FOR OFFICIAL USE ONLY Report No: RES45744 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND/OR INTERNATIONAL DEVELOPMENT ASSOCIATION RESTRUCTURING PAPER ON A PROPOSED PROGRAM RESTRUCTURING OF {NIGERIA - KADUNA STATE ECONOMIC TRANSFORMATION PROGRAM-FOR-RESULTS} {APPROVED ON JUNE 20, 2017} TO {THE} {FEDERAL MINISTRY OF FINANCE} {Finance, Competitiveness And Innovation Global Practice} {Africa West Central Region} Regional Vice President: Ousmane Diagana Country Director: Shubham Chaudhuri Regional Director: Abebe Adugna Dadi Practice Manager: Rashmi Shankar Task Team Leader(s): Nneamaka Pamela Okechukwu, Rajul Awasthi The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) ABBREVIATIONS AND ACRONYMS BVN Bank Verification Number BATMIS Budget and Treasury Management Information Systems CBN Central Bank of Nigeria CofOs Certificates of Occupancy CP3P Certified Public Private Professional DLIs Disbursement Linked Indicators DLRs Disbursement Linked Results E&S Environmental and Social FCCL Fiscal Commitments and Contingent Liabilities FRILIA Framework for Responsible and Inclusive Land-Intensive Agricultural Investments IVA Independent Verification Agent IGR Internal Generated Revenues JTB Joint Tax Board KADGIS Kaduna Geographic Information Systems KADIRS Kaduna Internal Revenue Service KADIPA Kaduna Investment Promotion Agency KDSG Kaduna State Government LGAs Local Governments Areas MOU Memoranda of Understanding MDA Ministries, Departments and Agencies MSC Multi-Stakeholder Committee NIPC Nigerian Investment Promotion Commission NGOs Non-Governmental Organizations PAYE Pay As You Earn PBC Planning and Budget Commission PAD Project Appraisal Document PMU Project Monitoring Unit PPIAF Public Private Infrastructure Advisory Facility PPPs Public Private Partnerships SFTAS States Fiscal Transparency Accountability and Sustainability SPRP Systematic Property Registration Program TIN Tax Identification Number The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) DATA SHEET (Nigeria - Kaduna State Economic Transformation Program-for-Results - P161998) BASIC DATA Project ID Financing Instrument IPF Component P161998 Program-for-Results Financing No Approval Date Current Closing Date 20-Jun-2017 31-Mar-2021 Organizations Borrower Responsible Agency Federal Ministry of Finance Kaduna State Ministry of Budget and Planning Program Development Objective(s) The Project Development Objective is to improve the business enabling environment and strengthen fiscal management and accountability in Kaduna State. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Approval Effectiveness Closing Ln/Cr/TF Signing Date Commitment Disbursed Undisbursed Date Date Date 31-Mar- IDA-60980 20-Jun-2017 29-Sep-2017 26-Apr-2019 133.79 111.39 22.27 2021 31-Mar- IDA-60990 20-Jun-2017 29-Sep-2017 26-Apr-2019 216.21 149.53 67.50 2021 Policy Waiver(s) Does the Program require any waivers of Bank policies applicable to Program-for-Results operations? No Page 1 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) I. PROGRAM STATUS AND RATIONALE FOR RESTRUCTURING 1. Kaduna State Economic Transformation Program for Results is funded by an IDA loan in the amount of SDR 255.4 million (US$ 350 million). The project was approved by the Board in June 2017, however the project only achieved effectiveness in April 2019. The project includes two reinforcing results areas, and a total of ten (10) Disbursement Linked Indicators (DLIs). Results area 1 focuses on Improving the Business-enabling Environment, while results area 2 focuses on Strengthening fiscal management and accountability. The two results areas are reinforcing – results area 1 supports Kaduna’s efforts to increase private investments for job creation, while results area 2 ensures that government revenues from the increased investments are spent efficiently and used to further catalyze private investments. 2. Kaduna state has made strong achievements on meeting it’s DLIs and has achieved 75 percent disbursement SDR 190.3 million (US$260.7 million). Kaduna State displays a strong reform momentum in several areas including the simplification of business processes, improvements to Internal Generated Revenues (IGR), and Investment promotion, among others. According to the 2018 subnational Doing Business rankings, Kaduna is leading the states in the implementation of business enabling reforms. In the first half of 2020, Kaduna was the number one destination for investments according to the Nigerian Investment Promotion Commission (NIPC), and the realized IGR exceeded the budgeted IGR in 2019. The reforms undertaken by the state were validated by project beneficiaries. In addition, Kaduna has contributed to nationwide reforms and has conducted several peer learning events with other states. Result Area 1: Improving the Business-enabling Environment 3. DLI1: Simplified business processes: reduction in the time required to start a business, deal with construction permit and register property. SDR 25.5 million (US$ 35 million). Kaduna state has continued to make significant progress in simplifying business processes and currently ranks number 1 in the Subnational Doing Business rankings. As per the last Subnational Doing Business rankings in 2018 it takes 13 days to start a business in Kaduna, 75 days to obtain a construction permit and 44 days to register a property. The total number of days for all three processes stands at 132 days (from the base of 248 days). The target for this indicator is 123 days at Project end. 4. DLI2: Implementation of systematic property registration program: number of new Certificates of Occupancy (CofOs) issued. SDR 25.5 million (US$ 35m). The Kaduna Geographic Information System (KADGIS) has made significant progress under the State’s Systematic Property Registration Program (SPRP), however an additional push is required by the state to accelerate the pace of implementation. Under