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Document of The World Bank Public Disclosure Authorized Report No: ICR1776 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A Public Disclosure Authorized GRANT IN THE AMOUNT OF US$65.00 MILLION (TF-54462) FROM THE WORLD BANK IRAQ TRUST FUND TO THE MINISTRY OF PLANNING AND DEVELOPMENT COOPERATION OF THE REPUBLIC OF IRAQ Public Disclosure Authorized FOR AN EMERGENCY PRIVATE SECTOR DEVELOPMENT PROJECT December 30, 2012 Public Disclosure Authorized Finance and Private Sector Development Group Middle East Department Middle East and North Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective December 13, 2012) Currency Unit = Iraqi Dinar 1,145.98 = US$1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS CBI Central Bank of Iraq CPA Coalition Provisional Authority DA Designated Account DARM Diwan Al Rikaba el Malia (Iraqi Supreme Audit Institute) EDF Economic Development Fund EPSD Emergency Private Sector Development Project ESSAF Environment and Social Safeguards Framework EU European Union FBS Fee-Based Services FDI Foreign Direct Investment FMA Fiduciary Monitoring Agent GDP Gross Domestic Product GOI Government of Iraq ICB Iraqi Central Bank IFR Interim Financial Report IMF International Monetary Fund IQD Iraqi Dinar IRTF Iraq Reconstruction Trust Fund ISRB Iraqi Strategic Review Board ITF Iraq Trust Fund (administered by the World Bank) ITPC Iraqi Telecommunications and Post Company KRG Kurdistan Regional Government MDG Millennium Development Goals MIGA Multilateral Investment Guarantee Agency MOC Ministry of Communications MOF Ministry of Finance MOPDC Ministry of Planning and Development Cooperation P&S Payments and Settlements PDO Project Development Objective PMT Project Management Team PSD Private Sector Development RP Restructuring Paper RVP Regional Vice President SCIS State Company for Internet Services SME Small-Medium Enterprise SOE State Owned Enterprise TA Technical Assistance TFTA Trust Fund Technical Annex TOR Terms of Reference UK United Kingdom UN United Nations UNDG United Nations Development Group UNIDO United National Industrial Development Organization US United States USD US Dollars Vice President: Inger Andersen Country Director: Ferid Belhaj Sector Manager: Simon C. Bell Project Team Leader: Stephen Rimmer ICR Team Leader: Stephen Rimmer REPUBLIC OF IRAQ Emergency Private Sector Development Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 5 3. Assessment of Outcomes .......................................................................................... 10 4. Assessment of Risk to Development Outcome ......................................................... 18 5. Assessment of Bank and Borrower Performance ..................................................... 19 6. Lessons Learned ....................................................................................................... 20 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 22 Annex 1. Project Costs and Financing .......................................................................... 23 Annex 2. Outputs by Component ................................................................................. 24 Annex 3. Economic and Financial Analysis ................................................................. 25 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 27 Annex 5. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 29 Annex 6. List of Supporting Documents ...................................................................... 46 A. Basic Information IQ-EMERGENCY Country: Iraq Project Name: PRIVATE SECTOR DEVELOPMENT Project ID: P091344 L/C/TF Number(s): TF-54462 ICR Date: 12/30/2012 ICR Type: Core ICR Lending Instrument: ERL Grantee: REPUBLIC OF IRAQ Original Total USD 55.00M Disbursed Amount: USD 61.48M Commitment: Revised Amount: USD 65.00M Environmental Category: B Implementing Agencies: Ministry of Planning and Development Cooperation Iraq Telecommunications and Post Company Ministry of Communications Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 09/16/2004 Effectiveness: 12/06/2004 03/31/2010 Appraisal: 11/23/2004 Restructuring(s): 03/31/2012 Approval: 11/30/2004 Mid-term Review: 06/30/2008 02/29/2008 Closing: 06/30/2007 06/30/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Grantee Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes Moderately Satisfactory at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General finance sector 20 20 General industry and trade sector 20 20 General information and communications sector 60 60 Theme Code (as % of total Bank financing) Conflict prevention and post-conflict reconstruction 50 50 Infrastructure services for private sector development 50 50 E. Bank Staff Positions At ICR At Approval Vice President: Inger Andersen Christiaan J. Poortman Country Director: Ferid Belhaj Joseph P. Saba Sector Manager: Simon C. Bell Zoubida Allaoua Project Team Leader: Stephen Rimmer Mohammad A. Mustafa ICR Team Leader: Stephen Rimmer ICR Primary Author: Stephen Rimmer Marc Jean Yves Lixi F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The overall project development objective (PDO) is defined in the TFTA as "To lay the foundation [for private sector development] by addressing certain key priorities in institutional capacity building and essential communications infrastructure to help foster the development of the private and financial sectors. A secondary objective of the project is to generate job creation through the development of the private sector". Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years 1. Strenghthening of the following institutions: (a) Investment Promotion Agency Indicator 1 : (b) Export promotion Agency (c) Economic Development Fund and (d) Development plans for two industrial zones at Arbil and basra. Successful strengthening of export promotion, effective The first three Value operation of objectives were not quantitative or 0 0 Economic fully achieved, Qualitative) Development Objective (d) was Fund and achieved. development of two industrial zones Date achieved 12/01/2004 12/01/2004 06/25/2010 06/30/2012 Comments 25% achieved. UNIDO is taking forward the component to establish industrial (incl. % zones. achievement) Support of (i) Export Promotion Fund at the Ministry of Trade which will channel TA to 100 eligible firms to develop export plans; (ii) Economic Indicator 2 : Development Fund at the MOPDC to channel TA for Iraqi private enterprises to develop feasibility studies. 30 firms have 75export ready developed export firms have plans. 0 eligible firms have developed export 30 private sector developed export plans. Value plans. firms assisted to 0 private sector firms quantitative or 50 private sector develop feasibility assisted to develop Qualitative) firms assisted to plans to seek feasibility plans to seek develop feasibility financing financing. plans to seek assisted to develop financing. feasibility plans to seek financing Date achieved 12/01/2004 12/01/2004 06/30/2012 Comments The capacity building component was abandoned in 2009 due to lack of capacity (incl. % by relevant ministries but provides a platform to implement an access to finance achievement) for SMEs program. Export market development continued by Ministry of Trade. 48% achieved Connecting the Central Bank of Iraq (CBI) with two Government owned Banks Indicator 3 : (Rafidein and Rasheed) and the headquarters of 20 private banks in Iraq with high capacity and reliable communications infrastructure. Value quantitative or 0 % achieved 20 banks in Iraq 52 banks in Iraq Qualitative) Date achieved 12/01/2004 06/25/2010 12/20/2011 Comments Target surpassed by 250%. 52 Iraqi bank headquarters connected to CBI's (incl. % network and services achievement) Rehabilitation and upgrading of three of five national background microwave Indicator 4 : routes: (i) Baghdad-Trabil, (ii) Baghdad-Mosul and (iii) Baghdad-Ammara- Basra. Value All routes All routes