Document of The World Bank

FOR OFFICIAL USE ONLY

Public Disclosure Authorized Report No: 67555-EG

EMERGENCY PROJECT PAPER

ON A Public Disclosure Authorized PROPOSED LOAN

IN THE AMOUNT OF US$200 MILLION

TO THE

ARAB REPUBLIC OF

FOR AN

Public Disclosure Authorized EMERGENCY LABOR INTENSIVE INVESTMENT PROJECT

June 13, 2012

Human Development Sector Middle East and North 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 June 13, 2012)

Currency Unit = Egyptian Pound (EGP) EGP 1 = US$0.17 US$1 = EGP 6.044

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

ADB African Development Bank CAS Country Assistance Strategy CCT Conditional Cash Transfer CDA Community Development Association CPAR Country Procurement Assessment Report DANIDA Danish International Development Agency EEAA Egypt Environmental Affairs Agency EC European Commission EGP Egyptian Pound ELIIP Emergency Labor Intensive Investment Project ESSAF Environmental and Social Screening and Assessment Framework EU European Union FDI Foreign Direct Investment FI Financial Intermediary GDP Gross Domestic Product GoE Government of Egypt GTZ German Agency for Technical Cooperation HCD SFD‟s Human and Community Development Department IA Intermediary Agencies IAD SFD‟s Internal Audit Department IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association ILO International Labor Organization ISN Interim Strategy Note KfW Kreditanstalt für Wiederaufbau Development Bank MIS Management Information System MOHP Ministry of Health and Population M&E Monitoring and Evaluation MFI Microfinance Institution ii

MSE Micro and Small Enterprises NCB National Competitive Bidding NGO Non-Governmental Organization OM Operations Manual O&M Operation and Maintenance PFM Public Financial Management PIU Project Implementation Unit PWP Public Works Programs SA Sponsoring Agencies SFD Social Fund for Development SIL Specific Investment Loan SME Small and Medium Enterprise SRFP Standard Request for Proposal TA Technical Assistance TOR Terms of Reference UNDP United Nations Development Program

Vice President: Inger Andersen Country Director: A. David Craig Sector Manager: Yasser El-Gammal Task Team Leader: Alaa Mahmoud Hamed Abdel Hamid

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Arab Republic of Egypt Labor Intensive Investment Project

CONTENTS

Page A. Introduction ...... viii B. Emergency Challenge: Country Context, Recovery Strategy and Rationale for Proposed Bank Emergency Project...... 2 C. Bank Response: The Project ...... 6 D. Appraisal of Project Activities ...... 8 E. Implementation Arrangements and Financing Plan ...... 14 F. Key Risks and Mitigating Measures ...... 17 G. Terms and Conditions for Project Financing ...... 17

Annex 1: Detailed Description of Project Components ...... 18

Annex 2: Results Framework and Monitoring ...... 20

Annex 3: Summary of Estimated Project Costs ...... 23

Annex 4: Operational Risk Assessment Framework (ORAF) ...... 24

Annex 5: Financial Management and Disbursement Arrangements ...... 27

Annex 6: Procurement Arrangements ...... 38

Annex 7: Implementation and Monitoring Arrangements ...... 43

Annex 8: Project Preparation and Appraisal Team Members ...... 50

Annex 9: Environmental and Social Safeguards Framework ...... 51

Annex 10: Economic and Financial Analysis ...... 67

Annex 11: Documents in Project Files ...... 71

Annex 12: Statement of Loans and Credits ...... 72

Annex 13: Country at a Glance ...... 73

Annex 14: Maps...... 75

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EGYPT

EMERGENCY LABOR INTENSIVE INVESTMENT PROJECT

PROJECT PAPER

MIDDLE EAST AND NORTH AFRICA

MNSHD

Basic Information Country Director: A. David Craig Sectors: Other Social Services Sector Manager/Director: Yasser El Themes: Human Development Gammal/ Steen Lau Jorgensen Environmental category: B Team Leader: Alaa Mahmoud Hamed Expected Closing Date: December 31, Abdel Hamid 2015 Project ID: P126339 Joint IFC: N/A Expected Effectiveness Date : October Joint Level: N/A 12, 2012 Lending Instrument: ERL Project Financing Data [ X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: The loan is a Variable Spread Loan with a 29-year maturity and seven (7) year grace period with commitment linked level repayment pattern. Financing Plan (US$m) Source Total Amount (US $m) Total Project Cost: Cofinancing: Borrower: Total Bank Financing: IBRD 200 IDA New Recommitted Client Information Recipient: Arab Republic of Egypt Responsible Agency: The Social Fund for Development Contact Person: Ms. Ghada Waly Telephone No.: Fax No.: (202) 2391-2815 Email: Estimated disbursements (Bank FY/US$m) FY FY13 FY14 FY15 FY16 Annual 10 55 60 75 Cumulative 10 65 125 200

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Project Development Objective and Description Project development objective:

The objectives of the Project are: (i) to create short-term employment opportunities for unemployed unskilled and semi-skilled workers; and (ii) to provide access to basic infrastructure services to the target population in poor areas in the Borrower‟s territory.

Project description:

Component 1: Employment-Intensive Sub-projects

This component will include provision of grants to sponsoring agencies by governorates and local authorities, for sub-projects consisting of small-scale infrastructure works including, but not limited to: canal cleaning and protection, and rehabilitation of schools, housing, and rural roads.

The sub-projects will be contracted out to private contractors.

This component will also include provision of grants to sponsoring agencies, by governorates and local authorities, for sub-projects consisting of community services including, but not limited to, early childhood education services, outreach for maternal and child health, nutrition, population services, solid waste collection, and youth employment in rural and urban settings.

The sub-project implementation will be contracted out to NGOs.

Component 2: Implementation Support

This component will include provision of project implementation support, including project management, audits, public information and communication, technical verification and quality assurance, monitoring and evaluation, and social accountability mechanisms.

Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [ X]Yes [ ] No Natural Habitats (OP/BP 4.04) [ ]Yes [ X ] No Forests (OP/BP 4.36) [ ]Yes [ X ] No Pest Management (OP 4.09) [ ]Yes [ X] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [ X ] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [ X ] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [ X ] No Safety of Dams (OP/BP 4.37) [ ]Yes [ X ] No Projects on International Waterways (OP/BP 7.50) [ ]Yes [ X ] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [ X ] No Does the project require any exceptions from Bank policies? [ ]Yes [ X ] No Have these been approved by Bank management? [ ]Yes [ ] No Conditions and Legal Covenants: Agreements References Description of Date Due Condition/Covenant

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(Project Agreement) Schedule For the purposes of proper Not later than 6 months Section IA, Paragraph 3 implementation of the Project, after Effective Date the Borrower shall cause the Project Implementing Entity, not later than six months after the Effective Date, to appoint for the duration of Project implementation, and on terms and conditions acceptable to the Bank, an Independent Verification Expert (IVE) to assess and verify that: (i) Project outcomes have been met; (ii) the quality of works undertaken in carrying out Sub-projects; and (iii) whether Sub-projects are implemented and maintained in accordance with the requirements of the Maintenance Manuals, the ESSAF and the Operations Manual. (Project Agreement) Schedule, The Borrower, through the Not later than one month Section IA, Paragraph 4 Project Implementing Entity, after the Effective Date shall update its existing automated accounting system to record and report on the new project activities (Project Agreement) Schedule, To facilitate the carrying out of Section IC, Paragraph 1 Part A of the Project, the Borrower shall ensure that the Project Implementing Entity shall make Sponsoring Agency Grants to Sponsoring Agencies in accordance with eligibility criteria and procedures mutually acceptable to the Bank and the Borrower.

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(Loan Agreement) Schedule 2, Notwithstanding the provisions Section IV, B1 of Part A of this Section, no withdrawal shall be made: (a) for payments made prior to the date of this Agreement; or (b) under Category (2) unless a procurement advisor has been appointed on terms and conditions mutually acceptable to the Bank and the Borrower; or (c) under Category (1) in the event that the ESSAF requires the preparation of a Sector- specific EIA/EMP, and/or Environmental Safeguard Guidelines, unless the Project Implementing Entity has accordingly prepared, disclosed and held consultations on the aforementioned Sector-specific EIA/EMP, and, where required under the ESSAF, has prepared Environmental Safeguard Guidelines for the particular Sub- project for which the application for withdrawal is required.

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A. Introduction

1. This Project Paper seeks the approval of the Executive Directors to provide a loan in an amount of US$200 million to the Arab Republic of Egypt for an Emergency Labor Intensive Investment Project (ELIIP). Fundamental political changes in Egypt have followed the collapse of President Mubarak‟s regime in February 2011. Parliamentary elections were conducted in March 2012. A 100-person assembly is being formed to draft a new constitution, which in turn will be subject to a popular referendum. At the time of the EPP, presidential elections are ongoing with two final candidates running for presidency. The transitional Government in place has requested Bank support for employment creation in poorer areas of Egypt in the short-term to maintain social stability during this period of transition. The employment and poverty situations in Egypt are critical. Unemployment is high (more than 13 percent), with an increase of 3.5 percentage points over the last year, and over 90 percent of all unemployed are youth. In addition, Egypt faces enormous fiscal challenges as the fiscal deficit widened to 9.5 percent of GDP in FY11, a substantial increase compared with the 8.1 percent deficit in FY10 and 7.9 percent originally budgeted for that year. Poverty rates also increased to 25 percent, from 21 percent in 2009. The growing financing needs of the Government have built up pressure in domestic financial markets, where yields on one year T-Bills increased to 13.6 percent in September 2011. Limited fiscal space and political uncertainty, combined with rising unemployment, poverty and regional disparities, could derail the transition process.

2. The proposed Project will address the following priorities (as defined in Paragraph 4 of World Bank Guidelines for OP 8.00): (a) establishing and/or preserving human, institutional, and/or social capital; (b) assisting with the crucial initial stages of building capacity for risk reduction; and (c) supporting measures to mitigate or avert the potential effects of imminent emergencies or future emergencies or crises in countries at high risk. On February 29, 2012, the World Bank Regional Vice President approved the processing of this operation on an emergency basis for OP 8.00.

3. The objectives of the Project are: (i) to create short-term employment opportunities for unemployed unskilled and semi-skilled workers; and (ii) to provide access to basic infrastructure services to the target population in poor areas in the Borrower‟s territory. This will be carried out through the construction/maintenance of community level infrastructure using labor- intensive techniques and the provision of community services.

4. Specifically, the proposed operation will focus on two main components. The first component, Employment-Intensive Sub-projects (US$198.0 million), will support two types of labor intensive sub-projects: (i) small-scale local infrastructure public works sub-projects: canal cleaning and protection, rehabilitation of schools, housing, and rural roads; and (ii) community service sub-projects. The second component, Implementation Support (US$2.0 million), will finance support to project management; audits, public information and communication; technical verification and quality assurance; monitoring and evaluation; auditing; and social accountability.

5. The project will be financed through an Emergency Recovery Loan (ERL). The EU is considering co-financing the proposed project with an amount of Euro 75.00 million. The Danish International Development Agency (DANIDA) is considering providing parallel financing in the amount of US$ 3.0 million to this project. In addition, parallel financing will be provided by the International Labor Organization (ILO) through technical assistance to the Government to support capacity building in use of labor-intensive approaches and techniques. UNDP will also provide parallel financing in the form of a project that will pilot innovative approaches for public works. Furthermore, the World Bank, through the Japanese Social Development Fund (JSDF), is planning to provide grant support (US$2.85 million) to a project aimed at minimizing the risks of chronic and/or unsafe unemployment among marginalized youth by facilitating their access to pertinent opportunities for job readiness and job placement.

B. Emergency Challenge: Country Context, Recovery Strategy and Rationale for Proposed Bank Emergency Project

Country Context

6. The deteriorating security situation and uncertainty following the January 25, 2011 Revolution has slowed down economic activity, and increased poverty and unemployment. On February 11, 2011, President Hosni Mubarak resigned from the Presidency of Egypt as a result of a people‟s revolution that erupted on January 25, 2011. As Egypt is going through a transitional stage of political and economic uncertainty, there have been significant increases in unemployment rates, from 9.6 percent before the revolution to about 13 percent in December 2011,1 and poverty rates also increased from 21 percent2 to 25 percent during the same period.3 In addition, the long-standing deprivation in the poorer parts of Egypt is threatening to derail the political transition and lead to a surge in extremism. Unskilled and semi-skilled workers, especially those who are already unemployed, will be more vulnerable as they are among the poorest segments of society. This may add to the complexity of the transition and could be a trigger for continuing social unrest, hence the urgency of addressing this important issue.

7. This effect is compounded by the return to Egypt of migrants who were working and living in Libya. These migrants who remain in Egypt account for an increase in unemployment by an additional 0.6 percent. This situation has been aggravated as more migrants return to Egypt as a result of the unrest that is occurring in other Middle Eastern countries.

8. The implications for the Egyptian economy of the crisis in Libya are significant. Libya is the top destination within the region for Egyptian youth, with 38 percent of youth migrants going to Libya, followed by 29.4 percent to Saudi Arabia. The estimated 330,000 Egyptians in Libya remitted up to US$33 million per annum. Official figures state that by March 22, 2011, about 147,900 Egyptians had returned to Egypt from Libya. The profile of returning migrants is as follows: (i) most come from rural areas (85 percent); and (ii) they tend to have only a basic level of education, with 25 percent being illiterate, and another 24 percent with a vocational education. Only fifteen percent have a general secondary high school or university background.4

1 CAPMAS, Labor Force Survey, July-September 2011 2 The World Bank. Poverty in Egypt 2008-09: Withstanding the Global Economic Crisis. January 2011 3 CAPMAS, Household Expenditure Survey, 2012 4 . International Organization for Migration (IOM) 2011 2

9. The expected increase in unemployment and underemployment adds to the complexity of an already existing problem of high unemployment, increasing poverty rates and regional disparities. Loss of employment is the most prominent cause of households falling into poverty. The sudden economic slowdown in the context of accelerating inflation in 2008/2009 reversed the gains in poverty reduction achieved during the period of rapid growth before 2008/2009.5 At the same time, the incidence of extreme poverty (the inability to meet basic food needs) increased by about 20 percent, as high inflation and rising food prices eroded the purchasing power of the population. This has created an additional strain on the economy‟s demand for labor. As a result, extreme and absolute poverty actually increased: as many as 5.1 million Egyptians were severely food deprived in 2008/09 (double the number in 2004/05), and absolute poverty increased from 19.6 percent to 22 percent. During the period 2008/09, 31 million Egyptians (around 40 percent of the population) were poor or near poor. The 2008/09 period was also characterized by a dramatic reduction in opportunities to get out of poverty. The population‟s vulnerability to sudden employment losses during this period was due to the absence of any targeted social safety net mechanisms to protect the poor, who typically work in the informal sector in low-earning occupations. This situation has recently been aggravated as the Central Agency for Public Mobilization and Statistics (CAPMAS) announced that the poverty prevalence rate further increased, reaching 25 percent.

10. In the short-run, the events since January 2011 have impacted the Egyptian economy through many channels, including the following:

(a) Direct Economic losses. Economic losses occurred following serious disruptions in production, stock market turbulence and capital flight. CAPMAS estimated that the economic losses were US$1.7 billion (US$650 million in manufacturing, US$150 million in tourism and US$130 million in construction, with the remainder spread across other sectors). The Ministry of Finance indicated that the losses during the 18 days of demonstrations amounted to US$310 million per day. It is expected that economic growth for the current year could drop to a mere 1.2 percent from over 5 percent prior to the revolution. (b) Decrease in exports. Exports in January 2012 declined from EGP 8.2 billion to EGP 7.7 billion and continue to decrease. (c) Reduction in tourism. Tourist resorts, hotels and tourism companies in governorates forced 90 percent of workers into open-ended periods of leave without pay after tourism sharply declined. Other tourist resorts decided to keep security and gardening laborers without paying bonuses. The number of workers in the Red Sea hotel sector is estimated at 400,000 and most of them come from governorates in south Egypt. Since a number of foreign airlines closed their branches at Airport, workers were given open-ended periods of leave until the resumption of tourist flights. Occupancy rates at hotels and tourist resorts at Hurghada, and Al-Qoseir failed to surpass 15 percent in 80 percent of the resorts, the lowest rate recorded in recent years. In addition, over 250,000 tourists cancelled their flights to the Red Sea in the days following the revolution. The tourism sector has not yet rebounded. Hotels in and report occupancy rates of less than 10 percent. All major tourist sites in Cairo lack

5 The World Bank. Poverty in Egypt 2008-09: Withstanding the Global Economic Crisis. January 2011. 3

visitors and companies declared that pre-booking for the 2011-12 winter seasons was the lowest witnessed for a winter season in the whole of the previous decade. (d) Migration. Migration is observed in two directions: Egyptians emigrating (minimal effect due to general situation in the region) and returnees coming back from Libya (see above). (e) Withdrawal of Foreign Direct Investment (FDI). Mainly for security reasons, FDI was practically non-existent in 2011. (f) Inflationary pressure. It is expected that inflation has increased as a result of the shortage of food during the unrest, as well as high oil prices. Food prices have reportedly not returned to their pre-revolution levels.

11. Public works programs, which have been suitable in similar crises, are not part of Egypt’s safety net system. In general, programs that have been launched in response to a crisis in other countries fall into two broad groups: (a) programs aimed at providing immediate short-term employment opportunities (i.e., some variant of public workfare programs), and (b) transfer programs, cash or in-kind, conditional or unconditional, mainly to maintain a critical minimum consumption level of vulnerable households to prevent irreversible damage to the accumulation of human capital. In Egypt, the role of workfare has diminished over time as the public works program, implemented by the Social Fund for Development (SFD) for the last 20 years, has been starved of funding.

12. Currently, Egypt’s safety net system is dominated by subsidies on food and energy. Increases in budget allocations during the last few years have focused on expanding the food subsidy program.

13. To mitigate social stress associated with the 2008/2009 food crisis, public spending increased through FY08-09, further distorting the safety net towards subsidies. In spite of several rounds of reforms to energy subsidies, which are available for all consumers and producers, subsidies still represent the largest burden on the budget (around 6 percent of GDP). The food subsidy program consists of two parts: (a) Baladi bread; and (b) ration cards. Bread subsidies, available for purchase by all Egyptians, are the second largest item in Egypt‟s safety net (accounting for around 1.5 percent of GDP). Spending on ration card subsidies, provided only to registered households, comprises only about 0.5 percent of GDP and a recent study revealed serious flaws in this program. In contrast, spending on cash transfers, which benefit mostly the poor and vulnerable, amounts to a very small 0.1 percent of GDP, while spending on public works has decreased to insignificant figures.

