FOR OFFICIAL USE ONLY Report No: PAD3081 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$ 23 MILLION TO THE REPUBLIC OF SURINAME FOR A COMPETITIVENESS AND SECTOR DIVERSIFICATION PROJECT June 14, 2019 Finance, Competitiveness And Innovation Global Practice Latin America And Caribbean Region 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 May 22, 2019) Currency Unit = Surinamese Dollar SRD 7.40 = US$ 1 US$ 0.14 = SDR 1 FISCAL YEAR January 1 - December 31 Regional Vice President: Axel van Trotsenburg Country Director: Tahseen Sayed Khan Global Director: Alfonso Garcia Mora Practice Manager: Zafer Mustafaoglu Task Team Leader(s): John Anderson, Tugba Gurcanlar, Susana Moreira ABBREVIATIONS AND ACRONYMS CARICOM Caribbean Community CPF Country Partnership Framework CPS Country Partnership Strategy DA Designated account EITI Extractive Industries Transparency Initiative ERR Expected rate of return ESMF Environmental and Social Management Framework EU European Union FAO Food and Agriculture Organization FM Financial management FMS Financial Management Specialist GDP Gross domestic product GNI Gross national income GOS Government of Suriname GRM Grievance redress mechanism IBRD International Bank for Reconstruction and Development IDB Interamerican Development Bank IFC International Finance Corporation IFR Interim financial report IMF International Monetary Fund IsDB Islamic Development Bank ITPPF Indigenous and Tribal Peoples Planning Framework M&E Monitoring and evaluation MNR Ministry of Natural Resources MOF Ministry of Finance MTIT Ministry of Trade, Industry & Tourism NPV Net present value PCC Project Coordination Committee PEFA Public Expenditure and Financial Accountability PDO Project development objective PIU Project Implementation Unit PPSD Project Procurement Strategy for Development RPF Resettlement Policy Framework SAI Supreme Audit Institution SCD Systematic Country Diagnostic SCSD Suriname Competitiveness and Sector Diversification SESA Strategic Environmental and Social Assessment SMEs Small and medium-sized enterprises SOE State-owned enterprise SORT Systematic Operations Risk-Rating Tool SURGE Program for Suriname’s Growth Enterprises TA Technical assistance UNESCO United Nations Educational, Scientific, and Cultural Organization USD United States dollars UWS Uitvoeringsvoorwaarden voor Werken in Suriname (Implementation Conditions for Works in Suriname) WB World Bank WBG World Bank Group WDI World Development Indicators The World Bank Competitiveness and Sector Diversification (P166187) TABLE OF CONTENTS DATASHEET ........................................................................................................................... 1 I. STRATEGIC CONTEXT ...................................................................................................... 6 A. Country Context................................................................................................................................ 6 B. Sectoral and Institutional Context .................................................................................................... 7 C. Relevance to Higher Level Objectives............................................................................................... 9 II. PROJECT DESCRIPTION.................................................................................................. 10 A. Project Development Objective ..................................................................................................... 10 B. Project Components ....................................................................................................................... 11 C. Project Beneficiaries ....................................................................................................................... 14 D. Results Chain .................................................................................................................................. 15 E. Rationale for Bank Involvement and Role of Partners ................................................................... 15 F. Lessons Learned and Reflected in the Project Design .................................................................... 16 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 18 A. Institutional and Implementation Arrangements .......................................................................... 18 B. Results Monitoring and Evaluation Arrangements......................................................................... 18 C. Sustainability................................................................................................................................... 19 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 19 A. Economic Analysis .......................................................................................................................... 19 B. Fiduciary.......................................................................................................................................... 21 C. Safeguards ...................................................................................................................................... 21 V. KEY RISKS ..................................................................................................................... 23 VI. RESULTS FRAMEWORK AND MONITORING ..................................................................... 26 ANNEX 1: Implementation Arrangements and Support Plan .......................................... 35 A. Project institutional and implementation arrangements............................................................... 35 B. Financial management and disbursement ..................................................................................... 37 C. Procurement ................................................................................................................................... 40 D. Strategy and approach for implementation support ..................................................................... 43 E. Implementation support plan and resource requirements ............................................................ 44 The World Bank Competitiveness and Sector Diversification (P166187) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Suriname Competitiveness and Sector Diversification Project ID Financing Instrument Environmental Assessment Category Investment Project P166187 B-Partial Assessment Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s) [ ] Disbursement-linked Indicators (DLIs) [✓] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) Expected Approval Date Expected Closing Date 09-Jul-2019 13-Jun-2025 Bank/IFC Collaboration Joint Level Yes Complementary or Interdependent project requiring active coordination Proposed Development Objective(s) The project development objective is to support sector governance improvements and increase competitiveness in targeted industries in Suriname. Page 1 of 44 The World Bank Competitiveness and Sector Diversification (P166187) Components Component Name Cost (US$, millions) Strengthening the mining sector governance, transparency, accountability, and 6.00 administration Investment in SMEs and value chains in targeted emerging industries 14.50 Project management and evaluation 2.50 Organizations Borrower: Republic of Suriname Implementing Agency: Ministry of Trade, Industry & Tourism Ministry of Natural Resources PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 23.00 Total Financing 23.00 of which IBRD/IDA 23.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 23.00 Expected Disbursements (in US$, Millions) WB Fiscal Year 2020 2021 2022 2023 2024 2025 Annual 1.21 1.79 3.19 5.34 7.69 3.79 Cumulative 1.21 3.00 6.18 11.52 19.21 23.00 Page 2 of 44 The World Bank Competitiveness and Sector Diversification (P166187) INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Finance, Competitiveness and Innovation Energy & Extractives Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of Yes country gaps identified through SCD and CPF b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or Yes men's empowerment c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ Substantial 2. Macroeconomic ⚫ Substantial 3. Sector Strategies and Policies ⚫ Substantial 4. Technical Design of Project or Program ⚫ Substantial 5. Institutional Capacity for Implementation and Sustainability ⚫ High 6. Fiduciary ⚫ Substantial 7. Environment and Social ⚫ Substantial 8. Stakeholders ⚫ Substantial 9. Other 10. Overall ⚫ Substantial Page 3 of 44 The World Bank Competitiveness and Sector Diversification (P166187) COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✔ Performance Standards for Private Sector Activities OP/BP 4.03 ✔ Natural Habitats OP/BP 4.04 ✔ Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔ Physical Cultural Resources OP/BP 4.11 ✔ Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔ Safety of Dams OP/BP 4.37 ✔ Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔ Legal Covenants Sections and Description The Borrower, through the Ministry of Natural Resources and the Ministry of Trade, Industry and Tourism, shall establish and thereafter operate and maintain a Project Coordination Committee throughout the implementation of the Project to ensure coordination between the MNR PIU and the MTIT PIU in the implementation of the Project and assist with reporting obligations to the Bank, based on terms of reference satisfactory to the Bank and further described in the Project Operations Manual. (Per Section I.A.4 of Schedule 2 of the Loan Agreement.) Sections and Description The Borrower, through the Ministry of Trade, Industry and Tourism, shall hire, not later than 180 days after the Signature Date, a Service Provider in accordance with Section 5.13 of the General Conditions to: (i) provide business development services to Beneficiaries; and (ii) carry out the provision of Grants, pursuant to an agreement (the Page 4 of 44 The World Bank Competitiveness and Sector Diversification (P166187) “Subsidiary and Services Agreement”) to be entered into between MTIT and the Service Provider, under terms and conditions satisfactory to the Bank. (Per Section I.A.5 of Schedule 2 of the Loan Agreement.) Sections and Description No withdrawal shall be made for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed $1,000,000 may be made for payments made prior to this date but on or after March 1, 2019, for Eligible Expenditures. (Per Section III.B.1.(a) of the Loan Agreement.) Conditions Type Description Disbursement No withdrawal shall be made under Category (3) (matching grants under Component 2) unless: (i) the Subsidiary Agreement (between the Borrower, through the MTIT, and the technical services provider) has been signed and has become effective in a manner satisfactory to the Bank; and (ii) the Grants and Business Development Services Manual (prepared by the technical services provider) has been adopted by the Borrower, through the MTIT, in a manner satisfactory to the Bank. (Per Section III.B.1.(c) of the Loan Agreement.) Type Description Disbursement No withdrawal shall be made under Category (1) (Component 1) unless the Borrower, through the MNR, has contracted a financial management consulting firm in a manner satisfactory to the Bank. (Per Section III.B.1.(b) of the Loan Agreement.) Type Description Effectiveness For the purpose of confirming that the conditions specified in paragraph (a) of Section 9.01 of the General Conditions have been met, the Bank requires the Borrower to prepare and submit to the Bank, as part of the conditions to declare the Loan Agreement effective, a legal opinion satisfactory to the Bank confirming that the Loan Agreement has been duly authorized by, and executed and delivered on behalf of the Borrower, and is legally binding upon the Borrower in accordance with its terms. (Per Section 9.02 (a) of the General Conditions and Paragraph 11 of the Minutes of Negotiations.) Type Description Effectiveness The Additional Condition of Effectiveness consists of the following, namely, that the Project Operations Manual has been adopted by the Borrower in a manner acceptable to the Bank. (Per Section 5.01 of the Loan Agreement.) Page 5 of 44 The World Bank Competitiveness and Sector Diversification (P166187) I. STRATEGIC CONTEXT A. Country Context 1. Suriname is an upper-middle-income country of 542,000 people with a concentrated economy that is vulnerable to economic shocks. Suriname has abundant natural resources; but as a small Caribbean state it has limited capacity for economic management. Suriname’s economy is highly concentrated in the extractive industries (gold, oil, and bauxite), which play a dominant role in driving growth, employment, and government revenues while also exposing economic performance to commodity price fluctuations. Historically, extractive industries have accounted directly for around 30 percent of GDP and as much as 90 percent of exports. Supported by rising commodity prices of its mineral and oil exports, Suriname’s economy grew at an average of 4.4 percent per year from 2000 to 2012, well above the 2.4 percent average for Caribbean small states, and per capita income reached US$9,350 in 2014. But as global commodity prices fell, the economy entered a severe recession and per capita income fell to US$6,990 in 2016. The economy is estimated to have stabilized in 2017 and 2018, driven by operations of a new gold mine. There is no official measure of poverty in Suriname, but recent estimates place overall poverty around 26 percent.1 Aggregate consumption trends indicate decreasing poverty during the 2000-12 growth period, although increasing subsequently with the economic downturn. 2. The public sector in Suriname plays a large role in the economy but has limited capacity in economic management and regulation. The Government of Suriname (GOS) redistributes revenue earned from extractives through significant public sector employment, accounting for about 60 percent of total formal employment, including in more than 140 state-owned enterprises (SOEs) that engage in quasi-regulatory and service delivery functions as well as commercial activities. The large public sector creates fiscal risks for the country; following the commodity price downturn and recession, government revenue from mining fell from 10 percent of GDP to just 3 percent, and government debt tripled to 75.8 percent of GDP in 2016 (IMF). Public enterprises and public sector institutions in general have limited capacity, including to manage the impacts of the main extractive activities on the country’s natural assets, which include substantial forest coverage and natural water reserves. Suriname lacks a comprehensive legal and regulatory framework to manage the environmental and social impacts of economic development across sectors, and there are limited plans to reduce greenhouse gas (GHG) emissions and mitigate the impact of climate change such as reduced annual rainfall and prolonged droughts, creating risks for sustainable growth.2 3. The private sector is underdeveloped and concentrated in non-tradable services. Micro, small, and medium-sized enterprises are dominant in the economy, accounting for 98 percent of all firms and 60 percent of total private sector employment. There are around 200 private companies with more than 50 employees in Suriname, but outside of mining these larger firms engage primarily in selling non-tradable services, which account for more than 50 percent of economic activity.3 Agriculture is a historically important sector, but less than 7 percent of registered firms engage in agribusiness or other manufacturing. Tourism is a nascent services export industry, but most firms are small and 1 Poverty analysis is hindered by an absence of available official poverty data. The cited rate is an unofficial estimate by the Inter-American Development Bank (IDB), the Electricity Company of Suriname, the Central Bank of Suriname, and other partners based on a 2016/17 Survey of Living Conditions. Using the upper-middle-income poverty line of $5.50 per day in 2011 PPP, this data yields a poverty rate of 28.9 percent, slightly higher than the Latin America & Caribbean regional average of 26.3 percent in 2015 (WDI). 2 The main sources of GHG emissions in Suriname are the combustion of fossil fuels, land-use change, and forestry and agriculture sectors (accounting for 49%, 31% and 19% of total GHG emissions respectively). For more, see Suriname’s Second National Communication to United Nations Framework on Climate Change (UNFCCC), 2016. 