Kaduna State’s SPRP, two (2) of the four (4) urban Local Governments Areas (LGAs) (Kaduna North and Kaduna South LGAs) have been fully registered. The other 2 (Chikun and Igabi LGA) are currently being covered. KADGIS noted that the rate of coverage was stalled by the COVID-19 crisis. However, it is important to note that the SPRP has gone beyond the initial local governments identified in the Project Appraisal Document (PAD). A clarification of this DLI is required to reflect that all CofOs issued by all SPRPs in the state, will be captured and counted as achievements towards the DLI. This will clarify the concern that only CofOs issued in the earlier identified LGAs in the PAD will count towards this DLI. 5. DLI3: Strengthening investment promotion: number of new Memoranda of Understanding (MOU) signed between investors and the Kaduna Investment Promotion Agency (KADIPA). SDR 25.5 million (US$ 35m). Kaduna continues to be a top destination for investors despite security challenges, mainly due to the key reforms undertaken under KADIPA to promote investments. According to KADIPA, the state has attracted $1.6 billion in investments and signed 26 MOUs. The KADIPA team indicated that 10 of the MOUs are fully operational, with the rest undergoing due diligence. This brings the total to 26 with the program target at 32. 6. DLI4: Institutional framework for Public Private Partnerships (PPP) SDR 25.5 million (US$ 35m). Kaduna State has developed and approved a PPP manual and framework; however, there is insufficient time remaining in the project life to complete all activities. Kaduna state has developed and approved a PPP manual and framework which captures key implementation arrangements and processes for PPPs in the state, as well as guidance on dealing with unsolicited proposals. With The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) support from the World Bank Public Private Infrastructure Advisory Facility (PPIAF), the state developed a PPP pipeline. Key members of staff have been trained on the PPP foundational course. In addition, the state approved the training on the Certified Public Private Professional (CP3P) Foundation Course for all staff and the Professional Certification for the staff of the PPP department which were held from 19th – 23rd October 2020. However due to the nature of PPP transactions, the lengthy time required to see a PPP to commercial close, it is unlikely that one PPP will meet commercial close at the end of the project, which is the final step to be undertaken under this DLI. 7. DLI 5: Development and implementation of a Framework for Responsible and Inclusive Land-Intensive Agricultural Investments (FRILIA) SDR 25.5 million (US$ 35million). Kaduna State has made some progress in the implementation of FRILIA, however this DLI needs to be restructured to reflect achievable targets in the remaining project life. The goal for FRILIA is to establish a participatory and sustainable land acquisition process for large-scale agribusiness investments in line with established international good practices, which guarantee shared benefits between private investor, surrounding communities and the state government. The framework is designed to ensure land accountability for the ease of doing business and sustenance of equitable development. The Kaduna State Governor on behalf of the State government signed the adoption of the FRILIA Principle on 3rd May 2017. In addition, the State has set up a FRILIA Multi-Stakeholder Committee (MSC), comprising government agencies that have direct reference to land use and investments in the State. In addition, the Kaduna State FRILIA framework has been developed in line with the approved principles through a consultative process. This framework has been delivered to the State and is awaiting approval by the Project Monitoring Unit (PMU) and the MSC and a FRILIA technical working group. Key next steps include the legislation of FRILIA by the state, the operationalization of the FRILIA Framework into implementable toolkits for ease of application, and a pilot to test the FRILIA framework in the state. Due to late start of the project and further delays caused by the COVID-19 pandemic, the pilot of FRILIA is unlikely to be completed by the end of the project. The pilot needs to be implemented over at least two planting seasons which will not be achievable in the limited remaining project life. There is a need to drop the last step of the DLI “social audit to verify the implementation of the FRILIA” which has SDR 7.3 million (US$ 10 million) attached to it. Result Area 2: Strengthening fiscal management and accountability. 8. DLI6: IGR outturn. SDR 25.5 million (US$ 35 million). Kaduna State has made significant reforms in generating IGR. Kaduna Internal Revenue Service (KADIRS) shared the results of the IGR outturn for 2019 and 2020 up to August. The outturn in 2019 is 107.7 percent of the budgeted amount, which is in excess of the target of Year 3 i.e. 60 percent. Furthermore, the actual collections in 2019 of N44.9 billion are a major improvement over the actuals in 2018 i.e. N29.4 billion. KADIRS reported that the initial budgeted amount for 2020 was N43.7 billion, out of which the sum of N11.1 billion was collected in Q1. However, the lockdown resulting from COVID-19 had a significant negative impact on achieving the target of IGR outturn and a revised budget for 2020 was approved in July. According to this revised budget the target for the year is revised to N29.4 billion; the pro-rata target for Jan-Aug 2020 is N19.6 billion and the achievement has been an impressive N28.5 billion which is 145.6 percent of the revised target. 