14. This Project will complement existing safety nets in Egypt by building up the public works pillar while addressing the emergency situation. While this Project is designed to meet the needs of the emergency situation, it should also help build the institutional capacity for PWPs in Egypt, a tool that is likely to be used frequently in the medium term. The inclusion of PWPs as an essential part of Egypt‟s safety net was recommended by the Bank as early as 2005, to be scaled up and down quickly to respond to shocks based on the country‟s situation.

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Government Response

15. The Government of Egypt (GoE) is planning to implement a PWP for Egypt that would adopt labor-based methods to address Egypt‟s short-term needs on an emergency basis to generate job opportunities. The proposed Project supports this strategy.

16. The proposed Project will be implemented by the Social Fund for Development (SFD). The SFD is a legally autonomous, well-established development organization with a 20-year track record of providing support to needy and underserved communities. Established in 1991, the SFD‟s initial key objective was to help mitigate the negative effects of Egypt's structural adjustment programs. In 1999, the SFD obtained a permanent mandate to focus on job creation. The SFD has managed considerable amounts of donor resources through grants and loans from more than 20 multilateral and bilateral donors. The World Bank has been a lead agency in developing and supporting the SFD and has granted three IDA credits to the SFD, totaling US$310 million during the period 1992-2005. In addition, the SFD, with the Ministry of Health and Population (MOHP), jointly implemented the IDA-financed Population Project (Cr. 2830, closed in 2005). The SFD also is the implementing entity for the Enhancing Access to Finance for Micro and Small Enterprises Project (Loan 7850-EG, approved March 25, 2010).

17. The SFD is well-placed to implement this Project, as a well-established institution with significant experience in interventions that provide services and employment to the poor, and with an increasing focus on community participation, cooperation with NGOs, and decentralization. Since 1992, about EGP 1.8 billion worth of projects have been implemented by SFD in infrastructure under its Community and Human Development Department. In the area of public works, the SFD currently implements two projects, one financed by the EC and another by the Kreditanstalt für Wiederaufbau (KfW) Development Bank. Over the years, the most common sub-projects implemented were water supply and sanitation projects, pavement of roads, cleaning of canals, buildings and riverbank protection.

18. The results of an independent impact evaluation of SFD activities in the areas of public works and community development for the period 2000-2004 provided a number of insights which are still relevant today. The evaluation concluded that, regardless of the type of intervention, communities considered almost all interventions (an average 99.4 percent) to have been community priorities. Participating communities generally observed a high beneficial impact of SFD interventions (between 80 and 90 percent of communities with interventions in education, potable water, road pavement, and environmental projects observed high impacts). Most communities attributed the positive impact of SFD interventions to improvements in health and living standards. The evaluation report also concluded that the allocation of PWP funds has been progressively targeted toward the poorer governorates.

Rationale for Bank Involvement

19. The GoE has requested the Bank‟s technical and financial support in the design and implementation of a PWP for Egypt. The program will adopt labor-based methods in order to address Egypt‟s short-term needs by generating short-term job opportunities for income support to unemployed unskilled and semi-skilled workers. A secondary objective will be the creation and/or maintenance of infrastructure and community assets.

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20. The Bank has the technical knowledge and long term experience in supporting PWPs as an important component of the overall safety net package in many IBRD and IDA countries, including Egypt. Other donors are considering support for the Government‟s program, leveraging this proposed Project.

C. Bank Response: The Project

21. The proposed Loan, at US$200 million, will help to finance the costs associated with creating short-term employment opportunities for the unemployed unskilled and semi-skilled workers in poor locations in Egypt.

22. The Project will adopt a gradual and phased approach in improving the original design of the PWP implemented by the SFD in the previous three IDA-financed projects. There are three important improvements to the model: (i) increasing the percentage of labor intensity;6,7 (ii) using geographic, community, and self targeting of the poor;8 and (iii) including labor-intensive community service sub-projects.

Project Development Objectives

23. The objectives of the Project are: (i) to create short-term employment opportunities for unemployed unskilled and semi-skilled workers; and (ii) to provide access to basic infrastructure services to the target population in poor areas in the Borrower‟s territory.

Summary of Project Components

Project description:

Component 1: Employment-Intensive Sub-projects (US$198 million)

24. This component will include provision of grants to sponsoring agencies, by governorates and local authorities, for sub-projects consisting of small-scale infrastructure works including, but not limited to: canal cleaning and protection, rehabilitation of schools, housing, and rural roads. The sub-projects will be contracted out to private contractors.

25. This component will also include provision of grants to sponsoring agencies, by local communities, for sub-projects consisting of community services including, but not limited to, early childhood education services, outreach for maternal and child health, nutrition, population services, solid waste collection, and youth employment in rural and urban settings. The sub- project implementation will be contracted out to NGOs.

6 Labor cost ranging between 50-70 percent of total cost is advised by international literature. The multiplier of a labor-intensive approach is at least 1.5 compared to only 0.7 for equipment-intensive construction techniques. 7 Current labor intensity applied by SFD average percentage ranges between 22-36%. 8 Geographic targeting will be guided by the Egypt Poverty Map and SFD Poverty targeting toolkit. 6

26. These grants will enable the SFD to also target more skilled unemployed youth in the provision of social services and could also target more urban settings where skilled unemployment is a greater concern. UNDP and ILO are working with SFD to expand the menu of options specifically targeting youth, and if such proposals fit the overall criteria as laid out in the Operations Manual, they could also be included.

Component 2: Implementation Support (US$2 million)

27. This component will include provision of project implementation support, including project management, audits, public information and communication, technical verification and quality assurance, monitoring and evaluation, and social accountability mechanisms.

Eligibility for Processing under OP/BP 8.00

28. The proposed Project is fully consistent with the Bank‟s Rapid Response Guidelines (OP 8.00) criteria. It complies with the guiding principles of the Bank‟s policy on rapid response to crises and emergencies as it will address the major adverse economic and social impacts resulting from the effects of economic slowdown since the January 25th revolution and the return of Egyptian migrants from neighboring countries, especially Libya, in the wake of the uprisings in the region. The Project will provide a rapid response to the GoE‟s request for urgent assistance for the above-mentioned emergency.

Consistency with Country Strategy (CAS or ISN)

29. The proposed Project directly supports the second pillar of support (job creation, through direct emergency lending) of the draft Interim Strategy Note (ISN). The ISN is expected to be presented to the Board at the same time as the proposed Project. The proposed Project also supports the draft ISN‟s objective of “creating opportunities for short-term productive job- creation and initiating steps to improve the environment for longer-term private sector job creation”.

Expected Outcomes

30. The main outcome indicator will be the number of job opportunities created under the Project.

31. The intermediate outcome indicators will include: the percentage of labor intensity, the number of person/days created, and the amount of wages paid. In terms of outputs, these indicators will include: the number of kilometers of canals cleaned, the number of kilometers of River Nile banks protected, the number of houses of the poor refurbished, the number of kilometers of rural roads paved or maintained, and the number of schools maintained.

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D. Appraisal of Project Activities

Economic Analysis

32. The estimated cost-benefit ratios for the proposed Project (under different scenarios) are presented in Annex 10 and compare favorably with other successful public works programs implemented in other areas of the world.

Technical Analysis

33. Global experience indicates that a PWP can be an important component of a safety net in response to a rapidly deteriorating employment and poverty situation. As discussed above, the Project will fill this gap in the current safety net system in Egypt.

34. Experience has shown that for the same level of investment in local infrastructure, the use of labor-based methods can create between two and four times more employment (mostly unskilled), drop foreign exchange requirements by 50 to 60 percent, decrease overall costs by 10 to 30 percent, and reduce environmental impacts. Further, there is a labor component in the materials themselves as they are all produced locally (pipes, cement, aggregates, etc.). The employment multiplier effect of such projects is at least 1.5 because of the injection of money into the local economy (use of local materials and other inputs, salaries mainly spent on basic needs).

35. Many PWPs are now being established with a long-term vision of being an integral part of the country‟s social safety net (scalable PWPs that can be extended during crises). In addition to infrastructure, social services and restoration of the natural resource base can be added to the classic menu of public/community works. Key features of a successful PWP would include:

(a) A wage rate lower than the prevailing market wage for comparable (skilled and semi- skilled) labor, wherever feasible; (b) A high labor intensity; (c) A combination of supply-driven sub-projects (sponsored by the Central Government) and demand-driven sub-projects (sponsored by local authorities and communities); and (d) Significant communication efforts that enabled potential participants to register themselves at notified places for public works activity of their choice (totally unskilled, low-skilled, semi-skilled, skilled, etc).

36. Allocation of funds. Given that a significant part of the public works program benefits accrue from the infrastructure created, the location of the infrastructure becomes important for allocation of funds. To increase the chances that the sub-projects will improve living conditions for those least able to protect themselves against the economic shocks, the locations for the works were selected using Egypt‟s poverty map taking into consideration the readiness for implementation and the intensity of labor of the proposed sub-projects.

37. Private Contracting. In Egypt, it is common practice to use contractors to execute public works programs. The Project will introduce one or more new methods to use contractors such as: (i) defining the share of labor in each specific contract during the tendering process, and 8 enforcing it; (ii) providing a list of laborers in each locality whom contractors could hire for any specific activity, with the possibility of directly paying them; and (iii) asking contractors to specify percent of labor cost in each sub-project that they plan to execute, with the provision that one of the selection criteria would be the share of labor in total cost, and subsequently picking the one that promises to meet quality standards and use the highest labor share in total cost. Alternative ways to allow the Government to fix the wage level for contractors to abide by will be explored. Again, contractors will be asked to use at least 50 percent of the available local labor, and only if such local labor is unavailable, will they be permitted to use outside labor.

38. Flexibility and Quick Scale-Up. The team examined the suggested design features that would enable flexibility and quick scaling up of workfare programs during periods of economic hardship. The most important opportunity for the team is to enable the Project to support the move toward greater efficiency, targeting accuracy, and labor intensity. This will then be evaluated, in the case of a need to scale-up so that the SFD, as a potential organization to implement this safety net approach, would be in a position to respond quickly. Given its implementation track record, existing regional offices and name recognition, scaling up would not be a challenge.

39. Technical viability of SFD. Technical viability has been demonstrated by over 20 years of successful public works, community and local development activity in Egypt. Investment cost estimates, physical contingencies, prices and estimates of inputs and outputs are based on actual historical data under the three previous IDA financed projects, as well as other donor financed projects. For public works, the SFD uses standardized designs which have been approved by the relevant line ministries. These standardized designs include engineering, technical, financial, and economic feasibility aspects, O&M, simple environmental guidelines and cost parameters. Field evidence demonstrates that these simple, practical standards have enhanced sub-project quality, sustainability and cost-effectiveness. All sub-projects will be screened by SFD staff and intermediary agencies. The sponsoring agency will be able to contract technical assistance to help in the design and implementation of sub-projects, as needed. Training programs are also being offered to develop the capacity of the implementing partners to prepare, implement, operate, and maintain sub-projects as well as to acquaint them with the Egypt Environmental Affairs Agency (EEAA) environmental regulations.

Fiduciary

40. Financial Management. SFD will be responsible for financial management and reporting, using systems and procedures acceptable to IBRD. Project records will be kept according to generally accepted accounting principles. They will be audited annually, following international standards on auditing, by qualified independent external auditors acceptable to the Bank. The Bank expects the Borrower to submit terms of reference for the project external audit for the Bank‟s prior review and approval within 3 months of effectiveness. Audit reports will be submitted to the Bank within six months from the end of each fiscal year (January 1st to December 31st). There are no outstanding reports or IFRs under projects implemented by the SFD.

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41. Procurement. For labor intensive sub-projects, procurement is the responsibility of the Sponsoring Agencies (SA), which are ministries, governorates, or NGOs; and the Intermediary Agencies (IA), which are the technical directorates of the governorates and Community Development Associations (CDAs). These procurement activities will be under the shopping thresholds for works, US$350,000, and goods, US$100,000. The Procurement Department of the SFD and its officers in the regional offices will ensure conformity of implementation according to PM regulations and procedures. For that purpose, they will conduct ex-post reviews, assess the capacity of the intermediary agencies, and conduct capacity building activities using as a basis the SFD Procurement Manual for the Labor Intensive Sub-projects. The SFD will sign Framework Agreements (also known as “Sponsoring Agency Grant Agreements”) with the SA/NGO which describe the guidelines to be followed and each party‟s role in the implementation of the sub-project. The SA/NGO then could sub-contract the work with a contractor and/or supplier. Where activities will be undertaken by an IA, the SA will enter into a further agreement with the IA, known as an Intermediary Agency Grant Agreement which will govern the use of the funds.

42. The SFD will have primary responsibility for monitoring physical and financial progress of the works undertaken by the SA/NGO. Procurement under the proposed Project will include small value contracts that constitute weed reduction, River Nile bank protection, upgrading of rural housing conditions, pavement of rural roads, school rehabilitation, solid waste collection and disposal, etc. The maximum financing for a Labor Intensive Framework Agreement will be around US$2,000,000 that includes small works in dispersed communities, estimated not to exceed US$350,000. Large contracts would not arise at the SA/NGOs level due to the nature of the works involved, and therefore, ICB is not foreseen.

43. All consulting service contracts under Component 2 will be procured at the SFD central level. The SFD Headquarters Office will be supported by a qualified procurement adviser who has experience with World Bank procurement procedures.

44. A summary of the procurement capacity assessment and project procurement arrangements are provided in Annex 6. Risks have been identified and the overall procurement risk is assessed as high. The main mitigation measures are updating of the procurement manual (a condition of negotiation which has been completed) and hiring of a qualified procurement adviser, a condition of disbursement whereby no withdrawal of funds shall be made from the services, non- consulting services and incremental costs category of the withdrawal schedule unless a procurement advisor on terms mutually acceptable to the Bank and Borrower.

45. To enhance project readiness for implementation, SFD will distribute the procurement manual and its annexes to stakeholders after a “validation workshop” once the manual is finalized and agreed with the Bank. Subsequently, the Procurement Department will train the procurement officers of the regional offices and the sponsoring and intermediary agencies concerning the appropriate use of the procurement manual and its annexes.

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Social

46. From a social perspective, the Project‟s impact is likely to be positive. With the emphasis on rural areas with priority targeting to Upper Egypt and the targeting of villages in the lowest 20 percent of the poverty map, the poorest and most vulnerable groups are likely to see an increase in employment, social and economic opportunities. The youth are likely to be the primary beneficiaries of employment opportunities, as they have higher unemployment rates. Females also will be targeted through supporting community services sub-projects.

47. Gender. The impact on women will be positive, especially from the social services sub- projects, where women would be more likely to be among beneficiaries of the services, as well as more likely to be employed to deliver the services. The gender differentiated impacts will be monitored by the monitoring and evaluation framework and will be a special focus of the social accountability measures to allow for adjustment during implementation to improve the impact on women. Given that male under- and unemployment, combined with discrimination within the areas where the Project will be located was part of what drove the revolution in Egypt, it is appropriate to target males in the project areas through infrastructure works.

48. Targeting. Under this program, special emphasis is being given to the poorest communities and vulnerable groups. A well targeted program is one that reaches the people affected by a country shock. Targeting beneficiaries of public works programs poses special challenges. The targeting methods that will be used will depend on the nature of sub-projects as follows:

a. For community infrastructure sub-projects using private contractors, the methods that were mentioned to improve the contracting procedures will be applied given the undesirable market distortions by setting wages to less than the market rates.

b. For community social services, community targeting will be used combined with a Proxy Means testing, wherever it is applicable and as determined by the Ministry of Social Affairs.

49. Social Accountability. This will be taken into consideration through different mechanisms as follows: (i) a grievance and transparency mechanism that allows citizens to provide feedback to the SFD about project implementation and allows potential beneficiaries who were not included in the program to seek redress; (ii) public information on the availability of employment opportunities created by the project at relevant levels of implementation; (iii) client satisfaction surveys, especially for community social services sub-projects; (iv) quality assurance surveys, especially for community infrastructure services using regional universities; and (v) independent verification of results of sub-project implementation using NGOs.

Environment

50. The proposed environmental category is “B” and OP/BP 4.01 is triggered. The Task Team has prepared an Environmental and Social Screening and Assessment Framework (ESSAF), attached in Annex 9, to address, in a sound environmental manner and in line with the World Bank safeguards policies, any likely negative environmental impacts potentially resulting from

11 the sub-project activities. The ESSAF was disclosed in-country on March 27, 2012, and also in the Bank‟s Infoshop on April 2, 2012.

51. The sub-projects of the proposed Project are likely to result in a number of positive environmental and socio-economic impacts. All of the sub-projects are expected to generate employment opportunities and improve income generation for many individuals as well as improving living conditions and livelihoods, especially for those representing the low or poorest segments of society in targeted areas and communities. This includes the improvement of housing conditions and solid waste collection for the poor which will lead to positive health and environmental impacts. However, despite the substantial positive environmental impacts that will result from the implementation of the sub-projects, there may still be some negative environmental impacts, though potentially minor and not significant.

52. Consistent with the World Bank OP/BP 8.00, an ESSAF has been developed to ensure compliance with the Bank‟s safeguard policies during project implementation. The ESSAF provides general policies, guidelines, codes of practice and procedures to be integrated into project implementation. The ESSAF also identifies the types of environmental assessment instruments that are suitable for each sub-project after initial approval. The ESSAF has been developed specifically to ensure environmental due diligence for all the sub-projects funded by this Project. It is intended to ensure that, for all activities financed by the proposed Project, all efforts are made to avoid and minimize environmental and social impacts; and where they cannot be avoided, that these impacts are identified and the necessary mitigation measures are developed and implemented following the relevant Egyptian laws as well as the World Bank policies. In addition, the ESSAF is to assist the SFD in screening all the sub-projects for their likely environmental impacts, identifying documentation and preparation requirements.

53. Most of the proposed sub-projects are likely to focus on canal weed reduction and protection of river banks, rehabilitation of rural housing, maintenance of rural roads, school rehabilitation, and solid waste collection. Individual sub-projects will be screened and assigned the appropriate environmental category and environmental due diligence will be conducted in accordance with OP 4.01.

54. Considering the nature and magnitude of potential environmental impacts from the relatively limited scale and magnitude of reconstruction works, only sub-projects classified as “B” or “C” will be financed by the Project. Any sub-projects classified as category „A‟ will not be eligible for funding under this operation.

