Document of The World Bank Report No: 66474 v1 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NICARAGUA HURRICANE FELIX EMERGENCY RECOVERY PROJECT PROJECT CREDIT 4392-NI MARCH 6, 2008 TO THE REPUBLIC OF NICARAGUA JANUARY 20, 2012 ABBREVIATIONS AND ACRONYMS FCR Rural Credit Fund (Fondo de Crédito Rural) GRAAN Government of the North Atlantic Autonomous Region (Gobierno Regional Autónomo del Atlántico Norte) HFERP Hurricane Felix Emergency Recovery Project (“the Project�) IDA International Development Association (“the Association�) INPESCA Nicaraguan Institute for Fisheries (Instituto Nicaragüense de la Pesca) INVUR Rural and Urban National Housing Institute (Instituto de la Vivienda Urbana y Rural) RAAN North Atlantic Autonomous Region (Región Autónoma del Atlántico Norte) SINAPRED National System for Disaster Prevention, Mitigation and Response (Sistema Nacional para la Prevención, Mitigación y Atención a Desastres) Regional Vice President: Hasan Tuluy Country Director: C. Felipe Jaramillo Sector Manager: Ethel Sennhauser Task Team Leader: Enrique Pantoja 2 NICARAGUA NICARAGUA HURRICANE FELIX EMERGENCY RECOVERY PROJECT P108974 CONTENTS Page A. SUMMARY ............................................................................................................... 4 B. PROJECT STATUS ................................................................................................. 4 C. PROPOSED CHANGES .......................................................................................... 4 ANNEX 1: RESULTS FRAMEWORK AND MONITORING.................................... 6 3 NICARAGUA HURRICANE FELIX EMERGENCY RECOVERY PROJECT RESTRUCTURING PAPER SUMMARY The proposed changes under this Project restructuring are: (a) adjustments to some Project indicators mainly to reflect reductions in targets under Component 3 (Reconstruction of Housing and Social Infrastructure); and (b) a first extension of Credit closing date from May 30, 2012 to December 31, 2012, mainly to allow for completion of small community infrastructure reconstruction and rolling out of the revolving fund for the small scale fisheries sector. PROJECT STATUS Despite challenges posed by recent difficult weather conditions and the elections period, overall implementation progress is moderately satisfactory. The Project Development Objective remains relevant and achievable, albeit additional implementation time will be needed to meet all project targets, even if, as detailed below, some of the targets related to social/community infrastructure reconstruction had to be reduced due to increased costs. As of December 2011, the Project has benefited a total of 3,142 families with rehabilitated or reconstructed houses and Pikineras (women working in the small scale fisheries sector) with US$150,000 in micro-credits and training, in addition to the distribution of seeds for family gardens and fishing gear and equipment. Preliminary surveys indicate the income of these women has increased significantly. In addition, contracting for the reconstruction of community centers, churches, and small health centers is underway, while the first boats to be provided through credits to fisher folk are being delivered in January 2012. Commitments have increased in FY12, so disbursements, which have slowed down recently, should pick up in the second half of the FY. Finally, the revolving fund for the small scale fisheries sector has been reactivated after a prolonged restructuring process. PROPOSED CHANGES Results/indicators As detailed in Annex 1, the targets for several Project indicators had been adjusted to (a) reflect reductions in targets for the small social/community infrastructure reconstruction activities. These reductions were agreed due to increases in construction costs; and, consequently to (b) be able to measure Project impact on beneficiaries more accurately. 4 Main changes include the following: • PDO level Indicator Two: text adjusted from “at least 120% increase in sustainable fish production in the region by end of project� to “a measurable increase in sustainable fish production among beneficiaries of revolving fund.� It was concluded during Mid-Term Review that there are many external factors affecting regional sustainable fish production that are beyond the Project’s control. • PDO level indicator four: it is clarified that these indicator include all beneficiaries of roof rehabilitation and housing reconstruction activities. • PDO level indicator five: number of communities given access to safe shelters adjusted from 40 to 25 to reflect reduced reconstruction targets of churches and community centers. • Intermediate Indicator 2.1: number of beneficiary groups adjusted to at least 30 to reflect final number of boats acquired under the Project. • Intermediate Indicator 2.3: “Fish Processing Plant and shipyard operated successfully� is eliminated based on decision not to finance rehabilitation of the plant and shipyard under the project. • Intermediate Indicator 3.1: “At least 60 communities benefiting from small health clinics reconstructed under the Project� is eliminated to avoid double counting since a core indicator on the same activity was added as indicator 3.3. • Intermediate Indicator 3.2: number of communities benefited by community centers reconstructed under the Project adjusted from 25 to 12 to reflect reduced reconstruction target of these centers. • Intermediate Indicator 3.3: number of health facilities constructed, renovated and/or equipped under the Project adjusted from 4 to 3 to reflect reduced reconstruction target of these facilities. Extension of Credit Closing Date The Government, through an official letter of September 2011, requested a seven-month Credit closing date extension (from May to December 2012) to ensure completion of the small social/community