The World Bank Competitiveness and Sector Diversification (P166187) Combined Project Information Documents / Integrated Safeguards Datasheet (PID/ISDS) Appraisal Stage | Date Prepared/Updated: 13-Feb-2019 | Report No: PIDISDSA25561 Feb 7, 2019 Page 1 of 18 The World Bank Competitiveness and Sector Diversification (P166187) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Project Data Country Project ID Project Name Parent Project ID (if any) Suriname P166187 Competitiveness and Sector Diversification Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) LATIN AMERICA AND CARIBBEAN 13-Feb-2019 29-Mar-2019 Finance, Competitiveness and Innovation Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Republic of Suriname Ministry of Trade, Industry & Tourism, Ministry of Natural Resources Proposed Development Objective(s) The project development objective is to support private sector-led investment and competitiveness in targeted industries in Suriname. Components Foundations for private investment in extractive industries Investing in SMEs and value chains in emerging industries Project management and evaluation PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 30.00 Total Financing 30.00 of which IBRD/IDA 30.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 30.00 Jan 4, 2019 Page 2 of 18 The World Bank Competitiveness and Sector Diversification (P166187) Environmental Assessment Category B-Partial Assessment Decision The review did authorize the team to appraise and negotiate B. Introduction and Context Country Context 1. Suriname is an upper-middle-income country of 542,000 people with a concentrated economy that is vulnerable to shocks. Natural resource extraction and processing have historically accounted directly for around 30 percent of GDP and as much as 90 percent of exports. As in other small Caribbean economies, Suriname’s concentrated economic activities and exports create vulnerability to shocks. Supported by rising commodity prices of its mineral and oil exports, Suriname’s economy grew an average of 4.7 percent per year from 2001 to 2013, well above the 2.4 percent average for the Caribbean small states, and per capita income reached US$9,350 in 2014. But as global commodity prices fell, the economy entered a severe recession and per capita income fell to US$6,990 in 2016. The economy is estimated to have stabilized in 2017 and 2018, driven by operations of a new gold mine. There is no official measure of poverty in Suriname, but recent estimates place overall poverty at 28.9 percent with 1.7 percent of the population in extreme poverty.1 Aggregate consumption trends indicate decreasing poverty during the 2001-13 growth period, although increasing subsequently with the economic downturn, reflecting vulnerability to external shocks. 2. The public sector in Suriname plays a large role in the economy but has limited capacity in economic management and regulation. The Government of Suriname (GOS) redistributes revenue earned from extractives through significant public sector employment, accounting for about 60 percent of total formal employment, including in more than 140 state-owned enterprises (SOEs). The large public sector creates fiscal risks for the country; following the commodity price downturn and recession, government revenue from mining fell from 10 percent of GDP to just 3 percent, and government debt tripled to 75.8 percent of GDP in 2016 (IMF 2018). Public enterprises and public sector institutions in general have limited capacity, including to manage the impacts of the main extractive activities on the country’s natural assets, which include substantial forest coverage and natural water reserves. There are gaps in Suriname’s environmental and social legal and regulatory framework, as well as limited policy plans to mitigate the impact of climate change such as increased flooding on economic activities, creating risks for sustainable growth. 3. The private sector is underdeveloped and concentrated in non-tradable services. Micro, small, and medium-sized enterprises are dominant in the economy, accounting for 98 percent of all firms and 60 percent of total private sector employment. There are around 200 private companies with more than 50 employees 1 Poverty analysis is hindered by an absence of available official poverty data. Cited rates are unofficial estimates by World Bank staff based on data from a Survey of Living Conditions conducted in 2016/17 by the Inter-American Development Bank (IDB), the Electricity Company of Suriname, the Central Bank of Suriname, and other partners, using poverty lines of $5.5 per day and $1.9 per day for extreme poverty in 2011 PPP. Jan 4, 2019 Page 3 of 18 The World Bank Competitiveness and Sector Diversification (P166187) in Suriname, but outside of mining these larger firms engage primarily in selling non-tradable services.2 Agriculture is a historically important sector, but less than 7 percent of registered firms engage in agribusiness or other manufacturing. Tourism is a nascent services export industry, but most firms are small and coordination in the sector is very limited. The private sector broadly demonstrates low measures of entrepreneurial activity, weak accounting and financial management practices, and low access to finance. 