3 Data on firm size are from the 2016 Business Census conducted by the General Bureau of Statistics Suriname. Page 6 of 44 The World Bank Competitiveness and Sector Diversification (P166187) coordination in the sector is very limited. The private sector broadly demonstrates low measures of entrepreneurial activity, weak accounting and financial management practices, and low access to finance. 4. The World Bank Group is supporting Suriname under a Country Partnership Strategy that was developed after a long hiatus.4 The proposed operation will be the second loan under this engagement, seeking to contribute to a more resilient economy with sustainable long-term growth and poverty reduction potential. The proposed project will finance a combination of technical assistance for institutional strengthening and regulatory reforms as well as investments in productivity enhancements for small and medium enterprises (SMEs). B. Sectoral and Institutional Context 5. There is significant competitive potential for increased private sector growth and diversification in Suriname’s economy. A recent World Bank Group (WBG) Sector Competitiveness Analysis (2017) identified opportunities for increased competitiveness and diversification within the established extractives and agriculture sectors. The tourism sector is small but growing, driven by small private firms that see competitive potential of Suriname’s tourism offerings. But the private sector’s ability to take advantage of these competitive opportunities in diversified economic activities is hindered by barriers in the enabling environment and at the firm level. Policy research on diversification in small economies like Suriname’s indicates that removing such barriers to enable diversification into new products and markets within such established industries is more likely to be feasible than targeting new sectors.5 6. The extractives sector drives Suriname’s economy, but is highly concentrated and has potential for increased revenue generation from mining. Suriname is located on the Guiana Shield geological formation that has significant mineral resources. One main bauxite extraction operation dominated the sector for the past 100 years, but operations ended in 2015 after accessible reserves were exhausted. Two new significant gold mine operations were established in the past decade. The mining sector also includes significant informal artisanal and small-scale operations and domestic firms supplying goods and services to extractive operations. Despite its economic importance, however, there is significant opportunity for the GOS to improve sector governance and revenue generation from mining, given limitations in sector revenue controls and traceability. 7. With abundant land and water resources, natural beauty, and cultural attractions, there are competitive opportunities in agribusiness and tourism to attract investment and further diversify the economy. Agriculture currently accounts for about 9 percent of GDP, and rice, bananas, fish, and shrimp already generate around US$100 million of exports per year. There are an estimated 1.5 million hectares of arable land, but only about 5 percent of that is currently under production. Suriname has preferential market access to the Caribbean through CARICOM and historical export connections to Europe through the Netherlands. Subsector analysis has identified significant potential for increased production and exports of higher-value products in existing and emerging subsectors, such as high-value fruit and vegetables, which could create new jobs as well as increase linkages with the existing 10,000 smallholder farmers and 4,000 fisherfolk. Tourism directly contributed US$49 million to GDP in 2017, and although total arrivals are small (278,000 in 2017), they have grown an average of 8 percent per year over the past ten years. 4 World Bank Group’s Country Partnership Strategy (CPS) covering FY2015–2019 (Report No: 91238-SR, discussed by the Board on April 27, 2015), which was extended through FY2021 by the World Bank Group’s Performance and Learning Review of the Country Partnership Strategy for Suriname FY2015–2019 (Report No: 131957-SR, discussed by the Board on December 11, 2018). 5 See for example Lederman and Lesniak, 2018, Open and Nimble: Finding Stable Growth in Small Economies, World Bank Group; and Draft Economic Diversification Guidance Note, Trade & Competitiveness Practice, World Bank Group, 2017, available at http://ieg.worldbankgroup.org/sites/default/files/Data/reports/EconomicDiversification.pdf. Page 7 of 44 The World Bank Competitiveness and Sector Diversification (P166187) Suriname offers a tourism product that is a mix of nature-based and adventure excursions in the Amazon and cultural attractions such as the multi-ethnic population and the historic center of the capital Paramaribo. 8. Despite the competitive opportunities, weak legal and regulatory frameworks and limited institutional capacity hinder economic development, diversification, and sector governance. In mining, the current 1986 decree governing the sector has not been complemented with implementing regulations. Management of mining titles and licensing procedures are far from good practice, resulting in lack of clarity, weak transparency, and risks to property rights. Institutional capacity to monitor the sector and enforce laws and regulations is weak; the Geological Mining Service responsible for monitoring mining title holders, for example, has almost no masters-trained geologists. These challenges in sector regulation and monitoring contribute to limited GOS revenue generation from the sector. In agribusiness, export efficiency of fresh products is limited by cumbersome inspection processes at the airport. 6 There is limited policy direction considering the risks of climate change (which include expected increased flooding due to sea level rise, reduction in annual rainfall of approximately 10 percent, and increase in temperature of 2 to 3 degrees Celsius by 2100) that will affect the competitiveness of Suriname’s agriculture in the long term, in particular for crops that are heavily dependent on the availability of freshwater.7 In tourism, industry standards and regulatory requirements are not defined, and limited tourism data hinders policy making. Draft laws to establish a Tourism Authority to support the sector have been prepared, but these frameworks have not been passed. 9. There are also gaps in the regulatory framework to manage environmental and social impacts of economic activities, creating risks for sustainable development and for new private investors. Within mining, this creates risks for deforestation of the country’s vast forest coverage (more than 90 percent of national territory) due to illegal gold mining, as well as widespread contaminative usage of mercury for gold extraction by artisanal and small-scale miners. There are indigenous and tribal populations living in areas with mineral potential, which often have land rights conflicts with informal mining operations. Lack of transparency and capacity to monitor and enforce environmental and social regulations can encourage a race to the bottom across sectors, to the detriment of formally established firms seeking to comply with global standards such as Responsible Agricultural Investment, Global Sustainable Tourism Criteria, and IFC Performance Standards on Social & Environmental Sustainability. 10. Gaps in the provision of public goods for high-potential value chains also limit competitiveness, diversification, and investment opportunities. Limited infrastructure such as last-mile access roads to agricultural production areas and shared packaging or consolidation facilities increases logistics costs and decreases export efficiency for agribusiness, especially of high-value fresh products. There are around 10 SOEs engaged in commercial ventures in agribusiness, and although the GOS has policy interest in promoting private investment in many of these public assets, it lacks capacity to prepare or promote commercially viable projects. In tourism, there has been limited institutional capacity or sector plans to invest in public goods such as nature parks or historical architecture, or to coordinate with airlines to increase flight connectivity to Suriname such as to establish regional tourism zones that can attract increased tourist arrivals. These gaps limit private sector opportunities to invest, market, and sell services around these products to tourists that are able to visit Suriname. 11. Firm-level constraints also limit competitiveness, investment, and growth in diversified economic activities, especially among SMEs. SMEs account for nearly all private firms in Suriname and 60 percent of formal private sector employment, but they have limited business capacity and ability to invest in growth and competitive upgrading. The 6“Suriname Agribusiness Sub-Sector Diagnostic”, 2018, WBG, financed by the Competitive Industries and Innovation Program trust fund. 7Given the importance of water resources for other activities and ecosystems beyond agriculture, these observed and anticipated climate change impacts will also increase the vulnerability of several other key sectors and the overall population in Suriname. Page 8 of 44 The World Bank Competitiveness and Sector Diversification (P166187) 2018 Enterprise Survey in Suriname finds that two thirds of firms lack at least one of three basic accounting practices, with smaller firms being more likely to lack these good practices. Few firms in Suriname are integrated into regional or global export value chains, and quality compliance is a constraint to competitiveness especially in emerging industries, with local farmers having limited ability to meet quality or quantity demands of export markets or the processing industry. Analysis of financing for agribusiness identified significant constraints in the demand for finance, including limited capacity for business plan development and undeveloped value chains that can be a mechanism for financing. There are private business development services in Suriname, but greater awareness of the benefits and stimulus of the market for commercial and export-oriented business development services are needed. 12. Investment climate constraints have an impact on female entrepreneurship. Only 32.7 percent of firms in Suriname have female ownership, well below the 49.9 percent regional average (2018 Enterprise Survey). Female-owned and managed firms are smaller and less likely to have international quality certifications, external auditing of financial statements, or direct exports. These gaps are associated with disparities in access to finance, as female-managed firms are much less likely to use banks or supplier credit to finance their investments or working capital (19.4 percent of female-managed firms use banks to finance investments compared to 54.7 percent for firms with male managers, per 2018 Enterprise Survey). Addressing constraints to female entrepreneurship is needed to reduce gender gaps, especially as female-owned firms are more likely to have female managers and to employ more women; across firms, only 40 percent of permanent full-time workers are female (2018 Enterprise Survey). There is evidence that emerging industries are more conducive to female entrepreneurship and employment: firms engaged in food manufacturing or tourism have higher rates of female management than firms on average, and food manufacturers employ higher proportions of women. 13. The GOS has demonstrated commitment to reforms to enable sector competitiveness, support private sector development, and promote good governance. In recent years, the GOS has established a Competitiveness Unit Suriname (CUS) that is now a central department of MTIT to support business environment reforms. GOS has also initiated the operations of InvestSur in 2018 as the national investment promotion agency to facilitate private sector growth and investment. Suriname successfully applied in 2017 to be a candidate country for the global Extractive Industries Transparency Initiative (EITI) and has published the country’s mining title maps online as efforts to improve transparency and governance in mining. Annual budgets approved by the National Assembly and annual ministerial planning documents establish the basis for a Mineral Institute to be established by the Ministry of Natural Resources (MNR). The National Assembly has also recently passed laws to improve food safety standards and the inspection regime. These efforts reflect the GOS’s commitment to reforms, although significant needs remain to continue improving the enabling environment for private sector competitiveness and diversification. C. Relevance to Higher Level Objectives 14. In an effort to further harness its natural capital to generate sustainable economic opportunities, the GOS seeks to achieve economic growth and diversification through good governance, private entrepreneurship, and investment. The government’s 2017-21 National Development Plan includes a pillar targeting economic growth and diversification, including optimal use of minerals and other natural resources for sustainable development. The National Development Plan seeks to achieve this through encouraging private entrepreneurship, facilitating private investment, and promoting exports. Good governance in the public and private sectors is a cross-cutting principle for the plan. Specific development strategies are established for mining, agro-industry, and tourism as priority sectors. The previous 2012-16 National Development Plan as well as the 2016-18 Stabilization and Recovery Plan highlighted similar objectives, reflecting the long-term policy commitment to private sector-led diversification. Page 9 of 44 The World Bank Competitiveness and Sector Diversification (P166187) 15. Building on these GOS plans, creating a conducive environment for private sector development is a key results area of the Country Partnership Strategy (CPS) established between the WBG and the GOS. The current CPS covering FY15-21 represents the first WBG engagement with Suriname in nearly 30 years, and it takes a selective approach with focus on improving governance and investment climate for economic growth and reducing vulnerability to floods. These focus areas of the CPS were reconfirmed during a recent Performance and Learning Review that extended the current CPS through FY21. Specific activities planned to enable growth include promoting good governance and supporting inclusion in mining, facilitating investments in agriculture, and cross-cutting interventions to enhance the business enabling environment. These objectives build directly on the goals of promoting economic diversification and good governance in the GOS National Development Plan. 16. The proposed project contributes to the WBG twin goals of reducing poverty and boosting shared prosperity as well as to objectives related to gender, climate change, and maximizing finance for development (MFD). Existing poverty analysis identifies much higher rates of poverty and extreme poverty in the interior rural areas of Suriname, where economic activity is predominantly in mining and agribusiness with significant rates of informality. Improved governance and competitiveness in these sectors will create opportunities for more formal jobs that can increase incomes for workers and households at lower income levels. The project is aligned with the WBG Gender Strategy, in particular with objectives to promote women’s entrepreneurship and job creation, and it is fully gender tagged to reflect the underpinning gender analysis and targets related to female beneficiaries. Project activities also support climate change adaptation and mitigation in Suriname, in particular related to increased sea level rise and reduced annual rainfall, thereby contributing to WBG climate co-benefit targets. The project is also aligned with the MFD approach to support sustainable development, with its focus on improving the enabling environment and developing regulatory conditions to enable private sector solutions and financing for growth and diversification especially in agribusiness and tourism. 