Document of The World Bank Group FOR OFFICIAL USE ONLY Report No. 122878-BI INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR THE REPUBLIC OF BURUNDI FOR THE PERIOD FY19-FY23 June 10, 2019 Country Management Unit, AFCE1 Africa Region The International Finance Corporation The Multilateral Investment Guarantee Agency 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 Group authorization. i The date of the last Performance and Learning Review was February 25, 2015 Exchange rate as of July 31, 2018 Currency unit: Burundi francs (FBu/BIF) US$1.00 = 1,767.97 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank LIC Low-income country BRB [Banque de la République du LRRP Landscape Restoration and Burundi} Central Bank of Resilience Project Burundi CDD Community-driven LVEMP2 Lake Victoria Environnemental development Management Project II CE Citizen Engagement M&E Monitoring and evaluation CLR Completion and Learning MDG Millennium Development Goals Review CPF Country Partnership Meranka Social Safety Nets Project (“Be equal Framework bandi to others”) MIGA MIGA Multilateral Investment Guarantee Agency CSCP Coffee Sector Competitiveness MSMEs Micro, small, and medium Project enterprises CPIA Country Policy and Institutional NDP National Development Plan Assessment CSO Civil society organization NPF New Procurement Framework DPF Development Policy Financing NGO Non Governemental Organsation DP Development partner PASEC Program for the Analysis of Education Systems DRC Democratic Republic of Congo PBF Performance Based Financing EAC East African Community PEA Political Economy Analysis EGLP Early Grade Learning Project PE Political Economy EAPHLN East Africa Public Health PER Public Expenditure Review Laboratory Network ECAAT Eastern and Central Africa PEFA Public Expenditure and Financial Agricultural Transformation Accountability Project ECVMB Enquête sur les Conditions de PIU Project Implementing Unit Vie des Ménages au Burundi ii (Survey on Household Living Conditions in Burundi) FBu Burundian franc PPP Public-private partnership FCV Fragility, conflict, and violence PRODEMA Agro-Pastoral Productivity and Markets Development Project FDI Foreign direct investment PRSP Poverty Reduction and Strategic Plan Forex Foreign exchange PSW Private Sector Window GAP Gender Acton Plan RGLIADP Regional Great Lakes Integrated Agriculture Development Project GBV Gender-based violence RRA Risk and Resilience Assessment GLESGBV - Great Lakes Emergency Sexual RRFHP Regional Rusumo Falls Hydroelectric WHP- Gender- Based Violence and Project Women’s Health Project HIMO Haute Intensité de Main- RSRHC Regional Sub-window for Refugees d’Oeuvre (labor-intensive labor and Host Communities approach) HSDSP Health Sector Development SSA Sub-Saharan Africa Support Project HCI Human Capital Index SCD Systematic Country Diagnostic IDP Internally displaced person SCLP Sustainable Coffee Landscape Project IEY&F Investing in Early Years & SBGV Sexually based gender violence Fertility IEG Independent Evaluation Group SDG Sustainable Development Goals IFC International Finance SICGEP Strengthening Institutional Capacity Corporation for Government Effectiveness Project ISTEEBU Burundi Institute of Statistics TPM Third Party Monitoring and Economic Studies IREP Infrastructure Resilience YSEP Youth Skills & Employability Project Emergency Project JMHP Jiji and Mulembwe Hydropower WBG World Bank Group Project KIRA Health System Support Project (“health and good wealth in Kirundi”) LDJP Local Development for Jobs Project iii FY19–FY23 COUNTRY PARTNERSHIP FRAMEWORK FOR THE REPUBLIC OF BURUNDI TABLE OF CONTENTS I. INTRODUCTION ..........................................................................................................1 II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA ......................................................4 A. Social and Political Context .................................................................................................................. 4 B. Economic Context and Outlook............................................................................................................ 5 C. Poverty, Inequality, and Jobs ............................................................................................................... 9 D. Development Challenges and Opportunities ..................................................................................... 11 III. WORLD BANK GROUP PARTNERSHIP STRATEGY ........................................................ 18 A. The Government Program and Medium-Term Strategy .................................................................... 18 B. WBG Country Partnership Framework ............................................................................................... 18 C. Focus Area I: Building Human Capital and Inclusion .......................................................................... 23 D. Focus Area II: Strengthening Foundations for Economic and Social Resilience ................................ 27 E. Foundations: Macroeconomic Stability, Structural Reforms, and Governance ................................. 30 IV. IMPLEMENTING THE BURUNDI CPF ........................................................................... 36 A. Financial Envelope .............................................................................................................................. 36 B. Financial Management, Procurement, and Other Government Systems .......................................... 39 C. Managing Programs ........................................................................................................................... 40 D. Partnerships and Donor Coordination ............................................................................................... 42 V. MANAGING RISKS TO THE CPF PROGRAM ................................................................. 43 LIST OF FIGURES Figure 1: Burundi’s Cycle of Fragility and Poverty ................................................................................. 2 Figure 2: Burundi Poverty Map .............................................................................................................. 9 Figure 3: Links between the National Development Plan, the SCD, and CPF Focus Areas .................. 20 Figure 4: The CPF Framework ............................................................................................................. 22 LIST OF TABLES Table 1: Main Economic Indicators 2015-2020...................................................................................... 8 Table 2: IDA Portfolio Trends over the CPF Cycle ................................................................................ 38 Table 3: ASA Pipeline ........................................................................................................................... 39 Table 4: Systematic Operations Risk-Rating Tool (SORT)..................................................................... 44 Table 6: PLR Development Outcome Ratings by Strategic Objective .................................................. 58 Table 7: CLR Development Outcome Ratings by Strategic Objective .................................................. 59 Table 8: ASA Delivered during the PLR ................................................................................................ 64 iv LIST OF BOXES Box 1: Key CPF Expected Outcomes over the CPF Period ............................................................................. 4 Box 2: Horn of Africa and The Great Lakes Region: Refugees and asylum-seekers by country of asylum as of 31 January 2019 ........................................................................................................................................ 5 Box 3: IMF Engagement in Burundi .............................................................................................................. 8 Box 4: Burundi’s Successes and Challenges in Education ........................................................................... 12 Box 5: RRA recommendations .................................................................................................................... 14 Box 6: Gender aspects in Burundi ............................................................................................................... 15 Box 7: Burundi’s Regional Integration Challenges and Opportunities........................................................ 17 Box 8: Putting Women’s Empowerment at the Forefront of WBG Programs in Burundi .......................... 27 Box 9: Coffee sector in Burundi .................................................................................................................. 29 Box 10: Applying MFD Principles in Burundi ............................................................................................... 32 Box 11: Examples of WBG leveraging innovative use of ICT in Burundi .................................................... 33 Box 12: Active and Indicative Pipeline (Only IDA financing) ....................................................................... 37 Box 13: Working Differently in Burundi ...................................................................................................... 41 LIST OF ANNEXES Annex 1: CPF Results Framework ........................................................................................................ 45 Annex 2: Completion and Learning Review (FY13–16) ........................................................................ 57 Annex 3: Selected Economic and Financial Indicators, 2012–17 ......................................................... 83 Annex 4: IFC Statement of Held Investment Activities (FY13 to FY 18) ............................................... 85 Annex 5: Approaches to Smart Supervision and Implementation in WBG Operations in Burundi ..... 86 Annex 6: Gender focused CPF Actions ................................................................................................. 88 Annex 7: Burundi CPF Consultations Summary ................................................................................... 91 Annex 8: Burundi’s Performance on the MDGs ................................................................................... 93 Annex 9: Development Partner Sectoral Mapping, FY18 .................................................................... 94 Annex 10: Map of Burundi .................................................................................................................. 95 IDA IFC MIGA Vice President: Hafez M.H. Ghanem Sergio Pimenta Keiko Honda Director: Bella Bird Jumoke Jagun- Merli Baroudi Manager: Nestor Coffi Dokunmu Moritz Nebe Task Team Leader: Nestor Coffi Manuel Moses Hoda Moustafa Co-Task Leader Yutaka Yoshino Sudha Bala Krishnan Nabil Fawaz v ACKNOWLEDGEMENTS The Country Partnership Framework was prepared by a World Bank Group team lead by Nestor Coffi and Yutaka Yoshino under the guidance of Bella Bird and Franck Bousquet. Bank team members were: Nancy Visavilwa, Inaam Ul Haq , Andre A. Bald, Gayle Martin, Preeti Arora, Catalina Quintero, Puteri Watson, Hugh Riddell, Mark E. Cackler, Daniel John Kirkwood, Alain- Desire Karibwami, Amadou Alassane, Andrea Mario Dall'Olio, Brahim Abdelwedoud, Charles Kunaka, Cindy Audiguier, Ephrem Niyongabo, Eric Zapatero Larrio, Hadia Samaha, Hamidou Sorgo, Hugues Agossou, Hussein Jumaine, Jerome Bezzina, Jian Xie , Joanna P. De Berry, Justin Beleoken Sanguen, Laurence Lannes, Lorenzo Bertolini, Matthew Stephens, Miriam Schneidman, Mourad Ezzine, Nadia Belhaj Hassine Belghith, Nataliya Kulichenko, Nicoletta Feruglio, Paola Agostini, Papa Mamadou Fall, Paul-Jean Feno, Philippe Eric Dardel, Quynh T. Nguyen, Rachel Bernice Perks, Richard Martin Humphreys, Richard Shugugu, Shiho Nagaki, Tanya June Savrimootoo, Therese Niyonzima Rukingama, Tim Kelly, Verena Phipps, Vonjy Rakotondramanana, Yadviga Viktorivna Semikolenova, Clarette Rwagatore, Nadia Nkwaya Beza, Alice Museri, Simone Bella Nikuze, Sylvestre Hakiza, Pacifique Kwizera, Jessica Kanani Oscar Nzaramyimana and Armand Rwobahirya. Completion and Learning Review was carried out by Nestor Coffi supported by Adam Nelsson, Nancy Visavilwa and Clarette Rwagatore. The Results Framework was produced by Nancy Visavilwa with support from Tsegaye A. Assayew. The IFC team was led by Manuel Moses, Ignace Rusenga Bacyaha, Sudha Bala Krishnan, Marcos Vaena, and with Steffie Mahoro. The MIGA team was supported by Hoda Atia Moustafa, Moritz Nebe, and Nabil Fawaz with Vanessa N. Saldanha. This document benefited from extensive and thoughtful discussions with Burundian counterparts led by the Minister of Finance, Budget and Economic Development Cooperation and with Development Partners in Burundi. 1 I. INTRODUCTION 1. Burundi is one of the poorest countries in the world. Household survey data show that Burundi has the fourth highest rate of extreme poverty globally.1 An estimated 72.9 percent of its people live below the international poverty line of US$1.90 per day—nearly double the average for Sub-Saharan Africa (SSA) and for low-income countries (LICs). Of 102 countries, Burundi had the 8th highest proportion of multidimensionally poor individuals, an estimated 81 percent. Poverty is concentrated in rural areas and in the North and Center-East regions, where the rate is triple that in Bujumbura. 2. Burundi is near the bottom for all global measures of human capital. It has the highest rate of chronic malnutrition in the world (56 percent) and a high fertility rate (5.5 children per woman). In 2018, Burundi ranked 138 out of 157 countries on the Human Capital Index (HCI) with an HCI of 0.38, slightly lower than the average for SSA of 0.40 but high for its income level. Despite recent progress in enrollment the quality of education is still poor. Today, 16 percent of Burundians are food insecure. 2 These factors highlight the urgency of improving human development if general development outcomes are to improve. 3. High population growth in Burundi, which will make it the seventh largest contributor of global poverty by 2030, poses a major barrier to its socio-economic development. With a growth rate of 3.1 percent, Burundi’s population is expected to double every 21 years. Burundi’s population is very young: 55 percent are no older than 19. High fertility limits girls’ education, and hence their workforce participation, leaving most women in informal jobs that are low- productivity, low-wage, low-skilled and which deter Burundi’s realization of the demographic dividend. 4. Since Independence in 1962 Burundi has been locked in a low-level equilibrium sustained by mutually reinforcing fragility and poverty. Burundi’s fragility takes four forms: economic (limited economic diversification and growth); demographic (high population growth and density); geographic and environmental (landlocked, land-scarce, and subject to climatic shocks); and political and institutional (political instability, poor governance, and inadequate institutions). 3 These factors also sustain high poverty rates and low levels of human capital. Burundi’s GDP per capita is being eroded by high population growth and minimal economic growth. Lack of human capital also keep fertility and malnutrition rates high. Economic growth, in turn, has been constrained by conflicts, climatic shocks, and the small and undiversified economy.4 1 The Survey on Household Living Conditions in Burundi (ECVMB) 2014 and confirmed by the 2018 Rapid household Survey. 2 Integrated food Security Phase Classification (IPC) December 2018. 3 Based on the 2017 Systematic Country Diagnostic (SCD) and the 2017 Risk and Resilience Assessment (RRA). 4 Over the past 50 years, for a cumulative 11 years Burundians had to cope with climate shocks that contracted agricultural output and for another 11 years with serious political conflicts that shrank the nonagricultural sector dramatically. 1 Figure 1: Burundi’s Cycle of Fragility and Poverty Fragility Poverty • Land locked • High population growth • Limited land • Climatic changes Geographic & Demographic Environmental Political & Economic Institutional • Lack of diversification • Conflict • Low productivity • Weak accountability • Unstable macro 5. Regional cooperation is critical for Burundi because its fortunes are tied with its neighbors as a small landlocked country historically affected by conflict spillover, notably refugee flows (Box 7). Regional connectivity in energy, trade, and transport can significantly expand opportunities for growth and poverty reduction and dismantle binding structural constraints. Facilitating Burundi’s integration in the East African Community (EAC) and the Great Lakes Region through better cross-border regional transport, disease surveillance, management of forced displacement, and logistics infrastructure and services will give Burundians opportunities to expand their markets, which will both contribute to growth and job creation and have positive impacts on human capital development, poverty, and gender. To that end, Burundi could participate in a number of regional intiatives in energy (e.g., Ruzizi III Hydropower Project) as well as regional trade and transport projects around Lake Victoria and Lake Tanganyika. 6. Despite a long history of fragility and poverty, during periods of stability Burundi has demonstrated that it can achieve robust gains in economic and human capital. After the stabilizing 2000 Arusha Peace Accords and democratic elections in 2005, Burundi’s growth accelerated to average 4.3 percent annually from 2007 to 2014, the fiscal deficit was cut to an average of 3.4 percent of GDP, and inflation was controlled. Moreover, its Human Capital Index (HCI) value went up from 0.35 to 0.38 between 2012 and 2017, a period when access to primary education became universal, with gender parity. Maternal and child mortality fell,and the country made solid progress in combating HIV/AIDS and other diseases. Maternal mortality ratio fell from 500 to 392/100,000 live births between 2010 and 2017 (DHS data for both years). Under five mortality rate fell from 96 to 78/1,000 and infant mortality rate from 59 to 47/1,000 between 2010 and 2017 (DHS data for both years). 2 7. The 2015 political crisis 5interrupted a decade of growth and development. Real GDP contracted by 3.9 percent in 2015 and 0.6 percent in 2016 before starting to recover in 2017. Foreign exchange (forex) reserves contracted to less than four weeks of imports. In 2016 tax revenue dropped due to depressed growth while donor support6, which had been financing half of the national budget, also sharply declined. These resulted in the pushed up of the fiscal deficit to 5.8 percent. The resulting drastic reductions in basic social services compromised citizen trust in the state. Shortages of food, fuel, and drugs still threaten livelihoods, and lives; and four years after the electoral crisis, the country is still struggling to re-establish the foundation it needs to move out of its low-level equilibrium. 8. The World Bank Group (WBG) has stayed engaged in Burundi throughout this crisis, guided by what it learned from the 2011 World Development Report (WDR) on conflict, security, and development; and by detailed analysis of fragility, conflict, and violence. The goal of the portfolio is to improve health and social protection; deliver basic services; restore livelihoods; and build economic resilience.7 Despite the challenging environment, results are being achieved, and programs are well-targeted to the most vulnerable, such as social safety nets and free health care for pregnant women and children under the age of five8. 9. A basic premise is that the political environment will not change significantly during this CPF cycle. In the baseline scenario, Burundi maintains the fragile political and economic status quo. Two alternative scenarios are also considered. In the upside scenario, economic and social reforms spur inclusive growth and the country engages more fully with the international community. Important to note is that currently there is no active IMF program and there has been no Article IV review for over four years.9 In that case, the WBG might expand its support for sustainable and inclusive growth and poverty reduction using such engagements as policy- based financing. In the downside scenario, the macroeconomic situation would deteriorate and a crisis materialize through such channels as a forex shortage, high inflation, loss of fiscal space, a distressed financial sector, or disruptions of social services generate a humanitarian crisis. In that case, to minimize human costs the CPF could be adjusted to target essential social services with rapid impacts. The next general elections are scheduled for mid-2020 after which a Performance and Learning Review (PLR) will be undertaken to take stock of any changes in the country context and adjust the program and results indicators accordingly. 10. This Country Partnership Framework (CPF) builds on lessons drawn from current engagements and recognition of the operating and reputational risks of the fragile political context. The CPF is fully aligned with WBG Strategy for Africa that aims to create sustainable and inclusive growth, strengthen human capital and build resilience to fragility and climate change. The outcome is a further shift in the Bank’s engagement toward a more citizen-centered and inclusive approach, with a focus on human development outcomes especially for the most 5 In 2015 a conflict broke out between the contenders of the presidential election 6 Since 2016 Development Partners have suspended direct budget support to the Government of Burundi. 7 The Board endorsed this approach at an Informal Board Briefing in June 2016. 8 2017 Risk and Resilience Assessment Assessment (RRA). 9 See box 3 for more details. 3 vulnerable; building economic and social resilience; and an approach adapted to a dynamic context.10 The CPF expects to achieve the following key results by 2023, across two Focus Areas: (i) Building Human Capital and Inclusion, and (ii) Strengthening Foundations for Economic and Social Resilience (Box 1). Box 1: Key CPF Expected Outcomes over the CPF Period11 • Enhanced coverage of safety nets to 1 million of the poorest population in Burundi • 1 million women and children under two receive basic nutrition services • Over 25,000 teachers trained and 7 million textbooks developed, printed and distributed to achieve a pupil-textbook ratio of 1:1 • 1 million beneficiaries of climate-smart, nutritious food production • 16 percent increase in land productivity, targeted to degraded landscapes • Energy generation capacity doubled from 55 to 100 MW • Expanded size of beneficiaries in refugees and host communities reached through socio-economic integration programs • Enhanced access to off-grid solar energy to rural communities, including health centers, public schools, training centers and markets II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA A. Social and Political Context 11. Though there is currently no active conflict, Burundi has been stuck in a low-level equilibrium with repeated cycles of fragility, conflict, and violence 12 since independence in 1962. It has experienced four coups d’état, mass violence, and the assassinations of five leaders.13 Stability was temporarily gained under the 2000 Arusha Accord, which ended a civil war driven by ethnic conflicts that had begun in 1993. The postwar transition that followed the Accord kept the country generally stable until 2015, though with occasional outbursts of violence and political tensions as strong political competition continued.14 The stability was lost in 2015 when civil unrest broke out in May 2015 and a failed coup attempt was followed by contested election- related violence that claimed hundreds of lives. Mediation by the leaders of the EAC was necessary to reduce the mass violence. Burundi now enjoys a relative calm, although political violence, mainly in the capital, continues to simmer, targeting leaders from both the opposition and the government. 12. In a May 17, 2018, referendum, the people of Burundi adopted a new constitution that entered into effect on June 7th, 2018. It changed term limits for the President, allowing President 10 This CPF supports the Government’s Vision 2025, which seeks to reverse the slide in per capita GDP experienced since 1993, and to halve poverty. The CPF is informed by the findings of the 2017 SCD; lessons learned from the 2017 Completion and Learning Review (CLR, summarized in Annex 2); other analytical work; and consultations with representatives of the Government, Parliament, the private sector, civil society, and development partners. 11 Some of these results will be updated at PLR when scale-up of the projects is envisaged subject to availability of funds. 12 Because Burundi currently differs from some other countries considered fragile where there is active conflict and for countries in transition to or from conflict situations, the challenges and opportunities for engagement also differ. 13 Two winners of democratic elections, one president, one prime minister, and one king. 14 The Arusha Accord between the political parties was signed in 2000 and is credited with ending the 1993–99 civil war. 4 Nkurunziza to run again, but he has since announced that he will step down in 2020. Preparations are underway for general elections scheduled in the second half of 2020. A national electoral commission has been appointed; after the referendum enrollment of voters was completed; and the EAC is striving to promote an inclusive inter-Burundian dialogue for peaceful, transparent, and inclusive general elections. 13. In 2015, the challenging security and socioeconomic conditions in the country triggered unprecedented forced displacement. In May 2018, Burundi had an estimated 187,000 internally displaced people (IDPs), 76 percent of whom were motivated by natural disasters and 24 percent by the socio-political situation. Another 396,000 Burundian refugees live in neighboring Tanzania and Rwanda, most of whom fled the 2015 political crisis. Although emigration from Burundi has gone down, few refugees have yet returned. 15 Meanwhile, Burundi itself is hosting 77,177 refugees, mostly from the Democratic Republic of Congo (DRC); see Box 2 below. Box 2: Horn of Africa and The Great Lakes Region: Refugees and asylum-seekers by country of origin as of January 31, 2019 B. Economic Context and Outlook 14. The economy is slowly recovering. In 2017, after two years of economic contraction, Burundi saw low but positive real GDP growth, estimated at 0.5 percent, supported by rebounds 15Between September 2017 and May 2018, the UN High Commission for Refugees (UNHCR) facilitated the voluntary return of 30,000 Burundian refugees from Tanzania, many to locations near UNHCR camps, and an estimated 57,000 have returned without UNHCR support. The Tripartite Agreement negotiated in 2017 between the Governments of Burundi and Tanzania and the UNHCR, which established principles to guide voluntary return, is currently being re-negotiated. 5 in coffee production, and in industries including mining as chronic power shortages were reduced by generation of 30 MW of thermal power. The growth momentum picked up further in 2018 with an estimated growth rate of 1.6 percent, driven by industry (e.g., growth in mining investments, and strong recovery of agro-processing industries). 16 Nonetheless, security concerns and severe forex shortages dampened services, especially tourism and banking. Driven by shortages of food and forex, headline inflation averaged 16.1 percent in 2017, moving to -2.6 percent contraction (deflation) in the 12 months ending in December 2018 as food supply conditions normalized after a poor 2017 harvest and prices declined significantly. 15. Despite recent improvements, the recovery remains fragile with substantial vulnerabilities in the economy, including in the external sector. After two years of economic contraction, exports of goods rose by 45 percent in 2017, as mineral exports surged—mainly gold (34 percent of total 2017 exports) and niobium ore (4 percent). However, the current account deficit significantly deteriorated by an estimated 19.2 percent of GDP in 2018 from 11.3 percent in 2017. The trade balance widened due to low exports—including gold exports which declined by 27 percent and offset the rise in exports of coffee and other minerals—while imports have substantially increased, supported by the recovery in domestic demand. The CAD was financed by increased inflows to the capital account through development projects and by investment led by commercial credits. However, foreign direct investment (FDI) dropped from 3 percent of GDP in 2014 to about zero since 2016. 16. The suspension of external budget support by donors in response to the 2015 crisis heightened the need for the Government to mobilize additional domestic revenue and consolidate spending, drying up much-needed spending on development. The government intensified tax collection efforts and introduced such revenue-boosting measures as hikes in taxes on fuel and mobile phones. These actions brought in additional domestic revenue, along with new revenues from mining in 2018, but not enough to fully offset the plunge in external financing. Consolidated spending, including cuts to development spending and a hiring freeze in the public sector, helped to narrow the fiscal deficit from 6.9 percent of GDP in 2016 to 4.5 percent in 2017 and 2018. However, with limited access to external sources, it was principally financed by government treasury bills and Central Bank (BRB) advances. 17. The country remains at high risk of debt distress, largely due to a rise in domestic debt as external borrowing options remain limited.17 Total public debt rose to about 50 percent of GDP at end-2018 while domestic debt has grown to more than 71 percent of total debt, up from 47 percent in 2012. Domestic debt is mainly in the form of short-term (less than a year) T-Bills and longer-term (2-5 years) bonds financed by commercial banks and Central Bank advances to the government. The shorter maturity and higher interest rates relative to previous external 16 Stronger readings in other high-frequency indicators such as energy production and total credit to the private sector also suggest stronger economic growth in 2018, compared to 2017. 17 This is based on the last Debt Sustainability Analysis (DSA) performed jointly by the World Bank and the IMF in 2015. Bank staff intend to conduct a DSA update in FY20 and advise the Government on a medium term debt strategy, provided that necessary statistics are made available. 6 borrowing options have increased debt-servicing costs and vulnerability to interest rate, refinancing and liquidity risks (see Box 3 below). 18. The decline in foreign aid since 2015 has depleted international reserves, and Burundi has limited sources of foreign exchange from exports, FDI, and remittances. By the end of 2018, international reserves covered just 0.9 months of imports, and import needs for some essentials went unfulfilled. BRB interventions in the forex market, such as liquidity injections and restrictions on forex transactions, limited depreciation of the official exchange rate to 4.6 percent in 2017 and 3 percent in 2018. Nonetheless, the parallel market premium soared from 25 percent in 2015 to 52 percent in mid-January 2019. Forex has been allocated only for imports the government defined as essential: medicines, fuel, agricultural inputs (fertilizer), and “strategic” manufacturing inputs (for breweries). There are concerns that opaque and unpredictable allocation decisions on access to forex at the official rate are also weighing on economic activity. 19. Vulnerabilities in the banking sector have been exacerbated by the rise in domestic debt and deteriorating portfolio quality. By 2018, capital adequacy and liquidity asset ratios were well above regulatory minimums. After substantial improvements in the main indicators of profitability, returns on assets and equity also improved. Commercial bank assets are increasingly concentrated in T-bills and T-bonds, which account for 50 percent of fiscal deficit financing; meanwhile, credit to the private sector has steadily declined. The banking sector has thus become more vulnerable. It is also burdened by concerning proportion of non-performing loans (NPLs) in the private sector credit. Despite recent improvements, the level of NPLs remains high at 9.2 percent as of December 2018 while public sector credit risk rises. 20. Burundi is expected to continue on the recovery path but faces serious downside macroeconomic risks which may jeopardize the nascent recovery from the crisis. At the moment, recovery in industrial activities, growth in mining exports, as well as government spending controls have kept the economy afloat. The economy could grow by about 2–2.5 percent in the medium term, supported by continued recovery of agriculture and industry (Table 1). However, deviations from the projected fiscal consolidation could jeopardize financial and macroeconomic stability, including increasing the insolvency risk of the public sector due to rising domestic debt. Also, if domestic financing of the fiscal deficit continues, it places upward pressure on inflation, which in turn reduces profitability of the already vulnerable banking sector. Extremely low levels of foreign exchange reserves also heighten the risks of a balance of payments crisis, for example if the terms of trade worsen, and create inflationary pressure and strains on the foreign exchange market. 