55. While ensuring due diligence in managing potential environmental risks, one has to recognize the emergency nature of the proposed Project which aims to provide assistance towards creating or maintaining infrastructure using labor-intensive techniques. Given that, the ESSAF is based on the following principles:  The proposed operation will support multiple sub-projects, the detailed designs of which may not be known at appraisal. To ensure effective application of the World Bank‟s safeguard policies, the ESSAF provides guidance on the approach to be taken during implementation for the selection and design of sub-projects and the planning of mitigation measures;

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 The proposed Project supports only environmental category “B” or “C” sub-projects as per the World Bank classification for safeguards;  No sub-projects entailing resettlement will be eligible for funding under the Project;  No sub-projects that involve the use or pollution of international waterways will be financed under this Project;  Sub-projects entailing weeding activities shall be manual weeding (i.e., by hand) and will not involve the use of pesticides. As a result, World Bank OP 4.09 is not triggered; and  Consultation and disclosure requirements will be simplified to meet the special needs of these operations. The ESSAF was shared with and disclosed in the SFD and relevant governorates in Egypt as well as in the World Bank InfoShop.

Lessons learned from previous country experience and/or from Bank-wide experience with emergency response operations

56. The lessons learned which are summarized below have emerged as relevant to this Project. This summary places a strong emphasis on lessons learned during the first three phases of Bank support to the SFD, lessons learned from related projects in Egypt, and lessons learned from best practice programs around the world.

57. It is critically important to select the program for an emergency operation that could have some degree of success in mitigating the adverse impacts of the crisis on the poor. If countries already have well-functioning safety nets, the response to the crisis could be relatively quick. However, in the absence of a strong functioning safety net, the response is often to expand whatever program existed before the crisis regardless of its capacity to reach the poorest, or to launch a new program in haste that may run the risk of poor implementation and lead to governance issues.

58. Based on Egypt’s context, the PWP as an emergency response to a systemic shock, supporting short-term, well-targeted, labor-intensive infrastructure sub-projects, can help the transient poor over the short-term. On the other hand, energy subsidies, poverty, inequality, unemployment, food security and agriculture are continuing challenges and require key reforms within a medium-term framework.

59. Targeted interventions can have a strong impact on local area well-being and help poor communities. Egypt uses contractors to implement infrastructure sub-projects, therefore the dependence on “self-selection” or self-targeting as the key method of targeting is not feasible. A combined targeting mechanism will be used to target project interventions, including geographic targeting, community targeting, selection of sub-projects of high labor intensity, and tendering contracts in small sizes to allow selection of local labor.

60. Specifically, poverty targeting mechanisms that are kept simple, verifiable, and based on objective criteria can foster transparency, minimize political interference in resource allocation and ensure that project resources reach the poorest areas. While it is expected that there will be issues of political economy that might weigh in on the targeting process, this will be

13 addressed through the use of Egypt‟s Poverty Map which is an objective assessment of priority poor areas.

61. Investments in monitoring and evaluation systems facilitate the sub-project evaluation process, provide feedback and necessary information to improve targeting and efficiency, and are an essential management and planning tool. In order to address the weaknesses in M&E experienced under previous projects, SFD‟s MIS system has been upgraded (with EU support) and enables users to receive real time monitoring of the entire sub-project cycle.

62. Continued emphasis on technical quality, including environmental screening processes, enhances impact and sustainability. Standardization of technical designs and unit costs simplifies the sub-project preparation and evaluation process, improves the quality of sub- projects, facilitates the procurement of goods and works, prevents over-design, and enables participation of poorer communities. The environmental screening checklist has been updated under the previously completed Bank-financed Social Fund III Project to optimize the criteria and procedures (and their application) for evaluating the environmental impact of sub-projects.

63. Operations and maintenance procedures need to be defined and agreed upon with beneficiaries and other stakeholders during the sub-project design phase. Operations and maintenance of public infrastructure and services is a systemic problem in Egypt. Recommendations from SFD‟s operation and maintenance pilots in the Sharqiya and Fayoum Governorates conclude that feasibility studies for labor intensive sub-projects should include an assessment of whether recurrent and operations and maintenance costs will be made available.

64. There are no policy exceptions and the Project is ready for implementation.

E. Implementation Arrangements and Financing Plan

Project Costs

65. The total estimated costs for the proposed Project amount to US$200 million, including about 0.7 percent physical and price contingencies.

Project Cost Summary (US$ million)

Cost % of IBRD % Including Components Total Financing Financing Contingencies

Comp-1: Labor Intensive Sub-projects 198 99.0 198 100.0 Comp-2: Implementation Support 2 1.0 2 100.0 Total PROJECT COSTS 200 100.0 200

Other cost tables are presented in Annex 3: Summary Cost Tables.

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Implementation Arrangements

66. The SFD will be the implementing agency for the proposed Project. The SFD will be responsible for the overall program, using its own fiduciary management systems that are in compliance with World Bank regulations and procedures, with institutional arrangements and procedures in place as a result of the previous three phases of World Bank support to the SFD. The SFD will rely on its Human and Community Development Central Sector (HCD) and the capacities of the Financial Management Department, the Internal Audit Department, the Environmental Safeguards Department, and the Planning, Monitoring, and Evaluation Department in implementing this Project. There will be no separate Project Implementation Unit established for the SFD Headquarters. On the other hand, Project Implementation Units (PIUs) will be established in the Sponsoring Agencies.

67. The SFD will work in close partnership with the governorates, sectoral ministries at the governorate level, local authorities, NGOs, and CDAs. The SFD will be responsible for implementing and coordinating the activities of this project with the support of its 27 regional offices which monitor project progress and reporting structures.

Main Partners:

 The SFD will select the intervention areas guided by Egypt‟s poverty map and will fund eligible sub-projects based on criteria defined in its Operations Manual. SFD‟s regional offices will oversee the implementation of sub-projects and provide assistance as may be required to sponsoring agencies (Central Ministry9/Local government offices/ or NGOs with an established track record of successful intervention and a demonstrated capacity to implement the proposed sub-project) and IAs (Technical Sectoral Departments). Small local private contractors/NGOs/ CDAs will be contracted for execution of contracts.  Line Ministries/ Governorates will endorse the proposed sub-projects and facilitate implementation at the local level. Technical directorates within the Governorates will provide guidance on sectoral issues and ensure that budgetary allocations are made for proper operation and maintenance of completed sub-projects. These technical directorates will also be responsible (as IAs) for implementing infrastructure sub-projects.  NGOs/ Community Development Associations (CDAs). NGOs are registered, large, experienced development associations with a track record in implementing community driven development projects. (CDAs) are groups of citizens from the community with a common interest, which organize into legally constituted civil associations. Both NGOs and CDAs will identify, prepare, implement, supervise, operate and maintain their sub- projects, assisted by technical specialists.

68. Project Oversight: The Board of Directors of the SFD is responsible for project oversight. The Board is chaired by the Prime Minister and includes ministers, experts in development, private sector representatives, and academia. SFD‟s Managing Director will be responsible for general project coordination and implementation, and the General Manager of the Human and Community Development Group will be responsible for day-to-day project management.

9 This will be applied only for central level ministerial sub-projects that would involve technical or geographical coverage requirements to be implemented at that level. 15

69. SFD Roles and Responsibilities: Key SFD duties will include: (a) preparing the sub-project pipeline in accordance with guidelines and eligibility criteria defined in the Operations Manual; (b) assessing the degree of labor intensity of the proposed sub-projects, (c) assessing the degree of community participation in identifying and executing sub-projects and the quality of the skills upgrading activities proposed; (d) supervising the activities of the SAs and the IAs; (e) overseeing the procurement arrangements to ensure that implementing partners are adhering to the agreed procedures; (f) ensuring that SAs are actually carrying out the capacity building activities for the implementing partners (including training on sub-project implementation, contracting, operation and maintenance, and financial management); (g) monitoring performance through the Management Information System (MIS) and reporting quarterly on progress; and (h) developing an impact evaluation process to provide information on project outcomes.

Alternatives Considered and Reasons for Rejection

70. The Bank was asked to consider the use of a Development Policy Loan (DPL). A DPL would be more appropriate for an operation that aims to support the adoption of appropriate policy reforms having a medium- to long-term impact on the unemployment problem in Egypt. The proposed Project, on the other hand, is designed to deliver support urgently to improve short-term employment opportunities that would be responsive to the immediate needs of the Government.

71. The Bank was also asked to consider small and medium enterprise programs. The Bank is already undertaking such support through the Enhancing Access to Finance for Micro- and Small-Enterprises (MSEs) Project (US$300 million), which is being implemented by SFD. The objective of the project is to contribute to a sustainable improvement in inclusive (region and gender) access to finance for MSEs on a commercial basis. There are two components to the project, the first component being a line of credit for microfinance channeled through banks, Non-Governmental Organizations (NGOs) and potential Microfinance Institutions (MFIs). Finally, this support would not be in compliance with the request from the Government to prepare a project under the Bank‟s guidelines for “Rapid Response to Crises and Emergency Operations.”

72. Support to design a broader safety net assistance program. One option considered was having a project design which addresses different aspects of the safety net, including reform of subsidies, cash transfers under the Ministry of Social Affairs, and public workfare and community development under the SFD. This would not be feasible within the context of an emergency operation, because such a project would be more complex in design and therefore would take longer to prepare and would involve several agencies. The proposed Project will make an important contribution to the Government‟s safety net reform by strengthening one of the key safety net instruments, the SFD, and making it more efficient and effective. The subsidy issue will continue to be pursued through macroeconomic policy dialogue

73. Support for labor-intensive public works implemented by line ministries. While such programs could be implemented relatively quickly, they were rejected for the following reasons: (i) any short term response to the crisis should be consistent with the longer term vision for

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Egypt, and given that in the long run the private sector has to be the engine of employment generation, hiring more people into an already too large public sector would be inconsistent with the vision, so an approach using private contractors and NGOs is better; (ii) the labor intensity of ministry-run programs is too low; and (iii) ministry programs do not correspond as well to local needs as programs with a more demand-driven approach.

74. Due to the emergency nature of the proposed Project, supervision will be carried out on a regular basis from the Bank‟s field office in Cairo. In addition, procurement and financial management specialists will carry out a minimum of two missions per year. An environmental specialist will be included in the project supervision team. The Project will be supported by operations staff in World Bank Headquarters.

75. The proposed Project is expected to close on December 31, 2015. It will be implemented over three years.

F. Key Risks and Mitigating Measures

76. The overall risk rating for the Project is Substantial. The Project has been prepared and will be implemented in a country and political environment that is still in transition. The Country, Governance, Fraud and Corruption risks are rated „Substantial‟. Mitigating measures to address these risks include, inter alia: (i) a project design that focuses on poor areas where the risk of major disruptions to project activities is lower; (ii) selection of the SFD as Implementing Agency. The SFD has considerable prior experience with implementing Bank-financed projects, and is familiar with Bank policies and procedures; and (iii) fiduciary safeguards in place for the Project to ensure effective oversight of the flow of funds and procurement procedures. The Procurement Risk Rating is „High‟ because of gaps in capacity to carry out procurement, especially at the local levels. Mitigating measures in place under the Project include: (i) hiring an experienced Procurement Advisor to help build procurement capacity and monitor conformity with procedures used for selection of consulting services; and (ii) updating the SFD Procurement Manual to ensure clear definitions of roles and responsibilities and consistent application of procedures. The project risks, their ratings, and mitigating measures are detailed in the Operational Risk Assessment Framework in Annex 4.

G. Terms and Conditions for Project Financing

77. The amount of the loan is US$200 million. The Borrower completed the Loan Choice Worksheet during negotiations and the parties agreed on an IBRD Variable Spread Loan with a 29 year maturity and a 7 year grace period with commitment linked level repayment pattern. Conditions for sub-project financing are detailed in the Schedule to the Project Agreement.

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Annex 1: Detailed Description of Project Components ARAB REPUBLIC OF EGYPT

Emergency Labor Intensive Investment Project

I. Proposed Development Objective(s)

1. The objectives of the Project are: (i) to create short-term employment opportunities for unemployed unskilled and semi-skilled workers; and (ii) to provide access to basic infrastructure services to the target population in poor areas in the Borrower‟s territory.

II. Preliminary Description

2. The Project will be three years in length, and will be financed by a US$200 million loan. It will be implemented by SFD following World Bank policies and procedures.

Component 1: Employment-Intensive Sub-projects (US$198.0 million)

3. This component will support two types of sub-projects: (i) small-scale local infrastructure works sub-projects; and (ii) community-level labor-intensive sub-projects for provision of social services.

4. Labor Intensity. The component will support employment-intensive sub-projects that will apply a labor intensity percentage of an overall average of 40 percent, higher than that currently being achieved in Egypt.

5. Small Scale Local Infrastructure Public Works Sub-projects. Eligible sub-projects could include, but are not limited to: canal weed reduction, Nile River bank protection, upgrading the conditions of rural housing, pavement of rural roads, and school rehabilitation. These sub- projects could be demand-driven, requested by the local government at the governorate level, or supply driven, requested by a central ministry based on needs.

6. Demand Driven Community Service Sub-projects. These would support the provision of demand driven community services. Social service sub-projects tend to employ unemployed females, so this type of sub-project would increase the percentage of targeting of women under the Project. Sub-projects could include labor intensive interventions such as community services, early childhood education services, employment intensive population services, outreach for health and nutrition services, solid waste collection, and youth engagement sub-projects, mainly in rural and urban areas.

7. Youth Employment. In addition to those specific sub-projects that will be targeted for youth employment in rural and urban settings, it is anticipated that the youth beneficiaries of the sub- projects funded under this component would be high, reaching 60 percent as projected by project estimates.

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Component 2: Implementation Support (US$2.0 million)

8. This component will finance the following:

9. Public Information, Communication, and Social Accountability. The component will support the design and implementation of a communication and social mobilization strategy and detailed action plan. The objective of the communication strategy will be to: (i) promote the benefits of labor intensive projects; (ii) raise public awareness about the availability of the potential employment opportunities that would be created by the Project; (iii) address areas of concern raised as the project is implemented; and (iv) create channels for feedback from the beneficiaries and civil society that would improve implementation. The communication strategy and plan will be prepared during the first year of project implementation. The strategy will propose key messages to be disseminated through communication/media channels, and training.

10. In addition, the component will support the design and implementation of a grievance and transparency mechanism that would allow citizens to provide feedback to the SFD about project implementation and allow potential beneficiaries who have not been included in the program to seek redress.

11. Technical Verification, Quality Assurance, and Audits. Periodic technical verification will be carried out on a semi-annual basis during the life of the Project, using an Independent Verification Expert (IVE) and NGOs. The IVE will verify: (i) the intermediate sectoral outcomes; and (ii) the output indicators. Quality assurance firms will assess: (i) the quality of the works; (ii) whether sub-projects are operated and maintained in accordance with SFD‟s maintenance manuals; (iii) compliance with the Operations Manual; and (iv) compliance with environmental and social safeguards for community infrastructure sub-projects as well as client satisfaction rates for community social services sub-projects.

12. Project Management. The Project will be implemented by the SFD using fiduciary management systems that will be in compliance with World Bank regulations and procedures.

13. Project Monitoring & Evaluation. Monitoring will be carried out by the SFD‟s internal monitoring system using the SFD management information system (MIS). The Project will finance support to conduct mid-term, end-of-project, and impact evaluations that will assist the Government of Egypt in its potential for scale-up as an essential part of Egypt‟s social safety net program. Evaluations will be carried out through independent consulting firms.

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Annex 2: Results Framework and Monitoring

EGYPT: Emergency Labor Intensive Investment Project

Results Framework Project Development Objective (PDO): (i) To create short-term employment opportunities for unemployed unskilled and semi-skilled workers; and (ii) to provide access to basic infrastructure services to the target population, in poor areas in the Borrower’s territory.

