Somalia Capacity Advancement, Livelihoods and Entrepreneurship, Through Digital Uplift Project
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FOR OFFICIAL USE ONLY Report No: PAD3015 Public Disclosure Authorized INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT (PRE-ARREARS CLEARANCE GRANT) IN THE AMOUNT OF SDR 12.9 MILLION (US$18 MILLION EQUIVALENT) TO THE Public Disclosure Authorized FEDERAL REPUBLIC OF SOMALIA FOR A SOMALIA CAPACITY ADVANCEMENT, LIVELIHOODS AND ENTREPRENEURSHIP, THROUGH DIGITAL UPLIFT PROJECT February 22, 2019 Finance, Competitiveness, and Innovation Global Practice Africa Region Public Disclosure Authorized 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. The World Bank Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) (P168115) CURRENCY EQUIVALENTS Exchange Rate Effective January 31, 2019 Currency Unit = Somali Shilling SOS 578 = US$1 US$1.40 = SDR 1 January 1 – December 31 ABBREVIATIONS AND ACRONYMS ALM Assets and Liabilities Management AMC Annual Maintenance Contract AML/CFT Anti-Money Laundering and Countering Financing of Terrorism AMISOM African Union Mission in Somalia ATS Automated Transfer System BDS Business Development Services CBS Central Bank of Somalia CDD Customer Due Diligence CPF Country Partnership Framework DA Designated Account DE4A Digital Economy for Africa DFI Development Finance Institution E&S Environmental and Social EAFS External Assistance Fiduciary Section ESMF Environmental and Social Management Framework ESMS Environmental and Social Management System FATF Financial Action Task Force FCV Fragility, Conflict, and Violence FGS Federal Government of Somalia FIDEP Financial Institutions Development Program FIDP Financial Institutions Development Plan FIL Financial Institutions Law FIU Financial Intelligence Unit FM Financial Management FMIS Financial Management Information System FMS Federal Member States FRC Financial Reporting Center G2P Government-to-Person The World Bank Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) (P168115) GBV Gender-Based Violence GDP Gross Domestic Product GEEL Growth, Enterprise, Employment, and Livelihoods GRM Grievance Redress Mechanism HIPC Heavily Indebted Poor Country ICT Information and Communications Technology ID4D Identification for Development IDP Internally Displaced Person IFC International Finance Corporation IFR Interim Financial Report IMF International Monetary Fund IPSAS International Public Sector Accounting Standards IRR Internal Rate of Return IRU Indefeasible Right of Use ISA International Standards on Auditing KYC Know Your Customer LEA Law Enforcement Agency M&E Monitoring and Evaluation MDAs Ministries, Departments, and Agencies MEF Monitoring and Evaluation Framework MFD Maximizing Finance for Development MFI Microfinance Institution MIS Management Information System MNO Mobile Network Operator MoCI Ministry of Commerce and Industry MoF Ministry of Finance MoIFAR Ministry of Interior, Federal Affairs, and Reconciliation MOU Memorandum of Understanding MPF Multi-Partner Fund MPTT Ministry of Posts, Telecommunications, and Technology MSMEs Micro, Small, and Medium Enterprises MTB Money Transfer Business MTO Money Transfer Operator NADRA National Database and Registration Authority NCA National Communications Authority NDP National Development Plan NGO Nongovernmental Organization NPL Nonperforming Loan NPS National Payment Systems NPV Net Present Value The World Bank Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) (P168115) NRA National Risk Assessment OSS One-Stop Shop PACG Pre-Arrears Clearance Grant PAFS Project Annual Financial Statement PDO Project Development Objective PFI Participating Financial Institution PFM Public Financial Management PIU Project Implementation Unit POM Project Operations Manual PP Procurement Plan PPA Public Procurement, Concessions, and Disposal Act PPD Public-Private Dialogue PPSD Project Procurement Strategy for Development PSC Project Steering Committee QPR Quarterly Progress Report RA Reflows Account RegTech Regulatory Technology SBCF Somali Business Catalytic Fund SCALED-UP Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project SCoA Standard Chart of Accounts SCORE Somali Core Economic Institutions and Opportunities Project SEAP Somali Electricity Access Project SMEs Small and Medium Enterprises SMEF SME Facility SMP Staff Monitored Program SMPF Somalia Multi-Partner Fund SOE Statement of Expenditure SomaliREN Somalia Research and Education Network STEP Systematic Tracking of Exchanges in Procurement TA Technical Assistance TOR Terms of Reference TTL Task Team Leader TTWG Tripartite Technical Working Group UNDB United Nations Development Business UNDP United Nations Development Programme WFP World Food Programme The World Bank Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) (P168115) Regional Vice President: Hafez M. H. Ghanem Country Director: Bella Bird Senior Global Practice Director: Sebastian Molineus Practice Manager: Niraj Verma Task Team Leader(s): Thilasoni Benjamin Musuku, Axel Rifon Perez The World Bank Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) (P168115) TABLE OF CONTENTS DATASHEET ........................................................................................................................... 1 I. STRATEGIC CONTEXT .......................................................................................................... 7 A. Country Context ............................................................................................................................... 7 B. Sectoral and Institutional Context ................................................................................................ 10 C. Relevance to Higher Level Objectives ........................................................................................... 15 II. PROJECT DESCRIPTION ..................................................................................................... 17 A. Project Development Objective .................................................................................................... 17 B. Project Components ...................................................................................................................... 17 C. Project Beneficiaries ...................................................................................................................... 24 D. Results Chain .................................................................................................................................. 25 E. Rationale for World Bank Group Involvement and Role of Partners ........................................... 26 F. Lessons Learned and Reflected in the Project Design ................................................................... 28 III. IMPLEMENTATION ARRANGEMENTS .............................................................................. 30 A. Institutional and Implementation Arrangements ........................................................................ 30 B. Results Monitoring and Evaluation Arrangements ...................................................................... 32 C. Sustainability .................................................................................................................................. 32 IV. PROJECT APPRAISAL SUMMARY ..................................................................................... 33 A. Technical, Economic, and Financial Analysis ................................................................................ 33 B. Fiduciary ......................................................................................................................................... 38 C. Safeguards ...................................................................................................................................... 38 V. KEY RISKS ........................................................................................................................ 41 VI. RESULTS FRAMEWORK AND MONITORING ..................................................................... 45 ANNEX 1: IMPLEMENTATION SUPPORT PLAN AND FIDUCIARY ARRANGEMENTS .................. 57 ANNEX 2: DESCRIPTION OF COMPONENTS ........................................................................... 71 ANNEX 3: RECENT MONETARY AND FINANCIAL SECTOR DEVELOPMENTS ............................. 86 ANNEX 4: FINANCIAL INTERMEDIARY FINANCING ................................................................ 92 ANNEX 5: GENDER ANALYSIS ............................................................................................. 105 ANNEX 6: DIGITAL ID and MSME FINANCING FACILITY RISKS ASSESSMENT ......................... 111 ANNEX 7: TEAM LIST .......................................................................................................... 118 ANNEX 8: MAP OF SOMALIA .............................................................................................. 119 The World Bank Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP) (P168115) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Somalia Capacity Advancement, Livelihoods and