4. The World Bank has recently renewed its relationship with Suriname, establishing the first formal engagement in several years through a Country Partnership Strategy. The proposed operation will be the second loan under this new engagement, seeking to contribute to a more resilient economy with sustainable long-term growth and poverty reduction potential, through better utilization of Suriname’s natural resources while also building a more diversified private sector with increased investment and job opportunities. Sectoral and Institutional Context 5. There is significant potential for increased private sector growth and diversification in Suriname’s economy. A recent World Bank Group (WBG) Sector Competitiveness Analysis3 identified opportunities for private investment and diversification within the established extractives and agriculture sectors. Two new significant gold mine operations were established in the past decade, and geological studies have shown evidence of high potential for a range of minerals, including additional gold extraction, diamonds, and other minerals such as kaolin and rare earth elements. There are significant indications of offshore oil given recent findings in Guyana. Agriculture already accounts for about 9 percent of GDP, there is a competitive base of rice, bananas, fish, and shrimp exports to build on, and only about 5 percent of the estimated 1.5 million hectares of arable land is currently under production. The tourism sector is small but growing, driven by small private firms that see competitive potential of Suriname’s nature and cultural tourism offerings. Policy research on diversification in small economies indicates that diversification over time into new products and markets within such established industries is more likely to be feasible than targeting new sectors, and new investment and development in these industries has potential to generate private sector jobs and additional local economic opportunities. 6. However, the private sector’s ability to take advantage of these competitive opportunities in diversified economic activities is hindered by regulatory, public infrastructure, and firm-level constraints. At the regulatory level, Suriname’s economy is one of the most unfavorable in terms of the ease of doing business as measured by Doing Business, with a low ranking of 165 out of 190 economies. The private sector reports a lack of predictability and consistency in public sector activity related to the business environment. The legal framework for investment authorizes the granting of incentives on a case-by-case basis and does not provide standard international investor protection rights. These regulatory challenges hinder firms seeking to establish and grow across sectors of the economy. 7. Weak regulatory frameworks and limited institutional capacity at the sectoral level hinder development and private investment. The current 1986 mining decree governing the extractives sector has not been complemented with implementing regulations. Management of mining titles and licensing procedures are far from good practice, resulting in property rights risks and an unlevel playing field for investors. Exports of 2 Data on firm size are from the 2016 Business Census conducted by the General Bureau of Statistics Suriname. 3Suriname Sector Competitiveness Analysis: Identifying Opportunities and Constraints to Investment and Diversification in the Agribusiness and Extractives Sectors. 2017. WBG. Available at: http://hdl.handle.net/10986/26205 Jan 4, 2019 Page 4 of 18 The World Bank Competitiveness and Sector Diversification (P166187) fresh agricultural products are limited by cumbersome inspection processes at the airport, and around 90 percent of land is publicly owned and allocated with complex land titling processes that limit access and the use of land for collateral. In tourism, institutional support for sector development is only recently being established; industry standards have not been defined, data on tourism is limited, and legal frameworks to establish a Tourism Authority have not been passed. The GOS has made significant recent reform efforts, such as applying for the Extractive Industries Transparency Initiative (EITI) and improving food safety legal frameworks, but significant needs remain to enable investment and growth in these sectors. 8. The regulatory framework to manage environmental and social impacts requires strengthening to better facilitate sustainable development and new private investment. There are gaps in the legal and institutional frameworks to manage environmental and social impacts of economic activities. Within extractives, this creates risks for deforestation of the country’s forest due to illegal gold mining, as well as widespread contaminative use of mercury for gold extraction by artisanal and small-scale miners. Indigenous populations live in areas with mineral potential, which often have land rights conflicts with informal extractive operations. Lack of transparency and capacity to monitor and enforce environmental and social regulations can encourage a race to the bottom across sectors, to the detriment of formally established firms seeking to comply, such as with global standards like Responsible Agricultural Investment or Global Sustainable Tourism Criteria. The GOS has made efforts to address these issues, including legislative ratification of the Minamata Convention on Mercury and preparing a draft Environmental Law, but significant progress is still needed. 