FOR OFFICIAL USE ONLY

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY EMERGENCY PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT FROM THE CRISIS RESPONSE WINDOW IN THE AMOUNT OF SDR 26.5 MILLION (US$40 MILLION EQUIVALENT) TO THE DEMOCRATIC REPUBLIC OF CONGO FOR AN Report No: ZR EMERGENCY URBAN AND SOCIAL REHABILITATION PROJECT Water and Urban Country Department AFCC2 Africa Region May 28, 2010 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 authorization.

2 CURRENCY EQUIVALENTS SDR 1.00 = US$ US$1.00 = Francs Congolais FC [April 30, 2010] FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CIS Comité Interministériel de Supervision (Inter-ministerial Oversight Committee) CQ Consultant s Qualification CRW Crisis Response Window DC Direct Contracting DFID UK Department for International Development DRC Democratic Republic of Congo EC European Commission FMR Financial Monitoring Report FY Fiscal Year GDP Gross Domestic Product HIPC Highly Indebted Poor Countries IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IC Individual Consultant IDA International Development Agency ITN Insecticide-treated bed nets LCS Least-cost selection LLIN Long-lasting insecticidal nets MEPSP Ministry of Education (Ministère de l Education Primaire, Secondaire et Professionnelle NCB National Competitive Bidding NGO Non-Governmental Organization PARSE Projet d Appui au Redressement du Secteur de l Education Education Sector Reform Project PARSS Projet d Appui au redressement du Secteur de la Santé - Health Sector Rehabilitation Support Project PDO Project Development Objective PER Public Expenditure Review PIU Project Implementation Unit PP Project Paper PRGF Poverty Reduction and Growth Facility

3 QCBS Quality-Cost Based Selection SBD Standard Bidding Document SECOPE Service de Contrôle et de la Paie des Enseignants (Teacher Pay Unit) SOE Statement of Expenditures SPP Simplified Procurement Plan SSS Single source selection UCOP Unité de Coordination du Projet (Project Coordination Unit) UNICEF United Nations Children s Fund UNOPS United Nations Office for Project Services WHO World Health Organization Vice President: Country Director: Sector Director: Sector Manager: Task Leader: Obiageli Katryn Ezekwesili Marie-Françoise Marie-Nelly Inger Andersen Junaid Kamal Ahmad Christian Diou

4 DEMOCRATIC REPUBLIC OF CONGO EMERGENCY URBAN AND SOCIAL REHABILITATION PROJECT ADDITIONAL FINANCING PROJECT PAPER CONTENTS Page Project Paper Data Sheet I. Introduction 1 II. Background and Rationale for Additional Financing 2 III. Proposed Changes 9 IV. Implementation Arrangements 12 V. Appraisal Summary 12 VI. Project Risks, Mitigation Measures and Supervision 17 VII. Terms and Conditions for the Additional Financing 18 Annex 1: Revised Results Framework and Monitoring 19 Annex 2: Operational Risk Assessment Framework 22 Annex 3: Detailed Description of Modified or New Project Activities 26 Annex 4: Revised Estimate of Project Costs 35 Annex 5: Procurement Arrangements and Procurement Plan 36 Annex 6: Financial Management and Disbursement Arrangements 40 Annex 7: Project Preparation and Team Members 43

5 EMERGENCY PROJECT PAPER DATA SHEET DEMOCRATIC REPUBLIC OF CONGO EMERGENCY URBAN AND SOCIAL REHABILITATION PROJECT ADDITIONAL FINANCING Africa Region Date: May 26, 2010 Team Leader: Christian Diou Country Director: Marie Françoise Marie- Nelly Sector Director : Inger Andersen Sector Manager: Junaid Kamal Ahmad Sectors: General education sector (50%); Health: (50%) Themes: Education for all (50%); Malaria (50%) Lending Instrument: Emergency Recovery Environmental category: B Grant (CRW) Type of Operation: New Operation [] Additional Financing [ X ] Existing Financing (restructuring) [ ] Financing type: Loan [ ] Credit [ ] IDA Grant [X] Other [ ] Original Project ID: P Project ID: P Total Amount: SDR26.5 million (US$40 million equivalent) Proposed terms: Grant Expected implementation period: 23 months Expected effectiveness date: July 1, 2010 Current closing date: May 31, 2011 Expected/revised closing date: May 31, 2012 Government: Democratic Republic of Congo Responsible agency: Ministry of Planning Project Coordination Unit (UCOP) Revised Development Objective: To respond to urgent challenges by: (i) supporting domestic debt settlement; and (ii) addressing urgent rehabilitation and social needs in targeted areas. Financing Plan (US$m) Source Local Foreign Total Government Total IBRD/IDA Others Total Estimated disbursements (Bank FY/US$m.) Fiscal Years Total IBRD/IDA Trust Funds i