17. Proposed activities under this investment project financing include a mix of investments and technical assistance to meet the specific needs of targeted industries. This hybrid approach is in line with the objective of building GOS capacity as an initial step in the country engagement. Project results are targeted accordingly, as presented in the project results framework below. Component 1 is focused on technical assistance, while Component 2 includes investments and technical assistance. II. PROJECT DESCRIPTION A. Project Development Objective PDO Statement The project development objective is to support sector governance improvements and increase competitiveness in targeted industries in Suriname. PDO Level Indicators 18. The project development objective of the proposed Suriname Competitiveness and Sector Diversification (SCSD) project will be measured through the following PDO-level indicators: Page 10 of 44 The World Bank Competitiveness and Sector Diversification (P166187) • Percentage of mining concessions subject to formal inspections following good international practices (%) • Increase in revenue of SMEs benefitting from project support, with gender disaggregation • Number of regulatory or policy reforms adopted to strengthen governance and competitiveness in targeted industries B. Project Components 19. The proposed project seeks to facilitate sector governance, competitiveness, and diversification in Suriname by addressing enabling environment constraints in the targeted industries of mining, agribusiness, and tourism . With an exclusive focus on these three sectors, this will be achieved by financing technical assistance for policy, legal, and regulatory reforms; capacity building of key institutions; and business development services and matching grants for SMEs and value chain development. Specific project components and activities are presented below, with Component 1 consisting fully of technical assistance and Component 2 including a mix of investment activities and technical assistance. The governance support, enabling environment reforms, and investments in SMEs financed by these two project components will unlock opportunities for competitiveness, diversification, and future growth across the targeted industries in an integrated way to achieve the project objective. 20. Component 1: Strengthening the mining sector governance, transparency, accountability, and administration ($6M). This component focuses on supporting improvements to the legal, regulatory, and institutional framework governing mining in Suriname. The purpose is to align Suriname’s framework to international best practice, and to provide its institutions with knowledge and tools to carry out their mandated functions. The component will be implemented by the MNR, and specific activities planned include: (a) Strengthening the legal, regulatory, and institutional frameworks governing the mining sector through support towards the revision of relevant legislation and regulations and the establishment of the Minerals Institute, which will integrate and strengthen mining cadaster, geological data management, and mining inspectorate functions. This includes defining a roadmap and implementing institutional reforms; supporting the development of required legal and regulatory frameworks; and supporting the establishment and operationalization of the Minerals Institute, including the collection of production and export statistics and setting up a Minerals Statistics Database. (b) Sector administration capacity building to assist the GOS, in particular staff from the Ministry of Natural Resources, the Minerals Institute, and other relevant ministries including the Ministry of Finance, to build the required technical skills and managerial capabilities to regulate and monitor the mining sector. (c) Strengthening revenue assessment, collection, and forecasting, including through support to EITI and setting up systems to improve revenue collection in a transparent and accountable manner. This includes the development of documentation systems and standardized procedures for the submission and analysis of monitoring reports, in conformity with the Mining Decree and specific investment agreement commitments, as well as for the calculation of mining royalties and establishment of export controls. (d) Enhancing environmental, health, and social performance of the mining sector, including: • Preparing a Strategic Environmental and Social Assessment (SESA) covering mining. The SESA will entail a comprehensive sector-wide examination of potential impacts, both positive and negative, of future development in the mining sector and identify gaps in regulations, institutional capacity, and public Page 11 of 44 The World Bank Competitiveness and Sector Diversification (P166187) consultation mechanisms that can be strengthened. It will be conducted as a priority activity early on in project implementation. • Capacity support to enhance social and environmental impact management, including technical assistance for the implementation of select reforms recommended by the SESA. This support will be consistent with international standards such as the World Bank Group's Environmental, Health, and Safety Guidelines and REDD+ guidelines, and will promote improved mining practices that aim to reduce impacts on the forest, reduce the sector’s vulnerability to climate change risks, help mitigate climate change - through improved water efficiency and substitution of inputs/enhanced energy efficiency to reduce GHG emissions in existing and future mining operations - and improve indigenous and tribal community engagement. (e) Building independent oversight capacity and stakeholder consultation mechanisms , by providing support to non-state actors involved in the EITI process in Suriname (including indigenous and tribal peoples’ representatives, non-governmental organizations, community-based organizations, technical experts, and other civil society representatives) to strengthen their participation in increasing transparency and disclosure in the mining industry. 21. Component 2: Investment in SMEs and value chains in targeted emerging industries ($14.5M). This component seeks to address the limited firm capabilities, investment climate challenges, vulnerabilities to climate change, and infrastructure shortcomings that constrain opportunities for growth and diversification in agribusiness, tourism, and other emerging industries, especially for SMEs. To do so, it will finance 1) business development services supporting SME managerial capabilities, 2) investments in productivity and competitive upgrading through matching grants, and 3) technical assistance and public investments to improve the business enabling environment. MTIT will be the implementing agency for this proposed component, which includes the following activities: a) Component 2a: Program for Suriname’s Growth Enterprises (SURGE) ($10M) . This activity will support growth-oriented enterprises in Suriname through a combination of business development services and matching grants for productivity-enhancing investments and value chain development. It will be managed by a private technical services firm hired by MTIT to ensure a market-driven approach to supporting enterprises. SURGE is expected to reach 160 firms with business development services, 80 of which will go on to also receive matching grant support; and it will also support 70 firms with matching grants for investments in shared value chain assets, directly benefiting 230 firms in total. Firms will be eligible to participate in SURGE based on their commercial viability and commitment to growth. SMEs will be the primary beneficiaries and will be the only firms eligible for individual business development services and matching grants; large firms will also be eligible to participate by applying for group matching grants in a consortium with SME partners.8 SURGE will promote and give preference to firms that: i. work in value chains that contribute to diversification through increasing non-traditional exports (such as in agribusiness or tourism), increasing domestic value addition in mining supply chains (but not directly engaged in exploration or extraction), or introducing innovative products or processes such as to increase local content and compete with imported inputs; ii. have an environmental sustainability or climate-friendly element to their business plan, such as incorporating energy efficiency in business operations or contributing to Suriname’s commitments to forest coverage; and 8Suriname does not have a formal SME definition. The SCSD project uses 1-5 employees for micro, 6-20 for small, and 21-50 for medium as a working definition; eligible SMEs are thus defined as firms with more than 5 but less than 50 employees, as well as less than 1 million USD in annual sales. The final SME definition for use by the SCSD project will be officially established in the Project Operations Manual. Page 12 of 44 The World Bank Competitiveness and Sector Diversification (P166187) iii. are women-owned or led or that employ a majority of female workers, with a target of 40 percent of beneficiaries being female entrepreneurs.9 The business development services will be tailored to the specific growth needs of each SME beneficiary. The support provided will include (a) initial diagnostic on the SME’s competitiveness potential and constraints; (b) problem solving and coaching around specific business challenges identified, including those particularly affecting women-owned firms; (c) provision of specific technical support, such as for quality improvement or standards development; and (d) improvements in know-how of buyer and market requirements, terms, and conditions. SMEs will commit to participating in SURGE for a minimum of one year to ensure sustained engagement. The promotion of SURGE business development services will have a particular focus on eligible firms owned by women or by members of indigenous or tribal communities. No SMEs directly doing mining exploration or extraction will be eligible, nor will firms linked to oil or gas. SURGE will then also provide matching grants to an estimated 80 individual beneficiary firms that have successfully participated in SURGE at least for one year that demonstrate further capacity for competitive upgrading. Matching grants are expected to co-finance investments in equipment upgrades, marketing or branding services, production process, or quality improvements. Matching grants will also be available to groups of firms that apply as a consortium to invest in shared assets to improve value chain competitiveness (targeting 10 to 12 groups for a total of 70 additional firms).10 Matching grants are expected to be in the range of $5,000 to $100,000 for individual firms and $150,000 to $300,000 per value chain group. These grants will require a 30 percent match (at least 20 percent in cash and up to 10 percent in-kind allowed) for individual applications and 20 percent match in cash for those that apply as a consortium and propose to invest in shared assets as semi-public goods. SURGE will be managed by a private technical services firm to ensure a market-driven and commercially oriented approach, hired through a competitive process with a multi-year management contract to ensure continuity of support to the beneficiary firms. It will also manage the implementation of matching grants and provide professional fiduciary oversight. This joint provision of business development services and matching grants by one services provider will minimize management costs and maximize subcomponent financing for direct beneficiary support. SURGE is expected to have a sustainable impact through a demonstration effect of the benefits of commercially oriented business development services that will stimulate the local market demand and supply going forward. b) Component 2b: Improving the business environment for emerging industries and growth enterprises ($4.5M). This sub-component will finance technical assistance and targeted public investments to improve the business enabling environment and address constraints to enterprise competitiveness and growth. Constraints to be addressed include those related to climate change risks, and any reforms to be supported will be screened from an environmental and social perspective to ensure positive impact. The sub- component will specifically finance: 9 SURGE will also coordinate beneficiary selection with other donor-funded SME support programs, in particular the EU-funded Suriname Agriculture Market Access Project supporting small horticulture farmers and the IDB-funded Innovation for Firms in Suriname program supporting SMEs pursuing business innovations in clusters, to ensure complementarity and not duplication of SURGE support. 10 Examples of shared value chain assets that have been identified include e-platforms for marketing and branding, shared storage or consolidation facilities for agricultural products, and visitor arrival location upgrades at tourism destinations. Group applications with a SURGE SME beneficiary member will be preferred; other high-potential group applicants will have to participate in SURGE technical assistance support to ensure their commercial viability before being fully approved for a group matching grant. Page 13 of 44 The World Bank Competitiveness and Sector Diversification (P166187) • Support to MTIT for implementation of its tourism strategy, including for the design and implementation of a tourism awareness campaign; support for the establishment and operation of a new Tourism Authority with improved tourism statistics capacity; and enhancing downtown Paramaribo as a tourism destination through improved walking tour information and facilities including signage at tourism sites. • Support to improve the enabling environment in agribusiness, including technical support for quality standards compliance and inspections to facilitate exports of fresh products; equipment and implementation support for an electronic single window for trade facilitation; feasibility studies to prepare public-private partnership investment opportunities such as in underutilized agricultural estates, considering climate change risks; and support to improve SME access to finance such as capacity building for implementation of a forthcoming secured transactions regime. • Targeted analytical studies necessary to inform future business environment reforms. 22. Component 3: Project management and evaluation ($2.5M). This component will fund all project management, operational, monitoring and evaluation, and communication costs. It includes support to strengthen GOS capacity in the implementation and environmental and social safeguards policies and frameworks under the proposed project. Resources for public-private dialogue and to collect supplemental data for monitoring and evaluation purposes under Component 2 are also funded through this component. This component will be divided into Component 3a and Component 3b to differentiate between project funds that will be managed by MNR and MTIT, respectively. C. Project Beneficiaries 23. Targeted project beneficiaries include SMEs and workers that take advantage of new opportunities in Suriname’s private sector. Agriculture and tourism already account for significant employment in the economy, including in the informal sector, and growth in these industries will create new opportunities for SMEs and job creation. Direct beneficiaries will include the 230 SMEs targeted for business development and competitiveness upgrading support through the SURGE program. At least 92 of these are targeted to be women-owned to support female entrepreneurship in the economy. Female workers are also targeted beneficiaries of the project, as SURGE will give preference to firms that have a majority of female employees, and the revenue growth of such firms will be tracked as part of the PDO-level indicators. A beneficiary feedback indicator is included in the results framework regarding the SURGE activity to facilitate citizen engagement of these beneficiaries in project implementation. The project also seeks to have a transformational impact on the private sector broadly, especially through the MFD-aligned approach to unlocking private sector solutions for sustainable growth. Investment climate reforms will create investment opportunities and benefit all private firms working in the targeted agribusiness and tourism industries. In the longer term, new investments informed by the improved enabling environment will directly lead to job creation and increased supply chain opportunities for SMEs working across sectors of the economy. Such new private sector growth opportunities and future investments could be supported by the IFC, as elaborated in the Rationale for Bank Involvement section below. 