Document of The World Bank Group FOR OFFICIAL USE ONLY Report No. 112944-STP INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION AND MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP STRATEGY FOR SÃO TOMÉ AND PRÍNCIPE FOR THE PERIOD FY14-FY18 May 1, 2019 Central Africa Country Department 1 Africa Region The International Finance Corporation Sub-Saharan Africa Department 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. Date of the last Country Partnership Strategy is May 28, 2014 FISCAL YEAR January 1 to December 31 CURRENCY EQUIVALENTS As of February 28, 2019 (average BCSTP rate) US$1.00= SÃO TOMÉ AND PRÍNCIPE Dobras [21.62] ABBREVIATIONS AND ACRONYMS ADI Independent Democratic Action Party AF Additional Financing AFAP Agencia Fiduciária de Administracão de Projectos (Implementing Agency) AfDB African Development Bank AGER Autoridade Geral de Regulação (Regulation Authority) ASA Advisory Services and Analytics BISTP Banco Internacional de São Tomé e Príncipe (International Bank of STP) CAB Central African Backbone CPF Country Partnership Framework CPI Consumer Price Index CPS Country Partnership Strategy DGTH Directorate General of Tourism and Hospitality DP Development Partner DPO Development Policy Operation DSA Debt Sustainability Analysis EC European Commission ECF Extended Credit Facility EIB European Investment Bank EITI Extractive Industries Transparency Initiative EMAE National Electricity Company EU European Union FSDIP Financial Sector Development Implementation Plan FY Fiscal Year GBV Gender-based Violence GDP Gross Domestic Product GEF Global Environment Facility GIME ` Groups of Interest in Road Maintenance GNI Gross National Income GoSTP Government of São Tomé and Príncipe GPE Global Partnership for Education GRM Grievance and Redress Mechanisms HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome IBRD International Bank for Reconstruction and Development ICT Information and Communication Technologies IDA International Development Association IFC International Finance Corporation IMF International Monetary Fund IPF Investment Project Financing MDGs Millennium Development Goals ii MFD Maximize Financing for Development MICS Multiple Indicator Cluster Survey MIGA Multilateral Investment Guarantee Agency NDC Nationally Determined Contributions PFM Public Financial Management PPIAF Public-Private Infrastructure Advisory Facility PPP Public Private Partnership PRC People’s Republic of China PRSP II Second Poverty Reduction Strategy Paper SCD Systematic Country Diagnostic SDGs Sustainable Development Goals SME Small and Medium Size Enterprise SOE State Owned Enterprise SP Social Protection SSA Sub-Saharan Africa STP São Tomé and Príncipe TA Technical Assistance TFs Trust Funds UN United Nations UNDP United Nations Development Program UNICEF United Nations International Children's Emergency Fund WACA West Africa Coastal Areas Resilience Project WBG World Bank Group WHO World Health Organization IDA IFC MIGA Vice President: Hafez Ghanem Sergio Pimenta Keiko Honda (EVP) Director: Elisabeth Huybens Aliou Maiga Merli Baroudi Task Team Leaders: Barbara Geiser Mehita Sylla Moritz N. Nebe Acknowledgements The PLR was prepared under the guidance of Elisabeth Huybens, Country Director (AFCC1). In addition to the task team leaders (TTL), the core team included Clara de Sousa, Country Manager (AFMAO); Angelique DePlaa, Country Program Coordinator (AFCC1); Hoda Mustafa, Head, (MIGAF); Issa Diaw, Mazen Bouri and Carine Clert, (Program Leaders, AFCC1); Olivier Godron, Country Program Coordinator (AFCC1); Ana Maria Carvalho, Senior Operations Officer (AFMAO); Elena Palei (MIGOP); and Maria Margarida Mendes, Executive Assistant (AFMAO). Several World Bank Group country team members based in Luanda, Washington D.C., and other locations made significant contributions including Rafael Chelles Barroso, Senior Economist (GMFDR); Eric Zapatero Larrio, Senior Social Protection Specialist (GSP07); Emily Gardner, Senior Education Specialist (GED13); Alvin Etang Ndip, Senior Economist (GPV01); Antonio Chamuco, Senior Procurement Specialist (GGO07); Joao Tinga, Sr. Financial Management Specialist (GGO13); Zenaida Hernandez Uriz, Senior Private Sector Specialist (GFCAC); Monique Courchesne, T&C/IFC Lead (CAFW4); Penelope Fidas, Senior Private Sector Development Specialist (GTC13); Nicolas Jean Marie Sans, Senior Hydropower Specialist (GEE07); Noroarisoa Rabefaniraka, Senior Transport Specialist (GTI07); Julian Casal, Senior Financial Sector Economist (GFM01); Domingas Pegado, Program Assistant (AFMAO); Tambi Matambo, Senior Environmental Specialist (GCCRA); Firmin Nkoghe, Country Program Assistant (AFCCM); Dean Thompson, Enand Iris Ollila and Marcela Natalicchio, Micheline Agbo Epse Faucompré, Consultants (AFCC1). iii Table of Contents 1. INTRODUCTION................................................................................................. 5 2. MAIN CHANGES IN COUNTRY CONTEXT ................................................. 6 A. Changes in poverty reduction and shared prosperity .................................... 6 B. Changes in key macroeconomic and debt developments ............................. 7 C. Political developments .................................................................................. 9 3. SUMMARY OF PROGRAM IMPLEMENTATION ....................................... 9 A. Program and portfolio performance .............................................................. 9 B. Evolution of stakeholders and partnerships ................................................ 12 C. Progress towards 2014-2018 CPS Outcomes ............................................. 12 4. EMERGING LESSONS ..................................................................................... 17 5. ADJUSTMENTS TO The COUNTRY PARTNERSHIP STRATEGY ........ 18 Theme One: Supporting Macroeconomic Stability and Inclusive Growth ........... 22 Theme Two: Strengthening Human Capacity and Reducing Vulnerability ......... 24 6. RISKS TO REVISED CPS PROGRAM .......................................................... 26 Figures Figure 1: Progress Towards Achieving CPS Outcomes .............................................. 16 Tables Table 1: STP Social Indicators (value and year of measurement) ............................... 7 Table 2: STP Selected Macroeconomic Indicators, 2014-2019 ..................................... 8 Table 3: World Bank Financing Program in STP (FY14-Q3FY19) .......................... 11 Table 4: PLR Indicative CPS Financing Plans, FY19-FY20 ...................................... 19 Table 5: Expected ASA, FY19-20 .................................................................................. 20 Table 6: STP Revised Systematic Operations Risk-Rating Tool (SORT) ................. 27 Annexes Annex 1: Updated Results Matrix ................................................................................. 28 Annex 2: Changes to original CPS Results Matrix ...................................................... 38 Annex 3: Progress toward FY14-18 CPS Outcomes .................................................... 47 Annex 4: Planned and Actual Deliveries of Non-Lending Services (FY14-18) ......... 53 Annex 5: World Bank Group Support to the Energy Sector in STP ......................... 54 Annex 6: World Bank Group Support to the Financial Sector in STP ..................... 56 Annex 7: Select Financial Soundness Indicators.......................................................... 57 Annex 8: Improving Business Regulation in São Tomé and Príncipe ....................... 58 Annex 9: Evolution of Partnerships in São Tomé and Príncipe ................................. 60 Annex 10: Map of São Tomé and Príncipe 61 iv THE REPUBLIC OF SÃO TOMÉ AND PRÍNCIPE PERFORMANCE AND LEARNING REVIEW OF THE FY14-FY18 COUNTRY PARTNERSHIP STRATEGY 1. INTRODUCTION 1. The Board of Executive Directors discussed the FY14-FY18 Country Partnership Strategy (CPS) for São Tomé and Príncipe (STP) on July 3, 2014 (Report No. 83144). The CPS supported STP’s Second Poverty Reduction Strategy Paper (PRSP II, 2012-2016), which aimed to maintain macroeconomic stability, diversification, and promote private sector-led growth. The CPS was structured around two themes: (1) supporting macroeconomic stability and national competitiveness; and (2) reducing vulnerability and strengthening human capacity. Gender, partnerships, and capacity building were elements cutting across all the proposed engagements, as were the promotion of inclusive private sector-led growth while maintaining macroeconomic stability. 2. STP’s economic outlook has improved relative to the beginning of the CPS period, but remoteness, small size, and insularity constrain the opportunities for inclusive growth. Real gross domestic product (GDP) growth has been hovering around 4 percent during the CPS period and is expected to remain at the same level in the medium term. Inflation has decreased, and external accounts have improved since 2015 due to lower oil prices and growing agricultural and tourism exports. Fiscal policy is the Achilles heel of economic policy, characterized by low domestic revenue mobilization, poor public financial management, aid dependency, and debt distress. The International Monetary Fund (IMF) program in place through most of the CPS period has helped maintain macroeconomic stability, but progress towards the program objectives was mixed. Tourism and agriculture are the main drivers of growth, and bottlenecks in transport, electricity, relevant skills, and the financial system need to be addressed for faster, job-creating growth. 3. Following the October 2018 Parliamentary elections, a new Government was installed on December 3, 2018. Two coalition parties (Movement for the Liberation of STP-Social Democratic Party and Democratic Convergent Party/Force for Change Democratic Movement/Democratic Union for Citizenship and Development) lead the coalition government. The two main objectives of the new Government are to considerably increase the average growth rate and to reinforce social cohesion. 4. Delivery of the CPS program has been broadly satisfactory, despite some challenges. With an IDA17 allocation of about US$15 million for three years, the implementation of the CPS program sought to further enhance selectivity. Several operations were dropped. While this detracted from progress on a few CPS outcomes, notably in building private sector capacity and 5 improving skills, it also contributed eventually to improved performance, thanks to a strengthened dialogue, greater complementarity and collaboration with other development partners (DPs), impactful deployment of trust funds (TFs), and an increased focus on the performance of the critically important electricity sector. 5. With a quadrupled IDA18 allocation, this Performance and Learning Review (PLR) allows for much greater ambition – accelerating progress towards the twin goals and strengthening focus on climate change resilience – while enhancing selectivity by consolidating the outcomes pursued. This PLR articulates how the World Bank Group (WBG) can play a transformational role to enable diversification and growth, build human capital, and – given STP’s vulnerabilities – promote resilience to climate change. The PLR further articulates how the CPS program will align with the IDA18 policy package and the Sustainable Development Goals (SDGs). Foundations are being laid to strengthen private sector investment in line with Maximizing Finance for Development (MFD) and closer IDA engagement with the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). 6. The PLR proposes a two-year extension of the FY14-FY18 CPS until the end of FY20. This PLR is being presented after the closing of the original CPS period, largely due to changing program preferences under the previous government and subsequently, the transition to the new government. The proposed extension would allow time to build ownership and trust with the newly elected government ahead of the development of the forthcoming Country Partnership Framework (CPF) and allow more time to achieve revised targets under this more ambitious PLR. In addition, it would allow the CPF to be informed by the Poverty Assessment and the findings of the Systematic Country Diagnostic (SCD) to be finalized in early FY20. 2. MAIN CHANGES IN COUNTRY CONTEXT A. CHANGES IN POVERTY REDUCTION AND SHARED PROSPERITY 7. Estimates based on the 2010 household survey suggest that the poverty rate has fallen slightly in recent years. Based on a growth-poverty elasticity model, the population living on less than US$1.90 per day (Purchasing Power Parity) would have declined from 33.9 percent in 2010 to 30.6 percent in 2018. The Poverty Assessment expected to be finalized in late FY19 will be based on the results from the 2018 national household survey and will provide a much-needed update on the profile of poverty in STP. 8. STP’s human development outcomes continue to improve. STP had met five Millennium Development Goals (MDGs) by 20151 and is on track to achieve the SDGs related to hunger and nutrition, healthy lives and equitable access to education, improve maternal health, ensure environmental sustainability and reduce child mortality by 2030. Human development outcomes for STP are well above the average for Sub-Saharan Africa (SSA) and some other comparator countries (See Table 1). However, the Government is keen to address pending challenges, especially those related to learning and social vulnerability and it has recently asked to join the Human Capital Project. STP as such is not yet included in the Human Capital Index 1 These are: Goal 2: Achieve universal primary education; Goal 4: Reduce child mortality; Goal 5: Improve Maternal Health; Goal 6: Combat HIV/AIDs, malaria and other diseases; and Goal 7: Ensure environmental sustainability. 6 because it has not developed internationally comparable data on the quality of education, but the upcoming Girls Empowerment and Quality Education for All Project (P169222) will tackle this issue. Table 1: STP Social Indicators (value and year of measurement) STP SSA Comoros Cabo Verde Maldives East Timor Poverty (below US$1.90/day ppp) 33.9 (10) 41.0 (13) 18.1 (13) 8.1 (07) 7.3 (09) 43.5 (07) Years of schooling (adults)* 5.3 (15) 5.4 (15) 4.8 (17) 4.8 (15) 6.2 (15) 4.4 (15) Primary completion (%) 82.9 (16) 68.6 (14) 70.9 (13) 102.2 (15) 92.1 (16) 106.1(15) Progression to secondary (% male) 100.0 (14) 79.6 (13) 100 (13) 97.1 (14) 93.4 (12) 93.8 (14) Progression to secondary (% 99.4 (14) 77.9 (13) 85.2 (13) 99.4 (14) 100.0 (12) 94.8 (14) female) Fertility rate, total births per woman 4.5 (16) 4.8 (16) 4.3 (16) 2.3 (16) 2.1 (16) 5.5 (16) Youth literacy (% male) 97.4 (15) 76.3 (10) 73.8 (12) 97.6 (15) 100.0 (15) 81.8 (15) Youth literacy (% female) 97.2 (15) 65.8 (10) 69.6 (12) 98.7 (15) 99.5 (15) 82.7 (15) Child Mortality under 5 33.8 (16) 78.4 (16) 69 (17) 21.4 (16) 8.5 (16) 49.7 (16) (per 1000 live births)** Immunization DTP3 (%)*** 96 (16) 75.8 (15) 91 (17) 96 (16) 99 (16) 85 (16) Stunting (height for age (% of 17.2 (14) NA 32.1 (12) 21.4 (94) 20.3 (09) 50.2(13) children under 5)** Life expectancy at birth 66.4 (15) 59.9 (15) 63.7 (16) 72.4 (15) 77.1 (15) 68.6 (15) Gross National Income (GNI) per 1,720 (16) 1,516 (16) 1280 (17) 2,970(16) 10,630 (16) 2,060 (16) capita (Atlas method, current US$) Source: World Development Indicator (WDI), except *UNDP-Human Development report (latest available data); ** Multiple Indicator Cluster Survey (MICS) 2014.; and ***World Health Organization (WHO) Global Health Observatory data repository. B. CHANGES IN KEY MACROECONOMIC AND DEBT DEVELOPMENTS 9. Macroeconomic performance has improved during the period covered by the CPS, but the economic outlook is less favorable. Growth averaged 4.2 percent p.a. between 2014- 2018. Inflation has come down because of the exchange rate peg with the euro and adequate control of monetary aggregates by the Central Bank. External imbalances, although large and typical of small-island economies, declined due to lower oil prices and increased agricultural and tourism exports.2 The economy’s main growth drivers are government spending, agriculture and tourism. Tourism has seen growth thanks to higher flight frequency, increased private investments, and the institution of 15-day visa-free access for nationals of the United States of America (USA), the European Union (EU), and Portuguese-speaking countries. While STP has been conducting exploratory oil drilling since 2012, it has not yet produced oil on a commercial basis.3 Further structural reforms and investments in electricity, transport, Information and Communication Technologies (ICT), and financial services as well as relevant skills are key to accelerate growth in agriculture and tourism. Fiscal consolidation will require more domestic revenue mobilization, while overall government spending is kept on check. Fiscal deficits and the run-down of international reserves are the main risk for growth going forward. 2 External grant resources mostly finance the external current account deficit. 3 Authorities expect that oil production will start around 2026, but even these projections now seem optimistic given the prevailing global oil prices and market outlook. 7 10. STP faces strong macroeconomic challenges, including fiscal pressures and external imbalances. Economic growth has been slowing, and is estimated at 2.7 percent in 2018, due to the reduction in government spending because of a drop in the availability of domestic and foreign resources, as well as the energy crisis in the second half of 2018, which stemmed in part from limited resources for operations and maintenance. 4 Fiscal consolidation halted in 2018, and preliminary data suggest that the domestic primary deficit reached 3.1 percent of GDP. STP is classified as being in debt distress due to prolonged negotiations on rescheduling external payment arrears.5 Expansive fiscal policies and lower external inflows drove reserves down to 1.8 months of imports at end-2018, from 2.9 months of imports at end-2017. The GoSTP has responded by requesting a new IMF program for an amount of US$19 million, 6 and seeking aid from other development partners. The Government may also seek to draw on the credit line with the Government of Portugal. Beyond the reserves crisis, the main challenge for STP is to increase revenues to balance the budget, which will allow the Government to stop generating arrears, pay off debt, and finance a larger part of the investments with its own resources. Table 2: STP Selected Macroeconomic Indicators, 2014-2021 Actual Estimate/Projections 2014 2015 2016 2017 2018 2019 2020 2021 GDP growth (% p.a.) 6.5 3.8 4.2 3.9 2.7 3.0 3.5 4.0 Consumer Price Index 6.4 4.0 5.1 7.7 9.0 5.3 4.9 3.7 (CPI) (end period) Public revenue, 27.4 28.9 29.3 28.0 23.7 22.9 21.9 22.8 including grants (% GDP) Of which, grants 11.8 12.1 14.2 13.5 8.2 8.8 8.5 8.3 Public expenditure (% 32.4 37.3 35.5 33.3 26.8 24.0 21.9 21.6 GDP) Domestic primary -1.8 -1.7 -2.6 -3.3 -3.1 -1.8 -1.9 -0.5 balance, incl. statistical discrepancy (% GDP) Current Account -29.8 -24.8 -20.5 -24.5 -18.9 -18.6 -17.7 -15.0 Balance, excl. official transfers (% GDP), PV of external debt (% 30.1 39.7 31.5 26.6 27.1 25.6 24.0 20.9 GDP) Memo: GDP nominal 335 318 348 373 419 440 476 560 (US$ million) Source: STP Authorities and World Bank/IMF Staff estimates, 2019. 