infrastructure deficit. This is aligned with one of the pillars of the decentralization strategy, which recommends encouraging economic and urban levers, considering urban centers as a means to deliver higher levels of services for the population and economic agents. Main large localities that are still lacking electricity connection will also be part of the electrification effort. Those investments will be complemented with institutional strengthening aiming to support dedicated actors to better plan and deliver services, contributing to consolidate the infrastructure and service investments through systematic and better consultation with local actors (both economic and service oriented), more transparent financing mechanisms, spending efficiency and revenue mobilization, as well as improved urban planning and management. By strengthening the management capacity of the targeted municipalities and regional councils, the project will hence contribute to increase the performance of LGs in driving local development.

24. The design and implementation of the project will be articulated with other IDA sectoral projects (access to water and sanitation, youth employment, and health and cash transfer services to refugee and host communities) to increase impact on economic development and job creation in this part of the country and other donor projects such as DECLIC 1, 2 as well and RIMDIR.

Component 1: Improving Access to Infrastructure and Services for Economic Development (US$55.0 million equivalent, of which US$34 million from IDA, US$17 million from IDA RSW)

Subcomponent 1.1: Resilient urban infrastructure and services supporting economic development in selected Southern intermediate cities (US$36.0 million)

25. The subcomponent will finance investments in infrastructure and services to support the economic development of selected cities, including investments that contribute to improve the attractivity of the city for businesses and employees. Financing will cover the feasibility and technical studies, as well as works and possible equipment. Seven cities—Rosso, Selibaby, Kiffa, Aioun, Nema, Bassikounou/M’bera Camp, and Adel —have been selected based on their population, level of economic activity, and potential to extend benefits to a larger surrounding population, as well as their role in the social and economic inclusion of refugees, applicable in the two host regions (that is, for the four cities of Hodh Ech Chargui and Hodh El Gharbi).

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

26. The project will finance infrastructure investments that are identified as development priorities through a participatory process. This process will follow three main steps, which will help ensure that the needs of different beneficiaries are properly reflected in the investment program:

(a) The Communal Development Plans (CDPs)27 will identify the priority areas for development of the cities. The plans are prepared in a participatory process, including consultation with different stakeholders and social groups, such as youth, women, and refugee groups (where applicable), as well as private economic actors.

(b) On the basis of the CDPs, the municipalities will conduct feasibility studies on those economic development priorities to select the investments eligible for funding under this subcomponent. The feasibility studies will assess the economic impact and help prioritize the interventions that provide the most benefits in terms of boosting urban economies, reducing poverty, and creating jobs, especially for young people. The studies will involve the following: (a) confirm the interest of existing and potential beneficiaries (social, informal, or private) (b) assess the technical and financial feasibility (c) identify investments that can be funded through private investments and those that need public funding (d) identify success factors, including for special beneficiary groups, such as women and refugees and (e) propose technical and design solutions that favor green investments (such as the use of eco- friendly material or green areas and tree planting), and screen environmental impacts to propose design features for the investments.

(c) The final selection of investments will be done by a local selection committee28 led by the municipality, which will comprise representatives of the main local public institutions (local administration and regional council), utilities, civil society (including women and youth), and economic actors (both formal and informal) and will comprise at least 30 percent of women and representatives of refugees (where applicable).

27. Infrastructure to be financed by the project will meet certain eligibility conditions. The eligibility conditions include some conditions typical to municipal investments: (a) fall within the municipality mandate, (b) be part of the CDP, (c) have mitigated social and environmental impacts; (d) those investments will not compete with private investment; (e) investments that have no or little economic impact as assessed by the feasibility study will not be funded; and (f) to encourage greener urbanization, 5 percent of each city allocation will be dedicated to green investments, covering additional costs incurred by design features. The full selection process will be provided in the Municipal Grant Manual (MGM), including selection criteria with regard to the economic impact, impact on refugees, and gender gap reduction.

28. It is anticipated that infrastructure would mostly include urban roads, urban drainage systems, electricity network extension, water network extension, solid or liquid waste management infrastructure, community or cultural facilities, markets, and public spaces and parks. Other types of

27 The CDP is the regulatory tool for commune investment planning. It is supposed to be prepared following local elections and help the municipality plan for its elected period, that is, it spans over five years. In practice, it is mostly an inventory of infrastructure and services, which leads to a priority investment plan established in a participatory manner. For the purpose of the project, the scope of the terms of references (ToRs) for the CDP was enlarged with a local economic development lens. 28 The selection committee will be an extension of the Municipal Consultative Committee, which is the official body for municipal planning.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

infrastructure that help improve the use of infrastructure such as sanitation, daycare, and streetlighting, are likely to be funded as well. All infrastructure will be designed keeping climate change considerations in mind, and many will directly support climate resilience (for example, improved urban drainage will help reduce the impacts of heavy rainfall events, while solid or liquid waste management will enhance environmental health and safety in view of increasingly severe climatic events and help reduce flooding in urban areas). The design of infrastructure will also be made in compliance with climate and risk- informed planning, as part of the feasibility study.

29. Each municipality will receive a grant calculated according to the following criteria. In addition to a fixed minimum lump sum, the allocation will include a variable sum determined by (a) the size of the urban population, (b) the size of its economic sector (based on the number of economic actors), and (c) the differential construction costs to compensate remote cities for unit cost difference (based on the road distance to Nouakchott). The allocation formula will favor the city with the greatest potential for economic development as an engine of growth for the region. Learning from the LGDP’s experience,29 70 percent of the subcomponent funding will be allocated at the beginning of the project. A remaining 30 percent will be distributed after two years of project implementation taking into account (a) the disbursement rate of the first allocation and (b) the increase in own-source revenue collection in the first year of the project.

Subcomponent 1.2: Urban and rural electrification (US$19.0 million)

30. The subcomponent will contribute to increasing access to electricity for households in the wilayas of Hodh Ech Chargui, Hodh El Gharbi, and Assaba using solar photovoltaic (PV) hybrid mini-grids. A top- down approach is proposed in this operation and is driven by the Government agenda to expand access starting with centers with the biggest population and high development potential. The subcomponent will also finance the extension of the existing grid and the production capacity in the city of Bassikounou (potentially extended to the M’bera Camp).

31. The project will promote private sector participation in electrification using renewable energy through a delegation scheme in rural areas. The scheme with private operators will be based on investment subsidies to reduce costs to end users in selected localities outside the national utility concession areas that are not expected to be reached by the national grid in the short term. It will strengthen and support PPP arrangements to install, operate, and maintain new hybrid solar-diesel mini- grids for the provision of electricity in areas which will not be connected to the national grid. It envisages that a nationwide harmonized tariff will be applied to all concession customers to align with the national electricity utility (SOMELEC) tariff. The tariff gap will be paid using the FAUS for the shortfall incurred by the private operators.

32. The targeted localities are chosen for their socioeconomic development potential including population density, and intensity of economic and social activity. The project will be implemented in synergy with the energy component of the RIMDIR led by AFD, EU, and the Belgian Development Agency (ENABEL). The subcomponent will finance infrastructure (solar PV hybrid mini-grid, networks, connections) that can support the growth of small isolated localities in three priority areas30 by providing electricity to households and enabling the emergence of economic activities in promising sectors. The

29 In the LGDP, parts of funding allocations to some LGs had to be cancelled in the fourth year of the project because of investment execution delays. 30 RIMDIR will finance electrification of three other priority areas. All technical and design studies for all six priority areas are financed by the AFD and EU through RIMDIR.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

subcomponent will finance the establishment of three centralized hybrid mini-grids covering 46 localities, including the three cities of , , and Twil, which are currently electrified using isolated diesel generators and managed by SOMELEC.

33. In the proposed scheme, investments will be subsidized up to 90 percent of investment costs to incentivize a private sector with limited financial capacity and reduce tariff gaps. The subcomponent will also finance the services of an owner’s engineer to assist SOMELEC. For the targeted three areas, the total investment needed in the power plant and distribution network is estimated at US$23 million (including connection costs, owner’s engineer, and technical assistance [TA]) while the available World Bank budget is US$19 million in total (including for Bassikounou).

34. The project will also increase access to electricity in the city of Bassikounou and the M’bera Camp through grid extension. The investment will consist of the upgrade and extension of distribution medium and low voltage networks and provision of meters and connections supplies. The feasibility study of this activity will take place in the first year of project implementation to design its technical scope and budget.

35. Finally, this subcomponent will finance TA activities to the MPEM for sector institutional strengthening. Support to the MPEM will be directed to strengthen the institutional and regulatory framework and finance reform measures including activities related to the ongoing redesign of the institutional scene, tariff study, management improvement plan for SOMELEC to identify areas of interventions to improve the operational and financial performance of the utility, as well as trainings on specific reform themes.

Component 2. Strengthening Decentralization and Local Government Capacity (US$8.0 million equivalent, of which US$6 million from IDA, US$2 million from IDA RSW)

36. The objectives of the component are to (a) build the capacity of the targeted LGs, both at the regional and municipal levels in public finance management (PFM) and public sector management to increase LGs’ efficiency and capacity to develop their local economy, and (b) strengthen the systems for implementing decentralization reform. Municipalities of the seven cities and the five regional councils will be primarily targeted for this component, to maximize synergies with Component 1.

Subcomponent 2.1: Strengthening the systems for decentralization (US$2.0 million)

37. The subcomponent aims to support the implementation of the deconcentration and decentralization strategy at the central level—in particular through the ministries in charge of Decentralization, Finance, and Urban Planning—to strengthen the legal framework and processes to effectively transfer responsibilities and the related resources to LGs. The project will finance TA and small equipment for the following:

(a) Improve central government oversight of LGs by (i) training the Direction Générale des Collectivités Territoriales (DGCT) staff on aspects relevant to local governance, including territorial development, PFM, HRM (human resource management), and performance- based management; (ii) supporting the deployment of DGCT units in the targeted regions; (iii) developing additional modules to the LG IFMIS to support local account quality, its deployment, and its interfacing with the state accounting system; and (iv) enhancing the

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

DGCT information management system and monitoring and evaluation (M&E) tools on local public policies and local investment management (infrastructure geo-reference, impact mapping, and so on) and decentralization and local development projects.

(b) Improve fiscal decentralization by (i) improving the legal framework for LG financing mechanisms that enhance LGs’ accountability and performance, fostering local economic development, and ensuring territorial equity; (ii) improving the manuals for LG planning and budgeting to strengthen inclusiveness, private sector development, and gender sensitivity; (iii) renovating and adapting the structures and organizations within the Local Finance Department (DGTCP) network to establish regional coordination of Treasury services, reorganize local finance administration, and create a service dedicated to municipalities to improve the service quality toward users; (iv) improving the own-source revenue mobilization by improving the management of inactive securities and their central management by the Treasury; (v) controlling risks and securing procedures by developing and supervising the system of internal accounting control by the Audit and Internal Control Department of the Treasury; and (vi) supporting the operationalization of regions by creating tools, producing normative documentation of their financial and accounting management, keeping the accounts, and producing management accounts.

(c) Improve the policy and systems for territorial and urban development planning, including processes for regional development planning, a study of the impact of national voluntary resettlement program, and training the Ministry of Urban Planning.

(d) Strengthen LG HRM, including the elaboration of the legal framework for LG staffing31 (LG HR legal framework, training center for LG staff and elected representatives, and so on) and a plan for the transfers of line ministries’ deconcentrated services to regional governments in compliance with the mandates and on the basis of the associated financial resources evaluated.

(e) Support deconcentration, decentralization, and state deployment policy making, including the elaboration of a program for the deployment of state’s human and financial resources across the territory, a stocktaking study of decentralization strategy implementation, a strategy for gender equality in the local elected office.

(f) Support the preparation of a national program for decentralization and support to productive intermediate cities, which would build on the experience of the project in the cities of the south and southeast and extend it to other wilayas, including the oasis and mining wilayas of the north, and would capitalize on other Subcomponent 2.1 activities.

Subcomponent 2.2: Building the capacity of LG (US$6.0 million)

38. The subcomponent aims to build the capacity of the targeted LGs specifically to improve their PFM and public sector management. The project will finance TA and small equipment for the following:

31 That is, an HRM framework adapted to LG needs and fiscal capacity, fostering attractivity for LG executive staff, flexibility and autonomy for LG management, and control from oversight authorities.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

(a) Improve targeted regional councils’ development planning, including the elaboration of regional development plans and agreements with sector ministries; training of regional councils’ executive staff in PFM and HRM; and support to the coordination of development actors, especially on humanitarian-development nexus in the regions hosting refugees.

(b) Strengthen targeted municipalities’ PFM, including the elaboration of local development plans and annual updates; pilot on local revenue mobilization using ICT; installation of the LG IFMIS and training key municipalities’ fiduciary staff, local counselors, and Treasury; set- up of the LG dialogue mechanism with local economic actors; and strategic and legal advice on municipality-level PPP.

(c) Improve targeted municipalities HRM, including functional reviews, HR adjustment plans, and simple HRM tools.

(d) Strengthen LG citizen engagement, including the elaboration of municipal simplified budget execution report; enhanced inclusiveness in LG local development planning and monitoring (including women and refugees); and piloting of a municipal grievance redress mechanism (GRM) in the targeted municipalities, accessible to all including women and refugees.

(e) Improve urban development planning, including the elaboration of urban plans and drainage master plans and implementation of urban land mobilization tools for infrastructure investments as needed in the selected cities of Subcomponent 1.2.

(f) Support deconcentrated services in the coordination of local actors, including humanitarian actors, where relevant, and local initiatives in selected LGs for the success of the project and other IDA RSW projects.

Component 3: Project management (US$8.0 million equivalent, of which US$6 million from IDA, US$1 million from IDA RSW)

39. This component will support the implementation of all activities in accordance with the World Bank’s policies and guidelines in the area of coordination, supervision, FM, procurement, audits, safeguards, M&E, and training and operating costs. This includes the cost of the Project Coordination Unit (PCU) and other implementing entities and project management and implementation support to SOMELEC for the project.

Component 4: Contingency Emergency Response Component (US$0.0 million)

40. Should a natural event precipitate a major disaster affecting the livelihoods of people living in the project area, the Government may request the World Bank to reallocate project funds to cover some costs of emergency response and recovery. Detailed operational guidelines for implementing the project Contingency Emergency Response Component (CERC) will be prepared and approved by the World Bank as a disbursement condition for this subcomponent. All expenditures under the CERC will be in accordance with paragraphs 11, 12, and 13 of the World Bank Policy: Investment Project Financing. They will be appraised and reviewed to determine if they are acceptable to the World Bank before any disbursement is made. Disbursements will be made against an approved list of goods, works, and services required to

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support crisis mitigation, response, recovery, and reconstruction. RSW funds should be used to finance eligible activities that benefit refugees and host communities.

Table 1. Component Cost per Source of Financing (US$, millions)

IDA18 IDA18 Counterpart Total National RSWa Funding Component 1: Improving Access to Infrastructure and Services for 34 17 4 55 Economic Development Subcomponent 1.1: Resilient urban infrastructure and services 22 10 4 36 supporting economic development in selected Southern intermediate cities Subcomponent 1.2: Urban and rural electrification 12 7 0 19 Component 2: Strengthening decentralization and Local 6 2 0 8 Government capacity Subcomponent 2.1: Strengthening the systems for decentralization 2 0 0 2 Subcomponent 2.2: Building the capacity of LG 4 2 0 6 Component 3: Project management 6 1 1 8 Component 4: Contingency Emergency Response Component 0 0 0 0 Total 46 20 5 71 Note: a. IDA18 RSW funds finance only infrastructure, services, and cost related to activities benefitting refugees and host communities.

