The World Bank Development Finance Project (P146319) REPORT NO.: RES33624 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF DEVELOPMENT FINANCE PROJECT APPROVED ON SEPTEMBER 25, 2014 TO FEDERAL REPUBLIC OF NIGERIA FINANCE, COMPETITIVENESS AND INNOVATION AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Rachid Benmessaoud Senior Global Practice Director: Ceyla Pazarbasioglu-Dutz Practice Manager/Manager: Rashmi Shankar Task Team Leader: Andrej Popovic Co-Task Team Leader: Nneamaka Okechukwu The World Bank Development Finance Project (P146319) ABBREVIATIONS AND ACRONYMS CGF Credit Guarantee Facility DBN Development Bank of Nigeria DLIs Disbursement Linked Indicators FM Financial Management FMOF Federal Ministry of Finance IBRD International Bank for Reconstruction and Development IERD International Economic Relations Department MFB Microfinance Banks MSMEs Micro, Small and Medium Enterprises PFI Participating Financial Institution PIU Project Implementation Unit The World Bank Development Finance Project (P146319) BASIC DATA Product Information Project ID Financing Instrument P146319 Investment Project Financing Original EA Category Current EA Category Financial Intermediary Assessment (F) Financial Intermediary Assessment (F) Approval Date Current Closing Date 25-Sep-2014 31-Dec-2021 Organizations Borrower Responsible Agency FEDERAL MINISTRY OF FINANCE,Development Bank of Federal Republic of Nigeria Nigeria Project Development Objective (PDO) Original PDO The project development objective is to increase the availability and access to finance for micro, small, and medium enterprises through eligible financial intermediaries with the support of a new wholesale development finance institution. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-84410 25-Sep-2014 25-Feb-2015 08-May-2015 31-Dec-2021 500.00 124.18 375.82 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Development Finance Project (P146319) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The project is funded by International Bank for Reconstruction and Development (IBRD) Loan in an amount of US$500 million. It supports the establishment of the Development Bank of Nigeria (DBN), a wholesale development finance institution that will provide long term financing and partial credit guarantees to eligible financial intermediaries for on-lending to micro-, small, and medium enterprises (MSMEs). The project also includes technical assistance for DBN’s institutional development as well as to eligible participating financial institutions – i.e. commercial banks - in support of downscaling their operations to the underserved MSME sector. The project has four components: i. Technical Assistance and Capacity Building in the amount of US$12 million; ii. Line of Credit Facility in the amount of US$445 million iii. Credit Guarantee Facility in the amount of US$35 million; and iv. Project Management in the amount of US$6.75 million. In addition, the front-end fee of US$1.25 million has been financed out of the proceeds of the loan. 2. The responsibility for implementation of Project Components 1 and 4 has been with the Project Implementation Unit (PIU) located at the International Economic Relations Department (IERD) within the Federal Ministry of Finance (FMOF), whereas the responsibility for implementation of Components 2 and 3 has been assigned to DBN. While Components 2 and 3 are to be disbursed through six disbursements linked indicators (DLIs) largely reflecting performance of the DBN, successful implementation of technical assistance (funded under Component 1 and managed by PIU/FMOF) is essential to this end. The PIU also serves as an administrative interface between the FMOF and the DBN regarding the on-lending of resources allocated under Components 2 and 3 - upon successful achievement of DLIs - via the Subsidiary Loan Agreement between FMOF and DBN. The Project was approved in September 2014 and it became effective in May 2015. The closing date of the project is December 2021. The disbursement rate is 24.84 percent. The details about disbursements are included below: Component 1: Technical Assistance and Capacity Building (US$12 million) 3. This component was primarily designed to fund tailored technical assistance to eligible participating financial institutions (PFIs) - i.e. commercial banks - to successfully downscale their operations to underserved MSMEs, as well as to support institutional development of DBN aimed at operationalizing its mandate. Technical assistance to PFIs is instrumental for supporting banks to reach out to MSMEs beyond their traditional client base and enhancing banks’ understanding and usage of novel lending techniques (e.g. cash-flow–based) required in environments where MSME’s The World Bank Development Finance Project (P146319) access to collateral is limited and weaknesses in the financial infrastructure inhibit efficient foreclosure on collateral. Technical assistance to DBN is critical to ensure strong corporate