9. Gaps in the provision of public goods like hard and soft infrastructure also limit private sector competitiveness and investment opportunities. Lack of data on specific geological potential and associated soft infrastructure to publicly disseminate it hinders natural resource exploration and extraction. Suriname lacks a comprehensive and up-to-date understanding of its mineral resource potential, and vast portions of the territory are known only through sparse and outdated surveys. International investors do not see Suriname as an attractive destination for its mineral potential—the Investment Attractiveness Index of the Fraser Institute ranked Suriname 61 out of 91 countries in 2017, ahead of Guyana (74) but behind Chile, Mexico, and Peru. The lack of geological data and mapping also limits public sector capacity in other areas, such as groundwater exploration and development, environmental management, land management, and regional planning. In agriculture, limited traditional infrastructure such as last-mile access roads to production areas decreases export efficiency, especially of high-value fresh products. Lack of shared packaging or consolidation facilities also increase logistics costs. Public investment is needed to develop Suriname’s natural and cultural resources into competitive tourism assets. Nature parks and historical architecture are public goods that require quality upgrading to create opportunities for the private tourism sector to invest in marketing and selling services around these products. 10. Firm-level constraints also limit competitiveness, investment, and growth in diversified economic activities, especially among small and medium-sized enterprises (SMEs). SMEs account for nearly all private firms in Suriname and 60 percent of formal private sector employment, but they have limited business capacity and ability to invest in growth and competitive upgrading. Domestic credit to the private sector is generally low in Suriname, driven by a small and concentrated financial sector with high collateral requirements. SMEs in particular have limited capacity to document cash flows and prepare bankable business plans. Few firms in Suriname are integrated into regional or global export value chains, and quality compliance is a constraint to competitiveness especially in emerging industries. There are low rates of female entrepreneurship in Suriname: only 36.7 percent of firms have female ownership, compared to 44.9 percent Jan 4, 2019 Page 5 of 18 The World Bank Competitiveness and Sector Diversification (P166187) regional average.4 There is also evidence that emerging industries are more conducive of female ownership and employment, as firms engaged in sales to tourists have higher rates of female ownership and female management and employ higher proportions of women. Reform efforts are underway to establish a secured transactions framework and improve credit reporting, which can improve access to finance for SMEs, but required frameworks have not been established. C. Proposed Development Objective(s) Development Objective(s) (From PAD) The project development objective is to support private sector-led investment and competitiveness in targeted industries in Suriname. Key Results 11. The project development objective of the proposed Suriname Competitiveness and Sector Diversification (SCSD) project will be measured through the following PDO-level indicators:  New geological information accessed by private sector firms to inform extractive exploration efforts  Increase in revenue of SMEs benefitting from project support  Number of regulatory or policy reforms adopted to strengthen sector competitiveness and regulation D. Project Description 12. The proposed project seeks to facilitate private sector-led growth and diversification in Suriname by addressing constraints to competitiveness at the public infrastructure, regulatory, and firm levels in targeted industries. The extractives sector has significant untapped potential to generate exports and jobs, but requires public goods including geodata and associated soft infrastructure to enable new private investment. Institutional and regulatory strengthening is required to establish a level playing field and facilitate new investments in extractives as well as in emerging industries such as agribusiness and tourism. SMEs have limited capacity to take advantage of emerging growth opportunities in agribusiness and tourism as well as to participate competitively in extractive industry supply chains. Proposed activities address specific GOS financing needs to facilitate investment, competitiveness, and growth in these areas: Component 1: Foundations for private investment in extractive industries ($15.5M). This proposed component will foster a more conducive environment for future private investment in this sector. Future growth will