Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 142981-DJ IMPLEMENTATION COMPLETION AND RESULTS REPORT JSDF TF0A0350 Public Disclosure Authorized ON A SMALL GRANT IN THE AMOUNT OF USD 2.73 MILLION TO THE REPUBLIC OF DJIBOUTI MINISTRY OF ECONOMY, FINANCE & PLANNING, IN CHARGE OF PRIVATIZATION Public Disclosure Authorized FOR ENHANCING INCOME OPPORTUNITIES PROJECT (P148586) November 27, 2019 Public Disclosure Authorized Social Protection & Jobs Global Practice Middle East And North Africa Region Regional Vice President: Ferid Belhaj Country Director: Marina Wes Regional Director: Keiko Miwa Practice Manager: Hana Brixi Task Team Leader(s): John Van Dyck ICR Main Contributor: Matuna Mostafa ABBREVIATIONS AND ACRONYMS ADDS Agence Djiboutienne de Développement Social (Djibouti Social Development Agency) ATA Aid to Artisans CLE Centre for Leadership and Entrepreneurship Caisse populaire d'épargne et de crédit (Popular Bank for Credit and Saving / national CPEC micro-financing entity) CPS Country Partnership Strategy DJF Djibouti Franc FM Financial Management IDA International Development Association IFR Interim Financial Reports INGO International Non-government Agency JSDF Japan Social Development Fund MASS Ministry of Social Affairs and Solidarity MSE Micro, Small and Medium Enterprise NGO Non-governmental Organization PDO Project Development Objective PIU Project Implementation Unit Projet de Promotion de l’Emploi des Jeunes et de l’Artisanat (Enhancing Income PROPEJA Opportunities Project) SME Small and Medium Enterprises SSN Social Safety Net TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 4 II. OUTCOME ...................................................................................................................... 8 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 18 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 24 V. LESSONS LEARNED AND RECOMMENDATIONS .............................................................. 28 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 31 ANNEX 2. PROJECT COST BY COMPONENT ........................................................................... 37 ANNEX 3. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ...... 38 ANNEX 4. CALCULATION OF INCREASE IN INCOME FOR YOUTH ENTREPRENEURS ................. 41 ANNEX 5. LOCALITIES/ DISTRICTS PROPEJA ACTIVITIES IMPLEMENTED ................................. 43 The World Bank Enhancing income opportunities in DJ (P148586) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P148586 Enhancing income opportunities in DJ Country Financing Instrument Djibouti Investment Project Financing Original EA Category Revised EA Category Not Required (C) Organizations Borrower Implementing Agency MIN. OF ECONOMY AND FINANCE ADDS Project Development Objective (PDO) Original PDO The Project Development Objective is to improve access to life-skill, livelihood skills training, and access to finance for at least 3000 low- and semi-skilled youth and women in poor communities in Djibouti-ville and neighboring Arta, the northern region of Tadjoura, and the southern region of Ali Sabieh. Page 1 of 45 The World Bank Enhancing income opportunities in DJ (P148586) FINANCING FINANCE_TBL Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) Donor Financing TF-A0350 2,730,000 2,730,000 2,729,787 Total 2,730,000 2,730,000 2,729,787 Total Project Cost 2,730,000 2,730,000 2,729,787 KEY DATES Approval Effectiveness Original Closing Actual Closing 19-Jun-2015 20-Aug-2015 20-May-2019 20-May-2019 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 15-Oct-2015 Satisfactory Satisfactory 0.00 Page 2 of 45 The World Bank Enhancing income opportunities in DJ (P148586) 02 20-Jan-2016 Satisfactory Satisfactory 0.40 03 11-Aug-2016 Satisfactory Satisfactory 0.40 04 21-Jun-2017 Moderately Satisfactory Moderately Satisfactory 0.65 05 05-Jun-2018 Satisfactory Satisfactory 1.59 06 29-Jul-2019 Satisfactory Satisfactory 2.73 ADM STAFF Role At Approval At ICR Regional Vice President: Gerard A. Byam Ferid Belhaj Country Director: Poonam Gupta Marina Wes Director: Xiaoqing Yu Keiko Miwa Yasser Aabdel-Aleem Awny El- Practice Manager: Cristobal Ridao-Cano Gammal Task Team Leader(s): Stefanie Koettl-Brodmann John Van Dyck ICR Contributing Author: Matuna Mushfeqa Mostafa Page 3 of 45 The World Bank Enhancing income opportunities in DJ (P148586) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES Context 1. Djibouti, one of the smallest countries in Africa with a population of less than a million, is also one of the poorest countries in the world. The country is akin to a city-state, with 80 percent of the population residing in and around the capital, Djibouti-Ville, with the vast majority of the people participating in the informal sector. The country lacks fresh ground water and arable land which combined with an annual long dry season that lasts 3–4 months and periodic droughts and floods, means that the country relies almost entirely on imports to meet its food requirements. 