7 Table 1: Main Economic Indicators 2016-202118 Box 3: IMF Engagement in Burundi Burundi has engaged with the IMF only to a limited extent since 2015. The three-year Extended Credit Facility (ECF) arrangement for Burundi, which was approved in January 2012 and was extended for one year to run until March 2016, went off-track in 2015 without completion of the final (seventh and eighth) reviews. The last Article IV consultation was completed on August 25, 2014. The next Article IV consultation mission, scheduled for February 2017, was canceled at the request of the authorities, and Burundi’s Article IV consultation is now delayed by more than three years. The authorities stopped providing data needed for surveillance in 2016. However, the IMF continues to engage in a dialogue with the authorities as much as possible. A staff visit took place in September 2018, and additional such visits are being envisaged for calendar year 2019, including to elaborate a joint understanding of economic developments. In addition, the IMF has continued to provide capacity building activities, most recently in the area of banking supervision. The IMF hopes to reengage more fully with Burundi in the near future. 21. The current economic challenges are complicated by the structural weaknesses of the economy as discussed in the SCD. These must be addressed if Burundi is to accelerate recovery from the current crisis and build long-term economic resilience. Major problems are unproductive agriculture, little economic diversification, and minimal fiscal space. Economic 18National accounts figures are based on estimates using a World Bank macroeconomic model MFMoD based on fiscal, external, and monetary data from official sources. Given the lack of availability of consistent national accounts data from the Government, GDP growth is estimated by the model to ensure its consistency with developments under other macroeconomic indicators as well as historical performance of key sectors of the economy. 8 success will depend on whether the government can effectively renew the pre-crisis reform agenda. C. Poverty, Inequality, and Jobs Figure 2: Burundi Poverty Map 22. Burundi has the fourth highest rate of poverty in the world. In 2014, 64.9 percent of its people lived below the national poverty line; and of these, 38.7 percent were even below the food poverty line.19 As Figure 2 shows, there is significant geographic variation: for example, poverty in the province of Muyinga (North region) was 78.6 percent and in Ruyigi (Central East region) 82.8 percent. The rural-urban divide is glaring: 69 percent of rural residents in Burundi are poor, compared to 21 percent in Bujumbura, and 41 percent in other urban areas. Rural- urban disparities are mainly driven by significant differences in household livelihood assets. 19At the international poverty line of $1.90 (2011 PPP) per day, poverty in Burundi in 2014 was an estimated 72.9 percent. 9 Differences in poverty by the sex and marital status of the household head 20illustrate the degree to which women must depend on men for access to resources like land and farm labor. Most nonpoor are themselves close to the poverty line—but most of the poor are far below it. 23. Since 2014, poverty has risen slightly and inequality has worsened, particularly in Bujumbura. Based on the latest Survey on Household Living Conditions in Burundi,21 which used the national poverty line, from 2014 to 2017 poverty rose from 64.9 to an estimated 66 percent,22 mainly because poverty in Bujumbura worsened from 20.8 to 24.7 percent. During the same period inequality worsened as well, as Burundi’s Gini coefficient rose from 36.1 to 37.7, 23 again with a particularly steep increase in Bujumbura (37.6 to 44).24 24. Unemployment rose significantly between 2014 and 2017 especially in Bujumbura. The national unrestricted unemployment rate, which includes individuals not actively seeking a job, went from 2.4 to 7.8 percent. The problem was particularly severe in Bujumbura, where unemployment worsened from 20.0 to 32.9 percent. Jobs in Burundi are overwhelmingly concentrated in agriculture, and many do not pay wages. In 2017, 83.5 percent of Burundi’s workers were employed in agriculture, 10.7 percent in services, 3.9 percent in trade, and 1.9 percent in industry. Urban employment is more diversified: 40 percent of the urban labor force works in services (55 percent in Bujumbura). Employment primarily takes the form of informal work and independent farming: a full 51 percent of workers do not get a formal wage; of these, 46.2 percent are unpaid farmers . 25. Women and youth are most likely to have informal jobs. While women account for 52.7 percent of the workforce, more women than men work in farming.25 Moreover, 71.2 percent of women are unpaid but only 28.5 percent of men. Similarly, more men (18.6 percent) than women (7.2 percent) have waged jobs. Youths aged 15–24 make up 18 percent of the Burundian population of about 11 million and account for most entrants into the labor market. About 150,000 of them enter each year, but most work as family helpers, independent workers, or manual labor, with low incomes. As the National Youth Policy 2016 –26 states, rural youth have no land at all or no productive land, and only a small number of urban youth have access to employment. As Burundi faces a large youth bulge, unemployed youth add to the already high 20 See more detailed discussion of cultural norms and legal restrictions on gender in Box 5, and the National Gender Action Plan in Annex 6 . 21 Belghith,N., et al. (2018). Subjective poverty and recent changes in living conditions: findings from the rapid household survey. Washington, D.C.: World Bank Group. 22 Given the difference of survey methodologies between ECVMB 2013-14 and ECVMB 2017, a survey-to-survey imputation has been employed to estimate a poverty figure for 2017 that is comparable to the 2014 number. For details, see “Subjective Poverty and Recent Changes in Living Conditions: Findings from the Rapid Household Survey” (World Bank Poverty and Equity Global Practice, June 2018). 23 Inequality may have been underestimated because the Burundi Poverty Assessment survey failed to sample the richest households and because of other measurement issues detailed in the 2016 Burundi Poverty Assessment. 24 Burundi’s Gini score is the same as Tanzania’s but at least 5 points lower than those of the DRC and Rwanda. 25 The industry sector employs 1 percent of total female workers and 4 percent of total male workers. The service sector employed 3 percent of total female workers and 10 percent of total male workers. 10 youth dependency ratio (See Box 5 on RRA recommendations for youth)26. Almost half of the population is below the age of 15 and there are nine children for every ten working adults . D. Development Challenges and Opportunities High population growth compounds massive human capital challenges. 26. At only 0.38 in 2018, Burundi’s HCI is among the lowest in the world. This means that as a child born in Burundi today grows up, they will become just 38 percent as productive as they would be if they had completed their education, both primary and secondary, and enjoyed full health. This calls for not only raising awareness of human capital needs but also for scaling up interventions. The CPF thus aims to accelerate more and better investments in people to support Burundi’s efforts to speed up the building of human capital. More than 80 percent of the people of Burundi are poor in numerous ways, especially education and health. Despite some progress, literacy is generally low, particularly among women and rural residents. Although enrollment in primary education has improved, primary completion rates are also low; and only 4.6 percent of Burundians aged 25 and above have any secondary education. On average, 18-year-old Burundians complete just 7.5 years of school.27 27. Burundi has made significant progress in health and education in the past decade but continues to struggle with a high child and maternal mortality rate, high fertility rate, extremely high rate of chronic malnutrition and a low completion rate for basic education. The introduction in 2006 of free maternal and child health services and performance-based financing (PBF) opened up access to care, though mortality was reduced less than expected because the quality of care is suboptimal. In health, although institutional deliveries increased dramatically, from 31.8 percent in 2005 to 85 percent in 2016–17, mortality is still high because of the poor quality of health care and high fertility rates. In the 2016–17 Demographic and Health Survey (DHS) under- 5 mortality was estimated at 78/1,000 and maternal mortality at 392/100,000. Under-five mortality is slightly higher than the SSA average (75.5/1,000 in 2017) and higher than in Rwanda (38/1,000) and Tanzania (54/1,000). The total fertility rate (TFR) of 5.5 children per woman in 2016–17 is much higher than the SSA average (4.8 in 2016- 17) or that of neighboring Rwanda (3.8) and Tanzania (5.0). The high fertility stems primarily from high rates of marital fertility and little use of contraceptives. Modern contraceptive prevalence only rose from 18 to 23 percent between 2010 and 2016–17. 28. In education, the 2005 education policy gave priority to expanding school access, deploying trained teachers, and a single language of instruction, Kirundi, in the early grades. By 2015 the gross enrollment ratio (GER) had gone up from 82 to 134.2 percent. Results from international assessments like the Program for the Analysis of Education Systems (PASEC 2014) 26 The RRA recomndation is to provide different kinds of support to youth in Burundi, including vocational skills training, capacity building, and psychosocial and monetary support as they are drivers of fragility. To address this the WBG program has come up with two projects (i) Local Development for Jobs Project and the (ii) Youth Skills and Employment Project that explicitly address youth unemployment in Burundi. 27 Burundi HCI note. 11 show relatively good learning outcomes (Box 4).Yet only about 44 percent of children enrolled in grade 1 are expected to reach grade 6.28 Repetition rates are also very high, averaging 24 percent for primary students. And despite a good ranking on the PASEC, there is still significant room for improvement in learning outcomes, especially early grade literacy—only 3 percent of second grade students read more than 40 words a minute 29, the minimum desired reading fluency in grade 2, and about 33 percent read no more than 5 words per minute. Reading comprehension is also below expected levels. Box 4: Burundi’s Successes and Challenges in Education Since the early 2000s, Burundi has shown significant progress in education despite major socioeconomic and political challenges, high levels of poverty, and continued demographic growth. After it introduced free primary education, between 2005 and 2015 the gross enrollment ratio (GER) went from 82 to 134.2 percent, and access increased for both genders and in all provinces, areas, and wealth quintiles. The out-of-school rate also fell, to 13 percent in 2014, compared to 17 percent in neighboring DRC. Gender parity was achieved in primary level in 2012 and in lower secondary in 2015. Cumulative dropout rates at the primary level is higher among boys than among girls (60 vs 54 percent), and relatively similar across gender in lower secondary (29 percent for girls vs 27 percent for boys). By the time they reach the end of the basic education cycle, most will have dropped out already explaining the fall in dropout rates in lower secondary. Early pregnancies, while it does happen, it is not among the main causes of dropouts. The number of early pregnancies (primary and lower secondary levels) have decreased from 2,438 to 2,208 between 2013/14 and 2015/16. Overall reproductive life among 15-19 (post-basic age) has decreased from 10 percent to 8 percent between 2010 and 2016/17 (DHS). However, education in Burundi is still inefficient. Repetition rates, both official and unofficial (hidden), are high. In addition to children failing to progress to their next class, “hidden” repetition also comes from children attending only sporadically throughout the year and re-enrolling in the same grade the following year. This contributes to large class sizes, which make both teaching and learning difficult. In 2012, the Ministry of Education committed to improving the quality of education for every Burundian child by reforming basic education. The new IDA-financed Early Grade Learning Project (P161600) seeks to protect Burundi’s hard-won education gains and support reforms in the early grades. 29. Prospects for building human capital in Burundi are further jeopardized by a high prevalence of chronic malnutrition countrywide, which is the highest in the world (56 percent in DHS 2016/17) and has been virtually unchanged for three decades. Except in Bujumbura, the prevalence of chronic malnutrition is close to half in all provinces. Chronic malnutrition increases susceptibility to diseases and infections and causes cognitive delays, compromised learning, and ultimately losses in work productivity. Restricted fetal growth and preterm birth are the main causes, followed by limited access to clean water, poor sanitation and personal hygiene, and maternal child feeding and care practices.30 High fertility, inadequate infant and child care, and heavy burdens on natural resources make it difficult to meet the nutritional needs of children. Chronic malnutrition also rises as families add more children; in the poorest households, rates of 28 UNESCO Institute for Statistics (UIS) 2016. 29 ACER (March 2014). The Early Grade Reading Assessment (EGRA 2012): Assessing children's acquisition of basic literacy skills in developing countries. Assessment GEMs no.2. Melbourne: ACER 30 Danaei, G., et al. (2016). “Risk Factors for Childhood Stunting in 137 Developing Countries: A Comparative Risk Assessment Analysis at Global, Regional, and Country Levels. PLoS Medicine 13(11), e1002164. 12 chronic malnutrition increase from 59 percent for the first birth to 68 percent for the third. There is also an inter-generational cycle of malnutrition: malnourished mothers are more likely to have babies who suffer from malnutrition; mothers under 20 are also more likely to have low birth- weight babies (14 percent in 2010) than mothers aged 20–34 (10 percent).31 The links between poverty and fragility 30. In Burundi, fragility and poverty are mutually reinforcing and driven by the same factors. As noted, the four forms of fragility are economic, demographic, geographic and environmental, and political and institutional. High population growth combined with land scarcity is a major driver of poverty and fragility. More people on the same amount of land leads to environmental degradation, which is steadily undermining land ownership and threatening the livelihoods of the poor. The scale and nature of land-related disputes have caused serious problems for Burundi’s conflict resolution institutions.32 In rural areas, land is a primary source of conflict: the livelihoods of 80 percent of Burundians rely on agriculture; there are few other opportunities. Furthermore, more than one-third of Burundi’s land is highly or very highly degraded. Land issues are thus central to concerns about poverty, the environment, and political stability. High population density also exacerbates pressures for delivery of social services. 31. Political and institutional instability, climatic fragility, and economic volatility have slammed the brakes on Burundi’s growth prospects. Inadequate governance and institutions make it difficult for the state to deliver services and react promptly when risks materialize. Lower scores on Burundi’s most recent Country Policy and Institutional Assessment (CPIA) illustrates its governance challenges. While both the SCD and the Risk and Resilience Assessment (RRA) emphasize the importance of governance for mitigating the drivers of FCV, creating conditions for growth, and reducing poverty, each assessment is realistic about the related difficulties. The RRA emphasizes the need to identify what can be achieved in the short term, before the 2020 elections, and what ground can be laid for growth and poverty reduction beyond 2020. In the short term, the RRA recommends encouraging citizen engagement and subnational governance, specifically community-driven service delivery, and weaving conflict resolution and peace- building initiatives into current projects. In the medium to long term, the RRA recommends that the World Bank emphasize efforts to build legitimate institutions that are inclusive of the population (see Box 5 below). 32. Public perception of corruption is very high, having worsened over the years. Corruption, which flourished during the civil war that ravaged Burundi from 1993 to 2000, has become entrenched. The political and macroeconomic stability that followed the Arusha Accord allowed Burundi to adopt many legislative, institutional, and policy instruments to fight corruption,33 but they have had little impact: as currently configured, there are few checks and 31 World Bank (2018). Demographic Challenges and Opportunities in Burundi. Washington, D.C.: World Bank Publications. 32 Especially the legal system and the Arusha Accord Special Commission for Land and Assets Disputes. 33 For example, numerous laws regulating governance were passed, such as Law no. 1/12 of 18 April 2006 against corruption, and institutions specialized in the fight against offenses of corruption and related offenses were created, such as the Special Anti- Corruption Brigade, the General Prosecutor's Office at the Anti-Corruption Court and the Anti-Corruption Court. The Burundi national strategy of good governance and fight against corruption covering 2011-2015 was later drafted. 13 balances on the state. A recent publication that described corruption as “strong and systematic” revealed a variety of corrupt public procurement practices (Rufyikiri 2016), among them exclusivity clauses in bidding documents, overbilling or under-invoicing in the purchase or sale of public goods, and public goods paid for but ultimately not provided. Risks of corruption also arise from restrictions on allocation of forex to specified items. Box 5: RRA recommendations The RRA is based on a desk study and interviews in Burundi which featured conversations about the country’s fragility, conflict, and violence (FCV) risks, opportunities to manage those risks, the society’s resilience factors, and recommendations for WBG programming and policy dialogue conducted in Burundi in 2017. The RRA team met with representatives from government ministries and agencies, embassies, UN agencies, nongovernmental organizations (NGOs), and activists from civil society organizations (CSOs). It updates previous fragility assessments conducted in July 2012 and February 2014, and the RRA conducted in June 2016. Below are the recommendations from the 2017 RRA analysis: • Engage the Government of Burundi in a policy dialogue for a sequenced approach to peaceful development that is centered on inclusivity, transparent growth, and poverty reduction. • Involve independent NGOs or companies in monitoring the work of implementing partners throughout the project cycle to ensure transparency and proper management. • Facilitate dialogue between donors and the government. • Help create a more competitive environment for business. • Continue to support the basic needs of the Burundi people, including the most vulnerable, the displaced, and the returnees. • Provide different kinds of support to youth in Burundi, including vocational skills training, capacity building, and psychosocial and monetary support. • Help reinforce trust between the government and the population. • Help the Government of Burundi introduce a transparent, merit-based public administration and civil service. • Help Burundi manage its natural resources, which are a tremendous asset but if not well managed could become a risk factor and add to its cycle of fragility. 33. Climate variability, coupled with already prevalent environmental degradation, poses serious threats to Burundi’s economy. Climatic shocks jeopardize its natural resources, abundant rainfall, dense network of rivers and lakes, and fertile though degrading agricultural land. In nearly every decade since independence, Burundi has suffered extreme climate-related events, mean temperatures have been rising, and the dry season has been getting longer. Climate change and land degradation not only threaten Burundi’s economy directly but are also likely to exacerbate the risks posed by poor soil management and agricultural and seasonal variations in water availability, on which power generation depends almost entirely. Though highly exposed to climate change, Burundi has very little capacity to respond to its shocks. Climate change will depress food security and water availability. These realities prompted the government in November 2013 to adopt a National Policy on Climate Change and National Determined Contributions to promote development resilient to climate change. In local areas, environmental stress, climate change-related shocks, and poor land management are all factors. For example, eight of the most impoverished provinces are also the most heavily degraded environmentally. 14 34. Gender aspects are relevant in addressing barriers to poverty reduction and growth. Among these are poor maternal health, high fertility, exposure to gender-based violence (GBV), lack of land tenure for women, the low productivity of women’s farms, and the difficulties they face in transitioning into non-farm activities (see box 6 below). Box 6: Gender aspects in Burundi High fertility not only threatens the health of women and children but is also a barrier to women’s empowerment and participation in the economy. Less access to land and to improved agricultural techniques and equipment limit the productivity of women farmers, undermining both household incomes and food security. While Burundi scores 73 percent on the Women, Business and Law Index, reforms passed in the last decade to address legal discrimination against women in business have yet to be translated into effective improvement in the lives of women. The source of many of these problems is women’s lack of empowerment. This i s often rooted in social norms that limit their involvement in making decisions even about their own health care; and patriarchal customs of land tenure and inheritance are disincentives for women to make productive investments in agriculture. Recent successes illustrate how change can come both from approaches that are top-down (such as policies for free primary education and maternal health care and the constitutional quota for women’s representation in parliament) and from the grassroots (such as gender-norms discussion groups for project beneficiaries). Consultations with businesswomen highlighted three types of obstacles to the development of women in Burundi: cultural, legal and access. The law on inheritance still does not allow women to inherit. This impacts their potential as economic operators with respect to access to credit because they do not have collateral to mortgage and create capital. Recommended sectors to support for the development of women in Burundi include: (i) Education, (ii) Social Protection, (ii) Entrepreneurship, (iii) Crafts, and (iv) Agribusiness. Recommendations : • The creation of guarantee funds. Access to bank guarantees and credit with a real focus on rural women is paramount. • The promotion of women's associations as a framework for empowerment and change of mentality in the societal perception of women. • The extension at the national level of projects like Merankabandi that really allow the empowerment of Burundian women and the change of mentalities. • The creation of a capacity building platform by women and for women and that adapted to rural areas (Business Plan in Kirundi). • The importance of education which is the only real way of empowerment in the given context. • The encouragement of the Burundian woman's commitment in public life for the achievement of the Arusha objectives to obtain 30% female representation which will then advocate for laws and policies in favor of women. 35. Limited economic growth, depressed by unproductive agriculture, lack of diversification and private sector growth, as well as minimal fiscal space, makes it much harder to reduce poverty. While agriculture provides income for about 85 percent of the people of Burundi and makes up about half of total GDP, agricultural workers tend to be locked into low-productivity and subsistence activities. The structural shift from agriculture to higher-productivity sectors has been slow and extremely challenging. External trade is limited by the narrow export base of coffee and tea. Economic diversification has been limited by such supply-side problems as limited access to energy and finance, skills shortages, and the small formal labor market, all of which 15 deter private sector development.34 Given its history of fragility, investors consider Burundi a very risky place to invest. Burundi’s economic growth and diversification also depends on macroeconomic stability in the country. However, with foreign aid declining over the past decade—from 27 percent of GDP in 2008 to 14 percent in 2014, and to below 10 percent after the 2015 crisis—growth in domestic revenue is not sufficient to fill the gap, Burundi does not have adequate fiscal buffers to counter shocks.35 34IFC jobs study; Assessing Private Sector Contributions to Job Creation and Poverty Reduction, February 2013. 35Yet aid to Burundi has been quite low compared to other countries. Even before 2015 other EAC countries were getting two to three times more aid per capita. 16 Box 7: Burundi’s Regional Integration Challenges and Opportunities 17 III. WORLD BANK GROUP PARTNERSHIP STRATEGY A. The Government Program and Medium-Term Strategy 36. Vision 2025 sets out the government’s intentions to promote (1) good governance and the rule of law; (2) a robust and competitive economy; and (3) a better quality of life for the people of Burundi. It recognizes the importance of development for peace and security and commits to reconstructing national unity; it also acknowledges that social progress can only be sustainable if all segments of society are unified. 37. On June 29, 2018, the Government adopted a new National Development Plan (NDP) through 2027 to succeed the second Poverty Reduction Strategy Plan (PRSP II). The NDP’s strategic objectives are to (1) promote the sources of growth to spur structural transformation of the economy; (2) build human capital; (3) ensure sustainable environmental management, mitigate the impacts of climate change, and improve landscape management; (4) improve governance, food security, and national sovereignty; and (5) mobilize resources, improve public financial management (PFM), and promote regional and international cooperation. The government also plans to pursue public-private partnerships (PPPs) to leverage economic and social funding and to reform the business climate so as to attract national and foreign investors. B. WBG Country Partnership Framework Lessons identified from previous work 38. The Completion and Learning Review (CLR) for Burundi’s Country Assistance Strategy (CAS) FY13–FY16 offers key lessons to guide the design and operation of CPF programs: • To reduce risks and improve results, it is important that engagements are fully informed by the RRA and by political economy analysis. • Project design characteristics such as simplicity, realistic goals, and close consultation with stakeholders and communities led to satisfactory outcomes. • The complexity of operating in Burundi requires close engagement with both development partners and the client to safeguard staff and dependents and the program, particularly during crisis periods. • Given the unpredictable and fragile context of Burundi, the WBG program needs to be flexible enough to adjust quickly to emerging scenarios and identified risks. • Despite the Governement’s commitment to privatization, it has been very challenging for IFC to achieve results, because of few opportunities for private sector, given the business environment that prevailed during CAS period. IFC stands ready to the extent that the economic environment improves to deploy its advisory services in support of SMEs and Investment Climate. IFC will also explore opportunities to use and make investments that can utilize the Private Sector Window when the deal pipeline builds up if there are concrete improvements in the business environment. 18 39. Stakeholder consultations highlighted the importance of improving agricultural productivity to creating links to the private sector and boosting regional trade. Secondary priorities identified were quality education and skills development. Private sector representatives and parliamentarians also raised the need for access to credit for MSMEs. All sectors see energy as a catalyst for economic development that will eventually lead to job creation. Free medical care for children under 5 and pregnant women is recognized as one of Burundi’s biggest successes and the demand to expand and build on it is strong. As reported by the 2017 Country Opinion Survey, the Government, Development Partners, and stakeholder groups all voiced appreciation for WBG support to Burundi. 40. Building on the current program of support, this CPF will apply a citizen-centered and inclusive approach suitable to the fragile context of Burundi. It embraces Burundi’s adoption of the Human Capital Project approach in November 2018 by prioritizing enhancement of human capital to address basic human needs, reduce poverty, and stabilize the country’s precarious economic and fiscal situation to create jobs and growth. The overarching objective is to reach the point that all Burundian children arrive in school well-nourished and ready to learn, can expect to really learn in the classroom, and ultimately enter the job market as healthy, skilled, and productive adults. The CPF is designed to build human capital by investing in people notably empowering women through social protection, nutrition, health care, reproductive health, quality education, jobs and skills. The CPF will be structured around two focus areas: (1) Building Human Capital and Inclusion, and (2) Strengthening the Foundations for Economic and Social Resilience. The foundation for the two priorities will be composed of macro economic stability, structural reforms, and more effective governance guided by streamlined citizen engagement. The volatile political environment calls for a selective, inclusive, and flexible CPF program. 41. This CPF is aligned with the priorities of the National Development Plan and WBG strategy for Africa to eradicate poverty and boost shared prosperity. Figure 3 illustrates how the National Vision 2025 and the SCD are linked to the structure of the CPF. It provides the framework for WBG support to Burundi through June 30, 2023, and it is also closely aligned with the new WBG strategy for Africa region that aims to create sustainable and inclusive growth, strengthen human capital and build resilience to fragility and climatic change. It is firmly grounded in the 2011 World Development Report on conflict and fragility and draws on lessons from such analytical pieces as the CAS Completion and Learning Review (CLR) and Client Opinion Survey, and feedback from stakeholder consultations. 19 Figure 3: Links between the National Development Plan, the SCD, and CPF Focus Areas 42. Selectivity: Three selectivity filters guided the choice of CPF focus areas: (1) potential for improving human capital; (2) pathways to addressing the drivers of local conflict 36 ; and (3) opportunity for positive change as determined by the sector readiness, absorptive capacity and a conducive political economy. 43. The CPF is designed to respond to various scenarios. The Performance and Learning Review (PLR), planned for after the 2020 general elections, will be a major point at which to assess new developments and make midcourse adjustments. However, should a downside scenario occur whereby the macroeconomic situation deteriorates and a crisis materializes, such as a forex shortage, escalating inflation, loss of fiscal space, a distressed financial sector, or disruptions in social services, the CPF program will be adjusted to target essential social services, addressing basic needs rapidly to minimize the human costs. In the upside scenario, if the 36Based on the RRA, selection and design of activities will be shaped by sensitivity to what drives conflict in Burundi, notably distrust between social groups, and between Government and citizens as well as demographic pressures and exclusion, primarily economic but also social and political. 20 government adopts economic and social reforms to spur inclusive growth and engages with the international community more fully, the WBG will consider ways to expand its support. 