FOR OFFICIAL USE ONLY Report No: 187421-PK INTERNATIONAL DEVELOPMENT ASSOCIATION NOTE ON CANCELLED OPERATION ON A CREDIT IN THE AMOUNT OF SDR 145.4 MILLION (US$ 200 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR LOCUST EMERGENCY AND FOOD SECURITY PROJECT (P174314) January 28, 2024 Agriculture And Food Global Practice South Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective {Nov 30, 2023}) Currency Unit = Pakistani Rupee (PKR) PKR 285 = US$1 (at Completion) US$ 1.33 = SDR 1 FISCAL YEAR July 1 - June 30 Regional Vice President: Martin Raiser Country Director: Najy Behassine Regional Director: Dina Umali-Deininger Practice Manager: Oliver Braedt Task Team Leader(s): Myriam Chaudron ABBREVIATIONS AND ACRONYMS COVID Coronavirus disease DPP Department of Plant Protection FAO Food and Agriculture Organization FSNIS Food Security and Nutrition Information System LEAFS Locust Emergency and Food Security Project MNFSR Federal Ministry of National Food Security and Research NDMA National Disaster Management Authority NLCC National Locust Control Centre PDO Project Development Objective PMU Project Management Unit PSC Project Steering Committee TABLE OF CONTENTS DATA SHEET I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 1 II. KEY FACTORS LEADING TO CANCELLATION ...................................................................... 4 III. BANK PERFORMANCE ..................................................................................................... 5 IV. LESSONS LEARNED AND RECOMMENDATIONS ................................................................ 6 ANNEX 1. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ........................... 7 ANNEX 2. SUPPORTING DOCUMENTS .................................................................................... 9 The World Bank Locust Emergency and Food Security Project (P174314) DATA SHEET BASIC INFORMATION Product Information BASIC INFO T BL Project ID Project Name P174314 Locust Emergency and Food Security Project Country Financing Instrument Pakistan Investment Project Financing Original EA Category Revised EA Category Organizations Borrower Implementing Agency Agricultural, Supply & Prices Department, Govt. of Sindh, Agriculture and Cooperatives Department, Govt of Balochistan, Agriculture Department, Govt. of the Islamic Republic of Pakistan Punjab, Department of Agriculture, Govt. of Khyber Pakhtunkhwa, Ministry of National Food Security and Research Project Development Objective (PDO) Original PDO To control the locust outbreak, restore livelihoods in locust-affected areas, and strengthen Pakistan’s national food security monitoring and management system. i The World Bank Locust Emergency and Food Security Project (P174314) FINANCING Standal one TBL Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Administered Financing IDA-67630 200,000,000 21,831,845 20,000,000 Total Project Cost 200,000,000 21,831,845 20,000,000 KEY DATES FIN_TABLE_DAT Project Approval Effectiveness Original Closing Revised Closing P174314 31-Jul-2020 30-Mar-2021 30-Jun-2023 30-Jun-2023 RESTRUCTURING AND/OR ADDITIONAL FINANCING RESTRUCTURE OR AF TBL Date(s) Amount Disbursed (US$M) Key Revisions 16-Mar-2022 20.00 Change in Components and Cost Cancellation of Financing Reallocation between Disbursement Categories Change in Disbursements Arrangements 28-Jun-2023 20.00 Change in Components and Cost Cancellation of Financing Reallocation between Disbursement Categories RATING OF BANK PERFORMANCE Moderately Satisfactory RATINGS OF PROJECT PERFORMANCE IN ISRs PERFORMANCE ISR TBL Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 23-Nov-2020 Satisfactory Satisfactory 0 02 16-Jul-2021 Moderately Satisfactory Moderately Satisfactory 0 03 07-Feb-2022 Moderately Satisfactory Moderately Satisfactory 20.00 04 19-Aug-2022 Unsatisfactory Unsatisfactory 20.00 05 20-Feb-2023 Highly Unsatisfactory Highly Unsatisfactory 20.00 ii The World Bank Locust Emergency and Food Security Project (P174314) SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 93 Crops 18 Public Administration - Agriculture, Fishing & Forestry 62 Other Agriculture, Fishing and Forestry 13 Social Protection 7 Social Protection 7 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Public Sector Management 62 Data Development and Capacity Building 62 Data production, accessibility and use 62 Social Development and Protection 25 Social Protection 25 Social Safety Nets 25 Human Development and Gender 100 Disease Control 90 Pandemic Response 90 Nutrition and Food Security 100 Food Security 48 Locust Response 100 iii The World Bank Locust Emergency and Food Security Project (P174314) Urban and Rural Development 62 Rural Development 35 Rural