governance and technical capacity to run wholesale banking and credit guarantee operations, market assessments, monitoring, reporting and impact evaluation, and observing related requirements such as environmental and social risk management. To date there has been no progress with implementation of this component due to lack of capacity of the PIU, as further discussed under Component 4 below. Revival of implementation of this component by addressing past implementation challenges is the principal reason for the proposed project restructuring. Component 2: Line of Credit Facility (US$445 million) 4. This component was designed to provide US$445 million to the DBN – extended via loan from the FMOF - designated for lines of credit to eligible PFIs for on-lending to eligible MSMEs. Following its establishment and operationalization, including hiring of all key executives and Board of Directors, licensing by the Central Bank of Nigeria and selection of initial PFIs, the DBN has met all requirements under the first two disbursement linked indicators (DLIs) in June 2017 which has led to disbursement of US$120 million in support of DBN’s lending operations; the resources has been successfully on-lent from the FMOF to DBN. DBN has subsequently continued to record steady implementation progress, including hiring of new staff and successful capital raising exercise and admission of two new shareholders -- European Investment Bank and African Development Bank. As a result, DBN now has a capital base of NGN100 billion, fully in line with minimum capital requirements prescribed by the Central Bank of Nigeria for wholesale development banks. 5. The DBN has commenced with initial lending to 5 Microfinance Banks (MFBs) and 1 commercial bank in the total amount of NGN1.62 billion as at July 2018. The beneficiary PFIs include LAPO, National Police Force, Microcred (Baobab), Bosak, and Infinity MFBs as well as Wema Bank which have on-lent these resources to 9,986 end-borrowers, of which 58 percent were women. DBN has also appraised additional 15 additional PFIs – including 8 commercial banks and 7 microfinance banks - with plans to gradually commence with lending operations. Plans for appraisal of additional PFIs are also underway. Overall, implementation of this component and DBN performance to date has been satisfactory, especially having in mind that DBN had not yet benefitted from the planned technical assistance under Component 1 which is critical for its further success and achievement of project development objectives. Component 3: Credit Guarantee Facility (US$35 million) 6. This component was designed to provide US$35 million for a Credit Guarantee Facility (CGF) to be established as the DBN’s wholly owned subsidiary. The establishment CGF is currently underway upon which the DBN will have a full set of instruments to support PFIs in reaching the underserved MSMEs towards achieving its mandate and project objectives. In light of the past challenges with implementation of Component 1, the World Bank managed to secure grant funding from the United Kingdom’s Department for International Development to support the DBN with initial activities towards the establishment of CGF and has hired a consulting firm which has already commenced with both on-site and remote support to DBN with a view of operationalizing the CGF within the next year. Following the establishment of CGF, appointment of CGF Manager, and adoption of credit guarantee manual, the project will be able to disburse US$35 million Naira equivalent to capitalize the CGF entity under the third DLI. Going forward, the CGF will require additional technical assistance support from the project expected following the revival of implementation of Component 1 supported with this restructuring. Component 4: Project Management (US$6.75 million) The World Bank Development Finance Project (P146319) 7. This component was designed to fund the project management functions supporting the overall project implementation administered by the PIU (within the FMOF) with direct responsibility for implementation of Components 1 and 4. Initially, this component was administered by the PIU unit housed in the FMOF which had been responsible for the World Bank-funded PPP Project. The primary project management functions included fiduciary responsibilities (e.g. work planning, procurement, financial management, withdrawal and disbursement requests) required for implementation of Components 1 and 4 as well as other requisite activities in support of achieving project objectives with funding of relevant staff, consultants, training, equipment, and operational expenses. This component was also envisaged to fund innovation agenda by providing additional technical assistance support to DBN with novel instruments with the assistance of qualified external providers. 