The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) REPORT NO.: RES57490 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE MOROCCO - COMMUNITY-BASED RURAL ROADS MAINTENANCE APPROVED ON MAY 8, 2019 TO THE KINGDOM OF MOROCCO Transport Global Practice Middle East and North Africa Regional Vice President: Ferid Belhaj Country Director: Jesko S. Hentschel Regional Director: Paul Noumba Um Practice Manager: Ibrahim Khalil Zaki Dajani Task Team Leader(s): Nabil Samir, Clotilde Virginie Minster The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) ABBREVIATIONS AND ACRONYMS CRSM Regional Council of Souss Massa IP Implementation Progress IPF Investment Project Financing ISR Implementation Status and Results Report GoM Government of Morocco MEE Ministry of Equipment and Water MEF Ministry of Economy and Finance MS Moderately Satisfactory PDO Project Development Objective S Satisfactory The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) BASIC DATA Product Information Project ID Financing Instrument P165411 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 08-May-2019 31-Dec-2023 Organizations Borrower Responsible Agency Ministry of Equipment, Transport, Logistics and Kingdom of Morocco Water,Ministry of Interior,Regional Government of Souss-Massa Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0 Total Financing 0 Financing Gap 0 DETAILS -NewFin3 The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) Project Development Objective (PDO) Original PDO The proposed Project Development Objective (PDO) is to provide livelihood improvement opportunities to disadvantaged rural inhabitants and maintain accessibility and usability of targeted rural roads in the Project Area. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-B0252 31-Jul-2019 10-Sep-2019 10-Sep-2019 31-Dec-2023 2.85 .58 2.27 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 and Results 1. The Investment Project Financing (IPF) grant, funded by the Japanese Social Development Fund (JSDF) in the amount of US$2.85 for the Morocco Community-based Rural Roads Maintenance project, was approved on May 9, 2018, and became effective on September 10, 2018. The original Project Development Objective (PDO) is to provide livelihood improvement opportunities to disadvantaged rural inhabitants and maintain accessibility and usability of targeted rural roads in the Project Area. 2. Progress towards achievement of the PDO and overall Implementation Progress (IP). The project is rated Moderately Satisfactory on both aspects. It should be noted that the implementation of the project experienced an initial delay due to several factors that have since been mostly addressed: (i) a significant initial learning curve, particularly at the local level, including on the IPF instrument procedures (as this is the first time this instrument is implemented by the project counterparts in the region of Souss Massa); (ii) the innovative nature of the subprojects and the multiplicity of actors involved, including at the subnational level; (iii) the recent advanced regionalization process which led to a substantial increase in operational and administrative tasks at the local level, combined with the limited number of additional human resources at their level; and (iv) project operational and logistical constraints resulting from the Covid- 19 pandemic. 3. These factors have been addressed during implementation for the most part, with hands-on field-based support from the Bank, as follows: (i) the strengthening of capacity and practical knowledge of stakeholders on the IPF instrument, including at the local level, through hands-on use and support; (ii) the subprojects have benefitted from technical assistance as needed; and (iii) the Government has provided support to local actors to adapt to the recent advanced regionalization process. The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) 4. Progress performance. The PDO-level indicators continue to achieve moderate progress. - The total rural roads being maintained by the project has reached 750 kilometers (out of an end target of 1,000 kilometers), with 32 road sub-projects (each in a different local community of the region of Souss Massa) finalized or in the final stages of implementation by the Ministry of Equipment and Water (MEE), under subcomponent 1.1- A. The remaining road maintenance subprojects to be carried out by the Regional Council of Souss Massa (CRSM), under subcomponent 1.1-B, are in the final stages of procurement. - The planned micro-loans for revenue-generating subprojects (under subcomponent 1.3) are to be launched in the next few months. - Overall, the number of direct project beneficiaries is currently 1,300, compared to 3,000 as an end target (in addition to 15,000 indirect beneficiaries), with a percentage of female direct beneficiaries that remains low at 5 percent (compared to an end target of 20 percent). This is due to the social norms in the targeted region when it comes to engaging women in manual work, especially in road maintenance. Several actions (including capacity building and awareness raising activities) are being carried out to progress in the achievement of this indicator. - The average increase in income of direct beneficiaries is 15 percent (compared to an end target of 40 percent). - Around 70,000 workdays (out of an end target of 200,000) resulting from direct, indirect, and induced jobs which have been generated to date by the project. - The percentage of subprojects that have been sustained after having benefited from financing under the project is now 10 percent (out of an end target of 50 percent) and will continue to increase as the project progresses further. 5. Implementation. In terms of Implementation Progress (IP), the current commitment rate for the project stands at around 65 percent, with 55 percent increase compared to six months ago, largely due to the activities carried out by the Ministry of Equipment and Water (MEE) which are all under implementation. It is expected to reach 93 percent by mid-December 2023, based on procurement progress and given that most administrative constraints have been addressed at the level of the MEE and the CRSM. The yet to be launched activities (additional road sub-projects and the selection of the provider of rural micro-loans for 50 revenue-generating sub-projects) are expected to be contracted in the next few weeks by the CRSM. Overall, the execution rate for the project is currently 40 percent. The anticipated execution rate of project activities should reach at least 60 percent by mid-November 2023, given that the average implementation period of sub-projects is only 12 months. This is supported by the ongoing execution of subcomponent 1.2 (technical assistance), component 2 (capacity building), and component 3 (project management and monitoring and evaluation). The current disbursement rate stands at 20 percent of the grant (which remains low) versus 5 percent six months ago and is expected to reach around 50 percent by the end of the calendar year, reflecting the progress in the project execution rate. Indeed, a substantial disbursement request (based on actual expenditures incurred) is under preparation by the recipient and should be submitted and processed in the next few weeks. 