C. Project Beneficiaries

41. The project will directly impact three levels of beneficiaries:

(a) The population of the selected cities and surrounding rural areas that will get improved access to urban services or electricity, including refugees and host communities of the M’bera Camp, Bassikounou, Nema, , and Aioun. Those direct beneficiaries include a large part of the refugees from Mali in and around the M’bera Camp as well as along the Malian border and of the host community.32 The electrification subcomponent will cover three urban centers and 43 rural localities for a total population of about 46,000. With the current project financing, the project is expected to result in 4,500 new electricity connections to households, community facilities, and productive users, respectively 2,500 in the rural localities and 2,000 in Bassikounou, accounting for the host community.

(b) Economic actors of the cities, about 140 formal enterprises and 11,000 informal and social actors, which will have improved access to infrastructure and services to grow their businesses, including refugee-owned businesses and businesses owned by members of the host communities.

(c) The staff and elected representatives of local institutions whose capacity will be reinforced.

32 The urban populations of Bassikounou, Nema, and Adel Bagrou are here accounted for the host community. But it will be updated once refugee registration in those cities will be done by UNHCR.

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42. Indirect beneficiaries include (a) the population of selected cities, which accounts for about 260,000 inhabitants, including 56,000 refugees of the camp and about 70,000 urban residents of the host communities, that will have daily improved access to economic opportunities (jobs) and enhanced resilience because of the infrastructure and services financed under this project and (b) the population of the regions as a whole, which is about 1.8 million people, that will have improved access to economic infrastructure in the selected cities and hence improved access to market for their agriculture and trade activities.

D. Results Chain

E. Rationale for Bank Involvement and Role of Partners

43. The project will support the GoM’s local development agenda outside the main two cities of the country, going hand in hand with national decentralization efforts. The Government’s commitment was already demonstrated in the previous World Bank-supported PNIDDLE. The renewed agenda promoted by the new government recognizes that a more effective decentralization has the potential to empower local development, as well as facilitate citizen engagement, good governance, and transparency. In 2018, the World Bank supported, through the LGDP, the preparation of a National Strategy on Decentralization and Local Development, the implementation of which will be supported by the project. Implementing the strategy will require substantial efforts to test and establish the systems for planning, budgeting, and transfer systems and to build capacity of LGs. The World Bank’s international experience supporting governments in the region with implementing similar decentralization efforts is a comparative advantage. The World Bank is also well positioned to continue playing a coordination role and ensure alignment with the other donors in the sector, including the Sahel Alliance.

44. Development partners have also played a key role in supporting the Government’s decentralization and refugee protection agendas. Besides the World Bank, AFD, GIZ, UNDP, and the EU have been actively engaged in different aspects of decentralization and urban development in Mauritania. The AFD, through its DECLIC 1 and 2, is supporting municipalities in the regions of Gorgol, Guidimakha,

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

and Assaba in implementing rural infrastructure through decentralized and deconcentrated entities. UNDP, through its local government project (PAGOURDEL), is building local governance in several regions covered by the project. The UNHCR is the leading development partner in supporting the Government’s response to the refugee inflow and in coordinating with partners. The World Bank will coordinate with these partners to leverage their work and ensure complementarity among the various interventions.

F. Lessons Learned and Reflected in the Project Design

45. Lesson 1: Using LGs for project management is critical to maximize investment ownership and build sustainable capacities outside the capital city of Nouakchott. The project builds on the PDU and the LGDP (P127543) that were conducted in Mauritania in the past two decades. The LGDP proved that communes can play an important role in planning and implementation of local investments, bringing communities in the decision-making process. It also emphasized the need for financially informed capacities, with, for example, possible shared HR for rural communes. But with centralized project coordination, efforts to build capacity among local actors have not really lasted beyond the project life. The creation of regional councils and the new Presidential agenda for local development and decentralization offers a unique opportunity to create financially sustainable local institutions that could last beyond the operation.

46. Lesson 2: Concentration of investments for economic development leads to greater impacts. The Integrated Growth Pole project in Madagascar focused on just two intermediate cities, each of them of about 60,000 inhabitants, with multiple interventions aiming to support local economic development while attracting further private investments. This approach led a large creation of new firms (1,200 in Nosy Be and 800 in Port Dauphin just for registered firms), which resulted in an 85 percent increase in the corporate income tax paid by Fort Dauphin firms.

47. Lesson 3: Integrate support to refugees and host communities through local governance. The design of the project draws from the lessons from the first projects to draw from the IDA18 RSW. The World Bank team concomitantly prepared four different projects in Cameroon while building strong synergies on support provided to refugees and host communities on decentralization (P164803), social protection (P164830), health (P164954), and education (P160926) on the targeting mechanism, aligning intervention with the local planning process, harmonizing community worker role, and beneficiary database. The country context does not enable concomitant preparation of projects benefiting from the RSW. However, the project has strong synergies with (a) the water project (Mauritania Water and Sanitation Sectoral Project [P167328] under preparation), as water is one of the responsibilities transferred to regions and communes and (b) Mauritania Social Safety Net System Additional Financing (P168232), as fostering jobs and local economy is a shared objective. Building synergies will be fostered by (a) quarterly coordination meetings between the respective PIUs; (b) LG planning process, which includes water sector and local economic actor’s dialogue(c) financing of LG productive investment, which will foster local jobs; and (d) coordination of development and humanitarian efforts at the regional level (Hodh Ech Charghi).

48. Lesson 4: Combine long-term institutional support to decentralization and LG capacity building. Drawing lessons from institutional reform assessment from the World Bank33 the project is combining

33 Huybens, E. et al. 2014. Institutions Taking Roots: Building State Capacity in Challenging Contexts. Washington, DC: World

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support on decentralization to foster commitment at policy and local levels as well as setting a space for informing policy through pilot initiatives at the local level. Support at the institutional level is also focusing on (a) the aspects of decentralization that are most subject to attention by either the central government or LGs (for example, fiscal decentralization and LG oversight) and (b) design to leave space for just-in-time TA at the central level on decentralization reform related topics, to ensure responsiveness to emerging demands from the client and foster ownership and commitment to the reform.

III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements

49. A Project Steering Committee (PSC) will be established within three months of project effectiveness to support project implementation. The PSC will be chaired by a representative of and will comprise, at a minimum, of representatives of the following entities: the Ministry of Economy and Industry, Ministry in charge of Decentralization, MoF, Ministry in charge of Urban Planning, Ministry in charge of Energy, and Ministry in charge of Environment and the mayor of one of the selected municipalities (as chosen by its peers).

50. Coordination. The overall project coordination will be conducted by the PCU of PNIDDLE at the Ministry of Economy and Industry and based in Nouakchott. Given the geographical extent of the project area, a branch of the PCU will be created and located in the city of Kiffa to support project implementation in the regions of Assaba, Guidimagha, Hodh Ech Chargui, and Hodh El Gharbi. The city of Rosso will be supervised by the PCU central office in Nouakchott. This PCU will coordinate the project implementation entities, oversee overall implementation and ensure compliance with World Bank procedures. It will have overall FM and safeguards management responsibilities, and will manage the following: (a) proper execution of Component 2 in collaboration with the beneficiaries, (b) conformity control of the execution of the Implementation Agreement by SOMELEC, (c) conformity control of the execution of Municipal Partnership Agreements by the municipalities; (d) reporting and M&E, (e) procurement under Components 2 and 3, and (f) communication and visibility. Key staff of the PCU will be recruited by project effectiveness and will include a project coordinator, a financial officer, and a procurement officer and within four months of effectiveness will include a technical specialist, a field coordinator (based in Kiffa), an environment specialist, and a social specialist.

51. Implementation. Specific implementation arrangements for project activities will be the following:

(a) Subcomponent 1.1 will be implemented by beneficiary municipalities with support from the PCU, including its branch in Kiffa. This proposed arrangement aims at creating a sustainable capacity for investment management among local authorities, empowering municipalities with the leading role in the selection and implementation of local infrastructure.34 The minimum technical staffing of municipalities to implement investments will be detailed in the MGM. The PCU will provide technical support to the municipalities in the identification, preparation, and construction phases of the investments. Depending on the size and

Bank; World Bank. 2017. Governance and the Law, World Development Report.

34 The proposed arrangement for implementation of Subcomponent 1.1 results from a comprehensive institutional assessment conducted as part of project preparation to design a mechanism consistent with the decentralization vision of the Government.

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complexity of a specific investment, municipalities could eventually delegate investment implementation to the PCU.

(b) Subcomponent 1.2 will be implemented by SOMELEC. Procurement for this subcomponent will be done by SOMELEC with the technical support of the PCU but FM will be ensured by the PCU. The SOMELEC implementation team35 will be composed of a coordinator, a technical specialist, a procurement specialist, an environment specialist, and a social specialist. It will be seated within the Project Execution Department (DEP) of SOMELEC and will report to the Director of DEP, who will be responsible for the procurement and safeguards aspects of the subcomponent. In addition, an experienced project design and supervision consultant (owner’s engineer) will be recruited by the project to assist with project implementation and will report directly to SOMELEC’s coordinator. The SOMELEC implementing team will benefit from support of the PCU for reporting, FM, audits, and M&E.

(c) The technical responsibility of activities related to decentralization in Component 2 lies with the relevant line ministries, the Ministry in charge of Decentralization, MoF, and Ministry in charge of Urbanism. For each of the three ministries, a focal point, selected from among the ministry staff, will ensure the overall coherence of the project activities with the government policy, and a decentralization specialist,36 hired by project effectiveness, will be placed at the Ministry in charge of Decentralization. The PCU will provide implementation support for the execution of the activities.

B. Results Monitoring and Evaluation Arrangements

52. The PCU will develop an M&E framework to support project implementation. The M&E system will be a result-based framework and management tool, focusing on both project impacts and outcomes, as well as the regular monitoring of inputs and outputs covering the three project components. The M&E system will build on the existing M&E system from the relevant ministries with regard to LG performance, public investment monitoring, and access to electricity, as well as tools for asset management and service management that will be established by the project as part of the technical support to municipalities.

53. Digital innovations will be leveraged to support M&E of the project during implementation. In particular, the Geo-Enabling initiative for Monitoring and Supervision (GEMS) under the Kobo Toolbox Platform piloted under the World Bank-financed PNIDDLE project will continue to be leveraged for this project. The GEMS will enable the PCU to collect and structure digital data that automatically feeds into a centralized M&E system. The platform will be customized to capture relevant indicators, photos, audio, videos; time and date stamps; and Global Positioning System coordinates that allow for automated geo- mapping of the project during implementation. Using these tools systematically allows the Government and the World Bank remote supervision, frequent safeguards monitoring, and coordination across projects and partners working in the same area.

54. The M&E process will involve data collection and reporting, production of periodic activity reports, and biannual reviews. Surveys will be conducted among economic actors of the seven cities of

35 The same team at SOMELEC will be overseeing the implementation of the AFD-funded RIMDIR and will benefit from the oversight of the RIMDIR PSC. 36 The specialist will be established in the same unit in charge of the AFD-funded DECLIC 1 and 2 projects to ensure synergies.

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Subcomponent 1.1 to assess their satisfaction and increase business activities. A midterm review will be conducted no later than three years after project effectiveness. A final independent evaluation will be conducted in the last semester of project implementation to assess overall achievement of expected project results.

55. The implementation and results of this project will be monitored through a variety of instruments, including close supervision by the World Bank project team through periodic missions, regular field visits by project beneficiary entities and project staff, oversight of the PSC, and annual operational audits that will produce timely information on the compliance of all stakeholders with the procedures and responsibilities outlined in the different Project manuals and M&E plan.

C. Sustainability

56. Five specific risks for the sustainability of project outcomes have been identified. The first risk is linked to the lack of technical and financial capacity of the LGs to operate and maintain urban infrastructure. The second risk is linked to the level of exposure to natural disasters of the project area. The third and final risk is the uncertainty that still prevails over the decentralization agenda. The following mitigation measures have been identified:

(a) Increasing own-source revenues and maintenance practices. LGs, in particular the communes, will be provided with TA to increase their own-source revenues and hence their overall resources, which will be needed to maintain their property and services. Training will be delivered, a maintenance plan will be prepared, and incentives will be given to encourage LGs to invest in the maintenance of their assets.

(b) Involving communities and project stakeholders for increased asset ownership and operation and maintenance. To ensure ownership of the project by the beneficiaries and be able to tap into the community to support asset maintenance, a strong community engagement strategy is a key element of the project. TA will be provided to LGs to organize consultation workshops regularly with different groups of the community to capture their needs and expectations. Projects will be designed with and for local economic actors and, whenever possible, operation and maintenance arrangements will include beneficiary contributions or financial cooperation.

(c) Incorporating resilience in investment selection and design. The project will incorporate resilience in investment prioritization and design. First, urban development plans incorporating hazard and risk assessments will be prepared for several cities. All investments will be required to comply with those plans in terms of risk management. Where those spatial plans do not exist, a risk management assessment will be conducted as part of the feasibility studies. Then, whenever needed, exposure to hazards will be accounted for and incorporated in key technical documents to ensure the structural resilience of infrastructure to be built/upgraded under the project. When needed, an integrated approach to flood management could also be adopted with priority flood protection investments, possibly improving flood safety levels beyond the investment area.

(d) Adopting a learning by doing approach. The project will adopt an adaptive approach with respect to the decentralization agenda. Operational instruments for the effective transfer of

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competencies to be prepared under the project will inform the national policy and test the upcoming budget reform.

IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic and Financial Analysis

(i) Technical

57. Subcomponent 1.1: Urban infrastructure and services will be identified as part of local economic projects developed by the communes in partnership with other local actors, including the regional councils. This will be done using a participatory process in the course of preparing the CDP, which will be done as part of Component 2. The CDPs of all seven cities are being conducted as part of project preparation and will be available by project effectiveness. In parallel, a framework contract will be used to prepare the feasibility studies and economic assessment of the proposed urban projects. The ToRs for the framework contract are being prepared. This framework approach will allow the first construction works to start at the beginning of the second year of the project.

58. To speed up project implementation, first year investments were selected during a workshop in October 2018. Two solid waste projects in Rosso and Kiffa were selected during project preparation. Solid waste is a priority for many cities but so far has received very little financial support. In these two cities, most of the solid waste is generated by businesses, especially markets and small industries. These investments will then not only improve the health environment and cleanliness of the cities but also help improve management of the markets.

59. Subcomponent 1.2: Rural electrification investments were selected through a detailed prefeasibility study prepared for the AFD RIMDIR. The selection of the localities was done based on the population and development potential of the areas, in coordination with the AFD, which will finance the other localities. The prefeasibility study provided a cost estimate for the construction of the infrastructure looking at three configurations including decentralized mini-grids, a centralized grid with the urban centers, and a centralized grid without the urban centers. A larger centralized system was preferred as it provides the opportunity for economies of scale, for better organization and operation in terms of managing subsidies and tariff compensations.

60. The project supports strengthening climate resilience. Any infrastructure investments constructed under the project will consider the vulnerability to disaster risks and climate change for its design and construction. The project will also support climate resilience through climate-informed urban planning across selected intermediary cities.

(ii) Economic and Financial

61. The project aims to set up a conducive environment to drive urban economic development in terms of tangible (infrastructure services) as well as intangible assets (capacity building, TA, and governance) to strengthen both the ongoing decentralization strategy and the capacity of local authorities in targeted urban and rural localities (±30,000 inhabitants) located in the hinterland at the crossroads of national and regional trade routes, agro-pastoralism, and migration. As these cities maintain village traits, the project will help local authorities better plan, manage, adapt, and expand urban infrastructure to

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redefine their regional and national comparative advantages; instill economic growth; reduce poverty; and create job opportunities, especially for youth.

62. Because Subcomponent 1.1 investments will be identified during project implementation, it was not possible to conduct an economic analysis during project preparation. An economic analysis will be performed for each selected investment as part of the feasibility studies, where project-expected impacts will quantitatively be valued through a cost/benefit analysis, and the World Bank added value will be assessed. It will be performed using a 6 percent social discount rate based on the opportunity cost of capital and country risk over the project period. A sensitivity analysis will be performed under a pessimistic scenario (a 10 percent increase in economic costs over the base case and an 8 percent discount rate) and an optimistic scenario (a 10 percent increase in benefits over the base case and a 4 percent discount rate). In addition, project viability switch-off points for equal cost increment and benefit decrement will be computed. Given the breadth of the project and because there are no private goods considered in the project, there is no need to carry out a financial analysis.

