The World Bank Improving the Livelihoods of Miskito Indigenous Peoples in La Moskitia (P167767) REPORT NO.: RES56028 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF IMPROVING THE LIVELIHOODS OF MISKITO INDIGENOUS PEOPLES IN LA MOSKITIA APPROVED ON NOVEMBER 6, 2019 TO FUNDACION AYUDA EN ACCION SOCIAL SUSTAINABILITY AND INCLUSION global practice LATIN AMERICA AND CARIBBEAN region Regional Vice President: Carlos Felipe Jaramillo Country Director: Michel Kerf Global Director: Louise J. Cord Practice Manager/Manager: Maria Gonzalez de Asis Task Team Leader(s): Norman Russle Howard Taylor, German Nicolas Freire The World Bank Improving the Livelihoods of Miskito Indigenous Peoples in La Moskitia (P167767) ABBREVIATIONS AND ACRONYMS ACICAFOC Coordinating Association of Indigenous and Community Agroforestry in Central America Asociación Coordinadora Indígena y Campesina de Agroforestería Comunitaria Centroamericana AeA Ayuda en Acción Foundation Fundación Ayuda en Acción CD Country Director CS Consultant Services CMU Country Management Unit ESA Environment and Social Assessment ESRS Environmental and Social Review Summary E&S Environmental and Social GO Goods GRM Grievance Redress Mechanism IP Overall Implementation Progress JSDF Japan Social Development Fund LMP Labor Management Plan NCS Non Consultant Services NGO Non-governmental organization OP Operating costs PDO Project Development Objective PIU Project Implementing Unit SOL Honduran Secretariat of Labor TR Training TTL Task Team Leader The World Bank Improving the Livelihoods of Miskito Indigenous Peoples in La Moskitia (P167767) BASIC DATA Product Information Project ID Financing Instrument P167767 Investment Project Financing Environmental and Social Risk Classification (ESRC) Substantial Approval Date Current Closing Date 06-Nov-2019 28-Feb-2024 Organizations Borrower Responsible Agency Fundacion Ayuda en Accion Fundacion Ayuda en Accion Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0 Total Financing 0 Financing Gap 0 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The development objective is to promote socio-economic productive activities to improve the livelihoods of Miskito indigenous peoples in Selected Territories in Honduras. Specifically, the project would work with Miskito communities seeking to target at least 1,800 Miskito indigenous peoples in the four selected territories. The World Bank Improving the Livelihoods of Miskito Indigenous Peoples in La Moskitia (P167767) OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-B1371 19-Oct-2019 09-Sep-2020 21-Oct-2020 28-Feb-2024 2.72 1.18 1.55 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Background 1. The Project Development Objective (PDO) is to promote socio-economic productive activities to improve the livelihoods of Miskito Indigenous Peoples in selected Miskito territories in Honduras. The Project in the amount of US$2.72 million was approved on October 19, 2019, and signed on September 9, 2020. The Project had to be restructured before signing to replace the original Implementing Agency that declined to continue with the Project due to concerns about the increasing insecurity in the Project area. As a result of the elapsed time from approval to signing, implementation only started in early 2021. The Project was restructured a second time in April 2022 to extend the Closing Date to February 28, 2024. B. Project Status 2. The Project is at the final stage of implementation, on track to achieve the main activities, i.e., the community investments or subprojects. Although only US$1.18 million (43.3 percent) of the Project has been disbursed to date, the entire allocation to subprojects (US$1.8 million for 45 subprojects) is committed. The PDO continues to be achievable and the progress towards the Development Objective (DO) and the Implementation Progress (IP) are both rated Moderately Satisfactory as per the last Implementation Status and Results Report (ISR) of March 2023. To date, there are 34 subprojects approved and under implementation for 15 Beneficiary Entities and 11 subprojects under evaluation. Currently, the Project is reaching 2,052 beneficiaries, out of which 1,277 (62 %) are women. 3. The implementing agency continues to demonstrate a strong commitment to complete Project activities and achieve the PDO. C. Rationale for Restructuring The World Bank Improving the Livelihoods of Miskito Indigenous Peoples in La Moskitia (P167767) 4. An official letter dated May 11, 2023, was submitted by the implementing agency to the Bank, as administrator of grant funds under the Japan Social Development Fund requesting a reallocation between disbursement categories. 5. Staffing of the Project Implementation Unit (PIU) has been significantly challenging. The Project suffered a severe delay in having a PIU fully staffed in La Moskitia, due to the remote location, and the lack of qualified professionals to fill the key technical positions. The implementation of the Project requires intensive field work in a highly insecure area that has also gone through several natural disasters such as hurricanes and floods during the past two years which have deteriorated work conditions, caused some resignations in the PIU, and generated claims for increased security conditions and salaries. Currently, the PIU is staffed with consultants and as such, the WB resources cannot be used to finance vacations or social benefits according to the Bank’s Procurement Regulations for consultant contracts. Under the Honduran labor law, these consultants are considered full time employees. 