The World Bank Niger Investment Climate Support (P148839) REPORT NO.: RES36596 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NIGER INVESTMENT CLIMATE SUPPORT APPROVED ON AUGUST 19, 2015 TO REPUBLIC OF NIGER FINANCE, COMPETITIVENESS AND INNOVATION AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Soukeyna Kane Senior Global Practice Director: Alfonso Garcia Mora Practice Manager/Manager: Consolate K. Rusagara Task Team Leader: Magueye Dia The World Bank Niger Investment Climate Support (P148839) I. BASIC DATA Product Information Project ID Financing Instrument P148839 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 19-Aug-2015 30-May-2019 Organizations Borrower Responsible Agency MOP - PIU (CR 51320),Ministry of Planning, Land Republic of Niger Management and Community Development Project Development Objective (PDO) Original PDO The objective is to improve critical elements of investment climate for the private sector and enhance competitiveness of SME inselected agriculture value chain. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A0809 19-Aug-2015 25-Aug-2015 01-Dec-2015 30-May-2019 9.08 4.69 4.39 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Niger Investment Climate Support (P148839) PROJECT STATUS 1. The Niger Investment Climate Support Project is rated Moderately Satisfactory on both progress towards achieving the Project Development Objective (PDO), and Implementation Progress. Project disbursement stands at 52 percent of the total financing received from the donor as of March 2019. 2. The initial phase of project implementation experienced delays due to various bottlenecks in government procurement approval procedures. Thanks to the operationalization of a new expenditure control system and the recruitment of a dedicated controller (trained by the project on World Bank procedures) for the Project’s line ministry in early 2018, project implementation has recorded progress. 3. Progress made by project components is outlined below: Component 1: Modernization of the Business Environment 4. Activities under this component aims to support the implementation of reforms with quick impact on the business environment. This component is contributing to the strengthening of institutions geared toward private sector development and export promotion. Specific developments are as follows. a. Subcomponent 1.1 “Implementing Investment Climate Reforms”, i. the Project has provided technical support to the Government of Niger to implement reforms related to the Doing Business agenda over the past 3 years, notably reforms of contract enforcement, business registration and trading across borders, thus contributing to the significant progress recorded by Niger in the ease of Doing Business index. More specifically, the distance to frontier score which captures how far on average Niger is from the best performance achieved by an economy on each Doing Business indicator has improved by 30 % between 2015 and 2018. ii. In addition, reforms implemented with the Project’s support have resulted in savings amounting to more than US$38 million for private sector operators that have registered a business or obtained a construction permit (Direct compliance costs savings). iii. The project has pursued targeted support to investment climate reforms through the modernization of the commercial court. The case management system for the court is ongoing and will enhance the transparency, and efficiency of this jurisdiction. The design of the information system architecture for the commercial court has been finalized. Bidding documents for the purchase of the software are expected by the end of June 2019, and the procurement process will be launched by mid-September 2019. iv. The newly appointed State Minister in charge of Investment Climate Reforms and Private sector development has expressed strong interest in the implementation of the entrepreneur regime in Niger and committed to champion the reform. The Project will support the new minister in developing an action plan to implement the new regime to foster formalization of private sector operators. b. Subcomponent 1.2 “Enabling Institutions for Private Sector Development through (i) Public-Private Dialogue and (ii) Support to the Operationalization of the Export Promotion Agency (ANIPEX)” i. The Project has contributed to the overhaul of ANIPEX’s legal framework and the removal of bottlenecks that were crippling its functioning. It is also financing ANIPEX’s business plan through provision of equipment and capacity The World Bank Niger Investment Climate Support (P148839) building. The recruitment of technical specialists to strengthen the Agency’s team has been initiated and is expected to be completed by end of September 2019. Component 2: Increase the competitiveness of selected agricultural value chains 5. This component aims to contribute to improved competitiveness of SMEs along the agricultural value chains in Zinder and Diffa. a. Sub-component 2.1 “Support to the Maison de l’Entreprise”, i. The Project has helped “Maison de l’Entreprise” (ME) diversify its Business