63. For Subcomponent 1.2, the World Bank financing provides significant value added by delivering part of the financing required for the electricity access projects. Economic and financial analyses have been carried out that demonstrate the economic and financial viability of each of the three rural electrification perimeters. For Perimeter B, the economic internal rate of return (EIRR) for the electricity access project is 16 percent, with a positive net present value (NPV) of US$17.25 million over a period of 25 years. The financial return is also positive with a total NPV of US$1.2 million with a tariff equilibrium subsidy to apply a harmonized social tariff of US$0.09 per kWh. However, if the average tariff level were to be raised to US$0.22 per kWh, there would not be a need for a SOMELEC equilibrium subsidy. To reach a 20 percent financial internal rate of return (FIRR) expected by private operators, the tariff subsidy would have to increase to US$1.58 million.37 In Perimeter D, the EIRR for the electricity access project is 14 percent, with a positive NPV of US$7 million. The financial equilibrium would require a tariff subsidy of US$0.9 million unless the tariff is applied at US$0.25 per kWh. For the operator to reach an FIRR of 20 percent, the requirement for a SOMELEC subsidy amount would be in the order of NPV US$1.06 million unless the tariff is increased to US$0.38 per kWh. For Perimeter E, the EIRR for the electricity access project is 12.1 percent, with a positive NPV of US$8.7 million. The financial equilibrium would require a tariff subsidy of US$1.14 million unless the tariff is applied at US$0.29 per kWh. For the operator to reach an FIRR of 20 percent, the requirement for a SOMELEC subsidy amount would be in the order of NPV US$1.45 million unless the tariff is increased to US$0.45 per kWh.

64. Moreover, the project would reap some climate co-benefits from activities such as (a) investment in production of renewable energy under Subcomponent 1.2 to replace the use of diesel for energy production and (b) investment under Subcomponent 1.1 to improve the solid waste management system in Rosso and Kiffa which will include the renewal of diesel collection fleet, reduction of open burning and open dumping of solid waste, and increase in material recycling. In addition, sanitary landfill design will include methane gas recovery systems. The GHG accounting undertaken for solid waste management investment under Subcomponent 1.1 and renewable energy investments under Subcomponent 1.2 will result in a reduction of 1,872,900 tons of CO2 in the next 25 years.

37 Without subsidy, the tariff has to be set at an average level of US$0.33 per kWh.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

B. Fiduciary

(i) Financial Management

65. An assessment of the FM capacity of the PNIDDLE PCU was carried in December 2019. The assessment entailed a review of its capacity and ability to record, control, and manage all project resources and produce timely, understandable, relevant, and reliable information for the key stakeholders including the Government and the World Bank. The FM assessment was carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Board on March 1, 2010 and retrofitted on February 4, 2015. These arrangements would ensure that the PCU (a) uses project funds only for the intended purposes in an efficient and economical way, (b) prepares accurate and reliable accounts as well as timely periodic financial reports, (c) safeguards assets of the project, and (d) has acceptable auditing arrangements.

66. The project will be managed through the existing FM arrangements in place for the PNIDDLE PCU which include putting in place (a) an FM team familiar with World Bank procedures comprising a financial and accounting officer and an accountant; (b) a multiproject accounting software which will easily integrate the project’s accounts; and (c) an updated administrative and FM manual in place.

67. Further to the last FM supervision of PNIDDLE held on May 2019, the overall FM performance of the PNIDDLE PCU has been rated Satisfactory: (a) the quarterly interim financial reports (IFRs) are submitted on time and the quality is satisfactory; (b) the external auditors have issued an unqualified opinion (clear opinion) on the 2018 financial statements; (c) the internal control is satisfactory; and (d) the accounting system in place is adequate.

68. The conclusion of the assessment is that the FM arrangements in PNIDDLE PCU are adequate and satisfy the World Bank’s minimum requirements under World Bank Policy and Directive on Investment Project Financing (IPF) effective in 2017. The overall risk for the project is rated Moderate.

(ii) Procurement

69. Procurement activities under the project shall be carried out in accordance with the World Bank Procurement Regulations for IPF Borrowers: ‘Procurement in Investment Project Financing Goods, Works, Non-Consulting, and Consulting Services,’ dated July 1, 2016, revised in November 2017 and August 2018; ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants,’ revised as of July 1, 2016; and the provisions stipulated in the Legal Agreement. 70. Project Procurement Strategy for Development (PPSD). The client has prepared a PPSD, along with the project’s Procurement Plan for the first 18 months, which has been reviewed and approved by the World Bank. 71. Procurement assessment. The procurement assessment carried out in November 2019 found that (a) although the project will be implemented by the same PCU, it was not clear whether the same team that implemented PNIDDLE will be retained for this project; and (b) SOMELEC staff have no relevant experience with World Bank procedures. To address these gaps, the following actions must be taken: (a) recruitment of two procurement specialists, one of them before Effectiveness, and a procurement assistant for the PCU to ensure quality control. One procurement specialist will be based in Kiffa to support

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

the municipalities; (b) designation before Effectiveness, by SOMELEC, of a procurement agent to work on Subcomponent 1.2. The procurement agent of SOMELEC will work with the procurement specialists of the PCU based in Nouakchott; (c) designation, by the PCU coordinator, of a procurement officer (person responsible for application of the procurement policy for the PCU procurement activities and control of SOMELEC and municipalities) for the procurement activities managed by the PCU; (d) creation of an internal Procurement Commission at the PCU in compliance with the national procurement regulation; (e) creation of the Regional Procurement Commissions and operationalization in the five regions of the project in the first year of the project with technical support from the PCU; (f) continued operationalization of the Municipal Procurement Commissions in the seven communes of the project, including designation of a procurement officer for each municipality, with the technical support from the PCU; (g) use of the national Procurement Commissions established within ministries according to the national regulation; and (h) training the team in charge of project procurement within the PCU, SOMELEC, the municipalities of the selected cities, and the relevant Regional Procurement Commissions (once created) on the New Procurement Framework for World Bank IPF projects.

72. Following the assessment, the overall procurement risk is Substantial. The following mitigation measures are proposed: (a) Preparation of an Administrative and Financial Procedures and Procurement Manual for the PCU and update of the SOMELEC procedures manual; (b) Preparation of a manual for the execution and monitoring of project activities.

. C. Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No .

D. Environmental and Social

73. The potential negative environmental and social impacts and risks of the proposed project are associated with the implementation of Component 1, which supports various communal or intermunicipal infrastructure construction activities. These may include management of liquid and solid waste (garbage/drainage) and extension of water and electricity networks, buildings or other facilities such as cultural centers and sports fields.

74. The Project is being undertaken under the new Environmental and Social Framework and has been classified as substantial risk for environmental and social risks. Seven of the ten environmental and social standards (ESS) are relevant for this project: (i) ESS1 Assessment and Management of Environmental and Social Risks and Impacts (ii) ESS2 Labor and Working Conditions (iii) ESS3 Resource Efficiency and Pollution Prevention and Management (iV) ESS4 Community Health and Safety (v) ESS5 Land Acquisition, Restrictions on Land Use, and Involuntary Resettlement (vi) ESS8 Cultural Heritage; and (vii) ESS10 Stakeholder Engagement and Information Disclosure. Details on the applicability of each environmental and social standard is provided are Annex 9.

75. A GRM was prepared during project preparation. The GRM will be established at four levels: (a) at the local level (in the city or village) under the supervision of the mayor of the commune, (b) at the

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department level (Moughataa) under the supervision of the Hakem, (c) at the regional level (the wilayas), and (d) at the national level.

V. GRIEVANCE REDRESS SERVICES 76. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.

VI. KEY RISKS 77. The overall risk is assessed as Substantial primarily stemming from political and governance, sector strategies and policies, environmental and social, and institutional capacity for sustainability. The risks rated ‘Substantial’ and the proposed mitigation measures are further elaborated in the following paragraphs.

78. Political and governance. The political and governance risk is deemed Substantial as the influence of political elites and stagnating perceptions of governance pose a considerable risk to inclusive growth and social cohesion. Ethnic stratification—and a growing youth cohort with difficulties in access to employment—continues to fuel grievances and compromises the efficiency of development projects. Fragility in neighboring states especially along the Malian border adds to the risk of spillover effects in the form of terrorism, criminal activity, inflows of refugees, and internal displacement. However, Mauritania has experienced sustained political stability over the last decade and has taken a strong stand, both politically and financially, to contain the radicalization risk. The proposed project does not include direct measures to mitigate political governance risks beyond the application of the World Bank operational guidelines for procurement, contracting, and its safeguards policies. However, the project’s focus on urban poverty reduction and strengthening resilience may help generate revenues and jobs among residents of the project areas and increase the population’s overall confidence in public policies.

79. Macroeconomic. The macroeconomic risk is deemed Substantial. Despite the Government’s prudent budget policies and the gradual recovery of global commodity prices, the country’s economy remains vulnerable to external shocks. Although the current account deficit has dropped, it is still substantial and poses a challenge to external financing mobilization and debt sustainability. In addition to budget support, the three-year program that recently concluded with the International Monetary Fund will provide financing to sustain macroeconomic stability and reforms aimed at diversification.

80. Sector strategies and policies. The sector strategy and policies risks are deemed Substantial mainly due to the uncertainty around the Government’s decentralization agenda. The decentralization process was initiated more than two decades ago, but despite good intentions, it has not yet materialized

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

into a clearly defined strategy for transfer of competences and adequate resources to LGs. Momentum was seen in 2018 with the preparation of the decentralization strategy with extensive consultations with local and national actors. However, the outcome of this strategy is uncertain. This risk will be mitigated by keeping an open dialogue with the incoming government and keeping expected project outcomes realistic.

81. Institutional capacity for implementation and sustainability. The institutional capacity is deemed substantial due to the limited capacity of the municipalities who will be responsible for implementing most of the infrastructure. The risk around the sustainability of the investment is due to the limited resources that municipalities are capable of mobilizing to operate and maintain the infrastructure. To mitigate this risk, the project will encourage the municipalities to reinforce their technical staff and provide technical support to the municipalities through the PCU. The risk associated with the financial sustainability will be mitigated by helping municipalities increase their own-source revenues and prepare infrastructure maintenance plans.

82. Fiduciary. The overall fiduciary risk is rated Substantial. SOMELEC, which will implement Component 1.2, has no relevant experience with World Bank procedures. The following mitigation measures are proposed (a) Preparation of an Administrative and Financial Procedures and Procurement Manual for the PCU and update of the SOMELEC procedures manual; (b) Preparation of a manual for the execution and monitoring of project activities; (c) Arrangement for the procurement specialist of the PCU to support SOMELEC on procurement; and (d) training to SOMELEC staff on procurement.

83. Environmental and social. The environment risk rating is classified as Substantial. Weak capacity of the municipalities in environmental and social management, including monitoring and reporting, combined with the lack of experience of SOMELEC on projects financed by the World Bank, will be a challenge for these stakeholders to adequately fulfil their responsibilities. The potential negative environmental impacts and risks of the proposed project are associated with the implementation of Component 1, which is designed to support various construction activities of communal or intermunicipal infrastructure. To mitigate that risk, the PCU and SOMELEC unit will be reinforced with adequate social and environmental safeguards expertise.

84. Stakeholders. The overall stakeholder risk is rated as Substantial due to the level of multi stakeholder coordination required for the selection of investments under sub-component 1.1. The preparation of CDPs did not systematically involve women and refugee populations. A lack of proper coordination of local actors could be a risk to the acceptability of the investments. To mitigate this risk the preparation of the CDPs will include consultations with different stakeholders to ensure that both males and females and refugees have representation in the process including the investment strategies.

85. Other risks related to the refugees and host community engagement are Substantial. Delivering services to refugee communities is a new area of engagement for the World Bank Group, in which there is limited knowledge and significant sensitivities. However, the Government’s overall acceptance of refugees and its general willingness to support their actual inclusion—backed by an overall positive assessment of Mauritania’s protection framework by the UNHCR—provides a supportive environment for the World Bank’s engagement. Key risks include the following:

(a) Social and protection risks. While the GoM has not practiced refoulement since 2016, the strict adherence to social norms or security considerations could result in cases of

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

refoulement in the future. The World Bank Group will continue to monitor the developments and remain in close contact with both the Government and UNHCR to assess the level of these risks and discuss appropriate mitigation measures. (b) Security risk. Increased security threats in Mauritania itself, along the southern border with Mali (Hodh El Gharbi and Hodh Ech Chargui), will affect the ability of the GoM to maintain peace and stability in the area. (c) Implementation challenges. The World Bank Group has very little reach and experience working in the southeastern part of Mauritania. The location of the refugees—and by extension of host communities in this remote and hard-to-reach area—will provide a challenging environment for the project team(s) to prepare, implement, and supervise impactful operations.

86. To mitigate these risks, the GoM has committed to a series of reforms. These are outlined in the Letter of Government Policy to bolster the country’s protection framework and promote medium-term socioeconomic solutions for refugees and host communities. Additionally, coordination with other humanitarian actors, enhanced with the support of Component 2, will help maintain continued monitoring of risks in the refugee and host communities. . .

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VII. RESULTS FRAMEWORK AND MONITORING

Results Framework COUNTRY: Mauritania Decentralization and Productive Intermediate Cities Support Project

Project Development Objectives(s) The development objectives of this operation are to (i) improve access to local services in selected localities; and (ii) strengthen the capacities of Local Governments to plan and manage local public services.

Project Development Objective Indicators

RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 Improve access to local services in selected Localities

People provided with improved access to services 0.00 0.00 0.00 50,000.00 100,000.00 140,000.00 through the project (Number)

Disagregated by women 0.00 0.00 0.00 25,000.00 50,000.00 70,000.00 (Number)

Disagregated by refugees 0.00 0.00 0.00 12,000.00 25,000.00 25,000.00 (Number)

Beneficiary local businesses in targeted localities positively impacted by the 0.00 35.00 70.00 infrastructures financed by the project (Percentage)

Disagregated by women- owned businesses 0.00 35.00 70.00 (Percentage)

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The World Bank Productive & Resilient Intermediate Cities (P169332)

RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 Disagregated by refugee- owned businesses 0.00 35.00 70.00 (Percentage)

Electricity connections created as a result of the project 0.00 0.00 0.00 1,500.00 2,000.00 4,500.00 (Number)

Including for refugee and 0.00 0.00 0.00 300.00 500.00 1,000.00 host communities (Number)

Strengthen the capacities of Local Governments to plan and manage local public services

Increase in Annual Investment Budget execution of targeted 0.00 0.00 5.00 15.00 25.00 30.00 municipalities (Percentage)

PDO Table SPACE

Intermediate Results Indicators by Components

RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 Improving Access to Infrastructure and Services for Economic Development Length of all-seasoned roads built by the project 0.00 0.00 5.00 15.00 20.00 25.00 (Kilometers) Quantity of waste collected and properly treated (Metric 0.00 0.00 15,000.00 15,000.00 20,000.00 30,000.00 ton) Investment Selection Committees with at least 30 0.00 1.00 2.00 2.00 3.00 7.00 percent women and, where relevant, one refugee

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RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 representative (Number) Electricity output from renewable energy constructed 0.00 0.60 or rehabilitated (Megawatt hour(MWh)) Strengthening Decentralization and Local Government Capacity Region and Municipal Development Plans approved 0.00 5.00 6.00 8.00 10.00 11.00 (Number) Investment Plans between the National Government and 0.00 0.00 1.00 2.00 3.00 3.00 Regions signed (Number) Increase of own-revenue mobilization in the targeted 0.00 0.00 10.00 15.00 20.00 30.00 municipalities (Percentage) Local public officials from LG and line ministries trained in 0.00 500.00 1,000.00 1,500.00 2,000.00 2,400.00 LG PFM or HRM (Number) Project Management Grievances received, recorded and addressed by the project 0.00 60.00 65.00 70.00 75.00 80.00 within 2 weeks (Percentage) Refugee and host community grievances received, recorded and 0.00 60.00 65.00 70.00 75.00 80.00 addressed by the project within 2 weeks (Percentage)

IO Table SPACE

UL Table SPACE

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Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection In each targeted locality, the PCU will conduct surveys on a semi- This indicator captures the Progress annual basis to number of people benefiting reports by estimate the number of from various types of People provided with improved access to Semi-annual PCU and women who are PCU services such as electricity, services through the project semi-annual accessing each service market, waste surveys. provided under the management, road, as a project. The result of the project. methodology for each specific service will be specified in the POM.