44. Flexibility and adaptation to fragility: Considering the unpredictable but recurrent crises Burundi experienced in the past and the uncertainty surrounding the 2020 general elections, the WBG will maximize flexibility in the specifics and size of each new intervention. Flexible funding mechanisms like the Contingent Emergency Response Component (CERC) and the Immediate Response Mechanism (IRM) will be geared to handling crises. Also, the WBG will aim to identify emerging project difficulties and take swift corrective action, if necessary restructuring the project to avoid further problems, as was done following the 2015 electoral crisis. The PLR will assess CPF progress against the new country context, post-elections in 2020, and make mid- course adjustments accordingly. Responses to FCV issues will involve independent civil society organizations (CSOs), third-party monitoring (TPM), and dialogue through traditional mechanisms, recognizing that community-driven development (CDD) and citizen engagement may also be subject to elite capture and requires robust social accountability mechanisms and location knowledge.37 45. Gender, social and regional inclusion: The CPF approach to gender has been informed by a range of multisector gender analyses38 and the new national Gender Action Plan (GAP)39 that supports the National Gender Policy40 (see Annex 6). The CPF is contributing to all six GAP axes and would provide additional support in several areas, such as activities related to management and technical training for women. The CPF emphasizes managing gender risks throughout projects, such as those related to GBV (see Section IV, Managing Risks). For example, the Social Safety Nets Project (P151853) incorporates specific outreach efforts to reduce the risk that giving women unconditional cash transfers will cause more domestic violence; and the Coffee Sector Competitiveness Project (P127258) will use the Gender Action Learning System (GALS) to promote intra-household negotiations on sharing household responsibilities so that women can benefit more from their participation in coffee value chains. Learning from the Madagascar experience, the CPF will also promote women’s access to information on the potential of higher- profit sectors and prepare them to work in these sectors. The CPF program will foster greater social inclusion and address regional and gender disparities. Where feasible, new interventions will aim to bridge the poverty gap between the Western and North-East regions and between urban and rural communities by prioritizing socioeconomic investments in the most impoverished regions and access of disadvantaged and minority groups, such as the Batwa, and people living with albinism and disabilities. 37 World Bank, Burundi Risk and Resilience Assessment, November 2017. 38 Poverty assessment (FY16), Burundi vulnerability assessment (2015) and SCD (FY16). 39 The GAP, which spans 2017–21, has six axes with numerous expected results: (1) improving the social and cultural status of women in the family and society; (2) strengthening equitable access of women, men, and adolescents to basic social services; (3) promoting equity of economic opportunity for women and men; (4) promoting equitable rights and responsibilities for women, men, and children; (5) promoting the equitable participation of women and men in decision making and in mechanisms for consolidating peace and security; and (6) strengthening institutional capacity for realizing the GAP. 40 Taken together, this fulfills the requirements of OP/BP 4.20 for a multisector gender assessment to inform the CPF. 21 Focus areas supported by the WBG 46. The WBG program for Burundi’s CPF has two strategic focus areas (see Figure 5) based on strong citizen engagement. Focus Area I addresses the need to bolster Burundi’s human capital, launches a new approach to social inclusiveness and service delivery, and prioritizes transformational investments in human capital. Focus Area II prioritizes strengthening of basic foundations for economic and socal resilience and thereby reinforces Focus Area I. The CPF will continue to support Burundi’s participation on an opportunistic basis in regional projects in health, agriculture, trade, energy, transport, and the environment, so it can leverage larger gains from its membership in regional bodies (e.g., EAC, COMESA and CEEAC) and the emerging African Continental Free Trade Area. 47. These two strategic focus areas will be built on the foundation of macroeconomic stability and stronger governance to reinforce delivery. Greater citizen engagement will be promoted where possible in WBG interventions to ensure social inclusion through broader participation in development programs, production of more timely and reliable statistics through more frequent household surveys and publication of their results; and greater public access to information on service delivery, especially disaggregated budget execution, expenditure tracking and more efficient and transparent public financial processes in health and education. Detailed assessments of the political economy will be carried out for both major current programs and new engagements to ascertain where support is feasible and what, if any, non-technical factors might affect achievement of results. Over the CPF period the WBG will work with public and private entities to address policy and institutional bottlenecks to service delivery and seek to create an environment that will renew public confidence in government and stimulate growth and job creation. Figure 4: The CPF Framework Focus Area I: Building Human Capital and Focus Area II: Strengthening Inclusion Foundations for Economic and Social Resilience Objective 1.1: Expand social protection and economic inclusion for the poor, women and other vulnerable groups Objective 2.1: Build sustainable food systems for nutrition and jobs Objective 1.2: Improve access to quality education and youth employability Objective 2.2: Increase access to Objective 1.3: Improve access to quality energy for poor families reproductive, maternal, child health, and nutrition services Foundations: Macroeconomic Stability, Structural Reforms, and Governance 22 C. Focus Area I: Building Human Capital and Inclusion Strategic Objectives Objective 1.1: Expand social protection and economic inclusion for the poor, women and other vulnerable groups Objective 1.2: Improve access to quality education and youth employability Objective 1.3: Improve access to quality reproductive, maternal, child health, and nutrition services 48. The intent of CPF Focus Area I is to meet basic human needs and ensure that services are targeted to the most vulnerable and disadvantaged subgroups. Strengthening social safety nets will help the targeted groups to cope with shocks and build resilience so that people can rise out of poverty and others are prevented from falling into it. One focus will be on interventions in a child’s first 1,000 days (from conception to two years old) because this period has a profound impact on cognitive development, with longer-term effects on the learning, health, and nutrition of individuals and ultimately their income-earning capacity. 49. Promoting social inclusion will ensure that previously excluded groups can benefit from WBG-financed operations. In all operations, focus on women will be central. Other groups include (1) Batwa, who find it difficult to access land, land rights, and basic services, and to make their voices heard; (2) people with physical and mental disabilities; (3) people with albinism; and (4) displaced subgroups such as IDPs, returning Burundian refugees, and refugees from other countries hosted by Burundi. Vulnerable or disadvantaged groups and individuals will be identified and access to services will be monitored regularly and reported in projects. Objective 1: Expand social protection and economic inclusion for the poor, women and other vulnerable groups Expected outcomes: • Increased number of beneficiaries of safety net programs, including women beneficiaries; • A lower percentage of beneficiary households that live below the extreme poverty line; • Increased beneficiaries of socioeconomic reintegration interventions by refugees and host communities. 50. In 2014, an estimated 72.9 percent of Burundians lived below the international poverty line, and 38.7 percent were even below the food poverty line. With 56 percent of its children suffering from chronic malnutrition and a fertility rate of 5.5, 41 Burundi’s rates of chronic malnutrition are among the highest in SSA, with half of its children under 5 chronically undernourished. During the 2015 crisis more than 270,000 Burundians fled to neighboring countries; since 2017 thousands have been returning home. Though the dialogue on social protection has made significant legal and conceptual progress, targeted social protection and labor programs are still few, fragmented, and largely donor- and NGO-driven. Most programs are 41 Demographic Health Survey (DHS) 2016-17. 23 ad hoc, short-term, and increasingly respond to humanitarian needs, mostly through cash and food transfers. 51. There are very few measures to protect the poor. The government needs a combination of short- and medium-term social protection, nutrition, and productive inclusion measures to protect the poorest, prevent vulnerable households from falling into poverty, and promote economic opportunities for the poor. What is needed is better poverty-targeted coverage of social safety net programs, with direct links to supportive measures such as maternal health and nutrition initiatives. This will require allocating a higher budget to safety net programs; adequate delivery systems for targeting and payments; and more effective decentralization of social protection and productive inclusion programs. 52. Social inclusion is a central objective of this CPF. Safety nets must be reinforced to get people out of the poverty trap and prevent others from falling in. The Social Safety Nets - Merankabandi Project (P151835) will provide unconditional cash transfers and support activities to women, generate employment and promote behavioral change for the poorest households in the most impoverished provinces, Karusi, Ruyigi, Gitega, and Kirundo. Other quick wins will be realized by targeting unconditional cash transfers to the most vulnerable and facilitating access to nutrition-sensitive and productive-inclusion initiatives. The program envisages reinforcing institutions to enhance both central and decentralized administrative and operational capacity and installing effective targeting, payment, and management information systems. The program will tackle specific areas of vulnerability for women and identify activities to minimize gender inequality. To reduce FCV risk, the approach will seek to build social cohesion and trust between the government, the private sector, and the public through equitable, needs-based targeting. It also seeks to build trust between women and men within households to reduce the risk that providing women with cash transfers would heighten tensions between couples and worsen domestic violence. 53. Burundi is eligible to access US$15 million from the IDA18 Refugee Sub-Window. The additional financing will be used to improve access to livelihood options, build socioeconomic infrastructure, and deliver social services to refugees, IDPs, and host communities. The Mobile Money Study will also explore opportunities for financial inclusion of marginalized rural communities through mobile money services. Objective 1.2: Improve access to quality education and youth employability. Expected outcomes: • Improve learning and student progression in early grades; • Increased number of youths completing training; • Increased number of firms benefitting from private sector initiatives, where youths account for most employees, in particular women. 54. The CPF is directed to sustaining the gains in primary education and build up post-basic education by expanding access to TVET. The Free Primary Education policy introduced in 2005 24 had by 2016 raised gross enrollment from 82 to 134.2 percent. CPF investments will build on this solid track record. The Burundi Early Grade Learning Project (EGLP) (P161600) is designed to ensure that from the early grades on, schooling translates to learning, so that more children can progress through the education cycle on time and meet learning standards. The EGLP focuses42 on grades 1 to 4 and supports active community involvement in school-related decisions. Parents, teachers, and the community will be empowered to help manage schools to improve learning outcomes, and the quality of education (as measured by early grade reading and numeracy scores) will be tracked by both independent assessments and by frequent project-supported surveys. 55. Investments in technical and vocational education for youth, both male and female, will help tackle the youth bulge—a long-standing fragility concern—and ensure that young people acquire the skills for a productive school-to-work transition. The Burundi Youth Skills and Employment Project (YSEP) (P164416) now being prepared aims to build skills to qualify for better jobs and more income in two ways: (1) improve the quality and performance of technical and vocational training institutions in the value chains with greatest employment potential in priority sectors (agroprocessing and agribusiness, construction, and ICT); and (2) broaden employment opportunities through apprenticeships and entrepreneurship initiatives that leverage PPPs. In fragile settings, empowering young men economically is particularly important to provide productive and peaceful alternatives to engagement in violent or illicit activities (see Blattman et al. 2015). For young women, opportunities to build skills with more economic promise are likely to make it easier for them to invest more in themselves before getting married or having a child, and thereby strengthen their sense of empowerment and livelihood potential. Recognizing the complexity of these challenges, YSEP (P164416) plans to supplement TVET with general skills training and youth development, such as entrepreneurship, language training and family planning (FP) support. The project plans to build on synergies with other interventions financed by the WBG and other donors, such as the Social Safety Nets project and agroprocessing and agribusiness interventions. 56. It is also vital to ensure that the skills learned help to create income-generating opportunities for the youth-at-risk and women who are targeted. The Local Development for Jobs Project (LDJP) (P155060) improves basic infrastructure and targets vulnerable populations and MSMEs in selected value chains. The LDJP (P155060) assumes that greater access to basic services, employment, and longer-term economic prospects will help to build resilience and address economic drivers of fragility. Support for MSMEs will focus on investments in equipment and business services, especially in value chains where women are active that also have high employment and income potential (e.g., coffee, fruits and fishery products for agribusiness, and clay and stone for construction). Objective 1.3: Improve access to quality reproductive, maternal, child health and nutrition services. 42Improving the quality of education here refers to producing better learning outcomes through a holistic approach targeting interventions (1) at the student and household level; (2) in the early grades, by improving teacher and classroom instructional practice; (3) in schools, by support for learning in the early grades; and (4) to management of the entire system. 25 Expected outcomes: • A higher contraceptive prevalence rate; • A higher percentage of pregnant women who receive four antenatal care visits; • Increased coverage of community nutrition services and adoption of hygiene practices; • Increased intake of quality diversified food. 57. Support will continue to both supply- and demand-side interventions to increase access to and the quality of child and maternal health services. The CPF will support the government’s results-based financing (RBF) and free health-care services for children under 5 and pregnant women, as the Bank has done since 2010 through the KIRA (P156012). The CPF will allow the RBF program to be extended to communities and emphasize the impact on health outcomes of quality services at all levels of care. The Merankabandi Project (P151835) will help stimulate demand for maternal and child health services through unconditional cash transfers to women and social and behavior change communications on FP and nutrition. Unmet demand for sexual and reproductive health services will be supported by the KIRA project (P156012) for facility and community-based distribution of contraceptives; the Investing in Early Years and Fertility (IEYF) in Burundi Project (Nkuriza43) (P165253) for community-based distribution; and the Great Lakes Emergency Sexual Gender-Based Violence and Women’s Health Project (GLESGBV-WHP; P147489). Because lowering fertility requires addressing social and cultural barriers, the CPF will support harmonized social and behavior change communications (SBC) in relevant projects, putting women’s empowerment at the forefront of WBG Programs in Burundi , including those not under the Ministry of Health, to ensure that all stakeholders recognize the risks associated with high fertility, not just for health but also for education, nutrition, agriculture, peace, and economic development (Box 8). The Nkuriza Project will also support advocacy, communication, and capacity-building to raise awareness and foster enhanced leadership. 58. The CPF will support multisectoral efforts in the early years to help children reach their full potential. It will promote a convergence of national, provincial, and community efforts to foster community ownership of nutrition interventions. These interventions are intended to raise awareness and address direct causes of chronic malnutrition, such as inadequate hygiene and sanitation and the need for early stimulation, and access to diversified and nutritious food through fortification, promotion of new household agriculture techniques, and small-animal husbandry. SBC on good practices in family planning, that allow children to reach their full potential, will be promoted in a harmonized way. 43 “Help my child grow” in Kirundi. 26 Box 8: Putting Women’s Empowerment at the Forefront of WBG Programs in Burundi Women face enormous challenges in Burundi. On top of the risks of violence they are exposed to in the fragile context in the country, women’s welfare and economic opportunities are significantly constrained due to poverty and human development challenges as well as lack of inclusive growth. The high fertility limits girls’ education, and hence their workforce participation, leaving most women in informal jobs with limited income earning opportunities. The Burundi SCD has identified investing in people through women ’s empowerment and improved nutrition as one of the three priorities for the country in the medium term as the country builds resilience against economic shocks and promotes inclusive growth. Building on the SCD, this CPF places women’s empowerment at the center of the WBG interventions, to address their socio-economic vulnerabilities and to build resilience in the economy and the society and realize opportunities for future inclusive growth. In this context, the CPF will help the country build human capital and inclusion (Focus Area 1) with a strong focus on generating positive impacts on women through, for example, cash transfer programs targeting women and promote investments in maternal health and nutrition services and girls’ education. The CPF will emphasize building women’s capacity to seize economic opportunities by focusing on livelihood developments in rural areas through agriculture-based job creation and facilitate their access to markets as well as access to finance (financial inclusion) (Focus Area 2). Women’s empowerment is also a part of the Bank’s interventions to strengthen government accountability (foundation) by promoting women’s participation in decision -making processes in the context of service delivery at the local level. Gender dimensions of WBG projects are summarized in Annex 6. 59. The proposed Nkuriza project will intensify support for nutrition-sensitive activities. As relevant, other WBG projects will also support the early years agenda to address the numerous determinants of chronic malnutrition. The Merankabandi Project will expand access to safety net programs, thus giving vulnerable households more disposable income to improve child nutrition and education. Agricultural operations (e.g. the Agro-Pastoral Productivity and Markets Development Project, (PRODEMA) (P107343) will emphasize SBC on mother and child nutrition and household production and consumption of adequate food. KIRA (P156012) will support facility-based health services for pregnant women and children, including those suffering from acute malnutrition, creating a continuum with the community-based Nkuriza project. Advisory Services and Analytics in health, education, social protection, and agriculture will broaden the information base on the IEYF agenda and interventions to minimize chronic malnutrition. D. Focus Area II: Strengthening Foundations for Economic and Social Resilience Strategic Objectives Objective 2.1: Build sustainable food systems for nutrition and jobs. Objective 2.2: Increasing access to energy for poor families. 60. This Focus Area supports restoration of the foundations for economic and social resilience. Interventions will put in place the structures and resources necessary to expand opportunities for the poor and help boost both national and household economic resilience. It also provides essential infrastructure and resources, such as food and energy, to support human capital development and better connect poorer Burundians with economic opportunities through jobs and income-generating activities. Throughout, the CPF will seek opportunities to crowd in private investment and PPPs via a One WBG approach with IFC and MIGA. 27 Objective 2.1: Build sustainable food systems for nutrition and jobs. Expected outcomes: • More productive agriculture, and market access for small producers; • Sustainable landscape management practiced more widely; • More jobs in agroprocessing, in particular among women; • More land certificates issued. 61. This objective will support improvements in productivity and high-nutrient value in agriculture to address the severe nationwide malnutrition problem and to enhance income opportunities for the poor and women by building agribusiness value chains. Agriculture is the primary source of income and employment for 83.5 percent of Burundians. However, their livelihoods are jeopardized by population growth, land shortages and degradation, and poor supporting services. Increasing food security and productivity requires a multipronged food systems approach. The CPF takes a comprehensive approach to agriculture, integrating such aspects as nutrition, domestic and regional transport connectivity for trade and marketing of agricultural products, agribusiness value chain development for livelihood and jobs, particularly for women, improved access to finance, reduction of gender disparities (by targeting women farmers with capital, technology, and training), secure land-tenure certification and environmental management. 62. Through land restoration and management, this CPF will help Burundi leverage its land resources sustainably to expand economic activities for the poor while building their resilience against climate change. Building on approaches proved effective elsewhere in the region, the Landscape Restoration and Resilience Project (LRRP) (P160613) will restore land productivity through enhanced land management and agricultural practices, make land tenure more secure by facilitating land certification for women and joint certification of spouses, and improve management of water resources. 63. As the top export of Burundi, coffee is the main source of rural incomes and jobs. Joint WB and IFC efforts in the past have beein geared towards (i) finalize coffee sector privatization, including resolving farmer participation; (ii) supporting development and implementation of a private sector led growth strategy for the sector; (iii) strengthening evidence based and action oriented Public Private Dialogue in sector; (iv) Improving overall productivity and quality in the sector and (v) strengthening institutional framework and regulatory regime governing the sector including addressing access to finance constraints in the sector. Box 9 highlights the potentially immense benefits the coffee sector provides to Burundi. 28 Box 9: Coffee sector in Burundi The coffee industry provides direct income to nearly 600,000 predominantly smallholder producers and thus supports the livelihoods of over 3 million people—one in every three rural households. The coffee value chain has considerable potential for growth. It affects other sectors through backward and forward links (inputs, processing, transport, financial services, and taxes). Thus, coffee value chains can generate steady income for farmers, provides job opportunities, and enhance food security that is critical for households to access quality education, health, and adequate nutrition. The CPF will provide support through the Burundi Coffee Sector Competitiveness Project (P151869). Past targeted WBG interventions have included T&C GP Advisory support to the 3rd round privatization, investment promotion (social impact investors), enhancing PPD, sector regulation and strengthen the position of cooperatives and in particular women in the sector (Investment Climate project). There was also close collaboration with IFC MAS: to mobilize experienced IFC clients for 3rd round of privatization, support private sector led sector financing solutions (working capital facility). In addition, T&C GP lending financed the Coffee Sector Privatization and Coffee Sector Strategy Development. (FPSDP) project). The WB’s Agriculture GP: $55 million Coffee sector operation in support of strategy, institutions, increasing productivity, quality, farmer organization and overall sector competitiveness; also piloted sustainable land and water management practices in the coffee sector in Burundi. 64. Developing local agribusiness value chains will foster income-generating opportunities; supply-side constraints on agribusiness producers therefore need to be minimized. Among these are access to finance, technical and marketing expertise, and equipment. The LDJP supports development of MSMEs to create value chains that have high employment and income potential for women, such as fruit and fishery product businesses. IFC investments and advisory services and MIGA activities will also continue to look to support agribusiness value chain development through business environment reforms and access to finance and political risk insurance. Also, the proposed Strengthening Food Security and Refugee Reintegration Project will link agriculture with support for livelihood development in refugee-hosting communities by fostering integration of the 65,000 Congolese refugees within host communities. Objective 2:2: Increasing access to energy for poor families. Expected outcomes: • Power generation capacity increased from 55 to 100 MW; • More community social services accessing electricity through off-grid solar systems, particularly services for women. 65. The CPF will support expansion of energy access among the poor and in rural areas to provide power for social services that are critical for human capital development. Minimal access to electricity in Burundi suppresses not only economic growth but also human capital development by limiting power resources for social services. Less than 5 percent of Burundians have access to power, and for those who do, the quality and reliability are poor. Outside urban centers, it is estimated that less than 1 percent of the population have access to power.44 The CPF will help the country double its power-generation capacity from 50.5 MW to 105 MW and 44 REGIDESO serves only about 76,000 customers, 64 percent of whom are in the capital. 29 increase the number of community social centers provided access electricity through off-grid systems from zero to 1,080 schools and 150 clinics in 2023. Burundi’s maximum installed electricity production capacity is only 50.5 MW, and relies heavily on hydropower (35 MW from power plants in Burundi, of which 84 percent is from hydropower). Available capacity is lower due to power plant deterioration and high losses in transmission and, especially, distribution networks—as well as hydrology seasonality. The state-owned utility, Regie de Production et de Distribution d’Eau et d’Electricite (REGIDESO) has had to contract an additional 10 MW of expensive rented diesel-fired units to supply power during peak hours. The government plans to make available capacity at affordable prices, and to strengthen operations of the utility, through the current Rusumo Falls Hydropower Project (P075941), and the Jiji and Mulembwe Hydropower Project (JMHP; P133610). Should the WBG endorse the regional Ruzizi III Hydropower pipeline project, Burundi could potentially increase its hydropower generation. 66. New CPF interventions will target electricity access for underserved rural social centers (health facilities, training centers, schools) through off-grid solar investments. Solar-home kits would be considered as a complement to the safety net program to allow the vulnerable to access affordable and clean energy. A second goal is to expand access to electricity for more than 250,000 rural residents. In support of the government’s plan to pursue PPPs, this CPF—through close collaboration between the Bank and MIGA—will also help the country diversify its energy mix when opportunities arise where MIGA might provide political risk insurance, with the help of IDA PSW resources.45 E. Foundations: Macroeconomic Stability, Structural Reforms, and Governance 67. The two Focus Areas are supported by cross-cutting foundations of macroeconomic stability, structural reforms, and governance. The stability of the economy will be closely monitored to ensure a solid foundation for the success of WBG interventions. The CPF will scale up policy dialogue on macroeconomic and structural reform issues. Such policy dialogue will support the Government’s initiative to develop an annual CPIA action plan in view of reversing the recent declining trend in CPIA performance.46 Through the governance foundation, citizen engagement will be mainstreamed to collect and build on real-time feedback from beneficiaries throughout program execution. Greater citizen engagement will be promoted to ensure broader participation in development programs; wider public access to information on service delivery, with timely and reliable statistics; and more efficient and transparent service delivery. This citizen-centered approach will directly inform portfolio operations, with projects adjusted in response to citizen feedback. 45 MIGA's current exposure in Burundi, US$10.4 million, consists of three agribusiness projects and one in the services sector. It will continue to support eligible projects through political risk insurance coverage, including where appropriate using the PSW. In parallel, the Bank will support strengthening Government’s capacity to competitively procure renewable energy through a PPIAF-financed grant. IFC will not use the PSW in Burundi due to very high convertibility risks. 46 Burundi CPIA declined from 3.4 in 2014 to 2.9 in 2017 because of the perceived deteriorating governance since the 2015 political crisis. 30 Expected outcomes • Deepened dialogue on macroeconomic and structural reforms important for unlocking future growth; • More timely and reliable statistics from more frequent household surveys, with more gender-disaggregated data, and publication of the results; • Better public access to information on service delivery, especially disaggregated budget execution and expenditure tracking; • Mainstreamed citizen engagement, particularly engagement of women; • More efficient and transparent public financial processes in health and education. Macroeconomic stability and structural reforms for unlocking future growth 68. Macroeconomic stability is essential to minimize disruptions in delivery of the social services that are essential to protect the welfare of Burundians. Fiscal constraints, compounded by other economic difficulties, such as the forex shortage, make it difficult for the government to deliver essential services like health care and education. The government needs to act immediately to ensure macroeconomic stability by tightening fiscal discipline and addressing financial sector vulnerabilities. Measures to increase revenues while reducing domestic financing are essential. Ceasing to monetize the deficit will reduce money expansion, relieve inflationary pressures, and restore external stability. Spending must be carefully managed to prevent the accumulation of arrears.47 To implement comprehensive macroeconomic reforms, reengaging with development partners, particularly the IMF 48 , will be a key priority to secure adequate external support. 69. Under this CPF, the World Bank will continue its macroeconomic and fiscal policy dialogue with the Burundian authorities to support and encourage adoption of sound macroeconomic policies. Through the Burundi Economic Update series and semiannual Macro- Poverty Outlook assessments, the WBG will continue to provide real-time information to the government as a foundation for policy-making and economic resilience, as well as short policy notes and more comprehensive analyses of macroeconomic and sector spending. 70. To unlock future growth, Burundi should also address medium-to-long-term structural issues. The current economic difficulties rest precariously on structural weaknesses that must be addressed if economic recovery is to accelerate. Among the weaknesses are low agricultural productivity and limited diversification. 71. In this context, this CPF will facilitate policy dialogues for improving the country’s investment climate for private sector development and fostering trade and investment. Immediately before the current crisis, Burundi was among the top 10 reformers globally on ease 47 Burundi does not have an official arrears clearance strategy; one is needed. The current stocktaking and verification of its arrears status is the first step. 48The reengagement of the Fund was reiterated through discussions during the IMF staff visit in Burundi organized in September 2018 and on the margins of the Annual Meetings held in Bali in October 2018 and the Spring Meetings of 2019. A next IMF staff visit is planned for July 2019. 31 of doing business. However, the pre-crisis gains have since been lost, and the country has slipped on its Doing Business overall ranking from 152nd in 2018 to 168th in 2019. The WBG will seek to engage with the Government and stakeholders in public-private dialogue to identify priority reforms, especially in sectors with growth potentials such as agriculture, energy, and infrastructure. In addition, the Government’s commitment to reforms to remove bottlenecks is crucial for Burundi to foster cross-border trade with its neighbors and improve harmonization with regional standards at the EAC level, which will require sustaining ongoing dialogue and collaboration with Government and private sector stakeholders. 