11. The banking sector has grown, but remains fragile, concentrated and inefficient. Following rapid growth fueled by the expectation of oil production, vulnerabilities emerged requiring Central Bank intervention. In January 2015, the third largest bank (with assets equivalent 4 This energy crisis – driven by rising demand and generation capacity shortages resulting from lack of investment and constrained resources for operations and maintenance - drastically reduced power supply. 5 The latest official World Bank/IMF Debt Sustainability Analysis (DSA) was completed in July 2018. Because of this debt classification, STP receives IDA financing on 100 percent grant terms. 6 In March-April 2019, an IMF staff team visited STP for discussions on a new program supported by the Extended Credit Facility (ECF). The last ECF (approved in July 2015) expired at end-2018. In July 2018, the Executive Board of the IMF completed the fifth review of the arrangement under the ECF for STP, which was presented to the Board jointly with the Article IV report. The sixth and last review was not completed because of the interruption after legislative elections in October 2018. 8 to 8 percent of GDP), was placed under government administration for failing to meet minimum capital requirements. It was sent to liquidation in August 2016, with creditors and depositors incurring losses. Non-performing loans increased from 15.6 percent in 2011 to 24.9 percent at end 2017 before coming down to 17.0 percent as of September 2018, albeit with significant provisioning (in excess of 80 percent as of end-2017). Stronger supervision by the Central Bank is needed to ensure that the financial sector supports growth over the medium term. The World Bank-supported Financial Sector Development Strategy, adopted by Government in September 2016, is expected to guide this reform. C. POLITICAL DEVELOPMENTS 12. Following the October 7, 2018 Parliamentary elections, a new Government was sworn in on December 3, 2018. Two coalition parties (Movement for the Liberation of STP-Social Democratic Party and Democratic Convergent Party/Force for Change Democratic Movement/Democratic Union for Citizenship and Development), with a combined 28 out of 55 parliamentary seats, formed a coalition government. With 25 seats, the Independent Democratic Action Party (ADI) which led the previous government, remains the largest party. On November 30, 2018, the President nominated Mr. Jorge Bom Jesus, a member of the largest coalition partner, as Prime Minister. The new Government submitted its Program to Parliament within the required 30 days and it was approved on December 27, 2018. 3. SUMMARY OF PROGRAM IMPLEMENTATION A. PROGRAM AND PORTFOLIO PERFORMANCE 13. Actual IDA financing from FY14 to FY18 was almost three times the level anticipated in the CPS, which allowed a shift to larger and more transformational WBG support to selected areas. The country program shifts were made possible by: (i) the quadrupling of the IDA18 allocation; (ii) the reallocation of IDA resources to STP in the last year of IDA17; and (iii) the leveraging of the IDA regional window. As a result, during the CPS period, total IDA commitments significantly scaled up, amounting to US$90.4 million to support Government of São Tomé and Príncipe (GoSTP) programs7 (See Table 3). This amount includes the Strengthening Growth and Fiscal Development Policy Operation (DPO) Series, which has completed two out of three operations (P159010 for US$5 million, and P161707 for US$6 million). 14. As of end March 2019, IDA had an active portfolio of US$79.3 million, comprised of the following Investment Project Financings (IPF): the Power Sector Recovery Project (P157096, US$16 million); the Quality Education for All Project (P146877, US$0.9 million, co-financed by IDA and the Global Partnership for Education (GPE) and its Additional Financing (AF) (P150828, US$3.5 million); the Institutional Capacity Building Project (P162129, US$12 million); the Social Protection and Skills Development Project (P163088, US$10 million); and the STP Transport Sector Development and Coastal Protection Project (P161842, US$29 million) approved by the Board in March 2019. In addition, STP is benefiting from the West Africa Coastal Areas Resilience Investment Project (WACA, P162337) co-financed by IDA’s regional integration window 7 Through end Q3, FY19. 9 (US$5.3 million), national IDA (US$2.7 million) and the Global Environment Facility (GEF) (US$1.15 million). 15. The Advisory Services and Analytics (ASA) program was streamlined over the course of the CPS period (Annex 4). Out of the 16 ASA activities planned, seven were dropped. New ASA activities were introduced to inform the evolving financing program, including three activities that directly supported critical reforms to remove bottlenecks to growth such as the ‘Financial Sector Development Implementation Plan’ (FSDIP) (P150418), and the ‘Building Capacity for the Digitization of the Property Registry in STP’ (P158926). A Tourism Development Strategy was also delivered under the Investment Climate Reform Program. ASA in areas such as social protection and skills were consolidated. Finally, areas such as agriculture or procurement were dropped because the African Development Bank (AfDB) and other DPs had planned ASA and financing in those areas. 16. IFC’s program combined Advisory and Investment Services. During FY16, IFC approved a Risk Sharing Facility for Small and Medium Size Enterprises (SMEs) with Banco Internacional de São Tomé e Príncipe (International Bank of STP, BISTP), the leading bank in the country with 60 percent of deposits. A commitment of US$1.5 million was made to help BISTP increase its SME reach and support local entrepreneurs more effectively. Through the Public- Private Infrastructure Advisory Facility (PPIAF), the IFC also provided initial advisory support on the development of a transshipment deep seaport, which turned out not to be feasible without an unsustainable increase in public financing and debt. An IFC Advisory Services project supported the improvement of the investment climate and tourism development strategy. Due to the challenges related to its relatively small market size, IFC will leverage Advisory Services and instruments such as the Private Sector Window to create new opportunities for private sector development in STP. In line with this, IFC will continue to engage with commercial banks to improve financial inclusion (digital financial services). 17. MIGA will continue to seek opportunities to de-risk foreign investments in private sector projects, through its political risk insurance products. 10 Table 3: IDA Financing Program in STP (FY14-Q3FY19), US$ Million Indicative Financing at CPS approval Status as of Q3 of FY19 Planned FY Project (Ongoing/CPS program) Financing Status Approval Financing Theme 1: Supporting Macroeconomic Stability and National Competitiveness 3rd Governance and Competitiveness 3.4 Dropped n.a 0.0 DPO (P146953) STP Economic Governance and 5.0 Dropped n.a 0.0 Competitiveness 1st STP Strengthening Growth and Fiscal 3.5 Closed FY17 5.0 Policy DPO (P159010) 2nd STP Strengthening Growth and 6.0 Closed FY18 6.0 Fiscal Policy DPO (P161707) Competitiveness and Growth Project 1.0 Dropped n.a 0.0 (P1492620) Central African Backbone (CAB6) n.a No longer planned n.a 0.0 Project (Regional Integration) STP Power Sector Recovery Project Addition to Active FY17 16.0 (P157096) CPS Theme 2: Reducing Vulnerability and Strengthening Human Capacity IDA and TF: Quality Education for All 2.0 Active FY14 0.9 (P146877) Quality Education for All AF (P150828) n.a Active FY14 3.5 Institutional Capacity Building Project Addition to Active FY18 12.0 (P162129) CPS West Africa Coastal Areas Resilience Addition to Active: US$9.15 FY18 8.0 Investment Project (WACA, Regional CPS (National IDA-US$2.7; Integration) (P162337) Regional IDA-US$5.3; GEF- US$1.15) Social Protection and Vulnerability Pilot 1.0 Dropped n.a 0.0 Social Protection and Skills n.a. Active FY19 10.0 Development Project (P163088) Transport Sector Development and Addition to Active FY19 29.0 Coastal Protection Project (P161842) CPS TOTAL (US$ million) 90.4 18. As the IDA portfolio has significantly grown in volume, implementation challenges have emerged. Over the course of the CPS period, US$90.4 million in financing has been approved for STP, US$79.3 million of which remains in the active portfolio. Early in the CPS cycle, disbursements ratios were consistently above 20 percent. Predictably, disbursement rates declined when relatively large projects were added to the portfolio and they are expected to rebound as the portfolio matures. Implementation of all activities is rated moderately satisfactory or higher as recorded in the Implementation Status and Results Reports (ISR). Maintaining this quality with growing volume will require strengthened capacity in technical, fiduciary, environmental and social areas, and better coordination among the beneficiary sectors, the Ministry of Finance and the portfolio-wide implementing agency Agência Fiduciária de Administração de Projectos (AFAP) (Implementing Agency). Extremely limited capacity and 11 occasional bottlenecks in information sharing regarding measures taken by the authorities has caused project delays and the decision to drop DPOs. 19. The World Bank and the GoSTP have been working to strengthen capacity and portfolio management. The World Bank recently posted its first staff member in STP, a Senior Procurement Specialist, which has helped strengthen implementation. In addition, with World Bank support, the Ministry of Finance and Blue Economy has taken a more active role in portfolio and project management notably through frequent dialogue with the fiduciary and task teams and regular portfolio reviews. Institutional capacity remains an issue and this will be addressed as a crosscutting issue through the ‘Institutional Capacity Development Project’ (P162129) and by strengthening the staffing of the implementation agency, AFAP. 20. Projects completed during the CPS period have yielded satisfactory or higher outcomes. The Regional CAB2 Project (P117652) had a particularly strong impact, achieving development objectives highly relevant to STP’s priorities and to the CPS. It introduced competition and significantly reduced retail prices of internet access. Independent Evaluation Group (IEG) rated the outcome of the project as highly satisfactory and both World Bank and Government performance were rated satisfactory. In addition, the project leveraged private funds and there were no cost overruns. The Second Governance and Competitiveness DPO (P130925) was rated satisfactory for outcomes and moderately satisfactory for World Bank and government performance. The project made a significant contribution in improving the comprehensiveness and public availability of budget data. The Adaptation to Climate Change Project (P111669) was rated satisfactory both for outcomes and World Bank performance and was succeeded by the WACA Resilience Project. The IFC–led Sao Tome and Principe Investment Climate Project (594467) was successfully completed and the project completion report has been submitted through workflow. Through this project, many business and foreign trade licensing requirements were successfully eliminated, reducing costs associated to doing business in STP. B. EVOLUTION OF STAKEHOLDERS AND PARTNERSHIPS 21. The 2015 country survey suggests that there has been a significant improvement in the attitudes and opinions of stakeholders toward the WBG. The World Bank is highly valued not just for its financial support, but also for its ability to provide policy advice, capacity building and mobilization of third-party resources. In addition, respondents were also more positive about the World Bank’s collaboration with the Government, its responsiveness and openness. However, more needs to be done to enhance communication with civil society organizations. 22. The WBG ensured close coordination with other DPs to support policy dialogue and leverage resources for lending engagements and advisory services. An effective collaboration and coordination between the World Bank, the IMF, the AfDB and the European Commission (EC) is helping to advance the policy dialogue on macroeconomic, public financial management (PFM), and structural reforms. The GoSTP is progressively assuming a stronger leadership over donor coordination. The WBG has successfully leveraged financing from partners and TFs for both lending and analytical and advisory work in several critical areas, including in transportation, energy, financial sector, private sector development, climate, education, and skills development as detailed in Annex 9. 12 C. PROGRESS TOWARDS 2014-2018 CPS OUTCOMES 23. Results under the WBG-supported program have so far been broadly satisfactory. As Figure 1 shows, one of the ten outcomes is achieved, four are on track, three are partially on track, and two are off track. Progress against the indicators for each outcome is detailed in Annex 3. 24. CPS Outcome 1: Strengthened public financial and natural resource management is partially on track. Despite delays and the cancellation of two DPOs (P146953 and P151500) targets for two indicators were achieved, such as development of a debt management strategy and dissemination of an Extractive Industries Transparency Initiative (EITI) report (P130994). The targets for three others are on track to be achieved. World Bank support helped to enhance transparency of oil and fisheries industries. Through technical assistance (TA), the World Bank helped STP to prepare EITI reports which describe the legal, contractual and fiscal frameworks applicable to the oil sector. Also, through the Adaptation to Climate Change Project (GEF- P111669), the World Bank has helped STP publish fishing licenses. 25. CPS Outcome 2: Enhanced statistical system is on track. The population and housing census was completed and disseminated between 2012 and 2014. In addition, a third national household survey was completed in 2018. Analysis of the results is now underway, which will feed into the upcoming poverty assessment and then serve as an input for the SCD. 26. CPS Outcome 3: Improved private sector capacity with a focus on the tourism sector and SMEs is off track, as the original indicators and milestones were not met. These results were to be supported by the STP Competitiveness and Growth Project (P149262), which was dropped to reflect the country’s priorities in the allocation of the modest IDA17 funding. In addition, applications put forth to the Institutional Development Fund (IDF) and the Competitive Industries and Innovation Program (CIIP) TFs were not successful. Nevertheless, there were several achievements towards the outcome not reflected in the original indicators. With the support of an IFC Advisory Services Project, the Directorate General of Tourism and Hospitality (DGTH) completed a new tourism strategy informed by extensive consultations with the private sector. Furthermore, DGTH implemented the first round of monitoring tourist satisfaction through exit surveys, launched an inventory of tourism assets, and trained and certified a cadre of officially recognized tour guides. 27. CPS Outcome 4: Improved business environment and trade regulations is partially on track. There has been significant progress in the areas of business entry and trade facilitation. The establishment of the online platform linked to the Guiché Único de Empresas (one stop shop) has improved business entry, making it possible for more than 650 companies to register online, with procedures and costs reduced, the time to register cut in half, and the minimum capital requirement eliminated. Furthermore, construction permits have been facilitated with new laws that came into effect in 2016, while property registration has been made easier with a reduction in fees starting in 2017. In trade, the introduction of an electronic single window for trade has simplified the process to export and import by consolidating trade-related agencies on an online platform, facilitating payments and procedures. While progress has clearly been made in these areas, the original indicators were based on an older version of the Doing Business report, which 13 has only partially captured these improvements and whose methodology has changed since the inception of this CPS. 28. CPS Outcome 5: Better targeting of energy subsidies is on track and the scope of the WBG’s support to the energy sector has broadened well beyond this outcome. WBG’s support to the energy sector considerably surpassed original CPS plans and now includes the DPO series, investment lending and TA. The Power Sector Recovery Project (PSRP - P157096) is supporting the rehabilitation of the main hydropower plant to provide additional renewable energy supply, which will improve both reliability and cost in the medium term. The WBG is also assisting the Government to put in place short term and affordable bridge power solutions.8 The Strengthening Energy Sector Monitoring and Planning Capacity in STP TA (P155621) is conducting survey work that will inform the implementation of future investments in the sector with a focus on distributed solar photovoltaic. A 20-year Least-Cost Development Plan (LCDP) was prepared in 2018, with the objective of reducing cost of generation by promoting the integration of low-cost renewables in the energy mix.9 Under the PSRP, TA is also provided to the Regulator AGER (Autoridade Geral de Regulação) to strengthen its capacity to conduct the tariff structure and regulation process. A related Energy Household and Enterprise survey was completed in 2018 and data analysis is ongoing for final dissemination in May 2019. This will help to better assess the level of subsidy and better identify households to be targeted. The World Bank has also successfully leveraged resources (including US$13 million from the European Investment Bank (EIB)) that will help transform the performance of STP’s energy sector (see Annex 5). 