In each targeted locality, the PCU will conduct surveys on a semi- This indicator captures the Progress annual basis to number of women reports by estimate the number of benefiting from various Semi-annual PCU and women who are PCU Disagregated by women types of services such as semi-annual accessing each service electricity, market, waste surveys provided under the management, road, as a project. The result of the project. methodology for each specific service will be specified in the POM.

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In each targeted locality, the PCU will conduct surveys on a semi- This indicator captures the Progress annual basis to number of refugees reports by estimate the number of benefiting from various Semi-annual PCU and refugees who are PCU Disagregated by refugees types of services such as semi-annual accessing each service electricity, market, waste surveys provided under the management, road, as a project. The result of the project. methodology for each specific service will be specified in the POM.

An impact evaluation survey will be conducted by mid-term and prior to closing of the project focusing on businesses benefiting This indicator captures the Survey from the number of local businesses At mid-term conducted at infrastructures which Beneficiary local businesses in targeted positively impacted by the and prior to mid-term activities have been PCU localities positively impacted by the various types of services closing of the and prior to positively impacted. infrastructures financed by the project financed by the project such project closing of The same methodology as electricity, market, waste project used to identify management, road, etc. beneficiary people (or households) will be used to identify the beneficiary businesses. The survey methodology and questionnaire for

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assessing impact as well as the methodology for measuring the indicator will be detailed in the POM.

The survey conducted This indicator captures the Survey at mid-term and prior number of women-owned At mid-term conducted at to closing will include local businesses positively and prior to mid-term specific questions to Disagregated by women-owned impacted by the various PCU closing of the and prior to enable the businesses types of services financed by project closing of disaggregation of by the project such as project women-owned electricity, market, waste businesses. management, road, etc.

The survey conducted This indicator captures the Survey at mid-term and prior number of refugee-owned At mid-term conducted at to closing will include local businesses positively and prior to mid-term specific questions to Disagregated by refugee-owned impacted by the various PCU closing of the and prior to enable the businesses types of services financed by project closing of disaggregation of by the project such as project refugee-owned electricity, market, waste businesses. management, road, etc.

Customer This indicator captures the SOMELEC and the database number of electricity private investors in maintained connections created rural areas will keep Electricity connections created as a result Semi-annual by SOMELEC PCU and SOMELEC through the project. This record the number of of the project and private will include connections to connections as a result investors in both households and of the project rural areas businesses.

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Customer SOMELEC and the This indicator captures the database private investors in number of electricity maintained rural areas will keep connections created for by SOMELEC record the number of Including for refugee and host refugees and host Semi-annual PCU and SOMELEC and the connections created for communities communities through the private refugees and hos project. This will include investors in communities as a result connections to both rural areas of the project. households and businesses.

The methodology to measure the indicator Ministry in charge of Increase in Annual Investment Budget Annual will be defined in the Decentralization execution of targeted municipalities MOP.

ME PDO Table SPACE

Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection The PCU will aggregate the number of km of Progress road built as measured Number of kilometers of all- Semi- Length of all-seasoned roads built by the reports from in the field and PCU and Municipalities seasoned roads constructed annual project PCU reported by the field as part of the project engineer in their monthly reports.

Yearly volumes of SW either Waste The PCU in recycled or disposed at volume coordination with PCU and targeted Quantity of waste collected and properly Annual sanitary landfills or datasheets targeted municipalities Municipalities treated rehabilitated dumpsites, as prepared by will aggregate the a result of Project targeted mu volume of waste

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interventions. nicipalities recorded at each of the waste collection facility constructed under the project.

The PCU will review the composition of the investment committee Municipal in each municipal This indicator assesses the decree Investment Selection Committees with at decree to determine level of inclusion of women Annual creating the PCU least 30 percent women and, where whether the threshold and refugees in the investment relevant, one refugee representative of 30 percent women selection committees. committee and one refugee

representative is met or not.

Energy SOMELEC and the production private investors in database ma rural areas will keep Number of MW of electricity intained by record of the number produced using renewable Semi- Electricity output from renewable energy SOMELEC of MW produced using PCU and SOMELEC energy such as solar, wind, annual constructed or rehabilitated and the renewable energy such etc, as a result of Project private as solar, wind, etc, interventions investors in communities as a result rural areas of the project

Region and municipal Deliberation The PCU will review development plans of the each deliberation of the prepared through the Municipal or Region and Municipal Development Plans Annual Municipal or Regional PCU project are officially Regional approved Council approving the adopted by the relevant Council plan. municipal or regional approving

council the plan

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Signed investment The PCU will review plans National Government and each plan to ensure Investment Plans between the National Annual between PCU Regions sign an investment that proper signatures Government and Regions signed National plan. have been obtained. Government

and Regions

The PCU in Municipal collaboration with the revenue Department of Local This indicator captures the records Finance at the Ministry improvement in own- PCU and the Department maintained of Finance will Increase of own-revenue mobilization in revenue mobilization in the Annual of Local Finance at the by the the aggregate the annual the targeted municipalities targeted municipalities, Ministry of Finance Department own-revenue compared to the baseline of Local mobilization by all (fiscal year 2019). Finance targeted municipalities under the Project.

The PCU will determine Number of public officials the number of people Progress from municipalities, regional who have benefited Local public officials from LG and line Annual reports from PCU councils and ministries who from capacity building ministries trained in LG PFM or HRM PCU receive training in Public training through

Finance Management. attendance sheets.

GRM and Percentage of project- The GRM will be Semi- progress Grievances received, recorded and related grievances received, designed to keep track PCU annual reports by addressed by the project within 2 weeks recorded and acted upon of this indicator. PCU within two weeks.

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Percentage of project- GRM and Refugee and host community related grievances received The GRM will be Semi- Progress grievances received, recorded and from refugees and host designed to keep track PCU annual reports by addressed by the project within 2 communities, recorded and of this indicator. PCU weeks acted upon within two

weeks. ME IO Table SPACE

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ANNEX 1: Implementation Arrangements and Support Plan

1. A Project Steering Committee (PSC) will be established within three months of project effectiveness to support project implementation. The PSC will be chaired by a representative of and will be comprised of, at a minimum, representatives of the following entities: the Ministry of Economy and Industry, Ministry in charge of Decentralization, MoF, Ministry in charge of Urban Planning, Ministry in charge of Energy, and Ministry in charge of Environment and the mayor of one of the selected municipalities (as chosen by its peers).

2. One of the goals of the project is to create sustainable capacity for investment management among local authorities. It builds on the PDU and PNIDDLE as well as other donor projects in local and urban development. While the goal is to place the institutions in charge of project implementation within the decentralization vision of the Government, the proposed arrangements take into account actual progress in the reform agenda and risk mitigation on the technical and fiduciary fronts. In that regard, the project will support the preparation of an institutional reform for local development, in particular with respect to infrastructure investment management, which proved to be the most challenging capacity to build at the local level. Hence, this proposed institutional arrangement gives municipalities a key role in the execution of local infrastructure works with support from the PCU, in consultation with regional state administration and regional councils in their role of local development oversight, in particular for coherence of municipal investment planning with higher-level policies and control of local fiduciary management.

Project Overall Coordination

3. Ministry of Economy and Industry. The overall project coordination will be led by the PCU at the Ministry of Economy and Industry. Based on the capacity and continuity of engagement of the Government with municipalities, the PNIDDLE PCU38 has been selected to be the PCU of the proposed project. The PNIDDLE PCU has successful experience with World Bank projects, overseeing investment implementation by municipalities in a complex geographic setting.

4. The PCU will coordinate the various project entities and oversee overall implementation and ensure compliance with World Bank procedures. The PCU will manage the following: (a) disbursement of project proceeds, (b) financial reporting, (c) financial audits, (d) reporting and M&E, (e) procurement of activities under Components 2 and 3, (f) compliance of safeguards, and (g) overall communication and visibility of the project. In addition, it will provide TA to the municipalities, to execute infrastructure investments, and assistance to SOMELEC on procurement.

5. The PCU will be based in Nouakchott. Given the geographical extent of the project area, a branch of the PCU will be created and located in the city of Kiffa to better support project implementation in the regions of Assaba, Guidimaka, Hodh Ech Chargui, and Hodh El Gharbi. The branch in Kiffa will have a similar role as the PNIDDLE mobile team on the technical front (including procurement and safeguards), providing hands-on support to the municipalities. The national coordination will be staffed, at a minimum, with a general coordinator, a technical coordinator, a financial officer, a procurement officer, an M&E specialist,

38 Since the closure of the LGDP, the PNIDDLE PCU has no other activity other than the proposed project.

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a social specialist, an environmental specialist, and a communication officer. The branch in Kiffa will be staffed with a field coordinator, a civil engineer, a procurement specialist, a social specialist, and an environment specialist.

6. Refugee and host community focal points. Two refugee and host community focal points based in Hodh Ech Chargui will be recruited to ensure permanent presence of the projects with RSW-funded components in this area and dialogue with other actors working with refugees and host populations. The focal points will have the responsibility to update the four projects’ coordination teams on the refugees and host communities’ situation and identify any critical points related to implementation of the projects in the related areas. The focal point based in Nema, financed under this proposed Decentralization and Productive Intermediate Cities Support Project (P169332), will provide technical support to local institutions to improve local coordination and monitoring of investments and other initiatives taking place in the region. The focal point based in Bassikounou, financed under the Social Safety Net System Project (P171125), will provide technical support to local authorities to monitor the social and gender environment of the refugees and host communities.

Implementation of Subcomponent 1.1

7. Municipalities. The municipalities of the selected cities will be responsible for implementation of Subcomponent 1.1, with technical support from the PCU or its branch in Kiffa. This proposed arrangement aims at creating a sustainable capacity for investment management among local authorities, empowering municipalities with the leading role in the selection and implementation of local infrastructure.39 The municipalities will prepare investment planning instruments and propose an investment plan to the local selection committee. The local selection committee is an extension of the Municipal Consultative Committee (adding other relevant actors), which is an official vehicle of municipal investment planning. They will then execute the investment plans. Hence, municipalities will be responsible for investment project preparation and implementation. The Municipal Procurement Commissions, established by the municipalities, will be responsible for the procurement of small investments, according to the ceiling established under the procurement law. Other Procurement Commissions—at the regional or national levels—will be mobilized based on the procurement law.

8. The minimum technical staffing of municipalities to implement Subcomponent 1.1 investments will be detailed in the MGM, following an assessment and preparation of individual municipal technical staff reinforcement plan. The PCU will provide technical support to the municipalities in the identification, preparation, and construction phases of the investments. Based on the typology of the municipal investments, the PCU will also be reinforced by temporary technical experts. For complex investments, beneficiary municipalities could eventually delegate investment implementation (contract management of technical studies, construction works, and works supervision) to the PCU.

9. Municipalities will also be one of the main beneficiaries of the institutional strengthening. They will be responsible to properly manage administrative procedures according to the national regulation, including through broad consultation with all local actors such as civil society, vulnerable groups, and economic actors, and improve its FM, in particular, increase its own-source revenues.

39 The proposed arrangement for implementation of Subcomponent 1.1 results from a comprehensive institutional assessment conducted as part of project preparation to design a mechanism consistent with the decentralization vision of the Government.

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10. Regional councils. The regional councils will lead the definition of the development strategies for their respective regions and will be consulted in the selection of investments funded by the project, to ensure coherence with other investment plans executed in the regions. They will also benefit from institutional strengthening under Component 2 and will be responsible for preparing sector transfer plans, in consultation with national government ministries.

Implementation of Subcomponent 1.2

11. SOMELEC will implement Subcomponent 1.2. Procurement for this subcomponent will be done by SOMELEC but FM will be ensured by the PCU. The SOMELEC Project Implementation Unit (PIU) will be seated within the DEP of SOMELEC and will report to the Director of DEP, who ultimately will be responsible for the procurement and safeguards aspects of the subcomponent. The same department at SOMELEC will oversee the implementation of the AFD-funded RIMDIR and the PIU will benefit from the oversight of the RIMDIR PSC. The PIU will be composed of a coordinator, a technical specialist, a procurement specialist, an environment specialist, and a social specialist. In addition, an experienced project design and supervision consultant (owner’s engineer) will be recruited by the project to assist with project implementation and will report directly to SOMELEC’s coordinator. SOMELEC has no experience with World Bank-financed projects. Hence, the SOMELEC implementing team will benefit from support of the PCU on procurement. Reporting, FM, audits, and M&E responsibilities will remain within the PCU.

Implementation of Component 2

12. The technical responsibilities of Component 2 will lie with sectoral ministries, the Ministry in charge of Decentralization, MoF, and Ministry in charge of Urban Planning, based on their respective mandates. The PCU will provide implementation support for the execution of the activities.

13. Ministry in charge of Decentralization. A focal point selected among the ministry staff will ensure overall coherence of the project activities with the government policy. A decentralization specialist,40 hired by the project, will be placed at the ministry to help implement the activities.

14. Ministry of Urbanism. A focal point at the Ministry of Urbanism will ensure overall coherence of the project activities with the government policy and will be in charge of the technical supervision of urban planning and land-related activities. The latest will be done in collaboration with the Department of Land/Domain at the MoF.

15. MoF. A focal point at the MoF will ensure overall coherence of the project activities with the government policy and will be in charge of the technical supervision of fiscal decentralization, local FM, and budget decentralization-related activities.

16. Collaboration among those actors will be framed by Memoranda of Understanding signed with the PCU.

17. Several Project manuals (the POM, the MGM, and the CERC manual) will be prepared and will describe in detail the project implementation arrangements including the roles and responsibilities of the key project stakeholder. The purpose of the manuals is to provide an ordered set of instructions on the

40 The specialist will be established in the same unit in charge of the AFD-funded DECLIC 1 and 2 projects to ensure synergies.

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organization, procedures, and resources dedicated to the efficient and effective achievement of the objectives of the project.

18. The PCU will prepare biannual progress reports, in accordance with the format outlined in the POM. The progress reports will cover (a) physical and financial progress achieved against agreed indicator targets (presented in section VI); (b) issues and problem areas, including remedial actions; and (c) work programs and cost estimates for the coming six months and year, including revised estimates for the current period.

Implementation Support Plan

19. The implementation support plan is built around extensive implementation support provided by the World Bank’s technical and operational support staff, including experts in urban infrastructure, such as solid waste and road and drainage, with a strong background on building resilient infrastructure, decentralization, and urban planning and land management. It will consist of regular missions, videoconference meetings, and periodic fiduciary compliance reviews.

20. The team will conduct missions twice a year to review the project progress and assess any particular constraints or issues for project implementation. Action plans will be prepared at the end of each mission, and adjustments to the project design or institutional arrangements may be recommended as deemed relevant by the missions. Given the large geographic scope of the project, and the fragile environment at the Malian boarder, a national consultant will be hired to conduct site visits in each city every year, while the World Bank staff team will visit two to three cities every year during missions.

21. A mid-term review will be conducted after approximately 30 months of implementation to review performance in depth, based on progress and studies commissioned for the mid-term review, and make any restructuring to the project.