Responsibility Description Unit of Cumulative Target Values Data Source/ PDO Level Results Indicators Baseline Frequency for Data (indicator

Core Measure Methodology YR 1 YR 2 YR3 YR 4 YR5 Collection definition etc.) Indicator One: Number of job No. of direct job opportunities Number 0 50,000 120,000 194,800 Every 6 SFD MIS SFD opportunities created through the project. months calculated a 4 month cycle per job created

based on number person/days employment created Indicator Two: This is an No. of indirect job opportunities Number 0 17,000 40,000 64,000 Every 6 SFD MIS SFD average factor of created through the project. months 1.5 times of direct job opportunities

calculated for community infrastructure subprojects at any given time Indicator Three: 25% of 25% of 25% of Extent of female Percentage of direct job Number 0 direct job direct job direct job Every 6 SFD MIS SFD participation in opportunities created through the opportuniti opportuniti opportunit months jobs created project, gender disaggregated es for es for ies for females females females Indicator Four: 50% of 55% of 60% of Extend of youth Percentage of direct job Number 0 direct job direct job direct job Every 6 SFD MIS SFD below age of 30 opportunities created through the opportuniti opportuniti opportunit months participation in project, age disaggregated es for youth es for youth ies for jobs created youth

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INTERMEDIATE RESULTS

Intermediate Results

Intermediate Result indicator MTR and Through Independent Percentage of One: Percent 0 65 70 75 End of client agency/SFD client satisfaction A- Percentage of Quality Project satisfaction rates of services

subprojects completed Evaluation surveys by an provided at subproject level as measured by– Client independent Satisfaction agency Intermediate Result indicator MTR and Through Independent Percentage of One: Percent 0 60 70 75 End of technical agency/SFD infrastructure B- Percentage of Project surveys by an subprojects

subprojects completed Evaluation independent achieving satisfactory levels with high– Technical agency of quality Quality Intermediate Result indicator Percentage of wages paid from Two: Percent 22-36 30 35 40 Every 6 SFD MIS SFD Labor intensity of subprojects months total subprojects costs. Intermediate Result indicator No. of working Three: Number 0 5 million 12 million 19.48 Every 6 SFD MIS SFD days of million months employment Number of person/days of created by the employment created subprojects Intermediate Result indicator 20 million 40 million 79.2 Amount paid in Four: Number million Every 6 SFD MIS SFD USD to workers in months subprojects Wages paid to workers (disaggregated by gender) Intermediate Result indicator The same number of 10,200 km will Four: Number 0 0 10,200 10,200 Every 6 SFD MIS SFD months be cleaned each Kilometers of canals cleaned year. Intermediate Result indicator No Kilometers Five: Number 0 11 30 47 Every 6 SFD MIS SFD of River Nile Kilometers of River Nile bank months bank protected protected cumulative Number of Intermediate Result indicator Six: Number 0 2,400 4,960 7,591 Every 6 SFD MIS SFD houses of the Number of houses of the poor months poor rehabilitated rehabilitated cumulative Intermediate Result indicator Number of Seven: Number 0 66.5 88.5 122 Every 6 SFD MIS SFD Kilometers of

21 Kilometers of rural roads months rural roads upgraded upgraded cumulative Number of Number 0 2,000 5,000 12,000 Every 6 SFD MIS SFD classrooms in Intermediate Result indicator classroom months schools and Eight: s in 710 kindergartens Number of classrooms in schools schools rehabilitated and kindergartens rehabilitated and 500 cumulative KGs

22 Annex 3: Summary of Estimated Project Costs ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

Components Cost Summary (US$ million)

% % Total Foreign Base Components Local Foreign Total Exchange Costs

Comp -1: Labor Intensive Sub- projects 196.57 196.57 0 98.3 Comp-2: Implementation Support 1.25 0.75 2.0 40 1.0 Total BASELINE COSTS Physical Contingencies 0.79 0.79 100 0.4 Price Contingencies 0.64 0.64 100 0.3 Total PROJECT COSTS 197.82 2.18 200.0 1.1

Expenditure Accounts Cost Summary (US$ million) % Foreign Expenditure Accounts Local Foreign Total Exchange A. Sub-projects to SFD 196.57 196.57 0 B. Consultants‟ Services, Training, Audit 1.25 0.75 2.0 40 Total BASELINE COSTS Physical Contingencies 0.79 0.79 100 Price Contingencies 0.64 0.64 100 Total PROJECT COSTS 197.82 2.18 200 1.1

23 Annex 4: Operational Risk Assessment Framework (ORAF) ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

Project Stakeholder Risks Rating M Description: SFD as an institution is supported by the Risk Management: The project will follow standard mechanisms for targeting, combining government and the donor community, and is known as an geographic targeting, self-targeting, and community targeting. effective poverty reduction instrument. Job creation is the top Resp: SFD/ Human & priority. Local government is the focal point for identification of Due Date : By Community Stage: Implementation Status: Ongoing sub-projects, and there may be the possibility of bias in Effectiveness targeting. Development Sector

Risk Management: The majority of sub-projects were identified during project preparation to At the local level, there may be bias in the identification of sub- avoid bias in sub-projects identification. projects to be funded. Resp: SFD/ Human & Community Due Date : April 13, Status: Stage: Appraisal Development Sector 2012 Completed

Implementing Agency Risks (including fiduciary) Capacity Rating: S Description: Lack of sufficient capacity for project management, given that SFD has not been managing PWP for many years. Insufficient procurement and FM capacity, Risk Management: Support from the project, under Component 2, in the form of TA to build including a challenging public financial management project management capacity, including in the areas of project management, procurement and environment, and insufficient levels of transparency at the financial management. country and sector levels. Lack of implementing capacity at the local levels. SFD did at one time have an active public works program, which the WB supported, but the program closed in the 1990s due to diminished demand. The staffing, procedures Resp: SFD/ Human & and other arrangements used during that period may no longer Due Date : April 13, Status: Community Stage: Appraisal be in place. However, capacity under the ongoing WB 2012 Completed microcredit project indicates that project management and Development Sector fiduciary capacity are adequate.

Procurement risk is considered „High‟ because: (i) there are Risk Management: Procurement: Mitigation measures include: (i) hire experienced Procurement gaps in procurement capacity, especially at the local level; and Advisor; (ii) update Procurement Manual with complete annexes to ensure clear definitions of roles (ii) all procurement for goods will be carried out using and responsibilities, and consistent application of procedures; (iii) reinforce capacity of regional Shopping procedures. offices through Procurement Advisor to monitor conformity with procedures used by SAs and IAs; and (iv) provide capacity building on development of Procurement Manual and Annexes. Financial Management risk is considered “Substantial” because: Financial Management: Mitigation measures include: (i) the Operations Manual clarifies the (i) the project is complex with decentralized implementation roles/responsibilities of the different implementation layers; (ii) per the framework agreements with arrangements with the SAs and NGOs at the governorate level the Sponsoring Agencies (SAs), the PIUs in the ministries, governorates or NGOs will be

24 managing the funds; (ii) there is weak capacity and oversight at responsible for sending monthly technical and financial reports to the SFD ROs in order to be the decentralized level; and (iii) the PFM diagnostics on Egypt entitled to request future tranches; (iii) SFD procedures have been amended to capture the FM during the past year have indicated that the PFM risk in Egypt is arrangements and disbursement requirements of the project; (iv) the SFD Internal Audit Substantial, with stagnant PFM reform agenda.. Department has established a risk based audit strategy which is acceptable to the Bank; (v) the SFD will track continuously the amounts actually disbursed, through the SFD Finance Department, and not only the amounts transferred to the SA. Resp: SFD/ Financial Management and Due Date : Three Procurement Stage: Implementation months after Status: Ongoing Departments effectiveness

Risk Management: The project will support the establishment of a web-based grievance system with text messaging capability to allow reporting of irregularities, complainants, and feedback. Resp: SFD/ Human & Due Date: Within six Community Stage: Implementation months of project Status: Ongoing Development Sector signing

Governance Rating S Description: Project implementation will involve multiple agencies at different levels, and this could complicate the implementation process, especially since the project is a Rapid Response operation. Risk Management: TA support under the project could be used to help build up the capacity at the local level. Also, the Project Operations Manual will detail the roles and responsibilities of all the Roles and responsibilities of the different agencies and levels players. (central, Governorate, municipality) may not be sufficiently clear.

Lags in decision-making. Resp: SFD/ Human & Due Date : Six months Too few qualified staff at local level to implement a large PWP. Community Stage: Implementation Status: Ongoing after effectiveness Development Sector SFD has a long and positive history of implementing similar projects. Project Risks Design Rating: S Description: The project is complex in nature, with weak Risk Management: The project includes funding to build and strengthen capacity of the SFD and capacity of the implementing partners, including Community the implementing partners, including fiduciary functions. For example, all CDAs and NGOs will Development Associations (CDAs) and NGOs. be required to have a Project Implementation Unit (PIU) which includes a full time project manager, an accountant and a procurement specialist. While envisaged PWP activities are straight forward, the project would provide support for the adoption of several targeting The project includes funding to build capacity of the SFD to use available and tested targeting mechanisms, some of which are new. Inequitable or skewed mechanisms. targeting of the poor for participation in the public works sub-

25 projects. Egypt does not have a scalable targeted social Resp: SFD/ Human Due Date : By protection system to adequately protect the poor if a crisis & Community Stage: Effectiveness Status: Ongoing Effectiveness emerges. Enhanced targeting measures are needed. Development Sector Social & Environmental Rating: L Description: Social – Social risks are minimal or non-existent. Risk Management: An Environmental and Social Screening and Assessment Framework This project would directly benefit unskilled, impoverished and (ESSAF) has been developed to ensure environmental due diligence for all the sub-projects funded largely rural population. by this project. It is intended to ensure that, for all activities financed by the project, all efforts are Environmental - there may be some negative environmental made to avoid and minimize environmental and social impacts. impacts resulting from implementing some sub-projects though potentially minor and not significant. SFD has experience in implementing EMP as per World Bank policies and guidelines. Resp: SFD/ Human & Due Date : April 2, It also has environmental focal points and qualified Community Stage: Appraisal Status: Done 2012 environmental consultants. Development Sector Delivery Monitoring & Sustainability Rating: M Description: The M&E system currently in place may not be Risk Management: The SFD MIS system has been upgraded (with EU support) and enables users adequate to effectively measure project results, including to receive real time monitoring of the entire subproject cycle. The MIS was also modified to outputs and outcomes. This risk is considered Moderate as the enable it to collect and report on project specific outputs and outcomes in disaggregated manner. SFD has developed M&E systems to monitor previous WB- The proposed project will also include support to continue strengthening the SFD M&E function financed projects. for project monitoring.

There is a risk to sustainability if the Government will not As the project is addressing country shocks, it is not meant to be financially sustainable. However, provide sufficient funding for O&M costs related to the public capacity development of the SFD as an institution that will be capable of implementing this works activities after the project closes, even though covering program in a scalable manner is an essential element of the program‟s sustainability and resources these O&M costs is a requirement as part of the initial sub- are devoted under the project towards that end. project agreement with the local government authorities.

Due Date : By six Resp: SFD/ Financial Stage: Implementation months from project Status: Ongoing Department signing

Overall Risk Following Review Implementation Risk Rating: S Comments: Given that the overall risk is rated as S, the project team will intensify its supervision efforts during implementation including planning additional missions during the first year of implementation, and including sectoral and fiduciary Bank team members to ensure the compliance of the SFD to the application of the mitigation measures outlined above.

26 Annex 5: Financial Management and Disbursement Arrangements ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

A. Executive Summary and Conclusions:

1. An assessment of the Financial Management (FM) arrangements for the proposed Project was undertaken in March 2012 to assess the capacity of the Project‟s implementing entity and assist in determining the required FM arrangements for project implementation. A detailed FM capacity assessment of the SFD was conducted and its outcome is found to be satisfactory to the Bank.

2. The Project‟s implementation arrangements were discussed at length with an evaluation of all FM options to be applied during implementation and their impact on the various stakeholders under the Project. The project activities will be implemented by the SFD which has the overall responsibility for project oversight, coordination, and implementation. While Component 2 of the Project will finance project implementation support disbursed directly by the SFD, Component 1of the Project will provide grants to Sponsoring Agencies (SAs) for the carrying out of sub-projects consisting of small-scale infrastructure public works and community services. To facilitate the carrying out of Component 1of the Project, the SFD will sign Grant Agreements with the SAs in accordance with eligibility criteria and procedures acceptable to the Bank, for sub-projects selected, implemented and evaluated in accordance with the principles and procedures of the Project‟s Operations Manual.

3. At the country level, the FM risk is considered as substantial due to the stagnant Public Financial Management (PFM) reform agenda for several years. The main challenges affecting the FM risk at the country level, as assessed by the 2009 PEFA report and the 2008 CFAA, are: (a) weak intricate internal control system, (b) absence of a Government Financial Management Information System (GFMIS); (c) lack of transparency; and (d) weak regulatory framework and capacity of the Egyptian Supreme Audit Institute. The current political and post revolution changes in the country represent an opportunity for tackling the PFM reform agenda provided that the Government becomes more engaged in the PFM reform.

4. At the project level, the FM risk is considered substantial before mitigating measures due to the complex implementation and oversight arrangements and the capacity at the decentralized level.

5. To mitigate the FM risks, the following mitigating measures have been agreed upon:

(i) The SFD will benefit from its experience with World Bank-financed projects and most recently the Enhancing Access to Finance for Micro and Small Enterprises Project during the preparation of which the Bank worked closely with the SFD team to improve the SFD‟s internal control procedures, including updating the FM Manual and the Internal Audit risk-based approach strategy. (ii) The Operations Manual has been revised to clarify the relations/responsibilities of the different layers of implementation.

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(iii)The SFD‟s Internal Audit Department (IAD) will play a major role in assessing the capacity of decentralized implementing agencies before advancing the project funds. (iv) The SFD has an acceptable automated accounting system which is Oracle based. The SFD will create a new unique code for this project and this action is expected to be concluded within one month from project effectiveness. (v) The SFD will contract with an IVE, based on terms of reference (TOR) acceptable to the Bank, to assess and verify that: (i) project outcomes have been met; (ii) the quality of works undertaken in carrying out sub-projects is acceptable; and (iii) sub-projects are implemented and maintained in accordance with the requirements of the Maintenance Manuals, the ESSAF and the Operations Manual. (vi) The SFD will contract with an independent external auditor based on TORs acceptable to the Bank, for the purpose of carrying out an external audit of the Project‟s financial statements which will include an extended scope to audit the SA implementation of sub- projects and their compliance with the agreed FM system and internal control procedures.

6. The SFD has prior experience with Bank-financed projects. The most recent project, SFD III, closed in February 2006 with satisfactory FM performance and audit compliance rate. The SFD is currently implementing the Enhancing Access to Finance for Micro and Small Enterprises Project, a US$300 million operation with satisfactory FM performance.

FM Arrangements:

Roles and Responsibilities

7. The SFD: The SFD will be responsible for maintaining the project‟s FM arrangements, including providing oversight of sub-projects implementation and monitoring the SAs‟ compliance with the Operations Manual, including financial and internal control procedures. The SFD will be responsible for budgeting, recording and reporting financial activities under the umbrella of the Project, requesting transfer of funds from the World Bank and transferring funds to the PIU/NGO. The SFD will contract with an independent external auditor based on TORs acceptable to the Bank, for the purpose of carrying out an external audit of the Project‟s Financial Statements.

8. The SFD Internal Audit (IAD): As per the existing IAD risk-based strategy, the IAD will be responsible for evaluating all PIUs and NGOs interested in implementing sub-projects under this Project. The IAD has representatives stationed in their Regional Offices (ROs) who will be responsible for carrying out the detailed assessments. The Bank reviewed the IAD‟s strategy, including their process of assessing the capacity of PIUs/NGOs to implement sub- projects and found the IAD strategy and the IAD capacity assessment process to be acceptable. Subsequent to the IAD‟s assessment and approval, the SFD will sign a Grant Agreement with the SA. The IAD, through conducting field visits, will follow up on the project implementation throughout the project‟s life.

9. The Sponsoring Agencies (SA) (PIUs/NGOs): The SA, in coordination with the IA, is responsible for implementation of sub-grants including the issuance of bidding documents, the selection process, supervision of implementation, the verification of technical acceptability of

28 implemented activities, and the issuance of payments to beneficiaries. Each SA will open and manage a separate bank account denominated in Egyptian Pounds, at an acceptable bank, for the sole purpose of managing the sub-grants received from the SFD under this Project. Each SA will follow acceptable FM systems and control procedures as agreed upon and as per the Operations Manual. The SAs will prepare monthly bank reconciliation and submit monthly financial and technical packages to the SFD office. The PIUs under the Ministries and Governorates are subject to the Central Accountancy Office (CAO) regular audit and the NGOs are legally required to have their annual financial statements audited by an independent external auditor. In addition, SAs will be subject to the annual external audits and regular audits by the SFD‟s IA Department.

Staffing:

10. The SFD Finance Department‟s structure is considered to be adequate in terms of staffing, capacity and previous experience in conducting project financial transactions. The staff capacity is considered to be adequate to carry out the additional workload of the Project. There are 100 employees in the Finance and Administration Group, both at the main office and the SFD‟s regional offices. SFD has prior experience with Bank-financed projects, has achieved satisfactory FM performance and has received unqualified audit reports in the past.10

Accounting, Recording and Reporting:

11. The SFD will record all project-related transactions using accrual basis and will maintain the accounting records. Original supporting documents for sub-projects will be kept at the SA level.

12. The SFD bookkeeping is automated through the Oracle accounting system, which is centralized in the SFD‟s Main Office. The regional offices have the ability to access the SFD MIS for the purposes of recording and reporting activities. The SFD accounting system is considered acceptable and SFD staff members are familiar with World Bank requirements, having been engaged previously with several Bank-financed projects. While the system was found to be generally acceptable by the Bank, it was agreed that the SFD‟s IT team will establish a separate module/code in the Oracle system for the sole purpose of recording and reporting on all project related transactions. The SFD‟s accounting system is capable of generating quarterly Interim Financial Reports (IFRs) and annual Project Financial Statements (PFS) which are required under the Loan Agreement. The format and content of the project reports has been discussed and agreed with the SFD Finance and IT Departments during project appraisal.

13. The Grant Agreement with the SA will obligate the PIUs to report on technical and financial progress on a monthly basis to the SFD. With regard to contracting with PIUs to implement sub-grants, the PIUs will be given access to SFD‟s MIS system to execute the recording and reporting activities. When contracting with NGOs, the SFD‟s regional offices will be responsible for the recording and reporting on the SFD system on behalf of the NGOs. Each sub-project agreement between the SFD and the SA is given a unique code in the SFD automated accounting system against the financing donor (i.e., The World Bank).

10 Please refer to Annex 2 for the SFD Finance Department organizational structure 29

14. Contracts will be kept at the SFD Headquarters while supporting documents for the sub- projects will be kept at the PIU/NGO level where the supporting documents will also be required to be scanned and sent to the SFD‟s regional offices as part of the disbursement process. The Grant Agreement with the PIUs will state that the SFD IA Department and the independent external auditor will be granted access to examine the original project documents supporting actual disbursements.

15. The SFD will keep track of the amounts actually disbursed and not only the amounts transferred to the PIUs/NGOs. The amounts actually disbursed to the contractors/suppliers should represent the basis for documentation of expenditures and requesting future advances.

Flow of Funds and Internal Controls:

16. To facilitate the flow of funds (provided the advancing of loan proceeds to a Designated Account is permitted by the Bank), a segregated USD Designated Account (DA) will be opened and managed by the SFD for the sole purpose of managing the project funds. The project‟s design allows SFD to request advances to the DA for an amount equal to two quarters (6 months) of the Project‟s cash forecast as presented in the quarterly unaudited IFRs (i.e., IFR based disbursement). Other disbursement methods such as reimbursement, direct payment and special commitments will be available.

17. A monthly bank reconciliation of the DA will be prepared by the SFD Financial Internal Control Department and will be prepared by Financial Officer and reviewed by the Internal Control Department Senior Manager.

18. In addition, each SA will open and manage a separate bank account denominated in Egyptian Pounds, at an acceptable bank, for the sole purpose of managing the sub-grants received from the SFD under this Project. Each SA will issue a disbursement request to the SFD regional office based on a 6-month disbursement forecast requesting the advance payment and later subsequently advanced after documenting initial advances.

19. The SFD‟s regional office will forward the requests for funds to the Human and Community Development Department (HCD). The HCD will fill out a disbursement form with all project information (i.e., code, name, responsible department, sub-project start date, sub- project duration, sub-project developmental objective, financing source, project value, total number of tranches according to the contract, previous tranches and their respective amount, remaining amount, SA bank name, bank account number). The form is signed by the responsible sub-project officer, and approved by the HCD Head of the Department and HCD Sector Head. The form is then reviewed and signed by the Monitoring and Evaluation Department. The form is forwarded to the Finance Department where it is reviewed, approved and authorized for payment. The form is signed by the Internal Control Department representative and the Head of Operations. The Finance Department issues a letter to the bank to transfer the requested and approved advance or replenishment to the SA from the SFD DA opened for the World Bank

30 project to the SA bank account. The letter is signed by the Internal Control Manager and the Internal Control Senior Manager.11

20. The same procedures apply for subsequent tranches. The following documents are attached with the disbursement request from the SA to the SFD‟s regional office: - The sub-project‟s disbursements to date. - Technical report on the sub-project‟s achievements to date. - Sub-project‟s cash forecast and planned activities.