6 Does the emergency operation require any exceptions from Bank policies? Have these been approved by Bank management? Yes [ ] No [X] Yes [ ] No [ ] Are there any critical risks rated substantial or high? Yes [X] No [ ] What safeguard policies are triggered, if any? None Significant, non-standard conditions, if any: Board Presentation: None Grant effectiveness: Standard legal conditions (i) Condition for Effectiveness: None. Covenants applicable to project implementation. Conditions for Disbursement under Category 1 : (i) No withdrawal shall be made for the first semestrial School Operating Expenditures Installment of US$9,750,000 equivalent under Category 1, unless the Recipient has provided to the Association an updated list of Selected Schools and related payment criteria under terms satisfactory to the Association and an audit satisfactory to the Association by the Auditor for School Expenditures on the payment of the previous School Operating Expenditures Installment made in the framework of the Original Financing Agreement, and for each semestrial School Operating Expenditures Installment of US$9,750,000 under Category (1), unless the Recipient has provided to the Association an audit satisfactory to the Association by the Auditor for School Expenditures on the payment of the previous School Operating Expenditures Installment. Legal covenants: (i) (ii) Extension of the internal and external auditors mandates for the project and for Component 1, in terms and conditions acceptable to the Association not later than six months after the Effectiveness Date; and Update of the Project Implementation Manual, Financial Management Procedures Manual and Anti-Corruption Manual in terms and conditions acceptable to the Association not later than six months after the Effectiveness Date. ii

7 DEMOCRATIC REPUBLIC OF CONGO EMERGENCY URBAN AND SOCIAL REHABILITATION PROJECT ADDITIONAL FINANCING PROJECT PAPER I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional grant in an amount of US$40 million to the Democratic Republic of Congo (DRC) Emergency Urban and Social Rehabilitation Project (PURUS, P104497, Grant H282-DRC). 2. The proposed additional grant would help finance the costs associated with additional activities for the PURUS in the amount of US$40 million. This request for Additional Financing builds on: (i) a request from the Government dated February 2, 2010, for World Bank support for the strengthening of public finance through, inter alia, support to the Health and Education sectors; and (ii) the successful implementation of the PURUS. 3. Economic growth was robust - an average of 6.4 percent per yearthroughout However, in the second half of 2008, the DRC suffered from two shocks: (a) the collapse of the price of copper, cobalt, and diamonds, which together represent four-fifths of the country s exports (copper prices fell from over US$4 per pound in June 2008 to less than US$1.5 per pound by year end), and (b) the escalation of conflict in the eastern provinces, leading to an increase in security-related expenditure. While the economy is recovering, the very tight fiscal situation and its impact on government resources have further constrained government budgetary allocation to social services, which have declined from 31.3 percent in 2008 to 23.3 percent in 2009 and to 20.6 percent (projected) in The proposed Additional Financing is aimed at addressing some of the nearterm impacts of the current financial crisis and sustaining social activities until the Government s policy responses can take effect and medium-term donor support, including the Bank s, can be fully deployed. It would finance costs associated with scaling up the development effectiveness and impact of the original project, as described in the PURUS Emergency Project Paper presented to the Board on March 29, The scaling up includes support in: (i) funding critical select recurrent, non-salary education expenditures; and (ii) urgent social needs through the distribution of up to three longlasting insecticidal bed nets per household in the Bandundu Province. It will also finance additional operating costs. 1

8 5. The proposed additional operation is well anchored in national sectoral strategies of education and health prepared as part of the HIPC Completion Point process. Partnership arrangements are also well established in the DRC for the Education and Health sectors, namely with: (i) the Education sector: the local donor group composed of International Development Agency (IDA), Department for International Development (DFID), United Nations Educational, Scientific and Cultural Organization (UNESCO), United Nations Children s Fund (UNICEF), African Development Bank AfDB, United States Agency for International Development (USAID) and the Belgian Cooperation, as well as the larger Comité de Concertation that comprises all partners in education, including non-governmental organizations (NGOs); and (ii) the Health sector: Global Fund, UNICEF, the World Health Organization (WHO), UNITAID, USAID, the European Union (EU), AfDB, through the GIBS (donor coordination group for the health sector currently led by the EU). This ongoing donor coordination has led to the consensus-based activities targeted by the Additional Financing. II. Background and Rationale for Additional Financing and use of CRW Country and economic context 6. Following a decade of conflict, the DRC experienced important political and economic gains since At the political level, the 2006 general elections (legislative and presidential) took place through a process judged as largely free and fair. Since 2007, a broad coalition government has implemented policies following a set of five priorities underpinning the Poverty Reduction Strategy Paper (good governance and peace consolidation, consolidation of macroeconomic stability and growth, access to social services, fight against HIV/AIDS, and promotion of community dynamics) in order to generate rapid growth and sustained development. 7. Growth picked up significantly after 2002, with an average annual GDP growth of 6.4 percent between 2002 and 2008 compared to -5.2 percent over the period. During the second half of 2008, the DRC s economic prospects deteriorated sharply as a consequence of the changing international environment resulting from the financial crisis. Economic growth in 2009 was 2.8 percent - compared to 6.2 percent in as the mining sector contracted sharply. The prices for mining products recovered significantly later in 2009, setting the stage for renewed growth. The original project provided interim budgetary resources that served as a basis for a gradual implementation of a broader fee-free schooling strategy. It was expected that the government, through its budget, will gradually assume such responsibility. However, while the economy is recovering, the very tight fiscal situation and its impact in terms of budgetary constraints prevented the Government from extending the programs as discussed during the initial project preparation. Not continuing the ongoing programs now could lead to loss of momentum and the inability to capitalize on the distribution system already put in place, especially with regard to the social sectors targeted by the project (Health and Education). Re-establishing the thrust later would be costly. 2