22. A closing mission will be conducted toward the end of the mission, preferably within the last two months of the project. A workshop will be organized to present the findings of the project completion report and discuss the satisfaction of the beneficiaries.

23. The missions will also conduct coordination meetings with main partners (AFD, ADB, GIZ, UNDP, and so on) to ensure synergies with other planned and ongoing projects, in particular those on decentralization, local development, and electrification, as well as city-specific investments. Additionally, the team will maintain regular communication with the UNHCR to ensure alignment with the refugee agenda and proper coordination with other initiatives in Hodh Ech Chargui and Hodh El Gharbi.

24. Based on the outcome of the FM risk assessment, the implementation support plan shown in table 1.2 is proposed. The objective of the implementation support plan is to ensure that the project maintains a satisfactory FM system throughout the project’s life.

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Table 1.1. FM Action Plan FM Activity Frequency Desk reviews IFRs review Quarterly Audit report review of the program Annually Review of other relevant information such as interim internal control Continuous as they become available systems reports On-site visits Review of overall operation of the FM system Annual for the PCU Monitoring of actions taken on issues highlighted in audit reports, As needed auditors’ management letters, internal audit, and other reports Transaction reviews (if needed) As needed Capacity-building support FM training sessions During implementation, as needed

25. Table 1.2 outlines the skills mix and resources needs.

Table 1.2. Implementation Support Plan Skill Needs Number of Staff Number of Comments Weeks (for the Trips duration of the project) Task team leader 35 11 3 implementation support missions during the first year; 2 the following years and technical visits to solve bottlenecks as needed Urban development specialist 35 10 Twice a year missions, routine support as needed Governance specialist 35 10 Twice a year missions, routine support as needed Procurement 25 Based in Twice a year missions, routine support as country needed office Local engineer 50 Based in Twice a year missions, routine support as country needed office FM 25 6 Once a year mission, routine support as needed Environmental safeguards 25 10 Twice a year missions, routine support as specialist needed Social safeguards 25 10 Twice a year missions, routine support as needed Legal 2 0 Staff weeks if restricting is needed. Disbursement 2 0

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Annex 2: Spatial Approach to the Country Partnership Framework

1. The World Bank intervention in the CPF with Mauritania is articulated according to a spatial approach focusing on delivering basic services and infrastructure to a select number of intermediate cities and adjacent territories. The approach focuses on offering economic development opportunities and concentrating investments in fragile areas that are vulnerable to climatic shocks, security risks, and high poverty. Cities have been selected both for their location in fragile areas and their economic development’s potential. These areas could yield important returns on investment in human capital development and inclusive growth.41

2. The coordinated spatial approach is consistent with the Sahel Alliance’s approach.42 The Sahel Alliance’s objective to increase financial and technical support to G5 Sahel countries over the next five years. In Mauritania, the World Bank has committed to concentrate its efforts on the areas of the country that are fragile and vulnerable to climate shocks and security risks, and particularly affected by poverty.

3. The spatial approach aims at leveraging the rapid urbanization process at play to implement the urban planning and decentralization strategy seeking to transform intermediate cities into centers of inclusive economic growth, including for refugees. The diversification of the economy will hinge upon the successful rollout of decentralization and urban planning. The panoply of reforms and investments are to enhance urban planning, promote sound urban development, strengthen coordination and financial transfers between central and decentralized institutions, improve the business environment, and develop coping strategies to manage environmental risks. The CPF supports various line ministries in developing and implementing the decentralization strategy.43

4. There are significant opportunities for Mauritania to nurture the emergence of productive intermediate cities in the south, where most of the population is concentrated. The emergence of intermediate cities could enhance economic externalities by drawing on the resources of surrounding areas.44 Cities in the southern corridor have great economic development potential for their territory. More than a third of the urban population live in the south of Mauritania, and poverty rates remain the highest. Four cities in this southern corridor have great economic development potential (Rosso, Kiffa, Aioun, and Selibaby). These cities are located adjacent to rural territories, within a wilaya with substantial natural resource wealth, which offer opportunities for economic development. For instance, Kiffa (75,000 habitants), at the heart of the agropastoral area, is a large crossroad for trade and Rosso (35,000 habitants), on the border with Senegal and close to the sea, is expected to develop very rapidly as construction of a bridge across the Senegal River proceeds and as offshore gas production materializes. Concentrating financing efforts in select intermediate cities and adjacent territories could help transform

41 CPF for the Islamic Republic of Mauritania, FY18–FY23, June 2018, page 29. 42 The Sahel Alliance is a donor organization launched in July 2017 by France, Germany, and the EU. The World Bank, AfDB, UNDP, Italy, Spain, the United Kingdom, and Luxembourg joined the Alliance later. The objective of the Sahel Alliance is to provide an appropriate, ambitious, and effective response to the challenges facing the G5 Sahel member countries (Mauritania, Mali, Niger, Burkina Faso, and Chad). 43 CPF, page 29. 44 CPF, page 28.

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social and economic opportunities for individuals and for the private sector, and thereby spur further growth.

5. Large disparities in access to electricity exist between urban areas (76.9 percent) and rural areas (6 percent).45 The availability of electricity is one of the most important needs for rural development— guaranteed access to electricity is also a strategic pillar for social inclusion. In the electricity sector, Mauritania has made substantial progress in increasing generation capacity, with 20 percent solar and wind capacity in the energy mix and additional potential for export gas‐based generation. However, this generation capacity has mostly benefitted the urban population, as the rural electricity access rate falls well below that of regional comparators. Electricity is a priority sector of the Sahel Alliance; hence, the World Bank Group financing will complement the efforts of other Alliance members to ensure access to affordable, reliable, and sustainable electricity for all. Adopting the same territorial approach as earlier, the World Bank Group intervention will target off‐grid electrification interventions, given the prohibitive cost of scaling up rural electricity access in Mauritania. In cases where it is financially viable, intermediate cities could be connected to the grid.

6. The Government’s SCAPP aims to reach 80 percent of rural electrification by 2030, as reliable and cheap energy is a condition for economic development and the reduction of territorial and social inequalities. Sustainable development Goal 7.1 involves ensuring high-quality energy coverage from all sources by 2030 by ensuring access for all to reliable and modern energy services at an affordable cost and promoting universal access to electricity and improved customer service delivery. This objective is in line with the authorities’ strategy described in the SCAPP46 of consolidating localities, introducing optimized prices, and extending and improving the quality of the network, as well as diversifying sources of electricity production by focusing on clean energies (particularly solar and wind).47 The SCAPP describes the Government’s intention to accelerate agricultural development, provide access to water and irrigation infrastructure, and connect other production areas to electricity grids and road networks through upgrading and technical capacities of public enterprises and the PPP. Mauritania is part of regional programs such as the Regional Off‐grid Electrification Project and the Economic Community of West African States‐Regional Electricity Access Project which is under preparation.48

Decentralization for Increased Services Delivery

7. Access to essential services in Mauritania is uneven across the territory. Communes that are predominantly urban show higher access figures across all types of services, and highest access is in Nouakchott and Nouadhibou, where the urban population is concentrated. On average, population access to primary education (63.5 percent) and drinking water supply (62.1 percent) is relatively high, as is access to telephony (66.4 percent). Yet, connectivity is poor—on average only 42.6 percent have access to public transportation and this figure is insignificant in areas outside Nouakchott and Nouadhibou. Low penetration of postal, banking, police, and justice services reflect the low technical capacity of LGs to step into assuming these roles, as well as shortage of funding by the national government.49

45 SCAPP, Volume II page 197 46 The SCAPP was adopted by the Council of Ministers on October 19, 2017, to form the basis of economic and social policies for 2016–2030. 47 SCAPP, page 66. 48 CPF, page 29. 49 SCAPP 2016–2030.

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8. To improve the socioeconomic conditions of regions outside Nouakchott and Nouadhibou, the Government has adopted a local development approach to decentralization. The SCAPP aims for cities outside Nouakchott and Nouadhibou to strengthen local governance as the basis for improved planning and local management. Municipalities are considered to be best positioned to identify the needs of the population and the economic actors and be more diligent to respond to those needs for their benefit. As such, communes created in the 1980s have been mandated to deliver basic services in sectors such as health and education and, to a lesser degree, in the areas of agriculture and the management of hydraulic resources. In January 2018, the GoM created 15 regions (at the level of the wilayas) through the adoption of the Organic Law, which was pending for nearly 27 years. But the establishment of these new entities, to make them effective institutions capable of accomplishing their mission of territorial development remains to be seen.

9. The CPF approach seeks to support decentralization in line with the SCAPP’s objectives.50 The CPF will seek to support the Government in promoting the emergence of viable local communities territorially and financially. It will support grassroots initiatives to improve sustainably the living conditions of rural populations and anchor public policies at regional and local levels. It will assist the establishment of mechanisms for harmonization between national programming and territorial realities. It will encourage the setting up of intermunicipal and interterritorial projects to foster partnership and solidarity between local authorities. The strategy will be more focused on promoting integral development through a territorial approach and multilevel governance, with reference to the process of ongoing decentralization reforms and the goal of creating the organizational and operational conditions to promote participatory, territorial, and inclusive approach of all governmental, communal and associative actors, communities, and technical and financial partners.

50 SCAPP, page 143.

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ANNEX 3: Overview of the refugee situation in Mauritania Country Context 1. One of the more stable countries across the Sahel region, Mauritania hosts a large population of refugees from neighboring conflicts. As of October 2019, Mauritania hosts 59,000 refugees, 95 percent of whom are Malians who have been arriving in the country since 2012. In addition to the large Malian population, there are around 3,000 urban refugees and asylum seekers, mostly from Central African Republic (CAR), Syria and Cote d’Ivoire. Most of the refugees in Mauritania live in the arid moughataa (district) of Bassikounou, located approximately 50 kilometers from the Malian border. The Malian refugee population is predominantly concentrated in the Mbera refugee camp, with some small enclaves scattered in host communities near the camp. 2. Mauritania is a party to several international conventions related to refugees. These include the 1951 United Nations Convention Relating to the Status of Refugees, the 1967 United Nations Protocol Relating to the Status of Refugees, and the 1969 Organization for African Unity (OAU) Convention Governing the Specific Aspects of Refugee Problems in Africa. A refugee law providing the basis for a national asylum system was developed in 2014 and reviewed by the relevant Government ministries in 2016. The bill is still pending submission to the Parliament. The new law would formalize refugee protection, including the commitment to not force refugees to return to insecurity and/or persecution in their country of origin (the principle of “non-refoulement”), grant civil rights and provide access to social services. In the interim, a Decree (number 022 of 2005) regulates the application of the norms contained in the 1951 UN Convention and the 1969 OAU Convention. The World Bank and the UNHCR will continue the dialogue with the inter-ministerial National Consultative Commission on Refugees (Commission Nationale Consultative sur les Réfugiés, CNCR) on the progress of the bill. 3. Assistance for refugees in Mauritania is coordinated by the Ministry of the Interior and Decentralization, through the CNCR. The CNCR has the authority to recommend decisions on the recognition of refugee status for urban refugees, based on positive individual assessments carried out by UNHCR. Refugees from Northern Mali receive their status on a prima facie basis. The ANRPTS is responsible for the issuance of identity cards and has set up a field office in the Mbera camp. 4. Humanitarian actors, led by the UNHCR and WFP, have traditionally provided the bulk of assistance to refugees, and to some extent, host communities in Mauritania. Status – as refugee— rather than poverty/vulnerability is the key targeting factor for assistance. Direct support to refugees has been accompanied by the provision of basic social services and activities to promote self-reliance and income generation. However, many of these services are of short duration. Humanitarian actors have opened their services to and made some smaller investments for host populations. However, their support has focused predominantly on refugees and their immediate needs, rather than on social, economic and human capital development to ensure long-term development of both refugee and host communities. 5. Until recently, the southern border regions (Hodh Chargui and Hodh El Gharbi) were not benefitting from much development assistance from the international community but on this is changing fast. The Sahel Alliance, a multi-donor initiative that aims to increase financial and technical support to the G5-Sahel countries over 2018-23, decided to concentrate their efforts there. Similarly, the European Union is supporting an agriculture and pastoralist project in the area. From 2020 onwards, the AFD also plans to support priority infrastructure investments in sectors of wider

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relevance (Declic II project). The AfDB will intervene in these two regions through a project to support the promotion of micro and small enterprises and youth employment more broadly (PAMPEJ). 6. The local government has limited capacity to support the increasing population and changing service and infrastructure needs in the region. The refugees increase the size of the poor and vulnerable population in the region. Overall, there is weak capacity both in the Bassikounou moughataa as well as throughout the region to coordinate an integrated and cost-effective response for regional development. The Mbera refugee camp is an emerging economic center of activities in the sub-region, with impacts on key resources such as water, pasture and fire wood. At present, the provision of services and resource management run in parallel between the camp and host region, with little coordination between UNHCR and the relevant line ministries, which limits synergies and cost-effectiveness. 7. Conscious of the likely prolonged nature of forced displacement in the country, the GoM is strongly committed to ensuring the protection of refugees while promoting their increased self- reliance and the resilience of the host communities. In its Refugee and Host Community Policy Development Letter, the Government stressed this commitment, including the adoption of a national asylum law. The Government has laid out the following three strategic directions for the national short- and medium-term response to the situation: (a) transforming local economic opportunities in a timely, sustainable, and inclusive manner; (b) improving social protection and access to basic services; and (c) strengthening the governance and management of the refugee response. 8. In December 2019, during the first World Refugee Forum, Mauritania, represented by the Minister of Foreign Affairs, made strong commitments in favor of local solutions for all refugees in Mauritania: (i) to adopt the national asylum law by 2020, (ii) to register all refugees with the civil registry services in order to allow them to obtain a national identification number, issue them with a secure national identification card and allow their inclusion in national systems, including statistical systems, (iii) to ensure the inclusion of refugees in health services on the same basis as nationals, and (iv) to ensure that refugees have the same conditions of access to the labor market as nationals. World Bank Program for Refugees and Host Communities in Mauritania 9. The World Bank Board approved Mauritania’s eligibility for the IDA18 Regional Sub- Window for Refugees and Host communities (RSW) in November 2018. Mauritania currently meets the three eligibility criteria: (i) the number of UNHCR-registered refugees, including persons in refugee-like situations, it hosts is at least 25,000 or 0.1 percent of the country population; (ii) the country adheres to an adequate framework for the protection of refugees; and (iii) the country has an action plan, strategy, or similar document in place. The RSW allocation will enable the World Bank to support the implementation of a program to support refugees and host populations in Mauritania. 10. The World Bank Group has adopted a programmatic multisectoral approach to support the implementation of the Government’s strategy, through policy dialogue, operations and analytical work. The program will take into consideration the fact that this is a new area for the World Bank Group and will complement UNHCR’s interventions and policy work. It will also factor in the challenge stemming from a lack of existing World Bank Group engagement in the refugee-affected areas and in the broader region, which borders Mali. 11. The proposed overall development objective of the program is to improve the delivery of basic social services and infrastructure for refugees and host communities in targeted areas. Specifically, this will be achieved through strengthening the institutional capacity of the Mauritanian

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Government’s social services and selected infrastructure within the two Hodhs. A key synergy across the Bank programs will be to support the inclusion of the poorest/most vulnerable refugee and host communities’ households in targeted interventions to address inequities and promote access to services. Initially the multisectoral program will include sectors prioritized by the Government: (a) health, mainly maternal and child health, (b) SP, (c) water and sanitation, and (d) decentralization and urban infrastructure—including electricity—and services in intermediate cities. This overall development objective is aligned with the Government strategy, the World Bank Group CPF and the focus areas of the Sahel Alliance. 12. The RSW resources will support the existing projects, building on existing partnerships and delivery mechanisms, or to projects under preparation to extend their activities in the targeted areas. The tentative breakdown of the financing between projects is presented below (table A4.1). Table A4.1: The RSW-supported program in Mauritania

Project PDO From National From the RSW PBA

Social safety net To increase the effectiveness and efficiency of the US$27 million system II (P171125) nationwide adaptive social safety net system and its coverage of poor and vulnerable households, with targeted social transfers, including in refugee and host communities.