29. CPS Outcome 6: Improved regional broadband connectivity is fully achieved, significantly surpassing the targets. As noted above, the CAB2 project has allowed the telecommunication sector to take a “giant step” forward in STP. The arrival of high-speed international connectivity, the first-time introduction of sector competition, the update of the legal and regulatory framework and of regulatory capacity building, have allowed a strong and sustained development of the telecommunications sector to benefit the STP population. The CAB2 project substantially achieved all its objectives including: access to and use of regional broadband network; reduction in international and domestic telecom prices; and competition. The Project ensured high-speed connection to the internet for all secondary schools. Furthermore, the Quality Education for All Project (P146877) has financed internet connectivity for the majority of primary schools. 30. CPS Outcome 7: Improved poverty targeting is partially on track. STP has made significant progress in Social Protection (SP), specifically with the approval of the National Social Protection Policy and Strategy (PENPS) in 2014. With the support of three ASAs, 10 the Government has overhauled its social safety nets approach. Specifically, it developed the basic elements of a Social Protection System including: (i) detailed program documents and operational manuals for the implementation of the three core SP programs defined in the PENPS; (ii) a targeting methodology to properly select SP beneficiaries and increase effectiveness of public 8 The ongoing effort involves potential investment support from the AfDB. 9 Least-Cost Power Development Plan for STP, 2018. 10 ‘Building Blocks for the Social Protection System’ (P149534), the ‘Development of Effective Delivery System for Social Protection’ (TF0A4617-P163445), and the GFDRR-JIT grant ‘Building households adaptation to climate change through social protection in STP.’ 14 expenditure; (iii) a Single Registry of SP programs; and (iv) effective payment and M&E systems. All SP beneficiaries (over 3,000 households) have been registered in the Social Registry which has allowed improved program targeting. Contrary to initial plans, a new public works program under the SSN TF project was not implemented and the Government opted for strengthening the existing Groups of Interest in Road Maintenance (GIME) program which is being supported by the WACA Resilience (P162337) and Transport Sector Development and Coastal Protection (P161842) Projects. Government prioritized the implementation of the social pensions and the design of a new cash transfer program for vulnerable families to be financed by the recently approved Social Protection and Skills Development Project (P163088). 31. CPS Outcome 8: Increased adaptive capacity of coastal communities and reduced potential loss of lives and assets is on track. Through the activities financed by the ‘Adaptation to Climate Change’ Project (P111669), around 70 percent of fishermen targeted under the project received safety at sea equipment. Also, 23 risk committees in several coastal communities were established to more effectively disseminate early warnings for fishermen and the population to improve preparedness and provide early relief after disasters. In four pilot communities, participatory risk mapping helped to raise awareness, and coastal protection works combined with vegetation planting have been used to reduce river and coastal flooding risk. The recently approved WACA Resilience Investment Project (P162337) consolidates and expands these achievements. 32. CPS Outcome 9: Improved training of teachers in primary education is on track. With the World Bank’s support, STP has continued to improve its primary education. Teacher training plans were developed together with a Teacher Qualifications Framework and certification process, all of which are improving the availability of qualified teachers. The project has also supported a distance learning program through which nearly all unqualified teachers in primary education have been benefitting from courses in key subjects and effective teaching methodologies. All primary schools now receive supervision visits at least four times per year and the Ministry has recruited 54 Instruction Leaders to support teachers in their classrooms and monitor performance. 33. CPS Outcome 10: Increased access to skills development is off track. There was lack of progress towards this outcome because it was decided to focus on reforming and improving basic education before moving to post-basic skills development. The newly approved ‘Social Protection and Skills Development Project’ (P163088) will enhance skills for tourism and entrepreneurship with first results expected beyond the revised CPS period. 34. Some progress is being made towards gender equality, but gaps remain. The multi- sectoral Institutional Capacity Building Project (P162129) has gender-specific activities and targets in its results framework, including for credit registry coverage, for property titling, and for training in statistics and procurement. The WACAR Project (P162337) closely looked into gender dimensions of adaptation strategies for coastal communities and integrated women’s experience in adaptation strategies. Overall STP has closed gender-based enrolment gaps. However, the high levels of early pregnancy threaten school completion rates for adolescent girls. A transformative approach to boost economic and social outcomes is therefore adopted for the remaining years of the CPS (see paragraph 44 below). 15 Figure 1: Progress Towards Achieving CPS Outcomes 16 4. EMERGING LESSONS 35. The World Bank’s portfolio in STP is still very small, thus limiting operational lessons. Nevertheless, the CPS program has demonstrated that the WBG can successfully support transformational change in STP. CPS implementation thus far has yielded several insights about things that are going well, those of which we need to do more, things that did not go well, and those which need to be adjusted: (i) Continue to strategically combine IDA resources with financing from TFs, regional sources, and other DPs to drive transformational change in STP. The Regional CAB2 Project (P117652) opened unprecedented possibilities in the country, such as online visas, online single windows for businesses to government procedures, and distance learning for teachers in remote areas. This project shows that by leveraging financing from the Regional Integration Program, even limited volumes of IDA resources can support change with considerable positive ripple effects on the business environment, tourism and social outcomes. TFs allowed progress in improving the business environment and social protection, which shifted from a paper-based system to a poverty-targeted program. These transformations will now be scaled up under the Social Protection and Skills Project (P163088). The ambitious support being provided to the energy sector is greatly facilitated by the EIB’s parallel financing. (ii) Strengthen policy dialogue and deepen mutual trust with the authorities to overcome difficulties faced in the preparation of DPOs. Several DPOs were delayed or cancelled because STP either borrowed non-concessionally or signed memoranda of understanding for megaprojects with potential Non-Concessional Borrowing Policy implications. Some of these projects lacked credible feasibility studies. Going forward the CPS will provide support to enhance institutional capacity for public investment management and stronger debt management, which will help avoid interruptions in the continued DPO program. These lessons are all the more relevant with the arrival of the new Government. (iii) Enhance support to implementation for continued satisfactory performance of the scaled-up portfolio. Project design will need to rely on simple implementation mechanisms, given STP’s institutional and capacity constraints. In addition, implementation challenges will be addressed through strengthening the centralized implementation and fiduciary unit, AFAP, as well as promoting better coordination and between AFAP and line ministries. Continued support from the field-based procurement specialist will remain critical. (iv) Better reflect STP’s high unit costs – due to small scale and remote location – in project design. The markets are small, with limited competitiveness, causing the prices to be significantly higher than in the African continent (up to 30–50 percent higher). Construction materials need either to be imported, or when procured locally, are produced in small quantities. Both situations cause the unit costs to be high, as prices reflect cost of transportation or lack of economy of scale for locally sourced materials. Under the Power Sector Recovery Project (P157096), for example, detailed design of 17 the rehabilitation works revealed a considerable financing gap because of high unit costs, which is being addressed through an AF. Henceforth, these high unit costs need to be taken into account for project costing, and an unallocated amount should be kept to cover unforeseen cost overruns due to insularity. (v) Utilize strategic communication campaigns, which have proven helpful to tackle gender-based social norms linked to women and girls’ disempowerment. The country program will continue to capitalize on the successful communication campaign and outreach to beneficiaries that was developed by the Ministry of Social Protection in the context of the Development of Effective Delivery Systems for SP TF (P163445). Both the recently approved Social Protection and Skills Development Project (P163088) and the forthcoming Girls Empowerment and Quality Education for All Project will benefit from this experience as they seek to tackle binding constraints to human capital formation for girls and young women, such as persistent high levels of fertility. 5. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP STRATEGY 36. The GoSTP seeks WBG support to address priority developmental challenges included in its recently adopted program, to which the revised CPS objectives - detailed below - will broadly respond. 11 The Government established on December 3, 2018, seeks to achieve two main objectives: to reach an average growth rate of 7 percent; and to reinforce social cohesion. The program is organized around four strategic axes: (i) strengthening democracy and the rule of law; (ii) robust economic growth with accelerated job creation (with a considerable focus on higher quality education); (iii) improved quality of health services and social protection; and (iv) foreign policy to support development. 37. With a more than quadrupled IDA18 allocation, the PLR reflects the opportunity to help STP accelerate progress towards the twin goals, including a strong focus on climate change resilience. At the same time, selectivity is increased by consolidating the number of outcomes from ten to seven. The adjustments to the program seek to support a more ambitious development agenda, bringing the WBG’s comparative advantages of financing, advice and convening power to enable diversification and growth, build human capital and girls’ empowerment, and promote resilience to climate change. The indicative IDA18 allocation for STP is in the range of US$65-75 million.12 The World Bank will also look for opportunities to tap into IDA’s Regional Program to support regional integration efforts, as done for coastal protection with the WACA Resilience Project. IDA, IFC, and MIGA are exploring opportunities to mobilize private capital, de-risk investments, and promote private sector-based growth, including through the use of IDA18 IFC-MIGA Private Sector Window (PSW). Leveraging will also be undertaken by collaborating with DPs. 11 The CMU organized a half-day workshop with the GoSTP in September 2016 to discuss progress and agreed on the program for FY17-FY20. This program was further confirmed during successive Annual and Spring Meetings as well as country visits, most recently in January 2019 with the new Government. 12 Referenced IDA18 volumes are indicative. Actual PBA allocations will be determined annually during the FY18- 20 period and will depend on: (i) total IDA resources available; (ii) the number of IDA-eligible countries; (iii) the country’s performance rating, per capita GNI, and population; and (iv) the performance and other allocation parameters for other IDA borrowers. 18 38. Following the design of the original CPS and applying lessons learned, the WBG will continue to strategically apply a mix of instruments to drive development results in STP. Lending to STP is in the form of IPFs and DPOs. Considering STP’s vulnerability to natural shocks, contingent financing instruments such as the Contingent Emergency Response Components (CERCs) are being included in new projects, such as the Transport Sector Development and Coastal Protection Project (P161842). As noted above, the WBG will continue to leverage TF resources and financing of DPs. 39. The PLR extends the period of the FY14-FY18 CPS for two more years to FY20. The extension would allow time to build ownership and trust with the new GoSTP. It will also allow the next CPF to be informed by the findings of the forthcoming SCD, as well as a Poverty Assessment, which will be based the results of the national household survey. With a higher IDA18 allocation, the WBG will be able to support a more ambitious development agenda. Table 4 below summarizes the proposed additional financing under this PLR for the remainder of the extended CPS period. The previous CPS two focus areas have been revised, streamlined and aligned to new government priorities and to the enlarged IDA envelope. The remainder of this section summarizes the PLR’s changes to the Focus Areas and CPS outcomes. (Annex 1 includes an updated results matrix. Annex 2 provides details on specific changes to the CPS). Table 4: PLR Indicative CPS Financing Plans, FY19-FY2013 PLR Indicative Financing Amount (US$ million) AF to STP Power Sector Recovery Project (P168335) 10 Third Strengthening Growth and First Policy DPO (P164321) 5 STP Girls Empowerment and Quality Education for All Project (P169222) 15 STP DPO New Series (P168335) 5 40. Advisory work will remain a critical component of the WBG’s work in STP. Analytic work is critical to support the GoSTP as it seeks to better understand the challenges and opportunities facing the country. A Poverty Assessment (P167907) will help inform dialogue and policies on poverty and inequality, while a Country Economic Memorandum (P164180) will enhance understanding of the reforms needed to boost private sector-led growth in agriculture, fisheries and tourism. STP will also benefit from just in time TA as part of a programmatic multi- country ASA on Human Capital. A Digital Economy Gap Analysis will be undertaken in FY20 to support the shift from broadband connectivity to bridging digitals gaps and unlocking digital economy potential. (See Table 5). 13 IDA financing through the end of FY19-FY20 is subject to the availability of IDA18 resources, and if necessary, financing operations may be postponed into FY21. 19 Table 5: Expected ASA, FY19-FY20 Knowledge/ASA Product Planned Delivery World Bank Resolution and Payment Strengthening (P159937) Q4 of FY19 Country Economic Memorandum (P164180) Q4 of FY19 Poverty Assessment (P167907) Q4 of FY19 Strengthening Energy Sector Monitoring and Planning Capacity (P155621) Q1 of FY20 Digital Economy Gap Analysis Q4 of FY20 Programmatic Multi-country ASA on Human Capital Q4 of FY20 41. The PLR will aim to help STP address its vulnerability to climate change by including adaptation measures across the portfolio, while seeking opportunities for reducing greenhouse gas emissions and air pollution. Given its insularity and the volcanic nature of its geology, most of STP’s economic activities and assets are located along the coast. Because of the country’s geographic morphology, location, and climate change effects (especially floods and coastal erosions), adequate protection and resilient designs for infrastructure are critical. Hence, the WACA Resilience Project (P162337) and the Transport Sector Development and Coastal Protection (P161842) projects were designed with a focus on climate change resilience, as reflected in the climate co-benefits of 100 percent and 96 percent, respectively. Reducing greenhouse gas emissions and air pollution will be achieved through the Power Sector Recovery Project (P157096) which supports a greater proportion of hydro-electricity in the energy mix and thus contributes to the global climate change mitigation agenda. The AF to the Power Sector Recovery Project (P168335) co-benefit is therefore likely to be high. 42. This PLR adjusts the first CPS Theme from ‘Supporting Macroeconomic Stability and National Competitiveness’ to ‘Supporting Macroeconomic Stability and Inclusive Growth’ while reducing the outcomes from six to four. This adjustment reflects client requests for scaled-up WBG support to private-sector led and inclusive growth. The PLR adjusts the focus of some outcomes and consolidates them from six to four under this theme. The PLR also narrows the focus of Outcome 1 to increasing fiscal revenues and the quality of public expenditures with less emphasis on natural resource management, due to low expectations for oil exploitation. Outcome 2 combines the existing emphasis on Extractive Industries governance and transparency (oil and fisheries) with State Owned Enterprise (SOE) governance, a new priority, as it greatly affects macro-economic stability and service delivery. Outcome 3 combines ICT with energy and transport as they comprise the main infrastructure bottlenecks to inclusive growth, adding transport, as a new priority. Outcome 4 focuses on improving the business environment with an emphasis on tourism and SMEs. 43. The PLR streamlines the outcomes in the second CPS Theme: ‘Reduced Vulnerability and Strengthened Human Capacity’ from four to three. In line with client demand, the PLR introduces CPS Outcome 5 focused on enhancing education and skills, which consolidates original CPS outcomes on training teachers and skills development. Outcome 6 highlights statistical capacity and poverty targeting to support social safety nets for vulnerable groups. Outcome 7 remains focused on increased adaptive capacity of coastal communities and reduced loss of lives and assets in fisheries. Accordingly, outcomes, milestones and results were revised. 