create jobs and opportunities for local firms, either to formally engage in extractive activities or to supply goods and services to lead firms. The project will finance a comprehensive geological data program to reduce the costs and risks of private mining exploration and to improve GOS capacity to manage its mineral resources and engage with private investors. This program will include an airborne geophysical data collection campaign; a computerized geodata management system that can be used to manage and promote the data; geological work to integrate this new geophysical data with the existing historical geological knowledge and update the national geological map; and developing geodata promotion actions to disseminate the new knowledge and attract potential investors. This program will allow mining companies to conduct concentrated exploration efforts, and will also strengthen overall GOS capacity to manage its natural resources, including in areas such as groundwater exploration and development, environmental 4 These results are preliminary findings from the ongoing 2018 Enterprise Survey. Jan 4, 2019 Page 6 of 18 The World Bank Competitiveness and Sector Diversification (P166187) management, land management, and regional planning. The geodata program will explicitly consider the environmental and social impacts of future mining sector development and will include information about protected areas and areas where indigenous and tribal communities live. In addition, this component will finance technical assistance to improve the institutional and regulatory framework for extractives. GOS plans are underway to establish a Minerals Institute that will integrate and strengthen mining cadaster, geological data management, and mining inspectorate functions. GOS also has plans to establish an independent oil regulator to separate production and regulatory functions. The project will support the establishment and operationalization of these institutions. It will also support the development of regulatory frameworks and new procedures to better integrate principles of sustainable development in sector planning efforts. To inform this, the project will finance a Strategic Social and Environmental Assessment (SESA) covering mining and oil. The SESA will entail a comprehensive sector-wide examination of potential impacts, both positive and negative, of future potential investments in these sectors and identify gaps in regulations, institutional capacity, and public consultation mechanisms that can be strengthened. The project will also finance technical assistance (TA) for implementation of priority recommendations that come from the SESA, which is expected to include training, advisory support, and other TA to strengthen the capacity of environmental and indigenous people’s representative institutions. 13. Component 2: Investing in SMEs and value chains in emerging industries ($11.5M). There is significant potential for growth and diversification within agribusiness, tourism, and other emerging industries in Suriname. However, limited firm capabilities, challenges in the investment climate, and infrastructure shortcomings hinder competitiveness and limit private investment opportunities, especially for SMEs. To address these constraints, this component will support SMEs’ managerial capabilities and invest in their productivity and competitive upgrading, at both the individual firm and value chain levels. It will finance a Program for Suriname’s Growth Enterprises (SURGE) that will provide a combination of business development services and matching grants to firms. SURGE will competitively select beneficiary firms based on their commercial viability and commitment to growth, with a preference for firms that work in emerging value chains, have a ‘green’ element to their business plan, and are women-owned or women-led.5 SURGE business development support will be provided by a private technical services provider firm with requisite skills and entrepreneurial structure to ensure a market-driven and commercial approach to supporting SMEs. The program will then also provide matching grants to select SURGE beneficiaries or to groups of firms that apply as a consortium to invest in shared assets to improve value chain competitiveness. This component will also finance technical assistance for the implementation of business environment reforms to address key constraints to enterprise competitiveness and growth. Improvements to the business enabling environment will benefit firms participating in the SURGE program, such as those in tourism, agribusiness, and extractive supply chains, and will also have cross-cutting impacts for firms across the economy. 