Infrastructure and service delivery 35 Disaster Risk Management 62 Disaster Risk Reduction 53 Disaster Preparedness 4 Flood and Drought Risk Management 8 Environment and Natural Resource Management 87 Climate change 87 Mitigation 4 Adaptation 83 ADM STAFF Role At Approval At NCO Regional Vice President: Hartwig Schafer Martin Raiser Country Director: Patchamuthu Illangovan Najy Benhassine Director: John A. Roome Dina Umali-Deininger Practice Manager: Loraine Ronchi Oliver Braedt Myriam Mireille Veronique Task Team Leader(s): Guo Li Chaudron iv The World Bank Locust Emergency and Food Security Project (P174314) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES 1. Agriculture is a major sector in Pakistan, accounting for a fifth of the country’s GDP. It is a key driver of food security given 20 percent of Pakistan’s population is considered food insecure and about 40 percent employed population rely on agriculture for livelihood. At the time of project appraisal in June 2020, Pakistan was dealing with the double threat of the Coronavirus disease 2019 (COVID-19) pandemic and the spread of locusts.1 The rapid spread of locusts risked exacerbating the economic and poverty challenges created by the COVID-19 crisis. Food insecurity was already high in the country, with 37 percent of the population facing food insecurity according to the 2018 National Nutrition Survey. There was a risk of worsening food insecurity due to inflationary pressures in food prices, with the food consumer price index 15 percent and 18 percent higher in June 2020 in urban and rural areas respectively, than in the same period in the previous year. 2. In 2019, the worst locust outbreak in 25 years reached Pakistan. According to the Government of Pakistan’s estimate, in the worst-case scenario, the agricultural loss could reach over US$15 billion for both the rabi (winter) and kharif (summer) crops. On January 31, 2020, a national emergency was declared, and a National Action Plan to combat the outbreak was approved. Coordination and support for large-scale locust control operations was to be managed by the National Disaster Management Authority (NDMA), Provincial Agricultural Departments, and the armed forces of Pakistan as needed. Between January to May 2020, an estimated 1.5 million people had been affected by swarms of locusts. 3. Quick action was required since Pakistan was assessed to be an important front-line country for desert locusts, as it lies on their migratory route and covers both summer and winter/spring breeding areas. Around 38 percent of the country’s geographic area is the breeding/recession area for desert locusts, and with two breeding seasons, the risk of spread of locust infestation in the region was high. The desert locusts arrived in Pakistan from Iran in June 2019 and ravaged cotton, wheat, maize, and other crops resulting in the country missing its production target for wheat by about two million tons. The supply shock to wheat pushed up food prices forcing the government to import the grain. Project Development Objectives 4. The Project Development Objective (PDO) was to control the locust outbreak, restore livelihoods in locust-affected areas, and strengthen Pakistan’s national food security monitoring and management system . Project Description 5. Locust Emergency and food security (LEAFS) project’s theory of change identified the need to provide a short-term answer to the locust outbreak emergency while also addressing structural weaknesses in the country’s resilience to natural shocks and disaster preparedness. The project aimed to introduce a set of customized activities, such as locust surveillance and control operations, rehabilitating livelihoods of affected rural communities and farmers, strengthening and operating the Food Security and Nutrition Information System (FSNIS). It also emphasized a series of climate-smart agriculture measures and supported women’s participation to effectively address the desert locust emergency and reduce vulnerability to climate change in the long term. 1The desert locust is a transboundary pest that attacks nearly all crops and rangeland vegetation in large parts of Africa and Asia, with a voracious appetite, high mobility aided by wind patterns, and a 20-fold increase in population with each generation over a 4-6-month period. These traits are a formidable threat to lives and livelihoods making it extremely difficult and costly to combat. Page 1 of 9 The World Bank Locust Emergency and Food Security Project (P174314) These activities were to be implemented through a strengthened and better coordinated federal-provincial government system. The expected outcomes included an improved disaster response system, a more stable agriculture production system, improved resilience of farmers’ livelihoods against climate-induced risks and strengthened public service delivery. 