The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) REPORT NO.: RES44796 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PROMOTING FINANCIAL INCLUSION POLICIES IN JORDAN APPROVED ON JANUARY 18, 2018 TO MINISTRY OF PLANNING AND INTERNATIONAL COOPERATION FINANCE, COMPETITIVENESS AND INNOVATION MIDDLE EAST AND NORTH AFRICA Regional Vice President: Ferid Belhaj Country Director: Saroj Kumar Jha Global Director: Caroline Freund Practice Manager/Manager: Irina Astrakhan Task Team Leader(s): Ghada Ahmed Waheed Ismail The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) ABBREVIATIONS AND ACRONYMS CBJ Central Bank of Jordan NFIS National Financial Inclusion Strategy PDO Project Development Objective PMU Project Management Unit TOR Terms of Reference The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) BASIC DATA Product Information Project ID Financing Instrument P163719 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 18-Jan-2018 31-Dec-2020 Organizations Borrower Responsible Agency Ministry of Planning and International Cooperation The Central Bank of Jordan 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 proposed project development objective (PDO) is to promote financial inclusion and digital financial services by supporting theimplementation of Jordan’s National Financial Inclusion Strategy (NFIS). OPS_TABLE_PDO_CURRENTPDO The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) Summary Status of Financing (US$, Millions) Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A7538 18-Jan-2018 16-Sep-2018 16-Sep-2018 31-Dec-2020 1.05 .28 .77 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. Project Status: a) The Restructuring proposes are to: (i) extend the closing date of the Promoting Financial Inclusion Policies in Jordan project (Grant No. TF0A7332) by 11 months, from December 31, 2020 to November 30, 2021; and (ii) revise the Results Framework Indicators. This extension was approved by the Middle East and North Africa Transition Fund Steering Committee on a no-objection basis on December 23, 2020. b) Project implementation is progressing well in achieving its development and intermediate development objectives. All Three PDO indicators have been met, while two out of eight Intermediate indicators were met, and the remaining are progressing very well towards achieving their targets. All remaining result indicators and additional ones are expected to be met by the proposed extension date of November 30, 2021. c) Both the Progress towards achievement of Project Development Objectives and Overall Implementation Progress are rated “Satisfactory” and have been consistently rated as such throughout the life of the project. Disbursement stands at US$0.28m (26.7 percent) as of September 2020. The Project Management Unit (PMU), The Central Bank of Jordan (CBJ), is responsive and performing well. d) The project has witnessed consistent improvements in achieving its development and intermediate development objectives, main deliverables of strategic importance are as follows: (i) Establishing the FinTech Regulatory Sandbox:  The project has provided support to The Central Bank of Jordan (CBJ) in establishing the Regulatory Sandbox, this included developing the operational manual, guidelines and terms of reference (TOR) for the regulatory sandbox.  The project team has conducted a simulation exercise on the regulatory sandbox with CBJ staff responsible of managing the sandbox, the simulation exercise provided capacity building to the CBJ for each stage of the Sandbox process: application, evaluation, testing, exiting and by integrating lessons learned into the policy frameworks. The Sandbox Simulation Exercise was attended by 25 participants including members of the Sandbox Steering and Executive Committees as well as members from several The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) departments including Fintech, payments, inclusion, legal, IT, supervision, who will be involved with the sandbox as part of the Executive Committee support or as Technical Committee (task force) members for specific sandbox projects.  CBJ established the FinTech Regulatory Sandbox and completed the first round titled “FinTech Regulatory Sandbox 2019” with five applicants. Moreover, CBJ announced in March 2020 the initiation of round two titled ”FinTech Regulatory Sandbox 2020” and under the initiative “FinTech in COVID19 and Beyond”, stemming from CBJ’s commitment towards promoting entrepreneurship in FinTech, and in light of the current COVID-19 crisis and the significant role technology plays in different fields. (ii) National Financial Inclusion Strategy (NFIS):  The team conducted a mid-term review for the National Financial Inclusion Strategy (NFIS) and discussed with the NFIS Working groups, progress in implementation of action plans against targets and key metrics. The mid-term review was a stock-take progress exercise towards achieving NFIS action plans, identified areas where implementation is on-track, is delayed and potential solutions to smooth bottlenecks to NFIS implementation. The evaluation focused on the following areas: (i) Progress towards national, high level goals of the NFIS; (ii) NFIS Governance and working groups’ achievement of action plans; (iii) The Financial Inclusion Secretariat; and (iv) The Monitoring and Evaluation System. In addition, the review assessed areas where the NFIS may require adjustments to NFIS goals and objectives.  