Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD4353 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF SDR146.9 MILLION (US$210.0 MILLION EQUIVALENT) FINANCED FROM A PRE-ARREARS CLEARANCE GRANT AND A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF US$210.0 MILLION FROM THE SUDAN TRANSITION AND RECOVERY SUPPORT MULTI-DONOR TRUST FUND TO THE REPUBLIC OF SUDAN FOR THE SUDAN FAMILY SUPPORT PROJECT February 23, 2021 Social Protection and Jobs Global Practice Eastern and Southern Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective November 30, 2020) Currency Unit = Sudanese Pound (SDG) SDG 55.232 = US$1 SDR 0.69925669= US$1 FISCAL YEAR January 1- December 31 Regional Vice President: Hafez M. H. Ghanem Country Director: Ousmane Dione Regional Director: Amit Dar Practice Manager: Robert S. Chase Task Team Leaders: Suleiman Namara, Surat F. Nsour ABBREVIATIONS AND ACRONYMS CBoS Central Bank of Sudan CDA Community Development Association CMR Clinical Management of Rape COVID-19 Coronavirus Disease 2019 CSO Civil Society Organization DA Designated Account DP Development Partner DEA Digital Economy Agency ESF Environmental and Social Framework ESRS Environmental and Social Review Summary ESS Environmental and Social Standards FCV Fragility, Conflict, and Violence FGM Female Genital Mutilation FHF Female-headed Families FM Financial Management GBV Gender-based Violence GDI Gender Development Index GDP Gross Domestic Product GoS Government of Sudan GRM Grievance Redress Mechanism GRS Grievance Redress Service HDI Human Development Index HIPC Highly Indebted Poor Country ICT Information and Communications Technology ID Identity Document IDA International Development Association IDP Internally Displaced Person IMF International Monetary Fund IPR Interim Procurement Review IT Information Technology KYC Know Your Customer M&E Monitoring and Evaluation MEL Monitoring, Evaluation, and Learning MDTF Multi-Donor Trust Fund MFI Multilateral Financial Institution MIS Management Information System MoFEP Ministry of Finance and Economic Planning MoI Ministry of Interior MoLSD Ministry of Labor and Social Development MoU Memorandum of Understanding NBHS National Baseline Household Survey NCR National Civil Registry NGO Nongovernmental Organization NN National Number PACG Pre-Arrears Clearance Grant PAD Project Appraisal Document PIOC Project Inter-ministerial Oversight Committee PIU Project Implementation Unit PDO Project Development Objective POM Project Operations Manual PPG Project Preparation Grant PPSD Project Procurement Strategy for Development PSP Payment Service Provider PTC Project Technical Committee SDG Sudanese Pounds SEA Sexual Exploitation and Abuse SEP Stakeholder Engagement Plan SFS Sudan Family Support [Project] SFSP Sudan Family Support Program SMS Short Message Service SOE Statement of Expenditure SP Social Protection SSN Social Safety Net Sudapost Sudan Postal Service STARS Sudan Transition and Recovery Support STEP Systematic Tracking of Exchanges in Procurement TA Technical Assistance TOR Terms of Reference TPM Third-party- Monitoring UN United Nations UNFPA United Nations Population Fund UNHCR United Nations High Commissioner for Refugees UNICEF United Nations Children’s Fund UNOPS United Nations Office for Project Services WB World Bank WFP World Food Programme Republic of Sudan Additional Financing for the Sudan Family Support Project TABLE OF CONTENTS I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING ........................................ 8 II. DESCRIPTION OF ADDITIONAL FINANCING .................................................................... 13 III. KEY RISKS ..................................................................................................................... 16 IV. APPRAISAL SUMMARY .................................................................................................. 18 V. WORLD BANK GRIEVANCE REDRESS .............................................................................. 32 VI SUMMARY TABLE OF CHANGES ..................................................................................... 33 VII DETAILED CHANGE(S) .................................................................................................... 33 VIII. RESULTS FRAMEWORK AND MONITORING ................................................................... 36 The World Bank Additional Financing - Sudan Family Support Project (P176154) BASIC INFORMATION – PARENT (Sudan Family Support Project - P173521) Country Product Line Team Leader(s) Sudan IBRD/IDA Suleiman Namara Project ID Financing Instrument Resp CC Req CC Practice Area (Lead) P173521 Investment Project HAES1 (9340) AECE3 (247) Social Protection & Jobs Financing Implementing Agency: Ministry of Finance and Economic Planning ADD_FIN_TBL1 Is this a regionally tagged project? No Bank/IFC Collaboration No Expected Approval Date Closing Date Guarantee Environmental and Social Risk Classification Expiration Date 08-Oct-2020 31-Dec-2022 Substantial Financing & Implementation Modalities Parent [ ] Multiphase Programmatic Approach [MPA] [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [✓] Responding to Natural or Man-made disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on, Enhanced Implementation Support (HEIS) February 23, 2021 Page 1 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) Development Objective(s) The objective is to deliver cash transfers and improve safety net systems to support the Sudanese families in the Recipient's territory affected by expected economic reforms and other short-term shocks. Ratings (from Parent ISR) RATING_DRAFT_NO Latest ISR 15-Dec-2020 Progress towards achievement of PDO S Overall Implementation Progress (IP) S Overall ESS Performance S Overall Risk H Financial Management S Project Management S Procurement S Monitoring and Evaluation S BASIC INFORMATION – ADDITIONAL FINANCING (Additional Financing - Sudan Family Support Project - P176154) ADDFIN_TABLE Urgent Need or Capacity Project ID Project Name Additional Financing Type Constraints P176154 Additional Financing - Restructuring, Scale Up Yes Sudan Family Support Project Financing instrument Product line Approval Date Investment Project IBRD/IDA 16-Mar-2021 Financing Projected Date of Full Bank/IFC Collaboration Disbursement 30-Oct-2023 No Is this a regionally tagged project? February 23, 2021 Page 2 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) No Financing & Implementation Modalities Child [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [✓] Responding to Natural or Man-made disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on, Enhanced Implementation Support (HEIS) [ ] Contingent Emergency Response Component (CERC) Disbursement Summary (from Parent ISR) Net Source of Funds Total Disbursed Remaining Balance Disbursed Commitments IBRD % IDA 200.00 100.64 102.44 50 % Grants 170.00 80.76 89.24 48 % PROJECT FINANCING DATA – ADDITIONAL FINANCING (Additional Financing - Sudan Family Support Project - P176154) PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFi n1 SUMMARY (Total Financing) Proposed Additional Total Proposed Current Financing Financing Financing Total Project Cost 400.00 420.00 820.00 Total Financing 400.00 420.00 820.00 of which IBRD/IDA 200.00 210.00 410.00 Financing Gap 0.00 0.00 0.00 February 23, 2021 Page 3 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) DETAILS - Additional Financing NewFinEnh1 World Bank Group Financing International Development Association (IDA) 210.00 IDA Grant 210.00 Non-World Bank Group Financing Trust Funds 210.00 Miscellaneous 1 210.00 IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount Sudan 0.00 210.00 0.00 210.00 National PBA 0.00 210.00 0.00 210.00 Total 0.00 210.00 0.00 210.00 COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [ ✔ ] No Does the project require any other Policy waiver(s)? [ ] Yes [ ✔ ] No February 23, 2021 Page 4 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) ESStandards Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance Assessment and Management of Environmental and Social Risks and Impacts Relevant Stakeholder Engagement and Information Disclosure Relevant Labor and Working Conditions Relevant Resource Efficiency and Pollution Prevention and Management Not Currently Relevant Community Health and Safety Relevant Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Not Currently Relevant Biodiversity Conservation and Sustainable Management of Living Natural Not Currently Relevant Resources Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Relevant Local Communities Cultural Heritage Not Currently Relevant Financial Intermediaries Not Currently Relevant ESStandardsNote NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). INSTITUTIONAL DATA Practice Area (Lead) Social Protection & Jobs Contributing Practice Areas Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks February 23, 2021 Page 5 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) PROJECT TEAM Bank Staff Name Role Specialization Unit Team Leader (ADM Suleiman Namara HAES1 Responsible) Surat F. Nsour Team Leader HAES1 Nizar Mohamed Ahmed Procurement Specialist (ADM EAERU Abu Elzoul Responsible) Anjani Kumar Procurement Specialist EAERU Omer Ahmed Mohamed Financial Management EAEG1 Abdalla Specialist (ADM Responsible) Financial Management Rafika Chaouali EAEG1 Specialist Financial Management Stephen Diero Amayo EAEG1 Specialist Social Specialist (ADM Simon Sottsas SAES2 Responsible) Environmental Specialist (ADM Tamene Tiruneh Matebe SAEE2 Responsible) Ahmet Fatih Ortakaya Team Member HMNSP Aimnn Mohamed Hassan Procurement Team AEMSD Alex Woodhouse Turingan Team Member LEGAM Amr S. Moubarak Team Member HAES1 Andrea Vermehren Team Member HAEDR Anne Anglio Team Member HAWS2 Antonia T. Koleva Team Member HSASP Begashaw Wukaw Woldu Team Member HAES1 Binyam Mesfin Shiferaw Team Member HAES1 Dalia Adel Rashad Aly Zaki Team Member HAES1 Emilie Suarez Santos Team Member LEGAM James L. Neumann Team Member IDD01 Jean O Owino Team Member Finance Officer WFACS Jeanine Braithwaite Team Member HAES1 February 23, 2021 Page 6 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) John D. Blomquist Team Member HSJDR Jonathan Daniel Marskell Team Member IDD03 Jorge Luis Alva-Luperdi Counsel LEGAM Julia Michal Clark Team Member IDD03 Limya Abdelaziz Mohamed Team Member AEMSD Ibrahim Mariam Denise Brain Team Member HAES1 Milena Petrova Stefanova Team Member AEMSD Mohammad Ilyas Butt Procurement Team EAERU Muhammad Amer Yusuf Team Member HMNSP Malik Omer Nasir Elseed Team Member HAEE1 Peter Ivanov Pojarski Team Member HAES1 Sheila Braka Musiime Team Member LEGAM Siv Elin Tokle Team Member HAES1 Ugo Gentilini Team Member HSJDR Uloaku Oyewole Team Member EAEF1 Usman Javaid Team Member HAES1 Victoria Ewura Ekua Wood Team Member LEGAM Yalemzewud Simachew Social Specialist SAES2 Tiruneh Yoko Doi Team Member EAEF1 Extended Team Name Title Organization Location February 23, 2021 Page 7 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING A. