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 EGYPT 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 iii 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 iv 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 v 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 vi (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