8. While activities under this component were critical for the establishment of DBN prior to hiring of the DBN’s permanent executive management, there were numerous implementation challenges and delays affecting overall project performance. In particular, these included fiduciary issues linked to work planning, approval protocols, procurement, contract management, and financial management resulting in delays with commencement of required technical assistance activities. To address these challenges, the World Bank and the FMOF had originally agreed in June 2016 to establish the new PIU solely dedicated to Development Finance Project (with prior arrangements relying on PIU also responsible for PPP Project managed by FMOF). The new PIU was fully established in June 2017 with the appointment of new PIU Coordinator (consultant) and three civil servants in the roles of procurement specialist, FM specialist/accountant, and internal auditor for which the World Bank has issued required no objections, with subsequent appointment of assistant project accountant (civil servant). However, despite these efforts there has been no substantial progress with revival of implementation activities and the legacy issues from the period prior to establishment of the new PIU persisted. Finally, the newly appointed PIU Coordinator had left the project some six months into appointment. 9. To address implementation challenges and advance implementation of technical assistance the FMOF has agreed with the DBN and the World Bank on a project restructuring that would assign DBN with fiduciary responsibility for managing project’s technical assistance activities. The FMOF request is included in Annex 1 of this Restructuring Paper. The rationale of this approach is to leverage DBN’s demonstrated implementation capacity and ensure synergy between its lending activities and provision of technical assistance to PFIs to reach the underserved MSMEs, thus ensuring success in fulfilling the DBN’s mandate and achieving the project development objective. II. DESCRIPTION OF PROPOSED CHANGES 10. Under the proposed restructuring approach, the DBN will be assigned with full fiduciary responsibility to manage US$12 million which is required towards this effort, an equivalent to original budget allocated to project Component 1: Technical Assistance and Capacity Building. The scope of the activities would be limited to TA aimed directly at strengthening DBN’s capacity as well as that of financial institutions in support of downscaling of their operations to successfully cater to underserved or unserved MSME sector. Under this proposal, DBN’s responsibility would include management of all activities required for the delivery of specific tasks (e.g. drafting terms of reference, procurement, contracting, contract management, payments, financial management, and reporting). 11. It is also important to note that Component 4: Project Management included a number of specific activities directly in support of DBN’s capacity building. While the responsibility for implementation of all of those activities would be assigned to DBN under the project restructuring, this would be covered from the proposed budget of US$12 million. The residual budget from Components 1 and 4 would remain dedicated to Component 4: Project Management within the Federal Ministry of Finance (see Table 2 below). The PIU at the FMOF will receive organizational and technical capacity building support towards successful implementation of activities under its responsibility under the existing fiduciary The World Bank Development Finance Project (P146319) arrangements. These activities will among other include administration of the Subsidiary Agreement, interfacing with relevant project entities and agencies on behalf of the FMOF, development finance policy coordination, relevant reporting, management of legacy contracts, all of which will be included in the annual work plan for this component. The only envisaged change to prior arrangements, which had already been communicated to FMOF in the context of prior implementation support, is that going forward the project audit for Component 4 would be conducted by Office of the Auditor General. 12. The indicative activities under the responsibility of DBN over the next three years, and fully in line with the original project design include, but are not limited, to the following:  TA to eligible PFIs (e.g. hiring consultant(s) to support the design and rollout of planned activities leading to selection of consulting firm(s) to support selected PFIs in adopting novel lending techniques – e.g. cash flow based lending - to downscale their operations to serve the MSME sector thus creating a pipeline of projects for DBN financing)  DBN’s Institutional Development (e.g. hiring expert consultants to support relevant technical activities including operationalizing E&S risk management policy, developing M&E framework, designing and conducing impact assessment, designing and conducting corporate governance reviews and supporting implementation of identified reforms, standardizing the selection and credit due diligence