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional grant of US$210 million equivalent to, and restructure the Sudan Family Support Project (SFS Project, or “the project”), in support of the Government of Sudan’s Sudan Family Support Program (SFSP). The Additional Financing (AF) would be financed through an International Development Association (IDA) Pre- arrears Clearance Grant (PACG) resources (SDR146.9 million, or US$210 million equivalent). It will also receive a co-financing and additional grant of US$210 million from the Sudan Transition and Recovery Support (STARS) Multi Donor Trust Fund (MDTF)1. The operation utilizes the remaining PACG allocation for Sudan. This AF would allow the program to grow towards its intended scale, adding predictability and ensuring regular cash transfers to an increased number of beneficiaries in additional states over a longer intended period. While the AF is requested less than 12 months after the approval of the original (parent) SFS Project2, it is important to allow the next phases of the Government’s SFSP to be properly financed and rolled out throughout Sudan in line with Government’s plans for rapid expansion. The newly available IDA and MDTF funding will secure the quick expansion of the SFSP. The phasing of the project to account for available financing has been built into the project design. It is therefore expected that this AF request would be made as soon as resources permit. Thus, the proposed AF aims to support SFSP to increase the number of beneficiaries reached by the program, to receive benefits over a longer period of time within the duration of the project, and to bring coverage of beneficiary households closer to the program’s total aspirational targets of SFSP. 2. The original project was approved by the World Bank Board of Executive Directors on October 8, 2020 and was signed on October 23, 2020. The project was declared effective on December 7, 2020 after meeting the two implementation-related effectiveness conditions, namely:  The Recipient has assigned or recruited a Project coordinator with qualifications, experience and under terms of reference satisfactory to the World Bank.  The Recipient has prepared and adopted a Project Operations Manual (POM) in form and substance satisfactory to the World Bank. 3. The legal covenants related to the project’s authorizing environment and project management have also been complied with. A Project Inter-Ministerial Committee (PIOC), chaired by Ministry of Finance and Economic Planning (MoFEP) and co-chaired by Ministry of Labor and Social Development (MoLSD), and a Project Technical Committee (PTC) have been established and are functional. Therefore, all main institutional and operational arrangements are in place to start with the massive implementation of the program. 4. Implementation of preparatory activities is progressing steadily . It is expected that the project will be able to disburse cash transfers to its first beneficiaries (approximately 80,000 people already enrolled under the SSNP, P148349) in the Red Sea state and Khartoum, the nation’s capital in December 2020. This quick-launch approach will be enabled by a Memorandum of Understanding (MoU) to be signed between the Ministry of Finance and Economic Planning (MoFEP) as the project’s main implementing 1Trust Fund No. 073498 2Waiver approved by the Regional Vice President for Eastern and Southern Africa to process Additional Financing of US$207 million to the SFS Project (P176154) within less than 12 months of the approval of the parent project. February 23, 2021 Page 8 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) agency, and the Ministry of Labor and Social Development (MoLSD), about the use of the MoLSD’s infrastructure for quick delivery of cash in the mentioned locations. 5. The Project Development Objectives, Components and Results Framework of the project remain unchanged. However, some of the targets of indicators will be adjusted to reflect the expansion of the SFSP. A restructuring is being processed as part of this AF to: (i) extend the closing date of the project by six months, to June 30, 2023; (ii) adjust the results framework increasing indicator targets as relevant; and (iii) update the component costs to reflect the increased amounts from the AF. B. Country Context 6. To stabilize the pressing macroeconomic imbalances and fiscal deficit facing the economy, the Government of Sudan (GoS) has set out an ambitious agenda to tackle inflation, reform energy price subsidies, clear arrears to Multilateral Financial Institutions (MFIs), and adopt policies to ease doing business and incentivize Foreign Direct Investment (FDI). These measures are expected to include exchange rate liberalization and reallocation of public resources away from commodity price subsidies and tax exemptions towards expansion of social and development investments. The GoS has proposed a program, originally planned for launch in early 2020, to phase out fuel subsidies by mid-2021 and simultaneously liberalize the exchange rate. An already deteriorating monetary and fiscal situation in Sudan has affected vulnerable people’s capacities to cover basic needs due to high inflation, lack of demand, and exchange rate devaluation pressures. Simultaneously, the Government constrained budget allows for limited reallocation of domestic financing to health and social protection sectors without drastic reductions in energy price subsidies and elimination of current tax exemption schemes. The deteriorating economic situation demands that the Government acts quickly to address the need for reforms to stabilize the economy and provide social mitigation to the high proportion of the population vulnerable to that deterioration. 7. Supporting the national Economic Stabilization efforts is critical for securing integration in international financial markets and access to debt restructuring . There is an urgent need to advance the economic reform program as a key part of a process to clear arrears to Multilateral Financial Institutions and reintegrate Sudan into the global economy. Sudan has an estimated debt of US$56 billion, of which 85 percent is in arrears as of the end of 2016. Sudan’s arrears to the World Bank, International Monetary Fund (IMF), and African Development Bank were respectively US$1 billion, US$1.3 billion, and US$0.4 billion as of end-May 2019. Arrears clearance to international financial institutions will need to be synchronized with highly indebted poor countries (HIPC) and Multilateral Debt Relief Initiative debt relief, including substantial relief from non-Paris Club creditors to ensure that the stock of remaining debt can be sustainably managed. Debt relief for Sudan under HIPC would be unprecedented in size relative to other recipients. The timing to reach a HIPC decision point depends on several steps, including satisfactory implementation of an IMF program for a minimum of six months. Finally, the GoS will receive from the World Bank a Pre-Arrears Clearance Grant (PACG) to support SFSP, through a special allocation approved by the World Bank’s shareholders. February 23, 2021 Page 9 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) 8. More recently, challenges facing most families3 have been compounded by the measures to mitigate the effects of the Coronavirus Disease 2019 (COVID-19) pandemic 4 in some regions of Sudan. COVID-19 is posing a significant health emergency and will create an additional shock to an already shrinking economy. Sudan has a health care system with extremely limited capacity. Stringent measures are needed to reduce the exponential growth of the epidemic. It is estimated that the mitigation measures undertaken in Sudan will contribute to an 8.2 percent loss in gross domestic product (GDP) in 2020. The COVID-19 impact accentuates the urgency for the economic reforms. It is also essential to renew the social contract and build confidence in government systems to deliver. C. Sectoral and Institutional Context 9. The deteriorating economic situation in Sudan has affected much of the population’s ability to cover basic needs. It is estimated that over 50 percent of the population lived under the poverty line (of US$3.60 per day) before the COVID-19 outbreak, compared to the reported 36.1 percent in 2014/2015. 5 Poverty in Sudan, including geographic dispersion, severity of deprivation, and its direct links with the fragility, conflict, and violence (FCV) context, present significant challenges in both the provision of and access to basic services. The GoS recognizes that the implementation of economic stabilization measures is the only sustainable pathway to create fiscal space for investment in essential services given the significant indebtedness and lack of foreign direct investment to generate growth. This makes the proposed SFSP a critical element of the economic reform program by cushioning the effects on a large part of the population. 10. To date, the GoS has been operating a limited Social Safety Net (SSN) program supporting about 500,000 poor and vulnerable families in all 18 states, managed by the MoLSD. In addition, Sudan has traditionally received significant humanitarian assistance from United Nations (UN) agencies which has largely been provided to internally displaced persons (IDPs), refugees, and conflict-affected segments of the population. 11. However, there is a broad consensus between the Government, civil society and development partners (DPs) that a large-scale cash transfer program is needed rapidly to mitigate the multiple shocks and to accompany the implementation of reforms . The GoS has therefore requested support from the donor community to establish the SFSP6 which intends to provide cash transfers to 80 percent of the population, that is, to 32.5 million individuals, with an annual cost of US$1.9 billion. The SFSP will provide 12 months of support to each beneficiary with US$5 per month. The program is expected to continue over a period of 24 months. As the mentioned reforms take effect, the GoS is expected to take on an increasing 3 Considering complexities for household and household head definition in societies with polygamous marriage, in Sudan, the GoS has adopted the family and not the household as the reference point for registration in the National Civil Registrar and for governmental programs. Therefore, throughout the Project Appraisal Document (PAD) and this Project Paper, the family is used as the unit of reference, although reference will still be made to households in describing family units in the text. 4 According to the WHO Coronavirus Disease (COVID-19) Dashboard data, Sudan has 23,100 confirmed COVID-19 cases and 1,461 deaths as of December 22, 2020 (covid19.who.int). 5 Sudan: Poverty Assessment Update, 2019. 6 Phase 1 of the Sudan Family Support Program (SFSP) described in section II(B) below constitutes the project appraised in this PAD and referred to as “Sudan Family Support Project”, or “the project” in the PAD and respective financing agreements. In the PAD, the terms “program” and “SFSP” are used to refer to GoS’s Sudan Family Support Program, supported by the Sudan Family Support (SFS) Project. February 23, 2021 Page 10 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) role in financing the SFSP. In the medium term, the GoS intends to transition eligible beneficiaries into permanent SSN support. D. Project Development Objective and Indicators 12. The PDO Statement of the original project will remain unchanged, as: to deliver cash transfers and improve safety net systems to support the Sudanese families in the Recipient’s territory affected by expected economic reforms and other short-term shocks. 