72. This CPF adopts an integrated approach to help crowd in investments to support private sector growth. IFC will support Burundi in working to improve the business environment and mitigate investment risks by, e.g., reducing regulatory barriers to investment, opening up access to finance, and especially for MSMEs. The CPF will endeavor to apply the “Maximizing Finance for Development (MFD)” principles by making the business environment more attractive to private investment (see Box 10). Box 10: Applying MFD Principles in Burundi An MFD approach will require long-term commitments by both the government and development partners to support sector-specific reforms to help attract private investments. In addition to the WBG support to private investment, Burundi may benefit from additional risk mitigation instruments, such as the IDA18 Private Sector Window for high-potential projects. Under this facility, MIGA may provide additional PRI to help mitigate country- specific risks. 1. Energy: Despite abundant hydroelectric potential, Burundi has a severe deficit in generation and transmission capacity because of underinvestment, network deterioration, and damaged equipment. Per capita domestic electrical production capacity is the lowest in the world. Because there are few service providers, prices may be double or triple those in other countries. WBG Response: Taking a comprehensive approach, the WB can provide technical assistance to REGIDESO in reforming its governance, including separating its roles as regulator and operator. IFC advisory teams are available to help the government create the conditions and reforms necessary to attract private investors, in accord with an agreed generation and distribution master plan. To support access in rural areas, the WB will work with IFC to support companies entering the off-grid sector, and to identify a sustainable way to procure, install, and maintain solar home systems that leverages private operators. 2. Agriculture: Two of Burundi’s main exports, coffee and tea, would benefit from private participation to boost production and processing capacity. Current regulations have erected high hurdles to private investments, primarily because ARFIC and OTB act as both regulators and operators. WBG Response: The WB will support revisions of coffee and tea regulation to enhance conditions for private participation, reducing the barriers resulting from the dual roles of the state-owned companies. Once an enabling regulatory framework is in place, IFC can assess the feasibility of advisory services to the private sector for upgrading value chains, compliance with environmental and social safeguards and quality standards, and heightening productivity to increase competitiveness, market access, and job creation. In FY2017, MIGA issued political risk insurance to a foreign investor for a project that consists of processing, distribution and exportation of processed green coffee from Burundi. MIGA successfully engaged with the government and the guarantee holder to address a number of challenges that affected the implementation of the project during its early stage. 3. Tourism and Hospitality: Tourism and hospitality, and the associated opportunities for property development, have good development potential for Burundi. However, impediments to accessing land and strict foreign exchange controls make it difficult for investors and operators to conduct business in the country. WBG Response: Provided the business environment is enabling, IFC will assess support to working with the administration to draft foreign exchange regulations that would invite greater private participation in tourism and hospitality. Sector- 32 specific advice may also be provided to help develop and market specific destinations and generate benefits to local communities from increased tourism revenues. 73. Harnessing digital connectivity will bring Burundi enormous benefits. Poor digital connectivity now makes it harder to improve livelihoods and stimulate growth.49 Burundi ranks 171st of 175 countries in the ICT Development Index,50 and just 6.9 percent of its adults have mobile money accounts, one of the lowest penetrations in SSA. However, the recent rapid growth in mobile money has promising potential for both the economy and households in terms of facilitating remittances, providing employment opportunities in rural areas, and building the platform for additional digital financial services. The CPF will facilitate policy dialogues on how best to leverage the digital economy for Burundi’s development and integrate ICT into its interventions. It will also leverage digital technologies in its interventions to support the two Focus Area objectives (see Box 11). 74. Under the leadership of the AU with the support of the WBG, Africa is ready to embark on digital economy development – a bold action plan to harness technology and innovation to transform the continent’s economies, societies and governments . The Digital Economy for Africa (DE4A) aims by 2030 to digitally connect every individual, business and government in Africa, ensuring each is digital enabled and ready to thrive in the digital economy. In Burundi, a Digital Economy Assessment will be carried out to identify the country’s Digital Development potential and action plans to address constraints to maximize opportunities to harness the digital economy as a driver of growth and innovation. Box 11: Examples of WBG leveraging innovative use of ICT in Burundi Digital ICT will greatly benefit development in Burundi by reducing the costs and increasing the efficiency of project investments and programs in both public and private sectors. It can also improve governance by raising service efficiency and transparency and promoting evidence-based policymaking. 1. Geo-Enabling Monitoring Supervision (GEMS)51. Burundi Team is working with PIU trained staff to use the GEMS platform to collect geo-located project activity data based on customized, self-created questionnaires, photos, time and date stamps, and GPS coordinates that allow for automated geo-mapping to enhance project supervision and implementation. 2. Mobile services. Merankandi Project has partnered with Econet, a local private ICT service provider, and is using mobile money to fund and monitor beneficiary activities. The project has a strong institution-building component to ensure that the safety net system is robust; it will heighten both central and decentralized administrative and operational capacity through systematic targeting, payment, and management information systems and M&E using ICT tools. Mobile services and surveys will be explored to ensure that coffee growers have fair access to the fertilizer and improved seeds scheme supported by the Bank-financed coffee project. 49 Burundi ranked 171 out of 175 countries in the latest ICT Development Index. 50 Burundi trails other SSA countries in the penetration of mobile money—a major entryway to financial inclusion—and accessing credit is extremely difficult for MSMEs. 51 GEMS is the systematic use of common ICT tools (smartphones, tablets) to remotely monitor interventions in near real-time, verify field conditions, and directly feed structured data into a project monitoring and evaluation (M&E) platform. 33 3. Computer-Assisted Personal Interview (CAPI). CAPI collects survey data using tablets and computers. Experiences globally show a significant reduction in the cost of administering surveys using CAPI technologies, particularly for respondents in remote areas. In conducting a rapid poverty assessment in 2017-18, ISTEBUU and the WBG team piloted a rapid, cost-effective household survey (ECVMB 2017) to explore the possibility of using multiple imputation methods to update poverty indicators more often. CAPI technologies can be considered for a variety of future ISTEBUU surveys. 4. Burundi Provincial Single Window initiative. This UNDP-supported initiative establishes provincial one-stop service centers to bring public services closer to citizens. The WBG will explore an opportunity to scale up this intiative, possibly through the SICGEP Project (P149176). It allows Burundians to obtain essential administrative documents (e.g., passport, resident card, driver’s license) in provincial cities instead of having to go to Bujumbura. This initiative has enhanced citizen access to public services by reducing the time and cost required to obtain such documents. Each center is digitally connected with the databases and applications used in the Bujumbura headquarters to produce the documents. Strengthen governance for improved public sector accountability, efficiency in service delivery and women’s empowerment. 75. Incentivizing collaboration between central, community, and service units through reforms and bringing services closer to citizens, including through use of digital technology, are key for government accountability and efficiency in services. Local communities have also been affected by the dual political and economic crisis, and though decentralization has progressed, the center still confirms community administrators. The crisis also narrowed the space for local citizens to voice demands and exact accountability from the government. Given the enormous human development needs and limited fiscal space in Burundi, it is critical to reorient governance in order to make social spending more efficient and sustainable. The Strengthening Institutional Capacity for Government Effectiveness Project (SICGEP) (P149176) and other interventions will spotlight management of public finances in social services. 76. Direct citizen engagement in decision-making on how public resources are spent is vital for boosting demand-side accountability and social inclusion. Communities that are engaged from the beginning in project activities and interacting with government representatives, local and international NGOs, and other civil society representatives, such as youths and minorities, are more likely to continue to be involved in their own development and work to ensure success. 52 This CPF includes programs where communities make decisions on budgets (community-driven) or where budgets are linked to community satisfaction rates (RBF). Through SICGEP (P149176), this CPF will help the government to improve its PFM and make the delivery of health and education services more transparent not only through better budget execution 52This approach is already part of the KIRA project (P156012), where 700 community-based organizations and NGOs provided independent verification and counter-verification of the free health care rendered by health centers supported by the program. CARITAS, a faith-based, organization, will prescreen and provide oversight of the participant youth at risk to be selected in the LDJP (P155060). Similar third-party execution is being considered for the LRRP (P160613) and Merankabandi (P151835), the planned Youth Skills and Employment program (P164416) and financing sought from the IDA18 Refugee Sub-Window. 34 reporting but also by systematically tracking expenditures, including use of the Open Budget Initiative53 to ensure citizen engagement in monitoring the budget. 77. Specific attention will be given to promoting women’s roles in the demand for good governance and addressing persistent barriers to women’s economic empowerment . Burundi LRRP (P160613) will support women’s participation in both formal and informal decision -making structures and in governance processes related to ecosystem-based adaptation. Similarly, the Burundi Coffee Sector Competitiveness Project (P151869) will support women’s involvement in community leadership. Where relevant, other projects will set quotas for women’s participation, build the capacity of individual women and women’s groups, and ensure that women participate effectively. Following WBG study on Women, Business and Law 54 , a deep dive on women’s entrepreneurship and empowerment will be conducted in FY21 to assess the challenges and legal discriminations experienced by women to start a business and propose policy reforms to promote women’s economic empowerment. 78. Building statistical capacity by making quality statistics available more frequently and opening access to information will also strengthen public sector accountability. Burundi continues to face significant challenges in collecting and compiling the economic and social statistics that are essential to informed policy and investment decisions, as well as core economic statistics, such as national accounts. ISTEEBU also has significant delays in finalizing its products, which makes it harder for citizens and CSOs to monitor the impact of government policies and the effectiveness of service delivery. SICGEP (P149176) will support more frequent collection and publication of data. 79. The government’s capacity and willingness to respond to public demand for better governance is essential. This CPF will support a systematic approach to grievance redress mechanisms, support to local CSOs, and inclusive stakeholder engagement in accordance with the new Environmental and Social Framework.55 Beneficiary feedback critical to accountability will be mainstreamed throughout the portfolio. A country-wide citizen engagement analysis, underpinned by current and potential citizen engagement approaches, is being carried out to assess the current situation, identify opportunities and constraints, and propose a roadmap that will efficiently mainstream citizen engagement in WBG interventions. In FY19 pilot- in-depth study was conducted in 6 of the 10 IDA-financed projects with the objective of mainstreaming citizen engagement in priority service delivery sectors in the Burundi portfolio. This activity was conceived as the first step on a longer-term path of gradually building the capacity and willingness of the state and citizens to engage with each other constructively in a way that improves development outcomes and will be rolled out to the remaining projects in the portfolio 53 The Open Budget Initiative is a global research and advocacy program that promotes public access to budget information and the adoption of accountable budget systems in order to make these systems responsive to the needs of the citizenry. Burundi has adopted and is implementing this system. 54 WBG gobal study on Women, Business and Law – A Decade of Reform (February 2019), confirms that Burundi scores 73 percent on Women, Business and Law Index but the focus group discussion organized by WB with Burundian business women revealed that passed reforms have yet to be translated into actual improvement in the lives of women. 55 The Environmental and Social Framework launched on October 1, 2018, enables the WBG and borrowers to better manage the environmental and social risks of projects and improve development outcomes. 35 in FY20. The WBG will examine relevant projects through a citizen engagement lens in ways that have a direct impact on incentives that drive government action. IV. IMPLEMENTING THE BURUNDI CPF A. Financial Envelope 80. The CPF will be financed by both IDA18 and IDA1956 resources. Like the IDA17 allocation, the indicative IDA18 allocation for Burundi is estimated at around US$260 million to US$300 million.57 Of these IDA allocation, US$120 million have been committed, reaching a total active commitment of US$727.48 million. Undisbursed balances stand at US$448.41 million as of May 20, 2019. FY21-23 will be financed by IDA19, and the indicative allocations will be known in FY21. The national allocation for Burundi may be supplemented by funding, when available, from the IDA regional, refugee58 , and other special windows for eligible projects and Trust Funds. The institutional and governance actions planned, especially those touching on significant reforms, may help to improve Burundi’s deteriorating CPIA rating and give the government incentives to pursue sustainable reforms. (See the active and indicative pipeline (Box 12) and portfolio trends for the CPF period, discussed below.) 56 For planning purpose, we assume IDA19 allocation will be the same as IDA18 57 Referenced IDA18 volumes are indicative. Actual Peformance Based Allocations (PBA) will be determined annually and will depend on (1) total IDA resources available; (2) the number of IDA-eligible countries; (3) the country’s performance rating, per capita GNI, and population; and (4) the performance and other allocation parameters for IDA borrowers. 58 Burundi is eligible to access US$15 million from the IDA18 Sub-Window for Refugees and Host Communities. 36 Box 12: Active and Indicative Pipeline (Only IDA financing)59 Focus Area Active Portfolio Pipeline FY19 –20 Pipeline FY21-23 (IDA19) (IDA18) • Agro-Pastoral Productivity and Markets • Investing in Focus Area I: Development Project (US$68) [FY2011- Early Years • AF –Early Grade Learning Building FY2020] and Fertility in (US$75m; FY22) Human Capital • Social Safety Nets (Merankabandi) Burundi and Inclusion (US$30m; • Health System Support (US$$40m) [FY17-FY22] Project ("KIRA") II • Health System Support Project ("KIRA") FY19) (US$80m; FY22) (US$$50m) [FY17-FY21] • Burundi Early Grade Learning Project • Youth Skills & Employment • AF-Merankabandi II (US$40m) [FY18-FY24] (US$80m; FY23) • Local Development for Jobs Project (US$30m; (US$$50m) [FY18-FY23] FY20) • RI-Great Lakes Emergency Sexual and Gender Based Violence & Women's Health Project (US$15.15m) [FY14-FY20] • RI-East Africa Public Health Laboratory Networking Project (US$25m) [FY10-FY20] Focus Area • Burundi Landscape Restoration and II60: Resilience Project (US$30m) [FY18-FY23] • Strengthening • AF - Burundi Landscape Strengthening • Jiji and Mulembwe Hydropower Food Security, Restoration and the US$100m)[FY14-FY20] Jobs and Resilience Project Foundation of • Burundi Coffee Sector Competitiveness Refugees (US$50m; FY23) Economic and Project (US$55m) [FY16-FY23] Reintegration Social • Sustainable Coffee Landscape Project (US$55m; Resilience (US$4.23M)[FY13-FY19] FY20) • Burundi-Infrastructure Resilience • Off-grid Emergency Project (US$25m)[FY15-FY19] Community • RI- Great Lakes Regional Integrated Solar Energy Agriculture Development Project Project (US$75m)[FY17-FY23] (US$50m, • RI- Regional Rusumo Falls Hydroelectric FY20) Project (US$113.3m)[FY14-FY21] Governance • Strengthening Institutional Capacity for • DPL (if circumstances and Government Effectiveness Project allow) Macroeconom (US$22m) [FY15-FY21] ic Reform Dialogue 59 In addition to IDA financing, Burundi has also benefitted from Trust Funds including (i) JSDF funding through the Burundi Maternal Child Nutrition Enhancement Project (P157993; US$2.73m) and Global Fund financing through the AF- Burundi Health System Support project (KIRA) (P166576; US$12.64m; FY19). 60 Rural Connectivty for Jobs program may be considered as a buffer project if circumstances allow after PLR under IDA19. 37 81. Burundi’s active IDA commitments as of May 1, 2019, amount to US$727.48 million— $499.03 million for ten national projects and US$228.45 million for four regional projects. The Trust Funds portfolio that contributes to the CPF objectives is currently at US$10.95 million. The active portfolio remains sound, with all projects rated MS. 82. Burundi’s project pipeline maintains the FY13-16 focus on resilience, economic growth, and poverty reduction and introduces four new operations in FY19 to 20 and three Additional Financing after the PLR in FY21-23 to consolidate existing operations. Given the country context, the CPF will give priority to mitigating risks; the likelihood of a further decline in per capita income; and the prevalence of deep-seated poverty. Over the proposed CPF cycle the national program is expected to stay at about 11 projects per FY, with any new financing dedicated to consolidate social protection, education, health, nutrition and access to energy as catalyst to human capital development. MIGA has no pre-determined program of new operations over the CPF period. However, it continues seeking opportunities to de-risk foreign direct investment through its political risk insurance instrument, with support, where appropriate, using the IDA18 Private Sector Window. Table 2: IDA Indicative Portfolio Trends over the CPF Cycle FY18 FY19 FY20 FY21 FY22 FY23*61 # US$ # US$ # US$ # US$ # US$ # US$ National IDA Projects 10 480 11 510 13 620 11 502 11 635 11 745 Regional IDA Projects 4 228 4 228 4 228 2 188 2 188 2 188 Total IDA Projects 14 708 15 738 17 798 13 690 13 823 13 933 Average national project size - actual & projected 48 46 48 63 58 68 (US$m) The regional program is expected to continue at four and then two projects per FY, subject to management decisions on the RI pipeline.62 The investment program will be supported by the proposed ASA (Table 3). 61 Rural Connectivity for Jobs Program (US$ 75m) is a buffer project that may be considered if circumstances allow after the PLR under IDA19. 62 Burundi may participate in the following regional initiatives if endorsed by WBG: Ruzizi III Hydropower Project (P148226), Lake Victoria Environmental Management Project (LVEMP III) (P165352), Lake Tanganyika Transport Program (P165119), Lake Tanganyika Environment Project, Eastern and Central Africa Agricultural Transformation Project (ECAAT) (P162416); Great Lakes Trade facilitation Project (P155329) and the EAC Accelerated Regional Integration Project (P154227). 38 Table 3: ASA Pipeline Focus Area I: Building Human • Water sector review/WASH diagnostics (FY19) Capital and Inclusion • Scaling up nutrition (FY19) • Operationalization of Social Protection Strategy (FY19) • SDI Survey (FY19) • Education Public Expenditure review (FY19) • Youth Employment for Jobs Study (FY20) • Programmatic PER (e.g., nutrition) • Delivery of the HCI project (FY20) Focus Area II: Strengthening • SE4ALL TA Burundi (FY20) Foundations for Economic and • Banking sector Monitoring and Payment Systems Surveillance (FY20) Social Resilience • Rural Infrastructure Study (FY20) • Market Linkages for Coffee Sector • Support to the Accounting Professionals • DE4A Assessement (FY20) Foundation: Governance and • Mainstreaming Citizen Engagement (FY19) Macroeconomic Reform Dialogue • Mobile Money Study (FY19) • Digital Burundi TA (FY19) • Statistical capacity building (FY20) • Economic Update (III, IV) (FY20, FY21) • Macro Economics & Fiscal Management Policy Notes Series (FY20) • Sector Political Economy Analysis (FY20) • Debt Sustainability Analysis (FY20) • Economic, Poverty and Governance Monitoring (FY20, FY21) • Poverty Monitoring (FY20) • Governance Monitoring and Dialogue (FY20) • Private Sector Monitoring and Dialogue (FY20) • Women Entrepreneurship and Empowerment Study (FY21) 83. The CPF will seek to leverage the RSW for which Burundi is eligible to access up to US$15 million. The Strengthening Food Security, Jobs and Refugees Reintegration project is expected to promote greater freedom of movement for refugees and expand livelihood options for both refugees and host communities by (1) intensifying agro-pastoral production in development zones that will cover refugee camps and host communities; and (2) providing access to finance and market-linked skills training. The project will also support access to and heightened quality for basic services (education, health, water, nutrition, and sanitation) that could be shared by refugees and host communities to promote socioeconomic integration and build human capital. B. Financial Management, Procurement, and Other Government Systems 84. The 2015 Public Expenditure and Financial Accountability (PEFA) mission found that Burundi's PFM system had significant shortcomings; the political, economic, and fiscal crises have aggravated these problems. The main problems were poor management of public investments, lack of policy-based planning and budgeting, ineffective audit functions (both 39 internal and external), and delayed payments of suppliers. The WBG has launched initiatives to build Burundi’s own systems through training and use of the Central Bank to host WBG Project Designated Accounts. Given the country’s forex shortages, use of the Central Bank has heightened the fiduciary risks associated with foreign currency payments. During the CPF, the WBG will work to (1) reinforce Central Bank internal controls for management of Designated Accounts; (2) enhance the capacity of the Burundi Supreme Audit Institution and the Professional Accountancy Organization; and (3) improve Burundi's procedures for financial management of WBG-supported projects. 85. Financial management (FM) training will emphasize the need for reasonable assurance that WBG financing is used for the intended purposes and assisting the government as it builds its FM capacity. Recognizing the heightened risk exposure resulting from the use of Designated Accounts at the Central Bank, the PFM team, in collaboration with the disbursement team, will closely monitor those accounts to ensure that their ceilings are consistent with project needs. Funds flow will also be designed to ensure that significant resources go directly to beneficiaries or independent entities (e.g., UN agencies and NGOs) to reduce the risk that funds will be diverted. If necessary, financial management will increase, and for some projects a component to address fiduciary risks may be considered. The WBG PFM team will support development of the accountancy infrastructure to ensure a control culture in the government. Despite the substantial risks, recent external auditors and WBG supervision missions have identified no significant ineligible expenditures. The WBG will maintain an intensive presence from CPF design to conclusion to ensure that strong fiduciary management and hands-on support for financial management and procurement are embedded in all operations. 86. As required by the WBG’s New Procurement Framework (NPF), WBG-financed projects will use country regulations and bidding documents for all procurements worth up to US$1.5 million for goods and US$5 million for services. As Burundi fulfills NPF requirements for use of national procedures, most WGB-financed contracts in Burundi will be reviewed using national competitive bidding with no prior WBG review. The higher prior review thresholds allow the WBG team to emphasize improvement of the national procurement system. In Burundi, as in many other countries, the main problems are ineffective procedures, inadequate procurement institutions, and the absence of accountability. It is therefore essential to introduce initiatives to increase system transparency by publishing public procurement data. Using open contracting means introducing computerized tracking systems to monitor procurements, collect statistics, and measure performance. For simpler purchases, e-procurement may be an option. A smoothly functioning system would allow the WBG to use national institutions more extensively in prior review and procurement audits. C. Managing Programs 87. The CPF will achieve the proposed outcomes through a mix of investment project financing and knowledge services, complemented by policy dialogue and IDA and IFC technical assistance. If circumstances allow, a programmatic series of development policy operations will be considered after the PLR. To support peace-building and heighten trust, WBG activities during 40 the CPF cycle will benefit from monitoring based on enhanced citizen engagement and social accountability through independent verification agents and third-party executing entities (see Annex 5). These are suitable for Burundi because the WBG and the government can deliver programs in all provinces. Use of project funds to pay for technical, social, and financial audits by contract verification agents is more cost-effective than third-party monitoring. Social and technical audits and the use of technology to improve monitoring and evaluation (M&E) systems will be considered where appropriate to complement financial audits (see Box 13). Grievance redress mechanisms will be redesigned and strengthened throughout the portfolio to ensure that negative impacts are identified and addressed immediately. 88. The Government of Burundi is committed to executing this CPF Program despite capacity constraints; additional support will be provided to mitigate the risks. Where government institutions are inadequate, projects will be carried out by project implementing units (PIUs). The WBG will ensure that PIUs are appropriately staffed and their activities adhere to fiduciary procedures. Use of smart supervision and implementation approaches tailored to the local context will be encouraged63 to do business differently (see Box 13). The CPF outcomes specified in the results framework will be closely monitored and evaluated jointly by the WBG and the government through Country Portfolio Performance Reviews and at the time of the Performance and Learning Review. 89. The CPF identifies areas to encourage greater social accountability and citizen engagement in the short term. Tapping into the 2016 joint UN-WB assessment of NGOs in the Great Lakes Region, the program is committed to deepening their contributions to development programs by mainstreaming citizen engagement in FY19 across the portfolio. The Geo-Enabling Method for Monitoring and Supervision (GEMS), a real-time digital M&E and supervision system, will be set up to track delivery of Bank-supported investment programs nationally. In addition, the program will build the capacity of PIUs, WBG staff, and partners to use the GEMS system to enhance field data collection and M&E in a flexible and sustainable way. Creating beneficiary feedback mechanisms to help remedy any misuse of resources or unintended risks of harm to the population will be emphasized. Box 13: Working Differently in Burundi After the 2015 crisis, business as usual was no longer an option for Burundi. Some adjustments were made to adapt the WBG program to the increased risk of elite capture. In 2015, the WBG increased the fiduciary safeguards through stringent measures to lower the risk of misappropriation of project funds. The 2016 Fragility Assessment provided insights from the ground and lessons from WDR2011 to adapt to the Burundi context. The 2017 RRA confirmed the continued prevalence of structural drivers of fragility, such as inconclusive political settlement, poverty, conflicts over land, inter-ethnic tensions, regional tensions, pressures from climate change, disruptive regime change, and the minimal resilience of economic institutions. The Burundi Program then deepened its knowledge base through critical analyses (e.g., a Poverty Assessment, Country Environmental Analysis, Systematic Country Diagnostic, Country Economic Update II), macropolitical economic analysis, close security assessment, careful monitoring of the portfolio, and more active staff engagement on site. 63Annex 5 illustrates some approaches to smart supervision and implementation embedded in the portfolio that enhanced citizen engagement and social accountability after the 2015 crisis and later adjustments to how business is conducted in Burundi. 41 The WBG model for engagement in Burundi was reoriented using a more bottom-up participatory approach to deliver grassroots projects, underpinned by the analyses, as well as a conflict filter. The WBG team provided more technical engagements using ring-fenced project implementing units (PIUs), increased monitoring and transparency with stringent fiduciary safeguards, and candid assessment of risks and mitigation measures to help maintain basic institutional capacity. The team also shifted focus by putting the Development Policy Operations series on hold but continuing economic monitoring, PFM technical assistance, and policy dialogue. It then changed the sequencing to protect vulnerable Burundians and the hard-earned development gains by emphasizing economic resilience measures directed to agriculture, the environment, and local development; needs-based targeting of social protection; and access to such services as health, nutrition, fertility, education, and skills development for youth. Finally, the team continues to leverage the WBG comparative advantage by generating and sharing knowledge through analysis and dialogue with multiple stakeholders, recognizing that international actors have complementary roles in assisting Burundi through a variety of interventions. D. Partnerships and Donor Coordination 90. Partnerships and coordination are central to engagement, especially in an FCV-affected country. Yet since the 2015 political crisis, there is no effective aid coordination platform between the Government and the Development Partners. Only a Development Partners Platform is established to (i) promote strategic reflections and discussions on development and humanitarian issues and policies, (ii) establish and facilitate the dialogue among the development partners in alignment with national priorities to the extent possible and (iii) contribute to strengthening the transposition of global development frameworks into Burundian regulatory development framework, e.g SDGs Agenda 2030, AU agenda 2063, and other international commitments signed up by Burundi. The immediate priority of the Platform focuses on improving the coordination among Development Partners notably UN, EU, AfDB, WBG, and bilateral donors while continuously exploring opportunities to support the Government to revitalize aid coordination. Building on the successful Nutrition Forum64 held along with the Spring Meetings of 2019, the WBG will continue to tape into its conveying role to bring together the development partners to support Burundi plan to accelerate human capital outcomes. See Annex 9 for an indicative mapping of donor activities in Burundi. 