The World Bank Special Financing Facility for Local Development (P156257) REPORT NO.: RES36369 Public Disclosure Authorized RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SPECIAL FINANCING FACILITY FOR LOCAL DEVELOPMENT APPROVED ON JANUARY 11, 2016 TO Public Disclosure Authorized FEDERAL GOVERNMENT OF SOMALIA SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE AFRICA Public Disclosure Authorized Regional Vice President: Hafez Ghanem Country Director: Bella Bird Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Meskerem Brhane Task Team Leader: Zishan Faiza Karim, Bernard Harborne Public Disclosure Authorized The World Bank Special Financing Facility for Local Development (P156257) ABBREVIATIONS AND ACRONYMS BRCiS Building Resilient Communities in Somalia CERC Contingent Emergency Response Component DA Designated Bank Account EAFS External Agency for Fiduciary Support FGS Federal Government of Somalia FMS Federal Member State ICR Implementation Completion Report IFRs Interim Unaudited Financial Reports MPF Multi Partner Fund PIU Project Implementation Unit SPF State and Peacebuilding Fund USD United States Dollar The World Bank Special Financing Facility for Local Development (P156257) BASIC DATA Product Information Project ID Financing Instrument P156257 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 11-Jan-2016 31-Mar-2019 Organizations Borrower Responsible Agency Ministry of Finance Ministry of Finance Project Development Objective (PDO) Original PDO To support the construction and reconstruction of infrastructure and the development of public service delivery capacity in targeted areas of Somalia and support the Federal Government and Interim Administration capacity to respond to an eligible crisis or emergency. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A4904 12-Apr-2017 25-Jul-2017 25-Jul-2017 31-Aug-2018 2.53 2.53 0 TF-A1715 11-Jan-2016 25-Jan-2016 25-Jan-2016 31-Mar-2019 6.00 5.04 .96 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Special Financing Facility for Local Development (P156257) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Background 1. The Special Financing Facility for Local Development (SFF-LD) has been effective since January 25, 2016 and has a current project closing date of March 31, 2019. The project is financed by the Somalia Multi-Partner Fund (MPF) (TF0A1715) (USD 6 million) as well as the State and Peace Building Trust Fund (SPF) (TF0A2683) (USD 2.8 million). While the main objective of the project is to support the construction and reconstruction of infrastructure in the newly formed Federal Member States (FMS), the SPF funding activated the project’s Contingent Emergency Response Component (CERC) and allowed for a government-led emergency drought/flood response through the ongoing project. 2. There have been four restructurings of the project to date – (i) in September 2016 to increase the Grant amount from USD 4 million to USD 6 million; (ii) in July 2017 to include the USD 2.8 million from the SPF Grant (iii) in November 2017 to extend the project closing date from December 31, 2017 to August 31, 2018; and (iv) in January 2017 to extend the project closing date from August 31, 2018 to March 31, 2019. This would be the fifth restructuring of the project. B. Project Status 3. The project has been making steady implementation progress with (i) phase I civil works in two urban areas (Baidoa, Jowhar) completed and the subprojects handed over to the respective State administrations and (ii) four of the five phase 2 civil works in three urban areas (Burtinle, Garbaharey and Xudur) completed. The last phase 2 subproject – the District Administration building in Burtinle - is expected to be completed by April 13, 2019 and handed over to the State authorities by end April. Implementation of this subproject in Burtinle was delayed due to procurement related complaints received and reported to INT. These complaints however have been resolved which allowed the civil works to proceed. Table 1 below provides more details on both phase 1 and 2 subprojects and their current status. Table 1: Subproject Implementation Progress Region Subproject Overall Budget Status Jowhar, Middle Rehabilitation of 5km $616,919.00, Project completed and Shabelle Region Jowhar Gravel Road handed over to the Hirshabelle state Hirshabelle Administration on February 24, 2018 Baidoa, Bay Region, Rehabilitation of $ 617,994.85 Project completed and South West State handed over to the 3.5 km Baidoa Asphalt South West State Road Administration on May 8, 2018. The World Bank Special Financing Facility for Local Development (P156257) Garbaharey, Gedo