process and monitoring of PFIs)  Technical Assistance and Capacity Building for the Credit Guarantee Facility (e.g. hiring consultant(s) to support training, institutional development, and capacity building of CGF) The detailed activities will be identified in the context of development of annual work plans and procurement plan for these activities which will be prepared by DBN. 13. The World Bank has assessed DBN’s procurement and financial management capacity and confirmed its ability to take on this task. The conclusion of these assessments is as follows: Procurement  DBN has well-structured procurement system, with detailed procurement manual, code of ethics and standard bidding documents. The control environment is strong and payments are made promptly. The Procurement Officer has good general qualification and excellent specific experience in private sector procurement. To strengthen the public procurement capacity in DBN and to ensure that procurement activities to be carried out by DBN on behalf of DF Project satisfy the required standards, the first two post review contracts for consultancy services and one of goods, non-consulting services and National Shopping will be reviewed by the World Bank. Contracts within prior review thresholds will follow the laid down procedure for review and clearances. The World Bank team will provide necessary support and training to strengthen this mandate. Following the project restructuring the DBN will conduct assigned procurement activities in accordance with the World Bank procedures enshrined in the existing project agreements.  The DBN will be responsible for preparing the annual work plan and the procurement plan for the activities under Component 1: Technical Assistance and Capacity Building. The DBN will handle the bidding and supervision processes in an effective, efficient, and transparent manner to ensure value for money. For each contract to be financed by the IBRD loan, the selection method, estimated cost, the review type, and timeframe shall be agreed between the DBN and the World Bank in the procurement plan. The procurement plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Financial Management The World Bank Development Finance Project (P146319)  DBN has appropriate and adequate financial management systems in place. The accounting and internal audit staff are well experienced professional accountants. There is adequate segregation of duties including well- functioning Internal Audit and Control Departments, Financial management (FM) policies and procedures are documented in the DBN’s Financial Management Policy and Expenses Management Policy manuals, and a robust computerized accounting system (EasyBank AX) is in place. Financial reports are prepared on monthly basis and the annual financial statements are audited by KPMG. The auditor’s opinion on the annual financial statements for the year ended December 31, 2017 was unqualified. Activities funded through the US$12 million technical assistance (TA) component under the responsibility of DBN will be subjected to the same arrangements for financial management and disbursement as the initial project. However, to support implementation of the TA, the following modifications to the arrangements are needed: a. A separate Disbursement Category will be created for Component 1: Technical Assistance and Capacity Building with a balance of US$12 million (as indicated in Table 2 below) b. A separate Designated Account will be established to deposit the TA proceeds separately from the main loan proceeds. c. As the FM staff in DBN do not have experience in the implementation of World Bank funded project, the World Bank will provide required training and ongoing support related to its policies and procedures. d. The computerized accounting system in DBN will be further reviewed and updated, if need be, to take into account any potential effect of the project restructuring, so that the period and annual financial reports can be produced timely and accurately. e. The project activities under DBN’s mandate will be subject to annual external audit by an independent auditor. The proposed changes to disbursement arrangements as stated in the Loan Agreement are as follows: Table 1: Disbursement Categories under the Original Agreement Category Amount of the Loan Percentage of Expenditures to be Allocated (expressed in Financed (inclusive of Taxes) USD) (1) Lines of Credit to PFIs for DFI Loans and 480,000,000 100% Partial Credit Guarantees under Parts 2 and 3 of the Project (2) Goods, non-consulting services, consultants’ 18,750,000 100% services, Operating Costs and Training under Parts 1 and 4 of the Project (3) Front-end Fee 1,250,000 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions (4) Interest Rate Cap or Interest Rate Collar 0 Amount due pursuant to Section Premium 2.07(c) of this Agreement TOTAL 500,000,000 Table 2: Disbursement Categories under the Proposed Restructuring: Category Amount of the Loan Percentage