The team provided CBJ with TOR for a firm to conduct the geospatial analysis to support CBJ in integrating, collecting and analyzing geospatial data, and disseminating maps of the existing/future data. (iii) Financial Literacy:  CBJ and the project team have agreed to conduct a comprehensive study for measuring the financial literacy in the Kingdom of Jordan Level, this study will help the Central Bank of Jordan to assess the financial literacy in the country and the changes in it after COVID-19, in addition to benchmark it with the other countries to assess the situation of the country and compare it with the Central Bank of Jordan Vision and Strategic Objectives in order to develop a tailored programs and plans to enhance the situation of the country. Moreover, the study will identify the gaps in the market and within each segment or city in addition to highlighting the required actions and programs to solve the issue on the category and the sub-category level. Main objectives of conducting the study can be presented as follows: (i) asses and analyze the financial literacy (Knowledge, Behavior and Attitude) in Jordan; (ii) Identify the impact of COVID-19 on financial literacy in Jordan and analyze the customers' segments that have been affected more and the degree of changes within each factor of the financial literacy indicators; (iii) Benchmark the current situation of the financial literacy in Jordan with the other countries regionally and globally; (iv) identify the gaps in the sector and analyze the reasons of it; (v) Compare and analyze the financial literacy indicators and factors for cities, Income and Social Class, Age Group, Gender, Family Size, Educational Background and so on; (vi) Highlight the required actions and programs to solve the financial literacy gaps for each category; and (vii) Identify the objectives and the Key Performance Indicators for the upcoming 3 years. (iv) Knowledge exchange, Training and Workshops: The World Bank Promoting Financial Inclusion Policies in Jordan (P163719)  The CBJ joined the Alliance for Finance Inclusion (AFI) as a member institution. This ensured CBJ engagement in (i) Working Groups of 15-40-member institutions focusing on: Digital Financial Services; Consumer Protection and Market Conduct; Financial Inclusion Strategy; Financial Inclusion Data; and SME Finance; (ii) Participation in AFI’s Global Policy Forum (GPF) global knowledge exchange event on financial inclusion policymaking; (iii) Peer Learning Initiatives with Standard Setting Bodies (SSBs). This provided opportunities for Jordan to participate in shaping and influencing the global agenda through knowledge sharing with SSBs, which can have a significant impact on how the global financial system helps or hinders financial inclusion.  The team provided training and workshops on the following topics: (i) coordinating the monitoring and evaluation of detailed action plans, milestones and timelines with working groups; (ii) building data infrastructural solutions to house and collect relevant data; (iii) the development of reporting and M&E tools to operationalize the secretariat; and (iv) the development of an operational manual for the Secretariat to clarify their roles and functions; (v) regulatory sandbox simulation exercise; (vi) The team coordinated with GIZ efforts and provided trainings and technical workshops that covered topics including monitoring and evaluation, data management, and the roles, responsibilities, tasks and deliverables needed to coordinate the implementation of the strategy; and (vii) a brief workshop on the potential of geospatial analysis with the Financial Inclusion Secretariat on how to mainstream geospatial functions into the CBJ. 2. Rationale for Restructuring: e) The extension of Project closing date will give CBJ the opportunity to complete all planned activities and fully achieve the development objective in light of the delays caused by the COVID-19 pandemic. The extension will allow for: (i) ensuring sound technical assistance resources are available to CBJ to respond to the COVID-19 outbreak; (ii) conducting supply and demand side surveys and an updated diagnostic study to evaluate the NFIS (2018-2020) in order to review the current status and assess progress in implementation of NFIS; (iii) formulate policies and actions to form for the next NFIS; (iv) conducting the financial awareness and financial literacy campaigns, CBJ currently are in the final stages of signing the contract with the vendor (v) developing the geospatial mapping as agreed upon in the mid-term review conducted in 2019 (vi) conducting a financial literacy assessment; (x) provide advisory to CBJ to support the Regulatory sandbox through conducting capacity building sessions around core FinTech areas in line with the Fintech regulatory sandbox applicants and building the roster of experts for FinTech topics to engage with the various committees. f) There are no overdue interim Unaudited Financial reports or overdue project annual audited financial statements. All requirements of Bank Policy and Bank Directive on Investment Project Financing for closing date extension have been met: (a) the PDO remains achievable; (b) the performance of the Borrower remains satisfactory; (c) the World Bank and the Recipient agree on actions that will be undertaken to complete the project on time; (d) the project is not subject to suspension of disbursements; and (e) there are no outstanding audit reports and the audit reports are satisfactory to the World Bank. II. DESCRIPTION OF PROPOSED CHANGES The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) g) Change in closing date. Extension of the closing date by 11 months, from December 31, 2020 to November 30, 2021, in response to a request received from the Recipient. h) Change in the results framework. The changes in the results framework has been discussed and agreed with the Recipient. It is proposed to revise (i) the end-target date to November 30, 2021 in line with the proposed extended closing date for all indicators and (ii) addition of the following