The World Bank Northern Crisis Recovery Project (P176157) REPORT NO.: RES54442 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NORTHERN CRISIS RECOVERY PROJECT APPROVED ON APRIL 27, 2021 TO REPUBLIC OF MOZAMBIQUE / MINISTRY OF ECONOMY AND FINANCE URBAN, RESILIENCE AND LAND EASTERN AND SOUTHERN AFRICA Regional Vice President: Victoria Kwakwa Country Director: Zviripayi Idah Pswarayi Riddihough Regional Director: Ayat Soliman Practice Manager/Manager: Catalina Marulanda Task Team Leader(s): Lizardo Narvaez Marulanda, Xavier Agostinho Chavana The World Bank Northern Crisis Recovery Project (P176157) ABBREVIATIONS AND ACRONYMS AF Additional Financing DNMA National Directorate of Monitoring and Evaluation FNDS National Sustainable Development Fund [Fundo Nacional de Desenvolvimento Sustentável] GoM Government of Mozambique IDA International Development Association IDPs Internally Displaced Persons M&E Monitoring and Evaluation MADER Ministry of Agriculture and Rural Development [Ministério da Agricultura e Desenvolvimento Rural] MEF Ministry of Economy and Finance [Ministério da Economia e Finanças] NCRP Northern Crisis Recovery Project PDO Project Development Objective PIU Project Implementation Unit PRCD Plan for the Reconstruction of Cabo Delgado [Plano de Reconstrução de Cabo Delgado} SC Steering Committee UNOPS United Nations Office for Project Services WASH Water, Sanitation and Hygiene The World Bank Northern Crisis Recovery Project (P176157) BASIC DATA Product Information Project ID Financing Instrument P176157 Investment Project Financing Environmental and Social Risk Classification (ESRC) High Approval Date Current Closing Date 27-Apr-2021 30-Apr-2026 Organizations Borrower Responsible Agency Republic of Mozambique / Ministry of Economy and Ministry of Agriculture and Rural Development (MADER), Finance Ministry of Economy and Finance Project Development Objective (PDO) Original PDO The Project Development Objective is to improve access to basic services and economic opportunities for internally displaced persons and host communities in targeted areas of Northern Mozambique OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D9530 20-Dec-2021 28-Dec-2021 15-Mar-2022 30-Apr-2026 100.00 0 94.30 IDA-D8090 27-Apr-2021 20-May-2021 01-Jul-2021 30-Apr-2026 100.00 94.75 .42 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Northern Crisis Recovery Project (P176157) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This paper seeks approval from the Country Director for a Level II restructuring of the Norther Crisis Recovery Project (NCRP, P176157), which at the request of the Government of Mozambique (GoM), will adjust implementation arrangements for the project. A. Project status 2. Background: NCRP is an Investment Project Financing that was approved on April 27, 2021, in the amount of US$100 million equivalent, and became effective on July 1, 2021 (NCRP south). An Additional Financing (AF) of US$100 million equivalent was approved on December 20, 2021; and became effective on March 15, 2022 (NCRP north). The Project’s closing date is April 30, 2026. The Project Development Objective (PDO) is to improve access to basic services and economic opportunities for internally displaced persons (IDP) and host communities in targeted areas of Northern Mozambique. NCRP consists of four components: (a) Building social cohesion and resilience to conflict (US$13 million); (b) Provision of livelihoods and economic opportunities for Internally Displaced Persons (IDPs) and host communities (US$38.3 million); (c) Rehabilitation, Construction, and Equipment of Climate Resilient Public Infrastructure (US$139.7 million); and (d) Project Implementation, Monitoring and Evaluation (US$9 million). 3. Progress towards achievement of the PDO is rated Satisfactory, as all project activities are being implemented as planned. The PDO level indicator related to livelihood support is completed at 82 percent (Number of beneficiaries with improved access to livelihoods support), while the one related to access to basic services is at 12 percent of completion (Number of beneficiaries with access to basic services and climate-resilient public infrastructure). The remaining PDO indicator, related to social cohesion is yet to be evaluated, nevertheless, all activities in that component are advancing well, as described below. 4. Implementation Progress is also rated Satisfactory as critical quick outputs have been delivered, including agriculture kits, Water, Sanitation, and Hygiene (WASH) infrastructure, temporary offices for public officials in the recently liberated districts in the north, and key assets like ambulances. In addition, other strategic outputs have been also delivered, like the civil registration working package, the Management Information System1 (MIS), technical assessments and designs for infrastructure development, and vocational training, among others. Also, the reconstruction of infrastructure has started in the most critical relocation sites in the south of Cabo Delgado (original financing); and preparatory activities are progressing well to inform project implementation in the northern districts (additional financing). The project is being implemented with the flexibility required to fit the current volatile security context. Both, Procurement and Financial Management are currently rated Satisfactory. There are no pending audits. Compliance with both social and environmental safeguards is also rated Satisfactory. To date, NCRP has disbursed US$97.92 million, equivalent to 49 percent of the project. 5. Activities under all components are advancing as planned. As of June 2023, project components have progressed as follows: 1 The civil registration process is core for the social cohesion strategy of the NCRP because it provides beneficiaries with proper recognition as citizens, which is considered the basic principle for restoring the social contract and initiating trust in government. It is also part of the milestones for the Prevention and Resilience Allocation (PRA). Similarly, the MIS provides transparency and accountability to all activities being implemented in the north, which also supports trust in government. The World Bank Northern Crisis Recovery Project (P176157) I. COMPONENT 1: BUILDING SOCIAL COHESION AND RESILIENCE TO CONFLICT.  