9. DLI7: Improvement of tax collection: increase in number of registered taxpayers Tax Identification Number (TIN) filing returns SDR 25.5 million (US$ 35million). Kaduna State has exceeded the milestones set for this DLI. It was established in the June 2020 Implementation Support Mission that the issuance of TIN by the Joint Tax Board (JTB) has been stalled for several months due to an ongoing system upgrade to establish links among databases for company registration, Bank Verification Number (BVN), and national identity documents. KADIRS shared their challenges in increasing the number of registered taxpayers with TINs as this upgrade is occurring at the federal level by the JTB; registration of tax payers for TIN has been temporarily put on hold until arrangements are concluded between JTB and the Central Bank of Nigeria (CBN) on data sharing. The KADIRS team, however, has shared data on taxpayers filing returns which is higher than the number of taxpayers issued a TIN. The number of tax returns, both on account of Direct Assessment (i.e., self-employed and small businesses) and Pay As You Earn (PAYE) have been steadily rising from 30,000 in 2016, to 51,544 in 2017, 82,989 in 2018, and 358,597 in 2019. 10. DLI8: Increasing capital expenditure execution rate. SDR 25.5 million (US$ 35 million). The Kaduna State Planning and Budget Commission (PBC) revealed that the capital expenditure execution rate target was achieved for 2019 (Year 3). The The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) Capital Budget execution rate achieved in year 3 was 98%, which surpassed the baseline target of 60%. The execution rate was based on actual implementation of the budget. For the year 2020, the budget has been revised in July, owing to the economic disruption of Covid-19. As at August, COVID 19 related expenditure has a budgetary provision of about N 124 billion. Capital Expenditure Execution Rate of the first two quarters (January to June 2020) stands at 14.17%, based on the original 2020 Approved Budget. The revised capital budget for the year 2020 is N 146,112,237,761, and the quarterly pro-rata amount is N 36,528,059,440. As against this, the quarterly expenditure is N 19,706,621,634, which is 53.95%. The January to September 2020 capital expenditure is N 32,753,761,637 which amounts to 22.42% of the total revised annual capital budget. 11. DLI9: Increasing Procurement Effectiveness SDR 25.5 million (US$ 35million). Kaduna state has successfully audited 15 Ministries, Departments and Agencies (MDAs) and awarded a contract for the implementation of e-procurement in the state. The implementation of e-procurement in all 15 MDAs commenced in Jan 2020. The modules to be implemented are e- Registration, e-Procurement Plan, e-Publishing/Notification, e-Tendering and e-Evaluation/e-Awarding, e-Reverse Auctions and Contract Management and Business Intelligence Reporting and Dashboard, with automated OCDS generation support disclosure of contract awards. 12. DLI10: Improved government responsiveness to citizens’ feedback on fiscal performance. SDR 25.5 million (US$ 35 million). As of December 2019, 46 percent of capital projects have been improved due to citizens engagement, against a target of 20 percent. The PBC informed the team that the Eyes and Ears call center was functional up till March 2020 when it encountered some technical problems which are yet to be rectified due to the lockdown in place owing to the COVID-19 pandemic. Detailed discussions were held with the PBC on the measurement of the results for this DLI and the strategy for achievement. This culminated in the change of the DLI title and an expansion of the scope of the DLI to include infrastructure related aspects. PBC informed the team that while there are several sources of citizen feedback in addition to the Eyes and Ears program, such as social media and radio programs, these are not currently being tracked. It was agreed that the scope of collection of citizen feedback should be widened to include townhalls, social audits (by Non-Governmental Organizations (NGOs) or the office of the State Auditor General) and statistical surveys by the state bureau of statistics. It was also discussed and agreed that tracking the feedback received and actions taken should be documented and reported online. Rationale for Restructuring 13. The Kaduna P4R is a successful project, but the 22-month delay in effectiveness coupled with the onset of COVID-19 and the resultant lockdown in the state has slowed down the pace of reforms in two of the ten DLIs, which had been designed in the expectation that the project would have a full five years to be implemented. The implementation of the SPRP was halted during the state-imposed lock down but has resumed. The economic downturn caused by COVID-19 has led to a decline in IGR of the state in 2020. Despite these challenges, the state remains on track to achieving 8 out of the 10 DLIs. The state is not on track to meeting DLIs associated with the implementation of PPPs (DLI 4) and the implementation of FRILIA (DLI5). Notwithstanding these delays, the State has achieved other DLIs within a relatively short time frame and the Program for Results is assessed as performing Satisfactorily. Latest Project Ratings Project Ratings: Areas Previous Revised Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory 14. This P4R has helped Kaduna State build on its strong reform momentum in several areas including the simplification of business processes, improvements to Internal Generated Revenues (IGR), and investment promotion, among others. According to the 2018 subnational Doing Business rankings, Kaduna is leading the states in implementing of business enabling reforms. In the first half of 2020, Kaduna was the number one destination for investments in Nigeria according to the Nigerian Investment The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) Promotion Commission (NIPC), and the realized IGR exceeded the budgeted IGR in 2019. The reforms undertaken by the state were validated by project beneficiaries. In addition, Kaduna has contributed to nationwide reforms and has conducted several peer learning events with other states. These peer learning events have been captured by the mission team. These are tangible results. 