13. The PDO level Indicators are grouped according to the PDO’s two main parts, namely: 14. PDO Part 1: to deliver cash transfers to Sudanese families affected by expected economic reforms and other short-term shocks, measured by: (a) Number of families receiving cash/income support; (b) Percentage of families headed by females, receiving cash/income support; (c) Number of beneficiaries of SFSP; (d) Percentage of female beneficiaries of SFSP. 15. PDO Part 2: to improve Sudan’s safety net systems, measured by (e) National Registry Platform that functions across the country is strengthened. E. Project Financing of the Original (Parent) Project 16. The original project supports Phase 1 of GoS’s SFSP and has been appraised at US$400 million . It combines US$200 million from contributions of donors to the STARS MDTF 7 and a US$200 million PACG from the World Bank Group (WBG). By the time of circulating the SFSP project package to the World Bank Board of Executive Directors (the Board), the funds actually received by the STARS Trust Fund from donors were less than US$200 million. After Board approval, two grant agreements were signed for the SFS Project (Phase 1 of the SFSP). The grant in the amount of SDR 141 million (equivalent to US$200 million) (Grant No. D735-SU) financed from a PACG to the Republic of Sudan for the SFSP was signed on September 26, 2020. Following Board approval, the World Bank’s management approved a grant in the amount of US$170 million financed from the STARS MDTF to the Republic of Sudan for the SFSP (Grant No. TF0B4259)8. 7Trust Fund No. 073498 8 Para 39 of the Sudan Multi-Partner Fund (SMPF) Restructuring Paper circulated to the Board on April 22, 2020 states that “Approval of grants to finance specific activities under the STARS would be the responsibility of World Bank management, represented by the Vice President, and follow the applicable World Bank procedures and standards, as applied to IDA operations.” February 23, 2021 Page 11 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) F. Original Project Components 17. The original project (for Phase 1 of the SFSP) includes 3 components providing (i) cash transfers (US$350 million), (ii) establish delivery systems and build institutional capacity (US$40 million), and (iii) project management as well as monitoring and evaluation (M&E) (US$10 million). Component 1: Provision of Cash Transfers (Original Total US$350 million: US$175 million equivalent IDA; US$175 million MDTF) 18. This component was originally set to finance cash transfers to selected families during the program’s first phase. The project (before the AF) would finance cash transfers in the states of Khartoum, Red Sea, South Darfur, and Kassala. With a fee of about 3.5 percent of cash payments to payment service providers (PSPs), there are enough resources in the project to allow SFSP Phase 1 to provide transfers to 11.3 million individuals in two million families for six months. The project will provide cash transfers of US$5 per person per month. Contingent on additional resources becoming available, the program ramp- up is expected to reach 80 percent of the population by September 2021. The total benefit level per family is calculated based on the number of family members (US$5 for each member of the family each month). 9 After economic stabilization and fiscal rebalancing measures are undertaken by the GoS, domestic revenues are expected to contribute to the longer-term sustainable SSN from 2022 onward. Component 1 also finances the service fees to expand the participation of electronic and mobile money, banking fees, or other fees of private payment providers. Component 2: Establish Delivery Systems and Build Institutional Capacity (Original Total US$40 million: US$20 million equivalent IDA; US$20 million MDTF) 19. Component 2 supports establishing the key building blocks of the SFSP delivery system. Activities under this component strengthen the Government’s institutional capacity to manage and implement the program. The component provides financing for outreach and registration, enrollment, beneficiary verification, payment delivery, Grievance Redress Mechanisms (GRM), monitoring, and capacity building. It will also establish operational procedures, an SFSP management information system (MIS), necessary expansion and enhancements to the National Civil Registry (NCR), and an enabling legal framework for data protection and privacy. The component supports both the delivery cycle (registration, enrollment, payment, and GRM) as well as supporting systems. Component 3: Project Management, Monitoring and Evaluation, and Learning (Original Total US$10 million: of which, US$5 million equivalent IDA, US$5 million MDTF) 20. This component supports coordination and project management activities necessary for the smooth functioning of the project, including support to establishing the Project Implementation Unit (PIU). The supported activities include the ‘soft’ establishment costs of the Digital Economy Agency (DEA), day-to-day operational management, institutional setup, and donor coordination by the PIU and DEA. The 9 The World Bank, the Ministry of Finance and Economic Planning (MoFEP), and the inter-ministerial task forces are in discussion on whether a limit will be introduced to the number of children (under age 18) in the household. This follows international practice on determination of generosity of transfers to households’ size considering the (a) economies of scale and (b) incentives to ‘double count’ underage dependents. February 23, 2021 Page 12 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) component would also invest in establishing the SFSP beneficiary database, necessary hardware and software, internet connectivity, and IT infrastructure at the national and local levels. This component will also support the coordination and local-level capacity-building process, where the NCR, the PIU, DEA, and MoLSD will be receiving the necessary training to support the SFSP implementation at the local level. The component will also support strong monitoring practices and the development of social accountability and citizen engagement mechanisms with the support of local-level institutions including CDAs and NGOs. Knowledge management and learning would also be supported. II. DESCRIPTION OF ADDITIONAL FINANCING A. Proposed Changes 21. The proposed AF would scale up project activities to respond to emergency needs in Sudan within the same scope of the parent project. The PDO would remain unchanged. The project components and activities would remain the same as described in the PAD for the original project but would be expanded to include additional geographical areas of the SFSP. Additional funding is also proposed to component 3 for project management, monitoring and evaluation, training, and coordination. The Results Framework will remain the same, but some targets will be adjusted for some PDO and intermediate results indicators that are adjusted given expansion in program coverage. The closing date of the project will be extended by six months, to allow for smooth implementation of the cash transfer program with the increased funding amount. (i) AF Scale and Coverage 22. The total amount of the AF would be US$420 million, of which SDR 146.9 million (US$210 million equivalent) are provided from the IDA PACG, and US$210 million from the STARS MDTF. The AF will support the SFSP in its expansion towards full scale and would contribute to two of the three original components. 23. With the AF, the project would be able to fund the planned Phase 2 of SFSP10, which the original SFS Project could not cover because of insufficient financing envelope. Under a streamlined scenario, the AF would cover an additional 13.4 million individuals (equal to an additional 2.4 million families) in new geographical areas. With the beneficiaries covered by the original financing, the total number of beneficiaries for the SFS Project (original plus AF) would reach 24.7 million individuals, or 4.4 million families. The geographical areas (states) to be covered by the AF in additional to the states included in the original financing are: South Kordofan, Blue Nile, Sinnar, Central Darfur, North Kordofan, East Darfur, West Kordofan, and White Nile. The overriding principle would be to cover 80 percent of the population of the participating states. The project will use a flexible approach and the selection of states for phases 1 and 2 will be subject to review and possible revision during implementation. 10According to original PAD estimates, Phase 2 would consist potentially of an additional US$435 million (US$235 million from STARS and US$200 million from PACG) and scaled up to cover all the states. February 23, 2021 Page 13 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) 24. This AF would provide additional funding to components 1 and 3 of the project, giving priority to the financing of the cash transfers. Project management will receive additional support for the expanded program, with US$5 million added to component 3. Table 1 below provides details on the revised component costs. Table 1. Revised Cost by Component Additional Financing Parent Project P176154 Total Original + Original Original Additional Additional Component Name AF (US$ Financing Financing Financing Financing million) IDA (US$ MDTF (US$ IDA (US$ MDTF (US$ million) million) million) million) Component 1: Provision of Cash 175.00 175.00 207.50 207.50 765.00 Transfers Component 2: Establish Delivery Systems and Build Institutional 20.00 20.00 0.00 0.00 40.00 Capacity Component 3: Project Management, Monitoring and 5.00 5.00 2.50 2.50 15.00 Evaluation, and Learning TOTAL 200.00 200.00 210.00 210.00 820.00 (ii) Revisions to the Results Framework 25. The original project’s results framework will remain unchanged. However, some targets of selected PDO and intermediate results indicators will be adjusted to reflect the increased project coverage in terms of areas and beneficiaries. Table 2 below summarizes the PDO-level target adjustments effected through this AF. Table 2. Revised Targets of PDO Indicators PDO Indicator Baseline Original Target Revised Target Number of families receiving 0 2,000,000 4,400,000 cash/income support (Number) of which females are heads of 0 2.40 2.40 families (Percentage) Number of beneficiaries of 0 11,300,000 24,700,000 SFSP (Number) of which female (Percentage) 0 50.00 50.00 National registry platform that National platform is National registry No change functions across the country is functioning, but has platform is strengthened (Text) low coverage and covering 80% of needs efficiency the population in improvements the regions covered by the project. February 23, 2021 Page 14 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) B. Rationale for the AF 26. The AF would increase the available funding for – and expand the reach of – the Government’s SFSP, which is only partially financed by the original SFS Project. The original project financing provides only a fraction of the funding needed to fully fund the Government’s SFSP. The Government’s intention is for the SFSP to cover 80 percent, about 32.5 million people for an annual cost of US$1.9 billion. Due to the funding shortage and to allow for flexibility in resource mobilization, the program adopted a phased approach. The original (parent) SFS Project represents SFSP’s Phase 1, which was planned to be introduced in four States: Khartoum, Red Sea, South Darfur, and Kassala, with a combined population of 14.7 million. The targeted 80 percent of the population in these four states therefore is approximately 11.8 million people11, of which the SFS Project only has enough resources (as SFSP Phase 1) to pay 11.3 million individuals in two million families for six months. This AF (phase 2) directly adds funding to support the strategic goals of the program, advancing the phasing to allow for faster and broader coverage of the population in line with the SFSP program target. 