20 44. The WBG plans to step up its efforts to reduce gender gaps and boost girls’ and women’s economic and social empowerment. Ongoing and planned operations devote specific attention to gender aspects including gender-sensitive activities and sub-components, including in the institutional capacity building, education, energy, transport, social protection and WACA projects. The breadth of the WBG’s engagement to boost girls’ and women’s economic and social empowerment is summarized below, as framed by the WBG Gender Strategy: • Reducing gaps in human endowments. World Bank engagement will help prevent early pregnancy and high levels of child bearing for women through a multipronged approach addressing underlying social norms and cost-related barriers: (i) the Social Protection and Skills Project provides sensitization sessions including family planning, and it partners with United Nations International Children's Emergency Fund (UNICEF) for parental education sessions for both women and men, which directly address fertility; (ii) the cash transfers program under the Project will gradually become a fully conditional cash transfer, as the Project will aim to keep girls longer in schools by connecting the social safety net information system with education attendance data. Moving forward, the proposed Girls Empowerment and Quality Education for All Project will address the secondary level of education and reinforce activities - establishing close linkages with the Social Safety Nets Program - to encourage school completion, prevent early pregnancy and bring back young girls who have dropped out due to pregnancy. In support of the gradual introduction of conditional cash transfers for girls, the respective information systems of the education and social protection ministries will be strengthened, allowing data-sharing and gradual interoperability. • Promoting access to more and better jobs. Under the Social Protection and Skills Project, young women will benefit from the opportunity to attend vocational training programs and enhance their employability in the tourism industry. Women will also benefit from gender- sensitive entrepreneurship training. The Transport Sector Development and Coastal Protection Project finances capacity building and training related to road maintenance, leadership and management to promote women's professional development. • Enhancing voice and preventing gender-based violence (GBV). All projects foster participation mechanisms and include Grievance and Redress Mechanisms (GRM) where women’s voices can be heard, and shape public interventions supported by the Bank. All projects will also seek to address, prevent and/or mitigate GBV, which is high in STP. To prevent conflict risks linked to the designation of women as cash recipients, the cash transfer program under the Social Protection and Skills Project includes parental and beneficiary training on intra-household conflict-resolution and empowerment. Finally, to mitigate risks of potential sexual harassment during vocational training courses, all trainers will receive sensitization sessions and students will be empowered to use the GRM to safely report disrespectful behaviors. 45. Partnerships and capacity building will also remain critical priorities. Effective collaboration with DPs and ongoing dialogue with domestic stakeholders (as described in paragraphs 21-22) have been instrumental and will continue. Finally, keen attention to capacity building – including the multi-sectoral Institutional Capacity Building Project (P162129) and the 21 more regular staff presence in STP – reflect the lessons learned to ensure the sustainability of WBG support. THEME ONE: SUPPORTING MACROECONOMIC STABILITY AND INCLUSIVE GROWTH 46. The GoSTP’s new program aims to unblock constraints to inclusive, private sector- driven growth, while pursuing measures to ensure macroeconomic stability. STP is highly dependent on aid inflows and this leads to recurring fiscal pressures due to aid volatility. The GoSTP is implementing reforms to enhance domestic revenue mobilization, while strengthening public expenditure management and implementing reforms to strengthen the performance of SOEs. STP also must ensure transparency in the management of its extractive industries (fisheries and oil). 47. Accelerated private sector-driven, and inclusive and sustainable growth is hindered by infrastructure constraints, inadequacies in the framework for doing business and scarcity of skills. The GoSTP chose tourism, agriculture, fisheries, and transit and facilitation as drivers for inclusive growth in the long term. The GoSTP plans to (i) implement an ambitious public investment program in transport (to improve the airport, improve the road networks, and thus connectivity) which will yield results only during the next CPF period; and (ii) increase access and reliability of power supply. The GoSTP also plans to implement reforms to enhance the business environment notably to attract private investors to the tourism, fisheries, transit and facilitation, and agriculture sectors. 48. Based on the existing CPS focus areas (expenditure and debt management, ICT, energy, business environment and the financial sector) and emerging new priorities (SOE performance and transport) the revised CPS focus area one will have four key outcomes: (i) increased fiscal revenues and improved quality of public expenditures; (ii) strengthened SOE governance and transparency of extractive industries; (iii) fostered growth enhancing reforms in ICT and the energy sector; and (iv) improved business environment with a focus on tourism and SMEs. The support to the transport sector will yield results only during the follow up CPF period. World Bank support will be channeled through the DPO series, IPFs and ASA. Continued coordination across IDA, IFC and MIGA, will help to further strengthen the investment climate, including ongoing efforts to improve the energy sector, ICT connectivity/affordability and payment systems. Planned future IFC activities include launching the STP Leasing Program. Revised CPS Outcome 1: Increased fiscal revenues and improved quality of public expenditures 49. Given STP’s continued macro-fiscal challenges, the program will continue to focus on enhancing fiscal performance, through revenue mobilization, improved expenditure quality, and enhanced debt management capacity. Currently, STP mobilizes tax revenues around 13-14 percent of GDP, with public spending about 30 percent of GDP in 2015-2016. STP is implementing fiscal reforms to enhance revenue mobilization, strengthening PFM to ensure transparent, sound, and efficient management of public resources, and improving debt management. The revised CPS expands the ongoing support provided to the GoSTP in coordination with the IMF, French Development Agency (Agence Française de Développement) 22 AFD, and EU to strengthen revenue mobilization and improve the quality of public expenditures through the Institutional Capacity Building Project (P162129) and the DPO series. Specific reforms being supported in this area include the introduction of a value added tax, better planning, budgeting and forecasting of public expenditures, improved public investment management, modernized public procurement, and strengthened debt management systems. Revised CPS Outcome 2: Strengthened SOE governance and improved transparency 50. The Program will have an increased focus on tackling SOEs transparency, efficiency, and financial viability challenges. SOEs have long-standing issues related to their transparency, efficiency, and financial viability which contribute to higher fiscal risks. SOEs in STP have an adequate legal and regulatory framework, but implementation is weak, and ownership and accountability mechanisms are unclear. Through the Power Sector Recovery Project (P157096), TA and the DPO series, the World Bank is supporting reforms in the national electricity company (EMAE). Meanwhile, the Public Expenditure Review (P161140) and the DPO series will inform future SOE reforms with implementation support to be provided by the Institutional Capacity Building Project (P16212). Specific reforms are expected to lead to improved capacity for SOE reporting, monitoring, and transparency. Revised CPS Outcome 3: Fostered growth-enhancing reforms in ICT, energy, and transport sectors 51. Inspired by the transformational impact achieved on ICT connectivity a similar approach will be pursued to other key enabling sectors for private sector development, namely transport and energy. The GoSTP plans to continue improving ICT while addressing infrastructure issues in energy and transport, both with significant potential for positive impacts on inclusive growth. Investments will ensure climate resilience and adequate protection in design for infrastructure. In ICT, the revised CPS will support a shift from broadband connectivity to bridging digital gaps, underpinned by a Digital Economy Gap Analysis which will pave the way for further engagement to unluck the digital potential under the next CPF period. In the energy sector the Power Sector Recovery Project and its planned AF (P168335) will increase renewable energy generation and improve the reliability of the electricity supply. In transport, the recently approved Transport Sector Development and Coastal Protection Project (P161842) will rehabilitate National Road 1 from Sao Tome to Guadalupe and strengthen the technical and management capacity of the National Roads Agency (INAE), the Road Fund and the community- based GIME association in charge of road maintenance. It will also protect the sea front and the main roads from impacts caused by submersion, erosion and landslides, currently affecting both the pavement and the structure of the road. Finally, it will improve road safety by developing and implementing a national road safety strategy, with an emphasis on vulnerable road users such as pedestrians. The first results for this project will only emerge during the next CPF period. 52. With energy being a critical bottleneck for private sector development, the Bank will support the foundations for private sector investment in the sector, seeking an MFD approach in collaboration with IFC and MIGA. Private financing is critical to add a needed 54.8 MW in generating capacity between 2018-203514, a threefold increase from current levels. 14 Least-Cost Power Development Plan for STP, 2018. 23 However, STP Power sector is facing binding constraints to private sector participation mainly linked to (i) the poor financial situation of the sector, (ii) the absence of an effective regulatory framework to ensure financial viability 15 and quality of service and (iii) lack of a sound PPP framework. Under the revised CPS, the IFC and the World B will coordinate closely to help GoSTP to address these constraints thus laying the foundations for the MFD approach and identifying potential private sector participation in the power sector, especially in the renewable energy space. Under the Power Sector Recovery Project (P157096) the Contador hydropower project is being rehabilitated with a view to increasing its installed capacity from 1.5 MW to 3.2 MW by 2022, which represents 12 % of the generation capacity necessary to meet energy demand. With support of the same project and the DPO series (P159010), the Bank is supporting: (i) a tariff study; (ii) strengthening of the utility (EMAE) and the regulatory agency (AGER): and (iii) financing of a Transaction Advisor to identify emergency generation solutions that would lower cost of generation. A Management Improvement Plan and Least-Cost Development Plan (LCDP) were developed and should be endorsed as prior actions under the DPO. A PPIAF grant16 is supporting the GoSTP to prepare a PPP strategy in the energy sector based on a review of the effectiveness of the legal and regulatory framework, 17 as well as an assessment of the sector's investment and capacity needs in coordination with the LCDP. The review of the PPP framework will consider the fiscal risks brought by PPPs, especially in a context of high debt and low domestic revenue like STP. The revised CPS will continue to finance investment and TA needed to ensure security of supply in the short term, improve EMAE performance and establish the enabling environment to attract private financing in the medium term (see Annex 5). Revised CPS Outcome 4: Improved business environment, with a focus on tourism and SMEs 53. Building on the achievements to date, activities will continue for improving the business environment and strengthening the financial sector. In spite of the progress made, much more needs to be done to further improve ease of doing business, open access to credit particularly to micro, small, and medium enterprises to develop their business, and spur sustainable tourism. Through TAs, the DPO series and the Institutional Capacity Building Project (P162129), the WBG will provide support for the business enabling environment, including property registration, credit information infrastructure (credit and moveable asset registries), microfinance, mobile payments, and improved capacity for banking sector supervision during the remainder of the extended CPS period. These cross-cutting reforms can help promote growth in key sectors such as tourism. `THEME TWO: STRENGTHENING HUMAN CAPACITY AND REDUCING VULNERABILITY 54. STP made considerable progress enhancing human capital in its efforts towards the MDGs, but challenges remain. To increase growth and inclusion the country needs to become more strategic in its investments in human capital, including through a better performing education sector, more effective and targeted safety nets, and adequate instruments for adaptation to climate 15 This is a pre-requisite to make the national utility a credible off-taker for any Independent Power Producer. 16 TF0A7283 - Private Sector Participation options to foster Renewable Energy and achieve Nationally Determined Contributions targets. 17 Including a PPP Law—Lei no. 06/2018 promulgated by the President of the Republic on March 12, 2018. 24 change by vulnerable populations. Better trained teachers and stronger supervision of schools are needed to improve the quality of education. In addition, to develop a more effective social protection system, accurate targeting and management systems are key. Thus, a good statistics system is critical to provide both data for adequate targeting and measuring impacts of interventions. At the same time, clear links between safety nets’ beneficiaries and skills development initiatives need to be established to enhance the productivity and employability of poor households. Finally, the adaptive capacity to climate change of coastal communities, among the most vulnerable, needs to be increased while reducing the potential loss of assets and lives. Considering ongoing and planned support by other DPs such as AfDB, the EU, and the UN agencies, the WBG will support this revised CPS Theme to achieve reforms in education and skills strengthening, social protection and adaptive capacity of coastal communities through IPFs, DPOs and ASA. Revised CPS Outcome 5: Enhanced education quality 55. While STP has achieved almost universal access to primary education, literacy rates above 95 percent and progression to secondary education of 100 percent, focus now needs to turn to the quality of education and the employability of graduates. To tap into the potential to accelerate growth offered by tourism and agriculture, STP would need to strengthen its skill base to better respond to market needs. The ongoing Quality Education for All Project (P146877) supports improved teacher training and school supervision. The forthcoming Girls Empowerment and Quality Education for All Project will bring a more comprehensive approach to improved quality, enhancing the scope of the World Bank’s support to both pre-school and secondary levels, and with a much-enhanced emphasis on gender aspects. A first step in the gradual introduction of conditional cash transfers for girls’ education and prevention of teen pregnancy will be the strengthening of the information systems and the agreement of the Ministries of Education and Social Protection to share data on school attendance. This expected improvement is now reflected in the introduction of a new outcome indicator, the signing of a memorandum of understanding (MoU) between the Ministries of Education and Social Protection describing the key principles of their collaboration, including data-sharing. Finally, the newly approved Social Protection and Skills Development Project (P163088) will enhance skills for tourism and entrepreneurship. First results for the latter two projects are expected beyond the period of the extended CPS period. Revised CPS Outcome 6: Improved poverty targeting and access to social safety nets for vulnerable groups 56. To promote poverty reduction that is more inclusive and sustainable, the PLR will sustain efforts to protect vulnerable communities and promote economic opportunities. In 2016, the budget for social protection and social assistance in STP accounted for less than 0.65 percent of GDP, well below the African average of 1.2 percent of GDP. Building on TA financed by the Rapid Social Response TF, the Social Protection and Skills Development Project (P163088) will support the upgrade and scale up of the current social protection delivery systems which, to date, have limited scope, capacity and funding. The Project is expected to support the upgrade and scale up of core SP delivery systems through (i) an accurate targeting system, (ii) a payment system, (iii) a Management Information System to improve cost-efficiency and effectiveness of current programs, and (iv) a monitoring and evaluation system. In addition, the Project includes a 25 conditional cash transfer component which will significantly expand coverage for extremely poor households, based upon the targeting methodology. Revised CPS Outcome 7: Increased adaptive capacity of coastal communities and reduced risk of loss of lives and assets 57. During the revised CPS period the WBG will contribute to increasing adaptive capacity of vulnerable coastal communities and help STP address its vulnerability to climate change and natural disasters. The recently adopted WACA Project (P162337) will support the GoSTP with increased awareness of climate change through participatory mapping as well as piloting adaptation strategies, combining soft and hard protection works, in addition to voluntary relocation of population to safer areas. For coastal communities, another critical challenge is the adoption of safer practices by fishermen who face increasing risks. The WACA Project is promoting activities that disseminate better information on weather and provide safety equipment to manage these risks, thereby saving lives and reducing the loss of assets that trap these communities in poverty. As noted earlier, the newly approved Transport Sector Development and Coastal Protection Project (P161842) will greatly help to protect the sea front and the main roads from impacts caused by submersion, erosion and landslides. It will also support a detailed assessment of vulnerabilities in road transport and develop a strategy for enhancing its climate resilience in line with the adaptation measures included in the NDC18. Results under this project are expected in the subsequent CPF period. 