6. The Bank Team (Procurement, Financial and CMU teams) in coordination with the AeA arrived at a consensus to explore for options to improve working conditions and recommended that a compensation be included in the consultants’ contracts as an increase in their rate. This would also contribute to preserving experienced, technical capacity within the PIU and enabling the completion of project activities by the current closing date. Consequently, an increase in the allocation of Category (3) for Consulting Services is inevitable. II. DESCRIPTION OF PROPOSED CHANGES A. Reallocation between Disbursement Categories 7. The Bank team has calculated that an increase in US$103,500 in Category (3) for Consulting Services is necessary to finance an increase in the contract of consultants working in the PIU. Additionally, due to the extensive PIU activities in this last phase of the Project, an increase of US$47,700 in Category (5) for Operating Cost would also be needed. This would require a reallocation of resources from Category (4) to Category (3) and (5), as per following table: Percentage of Category Original Allocation Proposed Allocation Expenditures to be (expressed in USD) (expressed in USD) Financed (inclusive of Taxes) (1) Goods and non-consulting services 43,000 43,000 100% under the Project (2) Subproject Grants 1,800,000 1,800,000 100% (3) Consulting services under the Project 588,500 692,000 100% (4) Training under the Project 178,200 27,000 100% (5) Operating Costs under the Project 112,500 160,200 100% The World Bank Improving the Livelihoods of Miskito Indigenous Peoples in La Moskitia (P167767) TOTAL AMOUNT 2,722,200 2,722,200 8. The proposed reallocation will not impact the Grant objectives, scope, or nature of project activities; as training activities are being undertaken and will continue to be implemented by project workers applying the “learning by doing” approach with Project beneficiaries. No other changes to the Project are expected at this stage (e.g., closing date, components, results framework or implementation arrangements). 9. The project has received exceptional clearance to move forward with this proposed change from the JSDF Program Secretariat taking into consideration the unusual circumstances prevailing in La Moskitia, the project area, and the positive results that the project has achieved on the ground. Environmental and Social 10. The restructuring is not expected to result in any new E&S impacts and the Environmental and Social Performance of the Project remains Moderately Satisfactory. 11. As of May 2023, the PIU has appointed new social specialist after the previous incumbent was let go in October of 2022. In the interim the PIU’s environmental specialist and the Project coordinator covered both the environmental and social aspects of Project and subproject activities. ES Explanation Table Describe any E&S issues and impacts associated with the change in project design. Identify and describe any potential large scale, significant and/or irreversible impacts. Describe any potential indirect and/or long-term impacts due to anticipated future activities in the project areas. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. Describe measures taken by the borrower to address E&S policy issues. Provide an assessment of borrower capacity to plan and implement the measure described. Identify key stakeholders and describe the mechanism for consultation and disclosure on E&S policies, with an emphasis of potentially affected people. ES NOTE TABLE III. SUMMARY OF CHANGES Changed Not Changed Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ The World Bank Improving the Livelihoods of Miskito Indigenous Peoples in La Moskitia (P167767) Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed TF-B1371-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: GO and NCS 43,000.00 42,885.79 43,000.00 100.00 100.00 The World Bank Improving the Livelihoods of Miskito Indigenous Peoples in La Moskitia (P167767) iLap Category Sequence No: 2 Current Expenditure Category: Subproject Grants 1,800,000.00 315,925.35 1,800,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: CS 588,500.00 378,618.22 692,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: TR 178,200.00 26,909.97 27,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: OP 112,500.00 112,464.60 160,200.00 100.00 100.00 Total 2,722,200.00 876,803.93 2,722,200.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Expected Disbursements (In US$) Fiscal Year Annual Cumulative 2020 0.00 0.00 2021 0.00 0.00 2022 0.00 0.00 2023 0.00 0.00 2024 0.00 0.00 Note to Task Teams: End of system generated content, document is editable from here.