21. The project disbursement plan and the budgetary process, which is conducted by the SFD Finance Department, is based on the signed contracts with the PIUs, and accordingly, the project disbursements forecast is registered on the system, will be updated periodically and will be used to reflect the variances upon IFRs submission. It is necessary that variance analysis be prepared with each IFR submission explaining variances that exceed 15 percent between actual and planned figures of the previous six months/quarter. Also, the IFR package will include DA Reconciliation Statement, Sources and Uses of Funds by Component and by Category, a List of Payments against contracts subject to the Bank‟s prior review, and a List of Payments against contracts not subject to the Bank‟s prior review.

22. The Borrower is responsible to bear all risks associated with foreign exchange fluctuations when making transfers from the DA which is denominated in US Dollars to the sub- accounts denominated in Egyptian Pounds. At the end of the Project, any unused balance in Egyptian Pounds should be converted to US Dollars and deposited in the DA.

Report-Based Disbursement

23. Under the report-based disbursement method, a forecast of expenditures will be agreed between the SFD and the Bank, covering up to two calendar quarters. Thereafter, aggregate disbursement requests not exceeding this forecast amount are transferred by the Bank into the Designated Account upon demand by the SFD. Disbursements will be made against Withdrawal Applications supported by IFRs. The Designated Account would be used in accordance with the Bank‟s Disbursement Guidelines. The SFD will be responsible for administration of the Designated Account and all disbursement related transactions.

24. Under Component 2 of this project, the capacity of the SFD staff in the regional offices will be enhanced through workshops conducted by external consultants. In order to ensure proper controls are applied over disbursements pertaining to the workshops, the workshop agendas, list of participants, venues, costs, etc., will be reviewed by the TTL and given a No Objection prior to taking place.

25. The following is an illustration of the flow of funds cycle:

11 On the SFD automated system, the related Journal Voucher is prepared by the Finance Officer, reviewed by the Finance Manager and approved by the Internal Control Department Senior Manager and the Sector Director, Finance and Operation. 31

IBRD

SFD HQ DA

Sponsoring Agencies (PIU or NGOs)

Service Providers/ Suppliers Consultants Contractors

Delivery of Sub-projects and Services to Beneficiaries and Responsible Authorities

26. SFD‟s Operations Manual was amended to capture the financial management arrangements and disbursement requirements of the Project which were found acceptable to the Bank. This entailed updating the SFD FM Manual to reflect activities under the envisaged Project, and included new disbursement voucher forms as annexes to the existing FM manual. The FM manual was reviewed by the Bank and found acceptable. The FM manual is now dated March 15, 2012. As per the IAD strategy, all SFD Departments should notify the IAD of any changes made to their respective policies and procedures prior to implementation to provide opportunity for the IAD to review and advise on whether such changes might weaken the system of internal controls.

Internal Audit Arrangements:

27. The SFD IAD. The SFD‟s IAD includes over 40 internal auditors at the HQ and governorate levels or regional offices. The IAD, with its current capacity, is responsible for conducting audit field work and related reporting for all SFD projects throughout Egypt.

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28. The SFD IAD has established a risk based audit strategy which was reviewed, and found acceptable, by the Bank. The audit strategy covers the IAD and the independent external auditor involvement in evaluating the grant recipient and follow up on activities being implemented. It was agreed with the Head of the IA that a capacity assessment of each PIU/NGO would be carried out before signing the SA grant agreement by the IAD representative stationed in the SFD regional office. Upon the IA clearance, the agreement will be signed accordingly and the IAD will update its annual audit plan to include the approved PIU/NGO in their work program.

29. The IAD audit plan is prepared annually and revised on a quarterly basis. The planned number of IAD visits and the associated scope of supervision is based on the results of the field work of the Internal Auditor and the noted observations on the PIU/NGO performance. The IAD plan establishes proper segregation of duties between the teams responsible for capacity assessment of PIU/NGO and those responsible for follow up on implementation activities.

30. Following the transfer of the first tranche, the IA representative from HQ visits the PIU to ensure that all of the financial arrangements stipulated in the SA grant agreement are followed. Any noted observations are reported in the IAD report and followed up on by the IAD until resolution. The final tranche is not transferred to the PIU until all IAD noted observations are resolved.

31. The SFD IAD and the Project‟s External Auditor will be granted access to examine the original supporting documentation. Meanwhile, the SA will send monthly reports to the SFD regional office. As per the existing SFD IAD strategy and Program, the IAD will conduct regular field visits by using the IAD‟s representatives stationed in the SFD‟s regional office throughout the project life. The IAD staff will be responsible for documenting the outcome of the visits by preparing and submitting to the Head of the Internal Audit a report documenting each visit. Also, for NGOs, the two latest audited financial statements will be obtained to ensure that there is an unqualified (clean) opinion on the NGO financial statements.

Transparency:

32. Allocation of funds under the umbrella of the Project was based on Egypt‟s geographical poverty map which was prepared by the GoE and applied by the World Bank in the project design in determining the targeted geographical areas. Signs and bulletin boards will be placed in the field demonstrating that the Project is financed by the World Bank in collaboration with the SFD.

33. Under the umbrella of the Project, a call for proposal will be announced in the local newspaper and on the announcement board in the Governorates and the Intermediary Agencies. The call for proposal will include the evaluation criteria, which address the eligibility of the applicant, and the associated scoring sheet, which determines the ceiling of the granted funds. Also, as is the common practice in all SFD projects, this information will be posted on the SFD website (in Arabic).

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34. The website provides comprehensive information about the SFD and its role, how to obtain services under different programs offered by the SFD, and the SFD development partners. HQ and RO contact information.

Complaints Handling and Grievances System:

35. At present, a limited grievance system is in place. The system is not web-based and does not allow anonymous reporting of complaints. Rejected applicants can file a complaint with the Head of the SFD regional office who investigates the complaint with the HCD representative in the regional office. A formal justification for rejection must be provided and, if a resolution is not reached. The matter is escalated to the SFD HQ. Alternatively, the complaint form can be obtained from the SFD website.

36. The project design includes: (i) support for client satisfaction surveys, and (ii) a sub- component which allow NGOs to conduct independent verification of sub-project implementation. The Project aims to establish an effective web-based grievances system with text messaging capability (SMS) to allow reporting of irregularities and complaints and feedback.

External Audit Arrangements:

37. The SFD is subject to annual external audits by: (i) the Central Accountancy Office (CAO) and (ii) independent external audit firms (currently KPMG). In addition, the SFD will contract with an independent external auditor based on TORs acceptable to the Bank, for the purpose of carrying out an external audit of the Project‟s Financial Statements. The SFD‟s Entity and Project audit reports will be submitted to the Bank within six months from the end of each calendar year.

38. The SFD will hire the Project‟s external auditor within three months after project effectiveness. The Bank expects the Borrower to submit terms of reference for the project external audit for the Bank‟s prior review and approval within 3 months of effectiveness. The external auditor will conduct quarterly reviews on the project IFRs before submission to the Bank.

39. The external audit report shall encompass all project activities and shall be in accordance with internationally accepted auditing standards, e.g., International Standards on Auditing (ISA). The annual audit report of the Project Accounts shall include a separate opinion as to whether the IFRs submitted during such fiscal year, together with the procedures of internal controls involved in their preparation, can be relied upon to support related Withdrawal Applications. Also, the audit report shall include a separate opinion on the Fund Accountability Statement (i.e., Statement of Sources and Uses of Funds), Withdrawals from the World Bank Loan, Disbursements Forecast and the DA Reconciliation Statement. In addition, the auditor will provide a separate opinion on compliance with the Operations Manual and effectiveness of the internal control system. In addition to the audit reports, the auditor will prepare a “management letter” identifying any observations, comments and deficiencies in the system and controls that the auditor considers pertinent and shall provide recommendations for their improvement. The

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Project‟s external auditor TOR will be subject to the Bank‟s review, tailored to include the auditing of sub-projects. The project auditor will use the SFD internal audit reports and other external audit reports furnished to SFD to determine whether to use using the risk-based approach as per SFD Audit Strategy. There are no overdue Audit Reports for projects previously implemented (or currently implemented) by the SFD.

40. The table below summarizes the financial reporting arrangements required under the Project.

Report Due Date Responsibility Sent Language Scope to: Interim financial 45 days from end External Auditor Bank Arabic/English Review Reports of quarter Annual Project 6 months from end External Auditor Bank Arabic/English Audit financial of the fiscal year statements Annual Entity 6 months from end External Auditor Bank Arabic/English Audit financial of the fiscal year Statements (SFD)

Supervision Plan:

41. After effectiveness, the Bank FMS will participate in Bank supervision missions. The Bank supervision will follow a risk based approach. At least two supervision missions will be carried out annually in addition to follow up visits as deemed necessary. The review and audit reports of the interim and annual financial statements respectively, in addition to the management letter, will be reviewed on a regular basis by the Bank FMS, and the results or any issues which emerge will be pursued during supervision missions. Also, during the Bank's supervision missions, the Project's financial management and disbursement arrangements will be reviewed to ensure compliance with the Bank's requirements and to develop the financial management rating for the Implementation Status Report (ISR).

Next actions:

Action Required By Whom When Status Amend the existing automated SFD IT Pending One month from accounting system to record and report Department effectiveness on the new project activities Amend the SFD Financial Manual to be SFD Finance Completed reflective of the envisaged project Department financial activities and ensure consistent March 15, 2012 implementation of control procedures.

Agree on the terms of reference for the SFD Within 3 months Pending project‟s external auditor. after effectiveness

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Appendix 1

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Appendix 2

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Annex 6: Procurement Arrangements ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

General

1. The Country Procurement Assessment Report (CPAR) of 2003 concluded that Egypt‟s Procurement Law (Law No. 89) and the Executive Statutes provide important concepts for public procurement in Egypt and generally contain sound principles. However, the broad nature of their principles and the absence of written guidelines for their application leave considerable room for extensive discretionary power which can result in inconsistent decisions and loss of transparency.

2. In addition, a follow-on sector specific assessment to the CPAR, an institutional procurement capacity assessment in the water sector, was carried out in 2005 as part of the Public Expenditure Review also issued at about the same time in early 2006. The assessment emphasized the importance of developing the National Procurement Guidelines to avoid conflicting interpretations of the above mentioned Law 89. The proposed guidelines should explain all steps necessary for the efficient procurement of goods and works, as well as provide guidelines for the selection of consultants (currently non-existent) based on qualitative criteria, as well as guidelines on thresholds.

3. More recently, upon the request of the General Authority for Government Services, the Bank has provided support through a legal Technical Assistance (TA) to modernize the Executive Regulations in line with UNCITRAL Model Law to the extent that Law 89 allows. The revisions are expected to be endorsed by the GoE shortly and rolled out nationally to all procuring agencies in the country.

4. Procurement for the proposed Project will be carried out in accordance with the World Bank‟s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011; “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011; the World Bank‟s Anti Corruption Guidelines (“Guidelines on Preventing and Combating Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants), and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

5. Procurement of Works: Works procured under this Project will include: small value contracts implemented by the SA, the beneficiary of SFD finance in the form of a Labor Intensive (LI) Sponsoring Agency Grant Agreement. Civil works contracts will include canal weed reduction and protection of river bank, rehabilitation of rural housing, upgrading of rural roads, school rehabilitation, and solid waste collection. The maximum financing for a LI SA

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Grant Agreement will be around US$2,000,000 and include small works in dispersed communities, estimated to not exceed US$350,000. Large contracts will not arise at the SA/NGO level due to the nature of the works involved and, therefore, ICB and NCB are not foreseen. Civil works with an estimated contract value below US$500,000 would be awarded through local shopping (small works procedures) as explained and agreed upon in the updated Operations Manual. The Operations Manual will also include standard evaluation forms related to these types of procurements.

6. Civil works with an estimated contract value more than US$500,000 will be procured at the SFD central level through National Competitive Bidding (NCB) using the modified World Bank standard bidding document in Arabic language which is currently being used by other World Bank financed projects in the water sector in Egypt, with advertisement in two national newspapers. NCB procedures shall comply with the requirements stipulated in the Financing Agreement under Provisions for NCB.

7. Procurement of Goods: Goods procured under this Project will include: small value contracts valued around US$100,000 or less implemented by the Sponsoring Agency SA/ NGOs, the beneficiary of SFD finance in the form of a LI SA Grant Agreement. The procurement will be done using the SFD updated procurement manual agreed upon with the Bank; this manual includes in its annexes simplified local shopping procedures for contracts estimated less than US$250,000 or equivalent. The manual also includes standard evaluation forms related to these types of procurements.

8. Procurement of non-consulting services: Procurement of non consulting services under the project may include printing services, translation services, transportation service, catering services, hotel services, etc.

9. Selection of Consultants: All consulting service contracts under Component 2 for firms would be procured at the SFD central level following the World Bank‟s procurement procedures by using the Bank‟s Standard Request for Proposal (SRFP). Consulting services contracts would mainly comprise hiring of an Independent Verification Expert, Evaluation, Communication, Quality Assurance, Capacity Development, and Audits. Consulting service contracts above US$500,000 will use QCBS and QBS.

10. Consulting service contracts below US$500,000 for selection of firms or NGOs may be procured using selection based on Consultants‟ Qualification, Fixed Budget Selection, and Least Cost Selection. Single Source Selection could be used in exceptional cases subject to approval by the Bank. The SFD updated procurement manual will include annexes of standard simplified RFP and contract forms as well as standard evaluation forms. Short lists of consultants for services estimated to cost less than US$300,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. All individual consulting assignments will be selected on the basis of comparison of qualifications in accordance with Section V of the Guidelines for Selection of Consultants.

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11. Capacity building activities to be financed by the Loan include workshops to train beneficiaries on environmental and other aspects related to implementation of the LI sub- projects. The procurement will be done in the form of a budget covering the expenses of the workshops. This will include trainee travel expenses, their accommodation if necessary, rental of space, consumables and remuneration for private facilitators.

Assessment of the Agency’s Capacity to Implement Procurement

12. The SFD has its main headquarters in Cairo, and is supported by 20 regional and 7 satellite offices. The SFD Headquarters Office will be supported by a qualified procurement adviser who has experience in World Bank procurement procedures. The regional and satellite offices are the main point of contact between requesting agencies and the SFD: they provide advice to communities, NGOs, and regional government on SFD procedures; receive completed application forms; coordinate sub-project appraisal committees; and conduct field appraisals and launch workshops through the SFD's Programs. The regional and satellite offices are linked to the national offices through telephones, facsimiles, and internet connections.

13. The SFD is supported by the following units: (a) Management Information Systems (MIS); (b) Credit Unit responsible for determining the credit worthiness of projects involving intermediary agencies and/or beneficiaries for both the Community Development and Enterprise Development Programs; (c) Projects and Planning Office (includes a monitoring targeting evaluation and studies unit), with requisite skills to plan and review SFD activities, as well as appraise and evaluate projects; (d) Legal mandated to prepare framework agreements and handle related legal matters; (e) International Cooperation Affairs and Information for Public Relations Department charged with managing and organizing marketing campaigns involving information dissemination on the role of SFD as well as handling problems arising from poor communication; and (f) IAD which reports directly to the Managing Director and the Board of Directors. The SFD would have primary responsibility for monitoring physical and financial progress of the works undertaken by the SA/NGO. The Governorate beneficiaries submit a proposal outlining the works to be undertaken and to be considered for financing by the SFD. The SFD reviews and approves the proposal for which an appraisal document is prepared (detailing the scope of work, feasibility, sustainability, timetable, disbursement schedule, etc.). Through the SFD's Programs, a Framework Agreement is signed with the SA/NGO which describes the guidelines to be followed and each party‟s role in the implementation of the sub- project. The SA/NGO then sub-contracts the work with a contractor and/or supplier. The SFD will oversee and guide the SA/NGO based on the processes outlined in the SFD‟s updated Program Operations Manual. The updated Operations Manual will form the cornerstone of the Project launch workshop and subsequent activities. This Manual will provide consistent procurement procedures for all project beneficiaries, and will be disseminated to all project entities.

14. An updated assessment of the methodology and the applied procurement procedures of Egypt SFD to implement and monitor procurement actions for the project were carried out by the Bank following the simplified procedures, OP 8.00 Rapid Response for Crises, which is applicable to this Project. The assessment reviewed the organizational structure, the applied procedures and the matrix of responsibility for implementing the Project.

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15. The key issues and risks concerning procurement for implementation of the Project have been identified and include:  BD inconsistent with Bank‟s Guidelines.  Inconsistent application of rules and procedures by the different implementing agencies;  Quality of selection process for NGOs yet to be improved.  Lack of standard BD, RFP, contract forms and evaluation forms;  Practice of pre/post award negotiations;  Unjustified re-bidding which may result in unnecessary delays in implementation;  Civil servants are paid out of the project proceeds.  A general practice across the country of negotiating prices with bidders or accepting discount after bids opening.

16. The overall project risk for procurement is high.

17. The corrective measures which have been agreed are: (i) hiring of an experienced procurement adviser for consulting services (disbursement condition); (ii) updating of the procurement manual with complete annexes to ensure clear definitions of rules and responsibilities and enable consistent application of these rules (completed March 2012); (iii) reinforcement of the capacity of the regional offices by the procurement adviser to monitor conform compliance to the application of procurement procedures by the SAs and IAs; and (v) carrying out of appropriate capacity building for the procurement manual and annexes.

Prior Review:

18. For the first consulting services contracts related to the selection of NGOs per sector and all consulting services contracts above US$200,000 under Component 1, and all consulting services contracts under Component 2 and the first contract for works and goods regardless of their values and their geographical location are subject to the Bank‟s prior review. The SFD regional office would review the first three contracts for each governorate and issue a formal no-objection letter to be documented for the Bank‟s post review. In addition, the SFD regional office would randomly carry out post review for contracts implemented by all different IAs/NGOs on a quarterly basis and send its findings and recommendations to the Bank. Rejection of all bids for rebidding purposes is subject to the Bank‟s prior review.