6. RISKS TO REVISED CPS PROGRAM 58. Compared to FY14, risks to the CPS outcomes have broadly remained stable, with some shifts in composition. First, political and governance risks have risen to substantial, given the narrow majority held by the coalition government. The risks related to macroeconomic sustainability remain substantial, as STP’s fiscal framework is fragile and could worsen. These governance and macroeconomic risks are being mitigated by close monitoring, a sequence of DPOs to advance reforms, and technical assistance. Institutional capacity for implementation and sustainability is very weak, and efforts to strengthen capacity are complicated by the high staff rotation in key ministries. This staff turnover along with the growth of the portfolio also raises fiduciary risks to substantial. Technical assistance, close supervision of projects, regular portfolio reviews, and the recent posting of the Senior Procurement Specialist all help mitigate these risks. Finally, as a small-island state, STP remains highly vulnerable to climate change (particularly floods and coastal erosion), a risk which WBG engagement aims to mitigate through such engagements as enhancing resilience of coastal communities and building climate resilient infrastructure. 18 The STP “Nationally Determined Contributions (NDC)” prepared for the twenty-first session of the Conference of the Parties (COP21) stated that resilience to erosion and maritime as well as river and storm flooding of coastal areas through improved Coastal Protection of vulnerable communities should be one of the main climate change adaption measures. 26 Table 6: STP Revised Systematic Operations Risk-Rating Tool (SORT) Risk Rating Revised Rating (H, S, M, L) 1 Political & governance Substantial 2 Macroeconomic Substantial 3 Sector strategies and policies Low 4 Technical design of project/ program Low 5 Institutional capacity for implementation and Substantial sustainability 6 Fiduciary Substantial 7 Environmental & social Substantial 8 Stakeholders Low 9 Other - Overall Substantial 27 Annex 1: Updated Results Matrix Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement Revised CPS Theme One: Supporting Macroeconomic Stability and Inclusive Growth STP’s Transformation Agenda aims to unblock constraints to private sector driven, inclusive growth and it includes measures to ensure macroeconomic stability, ease infrastructure bottlenecks and improve the business environment. STP is highly dependent on aid inflows, the volatility of which exposes the country to recurring fiscal pressures. The GoSTP is implementing reforms to enhance domestic revenue mobilization, while strengthening PFM. As Government investment is expected to remain high, thanks to the unprecedented IDA18 increase and to financing from the People’s Republic of China (PRC), strengthening the framework for public investment management is vital. As domestic revenue continues to be low and the debt level remains high STP needs to pursue fiscal consolidation, to subject expenditures to a hard budget constraint and to place public debt on a sustainable path. Meanwhile, STP also needs to improve transparency and performance in the management of SOEs and extractive industries (fisheries and oil), which have a high impact on the country’s public finances. Private sector driven, inclusive growth is hindered by infrastructure constraints, by inadequacies in the framework for doing business and by the scarcity of skills. The GoSTP chose tourism, agriculture, fisheries, and transit and facilitation, as drivers for inclusive growth in the long term. The GoSTP plans to implement an ambitious public investment program in transport (to improve the road networks and the airport) for which results will only be seen during the next CPF period, while continuing to increase access and reliability of power supply, and to enhance information and communication technologies (ICT). The GoSTP also plans to implement reforms to enhance the business environment, notably to attract private investors to the tourism, fisheries, transit and facilitation, and agriculture sectors. Considering support provided in the first phase of the CPS (expenditure and debt management, ICT, energy, business environment, financial sector), emerging new priorities (SOE performance, transport) and ongoing and planned support by the IMF, AfDB, EU, and bilateral partners such as China and the Netherlands, this PLR adjusts the CPS program and organizes the support during the remaining CPS period into four key outcomes: (i) increased fiscal revenues and improved quality of public expenditures; (ii) strengthened SOE and extractive industries governance and improved transparency; (iii) improved performance of the infrastructure sector (ICT energy, and transport); and (iv) improved business environment with a focus on the tourism sector and SMEs. WBG support will be channeled through the DPO series, IPFs and ASA. Revised CPS Outcome 1: Increased fiscal revenues and improved quality of public expenditures This post-MDRI country is in debt distress. It mobilizes tax revenues hovering around 13-14 percent of GDP, and public spending was about 30 percent of GDP in 2015-16. STP is implementing fiscal reforms to enhance revenue mobilization, strengthening PFM to ensure transparent, sound, and efficient management of public resources, and improve debt management. The revised CPS will expand the ongoing support provided to the GoSTP in coordination with the IMF, AfDB, and EU to strengthen revenue mobilization and improve the quality of public expenditures through ASA, a capacity strengthening IPF and development policy financing. 28 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement Revised CPS Indicator 1.1: Tax revenues as a share of 1.1: Preparation, auditing, and Completed Financing: GDP: presentation of State annual financial • 1st ‘Strengthening Growth and Building Foundations statements for legislative scrutiny: for Poverty Reduction’ DPO (P159010) • Baseline (2014): 14.3 % • 2nd ‘Strengthening Growth and Fiscal Policy’ DPO • Target (2020): 15.8% • Baseline (2013): Annual (P161707) statement for 2010 submitted for audit. Completed ASA: • Target (2020): Annual • ROSC (Report on the Observance of Standards and statement prepared, audited, Codes) (P149902) and presented to Parliament • MTDS (Medium Term Debt Management Strategy) within 15 months after close (P147175) of fiscal year. • Public Expenditure Review (P161140) • Financial Sector Strategy TA Project (P150418) 1.2: Availability of budget information (‘FIRST’ TF-World Bank executed) to the public: • Baseline (2013): 2 out of 6 types of budget information Ongoing ASA: under PEFA (Public • Bank Resolution and Payment System Strengthening Expenditure and Fiscal (P159937) FIRST TF Accountability) methodology • Institutional Capacity Building Project (Finance, PFM made available to the public and Trade) (P162129) within one month of their completion. Pipeline Financing: • Target (2020): At least 5 out • 3rd ‘Strengthening Growth and Fiscal Policy’ DPO of 6 types of budget (P164321) information made available within one month. 1.3. Share of ongoing and finalized projects with basic information included in the National Investment Portfolio Database: • Baseline (2014): 0 • Target (2020): 100% 29 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement Revised CPS Indicator 1.2: Number of Debt 1.4: Existence of a debt management Completed ASA: Performance Indicators (DPI) with a score of at least a strategy: • Follow-up DeMPA (P161882) “C” per DeMPA (Debt Management Performance • Debt Strategy Reform Plan Assessment) methodology: • Baseline (2013): No strategy in place Ongoing Financing: Baseline (2016): 27 out of 33 • Target (2020): Updated Medium- • Institutional Capacity Building Project (Finance, PFM Target (2020): 23 out of 33 term debt strategy publicly and Trade) (P162129) available Revised CPS Outcome 2: Strengthened SOE governance and improved transparency The GoSTP requested WBG support to tackle SOEs transparency, efficiency, and financial viability challenges while sustaining support to improve transparency in the extractive industries. SOEs such as the electricity company EMAE, the National Enterprise of Airports and Air Safety (ENASA), the National Enterprise of Ports, and Postal Service, have long standing issues related to the transparency, efficiency, and financial viability which increase fiscal risks. STP has an adequate legal and regulatory framework for SOEs, but implementation is weak, and ownership and accountability mechanisms are unclear. Through the Energy Sector Recovery Project, TA and the DPO series, the WBG is supporting reforms in EMAE. The Public Expenditure Review and the ongoing DPO series will inform future SOE reforms. Through this support the WBG expects to directly help improve the overall performance of SOEs. At the same time, the WBG will continue the support provided since the beginning of the CPS to enhance transparency of oil and fisheries industries. Through TA, the WBG is helping STP prepare EITI reports that have so far reviewed the legal, contractual and fiscal frameworks applicable to the oil sector. Also, through the Climate Change Adaptation grant the WBG has helped STP publish fishing licenses. Revised CPS Indicator 2.1: Completed ASA: External audits conducted for fully owned SOEs • Public Expenditure Review (P161140) Completed Financing: • Baseline (2014): N.A. • 2nd. ‘Strengthening Growth and Fiscal Policy’ DPO • Target (2020): 75% (P161707) Ongoing Financing: • Institutional Capacity Building Project (Finance, PFM and Trade) (P162129) Pipeline Financing: • 3rd ‘Strengthening Growth and Fiscal Policy’ DPO (P164321) 30 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement Revised CPS Indicator 2.2: Public disclosure of new Completed ASA: fishing agreements and licenses within one month of • Extractive Industries Transparency Initiative (EITI) signing agreements or (Multi-Donor TF) (P130994) issuing licenses: • Baseline (2014): 0% • Target (2020): 100% Revised CPS Indicator 2.3: Improved accountability in Completed ASA: oil sector governance: • Extractive Industries Transparency Initiative (EITI) (Multi-Donor TF) (P130994) • Baseline (2013): EITI reconciliation Report • Target (2020): EITI Reconciliation Report publicly available and disseminated in the country Revised CPS Outcome 3: Fostering growth-enhancing reforms in ICT, energy, and transport sectors The CPS has made a transformational impact on ICT connectivity in STP through the Central African Backbone (APL2) program. Building on this success, the GoSTP plans to continue improving the performance of the ICT sector while addressing issues in the energy and transport sectors, which both present significant potential to contribute to inclusive growth. The effects of good infrastructure on inclusive growth are well known. In addition, because of the country’s geography, location, and vulnerability to climate change (especially floods and coastal erosion) adequate infrastructure is critical. Considering ongoing and planned WBG and other DPs (EU, AfDB, and China) support, the revised CPS program maintains support to ICT and expands its interventions to increase renewable energy generation, improve the reliability of the electricity supply, expand and improve the road network. Instruments considered include ASA, a capacity strengthening IPF, and the DPO series. Results indicators below focus on the energy sector where an IPF is already under implementation, while results in the transport infrastructure will only emerge during the next CPF period. Revised CPS Indicator 3.1: Retail price of internet Completed Financing: services • Central African Backbone (APL2) • Baseline (2011): US$410 Pipeline ASA: • Target (2014): US$52 • Digital Economy Gap Analysis Revised CPS Indicator 3.2: EMAE’s technical and 3.1: Hydropower capacity Completed ASA: non-technical losses rehabilitated: • Power Sector Efficiency Improvement TA • Baseline (2017): 40% • Baseline (2017: 0MW • Target (2020): 34% • Target (2020): 2MW Ongoing Financing: • Power Sector Recovery Project (P157096) 31 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement 3.2: Least Cost Development Plan Pipeline ASA: prepared, including demand forecast. • Strengthening energy sector monitoring and planning capacity in STP (P155621) • Baseline (2017): No • Target (2020): Yes 3.3: Energy Household and Enterprise access/consumption survey prepared. • Baseline (2017): No • Target (2020): Yes 3.4: Completion and endorsement of Management Improvement Plan of EMAE. • Baseline (2017): No • Target (2020): Yes Revised CPS Outcome 4: Improved business environment, with a focus on tourism and SMEs Major strides were made in improving business regulation and strengthening the financial sector. However, much more needs to be done to improve ease of doing business, open access to credit, particularly to micro, small, and medium enterprises to develop their business, and to spur sustainable tourism. On the financial sector side, the starting point was the World Bank-supported FSDIP, adopted by the Government in September 2016 to provide a coherent vision and strategy for financial sector development. The FSDIP is followed by two FIRST-funded TA projects on banking resolution (essential for strengthening financial stability) and payment systems. The Bank Resolution Support Project supports the central bank (BCSTP) in improving financial stability by increasing supervisory capacity for off- and on- site supervision and by strengthening the regulatory framework for bank resolution. The Payment Systems Strengthening TA includes actions that promote retail payments and mobile financial services for inclusion. Through the multi-GP Institutional Capacity Building Project, the WBG supports actions to strengthen institutional capacity for financial stability and inclusion, public financial management, land registration, and statistics. These include activities to strengthen the central bank’s capacity in supervision and bank resolution: a demand-side survey of how individuals and small enterprises source their income and manage their finances; investments in financial infrastructure, including enhancements to the public credit registry (hardware, software, and a disaster recovery site) and movable collateral registry; capacity strengthening for public financial management, particularly in revenue forecasting, expenditure controls, and oversight of SOEs; support to the modernization of the land registry; and support to the development of data access and information policies and dissemination practices, including through financing enhancements to the statistical agency’s website and technical assistance on micro-data anonymization and annual production and distribution of statistical abstracts. The project will explore opportunities for public institutions to learn on-the-job, including through partnerships with similar organizations from more developed countries. The WBG plans to continue its support to the tourism and financial sector during the remainder of the revised CPS period through ASA. The STP Investment Climate Project, an IFC Advisory Services project, supported improvements in business regulations, trade facilitation and tourism development. Improvements supported by this project include 32 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement an electronic platform for starting a business, reform of construction permit regulations and property registration fees, technical advice on the implementation of an electronic single window for trade and risk management procedures at customs, advice on introducing electronic visas, and development of a tourism strategy. Revised CPS Indicator 4.1: Number of tourists: Indicator 4.1: Tourism strategy Completed ASA: developed: • South-South Experience Exchange Facility TF: • Baseline (2012): 5,000** Building Capacity for Digitization of property registry • Target (2020): 25,000 • Baseline (2014): No strategy • STP Investment Climate Project (IFC Advisory • Target (2020): Strategy in place Services) **Note: Updated baseline figure from the original CPS, • IFC-Investment Climate Reform Plan with newly available statistics for 2012 from the Indicator 4.2: Tourism inventory Tourism Directorate conducted for 6 districts of STP: Pipeline ASA: • Country Economic Memorandum (P164180) • Baseline (2014) Tourism inventory does not exist • Target (2020) Tourism inventory exists Indicator 4.3: Tourist exit survey conducted: • Baseline (2017): 0 • Target (2020): 4 Indicator 4.5: Number of days required to obtain a construction permit: • Baseline (2014): 118 • Target (2020): 90 Revised CPS Indicator 4.2: Private sector savings from Indicator 4.6: Time to import and Completed ASA: trade logistics reforms: export (border compliance) • SSKE- Strengthening Trade and Investment Promotion Agency • Baseline (2014): 0 • Target: (2020) US$1.3 million • Baseline (2014): export 115 Ongoing Financing: hours; import 163 hours • Institutional Capacity Building Project (Finance, PFM and Trade) (P162129) • Target (2020): export 90 hours; import 150 hours Ongoing ASA: 33 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement • STP Bank Resolution and Payment System Strengthening (P159937) (FIRST TF – World Bank executed) Revised CPS Indicator 4.3: All banks share data with Indicator 4.7: All Banks meet the the credit registry. minimum Capital Adequacy Ratio (CAR) required by the Central Bank • Baseline (2017) only a few banks provide information • Baseline (2017) percentage of • Target (2020) all banks provide information banks with CAR greater or equal to 10% is 86 in 2015 and 100 in 2016. • Target (2020) 100 in 2017, 2018 and 2019. Revised CPS Indicator 4.4: Share of the population with Ongoing ASA: access to formal financial services (I.e. transaction • STP Bank Resolution and Payment System accounts). Strengthening (P159937) (FIRST TF – World Bank Overall Access executed) • Baseline (2017): 39 percent • Target (2020): 45 percent Ongoing Financing: Women Access • STP Institutional Capacity Building Project • Baseline (2017): 15 percent (162129) • Target (2020): 20 percent Revised CPS Theme 2: Strengthening Human Capacity and Reducing Vulnerability STP made considerable progress enhancing human capital in its efforts towards the MDGs, but challenges remain. To increase growth and inclusion, the country needs to become more strategic in its investments in human capital, including through a better performing education sector, more effective and targeted safety nets, and adequate instruments for adaptation to climate change of vulnerable populations. Better trained teachers and stronger supervision of schools are needed to improve the quality of