indicators: Additional Indicators* End-target Nov. 30, 2021 PDO Indicator 4: Percentage of adults owning a transaction account 43% PDO Indicator 5: Finalizing the updated Financial Inclusion Market Diagnostic Yes study PDO Indicator 6: Conduct financial inclusion awareness campaign Yes Intermediate Indicator 9: Updated Demand side and Supply side surveys are Yes conducted Intermediate Indicator 10: Number of staff trained 15 Intermediate Indicator 11: Number of firms participating in the Regulatory 15 Sandbox** Intermediate Indicator 12: A roster of experts for FinTech topics to engage with Yes the various committees is developed *Note: All other indicator end-target values remain unchanged. Only change is the end-target date. ** This indicator measures the # of firms selected by the Fintech regulatory sandbox out of those applied to the sandbox i) Change in implementation schedule. The implementation schedule, considering the proposed extension, has been discussed with the PMU and actions agreed upon are as follows:  Conduct the supply and demand side surveys and the updated NFIS diagnostic. The TOR for the survey firm was prepared and reviewed by the Bank (January-June 2021);  Conduct the financial inclusion awareness campaign. the selection of a firm to was finalized and work started (October 2020-September 2021);  Conduct a training on the uses of geospatial data for financial inclusion and options for CBJ to move forward, utilizing the data collected with CBJs new data platform. (January- April 2021);  Support CBJ to revamp action plans. of particular interest include developing a gender action plan, as well as developing new action plans following the diagnostic. (June-November 2021);  Conduct capacity building sessions around core FinTech areas in line with the Fintech regulatory sandbox applicants (January-September 2021)  Provide TA to CBJ to build the roster of experts for FinTech topics to engage with the various committees.  Conduct a Financial literacy study. The study will Assess and analyze the financial literacy (Knowledge, Behavior and Attitude), identify the impact of COVID-19 on financial literacy; identify the gaps in the sector; and identify the required actions and programs to solve the financial literacy gaps for each category. The firm was selected (December 2020- April 2021). The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ 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_RESULTS_TABLE The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE The Financial Inclusion Monitoring and Evaluation (M&E) system is adopted and operationalized Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 NFIS technical action plans in digital finance and data are adopted Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 A Regulatory Sandbox is established and launched Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Percentage of adults owning a transaction account Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 24.60 42.00 43.00 New Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Finalizing the updated Financial Inclusion Market Diagnostic Study Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes New The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Conduct the financial inclusion awareness campaign Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes New Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Intermediate Indicators IO_IND_TABLE Secretariat policy and M&E toolkit delivered Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Number of surveys / data collection templates designed / improved Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 1.00 2.00 Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Geospatial mapping conducted and disseminated Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Development of automated data solution for supply side data Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) Value No No Yes Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Number of trainings and workshops delivered Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 4.00 6.00 Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Number of study tours conducted Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 1.00 1.00 Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Development of framework for regulatory sandbox and accelerator drafted Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Number of FinTech Pilots Financed Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 0.00 1.00 Revised Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Updated Demand side and Supply side surveys are conducted Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes New The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Number of staff trained Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 9.00 15.00 New Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 Number of firms approved by the Regulatory Sandbox Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 11.00 15.00 New Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 A roster of experts for FinTech topics to engage with the various committees is developed Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No No Yes New Date 31-Aug-2017 01-Sep-2020 30-Nov-2021 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A7538 Closed 31-Dec-2020 30-Nov-2021 30-Mar-2022 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Expected Disbursements (In US$) The World Bank Promoting Financial Inclusion Policies in Jordan (P163719) Fiscal Year Annual Cumulative 2017 0.00 0.00 2018 0.00 0.00 2019 100,000.00 100,000.00 2020 180,206.00 280,206.00 2021 770,000.00 1,050,206.00 2022 0.00 1,050,206.00 Note to Task Teams: End of system generated content, document is editable from here.