The World Bank Implementation Status & Results Report Second Private Sector Competitiveness and Economic Diversification Prj (P144933) Second Private Sector Competitiveness and Economic Diversification Prj (P144933) AFRICA | Lesotho | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2014 | Seq No: 12 | ARCHIVED on 23-May-2019 | ISR36218 | Implementing Agencies: Ministry of Development Planning, Ministry of Trade and Industry Key Dates Key Project Dates Bank Approval Date: 31-Oct-2013 Effectiveness Date: 09-Jan-2014 Planned Mid Term Review Date: 29-Feb-2016 Actual Mid-Term Review Date: 08-Feb-2016 Original Closing Date: 30-Apr-2019 Revised Closing Date: 30-Jun-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The development objective of the proposed project is to contribute to the development of selected non-textile sectors resulting in increased private sector investment, firm growth and job creation. Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured) To improve the business environment for firms, strengthen select government institutions, and further diversify the economy. Components Table Name Improving the Business Environment:(Cost $5.13 M) Supporting Economic Diversification:(Cost $5.69 M) Project Implementation:(Cost $2.58 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions Component 1, rating Moderately Satisfactory. On Component 1 the delayed Doing Business laws are still impeding the recovery of the Satisfactory rating. The three (3) key bills – Business Licensing and Registration Bill, Security Interest in Movables Bill and Insolvency Bill are progressing well, but still not enacted by the Parliament, thus impeding the full reform potential. On the bright side, all related digital and IT systems are in final stages of implementation and progressing well, either being upgraded, or getting enhanced with new functionality, thus making it easier and more efficient for the private sector to start a 5/23/2019 Page 1 of 7 The World Bank Implementation Status & Results Report Second Private Sector Competitiveness and Economic Diversification Prj (P144933) business, obtain construction permit, get credit and trade across borders. Specifically, the main recipients of digital systems support – the Central Bank, Ministry of Trade, OBFC, MCC, LRA and the Ministry of Law are digitizing and automating their processes. The new Business Facilitation Portal of OBFC implemented by UNCTAD is a world-class One-Stop Shop for information on business registration, licensing and permits. The Credit Bureau system is fully implemented and supported, covering now 11.3% of Lesotho’s adult population. The Central Bank is continuing its outreach and dissemination activities. MCC’s e-Construction Permit was upgraded and enhanced with online payments. On the LRA support, the disaster recovery site (DRS) for the ASYCUDA customs management systems is completed. The project engaged UNCTAD to upgrade and extend certain features of ASYCUDA with inception phase of this project completed and a resident consultant presently in-country. In addition, the consultant has started work on the development of a national Single Window for trade logistics. The consultant and LRA have delivered a Blueprint and identified the scope of the work for the supporting legal framework, which is pending Cabinet approval. Once approved, a Legal Working Group will be stablished. As a new activity, the PMU agreed to extend its support to the ongoing automation and digitization of the Land Registry under the LAA. All major digital and IT activities are proceeding according to plan. On Doing Business related procedures and processes, the mission, and the Country Management Unit facilitated a half-day VC workshop between the Government and the Topic Leads of the Doing Business Surveys team in Washington, DC on May 13, 2019. Component 2, rating Satisfactory: All activities are progressing well, and all agreed actions during previous mission are progressing on time. Significant progress was also noted in procurement, with the biggest procurement – the construction of the Tourism and Handicraft Center ongoing. On Horticulture, one of the key milestones is the restoration of the Global GAP certification for the Likhothola fruit farm. The other two farms (Maomafubelu and Likhotlane) supported by the project have just started bearing fruit and it is recommended that the PMU undertakes early preparations for Global GAP certification for these farms as well. An Agricultural Finance Department was created in the Lesotho Post Bank (LPB), four lending products were designed, the staff of the LPB were trained on the various aspects of agricultural lending and two agricultural loan officers were hired. The Bank has received 19 agricultural loan applications, of which nine were recommended for approval. The recommended projects included poultry, piggery, shade