In the south, 18 peace-building committees were established and are functional, (representing 51 percent of the final target); 241 Community-Based Organizations and leadership structures have been identified and mapped, 937 key actors identified and trained for social cohesion and trust-building (85 percent of the final target), 104 peace-building activities have been organized and 44 community-based organizations have received capacity-building support. In addition, 18 psychologists have been deployed to IDP relocation sites, 12 Child Protection Committees are functioning; the Gender-Based Violence /Sexual Exploitation and Abuse referral pathways have been established across 15 relocation sites; eight schools are being targeted with school-based psychosocial support programming and 6,626 trauma survivors have been assisted, (representing 60 percent of final target).  47,000 people have benefited from the integral civil registration in the South, which includes the provision of birth certificates and identification cards, while 17,000 people have been registered in the North (overall progress accounts for 10 percent of the final target) II. COMPONENT 2: PROVISION OF LIVELIHOODS AND ECONOMIC OPPORTUNITIES FOR IDPS AND HOST COMMUNITIES.  68,962 families received agricultural kits (87 percent of the final target), of which 25,462 were in the northern districts. Fisheries inputs were also acquired and will be soon delivered upon completion of the beneficiary verification process. 1,697 youth have graduated from small business management training (11 percent of the final target); 300 youth have graduated from technical and vocational courses. An additional 3,045 youth are currently participating in short courses; 285 people have received self-employment kits; over 100 local jobs have been created, in addition, other 890 IDPs and members of host communities were benefited by Cash for Work (3,6 percent of final target). III. COMPONENT 3: REHABILITATION, CONSTRUCTION, AND EQUIPMENT OF CLIMATE-RESILIENT PUBLIC INFRASTRUCTURE.  179 collective toilets and 159 hand-washing stations were provided; 22 climate-resilient water sources were rehabilitated, and 5,052 improved latrines were built (39 percent of the final target). Site adaptation for 11 sites where health infrastructure will be constructed while five Health Centers are under construction in the south. 10 Ambulances were handed over to the Government. Seven schools are in the construction phase.  30 modular container-type offices were delivered, of which 25 are already installed as well as 208 temporal offices (tents) in selected administrative posts. Nine community markets and six multi-purpose spaces for social services are under the final design adaptation stage. Tenders for the rehabilitation of 63 public buildings affected by the conflict in the northern districts are in process. 6. All dated covenants and conditions for disbursement have been met, and all key Environmental and Social Standard documents prepared and approved. The United Nations Office for Project Services (UNOPS) is supporting the GoM with the implementation of the NCRP and has established a project implementation support unit in Pemba with all required staff for Procurement, Financial Management, and Safeguards. B. Rationale for the restructuring The World Bank Northern Crisis Recovery Project (P176157) 7. Since August 2022, the Ministry of Economy and Finance (MEF) assumed the coordination of the Reconstruction Plan for Cabo Delgado (PRCD for its Portuguese acronym) and defined a Steering Committee (SC) for the oversight of its implementation. On May 18, 2023, MEF sent a letter to the Bank notifying the GoM’s intention to revise NCRP’s institutional arrangements and specifically requesting the change of the Project Implementation Unit (PIU) from the National Sustainable Development Fund (FNDS) at the Ministry of Agriculture (MADER), to the National Directorate of Monitoring and Evaluation (DNMA) in MEF. II. DESCRIPTION OF PROPOSED CHANGES 8. This restructuring paper seeks the approval of the adjustment of the institutional arrangement of the NCRP. All responsibilities assigned to FNDS under the Ministry of Agriculture will be transferred to DNMA at MEF. The Task Team has assessed the DNMA as adequate to assume the leadership of the NCRP, provided its role and performance as the technical secretariat of the PRCD. In addition, a dedicated PIU will be established in the DNMA exclusively for the NCRP and will be composed of: (i) Senior Project Coordinator, (ii) Monitoring and Evaluation Specialist, (iii) Financial Management Specialist, and (iv) a Procurement Specialist (part time). Current dedicated staff appointed as part of the UNOPS agreement will continue to ensure implementation of the Environmental and Social Framework as defined in the Environmental and Social Commitment Plan for the project. 9. Once restructured, the current contract signed between UNOPS and FNDS will be amended to provide the DNMA at MEF with the signatory authority to supervise and monitor UNOPS agreement, all other provisions of the contract will remain unchanged. 10. The Government will close the designated account currently held by FNDS, audit the account and transfer of funds to a new account to be opened by MEF. A modification of the disbursement letter to reflect new arrangements will be issued by the Bank. The Government will also rescind or void the subsidiary agreement between MADER and FNDS. MEF, with the support of UNOPS, will update the Project Operations Manual and submit it for World Bank approval no later than 60 days after the signature date of the amendment to the Financing Agreement. ES NOTE TABLE III. SUMMARY OF CHANGES Changed Not Changed Implementing Agency ✔ Institutional Arrangements ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ The World Bank Northern Crisis Recovery Project (P176157) Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Legal Covenants ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_IA_TABLE IMPLEMENTING AGENCY Implementing Agency Name Type Action Ministry of Agriculture and Rural Implementing Marked for Deletion Development (MADER) Agency Ministry of Economy and Finance Implementing New Agency .