education. In addition, to develop a more effective social protection system, accurate targeting and management systems need to improve. Thus, a good statistics system is critical to provide both data for adequate targeting and measure impacts of interventions for service delivery more broadly. At the same time, clear links between safety nets’ beneficiaries and skills development initiatives need to be established to enhance the productivity and employability of poor households. Finally, the adaptive capacity to climate change of coastal communities, among the most vulnerable, needs to be increased while reducing the potential loss of assets and lives. Considering ongoing and planned support by other DPs such as AfDB, the EC and the UN agencies, the WBG will support this revised CPS focus area to achieve reforms in education and skills strengthening, SP and adaptive capacity of coastal communities through IPFs, the DPO series and ASA. 34 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement Revised CPS Outcome 5: Enhanced education quality STP has achieved almost universal access to primary education, literacy rates are above 95 percent and progression to secondary education is 100 percent. However, quality is low. To tap into the potential to accelerate growth offered by tourism and agriculture, STP would need to strengthen its skill base to better respond to market needs. To enhance quality of education, the World Bank is supporting the improvement of teacher training and school supervision. The World Bank has just approved the Social Protection and Skills Project, but results will only be shown during the next CPF period. World Bank support will continue to be channeled through IPFs, the DPO series and ASA (PER). Revised CPS Indicator 5.1: Qualified primary teachers Ongoing Financing: resulting from projects • Quality Education for All Project(P146877) • AF GPE for Quality Education for All (FY19) • Baseline (2014): 40% (P150828) • Target (2020): 75% •Social Protection and Skills Development Project (P163088) Revised CPS Indicator 5.2: Memorandum of Ongoing ASA: Understanding signed between education and social • GPE TF for sector analysis and updated Education protection ministries, outlining key principles of Sector Plan collaboration for the gradual introduction of cash transfers for girls education and preventing early Pipeline Financing: pregnancy, including data-sharing. • STP Girls Empowerment and Quality Education for • Baseline: No intersectoral agreements in place to All (FY20) (P169222) address girls’ education and prevent early pregnancy through cash transfers • Target 2020: Agreement signed Revised CPS Indicator 5.3: Percentage of primary Ongoing Financing: schools benefitting from annual supervision: • Quality Education for All Project (P146877) • Baseline (2014): 0% Ongoing ASA: • Target (2020): 100% • GPE TF for sector analysis and updated Education Sector Plan Pipeline Financing: • STP Girls Empowerment and Quality Education for All (FY20) (P169222) 35 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement Revised CPS Outcome 6: Improved poverty targeting and access to social safety nets for vulnerable groups Poverty reduction in STP implies measures to protect vulnerable communities and promote economic opportunities. Coverage of SP programs should increase and to do that, it is important to develop and operationalize the basic blocks for a Social Protection System, including an accurate targeting system, a payment system and a Management Information System to improve cost-efficiency and effectiveness of programs. A good statistics system is critical to provide data for adequate targeting and measure impacts of interventions. Revised CPS Indicator 6.1: Statistical Capacity Score: 6.1: Preparation of Household Survey Pipeline ASA: • Poverty Assessment (P167907) • Baseline (2017): 70 • Baseline (2017): 3rd Household • Target (2020): 73 Survey is not completed. • Target (2020): 3rd Household Survey is completed. 6.2: Poverty Assessment • Baseline (2017): N/A • Target (2020): Concluded Revised CPS Indicator 6.2: Number of beneficiaries 6.3: Number of households registered Completed ASA: enrolled in the new programs: in the Social Registry: • Social Protection Rapid Social Response TF • Building Blocks for SP System • Baseline (2017): 0 • Baseline (2014): 0 • Poverty maps, Proxy Means Test and Poverty • Target (2020): 4,000 (Cash Transfer + Social • Target (2020): 4,400 Assessment; Management Information System; Pension) Communication Strategy Ongoing ASA: • Development of effective delivery systems for Social Protection (P163445) • GFDDR-TF (50k) to develop guidance for the implementation of a public works program. Ongoing Financing: • Social Protection and Skills Development Project (P163088) 36 Revised CPS Indicators (FY14–FY20) Supplementary Indicators WBG Engagement Revised CPS Outcome 7: Increased adaptive capacity of coastal communities and reduced potential of loss of lives and assets During the revised CPS period the WBG will contribute to increasing adaptive capacity of vulnerable coastal communities, with increased awareness through participatory mapping as well as piloting adaptation strategies, combining soft and hard protection works, in addition to voluntary relocation of population to safer areas. For coastal communities, another critical challenge is the adoption of safer practices by fishermen who are facing increasing risks. The World Bank is promoting activities that disseminate better information on weather, as well as provide safety equipment to manage these risks. Thus, saving lives and reducing the loss of assets that trap these communities in poverty. Through financing and ASA, the WBG is also helping STP to address its vulnerability to natural disasters and climate change in coordination with other West African countries. Revised CPS Indicator 7.1: Proportion of fishing 7.1: Artisanal fishermen are trained Completed ASA: population benefiting from training and equipment for and have received basic safety at sea • Adaptation to Climate Change (P111669) safety at sea. equipment: • Baseline (2014): 0% • Baseline (2014):0% Ongoing Financing: • Target (2018): 70% • Target (2020): 70% • WACA (P162337) Revised CPS Indicator 7.2: Fishermen deaths at sea caused by extreme weather conditions: • Baseline (2017):4.8 per year • Target (2020): less than 1 per year 37 Annex 2: Changes to original CPS Results Matrix Original CPS Results Matrix Updated CPS Results Matrix Comments Theme One: Supporting Macroeconomic Revised CPS Theme One: To reflect larger emphasis on Stability and National Competitiveness Supporting Macroeconomic inclusive growth and new Stability and Inclusive Growth priorities in reduction of its associated bottlenecks. Outcome 1. Strengthened public financial Revised CPS Outcome 1: To specify indicators around fiscal and natural resource management Increased fiscal revenues and revenues and stronger improved quality of public management of public expenditures expenditures Indicator 1.1: Availability of budget Moved to become supplementary information to the public: Indicator 1.2. • Baseline: (2013): 2 out of 6 types of (identical with revised target date budget information under PEFA of 2020) methodology made available to the public within one month of their completion. • Target (2017): At least 5 out of the 6 types of budget information made available within one month. Indicator 1.2: Preparation, auditing and Inserted as supplementary presentation of State Annual Financial Indicator 1.1. Statements for legislative scrutiny: 2020 target • Baseline (2013): Annual Statement for 2010 submitted for audit. • Target (2017) Annual Statement prepared, audited, and presented to Parliament within 15 months after close of fiscal year. Indicator 1.3: Percentage of direct contracting Dropped. No WBG activities will contribute to in procurement: achievement of the indicator. However, will coordinate with • Baseline (2013): 29% of all AfDB, which is working in this contracts. important area. • Target (2017): 10% of all contracts. Revised CPS Indicator 1.1 was Indicator is added to better align with added: "Tax revenues as share of new DPO series and with special GDP". Baseline (2014): 14.3 %; themes of IDA18. target (2020): 15.8 % Supplementary indicator 1.1: Preparation, auditing, and presentation of State Annual Financial Statements for legislative scrutiny: • Baseline (2013): Annual statement for 2010 submitted for audit. • Target (2020): Annual statement prepared, audited, and presented 38 Original CPS Results Matrix Updated CPS Results Matrix Comments within 15 months after close of fiscal year. Supplementary indicator 1.2: Availability of budget information to the public: • Baseline (2013): 2 out of 6 types of budget information under PEFA methodology made available to the public within one month of their completion. • Target (2020): At least 5 out of 6 types of budget information made available within one month. Supplementary indicator 1.3: Share of ongoing and finalized projects with basic information included in the National Investment Portfolio Database: • Baseline (2014): 0 % • Target (2020): 100% Indicator 1.4: Existence of debt management Revised CPS Indicator 1.2: Indicator is added to better align with strategy: "Number of Debt Performance new DPO series and with special Indicators (DPI) with a score of themes of IDA18. • Baseline (2013): No strategy. “D” per DeMPA methodology: • Target (2017): Medium-term debt • Baseline (2016): 27 out of strategy publicly available. 33 • Target (2020): 23 out of 33 Supplementary indicator 1.4: Existence of a debt management strategy: • Baseline (2013): No strategy in place • Target (2020): Updated medium-term debt strategy publicly available * In the DeMPA methodology, a score of D indicates that the minimum requirement has not been achieved, which signals a deficiency in performance, normally requiring priority corrective action. Indicator 1.5: Public disclosure of new fishing Revised CPS Outcome 2: A new CPS outcome became agreements and licenses within one month of Strengthened SOE and Extractive dedicated to governance and signing agreements or issuing licenses: Industries governance and transparency of SOE and extractive improved transparency. 39 Original CPS Results Matrix Updated CPS Results Matrix Comments • Baseline (2013): not disclosed. industries. Baselines and targets were • Target (2017): Routinely disclosed. Indicator 2.2: Public disclosure of modified to make them more new fishing agreements and specific. licenses within one month of signing agreements or issuing licenses: • Baseline (2014): 0% • Target (2020): 100% Indicator 1.6: Improved accountability in oil Revised CPS Outcome 2: sector governance: Strengthened SOE and Extractive Industries governance and • Baseline (2013): EITI reconciliation improved transparency. report. • Target (2017): EITI reconciliation Indicator 2.3: Improved report publicly available and accountability in oil sector disseminated in the country. governance: • Baseline (2013): EITI reconciliation report. • Target (2017): EITI reconciliation report publicly available and disseminated in the country. Outcome 2: Enhanced statistical system Revised Outcome 6: Improved Household survey will improve poverty targeting and access to targeting of social programs. Targets social safety nets for vulnerable are stronger and more specific. groups. Indicator 6.1: Statistical Capacity Score: • Baseline (2017): 70 • Target (2020): 73 Indicator 2.1: Population and Housing Census: Revised Outcome 6: Improved The Population and Housing survey poverty targeting and access to was completed in 2012 and • Baseline ((2013): Not completed. social safety nets for vulnerable disseminated in different formats • Target (2017): Completed and report groups: between 2013-2014. published summarizing main A new Household survey was findings. Supplementary Indicator 6.1: included in the new DPO series, and Preparation of Household Survey: benefits from TFs. • Baseline (2017): No household survey • Target (2020): Household survey finished and disseminated 40 Original CPS Results Matrix Updated CPS Results Matrix Comments Outcome 3: Improved private sector Revised CPS Outcome 4: All the outcomes and indicators capacity with a focus on the tourism sector Improved business environment, related to the improvement of the and SMEs with a focus on tourism and business environment for tourism SMEs. Many indicators, and SMEs were merged in the milestones, and baselines and Revised CPS Outcome 4, including targets were revised. business regulations, banking and tourism sector-related activities. Indicator 3.1: Medium-term tourism Supplementary Indicator 4.1: development strategy with an Action Plan: “Tourism strategy developed”: • Baseline (2013): Not prepared. • Baseline (2014): No • Target (2017): Adopted and being strategy. implemented. • Target (2020): Strategy in place. Indicator 3.2: Number of entities engaged in Dropped. Project that was supporting these provision of tourism services: activities and indicators was dropped. • Baseline ((2013): 300 approx. • Target (2017) 400 approx. Indicator 3.3: Occupancy of private sector Revised CPS Indicator 4.1: To better reflect objectives of the tourist capacities (tourist-days per year): Number of tourist arrivals. current projects as original project was dropped. It summarizes changes • Baseline (2013): 91,000 approx. • Baseline (2012): 12,743 produced by several supplementary • Target (2017): 140,000 approx. • Target (2020): 25,000. indicators: indicator 4.1: tourist arrivals 4.2: online visa issuance Supplementary Indicator 4.1: enabled; milestone indicator 4.3: Tourism strategy developed: tourism inventory conducted for 6 districts of STP; and indicator 4.4: • Baseline (2014): No strategy tourist exit survey conducted • Target (2020): Strategy in place Supplementary Indicator 4.2: Tourism inventory conducted for 6 districts of STP: • Baseline (2014) Tourism inventory does not exist. • Target (2020) Tourism inventory exists. Supplementary Indicator 4.3: Tourist exit survey conducted: • Baseline (2017): 0 • Target (2020): 4 Indicator 3.4: Number of entrepreneurs Dropped. Indicator 3.4 was based on a project receiving business development services (40% that was dropped. women) • Baseline (2013): 0 41 Original CPS Results Matrix Updated CPS Results Matrix Comments • Target (2017): Up to 300 individuals/SMEs supported to develop business plans and benefit from IFC Business Edge training Indicator 3.5: Number of microenterprises and Dropped Indicator 3.5 was based on a project SMEs benefiting from access to finance that was dropped. because of business plan development and IFC’s SME risk sharing program: • Baseline (2013?): 0 • Target (2017): 100-150 SMEs Indicator 3.6: Number of private sector Dropped. Indicator 3.6 was based on a project employees benefiting from training (50% that was dropped. women): • Baseline (2013): 0 • Target (2017): 300 employees Outcome 4: Improved business Revised CPS Outcome 4: environment and trade regulations Improved business environment, with a focus on tourism and SMEs Indicator 4.1: Number of days required to Supplementary Indicator 4.5: CPS indicator becomes a obtain a construction permit: supplementary one. • Baseline (2013): 118 • Baseline (2013): 118 • Target (2020): 90 • Target (2017): 90 Indicator 4.2: Average cost of compliance To make indicator more specific. with business regulations (as percent of per Supplementary Indicator 4.5: capita income): Number of days required to obtain a construction permit: • Baseline (2013): 386 • Target (2017): <200 • Baseline (2014): 118 Target (2020): 90 Indicator 4.3: Number of days to export and Revised CPS Indicator 4.2: Private To make milestone more specific. import: sector savings from trade logistics reforms: • Baseline (2013): export 26; import 28 • Baseline (2014): 0 • Target (2017): <16 • Target: (2020) US$1.3 million Supplementary indicator 4.6: Number of days to export and import: • Baseline (2014): export 26; import 28. • Target (2020): <16 42 Original CPS Results Matrix Updated CPS Results Matrix Comments Revised CPS Indicator 4.3: All banks share data with the credit registry. • Baseline (2017) only a few banks provide information. • Target (2020) all banks provide information. Supplementary Indicator 4.7: All Banks meet the minimum Capital Adequacy Ratio (CAR) required by the Central Bank • Baseline (2017) percentage of banks with CAR greater or equal to 10% is 86 in 2015 and 100 in 2016. • Target (2020) 100 in 2017, 2018 and 2019. Revised CPS Indicator 4.4: Share of the population with access to formal financial services (I.e. transaction accounts). Overall • Baseline (2017): 39 percent • Target (2020): 45 percent Women’s Access • Baseline (2017): 15 percent • Target (2020): 20 percent Outcome 5: Better targeting of energy Revised CPS Outcome 3: ICT, energy and transport sectors subsidies Improved performance of the were combined in Revised CPS infrastructure sector (ICT, outcome 3 as they represent the main energy and transport) infrastructure constraints to inclusive growth 43 Original CPS Results Matrix Updated CPS Results Matrix Comments Indicator 5.1: Tariff rates and targeting of Revised CPS Indicator 3.2: No change subsidies: EMAE’s technical and non- technical losses • Baseline: (2013): Tariff rates not changed since 2007 and only 40% of • Baseline (2017): 40% electricity subsidies reach the poor • Target (2020): 34% • Target (2017): Identification of a reform strategy to bring tariff rates Supplementary Indicator 3.1: closer to cost recovery while Hydropower capacity rehabilitated: improving the targeting of subsidies • Baseline (2017: 0MW • Target (2020): 2MW Supplementary Indicator 3.2: Least Cost Development Plan prepared, including demand forecast. • Baseline (2017): No • Target (2020): Yes Supplementary Indicator 3.3: Energy Household and Enterprise access/consumption survey prepared. • Baseline (2017): No • Target (2020): Yes Supplementary Indicator 3.4: Completion and endorsement of Management Improvement Plan of EMAE. • Baseline (2017): No • Target (2020): Yes Outcome 6: Improved regional broadband Revised CPS Outcome 3: ICT, energy and transport sectors connectivity Improved performance of the were combined in Revised CPS infrastructure sector (ICT, energy outcome 3 as they represent the main and transport) infrastructure constraints to inclusive growth Indicator 6.1: Retail price of internet services Revised CPS indicator 3.1: Retail Target well achieved (retail price (per Mbps monthly): price of internet services: now US$52). • Baseline (2012): US$410 • Baseline (2014): US$410 • Target (2014): US$340 • Target (2020): US$340 Theme Two: Reduced vulnerability and Revised CPS Theme Two: strengthened human capacity Strengthening human capacity and reducing