nets and irrigation systems. On Investment Climate, the LNDC internal realignment is progressing well with the appointment of three General Managers for the units of Investment and Trade Promotion, Property Development and Management and Development Finance (the Corporate Services position is still vacant) and ongoing business process reengineering. The mission suggested potential support for the Lesotho Economic Laboratories initiative for the establishment of the proposed Prime Minister’s Delivery Unit with focus on transaction advisory support for high potential horticulture investments through strengthening the role of LNDC. On Tourism and Handicrafts: 6 new establishments were registered from October 2018 till May 2019 amounting to a total of 33 Star Graded establishments to date. It is important that clear guidelines are established prior to construction of establishments as well as regular knowledge sharing sessions between Lesotho Tourism Development Corporation and the Lesotho Hospitality and Hotel Association members to increase understanding of the benefits of grading. Assessors also require continuous training to enhance their skills. The activities on strengthening the handicrafts industry included 1) provision of continuous training to 18 artisans and 2) training of two local commercial agents on the various aspects of handicraft marketing as well as support to their participation in the international shows. The activities resulted in increased local market sales and 400 basket orders for the US market. On LEAP: from Total Budget: Maloti 7 335 000.00, Maloti 860,000 were committed during this reporting cycle, amounting to a total of Maloti 5.0 million Maloti in total assistance. The Government payments delays, have however contributed to significant delays in delivering payments to SMEs. LEAP support operations have been suspended as the program manager is on leave and the project officer resigned. This is an opportunity to review the implementation arrangements for LEAP and identify sustainable options going forward. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- High High Macroeconomic -- High High Sector Strategies and Policies -- Low Low Technical Design of Project or Program -- Low Low Institutional Capacity for Implementation and Sustainability -- Moderate Moderate Fiduciary -- Low Low 5/23/2019 Page 2 of 7 The World Bank Implementation Status & Results Report Second Private Sector Competitiveness and Economic Diversification Prj (P144933) Environment and Social -- Moderate Moderate Stakeholders -- Moderate Moderate Other -- -- -- Overall -- Substantial Substantial Results PDO Indicators by Objectives / Outcomes Improve business environment, strengthen selected government institutions and diverisfy the economy IN00676807 ►Implemented reforms supporting private sector development (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 4.00 5.00 Date 31-Dec-2013 -- 13-May-2019 31-Dec-2021 During this Implementation Support period (November 18 - May 19) Doing Business acknowledged two new reforms directly supported by the project: 1. As a result of the ASYCUDA upgrade under LRA, Lesotho is #38 in Trade Across Borders indicator. 38 out of 195 countries is a great achievement; 2. Increased percentage of the adult population covered by the Credit Bureau - from 7,5 %to 13,5%. Hence the number of reforms, supported by the project, and officially acknowledged by DB is now 4. The 2 old doing Business reforms were confirmed by Doing Business years ago in the Getting Credit and Starting a Business indicator, and were subject to previous ISRs. A list of the 4 reforms acknowledged for Lesotho by DB, and supported by the project is below. DB 2019 Trading across Borders: Lesotho made exporting and importing easier by implementing an automated customs data management system, ASYCUDA.  DB 2017 Getting Credit: Lesotho improved access to credit information by expanding the coverage of its credit Comments: bureau.  DB 2016 Getting Credit: Lesotho improved access to credit information by establishing its first credit bureau.  DB 2014 Registering Property (Not supported by the Project): Lesotho made transferring property easier by streamlining procedures and increasing administrative efficiency.  