27. At the core of the SFSP is the provision of cash transfers to eligible families, and the AF would allow the process of systems building to advance. The safety net will be built to provide for (a) opening up multiple channels for families to register, and then using National Civil Registry (NCR) to validate the families’ registrations electronically, (b) those not in the NCR will first register with the NCR using existing infrastructure (physical or other means of registration), (c) monitoring program implementation and measuring results, (d) improving coordination with existing assistance interventions, (e) rationalizing the social protection expenditure to minimize overlaps and fill gaps, and (f) creating and strengthening links between the safety net interventions and other programs to support beneficiaries. The Government’s implementation capacity is expected to be strengthened gradually corresponding with the level of scale- up of the program and utilizing the additional financing under the first component to build out the delivery system and supporting infrastructure. C. Relevance to the Country Program and Response to the COVID-19 crisis 28. The project is a crucial element in the GoS’ two key objectives of continuing economic reforms and protecting the vulnerable population. In the short run, the objective is the sustainability of the structural reforms that address the deep economic disfunctions that limit productivity growth and poverty reduction. The longer-term objective is the establishment and strengthening of the permanent safety net in a sustainable social protection system. There are a number of subsidiary economic benefits, including a substantial scale-up of financial inclusion through the digital payment system. The first phase of the SFSP contributes significantly to both goals and puts in place a number of key building blocks for a permanent safety net. These components are discussed below and especially in components 2 and 3, and transitional arrangements are noted in the project description. 29. This AF is fully in line with the WBG Country Engagement Note (CEN), contributing to the achievement of most objectives under its two focus areas (reengagement and contributing to a 11This is the estimate from the time of appraisal of the original project in August 2019. More recent population data has become available from 2020, indicating that 80 percent of the population of the Phase 1 four states is 12.5 million people in 2020, which results in lower proportional coverage with the original financing. February 23, 2021 Page 15 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) renewed social contract)12 and the COVID-19 adjusted country program of the World Bank. The project is well aligned with the Sudan country engagement strategic priorities with its focus on economic and social stability and is the instrument for achieving the CEN’s Objective 1.2: Mitigating the Impact of Economic Reforms and COVID-19. Sudan has been severely impacted by the pandemic and ranks as one of the top four African countries at highest risk due to the impacts of COVID-19. COVID-19 has already worsened economic prospects, hampered key services, delayed political reforms, and have impacted public trust in government capacity. The crisis has revealed systemic weaknesses in Sudan’s health system, education services and learning opportunities. COVID-19 is also leading to increased prices of basic foods, rising unemployment, slower growth, higher deficits, and falling exports. In response to these new challenges, the World Bank country program was adjusted. To begin with, the SFSP is proposed to mitigate the impact of economic reforms and COVID-19, by being a broad government-run and donor-supported cash transfer program reaching the majority of the population. The project is processed under the World Bank Policy for Investment Project Financing, paragraph 12: Projects in Situations of Urgent Need of Assistance or Capacity Constraints due to conflict, impending natural disaster and capacity constraints. III. KEY RISKS 30. The assessment of key risks from the original PAD remains relevant, with the overall project risk assessed as High. Sudan is a very fragile state with interdependent drivers of fragility, namely (a) regional imbalances and social exclusion; (b) a dysfunctional economy; (c) weak institutional capacity to mitigate and regulate conflict. Institutional capacity in Sudan is limited the further away one gets from Khartoum and other urban areas. This is in addition to considerably weaker capacity in conflict-affected areas. These risks include political and security risks and the risk of inadequate funding. These risks are further compounded by the economic hardships facing Sudanese families due to the economic shutdown in Khartoum following the COVID-19 outbreak in Sudan and the expected increases in prices of fuels. The risk categories are reviewed in detail in the original PAD, and the analysis, which is very recent, remains fully relevant and includes proposed mitigation measures during preparation and implementation to address these risks..13 The political and governance risks, macroeconomic, technical design, institutional capacity, fiduciary, stakeholders and COVID-19 related risks are rated High due to the need to update the enabling legal environment to build trust in the administration of the SFSP, permit the lawful sharing of NCR data, remove the ‘paterfamilias’ requirements, which preclude women from registering in the NCR without a male guardian, and develop, enact, and implement a new data protection and privacy framework. Sector strategies and policies and environment and social risks are Substantial. 31. Various mitigation measures are being put in place by the project to handle the high and substantial risks in different areas. The detailed risk mitigation measures and strategies for all high- and substantial-risk areas are developed in detail in the original PAD and are fully valid for this AF. To mitigate the high political and governance risks in Sudan, given the FCV status of the country, the World Bank will continue to support the MoFEP to build consensus among all stakeholders, official and civilian, on the legitimacy of the SFSP and its anticipated benefits despite the painful adjustment caused by the removal of subsidies. In addition to that, insecurity, which affects all elements of SFSP service delivery, 12 The Board of Executive Directors discussed the Joint IDA/IFC/MIGA CEN for the Republic of Sudan for the Period FY21-FY22 (Report No. 152835-SD) on October 8, 2020. 13 A risk assessment document with retailed risk mitigation and an implementation plan for each of the program’s components has been developed and included in the implementation plan. February 23, 2021 Page 16 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) accountability, and sustainability remain a persistent high risk, especially in rural areas and regions where the peace agreement has not been fully endorsed. As a mitigation measure, the implementation will inform on the option of limiting cash transfers, whenever possible. Employing electronic means for the transfer of benefits to the individual beneficiaries would be increased and gradually scaled up during implementation. On the macroeconomic side, to address high macroeconomic risks, the GoS is committed to launching the program rollout, using its own resources. Still, in the future, there is a risk to the achievement of the PDO and the key results in case trust fund resources come late or at a smaller scale than planned. The World Bank is committed to support the MoFEP in its donor mobilization efforts. External resources made available for the program will support its rollout and scale-up. The approach is that SFSP program effectiveness will demonstrate the value of the approach and attract additional financing, to allow continuation of the program to its target scope and duration. 32. The substantial sector strategies and policies risk will be addressed by continued World Bank support for the policy dialogue. An emphasis will be placed on ensuring the buy-in, support, and understanding of the associated trade-offs by all stakeholders, the GoS as well as the Sudanese citizens. The World Bank will also continue to stand ready to support the GoS in timely planning of the communications efforts. The roles and responsibilities in terms of implementation are to be clarified during one of the inter-ministerial committee meetings and communicated to all respective parties. This would help to increase the precision of the SFSP design and implementation. Technical design of project or program risk is High, because of the need of a complex MIS, ensuring proper identification of beneficiaries, and the need for legal and regulatory reforms. The project design has considered all challenges and has proposed mitigating measures to each, described in the original PAD. Furthermore, during implementation, the project will conduct a continuous assessment of processes to allow adjustments and refinements to delivery. 33. The high risks on the institutional capacity for implementation and sustainability and high fiduciary risks will be mitigated by World Bank support for TA to build the procurement and FM capacity of the PIU. The project will also facilitate dialogue and discussion, generate data and information, and document lessons to further build institutional capacity and program sustainability. The World Bank will support the MoFEP, as the agency responsible for the implementation of the project, in building its technical, fiduciary, and safeguards management capacity to undertake the basic functions of the program. This will include helping in the recruitment of specialized skills in procurement, FM, social protection delivery systems, M&E, and communication. For the two other financing approaches, the World Bank will support the GoS, through technical appraisal, to ensure that design elements (MIS, hardware, software, support to digital payments, and complaint-handling mechanisms) are complementary and not duplicative with investments made in the project. To respond to the FM risks, the project is supporting the establishment of the PIU and DEA, ensuring capacity building of the MoFEP, DEA, and MoLSD staff, and piloting the cash transfer delivery systems. To address the FM-related challenges brought about by the COVID-19 pandemic, the project will rely on technologically enabled systems through banks and mobile money service providers to ensure remote confirmation of receipt of cash transfers by the intended beneficiaries. In remote and hard-to-reach areas, the project will rely on the systems used by humanitarian organizations which will provide confirmation of receipt of funds by the intended beneficiaries. 34. To reduce and mitigate the substantial social risks, the client is developing social risk management documents and procedures. These include: (i) GBV risk assessment with mitigation action February 23, 2021 Page 17 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) plan; (ii) Labor Management Procedures; (iii) Stakeholder Engagement Plan (developed); (iv) social assessment encompassing the country overall as well as a specific section for remote areas and areas where vulnerable groups are present, with a more comprehensive and long-term study on ESS7 14; (v) an assessment on privacy rights; and (vi) a security management plan. 35. Stakeholders risk is High as the SFSP has many stakeholders with different tasks, which will make the project very complex. In order to mitigate the risk of weakened coordination by multiple governmental agencies, an inter-ministerial committee will be established, as indicated in section III(A) on institutional and implementation arrangements. The World Bank will continue to support the GOS to communicate effectively and support consensus among all stakeholders during implementation. 