91. IFC’s Conflict Affected States in Africa Initiative (CASA), launched in 2008 to help Africa’s fragile or conflict affected situations (FCS) rebuild their private sectors, create jobs, and attract investment, and is active in Burundi along with 12 countries in the region. CASA supported the Burundi Credit Bureau Law, Leasing Law, Investment Climate Phase II among others interventions. It also conducted a study on the impact of the political crisis on SMEs which will 64On April 13, 2019 the WBG hosted during the Spring Meetings in Washington the first ever Nutrition Forum organized by the Government of Burundi to discuss the challenges and opportunities and learn from the international best practices to improve nutrition. The Forum brought together key development partners such as EU, WBG, UN led by the Chair of UN Peacebuidling Configuration for Burundi, WFP, UNICEF, and bilareal donors i.e The Netherlands, USA, Swiss Federation. The partners committed to support the Call for Actions made by the Government to improve the nutrition situation in Burundi. 42 inform the design of future activities. CASA will seek to support new activities in coordination with development partners who provide the funding. V. MANAGING RISKS TO THE CPF PROGRAM 92. As highlighted in the Economic Update II and the SCD, the risks associated with the Burundi CPF are multifaceted and interconnected. Four major risks to the CPF will be considered in project and ASA design (see Table 4). The first risk is that a political crisis might break out as Burundi prepares for the 2020 general elections, a risk the WBG can do little to affect. Four years after the latest political crisis began, it continues to have severe repercussions on the economy, society, and Burundi’s engagement with the international community. Indirectly, however, the WBG can support peacebuilding, and social inclusion activities can help to prevent conflict from recurring. By focusing on subnational social inclusion and citizen engagement, the WBG can contribute to stabilization. Where appropriate, the WBG will support community-driven services to ensure that local institutions are preserved and remain at the heart of all WBG engagement. The Local Development for Jobs Project (P155060) already uses this approach, as will the Landscape Restoration and Resilience (P160613), the Youth Skills and Employment Project (P164416), and activities for refugees and host communities. The current Merankabandi Project (P151835) is designed to decrease FCV risks by building trust between government, Burundians, and the private sector using an open, participatory approach and unconditional cash transfers. 93. The political crisis is interwoven with the second risk, which relates to the poor short- and medium-term economic outlook. The economy will continue to face significant complex and interlinked challenges. Stringent controls on the private sector and forex shortages will continue to slow the pace of economic recovery. Insufficient economic recovery will depress revenue collection, which, together with the continued lack of foreign aid flows, will put further pressure on the country’s fiscal position. If the government continues to seek domestic financing of its deficit, the private sector will continue to be crowded out, adding pressure on prices from the forex shortage. The short maturity of domestic debt heightens the risk that the public sector will become insolvent and that the banking sector will be destabilized. Even as political factors substantially impact these economic risks, however, the WBG will continue to engage in policy dialogue with the Burundian Government and collaborate with other development partners, especially the IMF, to mitigate the risks and encourage adoption of policies to halt any downward economic. Social protection and other programs will help ensure a safety net for the poor and vulnerable. 94. Severe humanitarian crises constitute the third risk, which is exacerbated by displaced groups, epidemics due to medicine shortages, lack of access to potable water and to sanitation, and hunger. According to December 2018 IPC, 16 percent of the population need immediate relief of nutritional and other basic services. Mitigating these risks are the KIRA (P156012), Maternal Child Nutrition Enhancement Project (P157993) and ELGP (P111556) health programs, Merankandi (P151835), the planned Investing in Early Years and Fertility (P165253) and financing from the IDA18 Sub-Window for Refugees. These interventions also address Burundi’s fertility 43 challenges and the high rate of chronic malnutrition by increasing the use of quality Reproductive, Maternal, Neonatal, Child, and Adolescent Health services through provision of free health care for pregnant women and under-5 children as well as piloting nutrition schemes for children and lactating mothers and supporting family planning services. Meanwhile, the youth bulge is being addressed by the LDJP (P155060), EGLP (P161600) and pipeline YSEP (P164416), both of which will address the need for skills demanded by the economy. 95. The fourth risk arises from climate shocks and environmental stresses that reduce agricultural output. PRODEMA (P107343), CSCP (P127258), SCLP (P149176), PURI (P150929), and LRRP (P160613) are directed to minimizing this risk. Immediate response mechanisms and the Contingent Emergency Response Component built into specific projects will be deployed to respond quickly and flexibly to climate shocks and environmental stress. 96. The CPF also recognizes the risk of GBV during its activities. This risk has been higher in heavy infrastructure projects, which may entail temporary relocation of large groups of (mostly male) workers away from their families and home communities. The CPF will ensure that all activities are informed by the findings of the Action Plan produced in response to the recent Global GBV Task Force Report. It will include support for GBV prevention and responses to sexual exploitation and abuse, and will have a Grievance Redress Mechanism for community members and codes of conduct for contractors for relevant projects. The CPF also has a stand-alone GBV program, the GLESGBV—WHP (P147489), which is supporting expansion of legal, medical, and psychosocial services to mitigate the short- and medium-term impact of SBGV on victims. Table 4: Systematic Operations Risk-Rating Tool (SORT) Risk Category Rating (H, S, M, L) 1. Political and Governance High 2. Macroeconomics High 3. Sector strategies and policies High 4.Technical design of project Moderate 5.Institutional capacity for implementation and Substantial sustainability 6. Fiduciary Substantial 7. Environment and Social High 8. Stakeholders Substantial 9. Conflict and Violence High Overall High 44 Annex 1: CPF Results Framework FOCUS AREA I: Building Human Capital and Inclusion Burundi’s National Development Plan Pillar 1 states that sustained and inclusive growth for economic resilience and sustainab le development will be achieved by building up human capital. The cornerstone of Burundi’s Vision 2025 is improving the living conditions and providing a better standard of living for the people of Burundi, based on a well-educated population that also enjoys good health. The country struggles with high population growth that exerts pressure on limited resources for health care, education, and land, which is the main source of livelihood for 85 percent of Burundians. The pressures entail a bulging youth group entering the labor market, which exacerbates the potential for unrest and continued fragility, conflict, and violence (FCV). The WBG will invest to ensure the continuation of pro-poor services and economic opportunities targeting the poorest and most vulnerable and mitigating the worst impacts of the 2015 crisis. To deliver on its targets, the government needs to launch socially inclusive initiatives: raise life expectancy at birth significantly, to 60 years; reduce infant mortality to 50 per 1,000 births; control the principal endemic-epidemic diseases; ensure that universal primary education is a reality and that the education system delivers well-educated and employable Burundians; and lower annual population growth from 2.5 to 2.0 percent. Objective 1.1: Expand social protection and economic inclusion for poor and vulnerable groups. Intervention logic: Safety net programs are necessary to lift people out of the poverty trap and prevent others from falling in. The WBG program aims to help the government by investing in economic and social inclusion of targeted vulnerable groups by expanding the existing social safety net program to include cash transfers, facilitated by financial inclusion interventions (mobile money); and extended social services to 48,000 women-headed households through the Social Safety Net (Merankabandi) Project. Merankabandi will use information, education, and communication activities to promote positive nutrition, maternal health, and education behaviors; and will promote economic opportunities for the poor through productive inclusion initiatives that generate employment for women. It will heighten gender equality by addressing some activities specifically to women, e.g., making them the primary recipients of cash transfers and facilitating their access to economic empowerment activities. The approach should build social cohesion and trust between the government, the private sector, and the public, which will in turn reduce the risk of FCV. An Additional Financing of the Merankabandi project will expand its geographic coverage and use mobile money services to enhance the financial inclusion of marginalized communities. Experiences from other countries show that financial transfers often drive poverty reduction, both through public channels like social safety nets and through private channels like mobile money transfers. In addition, financing 45 from the IDA18 Sub-Window for refugees and host communities will improve access to livelihoods and socioeconomic infrastructure for refugees and host communities. CPF Objective Indicators Supplementary Progress Indicators WBG Program Indicator 1.1.1: Increase in 1.1.1; Social registry and management Ongoing Operations Proposed Operations number of beneficiaries of information system developed for safety Social Safety Net Strengthening Food safety net programs that focus net programs Project (P151835) Security and Refugees on the poor, women and other Baseline: No (2018) Reintegration (P107343) vulnerable (% female) Target: Yes (2021) Advisory Services & Baseline: 0 (2018) Analytics Investing in Early Years & Target65: 1,000,000 (2021) Support for Fertility Project (P165253) Operationalizing Indicator 1.1.2: Percentage of 1.1.2; Number of vulnerable households Burundi's Social AF- Social Safety Net households enrolled in the registered in the country’s social registry Protection Strategy Project (P151835) beneficiary database (% female and classified by socioeconomic indicators (P165599) headed households) (% female headed) Baseline: 0 (2018) Baseline: 0 (2018) Scaling up Nutrition Target: 70 percent (2021) Target: 70,000 (2021) Interventions in Burundi (P165270) Objective 1.2: Improve access to quality education and youth employability. Intervention logic: The WBG is investing in basic primary education and TVET/skills development for youth in order to tackle long- term drivers of Burundi’s fragility. Despite high poverty and heavy demographic pressures, in the last decade Burundi signifi cantly increased access to education. The out-of-school incidence for primary-school-aged children has also decreased over time, although for children 13 and above the dropout rate is still far too high. Repetition and drop-out are common, and although primary completion rates are improving, in 2015 they were still only about 62 percent. Together with higher enrollment, high repetition rates overcrowd classrooms, lowering the learning opportunities for all and increasing demand for new classrooms and teachers. In response, the government has undertaken widespread reform of education, as outlined in the Sectoral Plan for 2012–20. To support the reforms, 65 Safety Net program- Merankabandi – will target 200,000 households once expanded, which corresponds to 1,000,000 individual beneficiaries. 46 the WBG Early Grade Learning project (P161600; US$40 million) will improve learning and student progression. Similarly, while the primary school inequality gap has been addressed, post-primary access is still a problem irrespective of gender, income, and urban or rural residence. The Youth Skills Development Project (US$30 million) will build skills and improve employment outcomes for youths by promoting vocational and general skills training, though it will be necessary to ensure that the skills learned in fact help to create income-generating opportunities for youth at risk and girls. The disparity in secondary education and higher learning will be addressed by emphasizing how unconditional cash transfers from the Merankabandi project can be applied to education. CPF Objective Indicators Supplementary Progress Indicators WBG Program Indicator 1.2.1: Student 1.2.1; Number of public-school teachers Ongoing Operations Proposed Operations progression: Grade 1 to Grade 2 trained on the new curriculum for Grades Early Grade Learning Youth Skills and enrollment ratio in public 1–4 (% female) (P161600) Employment Project primary schools (% female) Baseline: 0 (2018) (P164416) Baseline: 78 percent (2018) Target: 25,915 (2023) Social Safety Nets Target: 90 percent (2023) Project (P151835) AF Early Grade Learning (P161600) Advisory Services & Analytics Education Public Expenditure review Youth employment and jobs study Objective 1.3: Improve access to quality reproductive, maternal, child health, and nutrition services. Intervention logic: The Government of Burundi relies on external funding for basic needs, especially health care and nutrition services. The CPF program will therefore (1) expand access to essential reproductive, maternal, child health, and nutrition services and (2) increase investment in early years to meet the indispensable needs of Burundians, particularly in the targeted vulnerable and disadvantaged areas. The performance-based financing (PBF) scheme that is the single largest source of funding for the health sector nationally will broaden its community health interventions by training and incentivizing up to 12,000 Community Health Workers 47 (CHWs) and improving the quality of training in public nursing schools. The quality of health care will also continue to be enhanced by two regional projects, the public health laboratory network in East Africa and the women’s health project, particularly tr eatment for and prevention of sexual and gender-based violence, which is part of the Great Lakes Initiative. Burundi has the second highest rate of chronic malnutrition in the world and a high fertility rate; both of which have intergenerational effects on poverty and ill health. The new Investing in Early Years and Fertility Project (P165253) will address those issues through community-based nutrition- sensitive interventions, family planning (FP) services, and social and behavior change communication, all to be supplemented by advocacy, communication, and capacity-building strategies for enhanced leadership and awareness. The current Trust Fund on Maternal and Child Nutrition Enhancement Project (P157993), will increase production and consumption of micronutrient-rich foods in targeted provinces by mobilizing communities to improve nutrition practices and increase production of micronutrient-rich foods. CPF Objective Indicators Supplementary Progress Indicators WBG Program Indicator 1.3.1: Number of 1.3.1: Children 0–23 months receiving Ongoing Operations Proposed Operations people who receive essential essential community-based nutrition and Health Systems Investing in Early Years & health, nutrition, and early stimulation services in project areas Support Project–KIRA Fertility Project (P165253) population services66 (Percentage) (P156012) Baseline: 8,240,485.00 (2018) Baseline: 0 (2019) Strengthening Food Target: 18,640,000.00 (2023) Target: 30% (2023) AF Health Systems Security and Refugees Support Project–KIRA Reintegration (P107343) Indicator 1.3.2: Percentage of (P156012) women of reproductive age 1.3.2: Pregnant women benefiting from using modern contraception iron and folic acid supplementation in East Africa Public Advisory Services & Baseline: 23 percent (2017)67 project areas (cumulative) Health Laboratory Analytics Target: 30 percent (2023) Baseline: 0 (2019) Networking Project Scaling up Nutrition Target: 369,000 (2023) (P111556) Interventions in Burundi Water Sector Review/WASH diagnostics 66 Through operations supported by the World Bank, the indicator measures the sum of the number of children immunized, women and children who have received basic nutrition services, and deliveries attended by skilled health personnel 67 This baseline cannot change to FY20 figures since its from the DHS. 48 Maternal and Child and Nutrition Enhancement Project (P157993) Great Lakes Sexual and Gender-Based Violence and Women’s Health Project (P147489) FOCUS AREA 2: Strengthening Foundations for Economic and Social Resilience As highlighted in the SCD, economic growth and poverty reduction in Burundi have been severely delayed by decades of recurring political and climate-related shocks. The fragility of the environment in a densely populated country highly dependent on agriculture demands action to improve resilience; but to unlock Burundi’s economic potential, it will also be necessary to address other barriers, among them the limited road network, which blocks access to internal as well as external markets. Agricultural growth has not kept up with population growth, which is having a heavy impact on the arable land that is central to agricultural productivity and socioeconomic development. While there is clear need to enhance agricultural productivity, it is also crucial to ensure sustainable use of Burundi’s natural resources as pressures from high population growth and climate change intensify. Most of Burundi has no electricity, which means that farmers are trapped in subsistence activities and the efforts of small-scale entrepreneurs and industry of all sizes are severely compromised. A growing number of youth, mostly unemployed, and the high fertility rate of 5.5 children per woman intensify a long-standing fragility concern. Activities in this focus area should also reinforce the economic resilience of both the country and its households. Objective 2.1: Build sustainable food systems for nutrition and jobs. Intervention Logic: Burundi does not produce enough nutritious food of acceptable quality, which, coupled with inferior nutritional practices and cyclic climatic shocks to food systems, has resulted in the highest rate of chronic malnutrition, 56 percent, in the world. The country is thus confronted by an immense need to improve food and nutrition security, particularly for children. Current macroeconomic conditions are making imported food costlier and less available, so Burundians must rely largely on food produced locally. Improving local food systems by making agriculture more productive is thus critical for building socioeconomic resilience and improving nutrition throughout the country. The WBG program will provide support through the Strengthening Food Security and Refugees Reintegration project (P107343) that addresses the perennial nationwide malnutrition challenge by promoting agribusiness 49 value chains. These will enhance income opportunities for poor farmers including women while also providing quality nutrition and fostering integration of the 65,000 Congolese refugees within host communities. This project will also support employment in agribusiness (with focus on rural employment generation) given that Agriculture remains the main source of jobs and livelihoods for 85 percent of the population. The WBG is already assisting the government through three ongoing operations that seek to improve food security in terms of the quantity and quality of food produced and by providing incomes to the farmers that enable them to access essential services like health and education. Prodema (P107343) seeks to increase small producer productivity and market access for targeted commodities in 10 of the 18 provinces. The Coffee Sector Competitiveness Project (P151869) is designed to strengthen value chain governance and ensure improvement in coffee quality and market access for vulnerable farmers in the top six coffee-producing provinces). The Great Lakes Regional Integrated Agriculture Project (P161781) is directed to agricultural productivity and commercialization in five provinces in Burundi along the DRC and Tanzania borders, The intent is to improve agricultural integration in the region and provide immediate and effective responses to specified types of crisis and emergency. The Landscape Restoration & Resilience Project (P160613) helps to restore land productivity and train beneficiaries in better management of water resources, thus addressing both livelihoods and resilience. The WBG has proposed a program to open access to basic services, employment, and long-term economic prospects for both youth at risk and women that will help tackle the youth bulge, build resilience, and reduce FCV in vulnerable communities. The Local Development for Jobs Project (P155060), with support from IFC advisory services, will promote development of MSMEs to create value chains in rehabilitated agricultural areas where youth, women, and other vulnerable groups are active. Upstream work through Mobile Money ASA will catalyze much-needed financial inclusion in such sectors as social protection and agriculture. CPF Objective Indicators Supplementary Progress Indicators WBG Program Indicator 2.1.1: Increased 2.1.1: Adoption of improved technologies Ongoing Operations Proposed Operations agricultural productivity (in in selected value chains Ag. Pastoral Product. & • Strengthening Food targeted areas) Market Development Security and Refugees Rice Rice, Banana (P107343) Reintegration (P107343) Baseline (t/ha) : 4.10 (2018) Percentage of participating farmers (male Target (t/ha) : 4.90 (2022) and female) adopting new technology Coffee Sector Rural Roads Resilience Bananas packages (for production, post-harvest, Competitiveness and Safety program Baseline (t/ha) : 22.90 (2018) processing) (P151869) (US$50m, FY21) Target(t/ha) : 27.50 (2022) Baseline: 35.00 (2018) Coffee Target: 75.00 (2022) AF - Burundi Landscape 50 Baseline (kg/tree): 0.8 (2018) Coffee Regional Great Lakes Restoration and Target (kg/tree): 1.6 (2022) Number (million) of coffee trees replanted Integrated Agriculture Resilience Project Milk Baseline: 0.58 (2018) Development Project (US$50m, FY23) Baseline(liters): 1,260 (2018) Target: 16.50 (P143307 Target (liters): 1,512 (2022) Number (million) of coffee trees Advisory Services & rejuvenated: Landscape Restoration Analytics Baseline: 5.06 (2018) & Resilience Project DE4A Assessement Target: 18.75 (2022 (P160613) Milk Burundi Digital Economy Percentage of producers adopting new Infrastructure (P169911) breeds and husbandry practices for milk Resilience Emergency production Project (P150929) Banking Sector: Baseline: 30.00 (2018) Monitoring and Payment Target: 80.00 (2022) KCB Advisory Services Systems Surveillance Project (IFC) - Women Indicator 2.1.2. Increased 2.1.2: Number of producers (trainers, in Banking production of nutritious and including lead trained in production of Mobile Money Study biofortified food (in targeted biofortified crops or production in home areas) gardens (% female) Rural Infrastructure Study Baseline: 0.00 % (2018) Baseline: 132.00 (2018) Target: 10.00 % (2022) Target: 10,480.00 (2022) Market linkages for coffee sector Number of households with home gardens Baseline: 1,500 (2018) Support to the Accounting Target: 13,600(2022) Professionals Indicator 2.1.3: Increased land 2.1.3; 8,000 farmers adopting climate- area under sustainable smart agricultural technologies, of which landscape management 30% are female practice Reduction of erosion in target degraded Baseline: 0 (2018) landscapes: 51 Target: 89,360 ha (2023) Baseline: 0 Target 50% Land certificates issued: Baseline: 0 Target: 1,408 Indicator 2.1.4: Number of 2.1.4: Increase in employment by Local Development for person‐days of employment - beneficiary firms (0–10) (% female) Jobs (LDJP) (P155060) (% female) Baseline: 0 (2018) Baseline: 0 (2018) Target: 10 (2023 Target: 2,000,000 (2022) Objective 2.2: Increasing access to energy for poor families Intervention Logic: With only 5 percent of Burundians having access to electricity and recognizing Burundi’s high density but limited urbanization, the CPF will supplement current hydro generation by financing off-grid solar investments in rural community social centers (health centers and schools) to expand access and improve the delivery and quality of social services. The proposed Off-Grid Energy Access Project would provide people identified as most vulnerable in the WB cash transfer program (Merankandi) with solar kits and lanterns. The project will also benefit public institutions namely public schools (including 100 percent of the technical schools currently without electricity), hospitals, and medical centers; specifically, it will seek to provide Internet services to schools when relevant and train students in technical schools to maintain solar systems. It will also electrify population centers identified by the rural electrification agency. The project will provide subsidies for consumers to buy and install solar home systems and mini-grids. Gender gaps in the energy sector will be assessed in order to identify how off-grid activities address those gaps. Off-grid technologies can support more equality in income-earning activities by extending the working day or attracting small businesses that need energy. Labor-saving community services, such as electric water pumps and grain grinding, save time and allow women to set up their own small enterprises. CPF Objective Indicators Supplementary Progress Indicators WBG Program 52 Indicator 2.2.1: Electricity 2.2.1: Quantity of hydroelectricity Ongoing Operations Proposed Operations generation capacity doubled. generated by the project Jiji and Mulembwe Burundi Off Grid Energy Baseline: 51MW (2018) Baseline: FY18: 0 GWh/y; Access Project (P164435) Hydropower (P133610) Target: 105MW (2023) Target: FY21: 236.5 GWh/y Advisory Services & Indicator 2.2.2: Number of 2.2.2: Additional carbon dioxide emissions Regional Rusumo Falls Analytics community social centers avoided per year of operation. Hydroelectric Project PPIAF: Strengthening the provided with access to Baseline: FY18: 0 (P075941) regulatory framework for electricity through off grid Target: FY21: > 26,484 kg CO2 emissions competitive procurement systems under WB project (% of of renewable energy services targeting women) generation capacity in Baseline 0 schools and clinics Burundi (2018) Target: 1,080 schools and 150 clinics (2023) Foundation: Macroeconomic Stability, Structural reforms and Governance Burundi’s Vision 2025 advocates for promotion of robust leadership at all levels in the apparatus of the State. It will be th e development framework that will guide the actions of the government and the institutions of the Republic, in partnership with the private sector, civil society, religious groups, grass-root communities, and multilateral and bilateral cooperation to achieve the goals of sustainable development by 2025. To realize the Vision will require a refocusing of the role of the state and the professionalization of its institutions. This refocusing is essential to the rebuilding of a state of law, relaunching of the administration, and revival of economic growth. Objective 3.1: Strengthening public sector accountability, efficiency in service delivery, women empowerment and macroeconomic stability Intervention Logic: It is urgent that Burundi minimize disruptions in delivery of essential social services, particularly local delivery, that is impeded by government fiscal constraints and economic difficulties, like the foreign currencies shortage. Citizen engagement will be mainstreamed throughout the portfolio to collect, receive, and build on real-time feedback from beneficiaries during the 53 execution of the program. This will ensure social inclusion through broader participation in development programs, greater public access to information on service delivery, especially timely and reliable statistics, and more efficient and transparent service delivery. Here the WBG program will support the government by continuing the Strengthening Institutional Capacity for Government Effectiveness project (P149176), which is building government capacity for fiscal management. Specifically, it is supporting government efforts to mobilize domestic revenue, improve management of public spending, produce timely statistics for policy making, and better regulate mining. The Landscape Restoration and Resilience Project (P160613), will restore the productivity of certain degraded landscapes and respond immediately and effectively to a crisis or emergency. It should also contribute to settlement of land conflicts. The KIRA project (P156012) will continue to use 700 independent CBOs and NGOs to verify and counter-verify the free health careservices supported by the project. Social accountability will be enhanced by granting the public more access to information about government spending on services. Coordinated interventions will foster transparency in the central government and provide information about corruption to support policies and practices that reduce corruption . Macroeconomic stability will be closely monitored to ensure the success of WBG interventions. The World Bank will continue to discuss macroeconomic and fiscal policy with the Burundian authorities to encourage adoption of sound macroeconomic policies; it provides real-time information on macroeconomic policy through the Burundi Economic Update series, semiannual Macro-Poverty Outlook assessments, short policy notes, and comprehensive analyses of macroeconomic and sector spending. This CPF will facilitate policy dialogues on improving the investment climate and building up the private sector with a focus on women entrepreneurship and empowerment. IFC will support Burundi in improving the business environment, mitigating investment risks, reducing regulatory barriers to investment, and applying Maximizing Finance for Development principles to the energy, agricultural, and tourism and hospitality sectors. The CPF will support adaptation of the business environment to cross-border trade, harnessing digital connectivity for development, and integrating ICT into all its interventions, which should have enormous benefits for Burundi. CPF Objective Indicators Supplementary Progress Indicators WBG Program Indicator 3.1: Mainstream citizen 3.1: Citizen Engagement Analysis (CEA) Ongoing Operations Advisory Services & engagement in the World Bank produced for at least four projects. (% of Strengthening Analytics portfolio. women participating in the CEA). Institutional Capacity Citizen Engagement Baseline: 0 projects (2019) for Government Analysis Target: 4 projects (2022) 3.2: Key budget documents68 are produced Effectiveness Project 68 Finance Act, within 15 days following the beginning of the year; Quarterly budget execution report published within 30 days following the quarter; Statement of Government Operations 54 and published promptly online. (P149176) [to be Economic Update (III, Baseline: 0 (2018) integrated into the IV) (FY20, FY21 Target: 8 (2021) Strengthening Institutional Capacity Digital Burundi TA 3.3: Public participation in the budget process for Government (P169911) is improved, Effectiveness Project Baseline: 0 percent (2018) during its mid-term KCB Advisory Services Target: 12 percent (2021) (the current EAC review] Project (IFC)- Women average) in Banking Social Safety Nets 3.4: Strong budget oversight by the supreme Project (P151835) Banking sector Monitoring and audit institutions 69 Health System Payment Systems Baseline: 0 documents (2018) Support Project- KIRA Surveillance Target: 40 documents (2021) (P156012 Mobile Money Study 3.5: Improved production of timely and Local Development for reliable70 economic and social statistics (% Jobs (LDJP) (P155060) Youth Employment for female) Jobs Study Baseline:19 (2018) Landscape Restoration Target: 20 (2021) & Resilience Project Women (P160613) Entrepreneurship and Empowerment Study Advisory Services & Analytics Statistical capacity Macrolevel Political building Economy (164843) Economic Update (III, IV) (FY20, FY21) 69Audited reports of Consolidated Fund (Central Government financial statements), 6 reports expected; audited report of public entities, at least 34 reports. 70Timely as measured by the reasonable number of days it takes to issue the report: Monthly reports within 20 days after the month ends, Quarterly reports 30 days after the quarter ends; Annual reports available within 3 months of the end of year. Reliability is measured by the quality of the report: acceptable, unacceptable. 55 Macro Economics & Fiscal Management Policy Notes Series (FY20) Sector Political Economy Analysis (FY20) Debt Sustainability Analysis (FY20) Poverty Monitoring (FY20) Governance Monitoring and Dialogue (FY20) Private Sector Monitoring and Dialogue (FY20) 56 Annex 2: Completion and Learning Review (FY13–16) The CLR is available at Burundi Completion and Learning Review (FY13-16).pdf. I. Summary of CLR Findings and Ratings 1. This Completion and Learning Review (CLR) assesses the Performance and Learning Review (PLR) for Burundi (Report No. 92630-BI, dated February 25, 2015) under the Country Assistance Strategy (CAS) cycle for the period FY13–FY16 (Report No. 72334-BI, dated September 18, 2012). The CLR registers achievements against targets set out in the updated PLR Results Framework (RF), which revised certain outcome indicators and left CAS strategic objectives and outcomes unchanged. Burundi went through a period of political instability, which emerged about two months after the PLR and affected implementation of some World Bank projects from the PLR through the end of the CAS cycle. 