9 Similarly, the confidence built by the Government towards the targeted population and the positive impact of the public awareness campaigns already undertaken would be lost. Eligibility and rationale for additional financing 8. In accordance with OP/BP 13.20, Additional Financing for Investment Lending, the Additional Financing (US$40 million) will primarily be used to expand or scale-up the project to enhance its development impact. Subsequently, both the project objective and outcome indicators will be revised. The original project closing date will be extended from May 31, 2011 to May 31, The initial US$180 million PURUS was prepared as part of a package of Bank activities aimed at supporting reforms; in particular, governance reforms. It is complementary to the Bank s ongoing efforts to help the authorities rapidly develop and implement a prioritized development program and to start tackling some of the key sector issues in Kinshasa, in particular the IDA-funded sectoral operations in the education (i.e. the $150 million Projet d Appui au Redressement du Secteur de l Education - PARSE) and health sectors (the $150 million Projet d Appui au Redressement du Secteur de la Santé - PARSS). Two of the five components, Education, and Domestic Debt Settlement, had a wider focus than Kinshasa and had an impact on the rest of the country. The additional financing is aimed at addressing some of the near-term impacts of the current financial crisis and sustaining social activities while the Government s policy response is taking effect, along with the progressive deployment of donor support, including the Bank's. It would protect the functioning of essential social services when the resources of the national budget are negatively impacted by the crisis. It will therefore help preserve essential services as well as human and social capital. In addition, the Implementation Status and Results Report (ISR) ratings for both the Project Development Objective (PDO) and overall Implementation Progress (IP) have been consistently classified as Satisfactory since project effectiveness in Project scale-up to enhance development impact. The planned additional financing is expected to provide US$40 million to the DRC in FY11 and FY12 for shortterm costs comprising: (i) Two additional semesters, for about US$19.5 million, for select recurrent, non-salary school operating expenditures (frais de fonctionnement and frais d intervention ponctuelle) for secondary schools throughout the country. This amount includes only the payments to secondary schools, accordingly adjusted to meet an increased number of eligible schools and increased amount per school. This is fully in line with the vision and priority action plan of the recently adopted (March 2010) Ministry of Education (MEPSP) 6-year strategy. Payments for the primary schools will be made under the Education Sector Reform Project (- PARSE) as initially planned. These additional payments are expected to support current efforts that will contribute to improving the school learning environment and fund managing mechanisms, and eventually result in a 3

10 reduction of school fees paid by parents. They are also aimed at easing the transition between the PURUS and the PARSE. (ii) (iii) Distribution of up to three long-lasting insecticidal bed nets per household in Bandundu (about 2.8 million bed nets in total), as a means of reducing malaria-related infant mortality. The estimated amount is US$19.5 million. The Bandundu province is contiguous to Kinshasa province where the initial project successfully distributed about 2 million long-lasting insecticidal bed nets. This is harmonized with the ongoing efforts under the Health Sector Rehabilitation Support Project (PARSS) and other Bank and donor activities aimed at protecting the entire DRC population. Support to additional project implementation through Project Coordination Unit (Unité de Coordination du Projet, UCOP). The estimated amount is US$1.0 million. Use of OP/BP The justification for processing under OP/BP 8.00 is two-fold. Firstly, the Additional Financing addresses major adverse economic and/or social impacts resulting from the deteriorated financial situation of the country triggered by the recent economic developments. Secondly, the urgency to stabilize the fragile situation in DRC, which was the justification to use streamlined procedures of Operations Policy 8.00 for the original project, still remains valid. The Implementation Status and Results Report (ISR) ratings for both the Project Development Objective (PDO) and overall Implementation Progress (IP) consistently have been classified as "Satisfactory" since project effectiveness in The Additional Financing will support various specific objectives that are identified in OP 8.00 to be supported through emergency assistance, including (i) preserving or restoring essential services; and (ii) preserving human, institutional, and/or social capital, including economic reintegration of vulnerable groups. 11. The additional financing is aimed at addressing some of the near-term impacts of the current financial crisis and sustaining social activities until the government s policy responses can take effect and medium-term donor support, including the Bank, can be fully deployed. It would protect the functioning of essential social services, when the resources of the national budget are negatively impacted by the crisis. It will therefore help preserve essential services as well as human and social capital. While the economy is recovering, the very tight fiscal situation and its impact in terms of budgetary constraints prevented the Government to extend the programs as discussed during the initial Project preparation. Not continuing the ongoing programs now could lead to loss of momentum and the inability to capitalize on the distribution system already put in place, especially with regard to the social sectors targeted by the Project (Health and Education). Re-establishing the thrust later would be costly. Similarly, the confidence built by the Government towards the targeted population and the positive impact of the public awareness campaigns already undertaken would be lost. 4