14. Component 3: Project management and evaluation ($3M). This component will fund all project management, operational, monitoring and evaluation, and communication costs. It includes support to 5SURGE will also coordinate beneficiary selection with other donor-funded SME support programs, in particular the EU-funded Suriname Agriculture Market Access Project supporting small horticulture farmers and the IDB-funded Innovation for Firms in Suriname program supporting SMEs pursuing business innovations in clusters, to ensure complementarity and not duplication of SURGE support. Jan 4, 2019 Page 7 of 18 The World Bank Competitiveness and Sector Diversification (P166187) strengthen GOS capacity in the implementation and environmental and social safeguards policies under the proposed project, including all required studies and social consultations. E. Implementation Institutional and Implementation Arrangements 15. The Ministry of Natural Resources (MNR) and MTIT will be the implementing agencies for the proposed SCSD project, responsible for Component 1 and Component 2 respectively. A Project Implementation Unit (PIU) will be established in each ministry, led by a Component Manager financed by SCSD and responsible for daily implementation of the respective components. A Project Coordination Committee (PCC) will oversee project implementation and ensure coordination between the PIUs, led by a Project Coordinator financed by the project to facilitate this coordination. Additional monitoring and evaluation, safeguards, and communications staff will be financed by the project and shared across the PIUs to minimize project management costs. The PCC will ensure coordinated implementation of the social and environmental safeguards instruments across components of the project, including ensuring early implementation of the SESA as a priority project activity. 16. . F. Project location and Salient physical characteristics relevant to the safeguard analysis (if known) The locations of specific project activities are not known in advance. Regarding Component 1, the proposed geological data collection campaign is expected to cover most of the national territory of Suriname, but this activity only entails airborne data collection. Any development activities that may be informed by the data would not result for years and are not known in advance, and the SESA mechanism is in place to strengthen GOS capacity to better manage social and environmental impacts of those future development activities. Regarding Component 2, support for SMEs and shared value chain assets will occur primarily in the northern areas of the country where most agribusiness and tourism activities take place. The locations of specific project investments in SMEs and value chain assets will be defined during implementation and are not known in advance. Environmental and social impact assessments for specific activities will be conducted during implementation, financed by the project. G. Environmental and Social Safeguards Specialists on the Team Nyaneba E. Nkrumah, Environmental Specialist Francisco Xavier Geraldes Siragusa, Environmental Specialist Christopher Mays Johnson, Social Specialist Jan 4, 2019 Page 8 of 18 The World Bank Competitiveness and Sector Diversification (P166187) SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered? Explanation (Optional) The proposed project is classified as category B - Partial Assessment. The project seeks to strengthen the enabling environment for competitiveness and diversification in extractives, agribusiness, and tourism in Suriname. Some direct investment activities will occur at the subproject level related to agribusiness and tourism value chains and SMEs operating in those industries. Technical assistance activities will support the extractives sector, which will not have any direct social or environmental impacts, but do seek to inform future private investment opportunities that could imply potential medium to high level risks and impacts to environment and social settings in the future. The environmental and social legal framework in Suriname is weak, including an absence of a comprehensive environmental law. This limits the obligation for compliance with environmental and social frameworks by the beneficiaries of this project, which classifies this project with a substantial environmental risk level. Environmental Assessment OP/BP 4.01 Yes Component 1 of the proposed project will focus on extractive industries, seeking to increase public awareness of geological information and strengthen public sector capacity to regulate future private investments. To support public sector capacity to manage environmental and social impacts of future investments in this sector, the main safeguards instrument will be a Strategic Environmental and Social Assessment (SESA). The SESA will conduct a sector-wide examination of potential impacts, both positive and negative, of future potential investments in the mining and oil industries, both those informed by TA financed by this IPF and others. The process of preparing for the SESA will include a social assessment including consultations with indigenous peoples representatives at least at the national and regional levels during project preparation. The SESA will ultimately inform guidelines, policies, institutional strengthening, and capacity building to manage environmental and Dec 13, 2018 Page 9 of 18 The World Bank Competitiveness and Sector Diversification (P166187) social risks for the extractives sector. One specific output will be a cumulative impact assessment to estimate or model the total potential impact to the ecosystems from expansion in all the targeted sectors identified over a defined period of