of Expenditures to be Allocated (expressed in USD) Financed (inclusive of Taxes) (1) Lines of Credit to PFIs for DFI Loans and 480,000,000 100% Partial Credit Guarantees under Parts 2 and 3 of the Project The World Bank Development Finance Project (P146319) (2) Goods, non-consulting services, 1,065,808* 100% consultants’ services, Operating Costs and Training under Parts 1 and 4 of the Project, for which withdrawal applications are submitted prior to the effectiveness of this Amendment Letter (3) Front-end Fee 1,250,000 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions (4) Interest Rate Cap or Interest Rate Collar 0 Amount due pursuant to Section Premium 2.07(c) of this Agreement (5) Goods, non-consulting services, consultants’ services, Operating Costs and Training, for which withdrawal applications are submitted after the effectiveness of this Amendment Letter (a) Part 1 of the Project 12,000,000 (b) Part 4 of the Project 5,684,192** TOTAL 500,000,000 *Amount spent to date ** Residual amount following reallocation of US$12 million from Category 2 and adjusted for amount utilized to date. Proposed Changes to Legal Covenants 14. The project restructuring will be used as an opportunity to update the legal covenants that have lapsed due to prior implementation delays and to reflect the new implementation arrangements. The detailed changes are summarized in the Legal Covenants section of this restructuring paper as well as in the table below. The World Bank Development Finance Project (P146319) Original Covenant Revised Justification Finance Agreement: Credit Guarantee Credit Guarantee Facility (CGF) Entity Due to prior delays with project Facility (CGF) Entity | Description :No | Description: No later than eighteen implementation the deadline for later than eighteen (18) months, after (18) months, after Project achievement of this covenant had the Effective Date, the Borrower shall Restructuring, the Development Bank expired. As DBN is responsible for establish - or cause to be established - of Nigeria shall establish a CGF Entity, establishment of the CGF subsidiary, a CGF Entity, in form and substance in form and substance and with the responsibility for meeting this and with resources satisfactory to the resources satisfactory to the Bank, covenant is shifted from the Borrower Bank, for the purpose of providing for the purpose of providing Partial (i.e. FMOF) to DBN with a reasonable Partial Credit Guarantee to PFIs on Credit Guarantee to PFIs on their time period of 18 months from the their Sub-loans to Eligible Beneficiaries. Sub-loans to Eligible Beneficiaries date of formalization of Project | Due Date :26-Jul-2016 Restructuring. Finance Agreement :Guarantee Manual Not later than eighteen (18) months Similar to above, the propose change | Description :Not later than 24 months after Project Restructuring, the CGF is in response to prior delays with after the Effective Date, the CGF Entity Entity will adopt a guarantee manual, project implementation which had will adopt a guarantee manual, satisfactory to the Bank, addressing: caused the deadline for achievement satisfactory to the Bank, addressing: eligibility criteria for potential of this covenant to expire. The change eligibility criteria for potential beneficiaries; detailed conditions to includes a reasonable time period of beneficiaries; detailed conditions to be be met by potential CGF 18 months from the date of met by potential CGF beneficiaries; beneficiaries; mechanisms for formalization of Project Restructuring mechanisms for delivery of the Partial delivery of the Partial Credit for the CGF entity to adopt the Credit Guarantees; environmental and Guarantees; environmental and guarantee manual. social risk management; and M&E social risk management; and M&E system, including how to audit the CGF. system, including how to audit the | Due Date :26-Jul-2017 CGF Finance Agreement :Verification To verify the achievement of DLIs As the achievement of the DLIs is Arrangements | Description :To verify under tranches IV, V and VI, the entirely with the DBN, the proposed the achievement of DLIs under Development Bank of Nigeria shall change includes transferring the tranches IV, V and VI, the Borrower employ a verification agent, responsibility for engaging verification shall: not later than 18 months after acceptable to the Bank; and prior to agent to DBN. Further, as third-party the Effective Date, employ a each disbursement of Loan proceeds verification is required for DLIs IV-VI verification agent, acceptable to the ensure that the verification agent has which are expected to be achieved in Bank; and prior to each disbursement verified achievement of the different time periods, the revision of Loan proceeds ensure that the respective DLIs, satisfactory to the suggests dropping the deadline for verification agent has verified Bank. hiring verification agent within a achievement of the respective DLIs, specific time period and allowing this satisfactory