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Table 1 Prior Review Thresholds Procurement Method Thresholds Proposed (USD million) Proposed (USD million) Least ICB NCB Shopping QCBS QBS CQS SSS Cost Goods 0.1 ≥0.5 <0.25 <0.25 Works 0.35 ≥5 >0.5 <0. 5 Consulting Firms ≥ 0.2 default TBD <0.5 TBD TBD Services Individual ≥ 0.1 Rebidding All

Procurement Plan

19. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan was agreed upon between the Borrower and the Project Team before negotiation. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

20. The Programs of the SFD (CDP and PWP) being financed under the proposed Project have no procurement unit. The Programs are responsible for preparing a Project Appraisal Document, which is based on requests received from the Governorates/NGOs, and which outlines the scope of works (the project and its subprojects), feasibility, sustainability terms and conditions (criteria), project cost, disbursement schedule, and schedule of completion.

Frequency of Procurement Supervision

21. In addition to the prior review supervision to be carried out from the Bank office, the capacity assessment of the IA has recommended two supervision missions to visit the field to carry out post-review of procurement actions.

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Annex 7: Implementation and Monitoring Arrangements

ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

A. Project Implementation. The project implementation period is three years.

1. The Project will be implemented by the SFD. The SFD is a legally autonomous, permanent and well established development organization with a long track record of providing support to needy and underserved communities. The SFD has been implementing the public works program for the last 20 years to provide immediate short-term employment opportunities.

2. The SFD has significant experience in interventions that provide services and employment to the poor, and with an increasing focus on community participation, cooperation with NGOs, and decentralization. Since 1992, about EGP 1.8 billion worth of projects have been implemented by SFD in infrastructure under its HCD. Over the years, the most common sub-projects implemented were water supply and sanitation projects, pavement of roads, cleaning of canals, public buildings, and riverbank protection.

3. Project Oversight. The Board of Directors of the SFD, which is chaired by the Prime Minister and includes the Ministers of Finance, Manpower and Migration, Information, Foreign Trade and Industry, Transportation, the Chairman of the Public Authority for Investment and Free Zones, SFD‟s Managing Director, and the Financial and Legal Advisor, is responsible for project oversight. SFD‟s Managing Director will be responsible for general project coordination and implementation and the General Manager of the Human and Community Development Sector will be responsible for day-to-day project management responsibilities.

4. Project Management. The SFD will be the implementing agency for the proposed Project. The SFD central office, based in Cairo with the support of its 27 regional offices (one in each Governorate), will coordinate project activities with the various stakeholders.

5. SFD’s Roles and Responsibilities. Key SFD duties will include: (a) preparing the sub- projects pipeline in accordance with guidelines and eligibility criteria defined in the Operations Manual; (b) assessing the degree of labor intensity of the proposed sub-project, (c) assessing the degree of community participation in identifying and executing sub-projects and the quality of the skills upgrading activities proposed; (d) supervising the activities of the sponsoring agencies and the intermediary agencies; (e) overseeing the procurement arrangements to ensure that implementing partners are adhering to the agreed procedures; (f) ensuring that sponsoring agencies are actually carrying out the capacity building activities for the implementing partners (including training on sub-project implementation, contracting, operations and maintenance, and financial management); (g) monitoring performance through the MIS and reporting quarterly on progress; and (h) developing an impact evaluation process to provide information on project outcomes.

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Main Sub-project Partners

6. Line Ministries/Governorates and their technical directorates. Line Ministries are the sectoral ministries at the national level that identify the types of technical subsectors to be funded under this operation. Below the national level, the 27 governorates are the main focal points of government development efforts. Associated with line ministries/governorates are technical directorates (mudiriat) which represent line ministries within a particular governorate. Technical directorates are responsible for the technical aspects of their sectors throughout the governorate. Governorates and their technical directorates also assume the technical and financial responsibility for operation and maintenance of most infrastructure investments.

7. NGOs/ Community Development Associations (CDAs). NGOs are registered large experienced community development associations with a track record in implementing community driven development projects. NGOs support the formation, capacity development, and expansion of grass-roots CDAs at the village level. CDAs are groups of citizens from the community with a common interest, who organize into legally constituted civil associations. Both NGOs/CDAs will identify, prepare, implement, supervise, operate and maintain their sub- projects, assisted both by technical specialists whom they contract directly and by technical assistance and training made available through the Project.

B. Sub-project Cycle:

Priority setting for allocation of funds

8. Egypt poverty map information was used to prioritize allocation of funds for sub-projects geographical areas.

Sub-project implementation

9. Community Infrastructure Sub-projects.

. Identification of sub-projects The sub-projects pipeline is identified by SFD regional offices in collaboration with sectoral line ministries, technical directorates at the governorate level, local authorities, and in consultation with the local community.

. Approvals by SFD Once a group of sub-projects under a single framework agreement has been identified, it is sent to the standing SFD appraisal committee at headquarters for appraisal. Upon approval, the funds are allocated.

. Signing of framework agreements (also known as Sponsoring Agencies Grant Agreements) A framework agreement is signed between SFD and the governorate or line ministries (SA). Framework agreements define the scope of the sub-project,

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preliminary sub-project list, and reporting requirements, in addition to the roles and responsibilities of the technical directorates as IA (mudiriat). The IA will represent line ministries within a particular governorate and will also assume the technical and financial responsibility for operations and maintenance of infrastructure investments.

. Setting up a Project Implementation Unit (PIU) within the SA Based on an assessment of the strengths of the SA, a PIU will be set up within the SA. Personnel will include a full time project manager, an accountant, and a procurement specialist.

. Signing of sub-grant agreements between SA and IA (also known as Intermediary Grant Agreements) A sub-grant agreement is signed between the governorate/line ministries (SA) and their technical directorates at the governorate level (mudiriat) (IA). The sub-grant agreement defines the roles and responsibilities of the technical directorates, contracting conditions, and procurement procedures.

. Setting up required bank accounts A bank account for the sub-project will be set up in the name of the sponsoring agency, with signatory delegated to the PIU and other details declared. Similarly, every intermediary agency (technical directorate) which is expected to execute sub-projects will also set up bank accounts.

. Preparing detailed designs and tender documents by IA The IA is responsible for preparing the detailed designs, bills of quantities, tender documents, and technical daily supervision.

. Physical execution of sub-projects Sub-projects will be implemented through contracting local private civil works contractors in accordance with SFD‟s procurement manual and in compliance with SFD‟s financial management manual.

. Reporting on sub-project progress Implementation progress of sub-projects is reported by the SA as per reporting requirements defined in SFD‟s Operations Manual.

10. Community Subprojects.

. Signing of Protocol with governorates A memorandum of understanding (Protocol) is signed between SFD and the governorates that will define the key sectors and activities to be funded. The protocol will ensure the coordination between the governorate and the NGOs/CDAs that will be selected for sub-project implementation.

. Selection of NGOs/CDAs

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NGOs/CDAs will be selected based on the qualifications of the organization, past experience, and implementation and fund management capacity. A long list of NGOs/CDAs will be identified per sector for each governorate. The SFD has already a long list of qualified NGOs/CDA, which will be updated during project implementation.

. Identification of sub-projects Qualified NGOs/CDAs per sector per geographic area will develop the subprojects pipeline in partnership with SFD regional offices and in collaboration and consultation with the local authorities.

. Approvals by SFD Grant agreements for sub-projects are identified and sent to the standing SFD appraisal committee at headquarters for appraisal. Upon approval, the funds are allocated to the NGO/CDA.

. Signing of grant agreements for sub-project implementation (also known as Sponsoring Agencies Grant Agreements) An agreement is signed between SFD and the implementing NGO/CDA that will define the scope of the sub-project, the roles and responsibilities of NGO/CDA where applicable, reporting requirements, contracting conditions, and procurement procedures.

. Setting up a Project Implementation Unit (PIU) within the NGO/CDA Based on an assessment of the strengths of the NGO/CDA, a PIU will be set up within the SA. Personnel needed for the PIU will include a full time project manager, an accountant, and a procurement specialist.

. Setting up required bank accounts for the grant agreement A bank account for the sub-project will be set up in the name of the NGO/CDA, with signatory delegated to the PIU and other details declared.

. Physical execution of sub-projects Sub-projects will be implemented by the NGO/CDA through contracting suppliers and consultants in accordance with SFD‟s procurement manual and in compliance with SFD‟s financial management manual.

. Reporting on sub-project progress Implementation progress of the sub-projects is reported by the NGO/CDA as per reporting requirements defined in SFD‟s Operations Manual.

The project will be managed in accordance with SFD’s Operations Manual which at all times will need to be acceptable to the Bank.

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Monitoring & Evaluation

11. Monitoring. The SFD will monitor the progress of the implementation of sub-projects using its MIS which has been adapted to ensure that it will be able to respond to the reporting requirements of the Bank and the Results Framework of the Project.

12. Reporting. The SFD will submit to the Bank semi-annual progress reports that provide updates on the status of the project outcome, intermediate outcome, and output indicators. In addition, the SFD will submit to the Bank a Mid Term Review Report and a Project Completion Report.

13. Verification. The SFD, using the expertise of an IVE, will conduct community level verification of the results of implementation of sub-projects, using NGOs to ensure social accountability.

14. Evaluation. The SFD will conduct two evaluations, one at mid-term and another at the end of the Project, using independent consultants who will provide inputs to the SFD Mid Term Review and Completion Reports. Also, the SFD will plan to conduct an impact evaluation for the project.

15. Quality Assurance. The SFD, through use of quality assurance firms or regional universities, will conduct quality assurance activities that assess the technical quality of assets maintained under the community infrastructure sub-projects as well as measuring the rate of client satisfaction with the community social services sub-projects.

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Project Cost Table

Total ACTIVITY US$ M Implementation Component 1 US$198.00 million 1 Rehabilitation of 7,500 poorest household units (45 sq m rural house) 47.50 2 Canal weed reduction (10,200 km < 2m width) 30.00 3 River Nile Bank Protection for 47km 22.00 4 Maintenance and pavement of Rural Roads between villages (6m width) 11.00 5 Rehabilitation of 16,000 classrooms in 710 Schools 35.00 6 Rehabilitation of 1,000 KG classrooms in 500 KGs 2.50 7 Employment Intensive Population Services 19.50 8 Community Solid Waste Collection 13.00 9 Youth Employment in rural areas 4.50 10 Youth Employment in urban areas 12.00 11 Technical Verification using Independent NGOs 1.00

Component 2 US$2.00 million 1 Communication and public information 0.50 2 Mid-Term Review and End of Project Evaluations 0.25 3 Financial audit of the project 0.15 4 Quality assurance & Independent Verification 0.50 5 Project Management operating cost, equipment, software, and supplies. 0.25 6 Individual consulting services 0.35

TOTAL 200.00

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Project Pipeline

Direct Direct Jobs for Direct Jobs for Project Jobs Youth Females Total Responsible Project Labor Total Geographic Cost Total No. Wages Output Project Type Agency Cost (LE) Intensit Outpu Location (USD) Man/Day (LE) Unit Million y % ts Million Million

No. No. % No. %

Rehabilitation of 7,500 poorest household Poorest villages in Ministry of 1 47.5 285.0 8,159 4,079 50.0% 0 0.0% 815,851 38.6% House 7591 units (45 sq m rural 6 governorates Housing 110.00 house) Canal Weed Reduction Ministry of 2 (10,200 km less than Nationwide 30.0 180.0 31,500 15,750 50.0% 0 0.0% 3,150,000 70.0% KM 10200 Irrigation 126.00 2m width for 3 years) River Nile Bank Ministry of 3 Upper Egypt 22.0 131.9 13,464 6,732 50.0% 0 0.0% 1,346,400 47.6% KM 47 Protection for 47km Irrigation 62.83 Rural Roads between Local 4 13 governorates 11.0 66.0 3,950 1,975 50.0% 0 0.0% 395,000 24.9% KM 100 villages (6m width) Government 16.43 Rehabilitation of Ministry of Classro 5 16,000 classrooms in 11 governorates 35.0 210.0 14,400 7,200 50.0% 0 0.0% 1,440,000 37.0% 16000 Education 77.76 om 710 Schools Rehabilitation of 1,000 Classro 6 KG classrooms in 250 11 governorates NGOs 1.3 7.8 530 265 50.0% 0 0.0% 53,000 36.7% 1000 2.86 om KGs Early Child Education 100.0 Classro 7 of 1,000 KG 11 governorates NGOs 1.2 7.2 4,000 2,400 60.0% 4,000 400,000 86.1% 1000 % 6.20 om classrooms in 250 KGs Employment Intensive 100.0 8 16 governorates NGOs 19.5 117.0 47,736 28,642 60.0% 47,736 4,773,600 83.2% NGO 117 Population Services % 97.30

9 Solid Waste Collection 16 governorates NGOs 13.0 78.0 34,632 20,779 60.0% 0 0.0% 3,463,200 80.6% NGO 78 62.90 1 Youth Employment in 15 governorates NGOs 4.5 27.0 10,287 10,287 100.0% 514 5.0% 1,028,700 72.2% NGO 27 0 rural areas 19.50 1 Youth Emplyment in Urban NGOs 12.0 72.0 22,000 22,000 100.0% 1,100 5.0% 2,200,000 70.0% NGO 60 1 urban areas governorates 50.40 Technical Verification 1 All project using Independent NGOs 1.0 6.0 2,000 1,000 50.0% 100 5.0% 200,000 70.0% NGO 27 2 governorates 4.20 NGOs

TOTAL 62.9% 27.7% 53.6% 198 1,188 192,658 121,109 53,450 19,265,751 636.38

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Annex 8: Project Preparation and Appraisal Team Members

ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

Name Title Unit Alaa Mahmoud Hamed Abdel Hamid Sr. Health Specialist/Task Team Leader MNSHH Hany Al-Saadni Sr. Water Resources Specialist MNSWA Mahmoud Gamal El-Din Sr. Operations Officer MNSHE Nehad Kamel Infrastructure Specialist MNSHD Marc Van Imshoot Sr. Infrastructure Specialist ILO Amal Mwafy Sr. Program Officer ILO Dorothia Schmidt Sr. Employment Specialist ILO Akram El-Shorbagi Sr. Financial Management Specialist MNAFM Jamal Abdulla Abdulaziz Sr. Procurement Specialist MNAPR Alaa Ahmed Sarhan Sr. Environmental Specialist MNSEN Rebekka Grun Sr. Economist MNSSP Wael Ahmed Elshabrawy Financial Management Analyst MNAFM Adrien Andre Pinelli Operations Officer MNCO3 Mira Hong Operations Officer MNSSP Amy Champion Operations Analyst MNSHH Virginia Jackson Operations Advisor SASHD Claudine Kader Senior Program Assistant MNSHD Brigitte Franklin Program Assistant MNSHD Emma Paulette Etori Program Assistant MNSHD Mariam William Guirguis Team Assistant MNCO3 Raghada Abdel Hamid Team Assistant MNCO3

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Annex 9: Environmental and Social Safeguards Framework

ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

ENVIRONMENTAL AND SOCIAL SCREENING AND ASSESSMENT FRAMEWORK (ESSAF)

I. OBJECTIVES

1. The main objective of the Environmental and Social Screening and Assessment Framework (ESSAF) is to provide general policies, guidelines, and procedures to be integrated into the implementation of the World Bank-supported ELIIP which will be implemented by the SFD. This Framework has been developed to identify the environmental requirements needed to ensure that all sub-projects are in compliance with the national environmental protection laws, regulations and guidelines in Egypt, and the World Bank‟s safeguards policies more specifically. Furthermore, the ESSAF will provide clear guidance which will ascertain that all environmental and social impacts are being addressed effectively for the successful appraisal, design, and implementation of the sub-projects. More specifically, the ESSAF will: a. Provide a standardized safeguard screening and assessment process that enables the SFD to quickly and effectively assess the likely environmental impacts associated with any of the sub-projects. b. Provide some examples of the necessary mitigation measures (in line with best practices) to counter such impacts. c. Include the monitoring and evaluation indicators that are necessary for implementing the ESSAF. d. Provide guidance on the approach to be taken during consultation and disclosure requirements.

II. GENERAL PRINCIPLES

2. While ensuring due diligence in managing potential environmental and social risks, one has to recognize the emergency nature of the proposed Project which aims to provide assistance towards creating or maintaining infrastructure using labor-intensive techniques. Given that, the ESSAF is based on the following principles:  The proposed operation will support multiple sub-projects, the detailed designs of which were not necessarily known at appraisal. To ensure effective application of the World Bank‟s safeguard policies, the ESSAF provides guidance on the approach to be taken during implementation for the selection and design of sub-projects and the planning of mitigation measures;  The proposed Project supports only environmental category “B” or “C” sub-projects as per the World Bank classification for safeguards;

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 No sub-projects will be eligible for funding that trigger OP 4.12. In particular, all works, even if there are design changes, will be done on public land and will not result in relocation or loss of shelter, loss of assets or access to assets, or loss of income sources or means of livelihoods; and  No sub-projects that involve the use or pollution of international waterways will be financed under this Project;  Sub-projects entailing weeding activities shall be manual weeding (i.e., by hand) and will not involve the use of pesticides. As a result, the World Bank OP 4.09 is not triggered; and  Consultation and disclosure requirements will be simplified to meet the special needs of these operations. This ESSAF will be shared with and disclosed in the SFD and relevant governorates in Egypt as well as in the World Bank InfoShop.

III. PROJECT DESCRIPTION

3. The objectives of the Project are: (i) to create short-term employment opportunities for unemployed unskilled and semi-skilled workers; and (ii) to provide access to basic infrastructure services to the target population in poor areas in the Borrower‟s territory. The Project comprises the following components:

Component 1: Employment-Intensive Sub-projects (US$198 million)

This component will include provision of grants to sponsoring agencies to carry out, by governorate and local authorities, sub-projects consisting of small-scale infrastructure public works including, but not limited to, the following activities: canal cleaning and protection, rehabilitation of schools, housing, and rural roads.

This component will also include provision of grants to NGOs to carry out, by communities, sub- projects consisting of community services including, but not limited to, solid waste collection, early childhood education services, outreach for maternal and child health, nutrition, population services and youth employment in rural and urban settings.

Component 2: Implementation Support (US$2 million)

This component will include provision of project implementation support, including project management, audits, public information and communication, technical verification and quality assurance, monitoring and evaluation, and social accountability.

IV. POTENTIAL ENVIRONMENTAL IMPACTS

4. The sub-projects of the proposed Project are likely to result in a number of positive environmental and socio-economic impacts. That is, all of the sub-projects are expected to generate employment opportunities and improve income generation for many individuals as well as improve the living conditions and livelihoods, especially for those representing the low- or poorest segments of society in targeted areas and communities. For example, the improvement 52 of housing conditions and solid waste collection for the poor will lead to positive health and environmental impacts.

