The World Bank Sierra Leone Safety Nets Project (P143588) REPORT NO.: RES56785 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE SIERRA LEONE SAFETY NETS PROJECT APPROVED ON MARCH 25, 2014 TO THE REPUBLIC OF SIERRA LEONE SOCIAL PROTECTION AND JOBS GLOBAL PRACTICE WESTERN AND CENTRAL AFRICA REGION Regional Vice President: Ousmane Diagana Country Director: Pierre Frank Laporte Regional Director: Dena Ringold Practice Manager/Manager: Camilla Holmemo Task Team Leader(s): Abu Kargbo, Samik Adhikari The World Bank Sierra Leone Safety Nets Project (P143588) ABBREVIATIONS AND ACRONYMS ACC Anti-corruption Commission GoSL Government of Sierra Leone GRM Grievance Redress Mechanism IDA International Development Association IFR Interim Financial Report M&E Monitoring and Evaluation NaCSA National Commission for Social Action PDO Project Development Objective SP Social Protection SSN Social Safety Nets The World Bank Sierra Leone Safety Nets Project (P143588) BASIC DATA Product Information Project ID Financing Instrument P143588 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 25-Mar-2014 30-Jun-2023 Organizations Borrower Responsible Agency Republic of Sierra Leone Project Development Objective (PDO) Original PDO The project development objective is to establish the key building blocks for a basic national safety net system and to provide income support to extremely poor households in Sierra Leone. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D4900 01-Jul-2019 12-Sep-2019 10-Dec-2019 30-Jun-2023 30.00 27.43 2.44 IDA-D0920 06-Aug-2015 18-Sep-2015 16-Dec-2015 30-Jun-2023 10.00 10.03 0 IDA-H9250 25-Mar-2014 14-Apr-2014 29-Aug-2014 30-Jun-2023 7.00 6.48 0 TF-B4427 13-Jan-2021 13-Jan-2021 02-Feb-2021 30-Jun-2023 4.94 5.54 .02 TF-B1670 26-Nov-2019 07-Jan-2020 07-Jan-2020 30-Jun-2023 1.00 1.00 0 The World Bank Sierra Leone Safety Nets Project (P143588) TF-A0806 02-Sep-2015 18-Sep-2015 16-Dec-2015 30-Jun-2019 4.30 4.30 0 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status The Sierra Leone Safety Nets (SSN) Project was approved by the Board of Executive Directors on March 25, 2014. The Project Development Objective (PDO) of the SSN project is to establish the key building blocks for a basic national safety net system and to provide income support to extremely poor households in Sierra Leone. Interventions are structured around three components: (i) Development of systems for implementation of the SSN; (ii) Cash transfers to extremely poor households and (iii) Project Management & Capacity building. The project is implemented by the National Commission for Social Action (NaCSA), in partnership with the Anti-Corruption Commission (ACC) and Statistics Sierra Leone. The SSN project has brought together various financing resources. It is funded through grants from the International Development Association (IDA) (US$47 million), the Ebola Recovery and Reconstruction Trust Fund (US$4.3 million), the Global Risk Financing Facility (US$1 million) and the European Union (EU) (US$4.94 million). The government has to date paid US$1.1 million in counterpart funding, from a commitment of US$3.4 million. The SSN project is on track to fully meet its objectives. The overall implementation progress has been upgraded from Moderately Satisfactory to Satisfactory in June, and progress towards achievement of the PDO is rated Satisfactory. The project has established and improved key elements of a social protection (SP) system, including (i) targeting mechanisms, (ii) the management information system; the SP Registry for Integrated National Targeting; (iii) related operational tools, including electronic data collection; (iv) the electronic payments system; and (v) Grievance Redress Mechanism (GRM). A total of 100,695 households (approximately 604,170 individuals) received regular cash transfers under the SSN Project. An additional 74,059 households with informal sector workers (approximately 444,354 individuals) received a one-time emergency cash transfer as part of the government's COVID-19 response, funded by the contingency finance and third additional finance of the project. This is a total of 174,754 households (equivalent to approximately 1,048,524 individuals) that have benefited from cash transfers under the project since its inception in 2014, surpassing the target number of beneficiaries. In addition, the project also supported various developments in Social Protection policy and coordination in the country. The revised National Social Protection Policy was launched in 2019, the National Social Protection Strategy was published in December 2022 and drafting of the Sierra Leone Social Protection Bill is ongoing. The project also supported disaster preparedness at NaCSA, and the development of a Disaster Risk Financing Strategy. Results from a rapid assessment of the project conducted in 2018 reported that beneficiaries used the cash transfers to improve investments in health, education and welfare of their families. 