15. The two DLIs unlikely to achieve the last steps during the project duration are related to full implementation of PPP and FRILIA. Due to the lengthy nature of the PPP procurement and tender process, as well as the long timelines required to pilot FRILIA, it is unlikely that Kaduna state will complete the required last steps in each of these DLIs within the limited timeframe of the project, even though the state is likely to achieve these reforms in due course. Discussions with the Kaduna State Government (KDSG) and the Federal Ministry of Finance Budget and Planning during the project mid-term review determined that it would be expedient to reduce the scope of DLIs 4 and 5, and reallocate the funds to DLIs 1, 6, and 7, where the state is overachieving. 16. In addition, during the recent mid-term review (September 26 to October 6, 2020), the project team identified the need to clarify and improve the verification protocols of specific DLIs to improve their measurement. Lastly, discussions held during the mission concluded that extending the project closing date by 9 months, will strike a good balance between giving the state additional time to implement reforms, while mitigating some of the impact of the 22-month delay in project effectiveness. II. DESCRIPTION OF PROPOSED CHANGES 17. The key proposed changes requiring amendment to Loan Agreement are listed below: a. DLI 2: Further clarifications will be made to this DLI to ensure that disbursements are only made against CofOs when they are legal, while reflecting Kaduna state’s expansion of its systematic titling program. The clarifications are i) CofOs are not counted at the point of the Governor’s signature but are only counted once they have been duly registered as legal documents by the registrar; and ii) All new CofOs issued under all SPRPs under the state will be counted towards this DLI. b. DLI 4: Dropping the final step of “One PPP with low Environmental and Social (E&S) Risk meets Commercial Close”, in light of the limited project time. This final step has SDR 6.4 million (US$ 8.75 million) attached to it. c. DLI 5: Dropping the final step of the DLI “social audit to verify the implementation of the FRILIA”, in light of the limited project time. This final step has SDR 7.3 million (US$ 10 million) attached to it d. DLI 7: Changing the DLI to best reflect activities within the remit of the state, thereby removing reference to registrations with the JTB which are at the federal level of government and out of the sphere of influence of Kaduna State. The proposed amended DLI is: “Number of registered taxpayers registered with KADIRS and filing tax returns using their KADIRS Identification Number” e. DLI 9: It was decided that changes to the DLI are needed to eliminate any double counting with the States Fiscal Transparency Accountability and Sustainability (SFTAS) project. Kaduna will have to implement e- procurement in at least 15 main procuring MDAs (excluding, Education, Health and Public Works which are covered under the SFTAS). f. DLI10: It was agreed to expand the scope of this DLI to include infrastructure related projects, while also widening the scope of collection points for citizen feedback. The title of this DLI was proposed to be amended to; “Improved Government responsiveness to citizens’ feedback on Capital Projects and infrastructure related services under implementation and completed”. g. DLIs 1, 6 & 7: Increasing the funds allocated to these DLIs by SDR 13.3 million (US $18.25 million), divided equally across the three DLIs. h. Execute a 9-month extension of the project to December 31, 2021 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) 18. The Table 1 below includes the proposed changes to the original DLIs and DLI verification protocols Table 1: Proposed Changes to the DLIs DLI Current Proposed Current Verification Protocol Proposed Verification Protocol Justification DLI DLI Allocation Allocation DLI1 SDR 25.55 SDR Prior result: Announcement of Prior result: Announcement of Reallocation from million 30.112 Ease of Doing Business Charter Ease of Doing Business Charter = scaled back DLIs 4 (US$ 35 million = SDR 7.3 million (US$10 million) &5 million) (US$ 41.25 SDR 7.3 million (US$10 million) SDR 240,900 (US$0.33 million) per million) SDR 146,000 (US$0.2 million) reduced day per reduced day (capped to SDR 22.81 (capped to SDR 18.25 million (US$31.25million)) (US$25 million)) DLI2 No change No change Number of new CofOs issued by Number of new CofOs issued by To reflect the point KADGIS KADGIS and registered by the at which the Cof O (excluding recertification: that is, registrar becomes a legal replacement of old (excluding recertification: that is, tender CofOs). The target is 10,000 new replacement of old CofOs per year. CofOs). The target is 10,000 new CofOs per year. DLI 4 SDR 25.55 SDR 19.11 Disbursement Linked Results DLR4.1. Approval of suitable PPP Insufficient project million million (DLR)4.1. Approval of suitable legal and institutional framework time to see a PPP to (US$ 35 (US$ 26.25 PPP legal and institutional commercial close million) million) framework DLR4.2: Project Facilitation Fund Rules, Governance, and Operational DLR4.2: Project Facilitation Manual prepared; PPP pipeline Fund Rules, Governance, and prepared; Pre-feasibility Operational Manual prepared; studies for 3 projects completed; PPP pipeline prepared; Pre- PPP FCCL Management feasibility Framework (FCCL) adopted studies for 3 projects completed; PPP Fiscal Commitments and DLR4.3: FCCL from existing Contingent Liabilities (FCCL) projects measured and disclosed; Management Framework PPP Disclosure Framework (FCCL) adopted adopted, web portal established, and project information available; DLR4.3: FCCL from existing