6. LEAFS Project was part of the World Bank’s global locust emergency response as it strengthened locust surveillance and control in a front-line region. The project was also expected to have significant regional benefits given the locust spread across South Asia2, the Horn of Africa, and the Arabian Peninsula, as it was linked to regional and international surveillance systems. The LEAFS project was prepared under emergency procedures in two months and was approved on July 31, 2020, with a closing date of June 30, 2023. It became effective on March 30, 2021, with significant delays explained in section II. Project Design/Activities 7. The project consisted of four components: 1) Surveillance and Control Measures (US$104 million): This component aimed to improve the capacity for surveillance of breeding and support locust control activities including application and management of pesticides. 2) Livelihood Protection and Rehabilitation (US$50 million): This component was intended to support a robust protection scheme that ensures immediate relief to affected farmers and livestock owners will have two types of measures: (i) creation of temporary and self-employment opportunities; and (ii) restoration of lost assets. 3) Early Warning Preparedness and Food Security (US$26 million): This component aimed to strengthen: (i) national capacity for early warning and early response, linking these efforts to regional (international) and provincial (domestic) existing locust surveillance and control networks; and (ii) the capacity of Ministry of National Food Security and Research (MNFSR) by augmenting the Food Security and Nutrition Information System. 4) Project Management, Monitoring and Evaluation (US$20 million): This component was intended to support project administration and coordination at the federal and provincial levels; transparency and accountability in financial management, procurement, environmental and social risk management; information dissemination and monitoring and evaluation; and community mobilization and stakeholders’ engagement. Project Cost and Financing 8. The project had a financing envelope of US$200 million (SDR145.4 million), including US$75 million (SDR20.83 million) from national IDA and US$125 million (SDR34.71 million) from the IDA19 Regional Window. During implementation the project disbursed an advance of US$20 million out of which less than US$350,000 was utilized, and the remainder is to be refunded. Two restructurings were processed to cancel project funds. The first, in March 2022, cancelled US$104 million3 from the IDA Credit (5686-PK), and the second in June 2023, for an amount of US$ 74.168 million.4 2 Swarms had also been reported in Iran and India 3 Equivalent to SDR 74,829,296, consisting of: (a) IDA: SDR 28,060,986 (equivalent of US$ 39,000,000); and (b) Regional IDA SDR 46,768,310 (equivalent of US$ 65,000,000). 4 Equivalent to SDR 55,582,484, consisting of: (a) IDA: SDR 20,843,432 (equivalent of US$ 27,813,085); and (b) Regional IDA SDR Page 2 of 9 The World Bank Locust Emergency and Food Security Project (P174314) Project Financing Costs (US$, millions) IDA Credit IDA Regional Project Cost Financing Financing Component 1: Surveillance and Control Measures Sub-component 1.1: Pest surveillance 30 4 26 Sub-component 1.2: Control measures 64 6 58 Sub-component 1.3: Risk reduction and management 10 1 9 Subtotal 104 11 93 Component 2: Livelihood Protection and Rehabilitation Sub-component 2.1: Cash-based assistance for temporary employment creation 15 15 0 and food security Sub-component 2.2: Livelihood restoration and early recovery 30 30 0 Sub-component 2.3: Strengthening resilience and promoting agriculture 5 5 0 transformation Subtotal 50 50 0 Component 3: Early Warning Preparedness and Food Security Sub-component 3.1: Strengthening the national locust surveillance 15 2 13 system Sub-component 3.2: Strengthen linkages with the regional network for early 1 0 1 warning and preparedness Sub-component 3.3: Strengthening FSNIS 10 2 8 Subtotal 26 4 22 Component 4: Project Management, Monitoring and Evaluation Sub-component 4.1: Project Administration and Coordination 12 6 6 Sub-component 4.2: Enhancing Transparency, Accountability and Anti- 3 1.5 1.5 corruption Sub-component 4.3: Management information System, Monitoring & 3 1.5 1.5 Evaluation Sub-component 4.4: Communications and Stakeholder Engagement 2 1 1 Subtotal 20 10 10 Grand total 200 75 125 Description of Implementation arrangements 9. As a national emergency operation