Support for the To improve utilization and quality of Reproductive US$8 million health system – AF Maternal Neonatal and Child Health services in (P170585) selected regions US$67 million Water and To Increase access to improved water and US$30 million sanitation (P167328) sanitation services in selected rural areas and small towns and strengthen the performance of sector institutions.

Decentralization and To improve (i) improve access to local services in US$46 million urban development selected localities; and (ii) strengthen the capacity (P169332) of Local Governments to plan and manage public services

TOTAL US$111 million US$67 million

13. The Refugees and Host communities’ program will strengthen the “spatial approach” developed by the World Bank in Mauritania (see Annex 5) and enhance cross-sectoral collaboration between several GPs including Social Protection, Health, Urban Development, Water and Energy. The spatial approach will also help generate linkages between the host regions and the camp as an economic center. The program will seek to maximize synergies with other existing and pipeline projects such as the Sahelian Regional Support Project (P147674), the Integrated Agriculture and Livestock in Dryland Areas Project (P168847) and the Mauritania Youth Employability project (P162916). Given the overall development challenges facing the region, many of which are closely linked to efforts at the national level, the World Bank Group could take advantage of many of its core areas of engagement to mitigate some of the existing pressures and to benefit host communities and/or refugees. The World Bank program for refugees and host communities will seek to

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complement other partners’ interventions, considering the value-added and current expertise of the World Bank Group in Mauritania as well as donors’ ongoing and upcoming operations.

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ANNEX 4: Description of the Rural Electrification Subcomponent

1. The electricity sector has benefited from significant investments in power infrastructure, particularly in generation and transmission systems, with an increasing share of renewable energy. The total installed power capacity is 549 MW, out of which 505 MW is currently available. In addition, the mining industries total 188 MW for captive generation. Mauritania has surplus capacity to export to Senegal and Mali (up to 60 MW in 2017). Exports represent a sizeable share of the national utility's revenues—up to 25 percent of SOMELEC revenue in 2018. The growing share of renewables in the energy mix has had a beneficial effect on SOMELEC’s cash flow owing to the reduction in fuel costs. Renewables generation includes (a) a 30 MW wind power plant in Nouakchott (2017); (b) two solar plants of 15 MWp and 50 MWp in Nouakchott commissioned in 2013 and 2017, respectively; (c) a 100 MW wind power plant to be commissioned in 2019 in Nouadhibou; and (d) the shares of Mauritania in the Manantali hydropower plant and Felou hydropower plant.51 In 2016, renewable generation from solar, wind, and hydropower (Senegal River Basin Development Organization [OMVS] Manantali and Felou hydro plants) accounted for 40 percent of Mauritania's total generation. 2. The electrification strategy in Mauritania is embedded in the Government’s SCAPP with an ambitious target to reach universal access in urban areas and 80 percent access rate in rural areas by 2030. Despite the investments in generation and transmission, the electricity access rate in Mauritania remains low at 38.8 percent and compared to the average in Sub-Saharan Africa. A Sectoral Note,52 prepared by the MPEM, outlines four areas of interventions in the energy sector: (a) developing new generation capacities from domestic resources, mainly natural gas; (b) expanding the transmission network and interconnection with neighboring countries; (c) increasing the share of renewable energy in the energy mix; and (d) implementing off-grid solutions in remote rural areas. By 2030, it is expected that this strategy will result in a 70 percent share of renewables in the energy mix (from 32 percent in 2015), an urban electrification rate of 98 percent (compared to 76.9 in 2015) and a rural electrification rate of 80 percent (compared with 6 percent in 2015) and an electrification rate of 85 percent at the national level (against 38.8 percent in 2015). In terms of coverage, out of 828 localities with more than 500 inhabitants,53 only 95 localities have access to electricity. 3. To facilitate implementation of the SCAPP’s energy component, the Government has initiated a reform of the institutional, legal, and regulatory frameworks to improve the efficiency of the sector. The electricity sector in Mauritania was supposed to be governed by the Electricity Code (under Law 2001- 19). The Electricity Code allows third-party generation and private sector participation in the distribution segment, particularly for off-grid areas. The institutional framework of the electricity sector includes (a) the MPEM in charge of developing and implementing Government policy in the oil sector, energy, and mining and supported by the DEME, for the organization and monitoring of the electricity sector; (b) SOMELEC, a vertically integrated public utility, which is responsible for generation, transmission, and distribution of electricity; (c) ARE, an independent regulatory body active in key sectors, including the electricity sector; and (d) private operators or DSPE, which manages and operates the delegated centers, following contracts signed with the MPEM and subject to ARE regulation. In the rural electrification space, the Government decided to reshuffle the rural electrification institutional arrangements with the

51 Mauritania’s shares are 15 percent for Manantali (200 MW) and 25 percent for Felou (60 MW). 52 Currently, Mauritania does not have a policy document or strategy for the energy sector, nor a national electrification plan, nor an investment prospectus 53 Source: Note sectorielle novembre 2018 – MPEM

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dissolution of ADER and APAUS in July 2018. The Government transferred these responsibilities to SOMELEC. 4. In the new arrangement and under the PPP Law (Law 2017-06), SOMELEC has been designated as the contracting authority empowered to sign and administer contracts with private operators on behalf of the State. The newly created CAPPP will take over some responsibilities of ARE in the contracting process. The FAUS formerly administered by APAUS is now managed by the Ministry of Economic Affairs. The FAUS is financed through levies collected from telecom, water, and energy operators; ICT providers; provisions of the state budget; contributions from development partners; the poverty alleviation fund; and revenues and surpluses from own operations and investments. This fund is used to subsidize tariff gaps of mini-grids managed by private operators, as well as for replacement and renewal of electrification systems. The governance of the FAUS is critical for the success of the proposed PPP scheme. The Government is analyzing the most efficient arrangement to provide certainty and predictability of payment to private operators through an independent body from the Treasury (commercial banks). Currently, the FAUS has about MRO 1 billion (US$28 million) in its books and the collection of levies is well established. Currently, subsidies paid to DSPE for existing mini-grids amount to US$8.4 million. 5. Yet the reform agenda is missing important ingredients in clarifying the roles of all institutions and consistency between the Electricity Code and the PPP Law. ARE regulates the telecoms, electricity, and water sectors, but its regulatory authority does not have any control over SOMELEC’s activities and is limited to private operators in rural areas. SOMELEC signed a program contract in place of a license, as provided by the code, and it is therefore de facto regulated by the MPEM. There is also no clarity between the regulatory role of ARE and CAPPP when it comes to implementing PPPs for rural electrification. Donors are supporting the reform of the electricity sector with various interventions. The EU funded a study on the institutional reform and the UNDP is finalizing the revision of the Electricity Code and a tariff study for rural electrification. The revised Electricity Code seeks to clarify the roles of different institutions and support sectoral efficiency. It will be important to assist the Government in establishing a functioning regulation authority to expand its mandate to the regulation of the whole power sector, including SOMELEC. 6. Improving the operational and financial performance of SOMELEC is a determinant for the whole sector and will affect the rural electrification agenda. The increase in renewable energy that brings the overall generation cost down masks the inefficiencies of the delivery of electricity services in Mauritania. According to SOMELEC’s 2017 annual report, key performance indicators need to be improved. Only 71.8 percent of the electricity generated was billed in 2017, which is a decline from an already low 72.4 percent in 2016. The revenue collection rate fell from a low of 69.3 percent in 2016 to 64.9 percent in 2017. The proposed project provides the opportunity for the World Bank to support the reform of the sector, starting with TA activities in collaboration with other donors. There is a need to address the operational and financial inefficiencies of SOMELEC by analyzing options for cost-reflective tariffs and assessing the whole value chain to business areas of the utility to design a management implement plan that could provide insights in areas of improvements in the governance, management information system, revenue protection program, and priority investments. 7. The proposed project contributes to the objectives of the Sahel Alliance to double access to electricity in the G5 countries by 2023. So far, the World Bank’s support to the energy sector in Mauritania has taken place through regional projects under the OMVS with investments in the Felou hydropower plant and transmission lines to interconnect the countries’ power systems. Mauritania will be included in the Economic Community of West African States‐Regional Electricity Access Project to provide access by building and extending the distribution network around the OMVS high voltage substations of Boghé,

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Kaédi and Sélibabi. Mauritania is also covered in the Regional Off‐grid Electrification Project approved in April 2019. The component will complement the efforts of other Sahel Alliance members (AFD and EU) to promote a private sector led rural electrification mini-grids ensuring access to affordable, reliable, and sustainable electricity for beneficiary communities. Table 4.1. The Scope of the Investment in Energy Sub-component

Perimeters

ears ears oltage Y V (k ) Peak (kW) ocalities umber of of umber 10 Medium Medium Potential Potential L Length of of Length of Length in 5 Y onnections onnections Lines (km) ow Number of of Number of Number N of Number Demand in in Demand Population Households 33kV/0.4 kV L C Voltage Lines Lines Voltage Transformers B with 16 20,173 3,362 2,000 605 150.7 40.4 16 Djiguenni D with 12 12,068 1,474 1,080 241 76.0 26.5 12 Modibougou E with Twil 18 14,505 1,891 1,080 290 181 34.0 17 Total 46 46,746 6,727 4,160 1,136 407.7 100.9 45 Table 4.2. Estimate of Investments Needed for Three Configurations of Mini-grids (USD) Decentralized Systems Centralized Systems Centralized Systems With Without Urban Centers Urban Centers Perimeter B (Djiguenni) Power plants 4,113,400 2,785,536 3,221,409 Medium voltage 78,600 3,768,036 3,782,327 networks Low voltage networks 576,400 576,400 576,400 Total B 4,768,400 7,129,973 7,580,136 Perimeter D (Modibougou) Power plants 2,210,327 1,849,482 2,411,591 MV networks 0 1,949,518 1,963,809 Low voltage (LV) 378,709 378,709 378,709 networks Total D 2,589,036 4,177,709 4,754,109 Perimeter E (Twil) Power plants 3,039,200 2,359,191 1,520,791 MV networks 0 4,511,164 4,525,455 Low voltage (LV) 487,082 487,082 487,082 networks Total E 3,526,282 7,357,436 6,533,327 Perimeters B, D and E Power plants 9,362,927 6,994,209 7,153,791 MV networks 78,600 10,228,718 10,271,591 Low voltage (LV) 1,442,191 1,442,191 1,442,191 networks Total (B, D and E) 10,883,718 18,665,118 18,867,573

8. The subcomponent 1.2 is expected to result in the installation of about 1,136 kW of installed PV generation and related mini-grid distribution systems. The project will target 3,500 electricity connections (new and existing) to households, community facilities, and productive users within five years

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in the three perimeters. Based on the available budget, only one perimeter (around Djiguenni) will be initially financed. Overall, 1,500 connections would be targeted in that perimeter. This also means that the mini-grid will have 600 kWp installed capacity. 9. There is a large cost difference between the centralized and decentralized configurations. The investment costs for the centralized systems are estimated between US$18.6 million and US$18.9 million, while a decentralized approach will require US$10.9 million for 46 mini-grids. Investments in medium voltage networks required in the centralized systems represent significant expenses, which increase the overall costs by 73 percent compared to decentralized systems. The prefeasibility study provided an analysis of the levelized cost of energy for each configuration. The analysis shows that the levelized cost of energy is 20 percent to 30 percent lower in centralized systems than in decentralized mini-grids when medium voltage networks are subsidized. The final configuration will be confirmed with the detailed feasibility study that is being financed by the AFD. Also, the feasibility will provide detailed costs and the final choice of localities will be made depending on the World Bank’s available funds. 10. In the proposed business model, a competitive selection process will be launched to award the concession areas to the winning DSPE. In the existing DSPE model, the private operator was not required to contribute in the financing of the investments and was not involved in the choice of the technological solution and in the construction of the systems. Infrastructures were entirely financed and constructed by the Government through APAUS or ARE and passed on to private delegates through an ‘affermage’ contract. This approach has shown its limitation with concessions not operating and private operators not empowered to innovate. In the proposed project, investments will be subsidized up to 90 percent of investment costs to incentivize private sectors with limited financial capacity and reduce tariff gaps. The project will also finance the connection costs through the procurement of 1,500 meters and connections supplies. End users will contribute to a cost ranging from US$20 to US$50 to connect. The private operators will be required to provide a co-financing to fill the financial gap and propose a business plan that optimizes the tariff gap to ensure sustainability for the operation and replacement of equipment. A nationwide harmonized tariff will be applied to all rural concession customers to align with SOMELEC tariff. The tariff gap will be paid to DSPEs using the FAUS for the shortfall incurred by the private operators. The project will apply PPP arrangements in accordance with the World Bank Procurement Regulations for IPF Borrowers. This will be the opportunity to help build the capacity of the newly created CAPPP and reinforce the national system. 11. The subcomponent 1.2 will also finance the services of an owner’s engineer to assist SOMELEC with supervision and implementation support. These will take the form of (a) overall component management and supervision of the design, procurement, construction, commissioning, and management of the concession contracts and (b) coordination of the implementation of the ESMP. This subcomponent will finance two TAs to SOMELEC and the MPEM: (a) project management and implementation support to SOMELEC and (b) sector institutional strengthening. The support to SOMELEC will reinforce the project management and implementation capacity of the PIU, including technical; logistics (vehicles, computers, and premises rental); fiduciary; auditing; M&E; capacity building; gender mainstreaming; and operational costs. This subcomponent could also finance project preparatory activities such as feasibility studies, safeguards, and other required analytical work. The support to the energy sector and especially to the MPEM will be directed to strengthen the institutional, regulatory framework, finance reform measures, and trainings. These will include activities related to the ongoing redesign of the institutional scene, tariff study and management improvement plan for SOMELEC.

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Table 4.3. Subcomponent Costs and Financing (US$, millions) Total Budget IDA Credit Private Operators Financing Gap Needed Service-based rural electrification through 22.00 14.60 2.00 5.40 PPP solar hybrid mini-grids Construction of mini-grid systems (solar hybrid 19 11.8054 2.00 5.20 power plant, batteries, networks) Connections subsidies 1.00 0.80 0.00 0.20 Owner’s engineer 2.00 2.00 0.00 0.00 Project management and implementation 2.00 2.00 0.00 0.00 support to SOMELEC and institutional strengthening Project management and implementation 1.00 1.00 0.00 0.00 support to SOMELEC Institutional Strengthening 1.00 1.00 0.00 0.00 Total 24.00 16.60 2.00 5.40

Economic and Financial Analysis of the Rural Electrification Sub-component 12. The World Bank financing provides significant added value by delivering part of the financing required for the electricity access projects. The financial resources provided by the World Bank would buy-down the investment cost for private operators to increase electricity access in three perimeters, with over 46,000 rural population benefiting. In the same areas, AFD and EU are financing basic infrastructure to promote local economy including roads, agriculture and milk value chain. The proposed Project will support the development of the local economy in the targeted regions. The combination of these services will reinforce the positive spillovers and added value from each of the infrastructure projects themselves. 13. The economic analysis quantifies the net increase on electricity consumers surplus, due to an expected reduction in energy costs and an increase in energy consumption. The centralized solutions for this electricity access project will be deployed over three different perimeters. Therefore, three independent economic analyses were conducted, following the World Bank guidelines. Consumers will benefit from at least two different ways: (a) cost reduction on expenses for basic electricity services they already had access to (without the project) and (b) expected increase in access and consumption of electricity per capita. 14. The financial analysis quantifies the expected cash flow from the project, considering the tariff revenue, as well as capital and operation costs during the expected project lifetime. The analysis estimates the net cash flow over the 25 years of the project lifetime (PV panels lifespan), and the FIRR, using a 10 percent discount rate. It considers the expected tariff revenue based on SOMELEC social tariff (currently at the level of US$0.09 per kWh) and estimates the level of subsidy needed for a private investor to reach a financial equilibrium and a return of 20 percent. A 90 percent subsidy to capital expenditure is considered using the Bank financing. The remaining 10 percent of the capital expenditure (CAPEX) costs are covered by the operator, assuming a ratio of 80 percent debt and 20 percent by equity. In the case of the operating expenditure (OPEX) cost estimate, the financial analysis considers both fixed costs per year and variable costs per year.

