The World Bank ICT Sector Support in Somalia Phase II (P152358) REPORT NO.: RES38158 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ICT SECTOR SUPPORT IN SOMALIA PHASE II APPROVED ON JUNE 8, 2015 TO THE FEDERAL REPUBLIC OF SOMALIA DIGITAL DEVELOPMENT GLOBAL PRACTICE AFRICA REGION Regional Vice President: Hafez M. H. Ghanem Country Director: Bella Bird Regional Director: Riccardo Puliti Practice Manager/Manager: Michel Rogy Task Team Leaders: Timothy Kelly, Axel Rifon Perez The World Bank ICT Sector Support in Somalia Phase II (P152358) ABBREVIATIONS AND ACRONYMS ICT Information and Communication Technologies IP Implementation Progress IPF Investment Project Financing ISP Internet Service Provider ISR Implementation Status Report MoF Ministry of Finance MPF Multi-Partner Fund MPTT Ministry of Posts, Telecommunications and Technology NCA National Communications Authority PDO Program Development Objective PPIAF Public Private Infrastructure Advisory Facility SCALED-UP Somalia Capacity Advancement Livelihoods and Entrepreneurship through Digital Uplift Program (P1168115) SIM Subscriber Identification Module SPF State and Peace-building Fund TF Trust Fund USD United States Dollars The World Bank ICT Sector Support in Somalia Phase II (P152358) BASIC DATA Product Information Project ID Financing Instrument P152358 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 08-Jun-2015 30-Sep-2019 Organizations Borrower Responsible Agency Ministry of Posts, Telecoms and Technology,Ministry of Ministry of Finance Posts, Telecommunications and Technology, Federal Government of Somalia Project Development Objective (PDO) Original PDO The overarching Project Development Objective (PDO) for this series of projects is “to support the ICT Sector in Somalia by contributing to establishing an enabling environment and by encouraging efficiency and equity in access to connectivity”. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A7699 13-Jun-2018 13-Jun-2018 13-Jun-2018 30-Sep-2019 2.50 2.50 0 TF-A0175 15-Jun-2015 15-Jun-2015 15-Jun-2015 30-Sep-2019 7.00 6.96 .04 The World Bank ICT Sector Support in Somalia Phase II (P152358) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The World Bank is providing technical assistance to the Ministry of Posts, Telecommunications and Technology (MPTT) and the Ministry of Finance (MoF) of the Federal Government of Somalia. The ICT Sector Support Project in Somalia Phase 2 is utilizing US$14 million in funding from the Somalia Multi-Partner Fund (MPF), plus a further US$1.2 million leveraged from the EU AfricaConnect2 Fund, and US$2 million in additional financing from the State and Peace-building Fund (SPF). The Project Development Objective is “to support the ICT Sector in Somalia by contributing to establishing an enabling environment and by encouraging efficiency and equity in access to connectivity”. 2. Grant agreements for the Second Phase of the ICT Sector Support Project were signed in June 2015 and have been extended until 30 September 2019. Grant agreement amendments, increasing the availability of funds, were signed in September 2015, October 2016, January 2018 and September 2018. As a result, all of the US$ 16 million appraised, plus additional financing of US$2 million, is now available. In the latest Implementation Status Report (ISR), dated 13 May 2019, both project development objective (PDO) and implementation progress (IP) were rated “Satisfactory”. Virtually all of the project indicators have been met or exceeded, one exception being the award of formal telecom licenses. Nevertheless, through the letters issued to operators at the start of 2019, the major operators can now be considered as operating under jurisdiction of the regulatory agency, the National Communications Authority (NCA). The disbursement of funds to date is summarized in the Table below. For the Recipient-executed portion of the fund, disbursement is currently running at over 99 per cent, while for the Bank- executed portion it is at 68.0 per cent. Additional support from PPIAF has also been made available to assist in the establishment of the regulatory authority. Table: Disbursement and implementation progress, Phase 2, 15 June 2015 – 30 September 2019 (excluding AfricaConnect funding) Grant (date signed) Budget Disbursement at 2 Funds committed Comments allocated September 2019 /remaining at 2 (US$m) (%) September 2019 (%) Main focus of remaining Component 1: Enabling US$4.5m 2,572,605 (57.2%) 1’927,395 (42.8%) funds on support for Environment Regulatory Authority Second phase of research largely completed with Component 1: recent consultation meeting Additional financing for US$2m 1,845,327 (92.3%) 154,673 (7.6%) held in Mogadishu. drought response Distribution of drought payments underway. The World Bank ICT Sector Support in Somalia Phase II (P152358) Component 2: Funds fully disbursed and or Enhanced connectivity committed. Requirement to and US$9.5m 9,549,884 (99.6%) 40,166 (0.5%) produce draft ICR report and Component 3: Program final audit using remaining Management resources. Proposal no cost extension to 13,967,816 Overall US$16m 2,122,234 (12.7%) life of project to 30 June (87.3%) 2020. 