to the Bank. | Due Date engagement at the time when :26-Jul-2016 verification of specific DLI is needed. The World Bank Development Finance Project (P146319) Proposed Changes to Results Framework 15. The project restructuring will be used as opportunity to introduce editorial clarifications to the description of specific indicators in the results framework and to facilitate reporting. The substance of the project results is not affected or changed. Original Indicator Revised Justification PDO Indicator: Volume of PFIs' Volume of PFIs' Eligible Sub-Loans Replacing the reference to MSME MSME Sub-Loans facilitated by Line facilitated by Line of Credit Facility Sub-Loans to “Eligible” Sub-Loans of Credit Facility given that 10 percent of credit line could be extended to “small corporates” by original project design, which include slightly higher thresholds than those for MSMEs, and yet are relevant for access to finance agenda. This way the indicator captures DBN’s entire eligible portfolio. PDO Indicator: PFIs' MSME Sub-Loan PFIs’ Eligible Sub-Loan Portfolio As was the case above, clarifications Portfolio at risk (30 days) Quality (Non-Performing Loans) include reference to “eligible” sub- loans and more importantly correcting the terminology from portfolio at risk (30 days) to non- performing loans. PDO Indicator: Volume of PFIs' Volume of PFIs' Eligible Sub-Loans Again, clarification includes reference MSME Sub-Loan facilitated by CGF facilitated by CGF to “eligible” sub-loans as CGF sub- loan thresholds have yet to be determined. Intermediate Indicator: DFI Portfolio DFI’S Wholesale Portfolio Quality Clarifying that the monitoring refers at Risk (Non-Performing Loans) to non-performing loans of DBN’s wholesale portfolio. Intermediate Indicator: Number of Number of PFIs reporting on lending Editorial correction to clarify that the PFIs reporting to women sub- to women sub-borrowers reporting refers to lending to women borrowers sub-borrowers. 16. The proposed restructuring will require amendments to the following project documents: i) Amendment to Loan Agreement and ii) Amendment to Disbursement Letter. The Borrower subsequently need to amend the current Subsidiary Loan Agreement (between the FMOF and DBN) to reflect and formalize changes to implementation arrangements. Finally, the Project Operations Manual will also be adjusted. The World Bank Development Finance Project (P146319) III. SUMMARY OF CHANGES Changed Not Changed Implementing Agency ✔ Results Framework ✔ Components and Cost ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ DDO Status ✔ Project's Development Objectives ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ APA Reliance ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank Development Finance Project (P146319) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_IA_TABLE IMPLEMENTING AGENCY Implementing Agency Name Type Action FEDERAL MINISTRY OF FINANCE Implementing No Change Agency Development Bank of Nigeria Implementing New Agency OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Technical Component 1: Technical 12.00 Revised Assistance and Capacity 12.00 Assistance and Capacity Building Building Component 2: Line of Credit Component 2: Line of Credit 445.00 No Change 445.00 Facility Facility Component 3: Credit Guarantee Component 3: Credit 35.00 No Change 35.00 Facility Guarantee Facility Component 4: Project Component 4: Project 6.75 Revised 6.75 Management Management TOTAL 498.75 498.75 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-84410-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: LOC to PFI for DFI Lns &PCG Pt2&3 480,000,000.00 0.00 480,000,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Gd,NCS,CS,OC,Trg Pts 1&4 The World Bank Development Finance Project (P146319) 18,750,000.00 1,065,807.16 1,065,808.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: PREMIUM FOR CAPS/COLLARS 0.00 0.00 0.00 iLap Category Sequence No: 5A Current Expenditure Category: Gd,NCS,CS, OC, Trg, Part 1 0.00 0.00 12,000,000.00 100 iLap Category Sequence No: 5B Current Expenditure Category: Gd,NCS,CS, OC, Trg, Part 4 0.00 0.00 5,684,192.00 100 Total 498,750,000.00 1,065,807.16 498,750,000.00 OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action Finance Agreement :Credit Guarantee Facility (CGF) Entity | Description :No later than eighteen (18) months, after the Effective Date, the Borrower shall establish - or cause to be established - a CGF Entity, in IBRD-84410 Not complied with Revised form and substance and with resources satisfactory to the Bank, for the purpose of providing Partial Credit Guarantee to PFIs on their Sub-loans to Eligible Beneficiaries. | Due Date :26-Jul-2016 Credit Guarantee Facility (CGF) Entity | Description :No later than twelve (12) months, after Project Restructuring, the Development Bank of Nigeria shall Proposed establish a CGF Entity, in form and substance and with Not yet due resources satisfactory to the Bank, for the purpose of