2. Approximately two fifths (41.9 percent) of the population lives in extreme poverty (of less than US$1 per day); and poverty rates are even higher in rural areas, where 9 out of 10 people live in extreme poverty, and 7 out of 10 live in relative poverty. The rural nomadic population is dependent on pastoral and agricultural activities for their livelihood, which is under threat due to the degradation of natural resources from overgrazing. A severe drought in 2012, further intensified vulnerability and poverty, and left 20 percent of the Djibouti-Ville population and 75 percent of the rural population exposed to severe and moderate food insecurity. Despite concerted efforts, in 2012 (the most current data available during project preparation), Djibouti ranked 164 out of 187 countries in human development. Malnutrition was prevalent throughout the country: 29.6 percent of children under the age of 5 years were underweight, 29.7 percent were chronically malnourished, and 17.8 percent were acutely malnourished. 3. The typical household was poor, with a single earner participating in the informal economy. The country also had a young population, with 75 percent aged below 35 years. The overall unemployment rate in 2014 stood at 12 percent for people aged 15-64, while those aged 15-24 had an unemployment rate of 22 percent. Financial inclusion was also very low with only 12 percent of citizens having a bank account (the rate dropped to five percent for youth) and only 3 percent (15,000 people) having access to micro-finance. Low levels of education hindered labor force prospects, as the primary completion rate stood at 51 percent in 2013. Women were disadvantaged with a national literacy rate of 39.5 percent compared to 60.1 percent for men, and falling to 22 percent for rural women. About 40 percent of women participated in the labor force, most of them in small businesses in the informal sector. Household responsibilities, traditional gender roles and cultural norms, such as early marriages, hindered education and employment opportunities for women. 4. Despite these challenges, the country benefits from substantial foreign direct investment because of its geo-political positioning and the presence of American, European and Asian military bases, and from its port services for transit trade with Ethiopia. In 2012, the gross domestic product was estimated to grow at six percent per year; however, because of the lack of economic development, the country was vulnerable to fuel and food price shocks and from periodic natural disasters, such as droughts and floods. 5. To address the multi-dimensional development challenges, in 2007 the government launched the National Initiative Page 4 of 45 The World Bank Enhancing income opportunities in DJ (P148586) for Social Development and finalized its “Vision Djibouti 2035”1 in June 2014 (Report number 91695). The key objectives of the National Initiative were to reduce poverty, improve institutional capacity and access to basic services, and develop human capital. The Vision 2035 also prioritized women and youth and focused on promoting human capital to build a healthy and educated workforce. 6. At project appraisal, in 2014, provision of food rations and food subsidies were key components of the social protection system, which had good coverage of the poor. However, the analysis of the existing Social Safety Nets (SSNs), which included pensions, compensation for health care expenses, cash transfers, and tax exemptions on fuel products, determined that these SSNs had limited impact on reducing poverty and inequality due to poor targeting (the programs did not cover the majority of the lowest population quintile) and highlighted the low support provided to the beneficiaries. In addition, programs to enhance the employability and self-employment for women and youth were very limited, even though there was general acceptance by families and society for girls