3. By a letter sent from the Government on 11 July, with a follow up on 25 July, the Government of Somalia has formally requested an extension to the closing date of the project and additional funding. The request was sent by MPTT, and was followed up in discussions during a mission to Mogadishu, from 17-18 July 2019. The main reasons put forward by the Government for this project restructuring are: i. The MPTT lacks other sources of support (the SCALED-UP program (P168115) is mainly supporting the NCA); ii. The extension was requested at the April 2019 stakeholder consultation meeting, convened by the Ministry among the federal government, the federal member states and the private sector. This indicates a strong level of "ownership" of the activities and reforms undertaken by the project; iii. The extension of the project is needed to maintain the dialogue with the counterpart and support the preparation of the possible next phase of World Bank engagement around the Horn of Africa Digital Foundations regional program, iv. The Ministry requested that there are a number of high priority areas to study in order to move the digital agenda forward and to serve as building blocks for the development of a Digital Economy in Somalia. 4. As the sole donor involved with supporting the MPTT, the World Bank and the project are well placed to support the Client to conduct these activities which include: i. A risk assessment and mitigation study, related to the vulnerability of the digital ecosystem (especially mobile money); ii. A digital readiness diagnostic study; iii. Policy work on cybersecurity, data protection etc. The World Bank ICT Sector Support in Somalia Phase II (P152358) 5. The extension request was discussed further during the 17-18 July mission, in particular the three additional areas of focus. It was agreed that the Government would participate actively in the upcoming regional meetings on the Horn of Africa initiative, including in Addis Ababa at the start of September (originally planned for 9-10 September) and at the World Bank Annual Meetings in the week of 14 October 2019. The latter would also provide an opportunity for fundraising in the wider donor community. In its formal response, dated 1 August 2019, the World Bank acknowledged the request but noted that, unfortunately, all available funding from the Somalia Multi- Partner Fund is fully committed. Nevertheless, the World Bank proposed a no-cost extension to the closing date of the project to 30 June 2020. This would allow all undisbursed funds, notably under the Trust Funds that are World Bank-executed on behalf of the Recipient, to be fully utilized. The World Bank team also encouraged the Ministry and the NCA to make full use of the funding available under the SCALED-UP program, which is now effective. II. DESCRIPTION OF PROPOSED CHANGES 6. The restructuring involves a proposed extension of the Recipient Executed Trust Funds TF0A0175 and TF0A7699 for nine months. The cumulative extension would amount to 27 months, thus requiring approval by the Regional Vice President. The project will be five years at the time of the revised closing date. 7. In addition, approval is also sought to extend the two Trust Funds that are Bank Executed on behalf of the Recipient (TF0A0466 and TF0A7479) from 30 September 2019 to 30 June 2020. The level of disbursement, as of 2 September 2019, is highlighted in the Table above. 8. A transfer of US$193,900 is proposed between categories of expenditure from Category 1 to Category 2 for the Puntland Support (TF0A0175 and TF0A7699). 9. A reallocation of funds between components, to reflect the revised budget. Some US$0.46 million would be transferred from Component 2, reducing the total from US$7.8 million to US$7.34 million, The US$0.46 million would be transferred into Component 3, increasing the total from US$1.7 million to US$2.16 million. 10. Most of the project indicators are revised to the new closing date of the program (June 30, 2020). The only exceptions are those indicators which have already been achieved (e.g. creation of the NCA) or where the activity is ended (such as the Communications Rooms). One indicator, on SIM card registration, is proposed for deletion. This is because the emphasis under the new SCALED-UP program has now shifted to Digital ID, and because no household survey is likely to be available in time for validation. 