24. GOS ministries and agencies will also benefit from increased capacity to regulate and monitor targeted industries and promote commercially viable investment through the technical assistance financed by the project . MNR, the Geological Mining Service, other mining sector agencies, as well as the future Minerals Institute will directly receive significant capacity support to carry out their mandated functions, promote good governance and transparency, and better manage environmental and social impacts of the mining sector. MTIT will develop its capacity to use public- private dialogue mechanisms to prioritize and deliver industry competitiveness support; use sector data collection and dissemination as a building block to inform policy and attract private investment; and use the commercial Page 14 of 44 The World Bank Competitiveness and Sector Diversification (P166187) orientation of the technical services provider in supporting SMEs. The project’s MFD -aligned approach will also strengthen GOS capacity to identify and facilitate private sector solutions and financing for sustainable development in the targeted industries of agribusiness and tourism as well as in the economy broadly. D. Results Chain 25. Dependence on commodities, limited diversification of the economy, an underdeveloped private sector, and limited governance capacity create macroeconomic and sustainability risks for Suriname, with a results chain showing how the proposed SCSD project addresses this problem statement provided in Figure 2 below. Figure 2: SCSD Results Chain Activities Outputs Outcome (project) Outcome (impact) Support improvements in GOS framework for mining the legal, regulatory, and aligned with international Improved governance, institutional framework good practices, including for transparency, governing mining managing social and accountability, and environmental impacts administration of the Support for institutional mining sector and regulatory reforms and Strengthened regulatory More resilient economy targeted public investments environment and Improved enabling with potential for growth to improve the business institutional capacity of the environment for private and firm and job creation in enabling environment for public and private sector to investment and sustainable diversified economic agribusiness and tourism facilitate private investment growth in agribusiness and activities in agribusiness and tourism tourism Business development services and matching SMEs and value chain More competitive SMEs in grants to growth-oriented groups have higher capacity targeted emerging firms and value chain for business planning and industries groups in export-oriented co-investment in industries competitiveness upgrades E. Rationale for Bank Involvement and Role of Partners 26. The World Bank Group (WBG) brings particular technical expertise in addition to its financing resources to support GOS in achieving the objectives of the proposed operation. The Bank’s sector expertise in mining, agribusiness, and tourism will help GOS ministries improve their sector planning and regulatory efforts. The Bank has significant experience with investment project financing of technical assistance to support mining governance in other countries that will inform support to GOS under this project.11 Global experience with successful SME support and value chain development will support a commercially oriented approach to these activities in agribusiness and tourism under the project. The World Bank Group’s focus on maximizing finance for development will ensure a focus on government activities crowding in private investment and commercial financing whenever possible. Furthermore, the Bank’s focus on managing social and environmental impacts will help build GOS capacity in managing economic activities to ensure sustainability. 11See for example Laos Technical Assistance for Capacity Building in the Hydropower and Mining Sector (P109736), Cameroon Mining Sector Technical Assistance Project (P122153), Mozambique Mining and Gas Technical Assistance Project (P129847), Nigeria Mineral Sector Support for Economic Diversification Project (P159761), and the Sierra Leone Extractive Industries Technical Assistance Project Phase 2 (P160719). Page 15 of 44 The World Bank Competitiveness and Sector Diversification (P166187) 27. Previous World Bank Group technical engagement provides the foundation for the proposed project. Following the economic crisis, the Bank supported the GOS in passing legal reforms to improve the investment climate and advancing application to the EITI.12 The in-depth Sector Competitiveness Analysis (Report No: 113150) overseen jointly by the World Bank and IFC identified opportunities and constraints to investment and diversification in the agribusiness and extractives sectors that are informing the design of SCSD. Through the Extractive Industries TA project (P163612) in Suriname, the Bank has supported the GOS in establishing sector plans and strengthening institutional management related to mining. The Investment Climate and Sector Competitiveness advisory project (P161816), financed by the Competitive Industries and Innovation Trust Fund, provided advisory support that built on the Sector Competitiveness Analysis, which included support for business licensing reforms; establishing a multi- ministerial Agribusiness Investment Task Force; conducting value chain analyses of horticulture and fisheries, supporting a rapid tourism sector review; and financing the 2018 Enterprise Survey update. IFC conducted a customs and trade facilitation diagnostic to identify export logistics constraints. 28. Bank support for SCSD implementation will be done in close collaboration with the IFC. The analytical and advisory work underpinning SCSD design has been done jointly by the Bank and IFC. The IFC is also seeking to facilitate private investment in Suriname, reflected in a recent Memorandum of Understanding with MNR to identify opportunities to support energy, mining, or water projects that may be structured with private sector participation. 29. The proposed project will also leverage and be coordinated with other development partner support in Suriname . The Inter-American Development Bank (IDB) has supported reforms to modernize food safety laws and regulations and improve food safety inspections. It is also financing a pilot business plan competition with grant funds for clusters of firms; supporting cross-cutting business environment reforms; and preparing future operations to support InvestSur’s investment promotion work and to finance intermediary lending and a partial credit guarantee. The European Union (EU) is funding an agriculture market access project implemented by the Food and Agriculture Organization (FAO) to support small farmers by improving production quality and linkages with agro-processors in high-value horticulture. The Islamic Development Bank (IsDB) is supporting development of Suriname’s rice industry. The proposed interventions to be financed by the SCSD project will complement these activities and implementation will be closely coordinated with existing development partner support. F. Lessons Learned and Reflected in the Project Design 30. The proposed SCSD project has been informed by the World Bank’s experience supporting clients to achieve similar development objectives, including diversification goals in resource-rich countries. A recent review of Bank experience promoting growth and diversification in resource-rich economies13 identified the need to define a realistic diversification strategy and to focus on fundamentals, including investing in infrastructure, improving the business climate, and encouraging private investment. This lesson has informed SCSD design, with Component 2 targeting these types of outcomes within established but emerging industries in agribusiness and tourism. Regarding managing growth in mining, lessons learned include recognizing the value added by the Bank in using its knowledge and global experience to support appropriate policies and strengthen institutions to prudently manage natural resources in the 12 Legal reforms include amending the Code of Commerce in 2016, passing the Business and Professions licensing law in 2017, and passing the Electronic Transactions Law in 2017, which along with EITI application were part of a reform package being considered for possible Development Policy Lending support from the Bank. 13 World Bank Group Engagement in Resource-Rich Developing Countries: The Cases of the Plurinational State of Bolivia, Kazakhstan, Mongolia, and Zambia. Independent Evaluation Group, World Bank Group, 2015. Page 16 of 44 The World Bank Competitiveness and Sector Diversification (P166187) mining sector, including improving governance and mitigating environmental impacts of mining development. These lessons are reflected in the focus of Component 1 on strengthening legal and regulatory frameworks and building capacity of key institutions. 31. Proposed project design is also informed by the need for simplicity and flexibility in new country engagements. SCSD has a strong focus on building government capacity, a key step in the new engagement for the Bank. It also keeps proposed activities streamlined and focused, with clear plans for a strong mid-term review, to re-assess the risks and incorporate lessons learned during the initial implementation of Bank operations in the country. 32. Specific experience supporting mining development has informed the design of Component 1. This experience includes global work as well as lessons learned in Suriname including from the analytical and advisory support the Bank is providing in Suriname. Specific lessons learned include: a) Mining sector reforms often entail legal enforcement and other institutional capacity support that will improve sector governance. In SCSD, institutional capacity support will focus on specific needs along these lines related to cadaster offices and mining inspectorates. b) Mining industries pose particular governance challenges due to issues related to transparency, benefit sharing, and environmental and social impacts. In countries including Cameroon, Nigeria, Madagascar, and Mozambique, addressing these challenges through the use of SESAs combined with parallel support for EITI efforts has proven to be an effective way to engage with stakeholders and prioritize sector reforms to improve oversight and governance. Lessons have also been learned and incorporated regarding how to support governments in effectively engaging with indigenous peoples around mining, such as through proactive consultation efforts in advance of sector development efforts. c) Well-designed institutions can improve sector performance. Specific lessons learned in Suriname come from the experience of the Bauxite Institute of Suriname that was established in 1981, which strengthened the institutional capacity of the government through participating in all state bauxite commissions and in all agreements between the state and bauxite companies. 33. The design of Component 2 is informed by the Bank’s experience supporting industry competitiveness and SME development. Lessons learned that inform project design include the benefits of an industry focus to ensure that competitiveness interventions target specific binding constraints, and the importance of a private sector-led approach to SME support to have a focus on commercial viability. These lessons come from global experience as well as recent competitiveness and SME support activities in Suriname implemented by the WBG and other donor partners. Lessons learned have informed project activity design in the following ways: a) The SURGE program is informed by global lessons captured in a recent WBG review of matching grant interventions14 as well as well as ongoing country experiences from similar operations under implementation in Zambia, Jamaica, Ghana, and Argentina. Primary lessons learned include: i) SME support programs achieve better results when they provide intensive, sustained, and custom-tailored business development support to SMEs and introduce matching grants in this context; ii) ensuring a clear commercial link between SMEs and their markets is critical; iii) a clear focus on growth-oriented SMEs can improve employment and diversification outcomes; and iv) professional management of SME support programs ensures clarity, accountability, and entrepreneurial dynamism in the way SMEs are selected and supported. b) The investment climate reform subcomponent draws on lessons learned that regulatory and institutional reforms to the business environment are necessary complements to industry- or firm-level interventions to achieve results beyond the direct beneficiaries. Project design also leverages the experience of similar IPFs with 14 How to Make Grants a Better Match for Private Sector Development. World Bank Group, 2016. Page 17 of 44 The World Bank Competitiveness and Sector Diversification (P166187) business environment technical assistance components, ensuring that selected activities are directly in line with government reform priorities and that sufficient implementation support is provided to ensure implementation readiness so that activities can initiate quickly after project effectiveness. III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 34. MNR and MTIT will be the implementing agencies for SCSD, responsible for Component 1 and Component 2 respectively. The project will be implemented by a Project Implementation Unit (PIU) that has been established in each ministry, led by a Component Coordinator financed by SCSD and responsible for daily implementation of the respective components. Each PIU will have its own dedicated procurement and financial management specialist financed by SCSD with fiduciary responsibility for the component. The PIU in MTIT will draw on the existing capacity for managing donor-financed projects established in the Competitiveness Unit Suriname that is overseen by the Planning Unit. Funds will flow to separate designated accounts for each ministry, opened at the Central Bank of Suriname and maintained by the Ministry of Finance (MOF). Each PIU will be responsible for submitting quarterly interim financial reports to the Bank to document expenditures. Additional monitoring and evaluation, safeguards, and communications staff will be financed by the project and shared across the PIUs to minimize project management costs. This dual-PIU structure will facilitate implementation by minimizing ministerial coordination on fiduciary processes and will also build capacity in both MNR and MTIT for future project management of donor-financed activities. 35. A Project Coordination Committee (PCC) will oversee project implementation and ensure coordination between the PIUs. The PCC will consist of the Permanent Secretaries of the Ministry of Finance as the convening ministry and of MNR and MTIT. A Project Coordinator reporting jointly to MNR and MTIT will be financed by the project to support the PCC, which will have monthly meetings to directly coordinate project activities and ensure implementation progress. The Project Coordinator will serve as an implementation liaison with the PIUs, in particular with the Component Coordinators, to ensure timely completion of withdrawals, disbursements, payments, and procurement processes and to coordinate the shared PIU positions financed by the project. The design of the PCC with high-level composition at the Permanent Secretary level is intended to strengthen project oversight in consideration of the implementation risks associated with low institutional capacity and project technical design, as elaborated in the risks section below. The PCC will also ensure coordinated implementation of the social and environmental safeguards instruments across components of the project, including ensuring successful early implementation of the SESA as a priority project activity. Annex 1 provides additional details about implementation arrangements. B. Results Monitoring and Evaluation Arrangements 36. The PIUs in MNR and MTIT will have responsibility for results monitoring and evaluation (M&E) and project reporting. Both PIUs will be established under the Planning Unit of each ministry, which are the units responsible for overall monitoring and reporting for the ministries, ensuring that project-level M&E efforts fit into ministry-wide M&E. Project M&E will be led by each Component Coordinator, supported by a shared M&E Specialist that will support both components of the project. Data regarding the private sector in Suriname is generally limited, and the results indicators presented in Section VI below are designed to be relatively simple to collect and report with this limitation in mind. One specific area where additional data collection is expected to be required is to establish a Page 18 of 44 The World Bank Competitiveness and Sector Diversification (P166187) comparator group for SME beneficiaries, to measure the relative impacts of the SURGE SME support to the extent possible. This is expected to entail follow-up survey sampling from the 2018 Enterprise Survey in Suriname, and resources will be allocated to support this data collection in Component 3 of the project. The GOS is also in the process of establishing a Center for Innovation and Productivity with a mandate to design and promote productivity measurement in the country, and the project will coordinate with this center during implementation on SME M&E to the extent possible. 