Development Services for start-up and young businesses, including among other things: diagnostic tools, coaching and mentoring, and a dedicated window for innovation. b. Sub-component 2.2 “Provision of financial and non-financial business development services” i. The project has established a matching grant scheme for SMEs. A new strategy to enroll beneficiaries and boost the uptake of the matching grant is being implemented. Under this strategy, ME is directly reaching out to potential beneficiaries to help identify and formulate their needs in terms of Business Development Services (BDS). The new approach has led to encouraging results with an average of 20 new dossiers per month approved by the selection committee. The Project’s contribution to the delivery of the BDS amounts to US$300,000. The pace of enrollment of new beneficiaries should pick-up further, as an outreach campaign is being rolled out nationwide and the second phase of the business plan competition will be launched in September 2019. ii. The first business plan competition partly funded by the Project has been completed and 100 winning projects have been awarded. Since September 2018, the Project has provided technical assistance (TA) and mentoring services for the winning entrepreneurs to improve the quality of their business plans. Of the 100 winning business plans, 64 have mobilized funding to launch their business activities. c. Sub-component 2.3 “Infrastructure Development” i. This subcomponent finances economic infrastructure, namely roads for the Zinder trade corridor to Nigeria and marketplaces. 60 percent of the infrastructure works in Zinder has been completed. Works should be fully completed by June 30, 2019. This should boost the project disbursement rate, as the infrastructure program amounts to more than 52 percent of the component costs. Progress in Diffa has been slower, due to the security challenges faced by contractors. The Project Implementation Unit (PIU) is working on security arrangements that will help limit contractors’ exposure to security threats and ensure completion of works in Diffa by end of 2019. Among other options being considered, contracts could be amended to finance relocation and distance work for contactors. Component 3: Project Implementation Support 6. Implementation of the activities of the Project is undertaken mainly through the PIU of the IDA-financed Competitiveness and Growth Support Project under on-going arrangements. The World Bank Niger Investment Climate Support (P148839) RATIONALE FOR RESTRUCTURING 8. The Mid-Term Review (MTR) of the Danish Cooperation Program in Niger and a feasibility study conducted in 2018 concluded that the grant mechanism under subcomponent 1.2 was insufficient to respond to the financing constraints faced by actors in agricultural value chains and recommended to complement it with a Risk Sharing Facility (RSF) for SMEs. The objective of the RSF is to encourage national commercial banks to lend to private sector operators along the agricultural value chains. It would achieve this by partially mitigating creditor risk through counter guarantees offered by a local Guarantee Fund. 9. In this context, the Government has submitted a request to restructure the Project to meet the following objectives: a) Establish a RSF to facilitate access to finance for MSMEs; b) Extend the closing date from March 30, 2019 to December 30, 2020 to allow completion of project activities. 10. Setting up the RSF according to the terms and conditions requested by the donor will necessitate an in-depth evaluation of the proposed mechanism in accordance with World Bank operational policies (OP.10) on financial intermediaries. 11. The proposed Level II restructuring of the Niger Investment Climate Support Project would extend the project closing date from May 30, 2019 to December 30, 2020. A first extension of the closing date, from March 31, 2019 to May 30, 2019, had been granted to allow for the in-depth evaluation mentioned above. Now that this assessment has been conducted, a second extension to December 30, 2020, is necessary to establish the RSF and ensure that remaining project activities are completed and their associated results delivered. 13. The extension will also allow for technical and institutional features of the proposed RSF to comply with Bank requirements before its inclusion into the Project. 14. With the proposed closing date extension, the PDO remains achievable. 15. Development Finance (DFI) has pr ovided a No Objection for the proposed closing date ext ension. 16. The Administrative Agreement between the Danish Ministry of Foreign Affairs (the “Donor”) and the International Bank for Reconstruction and Development and the International Development Association has been amended to reflect the change in disbursement end date from May 30, 2019 to December 30, 2020. 17. There is no outstanding audit. II. DETAILED CHANGES The World Bank Niger Investment Climate Support (P148839) LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-May-2019, 30- TF-A0809 29-Mar-2019 30-Dec-2020 30-Apr-2021 May-2019