2. World Bank support to Burundi was aligned with Burundi’s Poverty Reduction Strategy Paper (PRSP) II (2011–2015) and sought to help Burundi lay the foundation for faster and more inclusive growth with a view to reduce poverty and mitigate the risk of renewed instability by building trust between the state and its citizens. The CAS was framed around two strategic objectives: (a) improving competitiveness by establishing an enabling environment for inclusive growth and (b) increasing resilience by consolidating social stability. In addition to the two strategic objectives, the CAS Foundation focused on improving governance with a cross-cutting approach, which was expected to contribute to both strategic objectives. 3. The CLR rates overall progress toward PLR strategic objectives as Moderately Unsatisfactory, contrary to achievements from the CAS to the PLR, which saw progress equivalent to Moderately Satisfactory. The lower ratings from the PLR to the end of the CAS cycle are based on Moderately Unsatisfactory progress toward PLR Strategic Objective I (improving competitiveness), Satisfactory progress toward PLR Strategic Objective II (increasing resilience by consolidating social stability), and Moderately Unsatisfactory progress toward the third strategic objective and the PLR Foundation (Strengthening Governance). Lower ratings from the PLR to the end of the CAS cycle are linked to Burundi’s political crisis, which affected almost the entire PLR implementation period. 4. The World Bank Group performance rating through the CAS cycle is Fair, as design and implementation successfully contributed to some achievements, but also saw an increase in Unsatisfactory project ratings, while the PLR design failed to adequately identify and formulate mitigating measures related to erosion of the foundation for the Arusha Peace and Reconciliation Agreement for Burundi. With a political crisis breaking out two months after the PLR date, the World Bank team took active measures to protect World Bank staff and families and safeguard the ongoing portfolio while continuing the World Bank's engagement with Burundi. Following developments in mediation efforts between the Government of Burundi (GoB) and members of the opposition, World Bank staff successfully assigned and reallocated the remaining International Development Association (IDA) funds (IDA17 funds) available to Burundi after the end of the CAS cycle. 5. The remainder of this report is structured as follows: Section II presents highlights of the PLR and CAS program development outcomes. Section III discusses the World Bank Group performance rating, followed by a discussion in Section IV of CAS and PLR alignment with World Bank Group Corporate Goals. Section V discusses key lessons learned. 57 II. Highlights of the CAS and PLR Program Development Outcomes Progress against CAS outcome indicators from the CAS to the PLR is reported in PLR Annex 2A and summarized in Table 6. Table 5: PLR Development Outcome Ratings by Strategic Objective Strategic Objective Strategic Objective II: Foundation: Relative I: Improving Increasing Resilience Strengthening outcome Competitiveness (2 by Consolidating Governance (1 indicator outcomes, 6 Social Stability (2 outcome, 3 outcome ratings across outcome outcomes, 4 outcome indicators) all pillars indicators) indicators) Achieved 3 1 1 38% Mostly Achieved 1 2 2 38% Partially Achieved 0 0 0 0% Not Achieved/Not 2 1 0 23% Verified DO* Moderately Moderately Moderately Rating/Strategic Unsatisfactory Satisfactory Satisfactory Objective Overall DO Rating Moderately Satisfactory Note: *DO = Development Objective. 6. The PLR maintained the three DOs formulated in the CAS: Strategic Objective I (Improving Competitiveness), Strategic Objective II (Increasing Resilience by Consolidating Social Stability), and Foundation (Strengthening Governance). At the PLR, some (but not all) achieved outcome indicators were updated or replaced, while the two DOs and the Foundation remained the same. Four out of twelve outcome indicators in the PLR RF were met before the PLR but not updated; hence, 25 percent of the PLR outcome indicators were not meaningful for gauging progress toward PLR objectives. 7. The PLR assesses progress toward CAS DOs as Satisfactory, with 76 percent of CAS outcome indicators Achieved or on track to being Achieved. Satisfactory progress from the CAS date to the PLR is contrasted by achievements from the PLR to the end of the CAS cycle, where Achieved indicators dropped to 58 percent and Partially Achieved and Not Achieved outcome indicators increased from 23 percent to 42 percent. In addition, three of seven Achieved outcome indicators in the period were met before the PLR and therefore have little relevance for determining progress against strategic objectives from the PLR to the end of the CAS cycle. Excluding outcome indicators already met at the PLR results in five of nine outcome indicators rated Partially Achieved or Not Achieved and four of nine outcome indicators rated Achieved. 58 Table 6: CLR Development Outcome Ratings by Strategic Objective Strategic Strategic Objective II: Foundation: Relative Objective I: Increasing Resilience Strengthening outcome Improving by Consolidating Governance (1 indicator ratings Competitiveness Social Stability (2 outcome, 3 across all pillars (2 outcomes, 5 outcomes, 4 outcome outcome outcome indicators) indicators) indicators) Achieved 3 3 1 58% Mostly Achieved 0 0 0 0% Partially Achieved 1 0 1 17% Not Achieved/Not 1 1 1 25% Verified DO Moderately Satisfactory Moderately Rating/Strategic Unsatisfactory Unsatisfactory Objective Overall DO Rating Moderately Unsatisfactory Note: Two outcome indicators Achieved before the PLR. b. One outcome indicator Achieved before the PLR. c. Three of seven outcome indicators were Achieved before the PLR. Excluding these outcome indicators results in 44 percent Achieved outcome indicators against 56 percent Partially Achieved and Not Achieved outcome indicators. Achievements under Strategic Objective I: Improving Competitiveness (Moderately Unsatisfactory) 8. Under Strategic Objective I, one outcome indicator was Achieved, one outcome indicator was Partially Achieved, and one outcome indicator was Not Achieved. Two outcome indicators were met at the PLR and therefore do not contribute meaningfully to measuring of achievements from the PLR to the end of the CAS cycle. 9. The Achieved outcome indicator for reduced infrastructure-related bottlenecks to growth is outcome indicator 1.2 linked to the Regional Rusumo Falls Hydroelectric Project (RRFHP, P075941) under which application decrees of Electricity and Public-Private Partnership (PPP) Laws were approved during the PLR period. The achievements of the RRFHP during the PLR are noteworthy, given the project's regional arrangement (beneficiary countries are Burundi, Rwanda, and Tanzania); co-financing arrangements with the African Development Bank (AfDB); and very long preparation time. The three beneficiary countries signed a Joint Project Development Agreement in 2006, but the project only became effective on July 10, 2014, with groundbreaking for the construction of the dam at the beginning of March 2017. In itself, the RRFHP's 80 MW hydropower generation capacity would be a significant contribution to Burundi's power sector. Moreover, Component B of the RRFHP will connect Rusumo to the national grids of Burundi, Rwanda, and Tanzania and so plays a vital role in the creation of a regional grid backbone, which will allow for future power trade within the Nile Equatorial Lakes Region. It is noteworthy that implementation of the RRFHP was not particularly affected by the 2015 political crisis in Burundi. It may therefore be relevant to consider whether the RRFHP's regional design would be useful for the Burundi project pipeline and for fragile states in general.71 Lastly, the RRFHP’s last Implementation Status and Results Report (ISR) in the CAS cycle (June 2016) indicated actual disbursements significantly 71A second hydroelectric project, the Jiji and Mulembwe Hydropower Project (JMHP, P133610), became effective on January 12, 2015. The JMHP is a national project with co-financing from the AfDB, European Union (EU), and the European Investment Bank (EIB). Unlike the RRFHP, the political crisis of 2015 directly affected implementation of the JMHP, resulting in the need to urgently identify a new advisory engineering firm. Although a company was identified, World Bank procurement rules resulted in selection being a lengthy process, raising the question whether procurement rules for fragile states could be streamlined. 59 below planned disbursements. While the Development Objective (DO) and Implementation Performance (IP) ratings for the RRFHP remained Moderately Satisfactory, good portfolio practice required downgrading projects with significant disbursement discrepancies. 10. While progress toward the four remaining PLR outcome indicators under Strategic Objective 1 was mixed, many positive developments for improving competitiveness are worth highlighting. These include progress under the Agro-Pastoral Productivity and Markets Development Project (PRODEMA, P107343), which saw Satisfactory progress against its DO of increasing small producers' productivity and market access. Under the project, eight of eleven indicators were met or surpassed at least six months ahead of the end target date. Under the Regional Communications Infrastructure Project (RCIP, P094103), the original CAS outcome indicator target of lower retail prices for Internet services 72 was met early in the CAS period, dropping from US$1,250 in March 2007 to US$100 in March 2016. Regrettably, the PLR RF did not update the outcome indicator related to more affordable access to Internet services; hence the substantial progress in this area is not directly attributable to achievements of CAS Outcome 2 (reduced infrastructure-related bottlenecks). 73 The RCIP saw initial progress in relation to PPP for the information and communication technology (ICT) sector with the creation of the Burundi Back Bone System (BBS) company, which would operate as a wholesaler, owned and managed jointly by the GoB and private sector operators as a PPP special purpose vehicle. BBS became effective on December 3, 2012, but faced challenges during project implementation. On January 16, 2017, the GoB announced termination of the contract governing the PPP arrangement, effectively ending the PPP arrangements set out under the RCIP. The reversal of progress in relation to PPP reform under the RCIP is like setbacks in many other areas (see paragraph 12regarding roads, doing business, privatization, and economic growth and governance reform) following completion of World Bank-supported projects and programs. This highlights the importance of sustainability and the risk of unpredictable political commitment in the design of World Bank operations in Burundi. 11. Progress was lacking or limited in relation to two outcomes under Strategic Objective 1: reduced infrastructure related bottlenecks and improved business climate and private investments (PLR Outcome 1.1 and 1.2). Under Outcome 1.1, 23.5 km of roads maintenance and rehabilitation was realized from the PLR to the end of the CAS cycle under the Public Works and Urban Management Project (PWUMP, P112998), in addition to 105 km of roads rehabilitated or maintained from the beginning of the CAS to the PLR. Yet while the PWUMP met and surpassed its project indicator targets, the PLR RF did not update its outcome indicator target for roads rehabilitation, which was left at 105 km, resulting in Partial progress toward the outcome indicator. In addition to the PWUMP, the Burundi Road Sector Development Project (BRSDP, P064876) contributed to Outcome 1.1. The two projects are among four projects that closed during the CAS cycle. The Independent Evaluation Group (IEG) rates the PWUMP outcome and World Bank Performance Moderately Satisfactory, while the BRSDP is rated Moderately Unsatisfactory on both parameters, resulting in a disconnect in the outcome rating, from Moderately Satisfactory at the time of the Implementation Completion and Results Report (ICR) to Moderately Unsatisfactory at the Implementation Completion Report Review (ICRR). IEG further notes that the BRSDP design relevance was modest and overambitious considering Burundi’s commitment and capacity to implement the project. The objectives of restoring part of the priority road network and improving institutional capacity in the road sector were partially achieved. 72 Due to technological developments, the price of monthly Internet services is not a suitable outcome indicator, as most consumers today buy bundles of data, which are recharged upon depletion. 73 In addition, the outcome indicator focuses on retail prices, while the World Bank's interventions under the RCIP are attributable to wholesale prices. 60 12. Progress toward improved business climate and private investment was Not Achieved as measured by progress against the two outcome indicators for CAS Outcome 1.2. The first outcome indicator—linked to the Financial and Private Sector Development Project (FPSDP, P107851)— registered no reduction in time for high-value transactions in the automated transfer system, whereas the goal for the second outcome indicator (market access for targeted commodities) linked to PRODEMA had been met in the year before the PLR and was not helpful for measuring progress toward the outcome. In relation to the first outcome indicator, it is likely that the target will be met eventually, but due to the project size and complexity, as well as the political crisis, the project has been delayed significantly. The combination of project size and complexity, with low implementation capacity, appear often in Burundi, with less-than-expected progress toward project goals. IEG’s lesson from the BRSDP appears relevant to Burundi’s portfolio in general: “For post-conflict affected countries, project objectives, designs, implementation arrangements, and M&E should be simple and implementable. In post-conflict situations, helping the government to generate employment and rebuild infrastructure is generally among the key priorities. As the governments’ capacity to rebuild the nation is usually low, the design and scope should focus on quick and easy implementation, with rapid and visible outputs.” 13. About the general business environment in Burundi, it should be mentioned that the country did remarkably well in the Doing Business Indicator (DBI) surveys of 2013 and 2014 (published 2012 and 2013), increasing in ranking from 159 to 140. However, since 2013, Burundi [has] reversed the gains made between the 2013 and 2014 DBI surveys, dropping back to 152 in the DBI surveys for 2015 and 2016. Burundi dropped further in the last CAS cycle year (DBI 2017) to 157. Achievements under Strategic Objective II: Increasing Resilience by Consolidating Social Stability (Satisfactory) 14. Achievements under Strategic Objective II were Satisfactory and in accordance with PLR targets for improving access to health services and strengthening the safety nets coverage. Achievements under Strategic Objective II include increased percentage in births attended by skilled personnel, increased utilization of contraceptives, job creation, and the adoption of a National Social Protection (SP) Strategy. 15. While all four health- and SP-related outcome indicators were Achieved under Strategic Objective II, the overall health situation in Burundi is deteriorating, in part due to withdrawal of development partner (DP) funding and unavailability of drugs. The PLR main text for Strategic Objective II is unclear on how consolidation of social stability would be achieved (the text emphasizes the importance of abolishing basic services fees, but how this would consolidate stability is not elaborated). 16. Noteworthy achievements under Strategic Objective II include World Bank support to civil society organization (CSO) monitoring of the quality of health services during the PLR. This approach resulted in significantly better health services scores in regions with CSO monitoring, compared to regions where no CSO monitoring was organized. 17. With respect to Outcome 4 (expanded safety nets to reduce volatility of livelihoods), both outcome indicators were Achieved and linked to the PWUMP and the Economic Reform Support Grant (ERSG) VI–VIII series. Lessons learned from the PWUMP implementation include building on successful operations—in the case of the PWUMP, the Public Works and Employment Creation Project—and matching capacity with realistic targets. The PWUMP ICR emphasizes the importance of taking a longer-term view on development, where a gradual approach to delegation of responsibilities may stretch across more than one project period. 61 18. Achievements under Foundation (Strategic Objective III): Strengthening Governance (Moderately Unsatisfactory) 19. The third Strategic PLR Objective (Foundation: Strengthening Governance) saw Moderately Unsatisfactory progress toward PLR outcome indicator targets. But the Foundation had only one associated outcome, measured by three outcome indicators, of which one was achieved before the PLR and thus not meaningful for assessing progress over the PLR period. As a result, the rating for Strategic Objective III is based on progress measured against two outcome indicators only. Of these two indicators, training in the new Integrated Financial Management Information System (IFMIS) took place for a little less than half of the target group, while no progress is registered on the Extractive Industries Transparency Initiative (EITI) website in relation to Burundi becoming an EITI candidate. The Development Policy Operations (DPO) series supported the revision of the mining code and the development of an action plan to prepare Burundi for EITI membership and Advisory Services and Analytics (ASA) Report No. 103086 (see Table 7 for further information) observes the GoB’s commitment to implement EITI, which led the GoB to declare, on January 20, 2015, its intention to pursue candidacy in the EITI process. This process included Burundi submitting its application for candidacy to the EITI Secretariat, which the GoB had pledged to do by December 2015. However, due to the 2015 crisis, nothing further has been done in relation to Burundi's efforts to become an EITI candidate country, and must be considered Not Achieved. PLR Design Focus areas and instruments 20. World Bank Group support to Burundi from the PLR to the end of the CAS cycle employed the following five lending instruments: one Adaptable Program Loan, four Specific Investment Loans, six Investment Project Financing loans, one Sector Investment Maintenance Loan, and a continuation of the Development Policy Lending (DPL) series for the ERSG, which began before the CAS cycle. 21. The evaluation of the ERSG VI–VIII (P150941, P144612, P127080) was carried out concurrently with the CLR, and lessons identified by the ERSG ICR suggest that budget support operations are powerful instruments to encourage implementation of a wide variety of policy reforms. At the same time, the ICR acknowledges the lack of sustainability of budget support when governments fail to recognize the need to pursue implementation of reforms after the end of a budget support operation. 22. Indeed, the 2011 World Development Report (WDR) on Conflict, Security, and Development stresses the importance of “varying oversight and delivery mechanisms when engaging through national institutions. Oversight mechanisms to adapt to risk include shifting from budget support to 'tracked' expenditure through government systems, and from regular reporting and internal control mechanisms to independent financial monitoring agents, independent monitoring of complaints, and independent technical agents. Variations in delivery mechanisms include community structures, civil society, the private sector, the UN, and other international executing agencies in delivering programs jointly with state institutions.” The WDR refers to budget support to Ethiopia in 2005 as an example of how a program of transfers to local and municipal governments secured support [in] all regions of the country, irrespective of political support. The WDR further advises against unconditional and unmonitored budget support in fragile situations. Lending instruments should recognize “the spectrum of risk, from governments who are well- intentioned but face insecurity and weak institutions, to those who are more abusive.” 62 Adequacy and appropriateness of interventions 23. Four projects closed during the CAS cycle with three projects’ final rating Moderately Unsatisfactory on either overall World Bank performance or outcome. IEG emphasizes overambitious design (considering inadequate country commitment and capacity), shortcomings in monitoring and evaluation (M&E) systems, and lack of focus on threats to achievement of the Project Development Objective (PDO) as reasons for its ratings. The low ratings suggest a need to review the complexity and ambition of World Bank operations in Burundi. 24. Shortcomings in monitoring of projects may explain widespread disconnects in ratings among the closed projects, both in relation to ISR-ICR ratings and ICR-ICRR ratings. Two of four projects have a rating disconnect related to either World Bank performance or outcome between the last ISR and ICR, while three of four projects have a rating disconnect related to either World Bank performance or outcome between ICR and ICRR ratings. The general trend for disconnect is higher ratings at ISR and lower ratings at the final IEG ratings. This observation suggests the need for more candor and realism in ISR ratings. 25. A portfolio snapshot at the end of the CAS cycle suggests that the World Bank’s operations in Burundi are doing well. Of eight active projects, seven are rated Moderately Satisfactory or Satisfactory on PDO and IP, while one operation (JMHP) is rated Moderately Unsatisfactory on both PDO and IP. 26. Consistency between financing and ASA. The political crisis, which gripped Burundi two months after the PLR date, affected most planned ASA work. Out of fifteen planned activities, two were delivered and two are being finalized at the CLR. In addition, two more ASA products, not planned at the PLR, were delivered. The six ASA products delivered or in the process of being delivered all have relevance to Burundi’s development challenges and the World Bank’s portfolio. Due to the crisis, most ASA work has been or is being delivered after the end of the CAS period, raising questions about the ASA’s ability to inform policy in a timely manner. Moreover, ASA dissemination has proved challenging as the WBG adopted a low-profile engagement policy since the crisis, which is not very conducive to engaging in public debate over ASA findings. 27. The Final IDA17 Replenishment Meeting took place from December 16 to 17, 2013, and includes emphasis on systematic development and use of case studies that will help gain more in-depth understanding of the nature of tough delivery challenges and of countries’ specific constraints. More specifically, the meeting participants emphasized the need for a clear understanding of the underlying causes of fragility and conflict and appreciated the increased integration of fragility analyses in country strategy products and instruments to help build resilience. The World Bank team’s use of the 2016 Fragility Assessment (FA) findings (see discussion of program implementation in paragraph 51) is a move in this direction and demonstrates flexibility and willingness to inform management. However, with information available at the PLR on Burundi’s fragile situation, as well as developments during the PLR stage, a clearer focus on and understanding of political economy (PE) dynamics would have been helpful for adjusting and calibrating the World Bank’s support to Burundi. This observation is a key lesson learned of the CLR. In relation to the current situation, it would be relevant for the World Bank to better understand the GoB’s fiscal space, for instance, the shape and dynamics of income streams. 63 Table 7: ASA Delivered during the PLR Strategic Objective I: Improving competitiveness Delivery Date Report No. Urbanization and Economic Development (FY15–16) June 19, 2015 ACS14147 ICT Transformation (FY15–16) Under internal review n.a. Programmatic Skills Development AAA (FY15–16): Skills May 2014 ACS8675 Development for Growth Economic Update (FY14–17) : De l’aide au commerce : June 2014 89330 L’intégration régionale comme moteur de croissance Regional Transport Study (FY15–16): Building a Reform April 15, 2015 ACS13131 Consensus for Integrated Corridor Development in the East African Community Strategic Objective II: Improving resilience Vulnerability Assessment (FY14–15) (delivered before the PLR) January 2015 AUS6966 Poverty Assessment (FY15–16) June 2016 107047 Safety Nets Assessment (FY14–15): Assessment of Social Safety June 6, 2014 NA Nets in Burundi (delivered before the PLR) RBF Impact Evaluation (FY14–15): Verification of Performance in July 2013 86190 Results-based Financing (RBF): the case of Burundi (delivered before the PLR) Foundation: Strengthening Governance Programmatic PER (FY13–16) In progressa TBD Support to EITI (FY14–16) : Étude de faisabilité de l’ITIE April 20, 2014 NA Phase de pré candidature; Burundi Systematic Country Diagnostic (FY16) In progressb TBD Country Environnemental Analysis (FY15–16)/Analyse February 2017 ACS20679 Environnementale Pays Policy Notes for the New Government (FY16) Not delivered NA Non-programmed ASA Who Benefited from Burundi’s Demobilization Program? June 1, 2016 WPS7732 Burundi: Impact de la crise sur la secteur privé July 1, 2016 NA Transparency in Revenues from Artisanal and Small-scale Mining 2016 103086 of Tin, Tantalum, Tungsten and Gold in Burundi Note: a. As of March 2017, a Health Public Expenditure Review (PER) is being prepared. b. As of June 2017, the Burundi Systematic Country Diagnostic has passed the Regional Operation Committee (ROC) stage. International Finance Corporation additionality and synergy across the WBG 28. Over the CAS cycle, the International Finance Corporation (IFC) focused on bridging the infrastructure gap (physical, social, and financial); building productive sectors (agribusiness and manufacturing); and leading inclusive business approaches for micro, small, and medium enterprises (MSMEs). 29. Investment and advisory services were provided to four commercial banks while IFC's partnership with Business Edge Partners for small and medium enterprise (SME) skills development started in 2014 for three years. IFC’s Conflict Affected States in Africa (CASA) funded a study on the impact of the 2015 crisis, which highlights the impact of the crisis on the tourism and construction sectors and foreign direct investment (FDI). IFC notes that the crisis accentuated a slowdown in the economy, already visible in 2014, with an increase in job cuts, contraction of credit to the private 64 sector, and a drop in foreign aid. The study helped World Bank Group staff understand which sectors were most affected by the crisis. 30. IFC advisory services were also provided to the Central Bank of Burundi (BRB) in relation to development of a credit reporting system, a collateral registry, and a leasing program. The Leasing Law was promulgated in January 2016 and the Collateral Registry Law was promulgated in August 2016. In addition, the BRB has requested a second phase of the leasing program for training of trainers. The Credit Bureau Law was adopted by Parliament but pushed back by the President’s Office. A lesson drawn from the pushback of the Credit Bureau Law is that government commitment and support is key to reduce banks’ risks and increase lending in Burundi. This lesson also applies to IFC’s commitment to development of the tourism sector in Burundi, where the development of a 4-star hotel is experiencing slowdowns and cost overruns. Additionally, IFC notes the need for political stability and ownership of the reform agenda at the highest level of government for sustained reform over the long term. 31. In the energy sector, IFC provided advisory services in relation to the legal and regulatory framework as part of the World Bank Group’s joint business plan. IFC also developed model concessions for power purchase agreements (PPAs), now pending finalization. Further, under the Public-Private Infrastructure Advisory Facility (PPIAF), IFC has been involved in assessment of potential energy PPPs. Consideration of other DPs’ programs 32. The World Bank collaborated on specific projects with DPs from the PLR to the end of the CAS cycle, including on the JMHP, co-financed by the AfDB, EU, and EIB, and the RRFHP, co-financed by the AfDB. Further, the World Bank and the EU collaborated extensively in the health sector. 33. In the wake of the 2015 crisis, DP funding to Burundi changed noticeably (from DPL toward traditional program support). The remaining budget-support DPs shifted funding to investment lending with long disbursement processes, which contributed to depletion of Burundi’s foreign exchange reserves and contraction of the fiscal space. The World Bank is perceived as filling gaps in Burundi’s development program and all DPs and GoB representatives interviewed for this CLR have indicated appreciation of the World Bank’s work in Burundi. Some also see potential for further collaboration as this is new (and positive) information. Where DPs would like to see more collaboration with the World Bank is in relation to regular updates to DPs on the World Bank’s work, as well as macroeconomic developments in Burundi. Trade-off between risk and development impact 34. The PLR refers to the World Bank’s 2014 FA, which was conducted to inform the World Bank’s portfolio, but in contrast to the assessment, the PLR describes the situation in Burundi at the PLR as progress since the Arusha Peace Agreement toward restoring peace and political stability. Yet with the main opposition parties’ withdrawal from the 2010 elections, the power-sharing system formulated by the Peace Agreement—and ingrained in Burundi’s Constitution—as this crucial part was overlooked by the PLR and is a crucial part of the CLR’s argument for its rating of Bank performance had eroded at the PLR. This erosion of the Peace Agreement foundation undeniably increased risks to the World Bank’s portfolio. Other developments suggesting increased risks to IDA’s portfolio in Burundi include the June 2013 media law, which restricts investigative reporting by journalists, and the December 2013 law, which regulates public demonstrations and limits civil rights and liberties. Questions throughout 2013 and 2014 around the ruling party’s youth league further elevated the risk to IDA’s portfolio. The highly politicized environment explains the continued use of Project Implementation Units (PIUs), which resulted in close project supervision 65 and mitigation of risk of capture (please see discussion in paragraph 63 regarding attention to safeguards and fiduciary issues). 35. From a learning perspective, timing appears to be critical in relation to risk management. With Burundi’s fixed five-year election cycle, the World Bank team may want to consider closer alignment of strategies and projects with Burundi’s electoral cycle. For the World Bank Group’s next Country Partnership Framework for Burundi, preparations for elections will dominate Burundi throughout the first half of the next strategic cycle, and possibly even after presidential elections scheduled for June 2020. Strength of RF and intervention logic 36. The PLR inherited an RF from the 2012 CAS, which builds on a results chain for WBG support. In view of the considerable number of risk-related developments occurring between the CAS and PLR, the PLR would have had a higher relevance if the PLR document had been delayed until after elections. As mentioned earlier, the PLR RF was not updated adequately and left many achieved outcome indicators in the RF instead of updating or replacing these outcome indicators. The RF’s outcomes, pillars, and Foundation were further not matched by a similar number of outcome indicators. This lowered the relevance of the RF further. To strengthen the next RF, the Country Team may wish to consider incorporating the Foundation (Strengthening Governance) across the two strategic objectives. This would ensure that governance is considered across the RF instead of being treated as a separate subject, removed from other World Bank activities. 37. In relation to the quality of RF outcome indicators, this review finds that more could have been done to adequately capture developments in Burundi where WBG activities had an impact. Health outcome indicators illustrate this challenge: PLR Strategic Objective II aligned with Burundi's PRSP II, Pillar 3 (improving access and quality in basic services and strengthening the social safety net) and so it was relevant to identify health outcome indicators, which would help capture the broader state of Burundi's health system. 74 Outcome Indicator 3.1 (births attended by skilled personnel) is relevant to the country goal (PRSP II, Pillar 3) and to World Bank support (through the Second Additional Financing Burundi Health Sector Development Support Project, P131919), while Outcome Indicator 3.2 (increased utilization of contraceptives by couples of reproductive age), albeit of general relevance, is relatively detached from Strategic Objective II’s support to PRSP II, Pillar 3. For the World Bank’s next strategy cycle, the Country Team may wish to reflect on health outcome indicators which would better capture the World Bank’s support to Burundi’s health sector and the sector’s performance. This exercise also has relevance in view of the DO of the Health Results Innovation TF (P131919), which provides incentives for health facilities to increase the use of a free package of health services targeting pregnant women and children under the age of five. Further support to Burundi’s PRSP II, Pillar 3 would logically also involve operations related to education and nutrition. 