37. The PCC will coordinate M&E and project reporting to the Bank with the PIUs. In its role coordinating the shared M&E Specialist, the PCC and specifically the Project Coordinator will facilitate timely and coordinated completion of M&E activities by the two PIUs across components. The Project Coordinator will also integrate the PIU results and reporting into biannual progress reports to be delivered to the Bank, the specific format of which will be outlined in the Project Operations Manual. 38. A rigorous mid-term review will evaluate project design and institutional arrangements during implementation. At the end of project year 3, the project will finance a mid-term review that evaluates project design and implementation arrangements and how they are contributing to effective achievement of project results. Especially as SCSD is part of a new Bank engagement in Suriname, this rigorous review will identify initial lessons learned about project implementation, re-assess the risks, and inform possible modifications necessary to achieve the project development objective. C. Sustainability 39. Contributing to sustainable development is a central goal of the proposed SCSD project. The higher-level objective that the project seeks to achieve is the establishment of a more sustainable growth path for Suriname by providing the foundations for growth in diversified economic activities that increase resilience to shocks. This higher-level objective is reflected in the project results chain, which ultimately seeks to achieve a more resilient economy. The GOS commitment to this sustainability objective and the specific target project outcomes is well reflected in consecutive National Development Plans; recent policy statements highlighting mining, agribusiness, and tourism as priority industries such as for the newly operationalized InvestSur investment promotion agency; and recent sector strategies such as the National Strategic Tourism Plan. 40. Specific project activities are also designed to achieve sustainability, through focuses on building long-term institutional capacity including for managing environmental and social impacts of future development activities. Support for the mining sector under Component 1 includes financing to build institutional capacity to improve long- term governance of the sector, including strengthening environmental and social regulatory oversight informed by the SESA. Component 2 seeks to address market failures related to productivity spillovers and investment climate constraints that will have impact beyond the life of the project, and SURGE support to SMEs is designed to increase their capacity for growth over time. The project also integrates climate change adaptation measures throughout project activities, to strengthen Suriname’s resilience to expected sea level rises and decreases in annual rainfall. IV. PROJECT APPRAISAL SUMMARY A. Economic Analysis Page 19 of 44 The World Bank Competitiveness and Sector Diversification (P166187) 41. The proposed project is forecast to have a positive development impact considering projected benefits and costs. This analysis was conducted using a combination of qualitative and quantitative cost-benefit analysis. Public sector financing is confirmed as the appropriate means to achieve project objectives, and project activities in Component 2 for which cost-benefit analysis is feasible yield a net present value (NPV) of $2.3 million and an economic rate of return (ERR) of 20 percent.15 42. Public sector financing is required and appropriate to create space for private sector development and achieve the SCSD objectives. Project interventions finance provision of public goods necessary to stimulate private economic activity and investment, in particular improved legal and institutional structures to improve governance, accountability, transparency, and establishing a level playing field for the private sector. Private financing would not recover a financial return from such investments, and the World Bank Group adds particular value to the requisite public financing through its mining, agribusiness, and tourism sector expertise to ensure project activities are designed and implemented to maximize development results. Business development and matching grant support to SMEs will help to overcome market failures in Suriname related to information about returns from business development services and positive spillover effects generated by investment in productivity upgrading and job creation. This supports public financing of these activities, and the World Bank adds value with its experience furthering the agenda of the public sector as an enabler for private sector development. 43. Cost-effectiveness analysis demonstrates the return to project activities under Component 1. This component strengthens the governance and regulatory environment for the mining sector, including from an environmental and social perspective. Quantitative estimates of the benefits from this component are difficult given the hypothetical nature of calculating potential future private investment activity based on unknown mineral potential. Project support for environmental and social regulatory oversight and governance capacity related to the mining sector in general, in particular through the SESA, would help ensure that potential future growth is managed in a sustainable way. Even without considering hypothetical future investment amounts, cost effectiveness analysis justifies these activities as there is no alternative means of improving governance, transparency, accountability, and administration of the mining sector without public sector activities. 44. Cost-benefit analysis for Component 2 forecasts a NPV of $2.3 million and an ERR of 20 percent for SME investments. This component invests in SMEs and value chains through business development services and matching grants at the individual firm and value chain group level, and supports institutional and regulatory reforms to the business environment. Quantitative economic analysis is possible for the SME matching grant activities given their direct impact on beneficiary firms and yields the positive NPV and ERR, assuming a conservative discount rate of 15 percent. The primary assumption underlying this analysis is that firms benefitting from project support will achieve additional revenue growth beyond what would have been achieved without project investments. Firms benefitting from business development support (160 firms total) are expected to achieve 5 percent higher revenue growth on average compared to other firms with growth potential, and firms that also receive matching grant support (80 of the 160 total) are expected to achieve an additional 5 percent higher revenue growth. Groups of firms benefitting from matching grants for shared value chain assets, expected to be 12 groups of on average 6 firms each, are expected to achieve 4 percent higher revenue growth, although over a more extended period of time given the semi- public good nature of the shared assets. The calculation of benefits also assumes a job creation rate of one job with an average annual salary of US$6,000 per US$10,000 in additional revenue generated by project beneficiaries. Cost- effectiveness analysis justifies the return to project activities related to institutional and regulatory reforms, which seek to address market failures such as the missing market of commercial SME lending driven partly by lacking public 15 Details of the economic analysis will be made available in the project files. Page 20 of 44 The World Bank Competitiveness and Sector Diversification (P166187) financial infrastructure for moveable asset-based lending. B. Fiduciary (i) Financial Management 45. A financial management (FM) assessment of the project was conducted in accordance with OP/BP 10.00 and Financial Management Manual for World Bank IPF Operations (OPCS5.05-DIR.01 issued February 10, 2017). The assessment concluded that MTIT has an adequate FM system, and subject to agreed action underway of hiring a FM consulting firm at MNR, it will also have in place a FM system that should be able to provide, with reasonable assurance, accurate and timely information on the status of the funds as required by the World Bank. The primary FM risks are mainly due to significant risk associated with creation of a new PIU in MNR and its lack of experience in implementing donor funded projects. It has been agreed to mitigate this risk by hiring a FM consulting firm at MNR, which will be an established accounting firm with experience in the development sector. The process of hiring the FM consulting firm is currently underway following the World Bank’s procurement procedures, and the contracting of the firm is a condition of disbursement for financing for Component 1 activities. Adequate internal controls will be included in the Project Operations Manual. The World Bank’s FM team will provide training on specific World Bank policies and guidelines to the project FM staff, including on interim financial reports, audit processes, and general features of good financial controls. The World Bank team will also connect MIIT and MNR FM staff with other well- performing WB-funded projects in Guyana to experience cross learnings. The risks and compliance will be monitored during the World Bank’s six-monthly implementation support missions, as well as through annual external audits. (ii) Procurement 46. Procurement under the project will be carried out in accordance with the ‘World Bank Procurement Regulations for IPF Borrowers’ dated July 2016 and revised in November 2017 and August 2018 (‘Procurement Regulations’) . A Procurement Capacity Assessment and Project Procurement Strategy for Development (PPSD) were completed during project preparation. Based on the recommendations of the PPSD, the Procurement Plan includes the proposed activities and methods to enable the delivery of value for money in achieving the PDO. In terms of project oversight, contracts subject to post review will be reviewed by the World Bank once a year. Based on the findings of these reviews and the proposed ratings, the World Bank may revise the prior review requirements. The PPSD also includes a detailed Procurement Risk Analysis and proposed mitigation actions. Primary risks include generally limited GOS procurement capacity and specifically lack of familiarity with World Bank procurement regulations. Mitigation measures include project financing of qualified procurement specialists and timely training provided by the World Bank, including capacity building in World Bank procurement regulations, procurement systems, and standard procurement documents. Full risk analysis and mitigation measures are provided in Table A1.1 in Annex 1. C. Safeguards (i) Environmental Safeguards 47. The SCSD project is a Category B investment under the World Bank’s Operational Policy on Environmental Assessment (OP 4.01) because any environmental impacts are likely to be site-specific, potentially reversible, and with feasible mitigation measures. Component 1 of the project has no investment activities and will only finance technical assistance for legal, regulatory, and institutional capacity enhancement activities for mining. These activities Page 21 of 44 The World Bank Competitiveness and Sector Diversification (P166187) will increase government capacity to regulate and monitor the mining sector. No project-financed activities will have any direct environmental impact. Component 2 will finance support for agro-industry, agro-processing, potential extraction of non-timber forest products, tourism, and other SME development, including matching grant support for shared assets for targeted value chains. Specific investments will be identified through competitive selection by the project during implementation. Considering these project plans, and that specific project sites are not known in advance, in addition to OP 4.01 Environmental Assessment, other World Bank environmental safeguards policies have been triggered including: Natural Habitats OP 4.04, Forests OP 4.36, Pest Management OP 4.09, and Physical Cultural Resources OP 4.11 (due to the territorial extent of the project and potential “chance finds” during implementation of activities, although the project is not expected to have any direct negative impacts on cultural property). 48. Given the subproject nature of investment activities, and as specific works and related impacts cannot be determined at this stage, an Environmental and Social Management Framework (ESMF) has been adopted as the primary environmental safeguard instrument for this project. The ESMF and associated plans will be prepared for the specific investments in SMEs and value chains through matching grants that are proposed under Component 2. All of the triggered policies have been included in the ESMF specifically prepared for this project, which was consulted in country with public and private sector stakeholders on November 13 and 15, 2018, disclosed on the World Bank website on February 1, 2019, and disclosed on the website of the government’s National Institute for Environment & Development on February 12, 2019. In addition, the SESA financed under Component 1 will support the government in conducting a sector-wide examination of potential impacts, both positive and negative, of future development in the mining sector. This will include identifying appropriate instruments for environmental management of future impacts and risks for the sector as a whole, beyond this SCSD project. (ii) Social Safeguards 49. Regarding social safeguards, the project is expected to produce positive benefits at a national level, with minimal negative social impacts. As the main project activities will be enhancing governance of the mining sector and financing matching grant support to SMEs and for small-scale shared assets in agriculture and tourism value chains, overall direct social impacts are expected to be minimal. There are no significant civil works and there will be no direct impacts on indigenous or tribal communities nor the need for any involuntary resettlement. The potential risks from this project are mainly associated with ensuring that all stakeholders are informed and that stakeholder expectations are well-managed (see below for the planned instruments for stakeholder engagement). 