36. Finally, other risks are assessed as High as the impact of the COVID-19 outbreak has been factored into the whole scheme as a novel and high risk that may highly affect the start and operation of the SFSP. The impact of the COVID-19 outbreak has being rapidly factored into the design, and mitigation measures for risks that may affect the start and operation of the SFSP are being developed as follows: (a) working remotely to help with the SFSP preparatory tasks; (b) engaging diligently with GoS counterparts and donors though all electronic communications channels; (c) receiving support from the World Bank Khartoum Office; (d) engaging virtually with that donors to inform the parameters and timing of support to the SFSP and other key social programs; and (e) increasing number of manual payment points, which will reduce the number of beneficiaries served by each point. IV. APPRAISAL SUMMARY A. Economic and Financial Analysis 37. An analysis of consumption-based poverty using the 2014/15 National Budget Household and Poverty Survey data indicated that more than a third, and up to half of Sudanese lived in poverty before COVID-19 impacted the economy15. Between May 2009 and November 2014, average real per capita consumption decreased by 8.1 percent. Average per capita consumption, decreased from SDG 573.5 in 2009 to SDG 530.7 in 2014, or 1.4 percent on an annual basis. The decrease is somewhat more pronounced than the decrease in real GDP per capita, which is estimated to have dropped by 2.7 percent over 2010– 2014 or half a percent annually. The decrease in average per capita consumption is driven entirely by falling per capita consumption in urban areas. While the real per capita consumption increased by 2.3 percent in rural areas, it decreased by 22 percent in urban areas between 2010 and 2014. This translates into a sharp increase in poverty in urban areas and a more mixed picture in rural areas. 38. Poverty in Sudan is urbanizing and there is a large regional disparity in poverty incidence. The poverty rate based on US$1.90 per day increased in urban areas from 4.2 percent to 9.5 percent between 2009 and 2014. Using US$3.20 as the national poverty line, urban poverty increased from 21.4 percent to 14 World Bank Environmental and Social Standard 7: Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities. https://www.worldbank.org/en/projects-operations/environmental-and-social- framework/brief/environmental-and-social-standards#ess7 15 The ongoing economic crisis, exacerbated by the impacts of COVID-19, will likely have significantly negative effects on living conditions, yielding an estimated increase in the extreme poverty rate to 20 percent in 2020. The full poverty impact is yet to be determined from a new household survey. February 23, 2021 Page 18 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) 39.8 percent. Urban poverty is increasingly concentrated in Khartoum: in 2014, 41 percent of the urban poor live in Khartoum, up from 23 percent in 2009. Average per capita consumption in Khartoum and in the northern region (northern and River Nile states) in 2014 was about 26 percent and 18 percent higher than the national average, respectively. On the other hand, average per capita expenditure was 8 percent and 18 percent lower than the national average in Kordofan and Darfur. However, the state with the lowest level of per capita consumption in 2014—20 percent below the national average—was Red Sea State in the east. Per capita consumption in urban areas was around 30 percent higher than in rural areas. 39. The primary goal of the SFSP is not to reduce overall poverty, but to mitigate the impacts of economic reforms on families and to create fiscal space for future investments in human capital. Using donor-financed funds, the World Bank technical and fiduciary oversight for design, implementation, and scale-up of the large cash transfer would support the GoS to be on a pathway for domestically financing expenditures in social sectors including an expanded SSN program after completion of the SFSP. In the medium-term, it is expected that subsidy reform will help reduce chronic budget deficits that contribute to inflation, adjust public sector wages that had been eroded by inflation, and allow increases in education and health expenditures. To that end, the short-term donor support to undertake the launch of the program to begin such reforms can minimize the political costs and unintended social and economic effects. 40. A simulation was conducted for the latest available SFSP rollout and ramp-down.16 The cash benefit is set at US$5 per person per month, paid to the household head.17 To ensure the most conservative estimates, a cap was assumed at US$25 per household per month, although this limit is not currently part of the SFSP design. Hence, in the simulation, total household transfer amounts range from US$5 to US$25 per month (SDG 275 to SDG 1,375) depending on the household size. 41. Despite poverty reduction not being an expected objective of the SFSP, simulations show a reduction in poverty and the severity of poverty due to the cash transfer program. Sudan’s official poverty head count is estimated at 36.1 percent according to the NBHS 2014 data. Assuming perfect implementation (that is, zero leakages) and a coverage of 80 percent of the population, the SFSP would reach every poor individual in the country. The program would cover more non-poor than poor (44 percent and 36 percent of population, respectively). The simulations assume that the entirety of the transfers will translate into an increase in household consumption.18 For comparison purposes, the total amount received by a household from June 2020 to December 2021 was adjusted to represent an average monthly value (over the number of months the household has received transfers).19 42. The poverty head count would drop 4.9 percentage points (from 36.1 percent to 31.2 percent), representing a 13.6 percent decline. Poverty gap, indicating the extent to which households on average fall below the poverty line (expressed as a percentage of the poverty line consumption) would drop 2 percentage points, from 9.1 percent to 7.1 percent, representing a 22 percent decline (figure 1). Table 3 16 According to the rollout plan as of June 2020. 17 The analysis described here uses the concept of ‘households’ as defined in the NBHS. The SFSP uses the concept of ‘families,’ based on NCR data. These concepts may differ to the extent that more than one family may occupy the same house. 18 This is because poverty in Sudan is measured in consumption terms. 19 Rollout plan as of June 2020. The simulation assumed rollout in the first two months would target the poorest households in Khartoum. From the 3rd to 17th monthly transfers, household inclusion was assumed from the poorest households to those in decile 8. February 23, 2021 Page 19 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) shows that the average amount needed to close the poverty gap (monthly, per capita) is US$11.66 in rural areas and US$15.95, but the individual benefit amount is US$5 for every family member, which is not sufficient to close the gap. Table 3. Indicators and Shares US$ Rural Urban Average consumption (annual, per capita) 783.01 1,016.06 Average consumption (monthly, per capita) 65.25 84.67 Poverty line (annual, per capita) 574.81 726.27 Poverty line (monthly, per capita) 47.90 60.52 Average transfer (monthly, per capita) 2.84 2.28 Average household size 6.81 6.84 Average amount needed to close the poverty gap (monthly, per capita) 11.66 15.95 Shares Transfer/poverty line (monthly, per capita) 5.9% 3.8% Transfer/consumption (monthly, per capita) 4.3% 2.7% 43. Due to phased implementation of the program, the average per capita monthly benefits are US$2.84 in rural areas and US$2.28 in urban areas from the simulation. Therefore, during the program cycle, the average transfer in rural and urban areas is 24 percent and 14 percent of the average poverty gap, respectively. Comparing the same average amounts received with the poverty line, it has been found that transfers are 5.9 percent and 3.8 percent of the poverty line, which is another indication that transfers per household are quite small. The simulated program impact on the Gini index of overall inequality corroborates this point. The Gini index is reduced by only 5.5 percent (from 0.29 to 0.28). (figure 1). 44. The preliminary economic analysis of the SFSP demonstrates two sets of impacts once the program is at full scale. First, even though poverty reduction is not an objective, the transfer of cash to 80 percent of Sudanese does reduce short-term poverty as well as the severity of poverty. This effect will be enhanced by the fact that economic reforms will be implemented in parallel with the provision of cash transfers. Families that consume relatively large amounts of previously subsidized fuel, typically wealthier families, will not be as well off as prices rise, while poorer families that do not consume as much of the subsidized commodities will benefit relatively more. Second, the reduction in subsidies and other reforms will increase the fiscal space of the Government, permitting future investments in health, education, and social protection which would be expected to build future human capital in Sudan. These secondary future effects are not simulated. February 23, 2021 Page 20 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) Figure 1. Impact on Poverty and Inequality 40% 0.4 36.1% 31.2% 0.29 30% 0.28 0.3 % OF THE POPULATION GINI INDEX 20% 0.2 9.1% 10% 7.1% 0.1 3.3% 2.4% 0% 0.0 Poverty Poverty Severity of Gini headcount gap poverty (p0) (p1) (p2) Source: Authors’ calculations based on the NBHS 2014. Note: The estimates adjusted the population of 2014 (34.6 million) to 2019 (43.7 million) by calibrating the weights in the analysis. Poverty line values were inflation adjusted to reflect 2019 values. B. Technical Analysis (i) Strategic Relevance 45. The economic reform program proposed by the GoS in the form of reduction of fuel subsidies and reform of exchange rates could lead to an increase in poverty and vulnerability due to the direct and indirect welfare impacts of increased in prices for energy and imported consumer goods. GoS has announced increases in the price of 90-Octane benzine (gasoline) by more than doubling the price at commercialized pump stations since March 2020, as a first step toward price reform. In the last quarter of 2020 calendar year, prices for diesel and gasoline are expected to fully reflect international prices - a further three-fold increase, as subsidies will be fully removed (while they will remain in place for other strategic commodities, including wheat, medicine and cooking gas). For the poor and vulnerable population, the direct effects of increases in fuel prices are expected to be limited. Fuel expenditure for the bottom 20 percent of the population constitutes 1.5 percent of the average total household expenditure. Preliminary estimates point to a 2.8 percent reduction in household expenditure for a twofold increase observed since March 2020.20 However, these welfare losses do not account for the indirect effects expected of price adjustments which may be significantly more. Finally, the analysis of fuel consumption by the expenditure quintile shows the extremely regressive nature of fuel price subsidies whereby the rich accounted for the bulk of the fuel subsidies captured directly. Of the amounts sold to households, the top wealthy quintile captured a disproportionate share of all fuels, followed by the second highest quintile, except for kerosene, which is more broadly used by the poorer population. By contrast, 20 NBHS (National Baseline Household Survey). 