time. Component 2 of the proposed project will strengthen agribusiness and tourism value chains and SMEs. This will be done through technical assistance and matching grant support to SMEs, including grants to groups of SMEs for shared value chain assets; and technical assistance for institutional and regulatory reforms to the investment climate. Direct project investments will be small-scale and likely to have minimal environmental or social impacts; but specific subprojects will be selected during implementation, and as specific activities and locations are not currently known, an Environmental and Social Management Framework (ESMF) has been prepared to inform activities under this component. This will include an Indigenous and Tribal People Planning Framework (ITPPF), as there are indigenous and tribal communities in the vicinity of many sites that may be supported by value chain or SME interventions. The development of the ITPPF has been directly informed by the social assessment that was conducted. The ESMF also includes a Resettlement Policy Framework (RPF) in case any value chain infrastructure subprojects have economic displacement impacts, although no resettlement is expected. Component 3 of the proposed project includes support for project management. This will specifically include capacity support for implementation of Bank safeguards policies and instruments under the proposed project. The activities financed by this project will be predominantly implemented by the government, hence this is not a private sector activity and OP 4.03 Performance Standards for Private Sector is not triggered. However, preparation of future No Activities OP/BP 4.03 private sector investments can benefit from private sector performance standards, and environmental capacity in the project implementation unit can be used to develop a Performance Standards Dec 13, 2018 Page 10 of 18 The World Bank Competitiveness and Sector Diversification (P166187) Framework during implementation depending on the findings and recommendations of the SESA. Considering the characteristics of the natural setting in Suriname, OP 4.04 is triggered so that its policy provisions can inform the development and analysis provided by the SESA, including recommendations for managing landscape-level and project-level impacts, regulatory Natural Habitats OP/BP 4.04 Yes and capacity issues, and long-term conservation planning, such as through a natural habitats plan. The ESMF for Component 2 also integrates natural habitats considerations specifically in the ESIAs or ESMPs that may need to be prepared as well as in exclusion criteria as appropriate for the selection of specific sites for interventions. This policy is triggered given the potential to support establishment of investments that may impact forests negatively in Component 2 activities. The ESMF integrates forest considerations specifically in Forests OP/BP 4.36 Yes the ESIAs or ESMPs that may need to be prepared as well as in exclusion criteria as appropriate for the selection of specific sites for interventions. The SESA will consider the potential impacts of expansion in mining and oil on forests and mangroves. This policy is triggered given the focus on agribusiness value chains. Activities financed by the Pest Management OP 4.09 Yes project will consider pest management policy provisions, which are incorporated into the ESMF for project activities under Component 2. Although the project is not expected to have direct negative impacts on cultural property, due to the territorial coverage of potential project sites, “chance finds� during implementation of activities could be possible. Chance finds procedures are Physical Cultural Resources OP/BP 4.11 Yes incorporated into the ESMF for the project, including procedures to identify PCRs and address potential impacts. Mapping efforts will seek to identify any areas of important cultural heritage, including those of importance to Indigenous Peoples. This policy is triggered given the presence of indigenous and tribal peoples near areas where agribusiness, tourism, and extractives activities Indigenous Peoples OP/BP 4.10 Yes occur in Suriname. An initial Social Assessment was conducted, including consultation with indigenous and tribal group representatives at national and Dec 13, 2018 Page 11 of 18 The World Bank Competitiveness and Sector Diversification (P166187) regional levels, to inform the preparation of the ITPPF as well as the SESA. The SESA itself will also involve consultations with indigenous and tribal peoples. The outputs of the SESA will include an impact assessment to estimate and/or model the total potential impact to indigenous peoples and vulnerable groups in all the critical sectors identified over a defined period of time. The SESA will also include detailed analysis of potential benefits, impacts and risks concerning indigenous peoples of potential sector specific investments and policy reforms. Geospatial data on indigenous and tribal people’s areas will be included in the geodata management system financed under Component 1. This policy is triggered as value chain and SME activities under Component 2 could include small- scale land acquisition or short-term economic