Detailed feasibility studies for 1 projects measured and disclosed; transaction completed; Project PPP Disclosure Framework Facilitation Fund established and adopted, web portal established, seed funding of NGN 60 million and project information provided available; Detailed feasibility studies for 1 transaction completed; Project Facilitation Fund established and seed funding of NGN 60 million provided The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) Year 4 results: DLR4.4 One PPP with low E&S risks* reaches commercial closure. SDR 6.37 million (US$8.75 million) for each of the *According to the PforR policy three (3) DLRs (DLR4.1, 4.2, 4.3). SDR 6.37 million (US$8.75 million) for each of the four (4) DLRs (DLR4.1, 4.2, 4.3 and 4.4). Disbursement against DLR4.4 requires that DLR4.1, 4.2 and 4.3 have been met. If DLR 4.4 is not met, the allocated funding will be cancelled. DLI 5 SDR 25.55 SDR 18.25 June 20, 2017 for FRILIA June 20, 2017 for FRILIA Insufficient project million million principles (DLR5.1 = prior principles (DLR5.1 = prior time to pilot FRILIA (US$ 35 (US$ 25 result) result) over 2 planting million) million) December 31, 2018 for December 31, 2018 for seasons approval of FRILIA approval of FRILIA (DLR5.2) (DLR5.2) December 31, 2019 for December 31, 2019 for enactment of FRILIA enactment of FRILIA (DLR5.3) (DLR5.3) December 31, 2020 for social audit confirming Prior result: Approval of FRILIA satisfactory implementation of principles (DLR5.1) = SDR 3.65 FRILIA (DLR 5.4) million (US$5 million) Prior result: Approval of SDR 7.3 million (US$10 million) is FRILIA allocated for principles (DLR5.1) = SDR 3.65 DLR5.2, and DLR 5.3) million (US$5 (each DLR = SDR 7.3 million million) (US$10 million)) SDR 7.3 million (US$10 million) subject to pass/fail and all is allocated for successive steps have to be DLR5.2, DLR 5.3 and DLR5.4 completed in the indicated order. (each DLR = SDR 7.3 million (US$10 million)) subject to pass/fail and all successive steps have to be completed in the indicated order. If DLR5.2 to 5.4 are not met, the allocated funding will be cancelled DLI 6 SDR 25.55 SDR Prior result: Budget and Prior result: BATMIS fully Reallocation from million 30.112 Treasury Management operational for revenues and scaled down DLIs 4 (US$ 35 million Information Systems (BATMIS) expenditure chain = = SDR 3.65 &5 million) fully million (US$5 million) The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) (US$ 41.25 operational for revenues and SDR 1.46 million (US$2.million) million) expenditure chain = = SDR 3.65 per point rounded million (US$5 million) to the closest point (capped to SDR 912,500 (US$1.25 million) SDR 26.46 Million per point rounded (US$36.25million)) to the closest point (capped to SDR 21.9 million (US$30 million)) DLI 7 SDR 25.55 SDR Prior result: 30,000 registered Prior result: 30,000 registered Reallocation from million 30.112 taxpayers filing returns = SDR taxpayers filing returns = SDR 7.3 scaled down DLIs 4 (US$ 35 million 7.3 million (US$10 million (US$10 &5 million) (US$ 41.25 million) million) million) SDR 107,353.7 (US$147,059) SDR 134,191.52 (US$183,824) per per 1,000 new 1,000 new registered taxpayers filing registered taxpayers filing returns returns (capped to SDR 22.81 million (capped to SDR 18.25 million (US$31.25 million)) (US$25 million)) DLI 9 No change No change Prior result: Approval of Yr 1: DLR 9.2 implement e- To ensure there is no Procurement Guidelines procurement in at least 3 main double counting (according to the procuring MDAs (excluding, between the Kaduna Procurement Law); Education, Health and Public PforR and the WB Adoption of e-procurement Works). funded SFTAS strategy; disclosure of project which has a contracts above NGN 50 E-Procurement for the Period 1 DLI for the million since January 2017 results DLI is implementation of e- implementation of e- (DLR9.1) Publishing/Notification module for procurement in contract notice and contract award Education, Health, Yr 1: DLR9.2: Implementation with automated OCDS generation and Public Works of e-procurement, disclosure of support for the e- contract awards in three Publishing/Notification module main procuring MDAs; procurement audit in one Year 2 DLR 9.3: implement e- MDA procurement in at least 5 main procuring MDAs (excluding, Yr 2 DLR9.3: Implementation of Education, Health and Public e-procurement, disclosure of Works). contract awards, procurement E-Procurement for Period 2 results audit in five MDAs DLI is implementation of the four modules: e-Registration, e- Yr 3. DLR9.4: Implementation Publishing/Notification, e- of Procurement Plan, e-Tendering and e-procurement, disclosure of e-Evaluation/e-Awarding with contract award, procurement automated OCDS generation audit in 10 MDAs support disclosure of contract awards. Yr 4. DLR9.5: Implementation of Yr 3 DLR 9.4; Implement e- e-procurement; disclosure of procurement in at least 10 main contract awards; procuring MDAs (excluding, procurement audit in 15 Education, Health and Public MDAs Works The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) Yr 4 DLR 9.5; Implement e- procurement in at least 15 main procuring MDAs (excluding, Education, Health and Public Works). E-Procurement for Period 3 &4 results DLI is implementation of the two additional modules: e-Reverse Auctions and Contract Management, with automated OCDS generation support disclosure of contract awards. DLI No change No change 2017: 5% of capital projects 2017: 5% of capital projects and To expand the scope 10 under implementation infrastructure related services under of projects to improved in response to citizens’ implementation and completed include feedback improved in response to citizens’ “infrastructure 2018: 10% of capital projects feedback related programs and under implementation 2018: 10% of capital projects and services such improved in response to citizens’ infrastructure