11 Use of CRW 12. The IDA financing for this project would be provided under the Crisis Response Window (CRW) to mitigate the impact of the financial crisis on the economy. The global financial crisis had a significant negative impact on public finances in the DRC. Following the onset of the global economic crisis in 2008, GDP growth slowed dramatically during 2009 and fiscal receipts contracted as a share of GDP. GDP growth averaged 6.4 percent during , but slowed abruptly to 2.8 percent in Following a collapse of the prices for DRC s main export commodities, export revenues contracted from US$6.6 billion in 2008 to US$4.4 billion a year later. Imports contracted and fiscal revenues fell from 18.5 to 16.8 percent of GDP; the first drop since the end of the war in Fiscal revenues from oil mining alone were 2 percentage points of GDP below their 2008 levels. Going forward export revenues recovered to their 2008 level, GDP growth picked up to a projected 5.4 percent in 2010, and fiscal receipts are projected to reach the same share of GDP as in However, despite the gradual recovery, the fiscal situation remains constrained, including government resources allocated to social services as indicated in para Consistently with CRW objectives, the proposed project will contribute to protect core spending on the financing of social services in the targeted areas and populations by: (i) (ii) Providing direct financing for various recurrent charges in the education sector. These charges are usually paid by the parents who compensate for the lack of public resources. Without this financing, the public resources would be unable to continue the ongoing Bank-financed programs developed under the initial PURUS, therefore adding prohibitive costs on the parents and ultimately stopping them from enrolling the children. Half of the additional resources are dedicated to this action; and Supporting the broader efforts by the international community to distribute bed nets throughout the country and supporting the Government in fighting one of the most important causes of illness and death in the country. Although difficult to assess, in endemic areas, like Bandundu province, the economic cost of malaria is considerable: direct costs are largely borne by households (prevention and treatment); and indirect costs include lost productivity and lower education as well as distortions in social and economic behavior. Overall, free mass coverage of bed nets in Bandundu would significantly reduce disease transmission, especially on poor and vulnerable populations. The initial project 14. The original Grant. In March 2007, the World Bank Board of Directors approved a grant for the DRC Emergency Urban and Social Rehabilitation Project. Because the situation was very unstable and the challenge was to consolidate and expand 5

12 recent achievements in the DRC, an IDA Grant of US$180 million was processed under the streamlined procedures of Operations Policy 8.00, Rapid Response to Crises and Emergencies. 15. Objective and scope of the initial project. The objective of the initial project is to assist the Recipient in responding to urgent post-elections challenges by: (i) providing resources to maintain macro-economic stability and fund critical expenditure in the immediate future; and (ii) addressing urgent rehabilitation and social needs in Kinshasa. The project is expected to help create an environment in which reforms can be sustained and to prevent political and economic regression, which may otherwise result in social instability, civil unrest, and possibly reversion to conflict. Project components 16. The original project has six components which are as follows: - Component 1 (US$45 million): Support of education recovery through finance of select recurrent expenditures. This component is financing select recurrent, non-salary expenditures (codified in the budget as frais de fonctionnement and frais d intervention ponctuelle) for primary and secondary schools throughout the country. - Component 2 (US$50 million): Completion of domestic debt settlement. This component financed the completion of a Bank-supported process for settling the debt accrued by the Government to its domestic suppliers during the years of war and instability (cutoff date: December 2001). - Component 3 (US$42 million): Rehabilitation of priority urban roads in Kinshasa. This component is financing heavy rehabilitation of about 40 km of access roads to poor neighborhoods. This is expected to restore or significantly improve accessibility by vehicle to key poor neighborhoods with an estimated 800,000 direct beneficiaries. - Component 4 (US$25 million): Water and Sanitation in peri-urban areas of Kinshasa. This component is financing the expansion of the distribution network from the recently-rehabilitated water treatment plant of Lukaya (in the Western part of Kinshasa) to poor neighborhoods. - Component 5 (US$13 million): Malaria reduction and prevention in Kinshasa. This component financed the distribution of up to three long-lasting insecticidal bed nets per household in Kinshasa (about 2 million in total), as a means of reducing malaria-related infant mortality. - Component 6 (US$5 million): Project implementation and coordination, including support to the recipient in project procurement, financial management, communication, monitoring and evaluation, as well as social and environmental mitigation measures. 6