providing Partial Credit Guarantee to PFIs on their Sub- loans to Eligible Beneficiaries Finance Agreement :Guarantee Manual | Description IBRD-84410 Not complied with Revised :Not later than 24 months after the Effective Date, the The World Bank Development Finance Project (P146319) CGF Entity will adopt a guarantee manual, satisfactory to the Bank, addressing: eligibility criteria for potential beneficiaries; detailed conditions to be met by potential CGF beneficiaries; mechanisms for delivery of the Partial Credit Guarantees; environmental and social risk management; and M&E system, including how to audit the CGF. | Due Date :26-Jul-2017 Not later than 12 months after Project Restructuring, the CGF Entity will adopt a guarantee manual, satisfactory to the Bank, addressing: eligibility criteria for potential beneficiaries; detailed conditions to be Proposed Not yet due met by potential CGF beneficiaries; mechanisms for delivery of the Partial Credit Guarantees; environmental and social risk management; and M&E system, including how to audit the CGF Finance Agreement :Verification Arrangements | Description :To verify the achievement of DLIs under tranches IV, V and VI, the Borrower shall: not later than 18 months after the Effective Date, employ a IBRD-84410 verification agent, acceptable to the Bank; and prior to Not yet due Revised each disbursement of Loan proceeds ensure that the verification agent has verified achievement of the respective DLIs, satisfactory to the Bank. | Due Date :26-Jul-2016 To verify the achievement of DLIs under tranches IV, V and VI, the Development Bank of Nigeria shall employ a verification agent, acceptable to the Bank; and prior to Proposed NYD each disbursement of Loan proceeds ensure that the verification agent has verified achievement of the respective DLIs, satisfactory to the Bank. Finance Agreement :Financial Management Covenants | Description :Not later than 90 days after the Effective Date, the Borrower shall: (a) appoint the independent auditors referred to in Section 5.09 (b) of the General IBRD-84410 Conditions, in accordance with the provisions of Section Complied with No Change III of Schedule 2; (b) update its computerized accounting systems to incorporate Project activities, satisfactory to the Bank; and (c) train its internal auditor on risk-based internal audit | Due Date :26-Apr-2015 The World Bank Development Finance Project (P146319) Finance Agreement :Procurement Complaint Mechanism | Description :The Borrower shall, not later than ninety (90) days after the Effective Date, establish IBRD-84410 a procurement complaint mechanism comprising an Complied with No Change online database or a complaint hotline, in form and substance satisfactory to the Bank. | Due Date :26-Apr- 2015 Finance Agreement :DFI Board Observer Status | Description :Without limitation to the provision of Article V of the General Conditions, the Borrower shall IBRD-84410 Complied with No Change enable the Bank's representatives to participate as observers on the DFI Board under the terms set forth in . the Project Operations Manual. The World Bank Development Finance Project (P146319) . Results framework COUNTRY: Nigeria Development Finance Project Project Development Objectives(s) The project development objective is to increase the availability and access to finance for micro, small, and medium enterprises through eligible financial intermediaries with the support of a new wholesale development finance institution. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 2015 1 2 3 4 5 6 7 2022 Increase in access and availability of finance to eligible enterprises/MSMEs (Action: This Objective is New) PFIs' Eligible Sub-loan Portfolio Quality (Non- 0.00 8.00 7.00 6.00 5.00 5.00 5.00 5.00 Performing Loans) (Percentage) Volume of PFIs' Eligible Sub-Loans facilitated by 0.00 60.00 157.00 297.00 460.00 651.00 651,000,000.00 CGF (Amount(USD)) Volume of PFIs' Eligible Sub-Loans facilitated by 0.00 50.00 125.00 205.00 305.00 405.00 445.00 445,000,000.00 Line of Credit Facility (Amount(USD)) PDO Table SPACE The World Bank Development Finance Project (P146319) Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 2015 1 2 3 4 5 6 7 2022 Component 2: Line of Credit Facility (Action: This Component is New) DFI Wholesale Portfolio Quality (Non- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Performing Loans) (Percentage) DFI ROA (Percentage) 0.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Volume of DFI’s Wholesale Loans 0.00 50.00 125.00 205.00 305.00 405.00 445.00 445,000,000.00 (Amount(USD)) Component 3: Credit Guarantee Facility (Action: This Component is New) Number of PFIs reporting on lending to 0.00 2.00 3.00 4.00 5.00 6.00 6.00 women sub-borrowers (Number) Volume of Guarantees 0.00 30.00 79.00 149.00 230.00 325.00 325,000,000.00 Issued (Amount(USD)) IO Table SPACE The World Bank Development Finance Project (P146319) Annex 1: Request for Project Restructuring from the Federal Ministry of Finance