54 Based on the current allocation of US$20 million for electricity investments, only Perimeters B and D will be implemented in the rural electrification subcomponent. US$3.4 million will be used for grid extension in Bassikounou.

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Table 4.4. Economic and Financial Analysis Assumptions and Parameters Assumption or Parameter Units Value Exchange rate (US$/MRO) US$/MRO 0.0028 Economic discount rate % 6 Financial discount rate % 10 Domestic inflation (Mauritania) % 4 Population growth % 4 World Bank subsidy % CAPEX 90 Contribution/equity (operator) % CAPEX 2 Debt (operator) % CAPEX 8 Operators’ loan term Years 5 Interest on operator’s debt % 10 Interest on deposits % 3 Subscription rate (after 1 year of electrification project) % 20 Subscription rate growth per year (year 2—year 5) % 20 Subscription rate growth per year (year 6 to year 10) % 10 GDP per capita growth (Mauritania, real terms) % 1.0 Representative village - Consumption with the project (per household, per month) kWh 20 Rate of growth of electricity consumption per year, with project (first 5 years) % 8.5 Rate of growth of electricity consumption per year, with project (starting at year 6) % 3.0 Social tariff (SOMELEC) US$ 0.09 Weighted average tariff (SOMELEC) US$ 0.10 Weighted average tariff (DSPE) US$ 0.17

Table 4.5. Economic and Financial Analysis Assumptions and Parameters

Economic Analysis: Economic Analysis Financial Analysis: Equilibrium Financial Analysis: Perimeter Population Internal Rate NPV (US$, millions) Subsidy Requirement to Reach Internal Rate of of Return (%) a 20% FIRR (US$, millions) Return (%) B 20,173 16 17.25 1.6 20 D 12,068 14 7.0 1.1 20 E 14,505 12 8.7 1.5 20 TOTAL 46,746 14 33.0 4.1 20

15. The economic analysis shows a highly positive EIRR, for each of the perimeters considered, while the financial analysis shows a marginal subsidy requirement to reach financial equilibrium. The EIRR is expected to be 14 percent for three perimeters. Additionally, the project shows a positive economic NPV of US$33 million. The EIRR and economic NPV differ across perimeters, however all of them are positive and significant, demonstrating the economic and social value of the project. However, the financial analysis shows a negative NPV (–US$3.2 million) without subsidy at the SOMELEC social tariff rate. This implies that the NPV of the expected financial revenues are less than the expected financial costs, over the project lifetime. However, the FAUS subsidy will be used to compensate for such expected losses and make the project financially viable. Overall, the total NPV of the FAUS subsidy amount required is US$4.1 million at a 20 percent FIRR for the operator.

16. GHG accounting undertaken indicates that the project can reduce 62,900 tons of CO2 emissions in the next 25 years with the use of solar energy instead of diesel-based mini-grids. The economic and financial analyses do not include the project’s effect on CO2 emissions. However, this project may have a significant positive effect on the environment, by reducing CO2 emissions due to the use of renewable energy. Currently, most of the mini-grids functioning in the rural areas of Mauritania use diesel power plants. This is a significantly more pollutant source of energy, than the solar power that the project aims to implement. Based on this CO2 emissions differential, this project could save approximately respectively 28,200 tCO2, 15,800 tCO2, and 18,900 tCO2 in the three perimeters.

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ANNEX 5: State of Decentralization in Mauritania

1. The creation of regions in 2018 and the adoption of new budgeting process in 2020 gave a new momentum to decentralization otherwise limited. Municipalities were created by the 1987 decree and entrusted with a legal personality, financial autonomy and responsibilities. Currently, Mauritania has 218 municipalities and 15 regions, overseen by the Ministry of interior. The government adopted its vision of decentralization in the 2010 Declaration of the Decentralization Policy and Local Development and the 2019-2028 National strategy for Decentralization and Local Development set a clear roadmap. The law creating regions followed by the election of the regional councils in 2018 and the adoption of the decree clarifying the responsibilities of regional councils mid-2019 gives a momentum. The 2019 elected GoM confirmed its commitment to decentralization55 and increased budget for decentralization in the 2020 Finance Law. 2. The creation of regions is both an opportunity and challenge for locally-driven development. So far, the effective transfer of responsibilities by sector ministries, and the related human and financial resources to LG has been limited. The creation of regions introduced a new layer for coordination and collaboration for local development, between deconcentrated services at the regional and district levels, local councils and regional councils. Some of the responsibilities transferred to regions and municipalities overlap (for example health, education, electricity, roads, and so on). Implementing texts will be required to clarify the transfer of responsibilities from line ministries to LGs, and the coordination between line ministries and LGs in development planning and service delivery. 3. Support to strengthen the capacity of LG in the past few years led to some improvements in local governance. The Ministry of Interior has developed training curricula for municipalities in the past few years. The rate of the municipalities that fulfilled the obligation to vote and approve the initial budget before December 31 increased from 54 percent to 90 percent 2015 and 2018. Most of the LGs (67 percent) declared holding citizen consultations. Between 2015 and 2018, the availability of mayors improved significantly, going from the 85-94 percent range to 93-100 percent.56 4. However, LG’s HR capacity is a key challenge. LGs’ staff capacity is limited, as they tend to not attract and retain cadres with adequate capacity. None of the regions can demonstrate two employees per 1,000 inhabitants and 49 municipalities out of 218 report have no permanent employees. LGs do not have personnel management strategies and skills are seldom aligned to needs. Most municipalities (72 percent) do not hold the four reunions required by law. Capacity in FM improved over the past few years but there is room for improvement, as 34 percent of municipalities do not keep a registry of expenses and payments. Many municipalities do not know how to establish an administrative account and all its

55 In the Discours de Politique Générale du Gouvernement (September 2019), the Government declared that “in the field of decentralization, the Government will strengthen State presence over the national territory by reactivating the options chosen for deconcentration through a better reorganization of external services of the Central State Administration to adapt to the constraints arising from the new policy of local development (regions and municipalities); (…) the decentralization mechanism will be complemented by the establishment of the necessary framework for the mobilization of local human resources, particularly through the promulgation of a specific status in the public administration (municipal and regional staff) and the creation of a national training center for territorial communities (regions and municipalities).” 56 GoM (2019) report on LG performance

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annexes.57 The capacity of the GoM to deliver the 2019-2023 strategy for strengthening LG capacity is limited. Also, there is no legal framework for LG civil service yet. 5. The Ministry of Finance developed in-house a budgeting-accounting software, connected to the Treasury that is promising. The digitization of budget management and the implementation of specialized software has taken place in some municipalities: 37 local councils report using the accounting management software in 2018.58 Others had not FM information system to support accounting yet.59 Treasury has piloted in September 2019 an integrated budget-accounting software and plans to roll it out in 2020. 6. Fiscal decentralization has been limited so far. Total transfers to LGs only represented 0.67 percent of 2018 budget (the lowest since 2013). The main sources of financing for municipalities are (a) local taxes; (b) international partners (for example, AFD, World Bank, and GIZ); and (c) FRD. Municipalities rely mostly on international partner60 and the FRD (see figure 5.2). There is no equalization financing, and investment per capita varies widely (see figure 5.3). Regional councils are financed by (a) an annual allocation for their recurrent spending, (b) transfers of investment budget from line ministries to be detailed in a convention for each ministries and regions, and (c) international partners. So far, regional councils only benefited from the recurrent budget allocation. Figure 5.1. Transfers flows and decentralization of responsibilities to regions and municipalities

7. The FRD modalities are limited to recurrent and maintenance spending, insufficient to foster investment, and lack predictability. The FRD, created in 2001, aimed at financing both recurrent and

57 GoM (2019) report on LG performance 58 Software “Elkhazin”. Source: Dahi, Mohamed Lemine. 2019. Rapport sur l'évaluation de la capacité institutionnelle des communes Mauritaniennes sur la base des données collectées en 2018. GIZ, page 95. 59 Sinet, Anne. May 2019. Evaluation du Fonds Régional de Développement, AMI N°2/PNIDDLE/2018, page 23. 60 For example, IDA-funded project PNIDDLE (2013-2019) financed investment in 100 municipalities. In 2015, the FRD contributed to 52 percent of the municipal investment effort, the remaining 48 percent being subsidized through PNIDDLE. PNIDDLE was a national program to support the decentralization effort, which was terminated in 2019 in line with its planned closure.

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investment spending of municipalities. Budget allocation for the FRD is decided annually in the Finance Law, and thus lacks predictability. In 2011–2018, the FRD represented about 1 percent of GoM spending, and has been stable since 2011. Allocations per municipality are unconditional and calculated as follow: (a) a fixed amount and (b) a variable amount depending on municipal population and poverty (regional poverty rate). No performance criteria or minimum requirement are included. Finally, the FRD is supposed to finance recurrent spending (60 percent) and maintenance (40 percent). Since 2016, the FRD is not supposed to finance investment even though it is not forbidden. Figure 5.2. Share of FRD in Municipalities’ investment spending (regional average) 100 90 80 70 60 50 40 30 20 10 0

2014 2018

Figure 5.3. Municipalities’ investment per capita (regional average) in 2017-2018 in million MRO

AVERAGE Nouakchott Ouest Nouakchott Nord Nouakchott Sud Inchiri Tiris-Zemmour Guidimakha Tagant Dakhlet Nouadhibou Adrar Trarza Brakna Gorgol Assaba Hodh Gharbi Hodh Charghi 0.00 500.00 1000.00 1500.00 2000.00 2500.00 3000.00

2017 2018

Source: WB calculation based on GoM statistical data.

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8. Local revenue mobilization is limited and varies widely, from US$3 to US$260 per capita61 Disparities in local tax recovery between comparable intermediate cities indicate likely room for improvement in local tax revenue mobilization. Variations are also visible in the targeted cities, where Rosso is performing better than the other cities in tax mobilization compared to the FRD transfers (figure 5.1). Variations are also visible in the type of local taxes, those municipalities that put efforts, indicating room for improvements in local tax recovery (see figures 5.4 and 5.5).

Figure 5.4: Local revenue versus FRD in LG revenue in Figure 5.5: local revenue mobilization per category in targeted cities (2018) Mauritanian cities with comparable pop. (2018)

14,000,000 100% 90% 12,000,000 80% 10,000,000 70% 60% 8,000,000 50% 6,000,000 40% 4,000,000 30% 20% 2,000,000 10% 0 0%

Ressources propres Impôts mobilisés avec l'appui de l'Etat

Fonds régional de développement (FRD) - Fonctionnement Impôts mobilisés par la commune Redevances

Droits domaniaux

Amendes

Recettes de services

61 GoM. 2019. Report on LG Performance.

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The World Bank Productive and Resilient Intermediate Cities (P169332)

ANNEX 6: Summary of Support from Technical and Financial Partners to the Decentralization Process and Municipalities

October 2019 - Mauritania

Development Project Budget Period Scope/Activities Geographic Coverage Partner World Bank Proposed US$50.0 2020– Distribution amounts and activities to be confirmed • LGs: Assaba (Kiffa), Hogh El Project million 2024 • Impact endowment in targeted cities (investment Gharbi (Aioun), Hodh Ech promoting economic development) Chargui (Nema, • Rural electrification in targeted areas (US$15 million) Bassikounou, and Adel • Support to the decentralization reform and support of the Begrou), Trarza (Rosso); regional councils and targeted cities (capacity building, • Electrification: Hodh El legal framework, and so on) Gharbi, Hodh Ech Chargui • Project management (including Bassikounou) AFD DECLIC 2 EUR 20.3 2019– • Basic infrastructure (schools, health center, and so on) in All the municipalities of the Project to million 2024 all 58 municipalities of the 2 Hodhs; (a) financing projects wilayas of support Local for economic development or joint management of • Hodh Ech Chargui Economic natural resources (markets, cattle tracks, and so on) and • Hodh El Gharbi Development (b) co-financing of experimental projects and collective and projects in promising sectors (EUR 15 million) Community • Strengthening control of municipal public works and the Initiatives capacity of territorial actors (EUR 3.3 million) • Investments fostering peaceful management of pastoral (in spaces and territories with high social and environmental preparation) risks (EUR 2 million) AFD DECLIC 1 EUR 15.0 2018– • Funding of basic infrastructure (school types, drilling, and All the municipalities of the Project to million 2023 so on) and economic development or joint management wilayas of support Local of natural resources (markets, cattle trails, and so on) in • Gorgol, Economic all the municipalities of the three regions - EUR 8.2 • Guidimakah Development million) • Assaba and • Strengthening of the communal project management and Community the capacities of territorial actors through participatory Initiatives in communal diagnostics and support for the revision of the wilayas CDPs (EUR2.8 million) of Gorgol,

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Development Project Budget Period Scope/Activities Geographic Coverage Partner Guidimakha, • TA to support the development and implementation of and Assaba national policies on decentralization, local development and land use (EUR 1 million) • Support for conflict prevention and sustainable management of natural resources at two sites: North Karakoro and the municipalities of Jeol and south of the Gorgol as part of a nongovernmental organization component GIZ ProDeF Estimated 2018– Proximity support in 10 pilot municipalities of Tagant and 10 10 pilot municipalities of Tagant EUR 3.0 2021 pilot municipalities of Brakna on the following themes: 10 pilot communes in Brakna million • Ownership, administration, and municipal (starts on December 1, 2019) management • Local taxation and fiscal civism • Citizen participation • Local economic development Equipment of townhalls with basic equipment (furniture, ICT equipment, solar panels, and so on) Equipment of some primary schools and health stations (solar panels) including water points/boreholes (solar pumps) Accompanying regional mayors’ associations 10 pilot municipalities of Tagant • Association of Mayors of the Tagant for Development 10 pilot communes of Brakna • Union of the mayors of Brakna in the area of communications and strategic planning • Implementation of the ‘from Waste to Income’ activities: 3 municipalities of Tagant: participatory approach and local economic development , Tamourt, N'aaj, and by recycling waste in 3 municipalities of Tagant Rachid • Training of 100 tagant young people: vocational training 10 pilot municipalities of Tagant at the technical and vocational high school in Boghé to meet local needs Strengthening of the DGCT M&E tool (CDM): National territory • Improved tool functionality • Organization of nationwide data collection Deployment of an integrated system for budget management National territory

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The World Bank Productive and Resilient Intermediate Cities (P169332)

Development Project Budget Period Scope/Activities Geographic Coverage Partner ‘El Beledi-El Khazen’ which is a joint system between the DGCT and the DGTCP (Treasury) Development and piloting of the El Mouhassil software for Sebkha collecting municipal taxes in the municipality of Sebkha: • Digitalized census of taxpayers • Software development and installation • Equipment and training of communal agents Capacity building and other support tools of the DGCT: DGCT • Elaboration of textbooks, guides, and manuals • Website • Development of a strategic plan for 2020–2023 As part of the new Agenda 2030 component: Agenda 2030 • Development of participatory budgets (5 pilot municipalities) • Development of a Regional Strategy for Accelerated Growth and Shared Prosperity (SCRAPP) in and in • Development of a monitoring system for the SCAPP and Agenda 2030 • Raising awareness and local understanding of SDGs taking into account the local context Technical support to the Association of Mayors of Mauritania Association of Mayors of in the field of communications and strategic planning Mauritania • Networking of different decentralization actors through Actors of decentralization participation in regional workshops on decentralization

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

ANNEX 7: Financial Management and Disbursement Arrangements

1. Internal control and internal auditing arrangements. The existing manual of administrative and financial procedures of the PNIDDLE will be updated to take into account all specificities of the project and remove specificities of closed project.