displacement. No involuntary resettlement is Involuntary Resettlement OP/BP 4.12 Yes expected. A Resettlement Policy Framework has been prepared to consider these project aspects. Social issues related to involuntary resettlement will also be covered by the SESA. The policy is not triggered as no dams will be Safety of Dams OP/BP 4.37 No financed or included in the project. Projects on International Waterways The policy is not triggered as there are no No OP/BP 7.50 international waterways under the project. The policy is not triggered as there are no disputed Projects in Disputed Areas OP/BP 7.60 No territories under the project. KEY SAFEGUARD POLICY ISSUES AND THEIR MANAGEMENT A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: The FCSD project is a Category B investment under the World Bank’s Operational Policy on Environmental Assessment, implying that any environmental impacts are likely to be site-specific, potentially reversible, and with feasible mitigation measures. Component 1 of the project will finance activities related to airborne geodata collection and technical assistance (TA) for regulatory capacity enhancement for extractive industries, which will not have any direct environmental impact. Component 2 will finance support for agro-industry, agro-processing, potential extraction of non-timber forest products, tourism, and other SME development, including limited financing for shared value chain assets, but on a relatively small scale. Specific investments would be informed by plans financed by the project during implementation. Dec 13, 2018 Page 12 of 18 The World Bank Competitiveness and Sector Diversification (P166187) Regarding social safeguards, the project is expected to produce positive benefits at a national level, and negative social impacts should be minimal. Since the main activities under the project will be providing information for future exploration activities and financing small-scale agriculture and tourism SME support, overall direct social impacts including on indigenous or tribal communities are expected to be minimal. There are no major civil works and there will be no need for involuntary resettlement. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: The activities under Component 1 of the project will increase government capacity to promote and regulate future investment opportunities in the mining and oil extractive sectors, including providing geological information that the private sector can use to inform future exploration activities. This geological information can also be used to inform broader land use and environmental planning efforts. Potential future exploration and extraction activities informed by the geological information could have potential risks of indirect environment and social impact in the future. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. The primary project alternative considered and adopted to minimize adverse impacts especially in the long term is including financing for a Strategic Environmental and Social Assessment (SESA) of the mining and oil sectors to identify regulatory and institutional improvements that can be undertaken to better manage environmental and social risks in the future. Recommendations of this assessment will inform the regulatory capacity development planned under Component 1. Technical assistance resources are also included to provide capacity support to environmental and social representative and advocacy groups to be able to engage in managing social and environmental impacts of future investment activities. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. The borrower has prepared an Environmental and Social Management Framework, an Indigenous and Tribal People Planning Framework, and a Resettlement Policy Framework to manage environmental and social risks under the project following the Bank's safeguard policies. The borrower has also prepared the terms of reference for the Strategic Environmental and Social Assessment of the mining and oil sectors to be conducted during project implementation, which will identify regulatory and institutional improvements that can be undertaken to better manage environmental and social risks in the future from investments or other activities beyond the scope of this project. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Key project stakeholders include representatives of the private sector and especially SMEs that are the targeted project beneficiaries. Additional key project stakeholders include representatives of indigenous and tribal peoples living in areas where project activities will occur. Consultation meetings with representatives of the private sector and representatives of indigenous and tribal groups on the project plans and associated safeguards instruments have been conducted and concluded. Public disclosure of the safeguards instruments for public comment by private sector and civil society broadly will occur prior to project appraisal. More in-depth consultations will take place during project implementation through the Strategic Environmental and Social Assessment. Dec 13, 2018 Page 13 of 18 The World Bank Competitiveness and Sector Diversification (P166187) B. Disclosure