5. However, despite the substantial positive environmental impacts that will result from the implementation of the sub-projects, there may still be some negative environmental impacts, though potentially minor and not significant.

V. APPLICABLE WORLD BANK SAFEGUARD POLICIES

6. This ESSAF has been developed specifically to ensure environmental and social due diligence for all the sub-projects funded by this Project. It is intended to ensure that, for all activities financed by the Project, all efforts are made to avoid and minimize environmental and social impacts; and where they cannot be avoided, that these impacts are identified and the necessary mitigation measures are developed and implemented following the relevant Egyptian laws as well as the World Bank policies.

7. In addition, this Framework is to assist the SFD in screening all the sub-projects for their likely environmental impacts, identifying documentation and preparation requirements.

8. World Bank BP/OP 4.01 Environmental Assessment. Most of the proposed sub- projects are likely to focus on canal weed reduction and protection of river banks, rehabilitation of rural housing, maintenance of rural roads, school rehabilitation, and solid waste collection. Given the nature of the proposed sub-projects, this policy will be triggered. Individual sub- projects will be screened and assigned the appropriate environmental categorization and environmental due diligence will be conducted in accordance with OP 4.01.

9. Considering the nature and magnitude of potential environmental impacts from the relatively limited scale and magnitude of reconstruction works, sub-projects classified as “B” or “C” will be financed by the Project. Any sub-projects classified as category “A” will not be eligible for funding under this operation.

VI. Approach to Address Environmental Safeguard Issues

10. In accordance with World Bank policy OP/BP 8.00, the ESSAF will guide the environment social safeguard planning and compliance during implementation of sub-projects. As sub-projects will be identified and proposed for financing in a continuous manner during the project implementation period, screening for potential environmental and social impacts will be conducted and mitigation and management measures will be developed in line with the agreed ESSAF.

11. Environmental and social impact screening, mitigation and management measures development and implementation will be carried out as per the following:

First: Screening for potential environmental and social safeguard impacts and determination of safeguards Category according to Egyptian laws and regulations, and World Bank policies; Second: Review of safeguards screening by World Bank;

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Third: Preparation of safeguards documents, consultation and disclosure; Fourth: Review and clearance of the safeguard documents within the Government or/and by the Bank; and Fifth: Implementation of agreed actions; and supervision, monitoring, and evaluation

A. Screening for Potential Environmental and Social Safeguard Impacts and Determination of Safeguards Category for Each Sub-project

12. Once sub-projects have been identified, the environmental safeguard specialists at SFD will concurrently screen each sub-project to determine the applicable Egyptian laws and regulations, the World Bank safeguards policies and guidelines and the corresponding safeguard instruments (i.e., EIA, EMP) which need to be prepared and implemented. Annex 1 provides a proposed checklist of the likely environmental impacts to be filled out for each sub-project or group of sub-projects.

13. The results of the screening exercise will determine the categorization for each sub- project.

Environmental Safeguards Screening

14. With respect to environmental screening of sub-projects, the Egyptian national regulations and World Bank policies and guidelines are considered on the whole to be closely related; both are impact-based and will require the SFD to identify and assess potential impacts to environmental components such as water, air, land and natural habitats and biodiversity.

15. For specific screening according to World Bank policies, the SFD will use the screening tool in Annex 1 to propose an environmental classification for each sub-project as follows:

 Category B: A proposed sub-project may have some adverse environmental impacts, but less adverse than those of Category A projects. These impacts are typically site-specific; few if any of them are irreversible; and in most cases, mitigation measures can be readily designed. The great majority of sub-projects for rehabilitation and reconstruction works are likely to fall into this category.

 Category C: A proposed sub-project is likely to have minimal or no adverse environmental impacts.

Determination of Environmental Safeguards Documents for Sub-projects

16. The environmental safeguards documentation requirements for each sub-project will be determined based on the screening procedures, as follows:

 Category B: Sub-projects will require an EIA or simplified EIA (as required under the Egyptian laws and regulations) and or an EMP (as per the World Bank policy) consisting, at a minimum, of standard environmental codes of practices supplemented, if necessary, with additional analysis. The sub-project specific EMP and/or standard environmental

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codes of practices, including chance-finds of physical cultural resources, will be included in all construction contracts/bidding documents.  Category C: Sub-projects that are rated Category C do not require environmental safeguards documents, but will comply with the Egyptian regulatory requirements.

B. Review of Safeguards Screening by the World Bank

17. The SFD will prepare a safeguards screening summary for each sub-project in a format specified in the Operations Manual. This will summarize: (a) the recommended categorization according to World Bank policies; and (b) the proposed environmental safeguards documentation requirements for the sub-project. The safeguards screening summary will be part of the sub-project identification package that will be submitted to the Bank by the SFD.

18. The World Bank will review the screening of sub-projects on a selective basis to verify that the screening tools and choice of documents are being applied appropriately and consistently.

C. Preparation of Safeguards Documents, Consultation and Disclosure

19. This ESSAF will be shared with the SFD and will be disclosed in-country in both Arabic and English by them in Egypt. The ESSAF will also be shared with the relevant ministries and governorates (i.e., local authorities) that are implementing the sub-projects. Disclosure will also be carried out through the World Bank‟s InfoShop. The other relevant specific safeguard documents/mitigation plans prepared for the sub-projects will also be subsequently disclosed.

20. For Category B12 sub-projects, the SFD will consult the stakeholders and/or the project- affected groups and local non-governmental organizations on the project's environmental and social aspects, and will take their views into account. The SFD will initiate these consultations as early as possible, and for meaningful consultations, will provide relevant material in a timely manner prior to consultation, in Arabic and in a form that is comprehensible and accessible to the groups being consulted.

21. Once the screening and documentation requirements are agreed by the Bank and confirmed by the SFD, the SFD will develop the relevant safeguard documents and impact mitigation measures.

22. The SFD are encouraged to liaise closely with the Bank if any issues arise that may require clarification from the Bank on the application of World Bank policies.

23. Safeguards documents will be subject to consultation and disclosure in an accessible place, in a timely manner, and in a form and language understandable to key stakeholders, prior to the finalization of the said documents. Particular attention will be given to ensure that the project stakeholders receive adequate time and ready access to draft documents before consultation is carried out. This is essentially to ensure that the project stakeholders participate

12 As defined in World Bank Operational Policy 4.01, Environmental Assessment. 55 in and contribute to the sub-project planning and implementation, and thereby help minimize any sub-project impacts while maximizing the benefits.

D. Review and Clearance of Safeguards Documents

24. Review and clearance of the environmental and social safeguards documents according to national regulations is the responsibility of the SFD.

25. The requirements for review and clearance of the environmental documents by the World Bank are as follows:

 Category B: The Simplified EA (or EIA) and EMP for Category B sub-projects will not be subject to World Bank review and clearance prior to approval of the sub-project. However, these documents will be post-reviewed on a selective basis during supervision missions.  Category C: No review required by the World Bank.

E. Implementation of Agreed Actions and Supervision, Monitoring and Evaluation

Implementation

26. Implementation of the safeguards measures during sub-project implementation is the responsibility of sub-project field office staff.

Supervision

27. The SFD will supervise the implementation of the EMP. The World Bank task team will regularly visit the sub-project areas throughout project implementation in order to:

 Provide guidance and assist in the preparation of safeguards instruments;  Review the screening results, due diligence review report, and safeguard documents of proposed sub-projects;  Supervise the implementation of the safeguards instruments to ensure they are implemented in compliance with the Bank policy requirements.

Monitoring and Evaluation

28. The SFD will engage qualified and experienced consultants to carry out the monitoring program to provide information on key environmental and social aspects of the sub-projects and the effectiveness of the planned mitigation measures. This will enable the Government and the Bank to evaluate the performance of the environmental program and allow corrective action to be taken as needed. Annex 2 provides a checklist for environmental monitoring indicators for typical sub-projects.

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VII. RESPONSIBILITIES FOR SAFEGUARDS SCREENING AND MITIGATION

29. In the environmental and social mitigation planning process described above, the various institutional roles and responsibilities are:

Environmental and social impact screening: the SFD, through its specialized staff comprising the 32 Environmental Focal Points from regional offices and headquarters and/or qualified consultants, will undertake environmental screening of each proposed sub-project, the findings of which will be post-reviewed by the World Bank on a sample basis. The Environmental Focal Points will also undertake social safeguards training.

Preparation of safeguards documents: individual sub-project proponents are responsible for planning, design and implementation of individual sub-projects, including environmental and social safeguard documents and mitigation measures, and will engage qualified consultants as needed.

Supervision: the SFD with the assistance of its specialized staff comprising the 32 Environmental Focal Points and/or qualified consultants will guide, supervise and manage the process of safeguard planning and implementation work.

Overall responsibility: the SFD will assume the overall responsibility for the planning and implementation of safeguards documents under the Project. The World Bank will support the process through periodic supervision and training.

Review and clearance of the safeguard documents: safeguards documents will be reviewed and cleared as per the provisions of the Law No. 4 for 1994 and its Executive Regulations and also its amendment, Law No. 9 for 2009.

World Bank review and clearance of the safeguards documents: the World Bank will carry out sample post-reviews during supervision missions.

Safeguards documents implementation: the sub-project proponents will be responsible for the implementation of the safeguard documents, under the direction and supervision of the SFD.

Supervision, monitoring and evaluation: the SFD through its environmental focal points and/or qualified consultants will assume the overall responsibility for the supervision, monitoring, and evaluation of the safeguard document implementation.

Environmental Safeguards Guidelines: For all sub-projects that are determined to be “Category B” sub-projects according to the terms of the ESSAF, the SFD will develop Environmental Safeguards Guidelines which will guide the specific regional office in the implementation of the ESSAF. No “Category B” sub-projects should be carried out before such Environmental Safeguards Guidelines are prepared. Category B sub-projects will be selectively post-reviewed. In addition, the Bank will review the Environmental Safeguard Guidelines to ensure consistency with the ESSAF.

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VIII. CAPACITY-BUILDING AND MONITORING OF SAFEGUARDS FRAMEWORK IMPLEMENTATION

30. As part of the capacity-building to be provided for implementation of the proposed operation, the Environmental/Safeguards Focal Points at the SFD as well as the relevant staff of the concerned governorates, NGOs, and other project stakeholders, will also receive training in ESSAF‟s application.

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Appendix 1

CHECKLIST OF LIKELY ENVIRONMENTAL AND SOCIAL IMPACTS OF SUB-PROJECTS

This Form is to be used by the Safeguards Focal Point at the SFD in screening Sub-project Applications.

Note: One copy of this form and accompanying documentation to be kept in the SFD and one copy to be sent to the task team leader of the World Bank.

Name of Sub-project:

Number of Sub-project:

Proposing Agency:

Sub-project Location:

Sub-project Objective:

Infrastructure to be rehabilitated:

Estimated Cost:

Proposed Date of Commencement of Work:

Technical Drawing/Specifications Reviewed (circle answer): Yes __ No __

No ISSUES Yes No

A. Zoning and Land Use Planning 1. Will the sub-project affect land use zoning and planning or conflict with prevalent land use patterns? 2. Will the sub-project involve significant land disturbance or site clearance? 3. Will the sub-project land be subject to potential encroachment by urban or industrial use or located in an area intended for urban or industrial development?

B. Utilities and Facilities 4. Will the sub-project require the setting up of ancillary production facilities? 5. Will the sub-project make significant demands on utilities and services? 6. Will the sub-project require significant levels of accommodation or service amenities to support the workforce during construction (e.g., contractor will need more than 20 workers)?

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C Water and Soil Contamination 7. Will the sub-project require large amounts of raw materials or construction materials? 8. Will the sub-project generate large amounts of residual waste, construction material waste or cause soil erosion? 9. Will the sub-project result in potential soil or water contamination (e.g., from oil, grease and fuel from equipment yards)? 10. Will the sub-project lead to contamination of ground and surface waters by herbicides for vegetation control and chemicals (e.g., calcium chloride) for dust control? 11. Will the sub-project lead to an increase in suspended sediments in streams affected by road cut erosion, decline in water quality and increased sedimentation downstream? 12. Will the sub-project involve the use of chemicals or solvents? 13. Will the sub-project lead to the destruction of vegetation and soil in the right-of-way, borrow pits, waste dumps, and equipment yards? 14. Will the sub-project lead to the creation of stagnant water bodies in borrow pits, quarries, etc., encouraging for mosquito breeding and other disease vectors?

D. Noise and Air Pollution Hazardous Substances 15. Will the sub-project increase the levels of harmful air emissions? 16. Will the sub-project increase ambient noise levels? 17. Will the sub-project involve the storage, handling or transport of hazardous substances?

E. Fauna and Flora 18. Will the sub-project involve the disturbance or modification of existing drainage channels (rivers, canals) or surface water bodies (wetlands, marshes)? 19. Will the sub-project lead to the destruction or damage of terrestrial or aquatic ecosystems or endangered species directly or by induced development? 20. Will the sub-project lead to the disruption/destruction of wildlife through interruption of migratory routes, disturbance of wildlife habitats, and noise-related problems?

F. Destruction/Disruption of Land and Vegetation 21. Will the sub-project lead to unplanned use of the infrastructure being developed? 22. Will the sub-project lead to long-term or semi-permanent destruction of soils in cleared areas not suited for agriculture? 23. Will the sub-project lead to the interruption of subsoil and overland drainage patterns (in areas of cuts and fills)? 24. Will the sub-project lead to landslides, slumps, slips and other mass movements in road cuts? 25. Will the sub-project lead to erosion of lands below the roadbed receiving concentrated outflow carried by covered or open drains? 26. Will the sub-project lead to long-term or semi-permanent destruction of soils in cleared areas not suited for agriculture?

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27. Will the sub-project lead to health hazards and interference of plant growth adjacent to roads by dust raised and blown by vehicles?

G. International Waterways Issues 28 Does the sub-project use or otherwise affect an international or trans-boundary waterway?

H. Land Acquisition and Resettlement 29 Does the sub-project require land acquisition? 30 If so, will this land acquisition be involuntary? 31 If so, will this involuntary land acquisition lead to relocation or loss of shelter? 32 If so, will this involuntary land acquisition lead to loss of assets or access to assets? If so, will this involuntary land acquisition lead to loss of income sources or means of livelihood (whether or not the affected persons must move to another location)? 33 Will the sub-project lead to the involuntary restriction of access to legally designated parks and protected areas resulting in adverse impacts on the livelihoods of the displaced persons?

Screening Tool Completed and Reviewed by:

Signed by Environmental Specialist in PMO:

Name: ______

Title and Date: ______

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Appendix 2 CHECKLIST FOR ENVIRONMENTAL MONITORING INDICATORS FOR TYPICAL SUB-PROJECTS

School Sub-project:

Monitoring Environmental Impact Monitoring Indicator Frequency Air Pollution Noise Odors Dust Smoke Annually Pollutants (i.e.CO, NOx. And SO2) Asbestos Paint containing lead Water Pollution Electrical Conductivity BOD – COD Annually E-Coli Nitrates Soil Pollution Oil Wastewater Annually Solid Waste

Road Sub-project:

Environmental Impact Monitoring Indicator Monitoring Frequency Air Pollution Increase in traffic Noise Odors Dust Smoke Annually Pollutants (i.e.CO, NOx. And SO2) Asbestos Paint containing lead VOC Different Forms of Visual Solid Waste Pollution Construction Waste Green Areas Annually Sewage System Archeological Sites / Artifacts Water Pollution EC BOD-COD Annually E-Coli Nitrates Reduction or Migration of Productivity of water source Water Sources Annually

Obstruction of Water Obstruction of canals on the road Collection Dispersion of natural canals Annually Road erosion

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Landslide, Erosion, and Falling rocks, soil, and debris on the road Structural Instability of Change in road width Annually Slopes

Population Emigration Census Annually

Tourism Support Determination of incoming tourists Semi-Annually

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Appendix 3: Examples of Negative Environmental Impacts that may be associated with Sub-projects13

Potential Environmental and Potential Environmental and Best Management Practices and Best Management Practices and Sub-project Type Social Negative Impacts Social Negative Impacts Mitigation Measures Mitigation Measures During Project Construction During Project Operation Water Supply and . Mismanagement of . Monitoring of water . Disruption to biodiversity . Quality; operation, and Networks construction and demolition / . Regional water use plans (changes to fauna, flora, maintenance plan rehabilitation waste . Proper drainage near wells and and aquatic life) . Avoid harmful effects to . Disruption to biodiversity pumping stations . Increased air pollutant biodiversity during operation Road, and (changes to fauna, flora, and . Erosion control during emissions . Monitoring of water Irrigation Canals aquatic life) construction . Foul odors . Regional water use plans . Cut down of trees or . Construction during dry season . Changes in soil (erosion / . Erosion control during destruction of green areas . Include odor-control technology fertility / salinity / pollution) operation . Increased air pollutant in design . Gas emissions . Include odor-control technology emissions . Provide appropriate sized bins to . Change in local climate in operation . Foul odors collect construction waste and . Accidents may occur . Use protective clothing and . Effluents to public water arrange for periodic pick up and leading to fire or personal masks for workers as systems disposal injury appropriate. . Alteration of current alignment . Restrict activities to areas where . Train workers on health care of streams biodiversity is not adversely waste segregation and . Obstruction of irrigation affected occupational safety measures intakes . Avoid cutting trees and . Obstruction of flood water destruction of green areas, and if course necessary, re-vegetation should . Alteration of surface water be arranged and included in the quality or quantity project . Interference with existing . Control construction by fencing drainage networks site and spraying water over . Alteration of direction / quality working area to control dust of groundwater emissions . Changes in soil (erosion / . Consider project siting during the fertility / salinity / pollution) design phase . Gas emissions . Collect liquid effluents during . Dust pollution construction and avoid disposal . Change in local climate of untreated effluents into public . Accidents may occur leading water systems to fire or personal injury . Careful design and appropriate 13 The table provides a summary of some of the negative environmental impacts that may be associated with the sub-projects different components though it is not intended to provide an exhaustive list of all types of the sub-projects, their impacts, and their mitigation measures that shall be funded by the Project, rather, the table highlights the typical impacts that can be expected in the types of sub-projects that shall be financed by the Project. 64

selection of irrigation systems . Use protective clothing and masks for workers as appropriate. . Train workers on health care waste segregation and occupational safety measures Waste . None perceived . None . The garbage streams contain . Avoiding contamination of Management all types of household and close by water bodies through other wastes, some of which random waste dumping. are hazardous. . Sound selection and siting of . Collection vehicles are not dumping areas, studies are covered during transport crucial for this type of project leads to littering. . Train workers on waste . Collection workers usually management and occupational have no special training or safety measures protection for handling these . Use protective clothing and wastes masks for workers as . Human scavengers at appropriate dumping area may be . Vehicles must be covered sorting through the waste. during transport. . Waste accumulating in . Waste generated should be dumping areas may burn collected frequently and storage spontaneously or by prohibited in streets. individuals resulting in air . Waste accumulated in dumping quality degradation from areas should be covered to smoke and dust. avoid scavenging and . Contamination of ground spontaneous burning water resources is of concern at dumping areas.