infrastructure reconstruction activities, and of the rolling out of the revolving fund aimed to provide credits for the small scale fisheries sector, including, inter alia, to help beneficiaries acquire small boats and equipment. The Project suffered initial delays due to weak capacity of the implementation agencies, procurement challenges, and the disappearance of the financial institution (Rural Credit Fund or FCR) which was expected to administer the revolving fund. Capacity has been strengthened, although some financial management issues still remain, all major procurement processes are underway, and the legal amendment to transfer the administration of the revolving fund from the Rural Credit Fund (FCR) to Banco Produzcamos, the new rural bank, is finally effective. An Action Plan, which will be closely monitored, was agreed in December 2011 to deal with FM issues. Implementation Plan 5 As part of its request for Credit closing date extension, the Government has submitted an implementation plan to December 2012, which will ensure achievement of the adjusted project targets and results. 6 ANNEX 1: Results Framework and Monitoring NICARAGUA: HURRICANE FELIX EMERGENCY RECOVERY PROJECT Project Development Objective (PDO): To support the sustainable recovery of the community affected by Hurricane Felix in the North Atlantic Autonomous Region (RAAN) of Nicaragua Revised Project Development Objective: D=Dropped Cumulative Target Values** C=Continue Core PDO Level Results N= New Unit of Data Source/ Responsibility for Baseline Frequency Indicators* R=Revised Measure YR 1 YR 2 YR 3 YR4 Methodology Data Collection Indicator One: Income of R % US$200 per --- --- --- Potential YR 2 and end of Surveys / GRAAN / fishermen and women month increase of project Database of INPESCA participating in the project is at least beneficiaries restored or improved 20% Indicator Two: At least 15% R % 0 --- --- --- Potential Final Project Surveys / GRAAN / increase in sustainable fish increase of evaluation Database of INPESCA / Banco production among beneficiaries at least beneficiaries Produzcamos of revolving fund 15% Indicator Three: At least 40% C % 0 10% 20% 30% 40% Annual Database of GRAAN / of beneficiaries receiving boats beneficiaries / INPESCA / Banco and fishing equipment under Supervision Produzcamos the Project are women Indicator Four: At least 3,300 R Number 0 1,000 1,500 2,000 3,300 Semi-annual Database of GRAAN / INVUR families living in houses beneficiaries / / SINAPRED rehabilitated or reconstructed to Supervision safer standards under the Project, including roofs or whole structures Indicator Five: At least 25 R Number 0 --- 5 10 25 Semi-annual Database of GRAAN / INVUR communities given access to beneficiaries / safer buildings for emergency Supervision safer buildings for emergency Supervision shelter through the Project INTERMEDIATE RESULTS Intermediate Result (Component One): Early Recovery Revised Intermediate Result (Component One): D=Dropped Core Intermediate Result C=Continue Unit of Data Source/ Responsibility for N= New Baseline YR1 YR2 YR3 YR4 Frequency Indicators Measure Methodology Data Collection R=Revised (1.1) At least 2,800 affected C Number 0 --- 800 1,500 2,800 Semi-Annual Database of SINAPRED / families have their roofs beneficiaries / GRAAN rehabilitated under the Project supervision by August 30, 2011 (1.2): 100% of Component 1 C % 0 10 30 60 100 Semi-Annual FMR / SINAPRED implemented by August 30, Supervision 2011 Intermediate Result (Component Two): Recovery of Small Scale Fisheries Sector Revised Intermediate Result (Component Two): (2.1): At least 30 groups with R Number 0 0 0 0 30 Semi-Annual BP Revolving GRAAN / Banco new boats and fishing Fund Report / Produzcamos equipment by end of Project Database of beneficiaries (2.2): A sustainable revolving C Number 0 0 0 0 1 Annual Assessment of Banco Produzcamos / fund established in BP by end Revolving Fund GRAAN of Project to continue providing Sustainability based on agreed credit to the small-scale portfolio fisheries sector indicators (2.3): Fish Processing Plant and D -- -- -- -- -- -- -- -- Dropped shipyard operated successfully (2.4): At least 80% (out of an R % 0 0 80 80 80 At YR2 and end of Surveys / GRAAN / INPESCA estimated 4,000) of Project Consultation beneficiaries, and 80% of meetings female beneficiaries are 8 satisfied with the sector rehabilitation efforts Intermediate Result (Component Three): Reconstruction of Housing and Social Infrastructure Revised Intermediate Result (Component Three): D=Dropped Core Intermediate Result C=Continue Unit of Data Source/ Responsibility for N= New Baseline YR1 YR2 YR3 YR4 Frequency Indicators Measure Methodology Data Collection R=Revised (3.1): At least 30 communities D --- --- --- --- --- --- --- --- Dropped (see benefiting from small health indicator 3.3) clinics reconstructed under the Project (3.2): At least 12 communities R Number 0 0 0 0 12 Semi-Annual Database of GRAAN / INVUR benefiting from community beneficiaries / centers reconstructed under the supervision Project (3.3): At least 3 health facilities N (CORE) Number 0 0 0 0 3 Semi-Annual Database of GRAAN constructed, renovated and/or X beneficiaries / equipped supervision (3.4): At least 80% of families C % 0 0 80 80 80 Semi-Annual Surveys / GRAAN are satisfied with the Consultation rehabilitation and meetings reconstruction activities financed under the Project Intermediate Result (Component Four): Strengthening for Project Management and M&E Revised Intermediate Result (Component Four): (4.1): Regional Government C --- 0 0 0 0 Agreed End of Project Independent GRAAN / has adequate capacity to performance Evaluation Independent prepare and implement indicators consultants externally-financed projects (as measured by an independent evaluation) by end of project 9 10