related services under as improved access feedback implementation and completed and quality, while 2019: 15% of capital projects improved in response to citizens’ Broadening the under implementation feedback scope of collection. improved in response to citizens’ 2019: 15% of capital projects and feedback infrastructure related services under 2020: 20% of capital projects implementation and completed under implementation improved in response to citizens’ improved in response to citizens’ feedback feedback 2020: 20% of capital projects and Improvements are remedial infrastructure related services under actions taken by the implementation and completed KDSG in response to citizens’ improved in response to citizens’ feedback on projects feedback under implementation (and captured as such by the Improvements are remedial actions monitoring system for capital taken by the KDSG in response to projects). Those citizens’ feedback on capital remedies can be ad hoc (specific projects and infrastructure related to a single project) services under implementation and or generic (common to all completed (and captured as such by relevant projects). The the monitoring system for capital KDSG is expected to report projects). This includes those remedies on the improvement to the design of public web-based platform which infrastructure and facilities as well support the citizens’ as access to and quality of feedback mechanism. The infrastructure services provided to Independent Verification Agent citizens. Those remedies can be ad (IVA) will verify the hoc (specific to a single project) or percentage of projects to which generic (common to all relevant such remedies projects). The KDSG is expected to actually apply. report those remedies on the web- based platform which support the citizens’ feedback mechanism. The IVA will verify the percentage of The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) projects to which such remedies actually apply. III. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Loan Closing Date(s) ✔ Reallocation between and/or Change in DLI ✔ Change in Implementation Schedule ✔ Other Change(s) ✔ Change in Implementing Agency ✔ Change in Program's Development Objectives ✔ Change in Program Scope ✔ Change in Cancellations Proposed ✔ Change in Disbursements Arrangements ✔ Change in Disbursement Estimates ✔ Change in Systematic Operations Risk-Rating Tool ✔ (SORT) Change in Safeguard Policies Triggered ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE OPS_DETAILEDCHANGES_LOANCLOSING_TABLE The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/TF Status Closing Date Closing(s) Date Closing Date for Withdrawal Applications IDA-60980 Effective 31-Mar-2021 31-Dec-2021 30-Apr-2022 IDA-60990 Effective 31-Mar-2021 31-Dec-2021 30-Apr-2022 OPS_DETAILEDCHANGES_EA_TABLE . The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) ANNEX 1: RESULTS FRAMEWORK . . Results framework Program Development Objectives(s) The Project Development Objective is to improve the business enabling environment and strengthen fiscal management and accountability in Kaduna State. Program Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Improving the business enabling environment 1. Simplified business processes: reduction in the time required to start a business, deal with construction permit and register 248.00 123.00 property (DLI1) (Days) Strengthening fiscal management and accountability 2. Increased budget credibility: IGR outturn and capital 42; 50 66; 70 expenditure execution rate, in percentage (DLI 6 & 8) (Text) 3. Increased fiscal accountability, measured by improved government responsiveness to citizens’ feedback on fiscal 0.00 20.00 performance: indicated by the percentage of capital projects improved (DLI 10) (Percentage) Page 12 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) PDO Table SPACE Intermediate Results Indicators by Result Areas RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Improving the business enabling environment Implemented reforms supporting private sector development 0.00 20.00 (CRI, Number) Implementation of systematic property registration program: 0.00 40,000.00 new Certificates of Occupancy (CofOs) issued (DLI 2) (Number) Strengthening investment promotion: Memoranda of Understanding signed between investors and KADIPA (DLI 3) 10.00 32.00 (Number) Investors that reach operations stage or aftercare in Kaduna 2.00 20.00 State with KADIPA facilitation (Amount(USD)) One PPP transaction with low E&S risks reaches Development of the legal and institutional framework for PPP Incomplete legal and institutional framework commercial closure (DLI 4) (Text) Action: This indicator has been Revised Development and implementation of a Framework for FRILIA adopted through a legal instrument and under Responsible and Inclusive Land-Intensive Agricultural No FRILIA satisfactory implementation Investments (DLI 5) (Text) Action: This indicator has been Revised Strengthening fiscal management and accountability Improvement of tax collection: registered taxpayers (TIN) filing 6,000.00 200,000.00 tax returns (DLI 7) (Number) Page 13 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Compliance of large (over 250 employees) private and public corporate entities with Personal Income Tax Administration 70% for private; 80% for public entities 80% for private, 90% for public entities (PAYE) system (Text) Enhanced strategic planning and budgeting of public investment: MDAs whose budgeted capital expenditure are aligned with 25.00 100.00 Sector Implementation Plans (SIP) (Percentage) Increased procurement effectiveness: main procuring MDAs implementing e-procurement, disclosing information on contract 0.00 15.00 awards and conducting procurement audits (DLI 9) (Number) Action: This indicator has been Revised Timely payment of contractors by public entities: arrears of payment to contractors as percentage of appropriation 