50. The risks identified above will be mitigated through several activities and instruments developed by the project . An Indigenous and Tribal People’s Planning Framework (ITPPF), a Resettlement Policy Framework (RPF), and a rapid social assessment have all been developed to cover SME and value chain development activities under Component 2, which along with the ESMF were disclosed on the World Bank website on February 1, 2019 and on the website of the National Institute for Environment & Development on February 12, 2019. All of these instruments will engage with a variety of key stakeholders, local communities, and indigenous and tribal groups and other vulnerable populations to ensure that their voices are incorporated into the project. Consultations with key stakeholders were conducted, including specifically with representatives of Suriname’s indigenous and tribal groups on January 23, 2019, and groups will be provided with information that identifies the key potential risks as well as the potential mitigation measures that the government will take to minimize any impacts. In addition, as mentioned above regarding environmental safeguards, the SESA will support the government’s capacity broadly to manage social risks related to future mining sector development, beyond activities directly supported by this project. Page 22 of 44 The World Bank Competitiveness and Sector Diversification (P166187) (iii) Other Safeguards No other safeguard policies are triggered for this project. (iv) Grievance Redress Mechanisms Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. V. KEY RISKS 51. The proposed risk rating for the operation is Substantial. This overall rating is driven by the following key risks to the project achieving its intended results or causing unintended outcomes: • Substantial political and governance risk. There are upcoming national elections in 2020. Pre-election campaigning may take attention away from early project implementation. The GOS has demonstrated commitment in recent years to reforms related to private sector development, transparency, and governance, decreasing the risk of potential changes in policy priorities during project implementation. Based on consultations with a broad spectrum of the society and stakeholders, mitigation measures for the remaining risk include project design focusing on activities that are included in recurrent National Development Plan priorities that reflects sustained public policy direction. Project activities are designed to enable early implementation results such as supporting the establishment of the Minerals Institute and initiating tourism and agribusiness support that can build political ownership of the project supported activities. Activities related to sector diversification and private sector development under Component 2 will be implemented by a private technical services provider and have public-private dialogue mechanisms incorporated to ensure transparency, private sector participation, and a commercial focus in the selection of beneficiary firms. • Substantial macroeconomic risk. Suriname is recovering from the deep recession of 2015-16 and country authorities are taking important steps to strengthen macroeconomic policies as they are aware that the country remains vulnerable to external shocks, such as commodity price volatility. Important steps include a new public financial management law that was introduced to the National Assembly and plans to improve budget planning and strengthen treasury operations. In parallel to efforts to modernize the public finance management systems, the Ministry of Finance allocates budget releases to sector ministries so that it can adjust fiscal policy in a timely manner in the event of adverse macroeconomic developments. Timely adjustment of budgetary releases in response to specific macroeconomic developments makes policies more sustainable and hence predictable. The Page 23 of 44 The World Bank Competitiveness and Sector Diversification (P166187) authorities’ commitment to appropriate macroeconomic management reduces the substantial risks to the realization of the project objectives. • Substantial project technical design risk. The proposed project design is multi-sectoral, requiring the involvement of two ministries and multiple sector development policies, which poses inherent coordination challenges. The design of SME support under Component 2 involves competitive calls for proposals from individual firms and value chain groups. This builds private sector engagement in the prioritization of activities and selection of beneficiaries. However, this could also create potential implementation delays due to time taken initially in organizing and launching competitive calls. These risks have been mitigated through the design of project institutional arrangements, including establishing separate PIUs in MNR and MTIT with the mandate to oversee their respective sectoral interventions and involving a private services provider with fund management expertise to support implementation of the SURGE program. • High risk related to institutional capacity for implementation and sustainability . GOS ministries and agencies have generally limited implementation capacity, especially for World Bank investment project financing given the new country engagement. The Planning Units in which the PIUs are housed are newly established in MTIT and MNR. Financial resources to sustain results beyond the WBG support are limited. Coordination across ministries in general is very limited. Mitigation measures include establishing a PCC with Permanent Secretary- level composition; utilizing existing project management capacity in the Competitiveness Unit Suriname; and financing component-level project management staff and a Project Coordinator to strengthen implementation capacity. Project design also seeks to mitigate cross-ministerial coordination challenges, with component activities delineated and separately managed by MNR and MTIT according to their ministerial responsibilities. • Substantial fiduciary risk. This operation along with the Saramacca Canal System Rehabilitation Project16 will be the GOS’s first investment lending operations with the WBG, reflecting the limited GOS experience with WBG investment project fiduciary policies and procedures. Previous assessments and Bank experience with recipient- executed grants indicate weak financial oversight arrangements, delays with procurements, and limited capacity for considering economy, efficiency, and effectiveness in public procurement. Mitigation measures include the project financing full-time PIU staff with procurement and financial management experience, which are already in place in MTIT and are being contracted by MNR; utilizing existing fiduciary capacity at the Competitiveness Unit Suriname in the PIU at MTIT; plans for the World Bank supervision team to provide fiduciary training at the beginning of project implementation and extra fiduciary implementation support during supervision; and using the fiduciary capacity of a private technical services provider firm to provide matching grants to the private sector. Suriname does have a longstanding engagement with the IDB, and the Bank will continue to coordinate closely with the IDB during the project for joint sharing of experiences and learning lessons during implementation. • Substantial environmental and social risk. The proposed project is a Category B, implying that any environmental or social impacts are likely to be site-specific, potentially reversible, and with feasible mitigation measures. Component 1 does not finance any investment activities in the mining sector, and Component 2 investments in SMEs and shared value chain assets will be small in scale. However, the legal and institutional environment for managing social and environmental impacts is weak, and the country has significant natural environments and indigenous and tribal populations. Mitigation measures include additional capacity support to GOS already 16 See the Saramacca Canal System Rehabilitation Project (P165973) Project Appraisal Document (Report PAD3030, January 17, 2019). Page 24 of 44 The World Bank Competitiveness and Sector Diversification (P166187) provided by the Bank for preparation of project safeguards instruments; financing of social and environmental specialists to support implementation; and financing a SESA with complementary TA to identify and implement opportunities to strengthen long-term GOS capacity to manage social and environmental impacts for future extractive industry development. . Page 25 of 44 The World Bank Competitiveness and Sector Diversification (P166187) VI. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Suriname Competitiveness and Sector Diversification Project Development Objectives(s) The project development objective is to support sector governance improvements and increase competitiveness in targeted industries in Suriname. Project Development Objective Indicators RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Enhanced sector governance in mining Percentage of mining concessions subject to formal inspections 0.00 0.00 0.00 10.00 20.00 35.00 50.00 following good international practices (Percentage) More competitive SMEs and value chains in targeted emerging industries Increase in revenue of SMEs benefitting from 0.00 0.00 0.00 5.00 10.00 15.00 15.00 project support (Percentage) Increase in revenue of SMEs benefitting from 0.00 0.00 0.00 5.00 10.00 15.00 15.00 project support that are Page 26 of 44 The World Bank Competitiveness and Sector Diversification (P166187) RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 women-owned or that employ a majority of female workers (Percentage) Improved enabling environment for sector development and competitiveness Number of regulatory or policy reforms adopted to strengthen governance and 0.00 0.00 5.00 9.00 13.00 14.00 14.00 competitiveness in targeted industries (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Strengthening the mining sector governance, transparency, accountability, and administration Standard operating procedures and associated documentation of key 0.00 0.00 3.00 5.00 7.00 7.00 7.00 mining functions within the Minerals Institute produced (Number) Number of government staff trained to manage, regulate, and monitor the mining sector 0.00 0.00 15.00 35.00 35.00 35.00 35.00 (disaggregated by gender and function) (Number) Page 27 of 44 The World Bank Competitiveness and Sector Diversification (P166187) RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Establishment of a system for transparent assessment and collection of revenues No No Yes Yes Yes Yes Yes from the mining sector (Yes/No) Number of mining concessions monitored and inspected by the Mines Inspectorate Department in 0.00 0.00 0.00 10.00 15.00 20.00 25.00 collaboration with other relevant agencies (Number) Investment in SMEs and value chains in targeted emerging industries Number of SMEs benefitting from capacity 0.00 0.00 20.00 80.00 160.00 160.00 160.00 upgrading support (Number) Of which women-owned 0.00 0.00 8.00 32.00 64.00 64.00 64.00 (Number) Number of SMEs receiving matching grants (Number) 0.00 0.00 10.00 45.00 120.00 150.00 150.00 Of which women-owned (Number) 0.00 0.00 4.00 18.00 48.00 60.00 60.00 Volume of private co- investment in competitive 0.00 0.00 0.00 300,000.00 1,000,000.00 1,500,000.00 1,500,000.00 upgrading (Amount(USD)) Number of recommended business environment regulations, codes, policies, 0.00 0.00 1.00 2.00 3.00 4.00 4.00 or procedures adopted (Number) Beneficiaries satisfied with quality of services provided 0.00 0.00 0.00 85.00 85.00 85.00 85.00 Page 28 of 44 The World Bank Competitiveness and Sector Diversification (P166187) RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 under Component 2 (Percentage) IO Table SPACE UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Measures percentage of formal mining concessions subject to inspections by relevant government institutions, following good international practices. The Data will be gathered specific number of total Project from MNR and the Percentage of mining concessions subject concessions granted that Implementati Minerals Institute Bi-Annual PIU to formal inspections following good will be used to calculate the on Progress established and international practices percentage will be the sum Report strengthened to of exploitation and conduct inspections. exploration concessions for gold and other minerals, and will be established during project implementation in the project M&E plan. Increase in revenue of SMEs benefitting This indicator will measure Annual Beneficiary Beneficiary survey SURGE technical from project support the increase in sales of SMEs survey services provider, Page 29 of 44 The World Bank Competitiveness and Sector Diversification (P166187) supported by the project. under the coordination This increase will be of the PIU measured relative to a baseline, either to the previous sales of the beneficiary SMEs, or to a comparator group such as a sample of non-beneficiary SMEs, depending on quality of comparator data that can be generated considering the relatively limited availability of data on the private sector. The component expects to support a 15% increase in gross sales for SMEs supported by the end of the project. This sub-indicator will measure the increase in SURGE technical Increase in revenue of SMEs revenue specifically for the Beneficiary services provider, benefitting from project support that subset of SMEs benefitting Annual Beneficiary survey survey under the coordination are women-owned or that employ a from project support that of the PIU majority of female workers are women-owned or that have at least 50 percent female employees. Number of legal, regulatory, Project Number of regulatory or policy reforms policy, or procedural actions Implementati Project Implementation Bi-Annual PIU adopted to strengthen governance and implemented by the on Progress Progress Report competitiveness in targeted industries Government benefitting Report from or informed by project Page 30 of 44 The World Bank Competitiveness and Sector Diversification (P166187) support that improve the enabling environment and governance for private sector development. This PDO indicator will be a composite of intermediate results indicators tracking reforms supported at the component level, including those directly measured by component intermediate results indicators and other reforms informed by the project. ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Development of standard Project Standard operating procedures and procedures with clear Implementati Project Implementation associated documentation of key mining documentation of how Annual PIU on Progress Progress Report functions within the Minerals Institute these should be used in key Report produced mining functions within the Minerals Institute Measures the cumulative Project Number of government staff trained to number of staff identified Implementati Project Implementation manage, regulate, and monitor the mining through a skills gap analysis Bi-Annual PIU on Progress Progress Report sector (disaggregated by gender and and provided with training. Report function) Staff will come from MNR, MOF, and the newly Page 31 of 44 The World Bank Competitiveness and Sector Diversification (P166187) established Minerals Institute. Training provided will be disaggregated by gender and by function, considering policy, regulation, planning, and revenue functions. Development of a management information system linking all MNR departments, the new Project Establishment of a system for transparent Minerals Institute, and MOF Implementati Project Implementation Bi-Annual PIU assessment and collection of revenues for regulatory effectiveness on Progress Progress Report from the mining sector and efficiency. The end Report target is a revenue system for assessment and collection fully established and operational. Measures the number of Project Number of mining concessions monitored annual inspections Implementati Project Implementation and inspected by the Mines Inspectorate conducted of formal mining Annual PIU on Progress Progress Report Department in collaboration with other concessions to ensure Report relevant agencies compliance with laws and regulations. The number of SMEs that Project receive business Implementati Project Implementation Number of SMEs benefitting from development services and Annual PIU on Progress Progress Report capacity upgrading support technical assistance from Report the SURGE fund under Component 2a. Number of beneficiary SMEs Annual Project Project Implementation PIU Of which women-owned that receive capacity Implementati Progress Report Page 32 of 44 The World Bank Competitiveness and Sector Diversification (P166187) upgrading support that are on Progress women-owned Report The number of growth firms Project that receive matching grant Implementati Project Implementation Number of SMEs receiving matching support at the individual or Annual PIU on Progress Progress Report grants group level through the Report SURGE program under Component 2a. Project Number of women-owned Implementati Project Implementation Annual PIU Of which women-owned SMEs receiving matching on Progress Progress Report grants under component 2a Report This indicator tracks the Project counterpart contributions Implementati Project Implementation Volume of private co-investment in provided by matching grant Annual PIU on Progress Progress Report competitive upgrading beneficiaries of the Report matching grant to co-invest in productivity upgrading. Measures