38. A second example of limited reflection of WBG support and scope for improvement relates to the RF’s Foundation. Given the limited number of Foundation outcome indicators for judging progress toward the PLR Foundation target (progress against the Foundation is measured by one outcome and three outcome indicators, of which one was met at the PLR), one suitable proxy outcome indicator would be progress in relation to land reform, given the governance and legal aspects of this matter and the PLR’s emphasis on the central role of land tenure to both social cohesion and private sector development in Burundi. An overall proxy outcome indicator for strengthened governance would be the Worldwide Governance Indicators (WGI). According to the WGI, Burundi 74An indicator such as Maternal Mortality Rate (MMR) would be suitable but requires periodic Household Budget Surveys (HBS). In the absence of periodic HBS, the citizens’ voice survey may be practical as MMR proxy. 66 has successively dropped in all but two percentile rankings from 2005 to 2010 and from 2010 to 2015.75 Burundi's ranking on government effectiveness peaked in 2010 and dropped below the 2005 level in 2015. Burundi improved successively from 2005 to 2010 and 2010 to 2015 in relation to regulatory quality. PLR realism 39. Burundi’s economic and PE developments over the last decade controvert the PLR’s largely positive and trusting outlook. From 2005 to 2015, Burundi’s per capita GDP (in constant 2000 US$) barely increased from US$205.07 to US$209.66, thus remaining below the level at the time of independence of US$214.09. The strongest growth period occurred from 2005 to 2014 and yielded growth at less than 1 percent per year. Low per capita economic growth translates into limited or negative poverty reduction. Contrary to per capita GDP growth, real GDP expanded over the CAS cycle from US$2.47 billion in 2012 to US$3.09 billion in 2015. These changes provide a space for investors to operate, which in turn could contribute to changes in per capita GDP. The PLR reflects the growth in real GDP, noting considerable progress in macroeconomic performance while acknowledging the importance of successful elections in June 2015. Yet, while the PLR acknowledges the significantly negative outcome of failed elections, it does not provide an alternative to the desired outcome beyond scaling up of activities under Strategic Objective II. In view of the numerous signs of elevated risk, realism of the PLR was low and did not provide a framework for discussion of how to change Burundi’s current economic situation, which in the past decade has seen limited growth and suggests that Burundi is trapped in a low-level economic state for the near to medium term. Changing this situation, with the fragile situation in mind, needs to be at the center of discussion of the WBG’s next strategy. Figure 1: GDP Per Capita (constant 2000 US$) for Burundi and Neighboring Countries Source: The World Bank Group. PLR objectives and relevance of outcome indicators 40. The PLR’s three strategic objectives were all relevant to Burundi’s PRSP II. A successor to Burundi’s PRSP was expected following the 2015 elections, but due to the political crisis, the document is yet to be released. Under the PLR’s three strategic objectives, the RF included five CAS (PLR) outcomes for which progress was measured against 12 outcome indicators. As three outcome 75WGI percentile rankings are (1) voice and accountability, (2) political stability and absence of violence, (3) Government effectiveness, (4) regulatory quality, (5) rule of law, and (6) control of corruption. 67 indicator targets were met at PLR, only nine outcome indicators (of which one was not adequately updated) contributed to measuring overall progress toward PLR outcomes and strategic objectives. In view of the World Bank’s diverse portfolio and three strategic objectives, a minimum of 12 outcome indicators would have been required to gauge progress against objectives with some degree of certainty. 41. With outcome indicator targets achieved at or before the PLR, at least two SMART 76 criteria (Measurable and Time-related) were not fulfilled for a substantial part of the PLR outcome indicators. With regard to the two outcome indicators for Outcome 3 (improved access to and quality of health services), the Country Team may want to discuss whether a proxy for the irregular Demographic and Health Surveys (DHS) could be established. One avenue would be use of third- party monitoring, which also lends itself well to monitoring of other sectors, such as education, water and sanitation, and governance.77 Integration of lessons learned from the previous CAS 42. Lessons learned in relation to design complexity and to lending instruments from the 2008 CAS for Burundi are still relevant to the broader country program in 2017. Thus, the 2008 CAS notes: "Development policy operations have helped initiate key reforms and jumpstart the economy; but they must be sensitive to the fragile political environment and weak institutional capacity." The lack of opposition participation in the 2010 elections appears to be an example of the fragile political environment referred to by the 2008 CAS, which further recommends operations to be focused and realistic, take into consideration conflicting interests of stakeholders, and promote internal consensus. In view of the low final ratings for three of the four projects, which closed during the CAS cycle, it appears integration of lessons learned from previous strategies can be further strengthened. PLR Implementation Appropriate World Bank Group collaboration and division of labor 43. Collaboration within the World Bank Group in Burundi was limited to the RRFHP, which after a long preparation time became effective during the CAS cycle. The Multilateral Investment Guarantee Agency (MIGA) was not active in Burundi during the PLR period but offered a guarantee to Cotecna Inspection S.A in June 2014 for the investment in the Bureau de Liaison de la Société Cotecna Inspection S.A. au Burundi. Collaboration on the RRFHP was satisfactory according to both IDA and IFC. About input to the PLR, no standalone IFC operations are registered in the RF Quality of supervision World Bank performance is rated Moderately Unsatisfactory in three of the four operations that closed during the CAS cycle. Common issues relate to overestimation of GoB implementation capacity, poor design of outcome indicators and general M&E frameworks, and inadequate attention to political and security issues, but supervision was also successful in some cases. IEG rates the World Bank performance on the PWUMP Moderately Satisfactory and the closing date of PRODEMA was extended from December 31, 2016, to January 31, 2020, according to a proposed additional grant of US$25 million. Project implementation for PRODEMA’s DO has consistently been rated Satisfactory over the CAS cycle. 76 SMART indicators are Specific (target a specific area for improvement); Measurable (quantify or at least suggest an indicator of progress); Agreed upon (specify who will do it); Realistic (state what results can realistically be achieved, given available resources); and Time-related (specify when the result(s) can be achieved). 77 See Operations Policy and Country Services (OPCS) and Social Development Department (SDV): Participatory and Third Party Monitoring in World Bank-financed Projects: What Can Non-State Actors Do? 68 Managing program risk 44. Management of risk to the PLR program was based on the following risk identification: (a) fragility (instability and violence linked to social and political dynamics); (b) environmental (population density and land scarcity); (c) exogenous (aid volatility, climatic shocks, influx of refugees, price variation in international markets); and (d) debt distress. The 2015 presidential elections were also identified as a high-risk event. Inadequate technical capacity is not identified and discussed by the PLR, while the 2012 CAS does make a note of this particularly challenging aspect of operations in Burundi. Developments during the PLR period confirm the PLR risk identification, as well as the challenge of inadequate technical capacity identified by the CAS. 45. Contrary to the risks identified, the PLR registers "notable progress in improving security, stability, governance, macroeconomic performance, social services, and business environment" since the Arusha Peace Agreement in 2000. PLR risk mitigation was based on the following tenets: (a) alignment with Burundi's PRSP, (b) engagement with the GoB, (c) dialogue with civil society and private sector representatives, and (d) close coordination with DPs. Should risks materialize the PLR outlines a move in portfolio from DPL to activities under Strategic Objective II, but it does not provide any further details. In view of developments before the PLR described earlier, the PLR was an opportune moment to adjust the portfolio toward projects with a higher risk-mitigating impact, as well as a greater chance of success in increasing Burundi's access to IDA resources going forward. In relation to IDA resources, further emphasis on risk-mitigating activities in the portfolio might have contributed to higher final ratings for closed projects. Last, the PLR relevance for management of program risk would have increased most significantly by awaiting the outcome of the 2015 presidential elections. Pacing World Bank deliverables (including country strategy documents) to match country contexts is therefore a lesson learned of this CLR. Portfolio risk and quality 46. Risks to the portfolio materialized in the form of the 2015 crisis and weak technical capacity, despite heavy reliance on PIUs, which hampered project implementation. The crisis affected project implementation unevenly across the portfolio. Disrupted projects include the FPSDP and JMHP. The quality of M&E remained a matter of concern during the CAS cycle, but recurring challenges linked to capacity and M&E did not prompt project restructuring. Projects that registered successful progress toward DOs were based on established design (for example, PRODEMA and PWUMP), which allowed project management undisturbed day-to-day operations during the crisis. Feedback from Task Team Leaders (TTLs) interviewed for the CLR suggests that simpler project design and realistic goals mitigated risks associated with the crisis. A lesson learned is that established project designs, realistic goals, and regional projects have all contributed to progress toward the World Bank’s strategic objectives. 47. The Country Management Unit (CMU) carried out a Country Portfolio Performance Review (CPPR) after the end of the CAS cycle. The CPPR identifies the following crisis-related circumstances, which affected the portfolio: (a) DP funding withdrawal affecting health and governance, notably in relation to financing complementarity; (b) doubt due to fragile country context resulting in lower company interest in calls for tenders across sectors; and (c) effectiveness delay for three new projects for more than 12 months approved within the CAS cycle for a total amount of US$57 million. Effectiveness delays before the crisis were on average 4 to 5 months. 48. Other indicators of the crisis’s impact on the portfolio include the drop in disbursements from 42.5 percent in June 2014 to 12.5 percent in June 2015 and 6.5 percent in June 2016. At the same time, the CPPR acknowledges that Burundi’s fragile status already before the crisis may have also contributed to deteriorating portfolio indicators. In addition, technical issues (that is, non-fragile 69 and non-crisis issues) related to the JMHP make up one-third of the decline in disbursements in 2016. 49. As discussed earlier, the disconnect in ratings was widespread over the CAS cycle, with three of four closed projects rated Moderately Satisfactory or higher at ICR and Moderately Unsatisfactory or lower by IEG. A common theme for projects with disconnects in ratings concerns realism of project design. Conversely, successfully implemented projects built on less complicated design and more realistic goals. Program implementation timeliness and adjustments 50. Program implementation over the CAS cycle can be divided into two distinct periods: from the beginning of the CAS cycle in September 2012 to the April 2015 crisis and from the 2015 crisis to the end of the CAS cycle in June 2016. In the period from the CAS to PLR (February 2015), 76 percent of outcome indicators were Achieved or Mostly Achieved, while outcome indicators Achieved or Mostly Achieved from the PLR to the end of the CAS cycle dropped to 58 percent when including many outcome indicators already rated Achieved at the PLR. Excluding outcome indicators already Achieved at the PLR, the number of Achieved or Mostly Achieved outcome indicators drops to 4 out of 9 or 44 percent, while Partially Achieved and Not Achieved outcome indicators amount to 5 of 9 or 56 percent. 51. The CAS document emphasized the importance of attention to capacity constraints in project design and the World Bank’s comparative advantage in designing and implementing regional programs. Under this approach, the RRFHP and the Mining and EITI Technical Assistance became effective while the PWUMP and PRODEMA were targeted for Additional Financing. The PLR indicated the beginning of a shift toward more multisectoral programmatic support, complementing ongoing community-based projects, and identified five projects that would be based on this new approach: the Coffee Sector Improvement Project (CSIP, US$55 million); the Regional Great Lakes Integrated Agriculture Development Program (US$75 million for Burundi); the Urban Cities Competitiveness Project (US$20 million); the Safety Net Project (SNP, budget not provided); and the Strengthening Institutional Capacity for Government Effectiveness Project (SICGEP, US$44 million). Of these five projects, two (CSIP and SNP) became effective before the CLR. 52. Following the 2015 crisis, the World Bank team took prudent measures to safeguard both staff and the World Bank’s activities. With the crisis gradually superseded by negotiations, on June 7, 2016, the World Bank team presented to the Board an update of economic developments in Burundi, which built on findings in the 2016 FA and included a reorientation toward health and social protection programs. 53. In relation to timeliness, the DPO series stands out, given the 2011 WDR warnings on using the instrument in fragile states. While World Bank support to Burundi was essential, delivery could— according to the WDR 2011—have taken place by other instruments than Development Policy Financing (DPF). Going forward, Program-for-Results Financing (PforR) may be a relevant instrument for the challenges facing Burundi. 54. A feature of program implementation over the CAS cycle is the use of PIUs, which has been discussed earlier in relation to trade-offs between risk and development impact and portfolio risk and quality. In view of the GoB's implementation capacity and successful fiduciary management during the crisis, use of PIUs was warranted, despite trade-offs related to less capacity building and building and strengthening of national systems. 70 Relevance, quality, and dissemination of knowledge services 55. Production of knowledge services was generally in accordance with the plan laid out at the PLR. Two highlights include the Regional Transport Study (FY15–16, report number: ACS13131) and Transparency in Revenues from Artisanal and Small-scale Mining of Tin, Tantalum, Tungsten, and Gold in Burundi (report number: 103086). 56. The GoB and DPs express satisfaction with the relevance and quality of the World Bank’s knowledge production while dissemination has been limited in view of the delicate public dialogue following the 2015 political crisis. The political crisis also rendered certain ASA (policy notes) irrelevant while other work (for example, SCD and programmatic PER) was delayed. It is expected that the programmatic PER will inform the GoB’s next PRSP and the Country Environmental Analysis will inform the forthcoming Landscape Project. Responsiveness to changing country circumstances, priorities, and demands 57. The 2015 crisis defined the PLR-to-end-of-the CAS-cycle period. World Bank management of the highly fluid environment should be commended for safeguarding World Bank staff and families as well as the project portfolio. World Bank staff with families were offered relocation to Nairobi, while World Bank-financed operations remained active. In accordance with the WDR 2011 advice, the World Bank did not suspend its portfolio in Burundi but remained engaged with a view to increasing support once the crisis was resolved. This approach received praise from all stakeholders interviewed for this report. A World Bank-wide lesson is therefore that Burundi lends support to the approach of staying engaged (when possible) during crises. 58. The World Bank’s decision to remain engaged in Burundi during the crisis allowed for preparation of many operations from the end of the CAS cycle to March 2017. In this period, five operations were approved by the Board, which ensured allocation of the entire IDA17 allocation for Burundi. Introducing mid-course correction when needed and updating the results matrix in the PLR 59. The PLR updated the FY13–16 CAS for Burundi 30 months into the CAS cycle. Over this period, one project (the Community and Social Development Project, P095211) had closed with a substantial disconnect between ISR/ICR and ICRR ratings. Economic growth per capita had been stagnant for about a decade, and questions regarding interpretation of the Constitution dominated the debate before elections, which were scheduled four months after the PLR date. The CAS furthermore had identified risks to Burundi to include renewed instability and land scarcity. An important reason for instability was the disintegration of the power-sharing system as envisaged in the Arusha Peace Agreement and ingrained in the Constitution. At the PLR, the incumbent party held a monopoly on power (the opposition had boycotted elections in 2010), while the incumbent party’s youth wing increasingly took part in intimidation and violence directed at members of the opposition. 60. The PLR RF introduced three new outcome indicators but left the RF structure intact. Three of twelve outcome indicators had been met at the PLR and were therefore not suitable to estimate progress toward CAS Objectives. The PLR presented an opportunity to strengthen the RF through addition of outcome indicators, update of outcome indicators that had been met, and harmonization of the World Bank’s strategy with Burundi’s election cycle. World Bank Group’s efforts for improving alignment with country systems and coordination with other DPs 61. The World Bank Group made several efforts to support the strengthening of Burundi’s country systems through capacity-building training during the CAS cycle, but due to low capacity and the risk of corruption, the use of PIUs remained widespread. SICGEP was approved in 2015 and 71 became effective a few weeks after the end of the CAS cycle. SICGEP would contribute to improvement of public financial management (PFM) and greater alignment with country systems. Operations that made use of country systems promoted and supported sound PFM, and took place in coordination with other DPs during the CAS cycle include the ERSG series. Attention to safeguard and fiduciary issues 62. Audit reports of World Bank-financed projects were all cleared, and no instances of ineligible expenses were reported during the CAS cycle. Likewise, no major safeguard issues were reported during the CAS cycle. The widespread use of PIUs and increased supervision may explain the absence of safeguard and fiduciary breaches. The Burundi CAS cycle thus offers a World Bank- wide lesson learned in relation to risk management under fragile circumstances. III. World Bank Group Performance Rating 63. World Bank Group implementation over the CAS cycle was successful in contributing to achievements in some areas, but the design of the PLR program failed to contribute to achievement of two of the three strategic objectives and did not discuss plans or put in place projects that would mitigate the fallout from unsuccessful elections. While the World Bank Group proactively engaged in adapting to changing circumstances in the aftermath of the 2015 crisis, Moderately Unsatisfactory ratings for three out of the four operations that closed during the CAS cycle raise questions regarding the adequacy of addressing implementation problems during the CAS cycle, as well as for some activities in place for the next strategy period. Based on this, the World Bank Group performance rating for Burundi’s FY13–16 CAS cycle is Fair. IV. Alignment with Corporate Goals 64. The World Bank Group’s focus in the CAS and PLR was on improved competitiveness, increased access to health services, and improved governance. While the CAS predates the establishment of the World Bank Group Corporate Goals, it is closely aligned with the objectives of eliminating poverty and ensuring shared growth. These areas of intervention were both relevant to the Burundi PRSP II and in line with the World Bank Group Corporate Goals. According to Burundi's growth in real GDP, windows of opportunities for investors could materialize in combination with a decline in risk and fragility. The PLR wholeheartedly pursued this prospect, which would have brought progress in relation to both World Bank Group Corporate Goals, but at the same time the strategy departed from the focus of earlier strategy products on simpler project design and emphasis on resilience. Both poverty and shared prosperity were in focus for the PLR RF, but with 25 percent of outcome indicators impractical for measuring progress and the number of outcome indicators relative to outcomes and objectives insufficient, links to the Corporate Goals and sustainability were weakened correspondingly. V. Key Lessons Learned 65. This review of the FY13–16 CAS cycle for Burundi has yielded many World Bank-wide and country- specific lessons learned. The center of findings converges on the use of analyses and tools to understand Burundi's PE dynamics, since PE dynamics defined Burundi's development challenges over the CAS cycle. The World Bank produced excellent insights into Burundi's PE dynamics in its 2014 and 2016 FAs, which was based on publicly available information, such as the Arusha Peace Agreement, Burundi's Constitution, and the outcome of the 2010 presidential elections. Developments after the 2010 elections confirmed a pattern, which suggested that Burundi was sliding into renewed fragility and further away from the vision of the Arusha Peace Agreement and its Constitution. The first lesson learned from this review is that Fragility Assessments (FA) 72 provide critical insights into the foundation for World Bank activities, including risks to World Bank investments, and should be firmly incorporated in future strategies. Beyond FAs, the World Bank may want to consider specific PE analytical tools and frameworks for fine-tuning its project and programmatic support. PE is also central to the World Bank’s use of DPF to promote reform in Burundi. Although core DPs (for example, Belgium and the Netherlands) had discontinued the use of DPF well before the 2015 elections, the World Bank’s last ERSG disbursement took place only months before the June 2015 elections. PE dynamics are also central to understand the lack of sustainability of prior actions met under the budget support program to Burundi, given the reversal of all prior actions taken under ESRG VIII's second pillar (Promoting private sector investment and economic diversification).78 Similarly, the repeal of the Credit Bureau Law (linked to IFC advisory activities) and renationalization of the BBS company (linked to the RCIP) underscore the need to understand changes in government commitment and what it will take to reenact the laws and continue the privatization agenda. PE analysis is also of relevance in relation to ensuring that World Bank activities are synchronized with important national political events, such as elections, and can thus guide World Bank strategies to reinforce positive political momentum. Last, PE analysis would be helpful to understanding the GoB's fiscal space, for instance, in relation to the shape and dynamics of income streams. An issue for discussion is the official exchange rate, which provides the GoB [with] discounted foreign currency from development projects at a fixed exchange rate. It is likely that the difference between the official and market exchange rates has an impact on competition in procurement, although a study of the issue is yet to be conducted. 66. A second core lesson learned from this review is the importance of combining realistic design and goals, stakeholder consensus, and a longer-term view for operations. Operations rated Satisfactory by IEG share lower design complexity and more realistic goals, while operations with Unsatisfactory IEG ratings share overly complex design and often rely too heavily on government implementation capacity. Successful operations (for example, PRODEMA, PWUMP, and RRFHP) have also often taken a long-term approach to implementation and carried out very thorough stakeholder consultations. The PWUMP ICR observation that a gradual approach to delegation of responsibilities may stretch across more than one project period has high relevance to new operations in Burundi. Regarding IEG ratings, it should be noted that the trend from higher ratings at ISR to lower ratings at final IEG ratings may indicate the need to revise ISR ratings in the interest of avoiding disconnects and assuring Burundi optimal future IDA allocations. In addition to higher risk of failure, high design complexity also increases the propensity toward use of PIUs, given Burundi’s generally limited implementation capacity. However, the GoB points to excellent implementation capacity in certain sectors, stressing the need to understand communications between the technical and political level in Burundi's administration, as well as the need for thorough stakeholder consultations to avoid supply-driven development. 67. A third World Bank-wide lesson learned is drawn from the Country Team’s successful and effective handling of the 2015 political crisis. Informed by the 2011 WDR, the team proposed to World Bank management to continue engagement with the GoB, which enabled the World Bank to fill a void created by departing DPs. Not only did the World Bank manage to safeguard staff and 78The second pillar of prior actions under ESRG VIII (Promoting private sector investment and economic diversification) included (a) Adopted revised coffee privatization strategy that aims to be more inclusive and is acceptable to farmers’ organizations; (b) Council of Ministers adopted decision to comply with EITI, and (c) published on website mining contracts awarded since adoption of mining code in October 2013. As of August 2016, the Government issued its formal suspension of coffee sector privatization (P107851, ISR August 2016). About mining, the ESRG series ICR notes that very little is known about what was done to stimulate development of the mining sector. A new mining code was adopted in October 2013 and the Government discussed conditions of Burundi’s membership with EITI, but no agreement was reached. Information on mining contracts is not readily available on the GoB's website. 73 families during a period of high uncertainty, no major episodes related to the World Bank’s investment ensued. With its portfolio intact, the World Bank could reallocate the remainder of Burundi’s IDA17 funds and is well positioned to engage in the dialogue with the GoB going forward. In addition, the World Bank received positive feedback on its program and position in Burundi from all DPs interviewed for this report. This position allows the World Bank to leverage the GoB’s trust and productive DP relations to discuss issues of high importance to growth and poverty reduction, such as population growth, land scarcity, mining investments, and inclusive economic growth. 74 CLR Annex 1: Updated PLR Results Framework CAS OUTCOME CAS OUTCOME INDICATOR SOURCES CLR REMARKS PROGRAM INSTRUMENTS BASELINE ACTUALS (end of CAS cycle) STRATEGIC OBJECTIVE I: IMPROVING COMPETITIVENESS (Moderately Unsatisfactory) CAS Outcome 1: CAS Outcome Indicator Partially Achieved: P064876 ICRR, Progress during PLR Ongoing operations at PLR: Reduced 1.1: Roads network (40 − 27) + (71.5 − P112998 ICR was only modest, but • Road Sector Development AF infrastructure- rehabilitated and 59) = 25.5 km non- target was also very Project related bottlenecks maintained: 105 km non- rural roads high. • Energy Efficiency Project/Global to growth (Partially rural roads rehabilitated rehabilitated Energy Trust Fund Achieved) by December 2015. • Regional Communications Baseline: 27 km in August Infrastructure Project 2012 • Rusumo Falls Hydroelectric CAS Outcome Indicator Achieved: Drafting P133610 ISR Project 1.2: Electricity regulatory of new electricity August 2016 • Jiji-Mulembwe Hydropower framework improved: law complete Project application decrees of (April 2015) Electricity and PPP Laws IFC Portfolio: approved by December • Energy Regulation Advisory PPP 2015 • Advisory in Energy CAS Outcome Indicator Not Verified: $300 P094103 ISRs Indicator should have 1.3: Affordability of ICT (since 2014) been updated, as Planned Operations: services improved: target was met before • Infrastructure Resilience reduced retail price of PLR, hence indicator Emergency Project (FY15) monthly Internet services not suitable for • Energy (Ruzizi 3) (FY16) (per Mbps) from measuring progress • Urban Development (FY16) US$1,600 in June 2012 to toward outcome. • Multimodal Transport (FY17) US$600 in 2016 Unclear whether target was correctly Planned AAA and TA: set in the first place. • Regional Transport Study • ICT for Transformation • Energy for All (TA) 75 CAS OUTCOME CAS OUTCOME INDICATOR SOURCES CLR REMARKS PROGRAM INSTRUMENTS BASELINE ACTUALS (end of CAS cycle) CAS Outcome 2: CAS Outcome Indicator Not Achieved P107851 ISR Target will only be Ongoing Operations: Improved business 2.1: Strengthened Aug 2016 achieved after project • Economic Reform Support Grant climate and financial infrastructure: closure, as some (FY13-14) increased private time for high-value residual tasks would • Financial and Private Sector investment transactions settled in the need to be Development Project (Partially Achieved) automatic transfer system accomplished with the • Agro-Pastoral Productivity and reduced from 3 days commercial banks to Market Access Development (2014) to 15 minutes completely achieve Project (2016) target. • Public Works and Urban CAS Outcome Indicator Achieved: 62.99 P107343 ISRs End target was Management Project 2.2: Market access (2014) achieved in 2014, • Watershed Approach to (percentage) for targeted hence indicator not Sustainable Coffee Production commodities increased: suitable for measuring project (GEF) percent of production of progress toward commodity in targeted outcome. IFC Portfolio: value chains marketed by • Advisory: Investment Climate participating producers Program increased from 10 (June • SMS Africa 2012) to 25 (April 2016) • Africa Micro, Small and Medium- Scale Enterprises Trade Finance Facilities with commercial banks • Investment: Hotel/Tourism and Telecommunications Planned Operations: • Economic Reform Support Grant IX (FY15–16) • Institutional Capacity for Government Effectiveness (FY15) • Coffee Productivity (FY15) Agriculture Project (Ruzizi Plan) • Urban Development, City Competitiveness and Job Creation Project 76 CAS OUTCOME CAS OUTCOME INDICATOR SOURCES CLR REMARKS PROGRAM INSTRUMENTS BASELINE ACTUALS (end of CAS cycle) Ongoing AAA and TA: • DTIS update; coffee marketing strategy • ROSC follow-up • Urbanization and Economic Development for Job Creation ESW • Agribusiness (coffee/tea/sugar) • Advisory Services (IFC) Planned AAA and TA: • Skills for Private Sector Development Study • Facilitating Tourism (IFC) • Facilitating Agribusiness (IFC) • Privatization advisory service (IFC) STRATEGIC OBJECTIVE II: INCREASING RESILIENCE BY CONSOLIDATING SOCIAL STABILITY (Satisfactory) CAS Outcome 3: CAS Outcome Indicator Achieved: 85.1% Interview with Ongoing Operations: Improved access to 3.1: Births attended by TTL and DHS • Health Sector Development AF and quality of skilled personnel: (2016) (P131919) health services percentage of births • East Africa Public Health (Achieved) attended by skilled Laboratory Networking personnel increases from (P111556) 78.4% (2012) to 80% (2015) Planned Operations: CAS Outcome Indicator Achieved: 42.3 Contraceptive • Health (Epidemiological 3.2: Utilization of Revolution, p. monitoring) (FY15) contraceptives by couples 3 • Health Sector Support Project of reproductive age (FY17) increased: contraceptive prevalence rate from 19.8 Ongoing AAA and TFs: (2012) to 40 (2015) 77 CAS OUTCOME CAS OUTCOME INDICATOR SOURCES CLR REMARKS PROGRAM INSTRUMENTS BASELINE ACTUALS (end of CAS cycle) • Poverty and Social Impact Analysis for Results-Based Financing in Health • Poverty Assessment and Social Safety Nets Study Planned AAA, TA, and TFs: Health Results Innovation CAS Outcome 4: CAS Outcome Indicator Achieved: P112998 ICR Target date was set Ongoing Operations: Expanded safety 4.1: Improve job creation 7,020,290, of before PLR, but • Agro-Pastoral Productivity and nets to reduce and local service delivery: which 23% women achievements Market Development Project volatility of generate short-term between 2014 and • Public Works and Urban livelihoods employment through end of CAS cycle are Management Project (Achieved) labor-intensive public substantial. • Regional Lake Victoria works from 2.94 million Environmental Management person-days (August Project 2012) to 4.92 million • Public Works and Urban person-days Management AF Project (December 2014), of • Watershed Approach to which at least 15% for Sustainable Coffee Production women project (GEF) CAS Outcome Indicator Achieved: National Box 2 in PAD 4.2: Establish framework Social Protection P151835 Planned Operations: for the effective delivery Strategy adopted • Agro-Pastoral Productivity and of social protection Market Development AF Project systems: adoption of the • Social Safety Net Program (FY16) National Social Protection Strategy (2015) Ongoing AAA and TFs: • TA to develop National Social Protection Strategy Planned AAA and TA: • Biodiversity and Water Management Study 78 CAS OUTCOME CAS OUTCOME INDICATOR SOURCES CLR REMARKS PROGRAM INSTRUMENTS BASELINE ACTUALS (end of CAS cycle) Foundation (Strategic Objective III): STRENGTHENING GOVERNANCE (Moderately Unsatisfactory) CAS Outcome 5: CAS Outcome Indicator Achieved: 100 ERSG VI–VIII End target was Ongoing Operations: Enhanced 5.1: Promote citizen (2013) Results achieved in 2013; • ESRG VIII transparency and engagement and Framework hence indicator not accountability in monitoring: share of suitable for measuring Planned Operations: public expenditure communes (%) where progress toward • Institutional Capacity for (Partially Achieved) budget information is outcome. Government Effectiveness made publicly available Project (FY15) from 26.5 (March 2012) to 50 (December 2015). Ongoing AAA and TFs: CAS Outcome Indicator Partially Achieved: Le Système • PETS/Public Expenditure Review 5.2: Strengthen 98 Intégré de (FY14) Government capacity to Gestion des effectively manage public Finances Planned AAA and TFs: spending: 200 Publiques • TA: To promote accountability beneficiaries (of which (SIGEFI) and demand for good governance 30% are female) trained evaluation • TA: Mining and EITI in the new IFMIS by 2016. training report CAS Outcome Indicator Not Achieved: No EITI website 5.3: Promote EITI country status transparency and is available for accountability in the Burundi. management of revenues from extractive industries: GoB is an EITI candidate with revised mineral fiscal measures benchmarked to international best practice and assessed by an external third party by December 2015. 