44 percent of beneficiaries used the cash transfers to cover school expenses, 40 percent bought more food of higher nutritional value and 12 percent invested in productive activities such as the establishment of microenterprises. The project has exceeded PDO targets including: (i) proportion of beneficiary households below the extreme poverty line; (ii) proportion of cash transfer component related grievances resolved within three months of being recorded in the GRM database; The World Bank Sierra Leone Safety Nets Project (P143588) (iii) beneficiaries of SSN programs (iv) beneficiaries of SSN programs that are female; (v) total beneficiaries of unconditional cash transfers; and (vi) beneficiaries with access to cash transfers from the contingency finance. The project was unable to meet one of the PDO targets, proportion of payments delivered on time. The challenge of delayed payments to project beneficiaries was due to the limited capacity of NaCSA and other stakeholders required for payments. Personnel from the ACC and payment service provider dedicated to the project were not enough to be distributed for simultaneous payments to beneficiaries across the country. Consequently, payments had to be in phases which meant longer periods for payment delivery. This also led to the payments being delivered in two tranches rather than quarterly. There were also periods of nationwide liquidity issues which delayed payments during 2022. The SSN systems are increasingly being utilized by other government institutions, development partners, and non- governmental organizations to target beneficiaries and deliver cash transfers to the most vulnerable during disasters or shocks. During the Ebola Outbreak, the Government of Sierra Leone (GoSL) scaled up cash transfer interventions in the country following standardized protocols, tools and systems developed under the project. A similar approach was adopted to respond to the landslide that affected the country in 2017 as well as the COVID-19 pandemic in 2020. Fiduciary (financial management and procurement) performance is progressing in a satisfactory manner. Financial management performance is currently rated Moderately Satisfactory and procurement is rated Satisfactory. While the Project had financial management issues such as poor quality and delayed submission of Interim Financial Reports (IFRs) and audited financial statements, there have been significant improvements since the end of 2022. An external consulting firm was hired to support NaCSA in submitting acceptable IFRs outstanding from 2022 (Q2, Q3 & Q4), which had previously been rejected by the Bank due to various errors. Monitoring and Evaluation (M&E) is rated Satisfactory. The M&E unit at NaCSA continues to implement its regular oversight monitoring activities during targeting and payments and produce reports. The capacity of the M&E and oversight monitoring team was also developed in the use digital tools for data collection. B. Rationale for Restructuring This Restructuring Paper seeks the approval of the Country Director to cancel XDR 1,870,625 of undisbursed funds of the Second Additional Financing (IDA-D4900) of the Sierra Leone Social Safety Nets (SSN) Project (P143588) before its closing date of June 30, 2023; and subsequently change the components’ costs and disbursement estimates. The undisbursed funds largely relate to the significant appreciation of the USD over the Leone which reduced the USD cost of cash transfers. The GoSL has requested this cancellation in a letter dated May 15, 2023, to allow these undisbursed funds to be reallocated to the Sierra Leone portfolio for operations in the pipeline of IDA 20 cycle. All project activities are completed, and the cancellation does not have any negative implications on the achievement of the PDO. There are no changes to the PDO, component descriptions, implementation arrangements, closing date, the project’s results framework or risk ratings. II. DESCRIPTION OF PROPOSED CHANGES The proposed changes are as follows: The World Bank Sierra Leone Safety Nets Project (P143588) 1. Cancel XDR 1,870,625 from Category 4 set forth in the withdrawal schedule of the Financing Agreement. 