2014. Poverty Brief. Entag, Columbe et al. February 23, 2021 Page 21 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) the bottom quintile captured only 1 percent of gasoline and diesel subsidies and 4 percent of liquified petroleum gas and generator fuel subsidies.21 46. To mitigate these welfare losses, the Government program intends to provide cash transfer to 80 percent of the population. The cash transfer amount (US$5 per person per month) is expected to be exceeding the expected loss of the energy subsidy reform for the poorest two quintiles.22 In addition to the short-term mitigation provided by the program to facilitate energy subsidy reform, the project will invest in building an adaptive safety net delivery system which will be transferred to support the permanent safety net system to a subset of the population (covering about 1 million families). In addition to support from systematic shocks, it is expected that the permanent financing of SSN will support poor and vulnerable families affected by idiosyncratic shocks in the medium to long term. (ii) Program Financing 47. The original SFS project represented the first phase of the government program, which will be using a phased approach in its rollout and ramp-down. The AF will allow the project to provide higher proportional support to the SFSP. The increased project costs for Component 1 are based on core program assumptions of a rollout of transfers to 24.7 million individuals in 4.4 million families, total by the original project and the AF. Based on these assumptions, the total new Component 1 cost is US$765 million. These costs are envisaged to be financed from a combination of DP support to the STARS MDTF and PACG financing at a rate of 50/50. Following the implementation of the SFS Project’s original and additional financing, further DP support and government financing would be sought to reach the full scale of the government program. (iii) Technical Soundness 48. While the implementation of the SFSP is inherently risky, the implementation design is technically sound. Key risks are summarized in section VI in this document. These include the risks of insufficient donor financing, the limited time available to provide cash efficiently to the majority of the Sudanese population, and the physical constraints imposed by the public health concerns during the COVID-19 pandemic, among other institutional and implementation risks. The program implementation design has attempted to mitigate and compensate for these risks to the extent possible. First, the NCR is used to develop an initial list of beneficiaries to reduce the time and proximity of an in-person application and enrollment process. Second, communications and GRM will rely on mobile phones to the extent possible, limiting physical contact and increasing the speed of recording and response. Third, payments will be as digital as possible, including direct payments to bank accounts, cash cards, and mobile money accounts. Physical touchpoints for program processes will be present as a complement to digital services and will be important in remote areas, but good social distancing practices will be followed in all cases. As digital access expands over time to more geographic areas, the reliance on physical, administratively heavy offices and interpersonal contact is expected to be reduced with increasing accuracy and timeliness of payments and responsiveness to grievances. 21NBHS (National Baseline Household Survey). 2014. Poverty Brief. Entag, Coulombe et al. 22US$5 per person per month, using an individual poverty line for 2014 represents over 5 percent of consumption level at the poverty line in urban areas. February 23, 2021 Page 22 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) 49. The SFSP full program, when expanded, will provide cash transfers to 5.8 million families equivalent to 32.5 million people of the estimated 44 million Sudanese. Based on the 2014 household income and expenditure data, transfer of US$5 per person would lead to a poverty head count reduction of 4.9 percentage points (from 36.1 percent to 31.2 percent), representing a 13.6 percent decline. The poverty gap, indicating the extent to which households on average fall below the poverty line (expressed as a percentage of the poverty line consumption), would drop 2 percentage points, from 9.1 percent to 7.1 percent, representing a 22 percent decline.23 The project’s emphasis on developing the MIS would allow future national safety net programs to be shock responsive by facilitating rapid identification of potential beneficiaries for expanded coverage. It would also support enhanced coordination among relevant government institutions and humanitarian and development partners for services delivery, leading to improved efficiency of interventions (see economic analysis for additional information). 50. To ensure appropriateness of the size of the benefits, cash transfers in local currency may be linked to inflation and indexed accordingly, resources permitting, as is the standard practice in many countries. Inflation in Sudan has been at 165 percent a year, and 41 percent per quarter, and to account for the respective loss of real purchasing power, the benefits levels would need be adjusted periodically. The adjustments may take place on a quarterly basis to determine the benefit level 3 months ahead of each payment cycle, beginning at US$5 benefit level. Presently, the starting point will be a flat rate but this can later be changed, depending on the macro situation in Sudan and on a basis of agreement with the Bank and the IMF. If indexation is applied, adjustment to the benefit level based on available consumer price data will be determined by a committee chaired by the Minister of Finance. Adjustments are expected to be carried out with a lag time to reflect rolling average of changes in consumer price, and to ensure that new benefit levels are communicated broadly to ensuring accountability and transparency in payments. The committee responsible for adjustment in benefit levels will estimate the coverage in terms of number of families for each upcoming quarter, as well as the SDG and estimated US$ costs of this coverage. Actual program financing will then ultimately depend on the execution of the enrollment processes. Any program savings from past cycles would be recycled back into the program to help reach coverage targets. 51. The Government is financing the initial testing of the program. The Government has launched a small pilot in mid-June 2020. The GoS’ has populated the program database with the family construction data based on the NCR, developed the TOR, advertised and hired three positions for the PIU to fill in basic functions (pilot program manager, database and website architect, and data governance and privacy specialist). These steps are taken with the aim to optimize as the pilot advances in the implementation and capture lessons learned which will inform and enhance the full rollout. The pilot launch phase is testing the feasibility and robustness of (a) registration outreach, (b) use of the national number (NN) and NCR for beneficiary identification, (c) digital payments, (d) a GRM, and (e) M&E. (iv) Beneficiary Eligibility 52. Beneficiary eligibility determination and enrollment modality may differ in urban and rural areas. In urban areas, program eligibility will be determined through exclusion of 20 percent of households using administrative data to verify income and asset ownership. A simple set of exclusion criteria are most likely to include (i) voluntary self-exclusion; (ii) mobile phone usage of voice services 23 See economic analysis for full description of working assumptions. February 23, 2021 Page 23 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) above certain threshold; and (iii) holding a public service position (with the possibility for waiving this criterion for low-level public servants). In rural areas, with higher concentrations of poverty, the program will consider using a geographic targeting approach to identify areas that may be universally included. In such localities, families will be registered and automatically enrolled without the application of exclusion criteria, given targets of reaching 80 percent of the population. 53. Once selected, the family will be enrolled as a beneficiary family in the SFSP database and will be added to the beneficiary registry and payment list. Families will be encouraged to designate women as beneficiaries. Beneficiaries will receive a notification. For those enrolled in regions for digital payments, notification will be sent through SMS, using the phone number supplied at registration. For those registered in regions where mobile services are not an option, applicants will be notified of their enrollment in the program at the time of registration. Other notifications for eligibility for the program will be done through multiple channels, including the SFSP website, SMS, call center, and through the designated registration offices. Citizen service points will be identified and developed before rollout in areas requiring physical touchpoints. (v) Delivery of Cash Transfer Payments 54. The program will leverage the use of digital payment mechanisms to the extent possible, expanding these capacities as broadly and quickly as possible. The GoS has opted to deliver this program through a mobile payment platform. The payment system will use national know-your-customer (KYC) requirements, using the NNs to the extent possible and the new regulatory framework for digital payments introduced by the Central Bank of Sudan (CBoS). With respect to populations with limited coverage, the MoFEP has opted to sequence areas first where digital payment options exist (consisting of both bank accounts and mobile money). Provision of digital payments in regions with lower penetration of banks and PSPs will then be established. Based on current assessments of digital payment capacities, in the first year of the program, digital payments are likely to be limited to certain urban areas. Regions where the digital payments options will be provided will be selected based on a state- and district-level payment assessments. The detailed district-level assessment will be undertaken as part of project implementation. At the launch of the program, it is assumed that more than half of the initial SFSP payments will be made electronically through bank accounts or mobile money, increasing as service areas grow. 55. It is expected that three types of modalities will be used to deliver payments to beneficiaries. These include (a) digital payments through mobile money or direct transfer to bank accounts, (b) over- the-counter payments delivered manually or through cash cards, and (c) payments delivered in remote areas not served by the GoS. A detailed payment assessment will be carried out (see above) to determine in which specific areas the different modalities will apply. For supply of payments and robust reconciliation, the program needs to develop an accurate reporting and reconciliation process with the FSPs to regularly track cash disbursement and monitor SFSP fees. The SFSP will also develop a complaint management program to address the complaints of the clients and a monitoring program to monitor the situation on the ground and resolve issues raised by the FSPs and their agents. 