The World Bank Competitiveness for Tourism Development (P146666) REPORT NO.: RES50119 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF COMPETITIVENESS FOR TOURISM DEVELOPMENT APPROVED ON MAY 10, 2016 TO MINISTÉRIO DAS FINANÇAS FINANCE, COMPETITIVENESS AND INNOVATION AFRICA WEST Regional Vice President: Ousmane Diagana Country Director: Nathan M. Belete Regional Director: Abebe Adugna Dadi Practice Manager/Manager: Consolate K. Rusagara Task Team Leader(s): Cristina Navarrete Moreno The World Bank Competitiveness for Tourism Development (P146666) I. BASIC DATA Product Information Project ID Financing Instrument P146666 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 10-May-2016 31-Jan-2022 Organizations Borrower Responsible Agency Ministério das Finanças Unidade de Gestao de Projectos Especiais (UGPE) Project Development Objective (PDO) Original PDO The project development objective is to create the conditions necessary to increase investment into and diversification of the tourism sector. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-58010 10-May-2016 17-Jun-2016 15-Nov-2016 31-Jan-2022 5.00 4.74 .43 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Competitiveness for Tourism Development (P146666) A. Summary of Project Status 1. A week from the loan closing date (i.e., January 31, 2022), the Project is progressing satisfactorily towards achieving its development objective. The Project ratings are Satisfactory in project development objective (PDO) and Overall Implementation (IP). The first PDO indicator, the value of the catalyzed investment, is already beyond the target, standing at over US$270 million against the US$35 million target. The second PDO indicator, number of certified MSMEs, is also above target (208 MSMEs certified against the 40 MSME target), mainly thanks to the considerable number of trainings associated with the COVID-19 response conducted. 2. As far as intermediate result indicators, an important number of these have already been achieved; yet others, despite being on the right track, remain to be achieved. While the Project has carried and almost completed all planned activities, half (i.e., six out of twelve) of the intermediate indicators have not yet been achieved. Under Component 1, two indicators related to the adoption of Tourism Masterplans and Tourism Zoning Plans (POTs) have not yet been achieved due to the pending official publication of the supported Masterplans (under a consolidated Tourism Operational Plan decree) and POTs (two out of six remaining). Similarly, the indicator regarding the enactment of the Tourism Code has not been achieved. The Project supported a Tourism Code White Paper assessing the legislative gaps and opportunities in the sector (a key milestone in supporting the tourism legislative reform agenda), but the official dissemination and publication of the White Paper, and the subsequent streamlined Tourism Code legal decree, is still pending and is unlikely to be met during Project duration. Under Component 2, the indicators related to training and certification activities has been progressing well under difficult COVID-19 -related constraints and is almost achieved (46 small accommodation benefitting from TA against 50 target). Moreover, the establishment of an online movable collateral registry has not yet been fully operationalized. From a technical point of view, the movable collateral platform is ready and finalized; however, due to legal concerns regarding the legal security of information to be uploaded to the platform, the registry is still not up and running, requiring a specific inter-ministerial decree for that purpose. Finally, the national certification company has not yet been established and it is not clear whether this indicator will be achieved by the Project's closure (see Annex 1 attached for summary of progress on Project results framework). 3. With an acceleration of the rate of disbursement in recent months, the Project disbursement rate stands at 95 percent of total funding of USD 5 million. During 2020, the Project suffered from a significant slowdown in disbursement pace compared to previous years due to challenges brought on by the COVID-19 pandemic. However, in 2021, the Project was able to resume pre-pandemic and satisfactory disbursement rates. The last scheduled supervision mission conducted on January 17-21, 2022, identified an estimated amount of USD 150,000 of uncommitted funds due to a favorable exchange rate SDR to USD. 4. Responding to the protracted crisis induced by the COVID-19 pandemic in the tourism sector, the Project has included a series of private sector support activities. Following the closure of Cabo Verde’s international borders in March 2020 and the partial re-opening in October 2020, tourism arrivals collapsed by about 75 percent in that year. Hospitality operations and restaurants were the hardest hit segment in the economy. The slowdown in arrivals continued into the first half 2021 as first quarter figures show a decrease of 93.6 percent in guest movements with respect to the same period in 2020. The second quarter of 2021 showed a slight uptick reflecting the progressive reopening, although still only about 12 percent of what had been recorded in the same period of 2019 (pre- pandemic), and the figures for the third quarter confirm the uptrend in resumption with about 42,396 guest arrivals (about 23 percent of the flows recorded in the similar quarter of 2019). In this context, the Project included throughout the second half of 2020 and 2021 a series of response activities, namely a “safe and clean” training and The World Bank Competitiveness for Tourism Development (P146666) certification program for tourism operators; training courses for guides, taxi driver, chefs, and bakers; and revamped outreach and marketing efforts to position the destination for recovery. B. Rationale for the Level II Restructuring 5. To ensure full completion of key structural activities, authorities have requested a four-month extension of the closing date of the Project, from January 31, 2022 to May 31, 2022. Considering that the tourism halt extended well into 2021 beyond the original scenarios, authorities continued to prioritize response measures such as design and implementation of COVID-19 related measures to support affected MSMEs in the tourism sector as well as communication, health and safety activities linked to the resumption of tourism. Inevitably, some of the Project legislative and operational targets have been delayed, and the Government’s ability to push through some of the reforms and capacity building activities has been constrained in this adverse context. 6. The extension will allow for proper completion of important ongoing structural activities of the Project concurrent with the intermediate results target. The activities to be implemented in the ensuing four months thus include: (i) the effective operationalization of the online-based movable collateral registry through the approval of the necessary inter-ministerial legal decrees and subsequent rollout of dissemination and contractor support activities (specifically capacity building, training and awareness building to practitioners and operators); (ii) Cabinet-level approval and publication of the tourism island-level tourism masterplans (through an integrated national Tourism Operational Plan decree); (iii) the approval and publication of the two remaining Project-supported Tourism Zoning Plans (Santa Maria Oeste in Sal and Praia Grande in São Vicente); (iv) additional capacity building and technical assistance activities to beneficiaries of the small accommodation quality seal program; and (v) the publication and dissemination of the Tourism Code White Paper to lay the basis for subsequent tourism regulatory framework reform and upgrades based on international best practices. C. Proposed changes Rationale for the Level II Restructuring 7. The Project Closing Date will be set to May 31, 2022, and a Workplan for 2022 will be drafted accordingly, with no changes to the results framework nor to components and costs. In the face of the current extension, the Project’s Implementation Agency and the Steering Committee will prepare Work Plan for 2022to: (i) support competition of pending structural activities mentioned above; (ii) allocate the identified uncommitted funds amongst approved activities; and (iii) adjust all the activity closing dates, accordingly. The results framework and the Project components are aligned with the proposed activities; thus, these won’t be changed. This is the 4th Level 2 Project restructuring. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-58010 Effective 31-May-2021 31-Jan-2022 31-May-2022 30-Sep-2022 The World Bank Competitiveness for Tourism Development (P146666)