DB2013 Starting a Business: Lesotho made starting a business easier by creating a one-stop shop for company incorporation and by eliminating the requirements for paid-in minimum capital and for notarization of the articles of association. Protecting Minority Investors (Not Supported by the Project): Lesotho strengthened investor protections by increasing the disclosure requirements for related-party transactions and improving the liability regime for company directors in cases of abusive related-party transactions. IN00676808 ►Direct project beneficiaries (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 205,000.00 220,000.00 Date 04-Sep-2013 -- 13-May-2019 30-Jun-2022 5/23/2019 Page 3 of 7 The World Bank Implementation Status & Results Report Second Private Sector Competitiveness and Economic Diversification Prj (P144933) this is counted as number of individuals and businesses (firms) using the newly available services from the reformed government institutions, example: number of individual covered by the credit bureau, number Comments: of businesses registered under the new OBFC system, number of applicants obtained Construction Permits under the new electronic Construction Permit system, etc. IN00676809 Female beneficiaries (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 20.00 22.00 IN00676810 ►Client satisfaction with selected government-to-business services (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 69.20 0.00 Date 05-Apr-2017 -- 13-May-2019 30-Jun-2022 Satisfaction with OBFC Services- business registration and licenses - 69,2% satisfied Comments: Satisfaction with LRA Services (customs, import/export) - 62,8% IN00676916 ►Jobs in the horticulture and handicraft sectors (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1,160.00 1,450.00 1,510.00 1,315.00 Date 31-Dec-2016 15-Oct-2018 13-May-2019 30-Jun-2022 Jobs in the Horticulture and Handicrafts sectors have not changed although have already surpassed 2022 projections.This indicator is no longer expected to grow faster due to staff rationalization program Comments: implemented at the horticulture farms that are supported by the project. Overall Comments PDO Good progress, implementation well on track. During this period DB recognized one more reform - Trada Across Borders, and one more reform - increase of the Credit Bureau coverage to 13,5%, hence 2 DB reforms are added for this supervision period, amounting to 4 DB reforms are officially recognized by DB. Intermediate Results Indicators by Components Improving the Business Environment IN00676917 ►Days required to obtain a construction permit from the Maseru City Council (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 106.00 95.00 95.00 30.00 Date 04-Sep-2013 15-Oct-2018 13-May-2019 31-Dec-2021 IN00676919 5/23/2019 Page 4 of 7 The World Bank Implementation Status & Results Report Second Private Sector Competitiveness and Economic Diversification Prj (P144933) ►Adult population covered by the Credit Bureau (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 7.50 13.50 13.00 Date 04-Sep-2013 15-Oct-2018 13-May-2019 31-Dec-2021 IN00676921 ►Agencies connected to the Trade Automation System (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 1.00 4.00 Date 31-Dec-2013 -- 13-May-2019 30-Jun-2022 Supporting Economic Diversification IN00676918 ►Registered lodging operations under the star grading system (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 28.00 33.00 40.00 Date 04-Sep-2013 15-Oct-2018 13-May-2019 30-Jun-2022 6 new establishments star graded, totaling to 28 during this period. Previous period 22 Comments: IN00676920 ►Tourism information center established and operational (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 04-Sep-2013 15-Oct-2018 15-Oct-2018 30-Jun-2022 Procurement for developer ongoing, 8 offers accepted, in process of selection and evaluation. Comments: IN00676922 ►Revenue generated by commercial horticulture farms (maloti) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 38,606.00 728,446.00 991,669.00 1,948,748.00 Date 30-Apr-2014 15-Oct-2018 13-May-2019 31-Dec-2021 IN00676923 ►Amount of funds disbursed to businesses through LEAP (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 56,422.00 -- 5,000,000.00 663,242.00 Date 31-Dec-2013 -- 13-May-2019 30-Jun-2022 5/23/2019 Page 5 of 7 The World Bank Implementation Status & Results Report Second Private Sector Competitiveness and Economic Diversification Prj (P144933) Overall Comments IR All indicators are progressing well, with some exceeding the end target during this period: 1. Percentage of adult population covered by the Credit Bureau has exceeded the end target of 13%, and is now at 13,5%! Well done Central Bank! Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P144933 IDA-53090 Effective USD 13.10 13.10 0.00 11.37 0.94 92% P144933 IDA-59610 Effective USD 13.40 13.40 0.00 3.62 10.23 26% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P144933 IDA-53090 Effective 31-Oct-2013 21-Nov-2013 09-Jan-2014 30-Apr-2019 30-Jun-2022 P144933 IDA-59610 Effective 24-Mar-2017 22-May-2017 25-Jul-2017 30-Jun-2022 30-Jun-2022 Cumulative Disbursements 5/23/2019 Page 6 of 7 The World Bank Implementation Status & Results Report Second Private Sector Competitiveness and Economic Diversification Prj (P144933) Restructuring History Level Approved on 14-Mar-2016 Related Project(s) P160964-Second Private Sector Competitiveness & Economic Diversification - AF 5/23/2019 Page 7 of 7