1.70 0.50 (Percentage) Improving performance information on service delivery: sector programs evaluated after three years of implementation 5.00 50.00 (Percentage) Increased fiscal transparency of State and Local Governments LG budgets disclosed for first time in 2016; audit report of Timely disclosure of state and LG budgets and audit reports (LG): disclosure of state and LG appropriations and budget LG budget execution not disclosed. of state and LG budget execution. execution audit reports (Text) IO Table SPACE Page 14 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) Disbursement Linked Indicators Matrix DLI IN00961982 ACTION 1. Simplified business processes: reduction in the time required to start a business, deal with construction permit and DLI 1 register property Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome Yes Days 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 248.00 Prior Results 10.00 2017 217.00 6.20 2018 186.00 6.20 2019 155.00 6.20 2020 123.00 6.40 DLI IN00961983 ACTION DLI 2 2. Implementation of systematic property registration program: number of new CofOs issued Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Number 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 Page 15 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) Prior Results 3,000.00 12.50 2017 10,000.00 4.50 2018 10,000.00 6.00 2019 10,000.00 6.00 2020 10,000.00 6.00 DLI IN00961984 ACTION 3. Strengthening investment promotion: number of new Memoranda of Understanding signed between investors and DLI 3 KADIPA Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Number 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 10.00 Prior Results 0.00 5.00 2017 8.00 7.50 2018 8.00 7.50 2019 8.00 7.50 2020 8.00 7.50 Page 16 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) DLI IN00961985 ACTION DLI 4 4. Development of the legal and institutional framework for PPP Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline Incomplete legal and institutional framework Prior Results 0.00 Approval of legal and institutional framework for 2017 8.75 PPP Project Facilitation Fund Rules, Governance and Operational Manual prepared; Development of PPP 2018 pipeline, pre-feasibility study for 3 priority 8.75 transactions; PPP FCCL Management Framework adopted. FCCL from existing projects measured and disclosed; PPP disclosure framework adopted; web portal established and project information available; 2019 detailed feasibility studies for one transaction with 8.75 low E&S risks completed; Project Facilitation Fund established and seed funding of NGN 60 million provided One PPP transaction with low E&S risks reaches 2020 8.75 commercial closure. Page 17 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) DLI IN00961986 ACTION 5. Development and implementation of a Framework for Responsible and Inclusive Land-Intensive Agricultural Investments DLI 5 (FRILIA) Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No FRILIA FRILIA principles approved by Kaduna State Prior Results 5.00 Governor. 2017 0.00 FRILIA developed in line with approved principles 2018 10.00 and through a consultative process. 2019 Enactment of FRILIA. 10.00 Social audit confirms satisfactory implementation of 2020 10.00 FRILIA. DLI IN00961987 ACTION DLI 6 6. Increasing IGR outturn Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome Yes Percentage 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 42.00 Prior Results 5.00 Page 18 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) 2017 50.00 10.00 2018 55.00 6.25 2019 60.00 6.25 2020 66.00 7.50 DLI IN00961988 ACTION DLI 7 7. Improvement of tax collection: increase in number of registered taxpayers (TIN) filing returns Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Number 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 6,000.00 Prior Results 30,000.00 10.00 2017 50,000.00 2.80 2018 100,000.00 7.40 2019 150,000.00 7.40 2020 200,000.00 7.40 Page 19 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) DLI IN00961989 ACTION DLI 8 8. Increasing capital expenditure execution rate Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome Yes Percentage 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 50.00 Prior Results 15.00 2017 55.00 5.00 2018 60.00 5.00 2019 65.00 5.00 2020 70.00 5.00 DLI IN00961990 ACTION DLI 9 9. Increasing procurement effectiveness Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Text 35.00 0.00 Period Value Allocated Amount (USD) Formula Low level of transparency and competitiveness in Baseline procurement process Prior Results 10.00 Page 20 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) Implementation of e-procurement, disclosure of 2017 contract awards in three main procuring MDAs; 6.25 procurement audit in one main procuring MDA. Implementation of e-procurement, disclosure of 2018 contract awards, procurement audit in five main 6.25 procuring MDAs. Implementation of e-procurement, disclosure of 2019 contract awards, procurement audit in 10 main 6.25 procuring MDAs. Implementation of e-procurement, disclosure of 2020 contract awards, procurement audit in 15 main 6.25 procuring MDAs. DLI IN00961991 ACTION 10. Improved government responsiveness to citizens’ feedback on fiscal performance: percentage of capital projects DLI 10 improved in response to citizens' feedback Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Percentage 35.