56. The project will also support communication and provision of financial literacy/awareness sessions to support the enrollment for, and access to, digital payments by beneficiaries who have not had bank accounts or mobile money in the past, with a particular outreach to women. This will include, February 23, 2021 Page 24 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) notification (through SMS) of eligibility of the program, information on available payment points in districts of accepted applicants, and options for enrollment in the program physically or through the phone. Beneficiaries who have not provided a bank account or do not have mobile money at the time of registration will be encouraged to join the financial awareness sessions and review literature on available payment providers in their district. To minimize potential barriers to take-up of digital payment services and support in the follow-through on financial literacy best practices, a behavioral science lens may be applied to identify barriers or challenges in the process of enrollment or use of these services to inform communications and/or design elements that mitigate the challenges. These design elements grounded in behavioral science could include tweaks such as framing messages to bring out the hidden prevalence of the use of such services among peers and priming a fear of loss at the possibility of missing out on taking up the opportunity, two items that have previously proven to increase take-up of digital services in other countries in Africa and Asia.24 Other contextualized designs to reduce the possible hassles in using digital services for the first time may also be considered depending on applicability. 57. The project will finance enrollment through mobile application and a website, in addition to supporting physical registration centers as needed. The enrollment process will require the applicant to provide the NN and information on the applicant’s existing bank account, card, or mobile money number (if it exists) and preferred financial service provider (FSP) to receive the funds (selected from a list of providers to the district or the region); the applicant’s family members (name, NN, date of birth, address if different to ensure co-payment, and co-ownership of the account with other household members); and the applicant’s mobile number and email (if available) for further notifications. (vi) Efficiency 58. The development of the MIS and use of technology through the SFSP will deliver cash more quickly and efficiently than current approaches in Sudan and will contribute to a more shock-responsive permanent social protection system. The expanded coverage of potential beneficiaries in the future would also enable identification and coordinated provision of social service delivery interventions, beyond SSN, for including productive livelihood activities, health and education complementary services, among others. 59. Payment agents will be encouraged to expand their outreach network to minimize the travel distance for beneficiaries and to reach out to women in particular. Beneficiaries can also formally authorize another family member to collect benefits on their behalf, such as a husband authorizing a wife. Beneficiaries or authorized people have the option to collect their benefits in cash or have it transferred to their mobile wallets (for those who have access to a secure mobile phone). Under Component 2, the project will support a shift to digital payment, in coordination with a financial inclusion TA project with the CBoS. Accountability and risks of leakage/fraud will be mitigated through a multilayered implementation and monitoring process, including (a) adherence to know-your-client (KYC) and e-KYC systems established by the CBoS (regulator), (b) electronic transfer of the beneficiary list to the payment agencies, (c) using the GRM to address grievances/complaints, and (d) contracting a third-party monitoring (TPM) agency which will assess beneficiaries’ experience with regard to the benefits received 24More details about these examples can be found in the ideas42 report ‘Transforming Financial Inclusion Using Behavioral Science’, available here: https://www.ideas42.org/wp-content/uploads/2019/04/I42-1020_ABPaper_FINAL-DIGITAL.pdf. February 23, 2021 Page 25 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) as well as the delivery processes, and (e) targeted system-building TA to allow for dynamic reconciliation of payments between the SFSP and payment providers over the life span of the project electronically. (vii) Partnership with World Food Programme (WFP) 60. The collaboration with WFP is solidly grounded in WFP’s ongoing support to the SFSP pilot, specifically WFP support for the payment system and the GRM. Where feasible, in the interim, the World Bank-financed program can leverage WFP’s payment and grievance redress system. The program will also coordinate in the delivery of benefits that WFP may provide under the framework of the SFSP with additional DP financing. (viii) Gender: Drivers of Gender Inequality in Sudan 61. Sudan has one of the world’s lowest rankings for gender equality . The Gender Development Index (GDI)25 of Sudan is 0.837, placing it in Group 5, denoting those countries furthest from achieving gender parity (UNDP 2019). A number of structural factors contribute to gender inequality (annex 3) in the country including; unequal participation in the labor market – which is 24.5 percent for women compared to 70.3 percent for men (UNDP 2019); the impact of cyclical conflict in Sudan; uneven educational attainment of adult women relative to adult men; and high burdens of unpaid care (UN Women 2016) and high poverty levels—particularly among rural women who are estimated to make up over 60 percent of the country’s most vulnerable poor (UNFPA 2013). Sudan also suffers from a weak normative and legislative framework on gender equality and gender-based violence (GBV). Gender equality and GBV provisions in national law are narrow, relative to regional and international standards and suffer from omissions of basic protective rights for women. Provisions permitting the practice of male guardianship, gender unequal divorce, and custody rights among others, are key contributing barriers to gender equality (UNFPA 2020), as is the absence of domestic violence legalization, including the prohibition of marital rape. 62. The AF will follow the original project design and will continue the focus on closing the gender gap through specific activities including, among others: (a) mindset change training for beneficiaries; (b) where applicable, issuing of joint client cards at enrollment for all beneficiaries from one household in a spousal/intimate partner relationship; (c) targeted outreach and enrollment of female-headed families (FHFs); (d) using gender-sensitive language in all publications about the project; (e) establishing registration and payment sites as close to clients as possible and within acceptable walking distance; (f) ensuring women are adequately represented and participate in various committees including a grievance redress committee that will be formed to implement project activities; etc. 63. Monitoring and evaluation of gender outcomes will be measured in the expanded GoS Monitoring, Evaluation, and Learning (MEL) framework in the POM. This framework contains detailed The GDI, based on the sex-disaggregated Human Development Index (HDI), is defined as a ratio of the female to the male 25 HDI. Available at http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/SDN.pdf. February 23, 2021 Page 26 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) monitoring indicators that will include tracking of key gender outcomes. The project itself will track the proportion of women as primary beneficiaries, as well as the integration of gender-focused behavioral science into the community strategy for the SFSP in areas where women are not designated primary beneficiaries. (ix) Gender-based Violence 64. GBV prevalence is unknown, however it is reported to be a commonly experienced violation of women and girls’ rights in Sudan. Given the stark gender inequalities prevalent in Sudan, the SFSP will seek to avoid reinforcing social perceptions and norms that privilege men as the primary gatekeepers of financial resources in the home. While there is continuing debate as to whether positive or negative household outcomes are more likely when cash transfers are given to male or female members of a household, there is a small evidence base suggesting that the impacts of cash transfers are not necessarily determined by the gender of the main recipient.26 Most families in Sudan are headed by men, however up to 2.4 percent are headed by women. The project will seek at a minimum to avoid reinforcing perceptions and norms that privilege men as the primary gatekeepers of financial resources in the home. This will be achieved by following emerging practice on promoting gender parity, reducing risk, and promoting women empowerment where possible through the removal of a number of barriers. A detailed project description and Results Framework were developed as part of the original PAD. (x) Mitigation of COVID- 19 risks in citizen interface 65. To mitigate the risks of the COVID-19 epidemic spread, citizen interface protocols will be established for project implementation. The project will institute measures to protect citizens during application, enrollment, and payments fully consistent with social distancing and limited movement guidance issued by the World Health Organization and at the national level. Specifically, the program will rely on digital communication channels for program outreach and communication using SMS messaging, social media, and automated calling services. To encourage social distancing, the options of online and SMS (short code) application options will be developed. In areas where digital payment is used, cash-out points will limit crowding at mobile, branchless banking, and other payment locations. Payment staggering (by date of birth or other categories) will also be used in rural locations as needed to ensure social distancing. (xi) Climate Change Adaptation 66. The proposed AF has been screened for short- and long-term climate change and disaster risks as part of the appraisal framework of the parent project. The climate vulnerability of the project was identified, and climate adaptation measures were considered in the project design. The proposed project would build the resilience of families through provision of emergency cash transfers, as it would enable them meet urgent needs and mitigate drought risks for families in rural areas faced with occasional droughts in parts of Sudan. It is also expected that the project’s emergency cash assistance will reduce families’ negative coping mechanisms. In the medium term, investments in the delivery of cash assistance would improve the shock responsiveness of the permanent SSN. 26Hagen-Zanker, Jessica et. al. 2017. “The Impact of Cash Transfers on Women and Girls: A Summary of the Evidence.” ODI Briefing. February 23, 2021 Page 27 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) 67. The SFSP is expected to contribute to climate adaptation at the household and community level with economy-wide implications. Focusing on poor families and communities, can help build the resilience of families to climate change through diversifying livelihoods and encouraging savings in the form of consumption smoothening through the cash transfer program which will help families reduce poor coping decisions in the form of selling assets. Social protection can also help build social cohesion and informal risk sharing in communities. Specific investments in the project potentially contributing to climate mitigation have been analyzed in the PAD for the parent project. (xii) Citizen Engagement 68. Citizen engagement is integrated in the SFSP. The SFSP citizen engagement strategy aims to consider key stakeholders and beneficiary feedback which entails empowering citizens to participate in the program process, while integrating citizen’s voice as key accelerators to achieving the SFSP results to mitigate the effects of the prolonged economic hardships as well as the economic reforms on Sudanese households. Ultimately, citizen engagement can contribute to achieving development outcomes of the SFSP in improving living conditions and promoting inclusive and sustainable economic growth. 