requiring a cross-provincial coordinated response, the federal MNFSR was responsible for overall project implementation. Since agriculture was and remains a fully devolved subject in Pakistan, MNFSR was to be supported in project implementation by provincial governments, Department of Plant Protection (DPP), National Locust Control Centre (NLCC), and NDMA, and with technical assistance from Food and Agriculture Organization (FAO), keeping in mind the comparative advantages of each organization. The Secretary, MNFSR was responsible for overseeing project implementation and managing a Project Management Unit (PMU). Provincial governments were to lead project implementation in the affected areas financed by grants from the federal government. Provincial agriculture departments were supposed to set up Provincial Project Implementation Units (PPIUs) under the direct supervision of the provincial agriculture 34,739,053 (equivalent of US$ 46,355,141). Page 3 of 9 The World Bank Locust Emergency and Food Security Project (P174314) department. A Project Steering Committee (PSC), with high level representation from MNFSR, Ministry of Economic Affairs, Ministry of Finance, Planning Commission, NLCC, NDMA, and provincial governments, was supposed to oversee and steer overall project implementation. Fiduciary 10. Substantial fiduciary risks and mitigation measures were identified during preparation; however, the mitigations measure could not be implemented as planned. The key financial management risks were: i) weak supply chain and inventory management; ii) delay in the flow of funds to the project and to affected communities; iii) weak implementation capacity of government departments participating in implementation; iv) unintended use of funds; and v) misuse of project assets and inventories. To manage these risks, a federal implementation structure was established to ensure adequate capacity is available to execute fiduciary tasks, technical assistance from FAO incorporated in project design, and internal and external audits were included in the implementation arrangements. Key procurement risks included: i) the lack of technical capacity for emergency procurement; ii) slow decision-making; and iii) poor implementation logistics to operate equipment and fully utilize supplies. Due to the emergency nature of the project, the preparation of a project procurement strategy for development was deferred till implementation (an initial three-month plan was agreed instead) and a fast-track emergency procurement approach was agreed with the government. To mitigate these risks, the Bank has an expert panel available for direct selection and Bank team was available to provide day to day support to facilitate procurement decision-making. Environmental and social 11. Environment and Social risks were also high since the government had already started using pesticides through various methods with unknown pollution load and health impacts . Social risk also emerged from potential elite capture and social exclusion in livelihood assistance, recovery and resilience components, and issues related to encroachers/land acquisition for locust surveillance outposts. To mitigate these risks, the project was supposed to prepare various plans including a pesticide management plan, an environment and social management framework, and stakeholder engagement plan. As LEAFS was processed as an emergency project, the development of these instruments was deferred to the implementation phase. During implementation, draft versions of these documents were prepared, however because of lack of Environmental and Social staff within the PMU these drafts could not be finalized. 12. Because of the above risks, the overall project risk was rated as Substantial at the time of appraisal. II. KEY FACTORS LEADING TO CANCELLATION 13. LEAFS was prepared as an emergency project and approved by the World Bank’s Board on July 31, 2020. In August 2020, updates on the locust situation reported low numbers of adults in breeding areas.5 By September 2020, it was clear that the situation had improved dramatically, with only a small residual infestation remaining. 6 This changed context resulted in delays in obtaining government approvals required to sign the credit. As a result, the project was signed eight months later on March 26, 2021. 