2. External auditing arrangements. The Disbursement and Financial Information Letter (DFIL) will require the submission of audited financial statements for the project to IDA within six months after the end of each fiscal year end of the GoM. The audit report should reflect all the activities of the project and all funded activities for beneficiary municipalities. An external auditor with qualifications satisfactory to the World Bank will be appointed to conduct annual audits of the project financial statements in accordance with audit ToRs agreed with IDA. In accordance with the World Bank policy on Access to Information, the borrower is required to make its audited financial statements publicly available in a manner acceptable to the Association. Following the World Bank’s formal receipt of these statements from the borrower, the World Bank also makes them available to the public. SOMELEC will also transmit to IDA its audited financial statements no later than six months after the end of the fiscal year.

Table 7.1. Auditing Requirements Audit Report Due Date Annual audited financial statements and Management Letter (including reconciliation End of June of the Designated Accounts (DAs), with appropriate notes and disclosures) Separate auditor’ opinion on funded activities for beneficiary municipalities including them recording in the municipalities accounts Annual audited financial statements and management letters of SOMELEC End of June

3. Accounting arrangements. The current accounting standards in use in Mauritania are acceptable to the World Bank. They are used for all ongoing World Bank-financed projects in Mauritania and will be applicable for this project. The existing accounting software will be customized to integrate this new project’s accounts.

4. Financial reporting arrangements. Each quarter, the PNIDDL’s PCU FM team will prepare IFRs for the project in form and content satisfactory to the World Bank. These IFRs will be submitted to the World Bank within 45 days after the end of each calendar quarter to which they relate. The FM team will prepare project’ financial statements in compliance with current accounting standards in use in Mauritania and World Bank requirements.

5. Budgeting arrangements. The project will prepare an annual budget based on the agreed annual work program. The budget should be adopted before the beginning of the year and its execution will be monitored on a quarterly basis and reports of budget monitoring and variance analysis will be prepared and included in the IFR. Annual draft budgets will be submitted to the PSC and then be submitted to the World Bank for ‘no objection’ no later than November 30 every year.

Flow of Funds and Disbursement and Banking Arrangements

a. Disbursement Arrangements

6. Disbursements would be transactions based, whereby withdrawal applications will be supported

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

with Statement of Expenditures. The following disbursement methods may be used under the project: reimbursement, advance, direct payment, and special commitment, as specified in the DFIL and in accordance with the Disbursement Guidelines for Investment Project Financing, dated February 2017. Documentation will be retained at the PCU for review by World Bank staff and auditors. The DFIL will provide details of the disbursement methods, required documentation, DAs’ ceiling, and minimum application size.

b. Banking Arrangements

7. A DA for the project will be opened in the Central Bank of Mauritania and a project account in local currency will be opened in a commercial bank in Nouakchott on terms and conditions acceptable to the World Bank. The DA will be used for all eligible expenditures financed by the credit and consistent with the specific terms and conditions of the Financing Agreement.

8. The flow of funds arrangements for the project is as shown in figure 7.1.

Figure 7.1. Flow of Funds Arrangements

IDA

Designated Account (Central Bank in Mauritania Government MoF

Project Account (Commercial Bank in Nouakchott)

Project Contractors (including for electricity construction works and for municipalities contractors), Consultants & Suppliers,

Transfer of funds Direct payment Transmission of documents (report invoice, withdrawal application audit report IFR, and so on)

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

9. FM Action Plan. The following actions, as shown in table 7.2, need to be taken to enhance the FM arrangements for the project.

Table 7.2. FM Action Plan Action Date Due Responsible Entity 1 • Prepare and agree with the World Bank on the Done during preparation PCU project team format of the IFRs • Draft the ToRs for financial audits of the project 2 • Selection of the external auditor Not later than four months PCU project team after effectiveness 3 • Update the project administrative and FM By project effectiveness manual

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

ANNEX 8: Gender Analysis, Actions, and Indicators

Gender Analysis

Mauritania in General

1. The 2020 Global Gender Gap Index62 gave Mauritania a score of 0.614 (where 1 = gender equality), signaling that Mauritania continues to make progress in closing gender gaps particularly in education and political empowerment. On the other hand, Mauritania lags in providing economic empowerment and opportunity to women, as well as in health and survival of women. In 2019, in Mauritania, the population was 50.2 percent female and 49.8 percent male and yet women tend to be more exposed to poverty and shocks. Indeed, men hold three jobs in every four, even though women represent 55 percent of the working-age population. And the labor force participation in Mauritania is 30.2 for females and 64.4 percent for males. Approximately 43.4 percent of females and 63.8 percent of males are literate. Primary school enrollment was 80.9 percent for females and 78.3 percent males and secondary school enrollment was 31.7 percent for females and 30.3 percent for males and yet boys are nearly 50 percent more likely to complete secondary education than girls. Additionally, insecure access to land also affects women, who account for just 8 percent of those holding land titles.

2. Despite those improvements, women are still under-represented in decision making, altering the capacity of institutions to properly address women’s issues in investment planning. With respect to political empowerment, in 2019, 20.3 percent of the parliamentarians in Mauritania were female and 31.8 percent of ministerial positions were held by women63, ahead of many other countries in the region. But in intermediate cities, women consider that their voice is insufficiently taken into account in local governance, in particular with respect to economic development.64

Mauritanian Refugees

3. The gender gaps are also very distinct within the refugee population of Mauritania. In 2019, Mauritania hosted over 57,000 refugees; 45 percent of the refugees were male, and 54.3 percent were female.65 Among the female refugees, 54 percent were under 18 years compared to 62 percent male. On the other hand, among the refugees between 18 and 59 years of age, 41 percent were female, while 33 percent were male. Among the refugee cases processed in Mauritania, 85 percent were female headed, while 15 percent were male headed.66 Most refugee households lack basic infrastructure such as electricity, while it is women in the household who are responsible for finding energy for cooking such as firewood which subjects them to GBV if they have to go far to search for fuel and time drudgery. Consequently, female refugees are not able to participate in economic empowerment activities such as education and income generating activities especially in rural areas.

62 http://www3.weforum.org/docs/WEF_GGGR_2020.pdf. 63 http://www3.weforum.org/docs/WEF_GGGR_2020.pdf. 64 Consultations with groups of women on economic opportunities in 5 intermediate cities (Rosso, Kiffa, Boghe, Kaedi, and Selibaby) in 2019 65 https://data2.unhcr.org/en/country/mrt. 66 https://data2.unhcr.org/en/documents/details/62648.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

Gender Actions

4. Improved access to electricity and other basic infrastructure to intermediary cities and households will improve opportunities for women, women-headed households, and women-headed economic actors, including for female refugees, and can contribute to reduce GBV targeted toward female refugees. The following are the proposed gender actions with respect to the refugee gender disparities within the scope of the project:

• Subcomponent 1.1

• As part of the CDPs preparation, which will include consultations with different stakeholders, both male and female members of the host communities, as well as male and female refugees, will have fair representation in the process, including through the investment strategies. The Commune Consultation Committee, established in each commune, will be a key vehicle in the decision-making process, in particular in the approval of the CDPs and the selection of the investments funded by the project since it will act as the local investment selection committee for the project. • The feasibility studies conducted by municipalities, aimed at identifying economic development priorities and improving the design of the investments, will collect inputs from women independently and from the refugee communities, including male and female refugees, in order to best include the specific needs or constraints of those groups. • Subcomponent 1.2 • Most of the households in the project area, including in the refugee community, are female headed so the project has to strategically target female-headed households through: - Consumer education and awareness of the project in female-only sessions at a time convenient for women, including female refugees, and facilitated by females; and - Whenever possible, financial assistance to female-headed refugee households to connect to basic infrastructure. • Subcomponent 2.2 (US$6.0 million): Building the capacity of Local Governments • Building capacity of LGs for public finance and public sector management will include gender capacity building for local actors and representatives of both host and refugee communities. • M&E • Gender-disaggregated indicators will be further disaggregated for female refugees. • Investment selection committees will be comprised of at least 30 percent of women and representatives of refugees (where applicable).

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

ANNEX 9: Applicability of Environmental and Social Standards

ESS1 Assessment and Management of Environmental and Social Risks and Impacts

1. As specific areas of intervention and details of investments are not known during project preparation, the GoM has prepared a draft Environmental and Social Management Framework (ESMF) which has been consulted upon, reviewed by the World Bank, and publicly disclosed on the Bank’s website on January 27, 2020, on the World Bank website. The draft ESMF defines screening mechanisms and monitoring procedures for the identification and management of potential adverse environmental and social impacts and provides a GRM with guidance on the reception, recording, handling, and reporting of complaints that may be encountered during project implementation.

2. The major concern raised by the ESMF is the weak capacity of the municipalities regarding their responsibilities for investment project preparation and implementation. In addition, SOMELEC has no experience with World Bank-financed projects. Other key environmental and social risks and negative impacts identified and assessed in the ESMF were determined to be mostly temporary and reversible if they are well managed. These risks and negative impacts will be managed in accordance with the ESMF through preparation of site-specific instruments such as Environmental and Social Management Plans (ESMPs). These include dust surges and air pollution, loss of vegetable species, production of waste, risks of erosion and pollution of grounds and surface water, risks of accidents at work and traffic, social conflicts between local populations and construction site staff, and risks of sexual abuse. Given the weak capacities of the municipalities, the challenge will therefore be to combine the development of the project's activities with the required environmental and social risk management.

3. Gender-based violence (GBV) management and mitigation. An initial assessment of the project’s potential risks of GBV using the World Bank’s GBV Risk Assessment Tool determined the potential risk as Moderate. This risk rating will be reassessed if any potential project activity is identified that could have some GBV risks. However, the Environmental and Social Impact Assessment (ESIA), which will be prepared during the project implementation, will include the GBV assessment and propose an action plan, including the feasibility of a GRM.

4. An Environmental and Social Commitment Plan (ESCP), drawn and agreed upon with the Borrower, has been prepared and disclosed on the Bank’s website on January 20, 2020. The ESCP sets out substantive measures and actions that will be required for the project to meet environmental and social requirements. These measures shall be implemented within the specified time frames and the status of implementation and will be reviewed as part of project monitoring and reporting.

ESS2 Labor and Working Conditions

5. The project footprint will certainly entail a significant amount of labor due to the works that the project could undertake in the seven wilayas. The labor and working conditions (including labor inflow to some wilayas near the Mali and Senegal frontiers) could be an issue. The project will therefore hire local unskilled labor, to the extent possible, for some construction, to minimize the inflow of unskilled labor and reduce the potential for harm. The Labor Management Procedure (LMP) has detailed information on the work terms and conditions including explicit prohibition of child labor. In addition to measures for the PCU staff, the LMP includes measures to protect community members who provide labor on a voluntary

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

basis, including participation of women and the health and safety of workers. The LMP describes the role of the direct workers, the primary supply workers, and the contractors’ workers, including migrants if any, and the roles and responsibilities for monitoring project workers. The LMP was disclosed on the Bank’s website on January 31, 2020.

6. The initial GBV risk is moderate but site-specific ESIAs will include GBV assessment. Measures to prevent and mitigate potential GBV risks involving project workers will be included in contractor and worker contracts and codes of conduct. Measures relating to occupational health and safety are addressed in the ESMF and will be considered in the site-specific ESIAs. The project will require contractors to develop and implement a grievance mechanism for their workforce, including subcontractors, as part of the construction ESMP. The LMP presents ways to access details of the GRM for project workers and the general project GRM for community members. In addition, the LMP describes the roles and responsibilities for monitoring.

7. Occupational health and safety. To ensure the health and safety of workers during the construction and operational phases of the project, the borrower will develop and implement a Health, Safety and Environmental plan in line with World Bank Group Environment, Health, and Safety Guidelines (for construction activities). The plan will include procedures on incident investigation and reporting, recording and reporting of nonconformances, emergency preparedness and response procedures, and continuous training and awareness to workers. The construction ESMP will confirm if there will be on-site accommodation for workers.

ESS3 Resource Efficiency and Pollution Prevention and Management

8. Although the project will invest in solid and liquid waste management, this ESS is relevant given the fact that strengthening the productivity of cities could substantially increase the production of waste that can be source of pollution. The site-specific ESIAs will determine the source, type, quantity, and risks associated with the waste likely to be generated by the project and, if such waste cannot be avoided, the ESIA will propose appropriate measures to minimize, reduce, and, where not possible, mitigate the risks associated with the waste. The management of waste needs to be considered during all phases of the project, including design, construction, operation, closure, and decommissioning. In addition, the specific ESIAs will explore technically and financially feasible measures to improve efficient consumption of energy, water, and building materials.

ESS4 Community Health and Safety

9. The project activities related to waste management are expected to contribute to improving community health. However, construction activities can cause the inflow of some workers, which can lead to adverse social impacts (GBV, sexual exploitation, and communicable diseases) on local communities. The LMPs requested in ESS2 include measures to ensure that the health and safety of workers are given adequate attention. In addition, for each construction site, the specific environmental and social assessment recommends the necessary measures to restrict community access to the construction site during the entire work period. And where the project includes construction of new buildings and structures that will be accessed by members of the public, the borrower will consider the incremental risks of the public’s potential exposure to operational accidents or natural hazards, including extreme weather events. Where technically and financially feasible, the borrower will also apply the concept of universal access to the design and construction of such new buildings and structures.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

ESS5 Land Acquisition, Restrictions on Land Use, and Involuntary Resettlement

10. The implementation of Component 1, which will support various construction activities of communal or intermunicipal infrastructure such as access road, drainage, urban road, regional markets; infrastructure for youth; management of solid and liquid waste management; and extension of water and electricity networks (buildings or other facilities such as cultural centers, craft houses, sports fields, and so on) could lead to land acquisition and involuntary resettlement. As activities and locations are not yet known at this stage of the project, a Resettlement Policy Framework has been prepared and disclosed on January 31, 2020, on the World Bank website. As soon as the locations and activities are defined, Resettlement Action Plan(s) will be prepared (as needed). Particular consideration will be given to any resettlement of women-led households and single women.

ESS8 Cultural Heritage

11. In Mauritania, there are cultural heritage sites in all cities. The screening mechanism in the ESMF should include questions to exclude activities that may have adverse impacts on any known tangible or intangible cultural heritage. In addition, due to potential impacts on cultural heritage associated with excavation during civil works, the ESMF includes provisions of ‘Chance Finds’ approach to ensure that these aspects are taken into account in specific ESIA/ESMPs and are then reflected in the firms’ contracts, in case any chance finds occur.

ESS10 Stakeholder Engagement and Information Disclosure

12. Stakeholder engagement is a critical tool for social and environmental risk management, project sustainability, and success. In consultation with the World Bank the client prepared and implemented an inclusive Stakeholder Engagement Plan (SEP) proportional to the nature and scale of the project and associated risks and impacts. The SEP has been publicly disclosed on the World Bank website on January 20, 2020. The borrower will be engaged in meaningful consultations with all stakeholders throughout the project life cycle, paying attention to the inclusion of vulnerable and disadvantaged groups (including the elderly, persons with disabilities, female-headed households, and orphans). Key stakeholders consulted during the SEP preparation include the former Ministry of Economy and Finance; Ministry of Health Action; Ministry of National Education; Ministry of Food Security; Ministry of Housing, Urbanism, and Territorial Development; Ministry of Hydraulics and Sanitation; Ministry of Social Affairs for Children and Families; the Ministry of Environment and Sustainable Development; Ministry of Rural Development; Ministry of Interior and Decentralization; Ministry of Employment, Youth, and Sports; wali; Hakem; municipalities; women associations; and youth groups. A strategy for the consultation of the different stakeholders as well as a plan for the stakeholder’s engagement in the project have been prepared for implementation throughout project implementation and closure.

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The World Bank Decentralization and Productive Intermediate Cities Support Project (P169332)

ANNEX 10: Map

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