6. Fiduciary aspects. The overall financial management performance is rated Moderately Satisfactory (MS) in the last Implementation Status and Results Report (ISR), and the overall risk is considered moderate. This reflects the reduced delays in the preparation of financial statements and the financial audit process, and the completion of the transfer of the needed funds from the central level to the regional level (for a total of US$0.85 million). Efforts have been deemed necessary by the World Bank to continue improving the project performance in financial reporting, particularly in terms of deadline compliance. The latest audit report (covering 2022) has been submitted to the World Bank with minor delays, an improvement over the last exercise. Procurement is rated Moderately Satisfactory (MS) as the capacity of the implementing agencies to procure contracts for project activities has progressively been strengthened, after initial delays. 7. Environmental and social (E&S) aspects. Regarding the environmental and social performance of the project, it has been rated as Moderately Satisfactory in the last ISR given minor limitations in terms of E&S monitoring at the project The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) level. While no noteworthy incidents and/or accidents have occurred to date as part of the project and recommended adjustments have been made in some instances, the need for efforts in the management of the project worksites has been highlighted given the limited size of involved microenterprises, particularly in terms of use of personal protective equipment (PPE) and the marking and signaling of worksites. This is critical to ensure the safety of workers, road users and citizens. Moreover, the detrimental social impact of projects activities remains limited in scope and scale, with the need to continue adequate management given the socio-economically vulnerable nature of some of the beneficiaries and the remoteness of the location of the sub-projects. B. Rationale for Restructuring 8. Official request. An official letter from the Government of Morocco (GoM) as the Recipient (through the Ministry of Economy and Finance - MEF) dated July 26th, 2023, has been received by the World Bank, requesting the extension of the project’s current closing date (December 31st, 2023) by 18 months. 9. Eligibility. The proposed extension meets the conditions of Paragraph 50 of Section III.B of the IPF policy, as the PDO remains achievable, and the implementation plan and disbursement projections have been reviewed and agreed by the World Bank. In addition, there are no outstanding project audit reports as the last audit report covering fiscal year 2022 has been received and found satisfactory to the Bank, with all grant funds disbursed under the project accounted for and the absence of ineligible expenditures (which has been the case with all project audits over the life of the project). 10. Rationale. Project implementation experienced an initial delay due to various factors as detailed above that have been addressed for the most part. While these delays have been partly compensated due to efforts from the implementing agencies with the support of the World Bank, all planned project activities will not be completed by the current project closing date of December 31st, 2023, which makes the requested extension, which has been endorsed by the JSDF, necessary to sustain the noted progress, to achieve the PDO objectives, and ensure the successful completion of the project in the proposed additional implementation period. 11. Implementation plan. In order to sustain this progress and ensure the completion of the project during the proposed additional implementation period, the recipient has shared an implementation plan to complete the activities of the restructured project by the proposed closing date, which is acceptable to the Bank. The following actions (financed from grant proceeds and the recipient’s budget) have been agreed with the GoM as part of the said plan and are already under implementation by the relevant agencies with the support of the World Bank: - Provision of additional capacity building activities to the various actors of the project (particularly at the local level) in technical, fiduciary, and social and environmental matters. - Mobilization of additional required expertise to support the implementation of project activities. - Thorough follow-up with the project stakeholders (particularly at the local level), through frequent missions, meetings, videoconferences, and workshops, on project activities to improve coordination, communication, and accountability. - Completion of the ongoing procurement process for all remaining project activities (see table below) in the next few weeks and increased efforts and focus on their implementation. REMAINING TYPE PROCUREMENT BUDGETED AMOUNT ENTITY CONTRACT TIMELINE (USD) CR-SM-06 Tata Civil works subproject November 30, 2023 48,000 CRSM CR-SM-04 Agadir Civil works subproject November 30, 2023 47,000 CRSM The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) CR-SM-09 Taroudant Civil works subproject November 30, 2023 42,000 CRSM CR-SM-10 Tiznit Civil works subproject November 30, 2023 40,000 CRSM CR-SM-03 Taroudant Civil works subproject December 15, 2023 58,000 CRSM CR-SM-07 Tata Civil works subproject December 15, 2023 44,000 CRSM CR-SM-08 Tiznit Civil works subproject December 15, 2023 31,000 CRSM CR-SM-04bis Agadir Civil works subproject December 15, 2023 41,000 CRSM CR-SM-05 Agadir Civil works subproject December 15, 2023 38,000 CRSM CR-SM-02 Tata Civil works subproject December 15, 2023 53,000 CRSM Selection of fund Non-consulting December 15, 2023 15,000 CRSM administrator of services micro-loans for local entrepreneurial subprojects C. DESCRIPTION OF PROPOSED CHANGES 12. Change in project closing date. It is proposed to extend the project closing date by 18 months from December 31st, 2023, to June 30th, 2025, to enable the completion of the remaining project activities and achieve the PDO as mentioned above. 13. Change in disbursement estimates. It is proposed to modify the implementation schedule and disbursement estimates of the project in line with the proposed change in project closing date. II. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-B0252 Effective 31-Dec-2023 30-Jun-2025 31-Oct-2025 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Expected Disbursements (In US$) Fiscal Year Annual Cumulative 2019 0.00 0.00 2020 0.00 0.00 2021 0.00 0.00 The World Bank Morocco - Community-Based Rural Roads Maintenance (P165411) 2022 0.00 0.00 2023 0.00 0.00 2024 1,501,000.00 1,501,000.00 2025 764,113.00 2,265,113.00