5 https://reliefweb.int/report/ethiopia/desert-locust-situation-update-7-august-2020 6 https://reliefweb.int/report/ethiopia/desert-locust-bulletin-504-5-october-2020-enar Page 4 of 9 The World Bank Locust Emergency and Food Security Project (P174314) 14. In the two months between initiation and delivery, the Government launched a national action plan for locust surveillance and control which was able to make significant progress on controlling the locust. As part of this national action plan, district committees were formed for coordination, and teams were deployed across the country in affected areas for locust surveillance and control . The government was, therefore, able to move quickly and control the locust invasion with implementation support from the country’s defence forces, while FAO provided technical, material and logistics support. 15. Although the locust invasion was under control, the government demonstrated interest to continue the project to strengthen preparedness and control systems for possible future pest attacks, and later to respond to catastrophic floods. Following an initial restructuring to cancel US$104 million in March 2022, further discussions were held in April, 2022, and a plan was prepared – but ultimately not approved – to align project interventions with the new context and priorities. Then, in September 2022, the project was identified as a potential instrument for emergency support in aftermath of the monsoon floods. It was proposed to use the project’s livelihood component to purchase and distribute wheat seeds to farmers successively affected by locusts and floods. The proposal agreed with the government was not implemented and the provinces initiated their own seed distribution programs. 16. The lack of suitable implementation arrangements for an emergency project and the turnover within the implementing agency considerably delayed implementation. The PMU was never adequately staffed to start work in the field. Project implementation was also affected by a high turnover of staff and management positions within the implementing agency resulting in delays in the decision-making process. Two PMU positions were filled during the course of project implementation: the Financial Management specialist in September 2022 and the national project director in December 2022. Two other key positions (Procurement and monitoring and evaluation specialists) remained vacant until project closing. 17. The project was therefore rated Highly Unsatisfactory for progress towards achievement of PDO and for implementation progress, and a second restructuring to cancel US$ 74.168 million was processed in June 2023. III. BANK PERFORMANCE 18. Bank performance is rated as Moderately Satisfactory. Quality at Entry was characterized by technically sound project activities to address the client’s needs, combining short and long terms solutions. As the situation changed due to unforeseen circumstances, the relevance of the emergency components reduced compared to what it was at the time of appraisal. The risk assessment carried out during project preparation had accurately identified all the risks to implementation but the mitigation measures expected to be implemented during execution did not materialize. 19. Given the substantial risks to implementation, the project design was perhaps overambitious given the emergency nature of the situation, with a short two-month preparation time, and in particular with a client with no experience in implementing World Bank-financed projects. In addition, the involvement of various stakeholders in the government's emergency response activities delayed obtaining the necessary approvals and, consequently, the implementation of the project. Page 5 of 9 The World Bank Locust Emergency and Food Security Project (P174314) 20. While the locust infestation subsided earlier than anticipated, the Bank team continued to support the client in launching the project interventions aimed at strengthening pest surveillance and early warning systems, and increasing farmers’ resilience to future shocks. As explained above, a significant part of the project was still technically relevant to address structural issues and weaknesses of the pest surveillance system. During the 28 months of implementation, four implementation support missions were conducted and regular follow-up meetings were held to make progress on the implementation of relevant components and realign the project design to the emerging needs of the government. However, the client’s priorities had changed after the end of the locust emergency, and the PMU could not be established to support the implementation of the operation. 