79 CLR Annex 2: End Target Sources for PLR RF PLR Outcome Indicator Source Remarks Outcome 1 1.1: Nonrural roads rehabilitated (km). Baseline: 27 km (August P133610 ISR. Aug 2016 Progress during PLR was only modest, but target 2012). Target: 105 km (December 2015) was also very high, raising questions of indicator realism. 1.2: Application decrees of Electricity and PPP Laws approved P107851 ISR. Aug 2016 — by December 2015 1.3: Reduce retail price of monthly Internet services (per P107343 ISRs End target was achieved in 2014; hence indicator Mbps). Baseline: US$1,600 (June 2012). Target: US$600 (2016) provides little information about progress toward the outcome and strategic objective. Outcome 2 2.1: Time for high-value transactions settled in the automatic P107851 ISR, Aug 2016 Indicator will only be achieved after project transfer system reduced. Baseline: 3 days (2014). Target: 15 closure, as some residual tasks would need to be minutes (2016) accomplished with the commercial banks. 2.2: Percent of production of commodity in targeted value P107343 ISRs End target was achieved in 2014; hence indicator chains marketed by participating producers. Baseline: 10 (June provides little information about progress toward 2012). Target: 25 (April 2016) the outcome and strategic objective. Outcome 3 3.1: Percentage of births attended by skilled personnel. Information from TTL and DHS (2016) — Baseline: 78.4% (2012). Target: 80% (2015) 3.2: Increased utilization of contraceptives by couples of Republic of Burundi and UNFPA: — reproductive age. Baseline: 19.8% (2012). Target: 40% (2015) Contraceptive Revolution in Burundi: Prospects for Benefitting from a Demographic Dividend. Aug 2016 Outcome 4 4.1: Generate short-term employment through labor-intensive P112998 ICR Target date was set before the PLR, but public works. Baseline: 2.94 million person-days (August 2012). achievements between 2014 and end of the CAS Target: 4.92 million person-days, of which at least 15% for cycle are very substantial. women (2014) 4.2: Adoption of the National Social Protection Strategy by end Box 2 in PAD P151835 — 2015 Foundation 5.1: Share of communes where budget information is made ERSG VI–VIII Results Framework End target was achieved in 2013; hence indicator publicly available. Baseline: 26.5% (March 2012). Target: 50% provides little information about progress toward (December 2015) the outcome and strategic objective. 80 PLR Outcome Indicator Source Remarks 5.2: Number of beneficiaries trained in the new IFMIS. Baseline: Interview with TTL — 0. Target 200 by 2016 (of which 30% are female) 5.3: GoB is an EITI candidate with revised mineral fiscal Interview with TTL and report 103086 — measures benchmarked to international best practice and assessed by an external third party by December 2015. 81 Annex 3: Burundi: CAS Cycle Portfolio Snapshot, Including Regional and Closed Projects Report date: June 30, 2016. Ratings for closed projects are highlighted yellow. Lendi Overall Cumulativ ng Ratings Cofin- e Total % Project Age Instr Commit Project Name Effective Date ancing Closing Date Disbursem Disburs ID Years u- -ment (Y / N) ent (US$, e-ment PDO IP ment millions) Type RI-Regional Rusumo Falls P075941 24-Oct-06 9.7 SIL Y 31-Dec-2020 283.25 14.53 5 MS MS Hydroelectric Project P101160 BI-Health Project (FY09) 30-Sep-09 6.8 IPF Y 30-Jun-2017 45.35 45.35 100 S MS BI-Finance & Private P107851 14-May-10 6.1 IPF N 31-Jul-2017 22.53 20.91 93 MS MS Sector Development BI-Sustainable Coffee P127258 8-Jun-12 4.1 IPF N 30-Apr-2017 14.53 3.18 22 MS MS Production BI-Jiji and Mulembwe P133610 12-Jan-15 1.5 IPF N 31-Dec-2019 14.53 1.73 12 MU MU Hydropower RI-Regional P094103 Communications 21-Aug-07 8.9 APL N 31-Dec-2016 20.10 20.10 100 S S Infrastructure Project BI-Community and Social P095211 28-Aug-07 5.3 SIL N 31-Dec-2012 40.00 40.00 100 MU MU Development Project BI - Agro-Pastoral P107343 Productivity and Market 17-Dec-10 5.5 SIL N 31-Dec-2016 25.00 25.00 100 S S Develop- ment Project BI-Public Works and P112998 30-Sep-09 5.8 SIL N 30-Jun-2015 60.00 60.00 100 MS MS Urban Management BI-Energy Efficiency P117225 26-Sep-12 3.2 IPF N 15-Dec-2015 1.82 1.82 100 MS MU Project BI - Economic Reform P144612 16-Dec-13 1.0 DPO N 31-Dec-2014 26.00 26.00 100 N/A N/A Support Grant VII RI-Great Lakes Emergency Sexual and Gender Based P147489 22-Sep-14 1.8 IPF N 30-Jun-2018 15.15 1.68 11 MS MS Violence and Women’s Health Project Eighth Economic Reform P150941 13-Jan-15 1.0 DPO N 31-Dec-2015 25.00 25.00 100 N/A N/A Support Grant BI-Burundi Road Sector P064876 1-Jul-04 10.6 SIM N 31-Jan-2015 70.10 70.20 100 MU MU Development Total 663.37 355.50 MU 3 4 MS 6 6 S 3 2 82 Annex 3: Selected Economic and Financial Indicators, 2012 –17 2012 2013 2014 2015 2016 2017 External sector US$ million Export of goods and services (US$ 228 225 206 178 198 236 million) Import of goods and services (US$ 922 910 924 833 742 855 million) Trade balance (US$ million) -694.6 -684.5 -718.3 -654.6 -544.2 -618.7 Current account balance (US$ million -255 -250 -393 -373 -340 -359 Gross international reserves (US$ 312 321 317 136 95 112 million) Gross international reserves (months of 4 4.2 4.1 2 1.4 1.7 imports) Net international reserves (US$ millions) 135.8 147.5 116.5 -48.5 -106.9 -87.0 Exchange rate (average over the period) 1,443 1,555 1,547 1,572 1,655 1,729 Percent of GDP Exports of goods and services (% of GDP) 9.8 9.2 7.6 5.7 6.7 7.4 Imports of goods and services i(% of 39.5 37.1 34.2 26.8 25.1 26.9 GDP) Trade balance (% of GDP) -29.8 -27.9 -26.5 -21.1 -18.4 -19.5 Current account (% of GDP) -10.9 -10.2 -14.5 -12.0 -11.5 -11.3 Public Finances BIF billion Total revenue 1,136.9 1,254.2 1,277.6 1,042.9 781.8 955.6 Tax revenue 491.8 522.3 572.2 549.7 584.6 699.1 Non-tax revenue 34.9 37.8 83.8 41.0 53.2 55.0 Grants 610.2 694.1 621.6 452.2 144.0 201.5 Total spending 1,269.8 1,325.6 1,442.2 1,370.6 1,117.9 1,201.4 Current spending 792.2 786.1 897.2 898.4 825.3 855.1 Capital spending 14.2 14.2 13.0 9.7 6.0 6.3 Overall balance including grants (71.4) (164.5) (327.7) (336.1) (245.8) (132.9) Overall balance excluding grants (765.54) (786.17) (779.9) (480.1) (447.3) (743.10) Percent of GDP Total revenue 33.8 32.9 30.5 21.4 16.0 17.4 Tax revenue 14.6 13.7 13.7 11.3 11.9 12.7 Non-tax revenue 1.0 1.0 2.0 0.8 1.1 1.0 Grants 18.1 18.2 14.9 9.3 2.9 3.7 Total spending 37.7 34.8 34.5 28.1 22.8 21.9 Current spending 23.5 20.6 21.4 18.4 16.9 15.6 Capital spending 14.2 14.2 13.0 9.7 6.0 6.3 Overall balance including grants (3.9) (1.9) (3.9) (6.7) (6.9) (4.5) 83 Overall balance excluding grants (22.1) (20.1) (18.8) (16.0) (9.8) (8.2) Public debt BIF billion Total public debt 1,147.2 1,213.6 1,383.8 1,761.8 2,098.7 2,426.1 External debt 607.7 615.7 656.6 691.2 724.6 778.3 External debt (% of total debt) 53.0 50.7 47.4 39.2 34.5 32.1 Domestic debt 539.6 598.0 727.3 1,070.6 1,374.1 1,647.8 Domestic debt (%of total debt 47.0 49.3 52.6 60.8 65.5 67.9 Percent of GDP Total public debt 34.1 31.8 33.1 36.1 42.9 44.2 External debt 18.1 16.1 15.7 14.2 14.8 14.2 Domestic debt 16.0 15.7 17.4 21.9 28.1 30.0 Sources of funding of domestic debt BIF billion Central Bank 410.0 396.5 448.0 641.7 752.2 787.1 T-Bonds and T-Bills 111.5 182.9 229.3 378.8 584.7 782.8 Other 17.9 18.4 49.1 49.9 37.0 76.6 Shares in funding domestic debt Percentage BRB 76.0 66.3 61.6 59.9 54.7 47.7 T-Bonds and T-Bills 20.7 30.6 31.5 35.4 42.6 47.5 Other 3.3 3.1 6.8 4.7 2.7 4.6 Financial soundness indicators Percentage Capital adequacy 20.2 22.3 17.3 18.1 23.0 23.7 Assets quality (NPL atio) 7.7 9.4 11.1 16.9 12.1 14.6 ROA 1.5 1.4 1.0 1.8 1.6 2.1 ROE 10.1 8.7 7.4 12.0 11.2 16.6 84 Annex 4: IFC Statement of Held Investment Activities (FY13 to FY 19) Annex 5: MIGA’s portfolio summary 85 Annex 5: Approaches to Smart Supervision and Implementation in WBG Operations in Burundi Operations before 2015 Operations after 2015 Rationale for Changes • Bilateral contract between Mandatory functional health committee as a prerequisite for Encourage better resource management Ministry of Health (MoH) signing the performance contract; no secondary subcontracts and curb political interference. and health facility with a (HSDSP) subcontract arrangement • MoH regulators assess • Health services quality assessed by 5 independent NGOs • Discourage complacency and poor health facility quality (3 international: Cordaid, Healthnet TPO, and Pathfinder; performance that affects quality. and 2 local: CoPED and IADH). This significantly improved • Use independent verification and service quality but raised the cost, so NGOs were re-verification agents to reduce replaced by 87 independent verification contractors complacency and get accurate (HSDSP, KIRA). information on how beneficiaries • Use of 644 CBOs to re-verify to ensure that money was perceive satisfaction and service paid for services rendered (HSDSP, KIRA). quality. • Use of 4,732 community health workers (grouped in 227 • Increase social accountability with cooperatives) to provide defined community-based more and better services now health services (KIRA) reaching health centers. • Use of World Vision, an international NGO, to implement • Leverage the comparative the Maternal and Child Nutrition Enhancement Project advantage of World Vision in (JSDF-funded) community-based interventions against chronic malnutrition where Health public providers have very little capacity. • Performance of regulatory • Link established between the performance score of • Deal with over-rated performance entities based on specific regulatory entities and the quality of care in health and award of unmerited bonuses routine activities (district facilities (KIRA, HSDSP) that wasted project funds. and province health office) • Make facilities more responsible for the quality of their work. • Exclusive use of designated • More frequent use of direct payment for goods (KIRA, • Tackle difficulty of accessing accounts Labs, GBV, and HSDSP) foreign currency and delayed • All contracts signed by the • Thresholds set for mandatory signatory: Minister signs procurement. MoH only prior review contracts; the rest are signed by the Director General (KIRA) • Disbursement conditions • One-time temporal waiver of disbursement conditions • Avoid delays in IDA disbursements. strictly applied where the WBG advanced payment and the government later paid its 1.4 percent per year. However, the program reverted to strict adherence to fiduciary and disbursement conditions (KIRA, HSDSP). • Physical carrying of money • Introduction of mobile payments directly into participant • Mitigate risk of funds for activities in the field, phones to avoid risk of robbery and misappropriation of misappropriation and robbery. e.g., training per diems funds. (All projects). • Minimal involvement of Greater involvement of local authorities in Sensitization to project activities local authorities in project implementation; deep involvement in local committees and ensuring sustainability during implementation and and technical committees at the national level (PACSC, crises. technical committees PRODEMA, Padzoc, LVEMP 3) • Mixed steering committee with representatives of CSOs • Encourage community engagement Agriculture and environment. and the private sector (GLAIP, LRRP, LVEMP 3) (CE) in project decision-making and implementation. • Use of NGOs to carry out • National confederation of coffee growers’ associations • Create ownership, since CNAC and operations (CNAC) and Intercafe used as conduct operations with Intercafe are the real coffee AFRIC as the regulator (PACSC) growers and processors • Use of international partners. e.g. IITA, ONUDI, IRRI, and • Capacity building, research, and ILRI, as third-party implementing agencies and to meet sharing knowledge of innovative quality standards; international training in masters and agricultural practices. doctorate courses in rice, milk and maize (GLAIP, PACSC, PRODEMA) • Role of associations and CBO in different levels and • Social accountability and CE projects in the agriculture sector. mechanisms embedded in the sector that ensure proper use of funds and quality services. • Use of mobile payments to transfer cash to beneficiaries • Ensure money reaches the targets protectio Social and does not stay in the ministry. n • Use of UNICEF and CSOs to deliver accompanying measures to the beneficiaries of cash transfers Development Policy Operations Shift in focus by putting the DPO series on hold while Sequencing and focus of the DPO Macro-economics (DPO) series delivered economic monitoring, technical assistance in PFM, and policy program are changed to protect both Trade and ICT dialogue continue vulnerable members of society and hard- earned development gains by directing the portfolio to economic resilience (agriculture, environment, infrastructure and local development); social protection; and access to services 86 Operations before 2015 Operations after 2015 Rationale for Changes (health, nutrition, fertility, education; skills development for youth) Macroeconomic monitoring was Difficulties accessing data to effectively conduct The WBG comparative advantage was effective, thanks to access to data macroeconomic monitoring, resulting in light-touch economic again leveraged by generating and assessments sharing knowledge through analysis and dialogue with multiple stakeholders, recognizing that international actors have differing but complementary roles in assisting Burundi. Easy access to foreign exchange Faced with a shortage of reserves caused by the decline in Governance and the performance of through designated accounts foreign support after the 2015 crisis, the GoB introduced a some projects could be affected by the hosted in commercial banks series of foreign currency controls, including currency centralization of foreign currency rationing and the transfer of all foreign currency accounts to accounts in terms of disbursements. As a the Central Bank. This resulted in three Central Bank actions: solution, the Central Bank has reinforced (1) closing by March 31, 2016, of all foreign currency accounts the single window created for foreign of international organizations opened in commercial banks; (2) currency accounts and payments. Also, it opening of foreign currency accounts at the Central Bank; (3) has requested PIUs to provide advance at the request of the beneficiaries, the Central Bank makes forecasts of their foreign exchange available to them national currency in their accounts with the expenditures so that it can make BRB or commercial banks. available the required amounts in time and clearly monitored by WBG teams. Proposals for doing business differently in the new and pipeline projects Early Grade Learning project: • Use WFP and UNICEF for TPE to deliver school food and distribute kits for children and teachers. This represents about 23 percent of total project cost. These activities will follow standard reporting mechanisms and adhere to the fiduciary standards for UN agencies, according to standard framework agreements. • Provide smart supervision for stronger IVM to support staff tasked with fiduciary oversight in Project Facilitation Units and reinforce the capacity of the Bank task team to carry out frequent supervision missions. The goal is to significantly reduce fiduciary risks by using mobile money transfers to pay teachers during their training. The project will leverage lessons learned from the Social Protection project. Education • Increase social accountability and greater community engagement through school-based management committees (SBMC), which are relatively new. Their role is to (1) ensure that resources (textbooks, readers, pedagogical support materials, etc.) are used and managed well; and (2) foster greater transparency and accountability through publicly displayed report cards on the school to give the community information on how their school performs on such indicators as pupil and teacher attendance and repetition rates. Youth Skills Development Project: • Foster real citizen engagement by integrating youth at the project preparation stage to ensure greater cohesion and create strong ownership. Explore use of TPE during project preparation: Partnerships with the ILO, BTC, UNESCO, UNICEF, and UNDP and youth organizations could ensure that service delivery is efficient and effective. • Adopt DLIs for key actions taken by clients (LVEMP 3). environment • Agriculture Use objective selectivity and prioritization criteria in deciding on zones and sites for specific interventions (LVEMP 3 and LRRP). • Create synergies with other DPs to crowd in additional funding because WBG financial resources for projects are limited (LVEMP 3). and • Reduce the overhead cost ratio and actual investment costs to improve program efficiency (LVEMP 3). • Give more emphasis to gender, social, and environmental aspects to ensure social accountability. • Use an HIMO+ or LIW+ approach (Building Local Public Infrastructure with Labor-Intensive Works) where an INGO (a joint-venture of Caritas Belgium and Caritas Burundi) supported by a large network of local NGOs can provide coverage nationwide to (1) identify and establish the Finance, Competitiveness, and profile of vulnerable people in targeted neighborhoods; (2) oversee targeting, mobilization, and support to beneficiaries employed to construct subprojects; (3) work with ABUTIP and construction firms on specific subprojects to ascertain and address the most important training needs and contract with training providers; (4) conduct beneficiary surveys to help assess the impact of infrastructure works; (5) Innovation bring feedback and any complaints from communities during subproject construction to the PIU and ABUTIP so that they can be taken into account going forward; and (6) help ensure that among workers hired for subprojects there is adequate representation of vulnerable groups (women, youth, displaced persons, and Batwas). • Create job opportunities that will first benefit vulnerable groups in the targeted neighborhoods; and enhance the skills acquired by individuals engaged in construction and provide supplementary training so that ultimately beneficiaries qualify for better jobs. Use of local materials is one selection criterion for subprojects financed by the project; technical and financial support are provided to SMEs through component 2 (PDLE). 87 Annex 6: Gender-focused CPF Actions Gender Actions Burundi National Gender Action Plan Axes and Expected Results Focus Area I: Building Human Capital and Inclusion Objective 1.1: • SP activities include cash • More equitable access of women, men, and Expand social transfers and promotion of adolescents to basic social services: protection and behaviors to support o Girls and women have the same chance economic inclusion demand for maternal as men to access, succeed in, and for the poor and for health services and complete all levels of education. vulnerable groups education (P151835). o Women, men, and adolescents have • Communications and access to the infrastructure, information, outreach activities can and means necessary to access reduce the chance that reproductive health services. providing women with • Greater social and cultural status of women in the cash transfers leads to family and society: tensions between couples o Both men and women have a positive and an increase in intimate perception of gender equity and adopt partner violence favorable attitudes and behaviors (P151835). • GBV is prevented and mitigated, with victims benefiting from psychosocial assistance and medical care. Objective 1.2: • Unconditional cash • More equitable access of women, men, and Improve access to transfers need not be adolescents to basic social services: quality education specifically targeted to • Girls and women have the same chance as men to and youth girls’ education, but access, succeed in, and complete all levels of employability. financial constraints education. appear to have more impact on the schooling of girls than boys (P151835). Objective 1.3 • Support application of the • Improved social and cultural status of women in Improve access to free health care policy, the family and society: quality especially for pregnant o Men and women have a positive reproductive, women, through perception of gender equity and adopt maternal, child performance-based favorable attitudes and behaviors. health, and payments, implementation o GBV is mitigated and prevented, with nutrition services support, and investments victims benefiting from psychosocial in community health assistance and medical care. workers and nurse-training • Equitable access of women, men, and adolescents schools (P156012). to basic social services: • Support demand for better o Women, men, and adolescents have maternal health care with access to the infrastructure, information, cash transfers to women and means necessary to access and promotion of positive reproductive health services. behaviors (P151835). o The poorest groups targeted have access • Support demand for family to basic social services. planning (FP) through • More equitable rights and responsibilities for community and national women, men, and children communications and advocacy. Support implementation of the 88 national strategy for sexual and reproductive health (P165253) • Address the nutritional causes of poor maternal health by distributing nutrition-smart technology packages and raising awareness of how malnutrition can damage maternal health (P107343). • Support expansion of services to mitigate the impacts of gender-based violence (GBV) on victims through medical, legal, and psychosocial services (P147489) Focus Area II: Strengthening Foundations for Economic and Social Resilience Objective 2.1: Build • Encourage the agricultural • More equity of economic opportunity for women sustainable food productivity and access to and men: systems for markets of women and o Women have access to factors of nutrition and jobs youth through technology production, basic infrastructure, support and seed grant capital services, and finance. investments (P107343). o Women have more time to spend on • Support participation of productive activities. women and youth in • Improved social and cultural status of women in coffee value chains the family and society: through access to assets, o Men and women have a positive training, and employment; perception of gender equity and adopt and use Gender Action favorable attitudes and behaviors. Learning System (GALS) to • More equitable opportunities for women and promote household men in the economy: negotiations on sharing • Women have access to factors of production, responsibilities (P151869). basic infrastructure, support services, and • Expand women’s finance. opportunities in • Women have more time to spend on productive agribusiness through activities. support to MSMEs for • Improved social and cultural status of women in equipment and business the family and society services, giving priority to • GBV is mitigated and prevented, with victims value chains with high benefiting from psychosocial assistance and employment potential in medical care. subsectors where women are already active (P155060). Objective 2.2: • Support of clean energy • More equitable opportunities for women and Increasing access to will especially benefit men in the economy: energy for poor women, who are mainly o Women have more time to spend on families. responsible for fetching productive activities. fuel wood and whose 89 health suffers from cooking with dirty fuel sources (P133610; P075941; P165938; P164435; P148226; 601010), FOUNDATION: Foundations: Macroeconomic Stability, Structural Reforms, and Governance Foundation • Support women’s jobs in • More equitable economic opportunities for objective: Foster ISTEEBU by ensuring that women and men: citizen engagement at least 25 percent of staff o Women have the technical and and social trained in statistics are managerial capacity to participate in the accountability women, as evidenced by economy. their presence in decision- • More equitable participation of women and men making posts (P149176). in decision-making and in mechanisms to • Support involvement of consolidate peace and security: women in leadership of o Women and men have equitable communities in the coffee participation in decision-making bodies value chain (P151869). and in political and economic • Support women’s governance at all levels. participation in formal and • Reinforcement of institutional capacity for informal decision-making implementing the Gender Action Plan structures and governance • Equipment of the national gender machinery with processes related to eco- the skills and financial and material resources to system- based adaptation effectively implement the Gender Action Plan (P160613). 90 Annex 7: Burundi CPF Consultations Summary From July 13–26, 2017, consultations for the CPF were held in four provinces and representatives of all 18 provinces were consulted. In Bujumbura, the consultations were co-chaired by the Ministry of Finance and Economic Development Planning and the World Bank Country Manager; in the regions the Government was represented by Governors. These consultations brought together local NGOs and development associations, women, youth, and persons with disabilities; the Government through the Ministries and other senior public officials; private sector; development partners (DPs); and the media. The World Bank was represented by Country Office staff and consultants. Participants in the consultations were unanimous in their appreciation of the opportunities to become familiar with World Bank procedures and to express their expectations. They generally confirmed the choices made in the draft CPF and recognized the urgency of using a package of initiatives to deal with the macroeconomic crisis, the impact of climate change on agriculture and food security, and energy sector issues. They also emphasized demographic issues and the concern for women’s development (building up their economic power, girls schooling) for more equity. The main ideas expressed at the meetings are as follows: The session with local NGOs and associations stressed the need: • to improve rural productivity and incomes through tailored actions based on the constraints and opportunities of each region; • for better socioeconomic interventions related to education, health, access to water and sanitation, access to energy, unemployment, refugees and internally displaced people, agriculture, animal husbandry and fishing; • to consider regional environmental vulnerability and demographic specifics; and • to formalize the informal sector. The session with the private sector revealed that: • increased IFC involvement in Burundi was considered highly beneficial for business development, especially for o structural reforms for private sector development; o access to bank credit facilities for local citizens; and o lower interest rates to make resources more available, supported by advisory services. • The CPF should better reflect support to the private sector by emphasizing o the general fiduciary environment; o the conditions for creating and building SMEs with products that are competitive on the market (= the need for innovation and standardization); and o the untapped potential of agribusiness. The session with DPs highlighted • the continuing need for collaboration and complementarity between the WBG and Burundi’s other DPs; • the adjustments DPs made to their own programs following the 2015 crisis, among them o reorientation of budgetary support to other sectors, especially infrastructure; 91 o redirection to decentralized local units and communes, such as micro-projects and innovations for individuals (food for cash; electronic registration of beneficiaries); o adjustments between development and humanitarian goals, with more direct support to NGOs and associations. Other consultations were held with DPs and Ambassadors on June 18, 2018, and with all UN agencies in Burundi on June 26, 2018, to create awareness of the CPF and look for synergies with the SDG agenda and with the Strategic Partnership Framework (SPF) signed by the UN and the WBG on May 18, 2018, that consolidates their joint commitment to cooperate in helping countries implement the 2030 Agenda for Sustainable Development. Consultation with the President of the National Assembly, the Vice-President, and the MPs identified the following national priorities for WBG assistance: • Reform of the educational curriculum and the need for equipment (e.g., for laboratories), and the importance of tackling school dropouts, early marriages, and early pregnancies • Modernization of agricultural production systems • Good governance and decentralization policies to empower rural communities in the decision-making process • Unemployment, especially among youth • Energy production, to form the backbone for modernizing and transformational activities in agriculture, mining, and the entire economy • Tourism, which has enormous as yet unexploited potential • Road-building to open up rural areas and facilitate transportation of goods, services, and people • The fragility of the environment, climate change, and the need for resilient ways to deal with both • Regional integration • Private sector development, especially funding to support SME development and eventually create jobs for the very active youthful unemployed. The MPs asked to be involved in the entire project cycle, not just ratification. The session with the media highlighted the need to build capacity in areas of WBG intervention and for support material that the media can relay in relation to development projects. A partnership between the media and the WBG can smooth communication with project beneficiaries. At the end of the consultations, the objectives of these participative meetings had been largely achieved and the team had learned stakeholder expectations and points of view on the CPF. 92 Annex 8: Burundi’s Performance on the MDGs MDG Objective Performance MDG1 Halve the poverty rate and proportion of food- Not achieved insecure people. MDG2 Provide access to primary education for all. Achieved MDG3 Promote gender equity and women empowerment. Partially achieved MDG4 Reduce by two-thirds under-5 child mortality. Partially achieved MDG5 Reduce by three-quarters maternal mortality. Partially achieved MDG6 Control and reverse HIV and malaria infection trend. Partially achieved MDG7 Provide sustainable development. Not achieved MDG8 Promote an inclusive nondiscriminatory and Not achieved financially sustainable development partnership framework 93 Annex 9: Development Partner Sectoral Mapping Nutrition & Food Social Protection Food Security & Sector Agric, Environ, Infrastructure Development Transport/ s Education HIV AIDS Security Energy Health Rural Sector s Donors Sector ADBs * * Belgium Sector * * * * EU s * * * FAO * * Sector France * * s ICGLR * IFADSector * * GEFs * IOM Sector * * * Switzerland s * * UNAIDS * * Sector UNESCO * s UNFPA * * UNHCR Sector * s UNICEF * * * * UNWOMEN Sector USAs * * * * WFP * * WHO Sector * s World Bank * * * * * * * Sector s Sector Coordination Thematic Group Lead Partner Sector 1. Agri, s environ & food security - GSADR FAO 2. Nutrition & food security (SUN) UNICEF 3. Social SectorProtection WFP 4. Education s UNICEF 5. Health France 6. HIV/AIDS Sector UNAIDS 7. Transport s & Infrastructure EU 8. Land Management Swiss Sector Cooperation s Sector s Sector s 94 Sector s Annex 10: Map of Burundi 95