the number of regulatory reforms or policy or procedural changes Project Number of recommended business implemented informed by implementati Project implementation Annual PIU environment regulations, codes, policies, support from the project on progress progress report or procedures adopted under Component 2b report related to tourism, agribusiness, and the investment climate. Satisfaction amongst direct Beneficiary Beneficiaries satisfied with quality of Annual Beneficiary survey PIU beneficiaries of the SURGE survey services provided under Component 2 business development and Page 33 of 44 The World Bank Competitiveness and Sector Diversification (P166187) matching grant services under Component 2 based on a beneficiary survey. This indicator will provide beneficiary feedback and enable citizen engagement in the implementation of the SCSD project. ME IO Table SPACE Page 34 of 44 The World Bank Competitiveness and Sector Diversification (P166187) ANNEX 1: Implementation Arrangements and Support Plan COUNTRY: Suriname Competitiveness and Sector Diversification A. Project institutional and implementation arrangements 1. MNR and MTIT will be the implementing agencies for SCSD, responsible for Component 1 and Component 2 respectively. A Project Implementation Unit (PIU) will be established in each ministry, under the Planning Unit of each ministry that is responsible for coordinating planning efforts and donor-financed projects. The PIU in MTIT will draw on the existing capacity to manage donor-financed projects established in the Competitiveness Unit Suriname that is overseen by the Planning Unit. Each PIU will be led by a Component Coordinator financed by SCSD and responsible for daily implementation of that component. Each PIU will have its own dedicated procurement and financial management specialist financed by SCSD with fiduciary responsibility for the component. Implementation arrangements are summarized visually in Figure A1.1 below: Figure A1.1: SCSD Implementation Arrangements 2. A Project Coordination Committee (PCC) will oversee project implementation and ensure coordination between the PIUs. The PCC will consist of the Permanent Secretaries of the Ministry of Finance as the convening ministry and of MNR and MTIT as the ministries responsible for implementation. This high-level composition of the PCC is designed to ensure that appropriate decision-making authority is in place to oversee implementation and address any inter- ministerial coordination issues that arise. The PCC will meet monthly to be updated on project implementation, give guidance on technical activities, and ensure fiduciary aspects are moving forward. PCC meetings may be decreased Page 35 of 44 The World Bank Competitiveness and Sector Diversification (P166187) to bimonthly, to be agreed between the Bank and the PCC, if required less frequently once project implementation is progressing effectively. The PCC will also formally update public and private stakeholders of the project twice per year through existing steering committees, such as the board of InvestSur. A Project Coordinator will be financed by the project to support the PCC. The coordinator will act as a committee secretary, organizing monthly meetings and key implementation issues to be addressed. The coordinator will also serve as an implementation liaison with the PIUs, in particular with the Component Coordinators, including to coordinate the four shared positions hired by the project (elaborated below). This position will in particular have a fiduciary coordination function to ensure that timely completion of withdrawals, disbursements, payments, and procurement processes happens across ministries. 3. The PIUs will share four project staff that will support both components: social specialist, environmental specialist, M&E specialist, and communications specialist. Each will be hired and officially report to one of the two ministries, but will support both PIUs under the coordination of the Project Coordinator. Additional short-term technical staffing support may be hired by each PIU as needed for component implementation. 4. The SURGE business support activity financed under Component 2a will be managed by a contracted private technical services firm hired by MTIT. As elaborated in the activity description, this services provider will be responsible for delivering direct services to beneficiary firms under Component 2, including direct business advisory services and management of the matching grant funds. This management of matching grant funds will include supervising compliance with the Bank’s fiduciary requirements including application of the Bank’s Procurement Regulations in procurement-related activities financed with matching grant funds. This firm will be hired by MTIT and report contractually to the head of the MTIT Planning Unit, with day to day technical oversight from the MTIT Component Coordinator. The implementation arrangements for the initial beneficiary selection and provision of business advisory services and matching grant provision are elaborated in the following figures: Figure A1.2: Implementation arrangements for Component 2a, SURGE provision of SME business advisory support Page 36 of 44 The World Bank Competitiveness and Sector Diversification (P166187) Figure A1.3: Implementation arrangements for Component 2a, selection and provision of SURGE matching grant support 5. The SURGE technical services provider will be selected through a competitive process from the international private sector. A consulting firm will be procured through international competitive tender to serve as the SURGE technical services provider. Terms of reference for this technical services provider will be developed as part of the SCSD project operational manual. Specific selection criteria for the competitive tender will be established in the terms of reference will include international experience providing commercially oriented business development services to the private sector; fiduciary capacity to manage funds being provided to private sector firms; and articulation of a strategy to successfully implement the SURGE program to meet the growth needs of the private sector in the Surinamese context. 6. The SURGE technical services provider will be responsible for establishing and leveraging the public-private selection committee. The final composition, work schedule, and the TORs of the committee will be approved by the Project Coordination Committee. The public-private selection committee is expected to be comprised of no more than seven members for nimble decision-making, which will likely include representatives of MTIT, Ministry of Agriculture, an international expert on tourism, an international expert on agribusiness, and representatives from the private sector in Suriname. The committee is expected to meet once per year or as calls for proposals are made and make a decision on the winning proposals within a week of elaboration, with at least three weeks provided prior to meetings for the review of the submissions. The technical service provider will support the committee in the review of the submissions and during selection elaborations. B. Financial management and disbursement 7. A FM assessment of the project was conducted in accordance with OP/BP 10.00 and Financial Management Manual for World Bank IPF Operations (OPCS 5.05-DIR.01 issued February 10, 2017). The assessment concluded that MTIT has an adequate FM system, and subject to the agreed action underway of hiring a FM consulting firm at MNR, it also will have in place a FM system that should be able to provide, with reasonable assurance, accurate and timely information on the status of the funds as required by the World Bank. Page 37 of 44 The World Bank Competitiveness and Sector Diversification (P166187) 8. FM and accountability arrangements for the project will be implemented for the respective components by PIUs in each of the two ministries, MTIT and MNR. The PIUs will be overseen by the Planning Unit in each ministry. MTIT is currently implementing a project funded by the IDB. MTIT has a Financial Management Specialist (FMS) in its PIU, which currently manages the FM aspects of the IDB-financed project. The FMS will also be responsible for FM of the World Bank-financed project. MNR has established a PIU but does not have prior experience with donor-funded projects. MNR is hiring a FM consulting firm (an established accounting firm with experience in development projects) to provide initial financial management support to the project. The FM consulting firm is in the process of being hired following the World Bank’s procurement procedures and its contracting is a condition of disbursement for financing for Component 1 activities. During the course of project implementation, the MNR PIU will hire an individual Financial Management Specialist, who will be duly trained by the FM consulting firm on the Bank’s financial management procedures. Once that FMS is in place and trained, the World Bank would appraise the adequacy of that new FM capacity within the PIU, at which point the FMS would take over project financial management responsibilities from the FM consulting firm. The FMS positions at both the PIUs will be maintained during the life of the project. 9. Planning and budgeting: An overall budget for the life of the related components of project will be prepared by the respective PIUs, which will be revisited periodically and updated, as needed, based on implementation progress and variance analysis. An annual work plan will be derived from this master budget, which will be approved and included in the GOS estimates of revenue and expenditures and reflected under MTIT’s and MNR’s allocations respectively. 10. Funds flow: Advances will be disbursed by the World Bank to a segregated Designated Account (DA) for each ministry, opened at the Central Bank of Suriname and maintained by the MOF. The two DA accounts will be used to finance the US$ currency expenditures. Funds will be periodically transferred from each DA to related segregated local currency operating accounts for each ministry, which will also be maintained at the Central Bank of Suriname by MOF. PIUs will use the local currency operating accounts to finance the local currency expenditures. Disbursement methods available to the PIUs will be: Advance, Reimbursement, and Direct Payment. The following figure presents this funds flow arrangement: Figure A1.4: Flow of funds arrangements World Bank Designated Designated Account (US$) Account (US$) MTIT MNR Operating Operating US$ Account US$ Account Payments Payments SRD SRD SRD SRD Payments Payments 11. Accounting and internal controls: Project transactions will be accounted for and reported on the cash basis of accounting, following international financial reporting standards. The PIU in MTIT maintains IDB-financed project accounting transactions in QuickBooks. They will use the same software for recording the World Bank transactions Page 38 of 44 The World Bank Competitiveness and Sector Diversification (P166187) by creating another entity in it for the World Bank. The FM consulting firm at the MNR will procure QuickBooks to maintain the World Bank transactions and have it implemented by the project effectiveness. The PIUs will design charts of accounts to capture project transactions by categories, components, subcomponent, and activities, as needed. The project’s FM procedures and processes will be guided by the Project Operations Manual, which will be finalized during project appraisal. It will be reviewed and cleared by the World Bank. Throughout the life of the project, the Project Operations Manual will be updated, as needed, to reflect the current procedures and processes. Overall expenditures of the project in QuickBooks will be regularly reconciled with the expenditure for the project recorded in the related line item in the MOF records. Once the FM capacity at the PIU in MNR has been developed and assessed by the World Bank, the FM consulting firm will completely handover the computerized and manual records to the MNR. 12. Reporting: Advances will be disbursed to the PIUs based on six-months cash forecast. Each PIU will be submitting quarterly unaudited financial reports to the World Bank (called interim financial reports, IFRs) within 45 days after each calendar quarter. Quarterly variance analysis (actual versus budgeted expenditures) would be included in the IFRs (which the respective ministries will submit into the World Bank Client Connection system). The World Bank will document expenditures from the IFRs, which will also include additional request for funds. Regarding grants provided to SME beneficiaries under Component 2, IFRs will report the disbursement of grant advances to the beneficiaries. The technical services firm implementing the matching grants program will be responsible for monitoring the actual expenditures of grant resources and ensuring compliance with the procedures and requirements established in the Grants Manual, under the supervision of the Financial Management Specialist in the MTIT PIU. 13. External auditing: Each PIU will prepare annual financial statements covering each the Government financial year ending December 31, which will be audited by external auditors as per TOR agreed for the project with the World Bank. The external audit will be conducted by a private audit firm deemed acceptable to the World Bank or by the Supreme Audit Institution (SAI) of Suriname with technical support of a Dutch speaking audit consultant and supported by two senior SAI staff. The project budget will include the estimated audit fees and / or the cost of the technical support to be obtained by the SAI. Each PIU will submit the Audit Report along with Audited Financial Statements and Management Letter to the World Bank no later than six months after the close of each year. 14. Conclusions of the financial management risks and agreed mitigation measures: The main FM risks are due to significant risk associated with creation of a new PIU in MNR and its lack of experience in implementing any donor- funded project. It has been agreed to mitigate this risk by hiring a FM consulting firm at MNR, which will be an established accounting firm with experience in the development sector. The FM consulting firm will be hired following the World Bank’s procurement procedures and its contracting is a condition of disbursement for financings for Component 1 activities. Adequate internal controls will be included in the Project Operations Manual. The World Bank’s FM team will provide training on specific World Bank policies and guidelines to the project FM staff. The World Bank team will also connect MTIT and MNR FM staff with other well-performing WB-funded projects in the region such as in Guyana to experience cross learnings. The risks and compliance will be monitored during the World Bank’s six-monthly implementation support missions as well as through annual external audits. 15. The overall disbursement arrangements will follow standard disbursement policies and procedures included in the Disbursement and Financial Information letter and as established in the Disbursement Guidelines for Investment Project Financing, dated February 2017. The minimum application size for Direct Payments and Reimbursements can be noted from the Disbursement and Financial Information Letter. Page 39 of 44 The World Bank Competitiveness and Sector Diversification (P166187) C. Procurement 16. Procurement will be carried out in accordance with the ‘World Bank Procurement Regulations for IPF Borrowers’ dated July 2016, revised in November 2017 and August 2018 (‘Procurement Regulations’) . The various items under different expenditure categories are described here. For each contract to be financed by the loan, the applicable procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the GOS and the World Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. The procurement procedures and standard procurement documents to be used for each procurement method, as well as standard forms of contracts, are posted on the World Bank’s website. In accordance with paragraph 5.9 of the Procurement Regulations, the World Bank’s STEP system will be used to prepare, clear, and update the Procurement Plans and conduct procurement transactions for the project. This textual part, along with the Procurement Plan tables in STEP, constitute the Procurement Plan for the project. The following conditions apply to all procurement activities in the Procurement Plan. The other elements of the Procurement Plan, as required under paragraph 4.4 of the Procurement Regulations, are set forth in STEP. 17. The World Bank’s standard procurement documents shall be used for all contracts. The procurement documents are subject to international competitive procurement and those contracts as specified in the Procurement Plan tables in STEP. 18. When approaching the national market, the country’s own procurement procedures may be used in accordance with the National Procurement Arrangements (paragraph 5.3) of the Procurement Regulations. This will be specified in the Procurement Plan tables in STEP. When the borrower uses its own national open competitive procurement arrangements, as set forth in the Procurement Act of 2003, such arrangements shall be subject to paragraph 5.4 of the Procurement Regulations and its following conditions. When other national procurement arrangements other than national open competitive procurement arrangements are applied by the borrower, such arrangements shall be subject to paragraph 5.5 of the Procurement Regulations. 