vulnerability Outcome 7: Improved poverty targeting Revised CPS Outcome 6: Combines poverty targeting with Improved poverty targeting and programs to improve social safety access to social safety nets for nets with more precision vulnerable groups 44 Original CPS Results Matrix Updated CPS Results Matrix Comments Indicator 7.1. (Exact indicator for improved Revised CPS indicator 6.2: Indicators added to account for new poverty targeting to be determined based on Number of beneficiaries enrolled social protection policy and strategy findings and decisions on completion of in the new programs: ongoing social protection policy and strategy) • Baseline (2017): 0 • Target (2020): 4,000 (Cash Transfer + Social Pension) Supplementary indicator 6.2: number of households registered in Social Registry: • Baseline (2014): 0 • Target (2020): 4,400 Indicator 7.2: Jobs created through targeted Dropped Public Works Program (PWP): • Baseline and target to be determined once details of the PWP are designed Outcome 8: Increased adaptive capacity of Revised CPS Outcome 7: coastal communities and reduced potential Increased capacity of coastal of loss of assets and lives communities and reduced potential of loss of lives and assets. Indicator 8.1: Proportion of fishing population Revised CPS indicator 7.1: Revised to provide a better benefiting from early warning system and Proportion of fishing population measurement of the outcome. safety at sea (%): benefiting from training and equipment for safety at sea: • Baseline (2013): 0% • Target (2016): 70% • Baseline (2014): 0% • Target (2018): 70% Revised CPS indicator 7.2: Fishermen deaths at sea due to extreme weather conditions • Baseline (2017): 4.8 per year • Target (2020): less than 1 per year Outcome 9: Improved training of teachers Revised CPS Outcome 5: in primary education Enhanced education quality and skills Indicator 9.1: Percent of qualified primary Revised CPS indicator 5.1: Indicator revised to better reflect teachers resulting from project: Qualified primary teachers objective of the project and target resulting from projects: revised to make it more realistic. • Baseline (2013): 40 % • Target (2017): 75% • Baseline (2014): 40% • Target (2020): 75% Indicator 9.2: Percent of primary schools benefiting from annual supervision: • Baseline (2013): 0% 45 Original CPS Results Matrix Updated CPS Results Matrix Comments • Target (2017): 100% Outcome 10: Increased access to skills Revised CPS Outcome 5: development Enhanced education quality and skills Indicator 11.1: To be determined based on Dropped findings of Skills Strategy and selected area of WBG support. Baseline (2014): TBD; Target (2018): TBD Cross-cutting Theme: Gender, Partnership, and Capacity Building 46 Annex 3: Progress toward FY14-18 CPS Outcomes CPS Outcomes Milestones Status Theme 1: Supporting Macroeconomic Stability and National Competitiveness Outcome 1: Strengthened Public Partially on track. Financial and Natural Resource Outcome 1 consists of 6 Management indicators, of which 4 have been achieved. Indicator 1: Availability of budget • Annual financial statements prepared and On track. A PEFA was information to the public. submitted to Tribunal of Accounts for audit. conducted and published in Baseline (2013): 2 out of 6 types of • Audit completed and presented to the October 2013, indicating budget information under PEFA Parliament for that 4 out of the 6 methodology made available to the legislative scrutiny and audit report Performance Indicators public within one month of their published. (PI-10) were made public completion. • Targeted PFM training/ seminars for in a timely manner. Target (2017): At least 5 out of 6 parliamentarians types of budget information conducted. made available within one month. • Debt legislation provides clear authorization to borrow, issue new debt, undertake debt-related transactions, and issue loan guarantees. • EITI Reconciliation Report adopted. Indicator 2: Preparation, auditing, Partially on track and presentation of State annual financial statements for legislative scrutiny Baseline (2013): Annual statement for 2010 submitted for Audit. Target (2017): Annual statement prepared, audited, and presented within 15 months after close of fiscal year. Indicator 3: Percentage of direct Off track. Not monitored contracting in systematically. To be Procurement. dropped because this result Baseline (2012): 29% of all is not directly supported by contracts. World Bank activities. Target (2018): 10% of all contracts. Indicator 4: Existence of a debt On track. A formal debt management strategy management strategy has Baseline (2013): No strategy in been developed and is in place. place. Target (2017): Medium-term debt strategy publicly available. Indicator 5: Public disclosure of On track. All current new fishing agreements fishing agreements and a and licenses within one month of registry of fishing licenses signing agreements or are made accessible to the issuing licenses public through the Official Baseline (2013): Not disclosed. Gazette on a regular and Target (2017): Routinely disclosed. timely basis. 47 Indicator 6: Improved On track. accountability in oil sector governance Baseline (2013): EITI reconciliation Report. Target (2017): EITI Reconciliation Report publicly available and disseminated in the country. Outcome 2: Enhanced statistical On track. Outcome 2 system consists of one indicator, that has been achieved. New indicator being added. Indicator: Population and housing Population and census. housing census Baseline (2013): Not completed completed (2014). (2013) Target (2014): Census completed, and report published summarizing main findings. Outcome 3: Improved private Off track. Outcome 3 has sector capacity with a focus on the 6 indicators, five of which tourism sector and SMEs are off track and one on track. Indicator 1: Medium-term tourism • National business plan competition On track. Wording of development strategy conducted. indicator revised to with an Action Plan. • Tourism Strategy’s Action Plan revised and “tourism strategy Baseline (2013): Not prepared. prioritized. developed”. The Tourism Target (2017): Adopted and being • Strategic tourism marketing plan Strategic Plan was implemented. prepared and implemented. launched in February 2018. • Online visa issuance enabled. Number of tourism arrivals • Tourism Tax Law created and in 2017 was 28,948. Indicator 2: Number of entities Off track. To be dropped implemented. engaged in provision of because this result is not • Number of tourists increased from 5,000 tourism services. directly supported by Baseline (2013): 300 approx. (2012) to 25,000 (2017). WBG activities. Target (2017): 400 Indicator 3: Occupancy of private Off track. To be dropped sector tourist capacities because this result is not (tourist-days per year) directly supported by Baseline (2013): 91,000 approx. WBG activities. Target (2017): 140,000 Indicator 4: Number of Off track. To be dropped entrepreneurs receiving business because this result is not development services (40% women) directly supported by Baseline (2013): 0 WBG activities. Target (2017): Up to 300 individuals/ SMEs supported to develop business plans and benefit from IFC Business Edge training Indicator 5: Number of micro- Off track. To be dropped enterprises and SMEs because this result is not benefitting from access to finance directly supported by because of business plan WBG activities. 48 development and IFC’s MSME risk sharing program. Baseline (?): 0 Target (2017): 100-150 MSMEs. Indicator 6: Number of private Off track. To be dropped sector employees benefitting from because this result is not training (50% women) directly supported by Baseline (?): 0 WBG activities. Target (2017): 300 employees Outcome 4: Improved business Partially on Track. environment and Outcome 4 has 3 trade regulations indicators, one of which was achieved and one was partially achieved. Indicator 1: Number of days •Online business registration and other Partially achieved. New required to obtain a online commercial registry features construction permit construction permit operational. regulations were issued. Baseline (2013): 118 • Single window for trade established and Comparisons between Target (2017): 90 fully operational. published DB data for • Modernization of trade-related regulations 2013 and 2017 are no initiated, particularly those related to longer possible due to nontariff barriers. changes in the DB methodology; using comparable data under the new methodology the time to obtain construction permits dropped by 9.4% between 2013 and 2017 according to DB. Indicator 2: Average cost of Partially achieved. New compliance with business construction permit regulations (as percent of per capita regulations were issued. income) Comparisons between Baseline (2013): 386 published DB data for Target (2017): <200 2013 and 2017 no longer possible due to changes in the DB methodology; using comparable data under the new DB methodology the cost to obtain construction permits dropped by 26% between 2013 and 2017 according to DB. Indicator 3: Number of days to Partially on track. Because export and import of the trade reform "single Baseline (2013): export 26; import window for international 28. trade" and related Target (2017): <16 streamlining of import export procedures the time to import dropped by 14% and to export by 18% between 2014 and 2017. Comparisons of DB 2013 data (used as baseline) and DB2017 data are no longer 49 possible due to changes in methodology. Outcome 5: Better targeting of On track. Outcome 5 has energy subsidies one indicator which is on track. Indicator: Tariff rates and targeting On track. The Energy of subsidies survey has been completed Baseline (2013): Tariff rates not and the MTF team is now changed since 2007 and only working on the final report 40% of electricity subsidies actually to be disseminated in May reach the poor 2019. Preliminary results Target (2019): Identification of a have been used to define reform strategy to bring tariff schemes. Tariff study tariff rates closer to cost recovery will be launched in 2nd half while improving the of CY 2018. The EMAE targeting of subsidies Management Improvement Plan has been prepared and is pending formal endorsement of GoSTP. Procurement of Consultants for EMAE Management Information System is ongoing. Outcome 6: Improved regional On track. Outcome 6 has broadband connectivity one indicator which has been achieved, and surpassed. Indicator: Retail price of internet On track and will surpass services (per Mbps monthly) largely the targets. Retail Baseline (2012): US$410. price of internet services Target (2014): US$340. has dropped radically to US$52 per Mbit/s per month. Competition has increased, and connectivity has improved significantly for both internet and telecom services. Theme 2: Reduced Vulnerability and Strengthened Human Capacity Outcome 7: Improved poverty Partially on track. targeting Outcome 7 has two indicators, of which one is on track and one is off track. Indicator 1: (Exact indicator for • Assessment of social protection programs On track. A targeting improved poverty targeting to be completed. methodology and a Social determined based on findings and • Core interventions for a social safety nets Registry were developed. decisions on completion of ongoing system identified. All Social Protection social protection policy and • Social protection strategy adopted. beneficiaries (over 31,000 strategy) • Key operational tools (targeting system households) were registered in the Social and Registry. registry of beneficiaries) developed. • Core social sector programs approved by the Government. 50 Indicator 2: Jobs created though Partially on track. Public targeted Public Works Program works program and (PWP) operational manual were (Baseline and target to be developed. Government determined once details of the lacks funds to start PWP are designed) implementation of the Public Works Program. Outcome 8: Increased adaptive On track. Outcome 8 capacity of coastal consists of one indicator communities and reduced which is on track, with potential loss of assets and most physical targets lives achieved, some surpassed. Indicator: Proportion of fishing • Coastal adaptation/protection measures On track. The safety at sea population benefiting implemented. program combined with an from early warning system and • Flooding exposure of target communities early warning system has safety at sea (%) reduced by two-thirds through coastal helped reduce mortality at Baseline (2013): 0%. adaptation measures. sea by about 80 percent Target (2016): 70%. •Training and awareness campaigns on safety- relative to the 2006-10 at-sea provided baseline (prior to the introduction of the system). • Safety at sea equipment distributed However, the number of fishermen has been increasing rapidly and safety at sea training needs to continue during the the WACA project. Outcome 9: Improved training of On track. Outcome 9 has teachers in primary two indicators of which education one is achieved (primary schools with annual supervision) and one is on track (qualified primary teachers). Indicator 1: Percent of qualified At least one student assessment conducted On track. Teachers' primary teachers for the target grades training plans have been resulting from project • In-service primary program set up developed and the project Baseline (2013): 40%. • Student learning assessment system design has been finalized. Target (2019): 75%. being developed A Teacher Qualifications • EMIS developed and functional Framework and certification process is also under development. Indicator 2: Percentage of primary On track. The target schools benefitting schools receive supervision from annual supervision 4 times per year. The Baseline: 0% (2013) Ministry has recruited 54 Target: 100% (2017) Instruction Leaders who regularly pay visits to primary schools. Outcome 10: Increased access to Off track. Outcome 10 has skills development one indicator which has not been achieved. Indicator: To be determined based Off track. A new milestone on findings of Skills Strategy included. and selected area for WBG support 51 Cross-cutting Theme: Gender, Issues integrated into the Partnership, and Capacity program Building 52 Annex 4: Planned and Actual Deliveries of Non-Lending Services (FY14-18) CPS PLANS (05/2014) STATUS COMMENT FY14-FY15 Report on the Observance of Standards and Codes, Delivered Review to help the Government identify measures to help Accounting and Auditing enforcement of applicable laws and recommend complimentary measures and actions delivered Debt Strategy Reform Plan Delivered A formal debt strategy in place Operationalizing the Social Protection Strategy Dropped Some analysis was taken over by the NLTA Building (Programmatic AAA) Blocks for SP System. Social Protection Rapid Social Response TF Delivered Renamed Building Blocks for SP System. Analysis on Social Protection for redefinition of Social Protection Programs and accurate beneficiary identification and selection system developed Skills Strategy Dropped The Social Protection and Skills Development Project will undertake studies to inform the project Agriculture Sector Issues Dropped The AfDB is taking the lead in this area, including on ASA IFC- Investment Climate Reform Plan Delivered Renamed. Supports business environment reforms and development of the tourism sector PPIAF/IFC- Analysis on Development of Delivered Provided policy advice on the possible development of a Transshipment and Overall Ports sector deep-sea port. FY15-FY16 Small Island Public Procurement Strategy Dropped Changed client demand WBI Courses and Seminars for Dropped Changed client demand Parliamentarians Strategy on Regional Integration and Trade Dropped Changed client demand Facilitation Policy Note on Public Spending Dropped Financial Sector Development Strategy Delivered Developed a coherent vision and strategy for (FIRST) financial sector development. The action plan is under implementation ADDITIONS to CPS PLANS (FY15-FY17) STATUS COMMENT Power Sector Efficiency Improvement Delivered Studies for the reduction of electrical losses (technical and non-technical) and improvement of reliability concluded SSKE- Strengthening Trade and Investment Delivered Technicians from STP TIPA participated in capacity Promotion Agency (TIPA) building activities in Maputo SSKE- Building Capacity for Digitization of Delivered Technicians from STP Property Registry participated in a property registry study tour to Cabo Verde, followed by a visit from an expert Cabo Verdean consultant to STP to develop a strategy for reform 53 Annex 5: World Bank Group Support to the Energy Sector in STP 1. Electricity coverage in STP extends to only about half the population. Electricity Access is more widespread among non-poor families (58.3 percent) than poorer families (47.5 percent). 38 percent of rural households do not have access to any source of electricity vs. 23 percent of urban households. While there is no available data on the quantity or duration of power cuts, service quality is widely acknowledged as unreliable and extensive outages are frequent, especially during periods of peak demand. 2. Electricity supply is constrained. In early 2016, EMAE interconnected generation asset on São Tomé Island, including four diesel thermal power plants (São Tomé, Santo Amaro, and Bobo-Forro 1 and 2) and two hydropower plants (Contador and Guégué) for a total capacity of 29.9 MW with only 15MW guaranteed. Most of the thermal generators have low efficiencies, leading to high fuel consumption. Regarding hydropower on the island, Guégué has been out of service since 2011, making Contador Hydropower Plant (2MW) the country’s only current source of utility-scale renewable energy. In 2015, São Tomé relied on the Contador hydropower plant for about 6.6 percent of its power but this share was reduced 5.5 percent in 2017. The Government’s stated objective is reaching 40 percent renewable energy penetration by 2020. The Power Sector Recovery Project (P169196) contributes to this objective by rehabilitating the Contador plant and developing the Least Cost Development Plan (LCD). 3. The energy utility (EMAE) faces challenges related to management and commercial viability. Two thirds of its current estimated 40 percent of losses were non-technical. These alone are estimated to increase the overall cost of production of electricity by over a third, independent of the energy source used. Therefore, despite high tariffs, EMAE is not able to recover energy costs with its revenues and EMAE has accumulated arrears with the Government and suppliers. It has also underinvested in the company, leading to low-quality service and high customer dissatisfaction. The major commercial problem faced by EMAE is proper metering, billing, and payment of the clients’ bills. Not all clients have meters and those who have are not measuring electricity consumption properly because of their age. Thus, clients are billed by estimate or the minimum amount. Furthermore, revenue collection in remote areas is challenging in the absence of an EMAE payment point. 