13 Project implementation record and results to date 17. The Implementation Status and Results Report (ISR) ratings for both the Project Development Objective (PDO) and overall Implementation Progress (IP) consistently have been classified as Satisfactory since project effectiveness in July The Government s commitment to the project remains strong. The reasons for the initial slow disbursement were linked to the lack of available technical studies for the works. Those studies have now been completed and works on most of the lots are underway and progressing well (see para. 19). 18. During the December 2009 Mid-Term Review, PURUS was confirmed as one of the most successful emergency operations in the DRC portfolio. After 32 months of implementation, the disbursement level is at about 60 percent. The project s development objectives are still valid and all components are being implemented satisfactorily, although with some delay due to the unpreparedness of investment components (water and urban roads) and adjustments in the disbursement mechanism utilized under the Education Component. Based on current performance, the targets selected for the performance indicators are likely to be either reached or exceeded. PURUS has allowed the Government of the DRC to demonstrate visible and tangible improvements in the lives of its citizens. 19. Activities implemented under the initial project. The activities under the initial project picked up slowly at the beginning of the initial implementation period as the technical studies for the urban roads and water works were not readily available and unplanned additional technical work had to be completed before launching the bidding processes. This has been done; the works have started for the water component and two of the slices of urban road works are well ongoing. The bidding documents for the third and final slice of urban road works are now ready and are under review by the Bank. Among the five initial components of the project, two components are completed, one is due to be completed by mid-2010, and works are ongoing for the last two components: (i) (ii) (iii) For Component 1, Education, the second payment (US$16 million) has been made, following the amendment of the Grant Agreement in March The third and last payment would be made during the first semester of As of May 2010, the target has been exceeded (99 percent versus 70 percent of schools receiving installments); The activities targeted for Component 2, Domestic debt settlements, have been completed. Both tranches have been disbursed (US$48.5 million). All but four eligible creditors have been paid (357 out of 361), exceeding the target (99 percent versus 95 percent); For Component 3, Urban Roads, works under Lots 1 (5 km) and 2 (12 km) are underway. A third Lot (24 km) is under preparation (studies completed, ESIA and bidding documents under review by the Bank). It is likely that the target will be met (40 km of urban roads rehabilitated); 7

14 (iv) (v) For Component 4, Water, the works contract is effective. It is likely that the target will be met (150,000 additional persons will have access to safe water); and Activities initially targeted for Component 5, Malaria reduction and prevention in Kinshasa, are mostly completed, but the component remains active, with an ex-post evaluation under completion. The 2 million bed nets have been distributed and the target is exceeded (64.7 percent versus 60 percent of children under five sleeping under bed netting); 20. All dated legal covenants beyond the conditions for effectiveness are met. 21. Overall safeguard compliance (Environmental Assessment OP/BP 4.01 and Involuntary Resettlement OP/BP 4.12) is rated Satisfactory. The Environmental and Social Management Framework and the Resettlement Policy Framework were prepared and disclosed in the country and at the Bank s InfoShop in August The Environmental Impact Assessment for the Urban Roads and Water Components were prepared and disclosed in the country and at the Bank s InfoShop in October and November 2008 respectively. The Resettlement Action Plan for the Water Component was prepared by the Project Coordination Unit (UCOP) and approved by the Bank. It will be published shortly. All safeguards requirements are being properly implemented and monitored, with external support from an international environmental firm, as agreed. The new components in the AF are not expected to trigger safeguards; however, the current safeguards documents adequately address any potential impacts. 22. Procurement activities have been mostly handled through the United Nations Office for Project Services (UNOPS) as a procurement agent. A few activities were directly handled by UCOP. Procurement activities have been closely monitored in both cases. The project team in UCOP includes qualified and experienced procurement specialists and they have access to appropriate tools and knowledge to enable them carry out their functions effectively. The last procurement review carried out in December 2009 during the Mid-Term Review (MTR) mission was Satisfactory and it was noted that almost all procurement processes have been finalized. The procurement plan has been updated as required during project implementation. 23. The project s financial management performance was also rated Satisfactory during the MTR. A detailed financial management supervision mission, held in February 2010, also confirmed a Satisfactory rating. As a result of the recruitment of an internal auditor and a sound control environment (qualified fiduciary staff, and adequate manual of procedures supported by a computerized accounting system), the project complies with financial management requirements such as timely submission of quarterly interim unaudited financial reports and annual audit reports. The latest audit opinion was unqualified and there are currently no open accountability issues. 8

15 III. Proposed Changes 24. The original Project Development Objective has been updated to be more focused and realistic. The revised objective reads as follows: to respond to urgent challenges by: (i) supporting domestic debt settlement; and (ii) addressing urgent rehabilitation and social needs in targeted areas. The project results would be measured through the following outcome indicators: direct project beneficiaries (number), and the share of which are female (%). Changes in design 25. Additional support to the Education Component (est. cost US$19.5 million). Building on the framework provided by the newly adopted basic education strategy document (March 2010), support will be provided to finance school recurrent expenditures, while the ongoing work on the sector medium-term expenditure framework lays the ground for greater sustainability of these expenditures in the long run. Building on the initial project and complementing the Education sector project which will focus on primary education, extra support to the Education Component will finance two additional half-yearly installments for the frais de fonctionnement and frais d intervention ponctuelle for formally registered secondary schools (écoles mecanisées) in the country. These expenditures are allocated to each school, with some distinction by school size. They presently account under the initial project, for secondary schools, for about US$6 million per half-year, which will be adjusted to current conditions and will amount to US$9.75 million per half-year under the additional project (based on the number of eligible registered schools and the unit amount per school). Support under the Additional Financing would not only supply the resources, but also provide opportunities for local communities to become more actively involved in school management, e.g., by giving parents a greater voice in the process of setting school fees. Expenditures for primary schools will be similarly adjusted to current conditions and will be financed under the PARSE. 26. Registered primary, secondary and professional schools numbered 26,141 under the initial project (based on the 2007 data approved under the PURUS and adjusted in 2009). The Ministry of Primary Secondary and Technical Education is expected (i) to update the list to take into consideration the school map dynamics since 2007; and (ii) to revise payment amount per school category along with some update of the list of eligible expenditures (positive list), building on lessons learned from initial project experience. Some 11,000-12,000 secondary schools (including professional schools) are expected to benefit from this additional financing. The adjustments to the payment amount per school and the eligible expenditure list are intended to ensure greater impact on school environment by better responding to the school needs. For instance, the schools may be given the possibility to choose to buy some basic equipment. The submission of such lists to IDA will be a prerequisite for disbursement of the component, including names and Service de Contrôle de la Paie des Enseignants (SECOPE) registration number of the schools. The school list will also include the amount planned for frais de fonctionnement and frais d intervention ponctuelle for each school. 9