Health Care . Mismanagement of demolition . Adequate sanitation and disposal . Indoor air pollution . Control sources of indoor Related / rehabilitation waste system for waste . Infectious waste may be pollution at source. . Disruption to biodiversity . Avoid cutting trees and disposed of in mixed form . Provide for appropriate in door (changes to fauna, flora, and destruction of green areas, and if with municipal waste ventilation either naturally by aquatic life) necessary, re-vegetation should . Incinerators, if used, may using larger windows or . Cut down of trees or be arranged and included in the not be properly sited, mechanically by using air destruction of green areas project operated or maintained circulation fans and vents . Changes in soil (erosion / . Restrict noisy activities to certain leading to air pollution and . Use different bags for

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fertility / salinity / pollution) hours during the day to avoid hazardous working municipal waste (black bags) . Dust pollution disturbance conditions. and infectious waste (red bags). . Accidents may occur leading . Control construction by fencing . Accidents may occur . Get approval on incinerator to fire or personal injury site and spraying water over leading to fire or personal location before installation. . Transportation and traffic working area to control dust injury . Maintain incinerator circulation emissions . Disruption / congestion of periodically. . Increase traffic hazards to . Provide appropriate sized bins to transportation and traffic . Use protective clothing and motorists and pedestrians collect construction waste and circulation masks for workers as . Introduction of new diseases arrange for periodic pick up and . Increase traffic hazards to appropriate. . Excessive exposure to existing disposal motorists and pedestrians . Train workers on health care diseases . Consider project siting during the . Introduction of new diseases waste segregation and . Attraction of pests and rodents design phase . Excessive exposure to occupational safety measures . Generation of excess solid . Restrict activities to areas where existing diseases . Consultation with affected wastes and litter biodiversity is not adversely . Attraction of pests and communities . Transport, storage or disposal affected rodents . Employ local citizens in sub- of regulated hazardous wastes . Use protective clothing and . Generation of excess solid project area in sub-project . Reduced aesthetic values / masks for workers as wastes and litter operation visual pollution appropriate. . Transport, storage or . Education in proper sanitation . Risk of impact on historical, . Train workers on health care disposal of regulated and health practices archaeological, touristic, waste segregation and hazardous wastes . Avoidance of stagnant waters religious, or protected areas occupational safety measures . Reduced aesthetic values / . Careful management of and sites . Education in proper sanitation visual pollution pesticides . Risk of impact on recreational and health practices . Risk of impact on historical, . Integrated pest management activities . Careful management of archaeological, touristic, or programs . Increased noise levels / noise pesticides protected areas and sites . Provide glowing traffic signs pollution . Integrated pest management . Risk of impact on and build artificial humps near programs recreational activities construction area . Provide glowing traffic signs and build artificial humps near construction area . Strict avoidance of construction near archeological, historical, or religious areas. If any potential artifacts are discovered during construction, work will be temporarily halted in this area . Restrict noisy activities to certain hours during the day to avoid disturbance

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Annex 10: Economic and Financial Analysis

ARAB REPUBLIC OF EGYPT Emergency Labor Investment Project

Rationale for public intervention

1. There is a strong rationale for government intervention to insure social risks, including poverty, through safety nets such as the present workfare program.

2. First, the private market in this area usually fails, for three reasons:

(i) Information asymmetry. An individual will always know more about his/her own inherent risk of poverty (hidden knowledge) and about actions that might increase that risk (hidden action). A private insurer has little possibility to get this information and will therefore try to „cream-skim‟ the market, i.e., select people with the „best‟ risks and leave out those with „bad‟ risks. However, this is socially inefficient because of two other market failures: (ii) Coordination failure. Individual risks of poverty are different: one person may be hit during the summer season, and another in the winter season; and they do not know of each other, and neither does an individual insurer. If they pool their risks, insuring them jointly will be more efficient. In fact, the more people with different risks who participate in the insurance scheme, the more efficient it is – also if some are „bad‟ risks. This is called risk-pooling. (iii)Externality/ returns to scale. If risks are spread across a large number of people, the cost of risk-bearing (risk-premium) can be nearly eliminated. For example, if two people share the costs and benefits of an undertaking, both the costs and the benefits are halved, and therefore the distance and variation between them are smaller (because costs are negative benefits). This is called risk-spreading.

3. Second, workfare is a safety net for poverty and unemployment of the neediest and thereby an instrument to promote greater equity. Appraisal of costs and benefits of the program

Framework

4. Based on the methodology by Martin Ravallion14, we estimate the share of the Government‟s outlay which benefits the poor, i.e.

where  NW is the net wage to beneficiaries (gross wage W minus any costs of participating),  IB are the indirect benefits of the assets (infrastructure etc) created, and

14 Ravallion, M :”Appraising Workfare Programs”, World Bank Policy Research Working Paper 1955, 1998 67

 G is the Government‟s budget for the program.

The above ratio can be decomposed as follows: where  C is private co-financing;  W is the gross wage;  L are leakages of salaries to the non-poor.

Poor people‟s share of the social benefits of the assets created is denoted as .

Calculations with real parameters

Targeting performance

5. If the workfare wage is low enough, it will self-select participants who do not have better labor market options. The Egyptian official minimum wage is only EGP 35 (unchanged for 26 years) and therefore not a benchmark. A recent 2011 field trip recorded formal salaries for the unskilled of EGP 700/month in cities and EGP 600 in rural areas. Most of these can be assumed to come from the poorest quintile (20%) of the population. Labor Force Survey data from 2006 reports average salaries for the illiterate of EGP 540 and for illiterate informal sector workers of EGP 420 in 2006. NGO-managed activities (2011) in rural areas pay EGP 350 for unskilled workers and the Ministry of Water Resources and Irrigation pays maintenance workers only EGP 300 per month, probably on arrangements with a similar motivation as the ELIIP. – We therefore assume EGP 350 as the outside wage option for the beneficiaries of the ELIIP, which will be mainly unskilled workers from the poorest 20% in targeted rural areas. If the ELIIP pays EGP 300 or below, it is unlikely to be attractive to currently employed poor workers. For the following calculations, we therefore assume a LIWP wage of EGP 300.

6. In addition, the LIWP is strictly targeted to very poor regions, namely Luxor, Aswan, , , Assiut, Fayoum, Al Sharqia, Kafr Al-Sheikh, , and Beheira. Also, the positive list of project types eligible under the LIWP will by their nature likely not appeal to people with access to other work.

7. In conclusion, we assume that the LIWP will suffer no leakages to the non-target population. L=0.

Net wage to beneficiaries

8. The net wage NW is the gross wage W minus the costs of participation. The costs of participation include any foregone wage opportunities. Let us assume conservatively that a beneficiary from the program‟s target population (i.e., an unskilled worker from the poorest 20%) will have a probability of finding work of 78%15 if he is not on the program. With the NGO wage in rural areas at EGP 350, his expected foregone wage is EGP 273, i.e., a bit lower than the set wage for the program.

15 Unemployment rate in most affected governorate, Luxor, 22%, ILO 2008. 68

9. The above are average calculations, concealing a distribution around the reservation wage and employment rate with poorer as well as better expectations. Comparing the options, we can presume it likely that many workers with less than average probability of finding a job and a lower expected wage join the program. We also assume that the probability of finding a job does not change through the time spent on the program, i.e. there will be enough spare time to look for another job. Let‟s assume the actual LIWP participants face a 30% higher unemployment rate than the average of the Luxor governorate (22%), i.e., 30%. With this in mind, the Costs C of participation are 70% * EGP350 = EGP245. And the net wage NW is EGP 300 – EGP 245, i.e., EGP 55.

Cost-effectiveness of the LIWP

10. The cost-effectiveness ratio is as explained above. Let us start to fill it with data one by one.

11. It is likely that the bulk of the indirect benefits IB will accrue in the future and will be zero as a current value. So IB=0 for now.

12. From a previous similar program, the Social Fund for Development, we know that the wage share of the overall costs varies between 22% and 36% for de-centrally implemented, and between 40% and 70% for centrally implemented activities. The pipeline of projects lined up for the LIWP achieves a minimum of 50% wage share. We therefore assume for the purposes of this calculation an intermediate wage share of 50%.

13. We also expect L to be =0 as explained above.

14. Scenario 1: Participants in the LIWP can find work outside the program with the probability of the current employment rate of Luxor and an NGO wage With W/G=50% and the NW=EGP 55, the current cost-effectiveness ratio will be

15. This means, under the LIWP it takes EGP 11 to transfer EGP 1 to the beneficiaries today. This performance can be improved with a higher labor intensity (i.e., going above 50%). The B/G estimate is about 1/2 of Egypt‟s overall poverty rate of 22% (2009, post crisis). The latter percentage would also be the share of the poor in a uniform, untargeted allocation of the same budget across the population. So the LIWP unfortunately provides less current immediate benefit to the poor than this alternative policy. The reason is the relatively low unemployment rate (22% in the most affected governorate according to our latest information), suggesting that beneficiaries would face relatively good chances of finding some work outside LIWP.

16. As the unemployment figures available to us probably do not reflect the reality of the poor unskilled, we also provide the results of a scenario assuming that workers cannot find work outside the LIWP.

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17. Scenario 2: participants in the LIWP cannot find work outside the program In this case, NW=W and NW/W=1. W/G=50% as before. Then, the current cost- effectiveness ratio will be

In this case, it only takes EGP 2 to transfer EGP 1 to the beneficiaries today. 18. The B/G estimate is now about 2 times Egypt‟s overall poverty rate of 22% (2009, post crisis). We can see that under this scenario, the LIWP would provide more current immediate benefit to the poor than a uniform, untargeted allocation of the same budget across the population. Adding in future indirect benefits (IB) to the poor

19. If we add in future IB, we have to examine the extent to which poor people will benefit from the assets created under LIWP. Given that Upper Egypt will be targeted, we calculate two scenarios, one for urban, one for rural Upper Egypt, whose poverty rates are 22% and 46%, respectively.16

Scenario 1: Rural Upper Egypt

20. The poverty rate also implies that the ratio IB/SB is 46%. If all people use a new road (100%), 46% of these people are poor, and this is the share of the benefit that goes to them.

21. In addition, if we assume that the projects under LIWP generate social benefits sufficient to cover their costs, then SB/(G+C)=1.

22. Combining the above figures, and conservatively setting C=0, we obtain

23. In concrete terms, it takes EGP 1.04 to increase the incomes of the poor by EGP 1 in the long term (EGP 1.8 if we use Scenario 1 of the net wage analysis). This is a very efficient result and compares very positively to the Argentinean Trabajar workfare program, where it cost EGP 2.5 to improve incomes by EGP 1.

24. Scenario 2: Urban Upper Egypt

Analogously to the above calculations, under this scenario .

It takes EGP 1.4 to increase the incomes of the poor by EGP 1 in the long term (EGP 3.2 if we use Scenario 1 of the net wage analysis). This ratio still compares favorably with the Trabajar program.

16 Source: Staff estimates based on HIECS 2008/09. Number of poor includes extreme poor. 70

Annex 11: Documents in Project Files

ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

 International Organization for Migration (IOM) Cairo. Egyptian Migration to Libya. March 2011.  The World Bank. Social and Economic Development Group. Middle East and North Africa. EGYPT - Poverty in Egypt 2008-09: Withstanding the Global Economic Crisis. January 2011.  The World Bank. Social and Economic Development Group. Middle East and North Africa. EGYPT - EGYPT‟S FOOD SUBSIDIES: BENEFIT INCIDENCE AND LEAKAGES, July 2010.  The World Bank. Social Protection. Macro Crises and Safety Net Responses Experience of Argentina, Mexico, Korea and Thailand and Lessons for East and Central Asia countries.  The World Bank. Social Protection Discussion Papers. Making Public Works Work. The Design and Implementation of Public Works Programs. A Toolkit for Practitioners. April 2010.  The World Bank. Social and Economic Development Group. Middle East and North Africa. EGYPT - UPPER EGYPT: PATHWAYS TO SHARED GROWTH. October 2009.  Ministry of Labor. International labor Organization. Egypt Youth Employment. National Action Plan - 2010-2015. May 2009.  The World Bank. Social and Economic Development Group. Middle East and North Africa. EGYPT - TOWARD A MORE EFFECTIVE SOCIAL POLICY: SUBSIDIES AND SOCIAL SAFETY NET. December 2005.  International Labor Organization. Livelihood and Employment Creation. Labour-based Infrastructure Projects. 2005  International labor Organization. Mitigating a Job Crisis. Innovations in Public Works Programmes. Case Study. The Mahatma Ghandi National Rural Employment Guarantee Act (NERGA), India.  International labor Organization. Employment-Intensive Infrastructure Programmes: Capacity Building for Contracting in the Construction Sector. 1999  International labor Organization. Employment-Intensive Infrastructure Programmes: Labour Policies and Practices. 1998

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Annex 12: Statement of Loans and Credits

ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev‟d P120161 2011 EG-Integrated Sanitation & Sew. Infra. 2 200.00 0.00 0.00 0.00 0.00 200.00 0.00 0.00 P117745 2011 EG-Farm-level Irrigation Modernization 100.00 0.00 0.00 0.00 0.00 100.00 10.50 0.00 P101201 2010 EG-Cairo Airport Development Project- 280.00 0.00 0.00 0.00 0.00 258.31 58.31 0.00 TB2 P112346 2010 EG-Affordable Mortgage Finance DPL 300.00 0.00 0.00 0.00 0.00 100.00 0.75 0.00 P113416 2010 EG-Wind Power Development 70.00 0.00 0.00 0.00 0.00 70.00 32.33 0.00 P116011 2010 EG-Enhancing Access to Finance for 300.00 0.00 0.00 0.00 0.00 136.21 -63.87 0.00 SMEs P116194 2010 EG- North Power Project 840.00 0.00 0.00 0.00 0.00 809.80 84.80 5.91 P080228 2010 EG-Health Insurance Systems 75.00 0.00 0.00 0.00 0.00 75.00 13.83 0.00 Development P101103 2009 EGYPT-Railways Restructuring 600.00 0.00 0.00 0.00 0.00 591.64 181.80 3.38 P100047 2009 EG-Ain Sokhna Power 600.00 0.00 0.00 0.00 0.00 479.66 53.00 0.00 P095392 2008 EG-Natural Gas Connections Project 75.00 0.00 0.00 0.00 0.00 6.93 -12.07 0.00 P094311 2008 EG INTEGRATED SANITATION & 120.00 0.00 0.00 0.00 0.00 106.86 61.91 0.65 SEWERAGE INFR P090073 2006 EG-Second Pollution Abatement 20.00 0.00 0.00 0.00 0.00 8.73 8.73 1.58 P082952 2005 EG-Early Childhood Education 20.00 0.00 0.00 0.00 0.00 8.65 -3.40 -0.02 Enhancement P073977 2005 EG-INTEGRATED IRRIGATION IMPR. 120.00 0.00 0.00 0.00 0.00 77.62 70.12 17.27 & MGT P045499 2000 EG-NATIONAL DRAINAGE II 80.00 0.00 0.00 0.00 0.00 28.43 -1.50 1.67 P050484 1999 EG Secondary Education Enhancement 0.00 50.00 0.00 0.00 0.00 7.79 3.87 4.50 Proj Total: 3,800.00 50.00 0.00 0.00 0.00 3,065.63 499.11 34.94

Egypt, Arab Republic of STATEMENT OF IFC‟s Held and Disbursed Portfolio In Millions of US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic.

Total pending commitment: 0.00 0.00 0.00 0.00

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Annex 13: Country at a Glance ARAB REPUBLIC OF EGYPT Emergency Labor Intensive Investment Project

73

74

IBRD 33400R ARAB REPUBLIC OF EGYPT

SELECTED CITIES AND TOWNS GOVERNORATE CAPITALS

ARAB REPUBLIC NATIONAL CAPITAL GOVERNORATES IN NILE DELTA: OF EGYPT 1 8 MENOUFIYA RIVERS 2 9 SHARGIYAH MAIN ROADS 3 10 QALIUBIYA 4 11 ISMAILIA RAILROADS 5 BEHEIRA 12 CAIRO 6 GHARBIYA 13 GIZA GOVERNORATE BOUNDARIES 7 DAGAHLIYA INTERNATIONAL BOUNDARIES

25°E 30°E 35°E

WEST BANK To AND GAZA To Darnah M e d i t e r r a n e a n S e a Tel Aviv Salum Marsa Matruh 2 Damietta 1Kafr el Alexandria Sheikh Port Said El' 3 JORDAN Libyan Plateau El Mansura ISRAEL 7 4 6 9 Zagizig Ismailia 8 NORTHERN 11 5 10 SINAI 30°N CAIRO 30°N Giza Suez Qattara Giza 12 SUEZ Depression 13 Qara Helwan Taba El Fayoum HELWAN SOUTHERN Siwa EL FAYOUM SINAI MARSA MATRUH BENI SUEF Abu Zenima GIZA Ras Gharib SAUDI AL MINYA El Tur Gulf of Aqaba Al Minya E ARABIA a s Nile t LIBYA e AL BAHR Al Ghurdaqah ASSIUT Assiut r River AL AHMAR n Bir Seiyala W e s t e r n Sohag D

L SOHAG e Red

i Qena s Quseir. b D e s e r t e Sea r y QENA

Luxor t

a A L WA D I Mut. El-Kharga

25°N n A L J A D I D Marsa 'Alam 25°N

ASWAN D

e

s Aswan Dam Aswan

e To Jalu r t Lake Nasser

Halaib

SUDAN 0 50 100 150 200 Kilometers To To To Port Sudan Dongola Berber This map was produced by the Map Design Unit of The World Bank. 0 50 100 150 Miles 20°N The boundaries, colors, denominations and any other information 20°N shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 25°E 30°E 35°E

MAY 2010