Installation of 42 solar $112,702.6 Project completed and Region, Jubbaland street lights along handed over to State Garbaharey Main Road Jubbaland Administration on February 13, 2019 Garbaharey, Gedo Rehabilitation and $462,213 Project completed and Region, Jubbaland construction of handed over to State Garbaharey Governor's Jubbaland compound Administration on February 13, 2019. Burtinle, Nugal Installation of 58 solar $154,120.3 Project completed and Region, Puntland street lights along handover is expected State Burtinle Main Road by end April, 2019 Burtinle, Nugal District Administration $ 276,745.86 Project to be completed Region, Puntland building rehabilitation by April 13, 2019 and State handed over expected by end April, 2019 Xudur, Bakool Secondary school $ 524,367 Project completed and Region, South West rehabilitation handed over on March State 6, 2019 4. The SPF financing channeled through the project CERC, enabled a government-led response to a drought that brought Somalia to the brink of famine in 2017. These emergency response activities were implemented through an NGO consortium – Building Resilient Communities in Somalia (BRCiS) in seven districts.1 Activities included the provision of clean water through water trucking, procurement of water storage tanks and bladders and rehabilitation of boreholes; provision of non-essential food items such as hygiene kits, shelter, food and medical supplies; chlorination of water sources; and training of water user committees. This component reached over 236,123 beneficiaries and is the first time in Somalia that NGOs have been contracted to the Federal Government of Somalia (FGS) for a government-led emergency response. 5. The TF supporting the CERC (TF0A2683) closed on August 31, 2018 and USD 2.6 million of the USD 2.8 million was fully disbursed. Of the MFP Grant (TFA1715), USD 5.04 million has been disbursed to date, representing an 84 percent disbursement rate. The remaining balance would be used to finance (i) the final payment to the contractors for civil works in Burtinle; (ii) costs related to the beneficiary feedback survey which would inform the Clients project completion report and the project Implementation Completion Report (ICR); (iii) capacity building support for PIU staff and select FMS officials and (iv) costs for key PIU staff until end June 2019. 6. The PIU performance is satisfactory and there are no overdue audit reports for this project. While there has been good implementation progress and all civil works have now been completed, the project the overall rating for the project is rated as Moderately Satisfactory due to the initial delays faced in implementing subprojects. C. Rationale for Restructuring 1 Xudur district in Bakool; Baardheere and Belet Hawal district in Gedo; Adado district in Galguduud; Iskhushuban district in Bari, and Mataaban district in Hiraan; Beledweyne district, in Hiraan and Xudur district, in Bakool. The World Bank Special Financing Facility for Local Development (P156257) 7. The PIU has followed a competitive procurement process to select a firm to carry out the beneficiary feedback surveys to inform the project ICR. These surveys would cover both the beneficiaries of the main SFF-LD activities as well as the drought response activities under the CERC. The procurement process for this firm took longer than anticipated and it was not possible to complete the surveys and compile the findings before the current project closing date of March 31, 2019. Moreover, the implementation of civil works in Burtinle was delayed due to procurement complaints which needed to be investigated and addressed. A project extension until June 30, 2019 would therefore allow for the beneficiary feedback surveys as well as the ongoing civil works in Burtinle to be completed and for the subproject to be properly handed over to the State authorities. Finally, the project extension would allow the PIU to utilize some of the undisbursed funds for providing capacity building support to both PIU staff and government officials from the FMS. The balance of USD USD 963,000 from the MPF is expected to be fully disbursed by June 30, 2019. Attached is the workplan for the remaining duration as well as a cashflow forecast until June 2019. II. DESCRIPTION OF PROPOSED CHANGES 6. The key change being brought to the project is an extension of the project closing date from March 31, 2019 to June 30, 2019. A three month no cost project extension will provide sufficient time to complete the beneficiary feedback surveys to inform the project ICR, complete the Burtinle civil works and support additional capacity building for