11. The proposed closing date extension meets the requirements of the World Bank Investment Project Financing (IPF) Directive regarding extension of closing dates, specifically: (i) the project objectives remains achievable; (ii) the performance of the Borrower remains satisfactory; (iii) the World Bank and the Borrower agree on actions that will be undertaken by the Borrower to complete project critical activities (a revised budget is attached); and (iv) it is confirmed there are no outstanding audits and/or interim financial reports. The World Bank ICT Sector Support in Somalia Phase II (P152358) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank ICT Sector Support in Somalia Phase II (P152358) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) 1. Enabling environment 4.50 No Change 1. Enabling environment 4.50 2. Efficiency and equity in access 2. Efficiency and equity in 7.80 Revised 7.34 to connectivity access to connectivity 3. Support the Project 3. Support the Project 1.70 Revised 2.16 Implementation Unit Implementation Unit TOTAL 14.00 14.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications TF-A0175 Effective 31-Mar-2018 30-Sep-2019 30-Jun-2020 30-Oct-2020 TF-A7699 Effective 30-Sep-2019 30-Jun-2020 30-Oct-2020 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed TF-A0175-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: Gd,Wk,NonCS,CS,Tg,OC Pts 1A and 2A 6,500,000.00 6,332,086.37 6,332,087.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Gd,Wk,NonCS,CS,Tg,OC Pts 1B and 2B 500,000.00 473,979.83 667,913.00 100.00 100.00 Total 7,000,000.00 6,806,066.20 7,000,000.00 The World Bank ICT Sector Support in Somalia Phase II (P152358) TF-A7699-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: Gd,Wk,NonCS,CS,Tg,OC Pts 1A and 2A 2,500,000.00 822,035.75 2,473,934.00 100.00 100.00 Current Expenditure Category: Goods, works, non-consulting - 100% services, iLap Category Sequence No: 2 consultants' services, Training and Operating Costs under Parts l.B & 2.B 0.00 0.00 26,066.00 100 Total 2,500,000.00 822,035.75 2,500,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 1,000,000.00 1,000,000.00 2016 4,000,000.00 3,000,000.00 2017 6,500,000.00 4,500,000.00 2018 4,000,000.00 3,000,000.00 2019 0.00 1,500,000.00 2020 0.00 500,000.00 2021 0.00 0.00 . The World Bank ICT Sector Support in Somalia Phase II (P152358) . Results framework COUNTRY: Somalia ICT Sector Support in Somalia Phase II Project Development Objectives(s) The overarching Project Development Objective (PDO) for this series of projects is “to support the ICT Sector in Somalia by contributing to establishing an enabling environment and by encouraging efficiency and equity in access to connectivity”. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 to support the ICT Sector in Somalia by contributing to establishing an enabling environment Establishing an ICT licensing and No Yes Yes Yes Yes taxation framework (Yes/No) Increased contribution of ICT Sector to public treasury 3,200,000.00 8,000,000.00 10,000,000.00 11,000,000.00 12,000,000.00 (Amount(USD)) Action: This indicator has been Revised to support the ICT Sector in Somalia by encouraging efficiency and equity in access to connectivity International internet bandwidth 85.00 340.00 510.00 680.00 850.00 per inhabitant (Number) Action: This indicator has been Revised PDO Table SPACE The World Bank ICT Sector Support in Somalia Phase II (P152358) Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 1. Enabling environment Establishment of independent federal ICT regulatory agency No Yes Yes Yes Yes (Yes/No) Mobile licenses issued (Number) 0.00 1.00 3.00 3.00 4.00 Action: This indicator has been Revised Number of ISPs authorized 0.00 3.00 5.00 8.00 10.00 (Number) Action: This indicator has been Revised 2. Efficiency and equity in access to connectivity International Internet Bandwidth 2 Gbit/s 4.00 6.00 8.00 10 Gbit/s (Text) Action: This indicator has been Revised Number of communications rooms 0.00 3.00 6.00 10.00 15.00 established by project (Number) Universities provided with 0.00 3.00 6.00 10.00 15.00 improved bandwidth (Number) Action: This indicator has been Revised SIM card registration (Number) 0.00 0.00 0.00 500,000.00 100,000.00 Action: This indicator has been Marked for Deletion The World Bank ICT Sector Support in Somalia Phase II (P152358) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 3. Support the Project Implementation Unit Number of people trained via the 10.00 20.00 40.00 60.00 80.00 project (Number) Action: This indicator has been Revised IO Table SPACE The World Bank ICT Sector Support in Somalia Phase II (P152358)