16 27. Additional support for malaria reduction and prevention (est. cost US$19.5 million). The aim of this additional support is to replicate the successful operation implemented in Kinshasa under the original project and to reduce malaria-related mortality in the Bandundu Province. As previously, it is in line with the government antimalaria strategic plan and it will specifically target children under five, through the increased use of insecticide-treated bed nets (ITNs). The province of Bandundu was selected through the joint Government/Donors task force for Malaria control in DRC that meets on a regular basis. The gaps in coverage are well documented and Bandundu Province was not covered by any of the large ongoing or planned operation. In addition the Bank already supports routine distributions in the province as well as the strengthening of service delivery, including malaria diagnosis and treatment in four health zones. 28. Additional resources provided under the component are part of a broader effort by the international community to distribute bed nets throughout the country, including initiatives by the World Bank, the Presidential Malaria Initiative funded by the US Government, the Global Fund, the United Nations Children s Fund (UNICEF), and the World Health Organization (WHO). More generally, the additional resources are to help improve sanitary conditions, including a sizable drainage program financed by Belgium and the European Commission. 29. Additional support to project implementation (est. cost US$1.0 million). This additional support will allow UCOP to implement all activities. Donor Coordination. 30. The Additional Financing is fully aligned with the current Country Assistance Strategy (CAS) and the DRC sector policies prepared for the two targeted sectors: the 2010 primary, secondary, and technical education 6-year plan and the 2009 Anti-Malaria Strategic Plan (Plan Stratégique de Lutte contre le Paludisme). It is also complementary to, and will be implemented in strong coordination with, other donors supporting health and education sector development in the DRC. Specific coordination mechanisms have been developed in recent years. For the Education sector, they include the ongoing donor coordination that has led to the consensus-based development of a primary and secondary education strategy and priority actions plans, including school fee reduction. The main donors involved are the USAID, UNICEF, WHO, the Global Fund, and IDA. In the Health sector, mechanisms include a strengthened donor coordination through the GIBS (donor coordination group for the health sector, currently led by the European Union), and the integration of mass distribution of bed nets with health interventions such as vaccination, the distribution of Vitamin A, or de-worming, which are supported by several donors through other programs. Donor partnership arrangements are wellestablished in the DRC for both education and health, namely with: (i) for the Education sector: DFID, AfDB, USAID, the AFD, the Belgian Cooperation, and IDA; and (ii) for the Health sector: the Global Fund, UNICEF, WHO, UNITAID, USAID, the EU, and AfDB. 10

17 Project outcome indicators 31. The project outcome indicators proposed for this Additional Financing will build on the ones approved for the initial project. Performance indicator to measure the outcomes of the education component will include: the percentage of schools receiving payments that are making good use of it to be equipped with basic functioning materials (eligible expenditures). The actual involvement of the school management committees and the availability of minutes that provide evidence of participatory fund management will be considered. Performance indicator to measure the outcomes of the anti-malaria component will include: the proportion of under-five children sleeping under bed nets in Bandundu. This will be assessed through surveys, which will be carried out at the beginning of the project (to set the baseline) and the end of the project. A reduction in under-five mortality, while the main objective of the component, is not considered a reliable indicator as changes cannot easily be attributed to any single factor, but the link between child mortality and bed net coverage is well-established and bed net coverage is hence a powerful performance indicator. 32. The indicators are presented in Table 1 below. Table 1: Additional Financing Indicators Intermediate Results One per Component Component 1: Support of education recovery through finance of selected recurrent expenditures Financing of frais de fonctionnement and of frais d interventions ponctuelles for registered eligible schools in the DRC over a period of two semesters starting in September Component 5: Prevention and reduction of malaria in Kinshasa and Bandundu 2.8 million bed nets distributed in Bandundu Province Results Indicators for Each Component Schools receiving payments that have improved their learning environment (basic school supplies, small equipment and repairs, other pedagogical inputs): 75% Percentage of children under 5 years old sleeping under bed nets: 80% (Bandundu). Baseline: tbd (est. 6%). Baseline data collection in Bandundu included in the Additional Financing Use of Outcome Monitoring Effectiveness of payment system to allow corrective action as may be necessary. Monitoring of performance in distribution and communication to allow corrective action as may be necessary. 11