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 Prior Results 15.00 2017 5.00 5.00 2018 10.00 5.00 2019 15.00 5.00 Page 21 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) 2020 20.00 5.00 Page 22 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) ANNEX 2: PROGRAM ACTION PLAN . . PAP_NOT_CHANGE_TBL Action Description Source DLI# Responsibility Timing Completion Measurement Review KADIPA’s budget (and outer years) to ensure it Supplementary budget for 2019 is commensurate budget (with estimates for 2020 to KADIPA’s and 2021) reflects the adjusted mandate Fiduciary Systems Client Recurrent Continuous budget for KADIPA Development and implementation by KADIPA of a strategy based on a socio-economic KADIPA approval of benefits assessment to sharing strategy and annual maximize benefits monitoring of implementation of sharing of strategy (with adjustments if investments Technical Client Recurrent Continuous necessary) Development of investors’ satisfaction survey (including satisfaction with KADIPA facilitation services) and of investors’ grievance Investors’ satisfaction survey redressal launched and investors’ grievance mechanism by redress mechanism operational; KADIPA Technical Client Recurrent Continuous annual reports KADIPA to lead the development of the proposed North West Investment Area NWIAA presented at the Northern Agreement Technical Client Recurrent Continuous Governors Forum Development of a PPP legal and institutional framework that appropriately manages E&S risks: (i) PforR PIM (I) PforR Implementation to incorporate Environmental and Social Manual E&S aspects & outline risk Systems Client Recurrent Continuous (II) PPP Manual Page 23 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) assessment criteria for low E&S risk; (ii) PPP manual incorporates best practice E&S risk management Commission of a study of social impact of tax reforms, through distributive analysis (KADIRS) Fiduciary Systems Client Recurrent Continuous Completion of study Undertake a Strategic Environmental and Social Assessment to support the Kaduna State Infrastructure Master Plan: (i) Outline and Terms of Reference; (ii) Strategic (i) Terms of Reference Environmental (ii) Approved Strategic and Social Environmental and Social Environmental and Social Assessment Systems Client Recurrent Continuous Assessment Publish Budget Execution Report, Annual Financial Statement and audit opinion on the Kaduna State Government and Local BERs available on the state’s Governments website (within six weeks of financial quarter end) and AFSs (within statements Fiduciary Systems Client Recurrent Continuous seven months of end of FY) (I) Stakeholder Engagement Plan submitted (II) KADGIS (and relevant agencies) has developed in-house Development and capacity to support the FRILIA implementation of implementation (staff trained and the Framework for assigned responsibility for Responsible and support to FRILIA Inclusive Land implementation) Intensive (cont. in Comments) Agricultural Investments - Environmental and Social FRILIA (KADGIS) Systems Client Recurrent Continuous Page 24 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) Review KADGIS’ budget to ensure Supplementary budget for 2019 it is (if required); (with estimates for commensurate to 2020 and 2021) reflecting the KADGIS mandate Fiduciary Systems Client Recurrent Continuous adjusted budget for KADGIS Agreed amendments to Kaduna State Land Use Regulations (KADGIS) Technical Client Recurrent Continuous Revised regulations Undertake, review, and enhance the Systematic Property Registration Program Stakeholder Engagement Environmental and Social Updated Stakeholder Engagement Strategy (KADGIS) Systems Client Recurrent Continuous Plan Implementation of a grievance redressal mechanism for the Systematic Property Registration Environmental and Social Grievance redress mechanism Program (KADGIS) Systems Client Recurrent Continuous operational Prepare and regularly review Systematic Approved Standard Operating Property Procedure manual; training Registration manual and promotional Program material; updated SPRP documentation Environmental and Social documentation (including (KADGIS) Systems Client Recurrent Continuous regulatory framework) Review KEPA budget to ensure that it allows KEPA to satisfactorily fulfill its mandate, with a focus on private investments in Supplementary budget for 2019 Kaduna State; and supported by a capacity detailed capacity- assessment program; (with building program estimates for 2020 and 2021) outlined and reflects the adjusted budget for budgeted Fiduciary Systems Client Recurrent Continuous KEPA Strengthening of Grievance redress mechanism grievance Fiduciary Systems Client Recurrent Continuous operational Page 25 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) redressal system for taxpayers (KADIRS) Production and dissemination of statistical information, with a focus on socio- economic information (Kaduna State Bureau of Number of surveys completed Statistics) Fiduciary Systems Client Recurrent Continuous and publicly disclosed Prepare Procurement Plans for five MDAs with highest volume procurements as Ministry of Agriculture, Works, part of the budget Education, Health, and Water preparation and Resources—procurement plans of approval process Fiduciary Systems Client Recurrent Continuous these MDAs available Adoption of fund release policy to MDAs for improved predictability of MDAs BERs showing cumulative resource flows to budget releases against MDAs Fiduciary Systems Client Recurrent Continuous appropriations Capacity building on e-procurement procedures and contract management conducted annually for pilot Signed attendance sheets, MDAs (KPPA) Fiduciary Systems Client Recurrent Continuous photographs and KADPPA reports Implementation of grievance redressal Grievance redress mechanism mechanism (KPPA) Technical Client Recurrent Continuous annual reports Introduction of risk-based internal audit function outside the expenditure processing cycle (Accountant General) Fiduciary Systems Client Recurrent Continuous Internal audit reports Appointment of anti-corruption Operationalization Fiduciary Systems Client Recurrent Continuous desk officer Page 26 of 27 The World Bank Nigeria - Kaduna State Economic Transformation Program-for-Results (P161998) of the state anticorruption framework (for PForR lead agencies) . 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