4. Through the second DPO series and the Power Sector Recovery Project, the WBG is supporting an integrated and synergetic solution to energy issues in STP. While the Power Sector Recovery Project supports the infrastructure and plans needed to revamp the energy sector in STP such as the rehabilitation of the hydroelectric power plant, transmission lines, managerial improvement plan for EMAE, the DPO focuses on the policies needed to enable these improvements. For instance, the DPO supports the adoption of the LCD plan as the binding mechanism to expand the power sector in STP. The DPO also supports measures with more immediate effects on the finances of EMAE such as the change in commercial practices and the inventory of government bills. It also supports the enactment of regulations that are foreseen in legislation and were never implemented, which drafts are financed by the Power Sector Recovery Project. 54 5. The Power Sector Energy Efficiency Improvement TA contributed with studies for the improvement of EMAE’s financial sustainability. It is also contributing to the improvement of the quality of electricity services by reducing the system’s technical and non- technical losses in the generation, transmission and distribution, and by promoting energy efficiency programs on the demand side. A TA for Strengthening Energy Monitoring and Planning, still ongoing, follows this up. It is aimed at improving monitoring and planning capacity of the GoSTP in the energy sector and promote renewable energy development. The recommendations of these studies are being taken up for implementation within the framework of the Power Sector Recovery Project, including a reform strategy to bring tariff rates closer to cost recovery while improving the targeting of subsidies. 6. PPIAF TF Project: Private Sector Participation Options to Foster Renewable Energy: The overall objective of the TA is to enable the Government of STP to attract private financing for low cost, low carbon but capital intensive hydropower and solar IPPs through review of the effectiveness of the legislative framework, benchmark hydro and solar IPP projects in the region and the sector's investment and capacity needs and to develop standard documentation for IPPs. It is expected that there will be capacity building within the involved entities that would enable them to continue the process of private sector participation and accomplish the Climate Change goals and secure the energy supply of the country. 55 Annex 6: World Bank Group Support to the Financial Sector in STP 1. In response to client demand, and in line with the GoSTP’s priorities, the WBG has increased its engagement on the financial sector development in STP. The starting point was the FSDIP, adopted by the Government in September 2016 to provide a coherent vision and strategy for financial sector development. The FSDIP is followed by two FIRST-funded TA projects on banking resolution (essential for strengthening financial stability) and payment systems, which includes promoting retail payments and mobile financial services for inclusion which are informing and advancing the reforms of the financial sector pillar of the new DPO series. In FY18, the World Bank approved a new multi-GP Investment Lending Operation (IPF) focused on strengthening institutional capacity for financial inclusion and stability, public financial management, land registration, and statistics. 2. The World Bank Resolution Support Project financed by FIRST supports the central bank (BCSTP) in improving financial stability, by increasing supervisory capacity for off- and on- site supervision and strengthening the regulatory framework for bank resolution. The current focus is on the regulatory framework for effective bank resolution. This will involve supporting efforts by the BCSTP to prepare the regulations and guidelines necessary to implement the new bank resolution law. 3. The Payment Systems Strengthening and Financial Inclusion Project, also financed by FIRST, aims to support the GoSTP in improving financial inclusion and the overall efficiency of the economy, by assisting the central bank in developing the national payments system, improving its oversight and enhancing the legal framework to include all electronic payments and services, supporting microfinance institutions, and strengthening financial consumer protection as well as the credit information infrastructure. It supports a strategy for enhancing retail payments including person-to-person, person-to-business, business-to-person, business-to- business, person/business-to-government, and government-to-person/business payments including by mobile platforms. It will lay the groundwork for investments in the national payments system. 4. The Institutional Capacity Building Project is an IDA grant (US$12 million) that provides a solid basis for a comprehensive multi-year operation to support implementation of the FSDIP action plan. This IPF focuses on strengthening institutional capacity for financial inclusion and stability, public financial management, land registration, and statistics. This includes activities to strengthen the central bank’s capacity in supervision; support investments in financial infrastructure, including enhancements to the public credit registry (hardware, software, and a disaster recovery site) and movable collateral registry. It also includes a component to finance the review of asset quality in the banking sector, which is an IMF structural benchmark. The Project thus complements the TA being provided under the FIRST funded projects and also supports the reform programs in the financial sector pillar of the DPO series. 56 Annex 7: Select Financial Soundness Indicators 2012 2013 2014 2015 2016 2017 18-Sep Capital Adequacy Capital (net worth) to risk weighted assets 20.3% 22.7% 22.6% 24.1% 27.8% 33.6% 31.2% Percentage of banks greater or equal to 10 percent 88% 75% 75% 86% 100% 100% 100% Percentage of banks below 10 and above 6 percent minimum 0.0% 12.5% 12.5% 0.0% 0.0% 0.0% 0.0% Percentage of banks below 6 percent minimum 12.5% 12.5% 12.5% 14.3% 0.0% 0.0% 0.0% Deposits w/banks below 6% (Dobra billion ) 83 59 325 455 0 0 0 Capital (net worth) to assets 23% 18% 20% 16% 23% 24% 21% Tier 1 Capital Ratio 76% 68% 72% 62% 91% 94% 94% Tier 2 Capital Ratio 24% 24% 15% 12% 9% 6% 6% Tier 1 to assets 19% 21% 19% Asset quality Past-due loans to gross loans 67% 30% 36% 35% 31% 28% 23% Nonperforming loans (Dobra billion) 292 310 329 570 438 401 305 Nonperforming loans 15.4% 16.9% 19.1% 29.8% 27.1% 24.9% 17.9% Watch-listed loans 51% 14% 17% 5% 4% 3% 5% Impaired assets/gross lending 7% 9% 9% 17% 16% 20% 15% Provisions (Dobra Million) 242 512 345 516 380 378 317 Provision as percent of past-due loans 0% 56% 45% 69% 71% 80% 74% Total assets (Dobra billion) 3,784 4,007 4,580 4,809 4,435 3,988 4,264 % change in total assets over past 12 months 28.7% 5.5% 14.3% 5.0% -7.8% -10.1% -0.1% Foreign exchange loans to total loans 58% 54% 47% 42% 27% 17% 10% Large exposures (>=10 % capital) to capital 48% 56% 45% Foreign-currency-denominated loans to total loans 27% 17% 10% Customer deposits to total (moninterbank) loans 158% 168% 172% Earnings and profitability Net Income to average assets (ROA) -0.83% -2.10% -3.15% -5.19% 0.03% -0.62% 0.70% Net Income to average capital (ROE) -3.27% -9.33% -15.92% -27.05% 0.18% -2.98% 3.52% Noninterest expense to gross income 80% 428% 110% 141.02% 73.69% 74.22% 72.28% Personnel expense to gross income 25% 33% 39% 40% 31% 31% 32% Noninterest income to gross income 58.32% 385.20% 59.74% 89% 55% 64% 58% Net profit (Dobra Billion) -32 -82 -135 -226 2 -26 29 Net profit of prior 12 months as % of average total assets ** -1% -2% -3% -5.19% 0.03% -0.62% 0.70% Expense(w/amortization & provisions)/income 118% 471% 164% 216% 109% 113% 92% Net profit (before tax)/net income 100% 100% 100% 100% 100% 100% 100% Net Interest Margin 68% 10% 11% 11% 11% 11% 9% Net Interest Margin to Gross income 60% 60% 49% 51% 46% 51% Personnel expense to noninterest expenses 32% 36% 34% 39% 41% 44% Liquidity Liquid assets/total assets 38% 41% 46% 52% 54% 50% 50% Liquid assets/short term liabilities 61% 40% 73% 73% 85% 69% 66% Loan/deposits 102% 86% 70% 64% 63% 60% 58% Liquid Assets/total deposits 77% 76% 85% 83% 94% 73% 73% Loan/total liabilities 65% 56% 47% 47% 47% 53% 51% Excess reserves/broad money 8% 20% 19% 18% 37% 30% 76% Sensitivity to market risk Foreign exchange liabilities/total liabilities 31% 27% 28% 30% 27% 29% 25% Foreign exchange liabilities to shareholders funds 105% 119% 110% 163% 91% 91% 92% Foreign currency deposits/official reserves 85% 65% 69% 65% 61% 52% 53% **During the year, accumulated in the period, not 12 months. Source: Central Bank of STP, 2018. 57 Annex 8: Improving Business Regulation in São Tomé and Príncipe 1. During the early years of the implementation of the STP FY14-FY18 CPS, major strides were made in improving business regulation in STP. Two examples of success stories are: (1) the one stop business registration; and (2) the single window for international trade. These reforms were supported by the São Tomé Investment Climate Advisory Services project (IFC Advisory Services #594467), which ran from January 2013 till June 2018. The one-stop shop for business registration 2. The one-stop shop for business registration (the Guiché Único para Empresas, or GUE) has been an important achievement in improving the investment climate and a major factor in improving the country’s Doing Business (DB) ranking. The October 2015 DB report showed that STP improved its rank in the Starting a Business indicator from 130th, before the reform, to 31st out of the 189 economies measured then. Moreover, its absolute score on the ‘distance to the frontier’ in this indicator has improved from 69.4/100 to 93.9/100, nearing the global best practice. 3. The GUE was strengthened with the development of the GUEnet platform (www.guenet.st), an information system for creating, modifying, and winding up a company. GUEnet was formally launched in February 2016. Until June 2018, 830 companies had been incorporated using the online system. 4. GUEnet combines three interfaces that automate key administrative procedures involved in a company’s life cycle: ▪ Public front office: This part is visible to the public at large and allows users to conduct searches on companies, regulations and more, as well as create their own accounts. ▪ Private front office: The part visible only to an individual user with his/her own account. This is where the user is able to establish and modify companies. ▪ Back-office: Accessible only to GUE agents and other institutions connected with it. This is where officials manage company creation and modification and interact with users. 5. Before the reform, entrepreneurs would be required to conduct four separate steps, over a period of 10 days, just to start a business. Today, they can save time and resources and start their activities faster, incorporating in less than one hour using the GUEnet. Procedures such as the name search and publication of the notice of incorporation have been fully automated. The name search is conducted online, while the publication has been legally transferred from the paper ‘Diario da Republica’, which often took months to publish, to a simple online publication at the GUE. 6. To complement the GUE, the Government has also launched the online business-licensing portal (http://frontoffice.gue-stp.net/licence_choix.php5), which (a) allows users to find the licenses they need to start various businesses and (b) advises users on how to go about obtaining the licenses. This has increased overall transparency and reduced the time required to obtain business licenses. 58 The single window for international trade 7. The Government and the WBG, along with the Investment Climate Facility for Africa (ICF), shared a vision for the modernization of the trade logistics system in the country: an online single window for trade. However, to move from a complex paper-based system to a fully electronic one would require a phased approach to ensure a sustainable reform. The WBG committed to provide the technical assistance for this process, while the ICF financed the software and infrastructure to set up the single window. 8. The single window for international trade (GUCE – Guiche Unico de Comercio Externo) integrated nine government agencies involved in the import-export process. The WBG team worked with each individual agency and mediated among them to educate them about the proposed system and the value of the online platform. Each agency had different business processes and information requirements about the goods traded. Before integration into the online platform, the WBG team worked with the agencies to rationalize and standardize these processes. 9. Several milestones ensured the reform’s success: a) Establishment of a risk-based inter-agency physical inspection procedure. Prior to the reform, customs and other agencies were conducting physical inspections on nearly 80 percent of all consignments. Thanks to training from the WBG team, the agencies now conduct joint inspections on just 18 percent of all cargo. b) Remote access to information and document submission for customs brokers and shipping agents. Parties are now able to conduct trade procedures online, eliminating the need for paper documents, which were prone to mistakes and opportunities for unofficial payments. c) Single payment for all duties, fees and taxes. Previously, traders had to visit six agencies to make seven payments for a single import transaction. 10. The easing of trade procedures has contributed to time and cost savings for both traders and the public sector. The reforms implemented by the GoSTP are reflected in international comparisons of the ease of doing business. STP moved closer to the regulatory frontier of best practice in the trading across borders indicator—improving its score from 62.43 points in the Doing Business 2015 report (data as of May 31, 2014) to 66.03 in DB2018. During that period STP reduced the border compliance time from 163 to 150 hours for imports and from 115 to 83 hours for exports. These improvements in trade procedures build on previous advance in reducing the costs to import and export, as illustrated in the reduction from US$937 to US$690 in the cost to export, and from US$784 to US577 in the cost to import, between 2011 and 2014. (Doing Business methodology for trading across borders changed in 2015, hence it is not possible to compare the data between the old and new methodology). 59 Annex 9: Evolution of Partnerships in São Tomé and Príncipe 1. WBG ensured close coordination with DPs on policy dialogue. Effective collaboration and coordination between the World Bank, the IMF, the AfDB and the EC helps advance the policy dialogue on macroeconomic, PFM, and structural reforms. The World Bank coordinates closely with the IMF on the DPO series especially regarding fiscal and tax reforms. The World Bank also fosters policy dialogue with partners such as Angola, the Netherlands, Israel, Brazil, and Portugal, while undertaking regular dialogue with domestic stakeholders including the relevant Commissions in Parliament, business organizations and civil society organizations. This dialogue is helping narrow the information gap regarding World Bank activities, underlined in client surveys. The GoSTP is assuming stronger leadership over donor coordination, beginning with the preparation of the October 2015 London SteP-In Conference and has been maintained since, although meetings are irregular. 2. WBG successfully leveraged financing from partners and collaborated on project design to support key lending priorities. In the energy sector, the Power Sector Recovery Project (P157096) has mobilized US$13 million from the EIB. In transport, a joint approach to climate resilient road rehabilitation has been developed for the Transport Development and Coastal Protection Project (P161842), with EIB and RVO (Dutch Bilateral cooperation) financing a parallel project (US$30 million) to strengthen the resilience of and rehabilitate the seafront road in the capital, São Tomé. In the financial sector, the World Bank is providing parallel technical assistance through the ongoing FIRST Payments TA project for the AfDB investment operation in payments systems infrastructure, while the recommendations of the Financial Sector Strategy TA (P150418) are being implemented through activities financed by AfDB. The World Bank has also worked closely with UNDP toward implementation of the Adaptation to Climate Change Project (P111669), and with UNICEF through the design and piloting of the Parental Education Program, as well as design of the Social Protection and Skills Development Project (P163088). 3. Also, WBG leveraged resources from partners and TFs to fund advisory work. The GEF provided US$4.3 million for the FY11 Adaptation to Climate Change Project, which closed in FY17, as well as US$1.15 million for the FY18 WACA Project. The GPE funded US$1.1 million for the Education for All Project, and the TF for Statistical Capacity Building funded the FY17 Household Budget Survey Recipient Executed TF Project. The CPS also made strategic use of World Bank Executed TFs to guide client reforms and WBG engagement.19 The World Bank has supported STP through a South-South Knowledge exchange TF, including knowledge exchanges between STP and Mozambique and Cape Verde, which culminated in the development of the STP Investment Promotion Strategy. The World Bank also mobilized Africa Renewable Energy Access Program TF to finance a Strengthening Energy Sector Monitoring and Planning Capacity ASA (P155621). Resources have been secured through the PPIAF TF to support the establishment of a PPP framework in the energy sector (“TF0A7283 Private Sector Participation Options to Foster RE and Achieve NDC Targets for STP” project, US$0.1 million). 19 The Financial Sector Reform and Strengthening Initiative (FIRST) funded activities to strengthen bank resolution and payment systems; the Energy Sector Management Assistance Program (ESMAP) funded an ASA to strengthen client capacity for planning and monitoring in the energy sector; the PPIAF TF funded an ASA on Private Sector Participation Options to Foster Renewable Energy and the Rapid Social Response (RSR) program funded an ASA to develop delivery systems for social protection programs, which informed the development of the FY19 Social Protection and Skills Development Project. 60 Annex 10: Map of São Tomé and Príncipe 61