18 Cost by Component 33. The costs and financing allocation, by component, for the original operation and for the proposed additional financing are presented in Table 2 below. Table 2: Cost by Component Component Initial cost Additional cost Revised cost - Support of education recovery through finance of select recurrent expenditures - Completion of the domestic debt settlement - Rehabilitation of priority urban roads in Kinshasa - Water supply in peri-urban areas of Kinshasa - Malaria reduction and prevention in Kinshasa and Bandundu Implementation costs Total Project costs (US$ million) IV. Implementation arrangements 34. Given the strong track record of PURUS, the Additional Financing would be implemented using the same institutional, procurement, and disbursement arrangements as for the original project, as they have been assessed to be acceptable by the Bank fiduciary teams. 35. The proposed activities are similar in type and scope to two in the original program. The additional activities to be carried out under the proposed Additional Financing are not expected to affect the environmental category of the project, which remains a Category B. No additional physical investment is included in the Additional Financing. The AF components themselves do not trigger the safeguards policies, and thus there is no need to amend the project's safeguards documents V. Appraisal Summary Lessons learned and reflected in the project s design 36. The lessons learned during appraisal of the initial project in 2007 are already included in the initial project design. They were, first, that success is possible, despite formidable logistical and capacity constraints, and second, that the key to such success is 12

19 in the design of effective implementation arrangements. The design of the initial project built on successful, earlier Bank-financed operations, and the following operational lessons were incorporated into the design of the initial project: (i) Use of a PIU like UCOP as a tailor-made implementation mechanism continues to be necessary; (ii) Effective implementation requires substantial hands-on Bank involvement; and (iii) Involving the public is vital for effective oversight, especially in urban settings. The initial project also drew on lessons from the Quality Assurance Group (QAG) assessments of past emergency Bank operations, including the importance of keeping project design simple, the need for adequate institutional arrangements that reflect existing capacity on the ground, and the importance of ensuring sustainability of financed activities. These lessons are still valid and they were also considered during the preparation of the additional financing. 37. New lessons learned from the initial implementation period of the PURUS: - A close cooperation and strong operational links need to be built between emergency operations like the original project, and longer-term sector wide operations. The initial implementation period of the PURUS led to the finetuning of the implementation arrangements, especially under the Education and Health PURUS Components which are now fully aligned with the planned activities and reforms prepared under the ongoing education sector and health sector projects. A positive impact will only be possible if PURUS-financed activities are sustaining the long-terms objectives targeted by the Bank and the Government and now supported by sector projects. Moreover, sector projects are more likely to create the sustainability than emergency projects. Therefore, a closer cooperation has been developed on Health and Education; - The use of a tailor made external procurement agent is still needed to allow the Project Coordination Unit (Unité de Coordination du Project, UCOP) to fulfill its responsibilities in Procurement. While transitory, the recruitment of UNOPS as a procurement agent helped secure the procurement processes and developed confidence between UCOP and potential contractors. Therefore, UNOPS will be also used under the Additional Financing to handle the large contract related to the bed nets. - The capacity of the Borrower's institutions has been compromised by years of conflict and local institutions did not have the capacity to proceed to the type of environment and social assessment that are needed under the PURUS. The existing rules and regulations were also inadequate in ensuring to compliance with World Bank safeguard policies. During the implementation of the initial project, the Borrower developed a project specific safeguards capacity by creating a project environmental unit within the project implementing agency. The unit has been supported by an international consultant firm, which has provided hands on training to the unit and assists the unit in monitoring and supervision, to ensure safeguards compliance. Lessons from the implementation have been overall satisfactory; with the Borrower taking the necessary actions to ensure compliance 13

20 with World Bank safeguards. Therefore, the mandate of the consultant firm has been adjusted to cover the implementation period of the works financed under the initial project (urban roads and water); and - The use of a PIU is still required in the current country context for emergency projects. UCOP has already had a strong positive impact on the quality of the output and outcome of the project and its management. Therefore, as the Additional Financing covers emergency activities, UCOP will be in charge of their implementation, rather than sector entities, still in a reinforcement phase. Implementation arrangements 38. Given the need for rapid results on the ground, and the good results of the arrangements which are already in place for PURUS, the Additional Financing will be implemented through the same mechanism, successfully tested under earlier Bankfinanced activities: - UCOP will continue as the Bank s main counterpart and focal point for project implementation. It will be responsible for: (i) overall implementation; (ii) coordination with technical ministries and other relevant entities for the successful implementation of all components; (iii) management of contracts awarded under the project; (iv) financial management; (v) liaison with the Bank; and (vi) management of a proactive communication campaign. UCOP is successfully handling identical responsibilities under the initial PURUS. UCOP will adjust its current contractual agreement with the independent procurement agent (UNOPS) which will handle all procurement-related matters on its behalf (excluding the signature of contracts). - The Interministerial Oversight Committee (Comité Interministériel de Supervision, CIS): (i) oversees UCOP activities, with a focus on effectiveness and transparency; (ii) provides overall guidance as may be needed; and (iii) facilitates the coordination of the various public institutions involved in the project. The CIS keeps playing this role for the Additional Financing. Membership in the CIS will be broadened, to include representatives of Bandundu provincial authorities. - Selected technical entities will be involved in implementation of the PURUS. The MEPSP is already involved, and will remain involved for the Additional Financing for schools, especially through SECOPE. The Bandundu Provincial Health Authority and PNLP will be involved for the planning and the oversight of the distribution of the bed nets in this province following the same scheme used in the Kinshasa Province under the PURUS. 14