2. Modify the project’s components’ costs in USD in the Datasheet (below), with Component 2 reduced from US$45.92 million to US$43.43 million, and the total project cost from US$61.31 million to US$58.82 million. Table 1: Changes to component costs Component Initial Cost (US$) Cancelled Revised cost SDR equivalent amount (US$) (US$) cancelled1 Component 1 (Development of Systems for 6,970,000.00 0.00 6,970,000.00 0.00 Implementation of Social Safety Net Interventions) Component 2 (Cash Transfers to Extremely 45,920,000.00 2,494,123.02 43,425,876.98 1,870,625.00 Poor Households and Emergency Response) Component 3 (Project Management and 8,420,000.00 0.00 8,420,000.00 0.00 Capacity Building) Total 61,310,000.00 2,494,123.02 58,815,876.98 1,870,625.00 3. Modify the disbursement category estimates2, to reflect the impact of the partial cancellation on the projected disbursements at the project closing date. Table 2: Project cost per category in XDR as of June 14, 2023 Category Initial amount Disbursed to date Cancellation Revised amount XDR XDR XDR XDR 1 Goods, non-consulting 0.00 0.00 0.00 0.00 services. Consultant’s services, training, and operating costs under parts 1 and 3 of the Project 2 Cash Transfer Program 0.00 0.00 0.00 0.00 under Part 2 of the Project 1Exchange rate as of June 14, 2023 on Client Connection is 1 XDR= 1.33331 USD 2Disbursement includes an additional XDR 7,080,376.87 of undocumented expenses for which documentation has been submitted and is being reviewed by the Bank prior to processing in Client Connection. The World Bank Sierra Leone Safety Nets Project (P143588) 3 Goods, non-consulting 6,300,000.00 3,906,649.07 0.00 6,262,006.00 services, consultant’s services, training and Operating Costs for the Districts under Parts 1 and 3 of the Project 4 Cash transfer program for 12,500,000.00 5,904,355.24 1,870,625.00 10,629,375.00 the Districts under Part 2(a) of the Project 5 Cash transfer program for 2,900,000.00 2,937,993.12 0.00 2,937,994.00 the Districts under Part 2(b) of the Project Total Amount 21,700,000.00 12,748,997.43 1,870,625.00 19,829,375.00 III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ The World Bank Sierra Leone Safety Nets Project (P143588) Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ 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_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Development of Systems for Development of Systems for Implementation of Social Safety 6.97 No Change Implementation of Social 6.97 Net Interventions Safety Net Interventions Cash Transfers to Extremely Poor Cash Transfers to Extremely Households and Emergency 45.92 Revised Poor Households and 43.43 Response Emergency Response Project Management and Project Management and 8.42 No Change 8.42 Capacity Building Capacity Building TOTAL 61.31 58.82 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE The World Bank Sierra Leone Safety Nets Project (P143588) CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation IDA-D0920- Disburs XDR 7,200,000.00 0.00 7,200,000.00 001 ing BORROWER' S REQUEST IDA-D4900- Disburs XDR 21,700,000.00 1,870,625.00 16-May-2023 19,829,375.00 FOR 001 ing COUNTRY REASONS IDA-H9250- Disburs XDR 4,600,000.00 0.00 4,600,000.00 001 ing Fully TF-A0806- Disburs USD 4,299,991.19 0.00 4,299,991.19 001 ed TF-B1670- Disburs USD 1,000,000.00 0.00 1,000,000.00 001 ing TF-B4427- Disburs EUR 4,650,000.00 0.00 4,650,000.00 001 ing OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-D4900-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GD,NCS,CS,TRN &OC PRT 1& 3 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: CASH TRANSFER PROGRM PRT 2 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: GD,NCS,CS,TRN &OC PRT 1& 3 6,300,000.00 3,906,649.07 6,262,006.00 0.01 0.01 The World Bank Sierra Leone Safety Nets Project (P143588) iLap Category Sequence No: 4 Current Expenditure Category: CASH TRANSFER PROG FOR DIST.PRT 2a 12,500,000.00 5,904,355.24 10,629,375.00 0.01 0.01 iLap Category Sequence No: 5 Current Expenditure Category: CASH TRANSFER PROG PRT 2b 2,900,000.00 2,937,993.12 2,937,994.00 100.00 100.00 Total 21,700,000.00 12,748,997.43 19,829,375.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2014 6,086.50 6,086.50 2015 1,875,600.00 1,875,600.00 2016 7,360,000.00 7,360,000.00 2017 1,233,000.00 1,233,000.00 2018 3,370,000.00 3,370,000.00 2019 4,760,000.00 4,760,000.00 2020 6,113,000.00 6,113,000.00 2021 12,150,000.00 12,150,000.00 2022 15,500,000.00 15,500,000.00 2023 5,000,000.00 2,505,876.98 .