21. At the request of the client, the second restructuring and cancellation of the undisbursed amount of the project was processed in June 2023. IV. LESSONS LEARNED AND RECOMMENDATIONS 22. Phasing the engagement, starting with targeted emergency interventions followed by capacity building activities of the implementing agencies, could help the client to focus and better implement the emergency interventions. The need to build back better can support the inclusion of much needed resilience and capacity building activities in project design. However, in an emergency situation, it might have been more effective to focus on the main emergency response and include technical assistance to design recovery and resilience-building activities instead of delivering an ambitious project in two months. 23. Special attention should be given to the type of instrument to be used in an emergency situation. Alternate means of mobilizing emergency resources, such as Contingency Emergency Response Components (CERC), can be utilized to meet and finance immediate needs, thus allowing more time to prepare a project more focused on medium and long-term needs with the necessary implementation and risk mitigation arrangements. As explained above, although the Governement did not use the Bank’s funding for locust control, they managed to control and stop the invasion. For this specific situation, the provision of technical assistance (possibly through CERCs in other operations) to support government-led response activities would have been an interesting alternative to consider. 24. Federal-provincial coordination in the implementation of federal projects remains a challenge, and measures to mitigate this risk must be planned during project preparation. Since the agriculture sector is highly devolved, MNFSR's roles and mandate is relatively limited. While the NLCC was successful in coordinating timely activities to control the locust attack, resilience to shocks requires systemic coordination between stakeholders to anticipate and prevent shocks. For example, the implementation of a locust surveillance system or data sharing for the Food and Nutrition Information System requires a streamlined and secure mechanism to obtain consistent and harmonized data from all provinces (and different departments within each province) to anticipate emergencies and take timely prevention action. This requires systemic change and commitment from top leadership to lead and foster coordination at all levels of implementation, beyond just emergency response. . Page 6 of 9 The World Bank Locust Emergency and Food Security Project (P174314) ANNEX 1. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION TASK TEAM MEMBERS Name Role Preparation Guo Li Task Team Leader(s) Rehan Hyder Procurement Specialist(s) Noaman Ali Financial Management Specialist Sana Ahmed Environmental Specialist Xueling Li Team Member Fang Zhang Team Member Najm-Ul-Sahr Ata-Ullah Team Member Babar Naseem Khan Social Specialist Mohammad Aslam Malik Team Member Amjad Zafar Khan Team Member Puteri Natalie Watson Team Member Maha Ahmed Team Member David I Team Member Abdelaziz Lagnaoui Team Member Bremala Malli Team Member Wilhelmus Gerardus Janssen Team Member Pierre Olivier Colleye Team Member Harideep Singh Team Member Supervision/NCO Page 7 of 9 The World Bank Locust Emergency and Food Security Project (P174314) Myriam Mireille Veronique Chaudron Task Team Leader(s) Aimal Sherzad, Rehan Hyder Procurement Specialist(s) Noaman Ali Financial Management Specialist Ama Esson Team Member Maha Ahmed Team Member Puteri Natalie Watson Team Member Mohammad Aslam Malik Team Member Amena Raja Team Member Babar Naseem Khan Social Specialist Sana Ahmed Environmental Specialist Basit Ali Khan Team Member STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY20 0 5,137.64 FY21 11.555 75,806.32 Total 11.56 80,943.96 Supervision/NCO FY21 45.255 253,784.87 FY22 29.482 198,504.16 FY23 25.765 164,210.14 FY24 3.511 29,200.21 Total 104.01 645,699.38 Page 8 of 9 The World Bank Locust Emergency and Food Security Project (P174314) ANNEX 2. SUPPORTING DOCUMENTS (IF ANY) Disclosed ISRs: Sequence No 1: https://documents1.worldbank.org/curated/en/297421606141497563/pdf/Disclosable- Version-of-the-ISR-Locust-Emergency-and-Food-Security-Project-P174314-Sequence-No-01.pdf Sequence No 2 https://documents1.worldbank.org/curated/en/530891626449263225/pdf/Disclosable-Version- of-the-ISR-Locust-Emergency-and-Food-Security-Project-P174314-Sequence-No-02.pdf Sequence No 3: https://documents1.worldbank.org/curated/en/099550002072242349/pdf/Disclosable0Ve04000Sequence0No0 0003.pdf Sequence No 4: https://documents1.worldbank.org/curated/en/099630008192232651/pdf/P174314075ac0e0930bffe06d92cfd cd2d2.pdf Sequence No 5: https://documents1.worldbank.org/curated/en/099163502202377542/pdf/P174314056ae9801b0acad0a8586 7aea0e0.pdf Disclosed Restructuring Papers: https://documents1.worldbank.org/curated/en/099450003162242373/pdf/Disclosable0Re0ty0Project000P174 314.pdf https://documentsinternal.worldbank.org/search/34103574 Page 9 of 9