21 Closing date 39. The activities financed under the Additional Financing are expected to be fully implemented by the end of However, as proposed during the Mid-Term Review held in November 2009, the original project closing date will be extended from May 31, 2011 to May 31, This extension is not triggered by the Additional Financing but both closing dates will be aligned to ease implementation. The Financing Agreement of the original financing will be amended to extend the closing date of the original financing. Procurement arrangements 40. Priority will be given to ensuring adequate transparency of the procurement process, even if it may result in delays. Procurement methods and arrangements used under the PURUS will be used. UCOP will not be directly involved in procurement, except for small goods and services needed for its own operations. Under the initial Project, UCOP delegated responsibility to a specialized procurement agent (UNOPS) which has a proven track record for the provision of such services. UNOPS will stay responsible for procurement of large contracts. UCOP, however, will sign all contracts awarded under the project. 41. Procurement will be conducted in accordance with applicable IDA guidelines. Procurement methods will rely on competitive processes in most cases essentially International Competitive Bidding (ICB) for goods, and Quality-Cost Based Selection (QCBS) for services. Single source selection (SSS) contracting, however, will be used for some service contracts when absolutely indispensable to avoid significant delays in implementation and where applicable per the criteria set in Bank safeguard OP/BP 8.00, Rapid Response to Crises and Emergencies. Single Source Selection will be used to hire the National Health Public School to conduct the Baseline data collection and impact monitoring in Bandundu for the anti- malaria component. The estimate amount of the contract is US$400,000. This public service is a government-owned university which has a large and a unique expertise within the country to conduct such assignment. Detailed procurement arrangements and a Simplified Procurement Plan (SPP) are presented in Annex 6. Financial management, Disbursement arrangements, reporting and auditing 42. As it is the case under the initial project, the Additional Financing will finance 100 percent of all expenditures, inclusive of taxes and duties. The disbursement schedule is expected to be as follows: 75 percent in FY11 and 25 percent in FY UCOP will be the Bank focal point. The UCOP is very familiar with the Bank financial management (FM) requirements and is currently managing four IDA-financed projects. The financial management of the Additional Financing will follow the same approach as the implementation arrangements in place for the ongoing projects managed 15

22 by the UCOP. These are considered acceptable to IDA. The FM team is staffed with experienced and qualified FM manager and accountants. TOMPRO, the multi-project accounting software, operates well and will be used for this Additional Financing. The current FM procedures manual is acceptable to IDA but will be updated to reflect the Additional Financing aspects. The residual FM risk after mitigation measures remains Substantial. The FM performance was rated Satisfactory following the last implementation support mission of February The action plans derived from this mission, as well as the recommendations of the 2008 external audit reports, have been or are being implemented very well. The Interim Un-audited Financial Reports (IFR) are prepared every quarter and submitted to the Bank regularly (e.g. 45 days after the end of each quarter) in a form and substance that complies with IDA Financial Management requirements, and are current. 44. The internal audit function has been contracted to an auditing firm and it operates well. The accounts of the Additional Financing will be audited on an annual basis and the external audit reports will be submitted to IDA within six months after the end of each calendar year. The terms of reference (TOR) of the current internal and external auditing firms will be updated to reflect the Additional Financing within three months after project effectiveness. Disbursements of Component 1: Support of education recovery through the finance of select recurrent expenditures (frais de fonctionnement and frais d interventions ponctuelles) are subject to audit by an independent auditor after completion of each tranche payment. The project audit reports managed by the UCOP covering the period that ended December 31, 2008 were submitted on time and acceptable to IDA. The audit of reports of the payment of teachers salaries and school expenditures (for the DRC Emergency Project to Mitigate the Impact of Financial Crisis- PUAICF and the original project) outlined some issues (e.g. misallocation of resources, ineligible expenditures, weak internal controls, etc.) but the action plans are being implemented to address these issues. The audit reports for the FY ended on December 31, 2009 are due on June 30, 2010; therefore there is no overdue audit report at the time of preparation of this Additional Financing. 45. Upon Grant effectiveness, transaction-based disbursements will be used during the first months of project implementation. For the Malaria Component, an initial advance will be made into a designated account for the Additional Financing, to be opened by the Recipient in a commercial bank acceptable to IDA, and subsequent disbursements will be made against submission of Statements of Expenditures (SOE) or records. The other methods of disbursing the funds (reimbursement, direct payment and special commitment) will also be available to the project. 46. For Component 1, support of education recovery through the finance of select recurrent expenditures (frais de fonctionnement and frais d interventions ponctuelles), disbursement arrangements will be strengthened and will follow the same approach as the ongoing operation. Upon effectiveness and after meeting the disbursement conditions specified below, the first semestrial installment will be disbursed directly from the IDA Grant Account (on the basis of an request certified by UCOP) to the designated account held at the Central Bank of Congo (Banque Centrale du Congo, 16