Requirements OPS_EA_DISCLOSURE_TABLE Environmental Assessment/Audit/Management Plan/Other For category A projects, date of Date of receipt by the Bank Date of submission for disclosure distributing the Executive Summary of the EA to the Executive Directors 12-Dec-2018 08-Feb-2019 "In country" Disclosure Suriname 08-Feb-2019 Comments To be disclosed via public consultation meetings and through publication on the NIMOS website. OPS_RA_D ISCLOSURE_T ABLE Resettlement Action Plan/Framework/Policy Process Date of receipt by the Bank Date of submission for disclosure 12-Dec-2018 08-Feb-2019 "In country" Disclosure Suriname 08-Feb-2019 Comments To be disclosed via public consultation meetings and through publication on the NIMOS website. OPS_I P_DIS CLOSURE_TA BLE Indigenous Peoples Development Plan/Framework Date of receipt by the Bank Date of submission for disclosure 12-Dec-2018 08-Feb-2019 "In country" Disclosure Suriname 08-Feb-2019 Comments To be disclosed via public consultation meetings and through publication on the NIMOS website. Dec 13, 2018 Page 14 of 18 The World Bank Competitiveness and Sector Diversification (P166187) OPS_ PM_D ISCLOSURE_TA BLE Pest Management Plan Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of submission for disclosure Yes 12-Dec-2018 08-Feb-2019 "In country" Disclosure Suriname 08-Feb-2019 Comments To be disclosed via a public consultation meeting and through publication on the NIMOS website. OPS_PM_ PCR_TABLE If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OPS_EA_COMP_TABLE OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? Yes If yes, then did the Regional Environment Unit or Practice Manager (PM) review and approve the EA report? Yes Are the cost and the accountabilities for the EMP incorporated in the credit/loan? Yes OPS_ NH_COM P_TA BLE OP/BP 4.04 - Natural Habitats Would the project result in any significant conversion or degradation of critical natural habitats? No If the project would result in significant conversion or degradation of other (non-critical) natural habitats, does the project include mitigation measures acceptable to the Bank? NA OPS_ PM_COM P_TA BLE OP 4.09 - Pest Management Dec 13, 2018 Page 15 of 18 The World Bank Competitiveness and Sector Diversification (P166187) Does the EA adequately address the pest management issues? Yes Is a separate PMP required? No If yes, has the PMP been reviewed and approved by a safeguards specialist or PM? Are PMP requirements included in project design? If yes, does the project team include a Pest Management Specialist? NA OPS_ PCR_COM P_TA BLE OP/BP 4.11 - Physical Cultural Resources Does the EA include adequate measures related to cultural property? Yes Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on cultural property? Yes OPS_I P_COM P_TA BLE OP/BP 4.10 - Indigenous Peoples Has a separate Indigenous Peoples Plan/Planning Framework (as appropriate) been prepared in consultation with affected Indigenous Peoples? Yes If yes, then did the Regional unit responsible for safeguards or Practice Manager review the plan? Yes If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social Development Unit or Practice Manager? NA OPS_IR_ COMP_TA BLE OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process framework (as appropriate) been prepared? Yes If yes, then did the Regional unit responsible for safeguards or Practice Manager review the plan? Yes OPS_F O_COM P_TA BLE OP/BP 4.36 - Forests Has the sector-wide analysis of policy and institutional issues and constraints been carried out? NA Does the project design include satisfactory measures to overcome these constraints? NA Does the project finance commercial harvesting, and if so, does it include provisions for certification system? NA OPS_ PDI_ COMP_TA BLE The World Bank Policy on Disclosure of Information Dec 13, 2018 Page 16 of 18 The World Bank Competitiveness and Sector Diversification (P166187) Have relevant safeguard policies documents been sent to the World Bank for disclosure? Yes Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? Yes All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Yes Have costs related to safeguard policy measures been included in the project cost? Yes Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Yes Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? Yes CONTACT POINT World Bank John Millies Anderson Senior Economist Susana Moreira Oil and Gas Specialist Tugba Gurcanlar Senior Private Sector Specialist Borrower/Client/Recipient Republic of Suriname Iris Sandel Permanent Secretary, Ministry of Finance iris.sandel@finance.gov.sr Implementing Agencies Dec 13, 2018 Page 17 of 18 The World Bank Competitiveness and Sector Diversification (P166187) Ministry of Trade, Industry & Tourism Reina Raveles Permanent Secretary reina.raveles@minhi.gov.sr Ministry of Natural Resources Dave Abeleven Permanent Secretary directeur@naturalresources.gov.sr FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL John Millies Anderson Task Team Leader(s): Susana Moreira Tugba Gurcanlar Approved By Safeguards Advisor: Svend E. Jensby 06-Feb-2019 Practice Manager/Manager: Zafer Mustafaoglu 07-Feb-2019 Country Director: Sabine Hader 13-Feb-2019 Dec 13, 2018 Page 18 of 18