19. As identified by the Procurement Plan tables, contracts for leased assets, procurement of second-hand goods, and domestic preference will be bound by the Procurement Regulations. Procurement Regulations will be applicable as specified under paragraph 5.10 for leased assets and paragraph 5.11 of the Procurement Regulations for procurement of second-hand goods. Domestic preference will be specified under paragraph 5.51 of the Procurement Regulations (Goods and Works). Goods is applicable for those contracts identified in the Procurement Plan tables. Overview of country and borrower 20. Overview of client capability and PIU assessment for MTIT. An assessment of the MTIT PIU was conducted for the preparation of the project and PPSD; the main findings were as follows: • Experience: the PIU at MTIT is well established and has implemented projects financed by international financiers, including IDB. In all cases, the PIU has followed the procurement provision of the financing institution. The PIU is staffed with a Coordinator, FM and Procurement Specialist as well as other support staff. The PIU conforms the evaluation committees and handles all procurement matters independently. • Need for hands-on support: while extensive procurement supervision and hand holding is expected, the project will not require hands-on expanded implementation support. MTIT capacity in ensuring application of the Procurement Regulations as required for matching grants activities will be supplemented by the Page 40 of 44 The World Bank Competitiveness and Sector Diversification (P166187) fiduciary capacity and services provided by the technical services provider implementing the SURGE program. • Contract management capability and capacity: the PIU demonstrated to have procurement and project management capacity. Record keeping is done by the PIU at their offices. • Complaints management and dispute resolution systems: all complaints are handled following the provisions of the financing institutions. • Conclusions: Although the ultimate objective is to strengthen MTIT, capacity at the PIU seems to be sufficient to implement the project. Provided that the team currently in CUS remains with the same capacity, the Procurement Specialist will need to receive training in the Procurement Regulations issued in July 2016. If the current arrangements and team are kept in place, the procurement risks to implement the project is Substantial, but with the proposed mitigation measures it could be rated as Moderate on a follow up assessment, during implementation. 21. Overview of client capability and PIU assessment for MNR. An assessment of the MNR PIU was conducted for the preparation of the project and PPSD; the main findings were as follows: • Experience: the MNR has not had any recent experience with IDB or WB financed projects. A PIU will be created for the implementation of the Project within the Planning Unit of the Ministry, which is also under creation. The Ministry will build on the experience the Bauxite Institute has with the implementation of the EITI Project, however, procurement experience in the Bauxite Institute is very limited as well, therefore additional measures shall be taken to reduce the procurement implementation risks. Procurement procedures carried out by the Ministry follow the local legislation, based on the information received by the Ministry, the Bank concluded that the procurement capacity is very weak. There is a requirement in the local procurement regulations that all contracts above a defined ceiling require approval from the Council of Ministers, which could cause delays in procurement processing, although this ceiling applies to Government- financed contracts and this requirement is not included in the procurement procedures in the Project Operations Manual that will be adopted by the Government prior to project effectiveness. • Need for hands-on support: while extensive procurement supervision and hand holding is expected, the project will not require hands-on expanded implementation support. • Contract management capability and capacity: MNR has experience handling contracts procured under their local legislation. • Complaints management and dispute resolution systems: Complaints are handled following the provisions of the “Uitvoeringsvoorwaarden voor Werken in Suriname 1996 (UWS 1996). • Conclusions: the following have been identified as procurement risks for the project: i) MNR’s lack of experience with donor funded projects and in particular with the implementation of WB’s procurement procedures; ii) the requirement to obtain approval from the Council of Ministers for all contracts above USD500 is a major concern that could cause delays in procurement processing. Based on the above, to ensure a smooth implementation of the Project, it is recommended to appoint a Procurement Specialist in the PIU with relevant experience in donor funded procurement, particularly in WB/IDB procurement rules and procedures. The Procurement Specialist will need to receive training in the Procurement Regulations issued in July 2016. Further, the PIU shall be responsible for all procurement activities within the Project. Based on the conclusions above, the procurement risks to implement the project is High, but with the proposed mitigation measures the risk could be considered as Substantial. Operational context and marketplace 22. Governance aspects. According to the 2011 Public Expenditure and Financial Accountability (PEFA) and the 2015 Page 41 of 44 The World Bank Competitiveness and Sector Diversification (P166187) Repeat Assessment, the public procurement legal framework in Suriname is outdated and not comprehensive. The country does not have a procurement law in place; instead articles 18 and 19 of the Budget Law govern procurement in Central Government, autonomous government agencies, and public corporations. Based on the information provided by the PEFA, the Government could clearly benefit from a more comprehensive public procurement legislation, which should follow international best practices and allow for competition, economy, efficiency, and transparency. Public procurement should be the preferred method and exceptions should be clearly defined in the new legislation, and all processes should be advertised. The new legislation should also include mandatory preparation and publication of Procurement Plans, as well as publication of contract awards. A formal complaint mechanism should also be included, to allow for timely claims and a standstill period for presentation of claims. During project preparation, the World Bank received copies of the Rules and Regulations for the Tender of Works in Suriname (UWS 1996) and the Conditions for the Execution of Works in Suriname (UWS 1996). 23. Economic aspects. Suriname has a small economy; in most cases, international firms need to be engaged for consulting services. The country has a limited market; nevertheless, some goods are generally available locally. It is recommended that contracts are packaged to ensure adequate participation of international bidders and to benefit from economies of scale. 24. Technological aspects. There are some limitations on internet access. Measures shall be taken to ensure high quality of any hardware and software to be procured locally. 25. Since the market is small, some goods need to be purchased from international suppliers. Further, for complex consulting assignments, the use of international consulting firms is also envisioned. Packaging of contracts is recommended to ensure competitive process and participation of international bidders. 26. Procurement risks, mitigation measures, and frequency of procurement implementation support. The PPSD completed during project preparation identified procurement risks and mitigation measures, which are presented in Table A1.1 below. Contracts subject to post review will be reviewed by the World Bank once a year. Based on the findings of these reviews and the proposed ratings, the World Bank may determine the revision of the prior review requirements. The overall procurement risk for the project is high, given the considerations above. Table A1.1: Procurement Risk Analysis and Mitigation Measures Risk Description Description of Mitigation Risk Owner The MTIT is not familiar with the • Maintaining an experienced Procurement Specialist within the proposed MTIT / PCC / World Bank’s Procurement PIU to ensure timely processing of procurement activities financed under World Bank Regulations issued in July 2016. the project • Training to be provided to the PIU’s Procurement Specialist before project effectiveness MNR is not familiar with donor • Appointment of an experienced Procurement Specialist within the MNR/PCC/ funded procurement procedures, proposed PIU, the contracting of which is underway prior to Board World Bank particularly the WB Procurement submission, to ensure timely processing of procurement activities Regulations. financed under the Project. Training to be provided to the PIU including the contracted Procurement Specialist before project effectiveness. Page 42 of 44 The World Bank Competitiveness and Sector Diversification (P166187) Risk Description Description of Mitigation Risk Owner Internal procurement procedures • Simplification of the internal procedures by having the PIU be solely MNR/PCC/WB at the MNR are not well responsible for all the fiduciary activities related to the Project. established or streamlined. Preparation of an Operations Manual for the Project with detailed Requirement for approval of all procurement procedures following WB’s Procurement Regulations contracts above USD500 by the • Obtaining a formal communication from MNR, confirming that the Board of Ministers. requirement to send all procurement activities to the Board of Ministers will be waived for the Project. Possible weak procurement • Training to be provided to evaluators and to technical specialists working MTIT/MNR/PCC capacity of evaluators and on the project World Bank technical teams Delays in the handling of • Ensure smooth processing of procurement complaints related to the MTIT/MNR/PCC/ procurement-related complaints World Bank’s financed contracts, through procedures established in the World Bank Project Operations Manual and training in the processing of procurement complaints through the World Bank’s procurement system. Lack of interest from bidders/firms • Packaging of contracts to ensure interest of bidders and reduction of MTIT and MNR in project’s bidding and consulting processing time PIUs processes D. Strategy and approach for implementation support 27. The strategy and approach for implementation support responds to the risk profile of the proposed SCSD project, especially to address the high risks related to GOS institutional capacity for project implementation and sustainability. This will be the first WB-financed project implemented by MTIT and MNR, and significant resources will be allocated especially during the first year of implementation to help establish a fully functional PIU engaged in robust planning and operationalization of the various project sub-components. World Bank implementation support missions are expected at least three times during the first year, with an expected decrease to two per year once project implementation is fully underway. The implementation support team will include the following specializations: (a) task team leaders with private sector development and extractives specializations; (b) mining cadaster and institutional development specialists; (c) agribusiness and tourism sector specialists; (d) an entrepreneurship and SME finance specialist; (e) a results measurement and M&E specialist; (f) a FM specialist; (g) a procurement specialist; (h) a social safeguards specialist; and (i) an environmental safeguards specialist. Other skills will be drawn upon as and when the need arises. The implementation support plan will be reviewed annually to ensure flexibility and efficiency. 28. Technical support will focus on initiating project activities that can achieve early implementation results and are critical for subsequent project disbursements. Regarding Component 1, this includes support for initiating the SESA. Support for the SESA in particular will include prior procurement review and participation of Bank technical and safeguards team members in the review of intermediate products to ensure quality. Regarding Component 2, this includes technical support for implementing initial tourism and agribusiness investment climate activities and advancing procurement of the private technical services provider firm to drive the implementation of the SURGE programs. 29. Bank implementation support will also focus on building GOS safeguards and fiduciary capacity. Social development and environmental specialists will support PIU counterparts especially during the first year in the operationalization of the safeguards instruments development for the project, in addition to subsequently providing Page 43 of 44 The World Bank Competitiveness and Sector Diversification (P166187) oversight of compliance with Bank safeguards policies and requirements throughout implementation. Bank FM and Procurement Specialists will provide timely, targeted training to MTIT, MNR, and MOF. These specialists will help enhance MTIT, MNR, and MOF knowledge and understanding of World Bank requirements and support the line ministries in building their overall FM and procurement capacity. Supervision of the FM arrangements would be conducted semiannually and as needed in response to project needs. Procurement supervision would also be carried out semiannually, following early additional support, with a focus on contract management and on improving proficiency and efficiency in procurement implementation. E. Implementation support plan and resource requirements 30. The expected skills mix and resource needs to provide this implementation support are provided in the following table: Table A1.2: Implementation support plan Resource estimate Time Focus Skills needed (in staff weeks) First 12 Overall technical and Task team leader(s) with private sector development 12 months operational support with a specialization focus on implementation Task team leader(s) with extractives specialization 12 start-up M&E specialist 4 Specific technical expertise Mining cadaster specialist 5 for Components 1 and 2 Extractives institutional development specialist 5 with a focus on initiation Agribusiness specialist 5 of technical activities Tourism specialist 5 Entrepreneurship and SME finance specialist 5 Safeguards capacity Social safeguards specialist 6 development and Environmental safeguards specialist 6 oversight Fiduciary capacity Financial management specialist 5 development and Procurement specialist 5 oversight Years 2 Overall ongoing technical Task team leader(s) with private sector development 10 through 6 and operational support specialization Task team leader(s) with extractives specialization 10 M&E specialist 3 Specific technical expertise Mining cadaster specialist 4 for ongoing Components 1 Extractives institutional development specialist 4 and 2 support Agribusiness specialist 4 Tourism specialist 4 Entrepreneurship and SME finance specialist 4 Safeguards Social safeguards specialist 4 Environmental safeguards specialist 4 Fiduciary Financial management specialist 4 Procurement specialist 4 Page 44 of 44