69. Citizen engagement will be guided by the principles of the World Bank Group-supported operations framework for mainstreaming citizen engagement. The approach is results-focused, involves engaging throughout the operational cycle, seeks to strengthen country systems, is context-specific, and is gradual and appropriate to the local circumstances. Considering these principles, the SFSP seeks to enhance citizen engagement through various actions, including but not limited to community engagement events; establishing federal, state, and local committees to help in guiding beneficiaries; create communication and community outreach voluntary groups to include youth and women that will help in informing and educating people in rural and remote areas; and others as applicable. The project will closely follow a specific citizen engagement indicator that looks at the percentage of complaints resolved through the GRM in less than 15 days. C. Financial Management 70. Financial management arrangements for the proposed AF will remain the same as appraised for the original project. MoFEP will retain the overall fiduciary responsibility for the implementation of the proposed AF through the existing PIU headed by a Project Coordinator. The PIU will be staffed with qualified and experienced financial management staff to ensure adequate fiduciary oversight of project resources. Under the parent project, GoS has established an oversight structure including the Project Inter-Ministerial Committee (PIOC, chaired by MoFEP and co-chaired by MoLSD), and a Project Technical Committee (PTC). A Project Operations Manual with detailed FM arrangements has also been prepared for the parent project. All these arrangements will apply to the AF. The systems for the delivery of cash transfers to the intended beneficiaries have however not yet been developed. In the interim period, the parent project will rely on MoLSD’s delivery systems under the existing Sudan Social Safety Net Project (P148349). Existing accounting capacity as well as arrangements for budgeting, financial reporting, internal control and auditing applicable to the parent project will equally apply to the AF. The project will submit quarterly interim unaudited financial reports to the World Bank within 45 days after the end of the quarter. The project will also be subject to annual external audit by the National Audit Chamber in collaboration with other private audit firms due to expanded scope. The audit report and management February 23, 2021 Page 28 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) letter will be submitted to the World Bank within six months after the financial year end. Other oversight arrangements under the parent project including TPM will be applicable to the AF. 71. As the AF will finance expansion of project activities to additional states, the key fiduciary risks identified under the parent project will also impact project implementation. This includes potential for system unavailability, under-performance or failure, challenges of ensuring effective coordination of project activities in multiple states, difficulty of project supervision in diverse places due to insecurity and inaccessibility, and potential loss of project funds due to inadequate oversight. There could also be challenges of ensuring beneficiary identification and confirmation of receipt of cash transfers by the intended beneficiaries in remote places. Further, there could be capacity constraints at MoFEP due to expanded project scope in addition to COVID-19 related challenges. 72. The mitigation measures outlined under the parent project will continue to apply for the proposed AF. This includes WFP technical support in developing the systems for the delivery of the cash transfer operation and implementation of the project. Internal auditors in the new states will collaborate with the federal-level internal auditors in ensuring quarterly internal audit of the cash transfer component to confirm receipt of funds by the intended beneficiaries. Registration of beneficiaries will be based on the national identification number (NN) which will be validated against the NCR to mitigate the risk of potential double registration that could result in duplicate payments. Feedback reports from payment service providers will be submitted electronically to the PIU to facilitate timely reconciliations after every payment cycle. MOFEP will explore the use of cash cards to authenticate manual payments made in designated touchpoints while the MIS will have a provision for upload of manual registration and payment data. The PIU in the MoFEP will also be staffed with adequate capacity to ensure effective supervision and coordination of project activities around the country. The proposed AF will also benefit from enhanced GRM and social accountability mechanisms established under the parent project. The residual FM risk rating for the proposed AF is deemed Substantial. 73. Funds flow and disbursements arrangements will also remain the same. The project will retain the two Designated Accounts opened under the parent project – one DA for the IDA Grant and another DA for the MDTF. Funds from the World Bank will flow to the DA’s upon submission of Withdrawal Applications by the project accompanied by cash forecast and statements of expenditure as the case may be. Payments for eligible expenditures will be made from the respective DA’s or local currency project accounts based on documentary evidence of goods delivered or services rendered or approved beneficiary payroll. Detailed disbursement arrangements will be reflected in the disbursement letter. D. Procurement 74. Procurement arrangements have been appraised for the original project and will remain unchanged. Procurement activities with funding from the STARS MDTF shall be carried out in accordance with the World Bank’s Procurement Regulations for Investment Project Financing (IPF) Borrowers: ‘Procurement in IPF, Goods, Works, Non-Consulting, and Consulting Services’, dated July 1, 2016, revised November 2017 and August 2018; ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’, revised as of July 1, 2016; and the provisions stipulated in the Legal Agreement. February 23, 2021 Page 29 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) 75. The MoFEP shall be responsible for implementing the project. A procurement capacity assessment of the implementing agency (MoFEP) was carried out as part of the preparation of the proposed operation. A PIU under the MoFEP shall execute all the procurement activities. The assessment found that the implementing agency under the proposed project has more than a decade of experience in implementing World Bank-financed projects. Over a period of time, some improvements have been made in the procurement process including planning, preparation of bidding documents, and request for proposals, evaluation of bids/proposals, award and publication of contracts, contract management, and procurement record keeping, among other things. The implementing agency has also made efforts to build the capacity of staff. 76. However, weaknesses remain in the procurement processes particularly on noncompliance with key procedures. Lack of qualified and proficient dedicated professional procurement staff, frequent staff turnover, and the nonrecognition of procurement as a career limit the ability of the implementing agency to apply these laws properly. Other key issues and risks for implementation of procurement under the proposed project, particularly include lack of adequate capacity for procurement record keeping; lack of skill development schemes for procurement personnel; the pay scale for procurement personnel, which is too low to attract qualified procurement personnel; lack of systematic procurement planning and follow-up; and lack of experience in contract administration and management for implementation of projects. Internal control for procurement processes is also very weak. Based on the assessment the overall project procurement risk is High. To mitigate the problem of procurement capacity constraint, the MoFEP procurement expert who is hired to handle the SFSP parent project will be responsible for both. The various procurement risks and mitigation measures have been provided in annex 1. 77. Project Procurement Strategy for Development (PPSD), Procurement Plan, and Systematic Tracking of Exchanges in Procurement (STEP). The borrower has revised the PPSD of the original SFSP as agreed with the World Bank, to cover both original project and the AF, which forms the basis for a Procurement Plan and is almost the same to ensure both projects implementation and provides the basis for the procurement arrangements to all. The project will use the World Bank’s online procurement planning and tracking tools STEP for all transactions. The Procurement Plan will be updated by the project team annually or as required to reflect the actual project implementation needs and agreed with the World Bank. After obtaining the World Bank’s agreement to the plan, all documents at each stage of the procurement process will be uploaded in STEP for the World Bank’s post review. 78. World Bank’s oversight. The World Bank will provide oversight of procurement activities through prior reviews, which will be based on the risk level assessed by the World Bank during appraisal and shall be updated periodically. The World Bank will carry out regular procurement supervision missions annually and carry out procurement post-reviews and/or interim procurement reviews (IPRs) annually. Contracts not subject to prior review will be subject to post review by the World Bank according to the procedures set forth in annex II – ‘Procurement Oversight’ of the Procurement Regulations. The sample contracts for the procurement post reviews and IPRs will be risk based. . E. Legal Operational Policies Triggered? February 23, 2021 Page 30 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No . F. Environmental and Social 79. Sudan covers an area of about 1.87 million km2, and in general terms, desert and semi-desert conditions cover between 60 percent and 70 percent of the country’s total area. Sudan remains rural with the majority of the population dependent on the country’s natural resources for their livelihoods. It is estimated that agriculture (crops, livestock, and forestry) contributes 35–40 percent of GDP (with livestock accounting for 50 percent of the production) and employs more than 80 percent of the total population. Traditional farming accounts for 60–70 percent of the agricultural output and is largely subsistence production based on shifting cultivation and livestock rearing. 80. Sudan faces environmental challenges due to its geographic location within the fragile Sudano- Sahelian and Sub-Saharan African zones. Short variable erratic rainy seasons, arid lands, and poor sparse vegetative cover contribute to the country’s vulnerability. The steady increases of both human and livestock populations put pressure on natural resources, and has resulted in desertification, land degradation, water pollution, soil erosion and nutrient loss, and deterioration of biodiversity across large tracts of the country. 81. The proposed project finances only cash transfers without any on-the-ground activity with potential negative environmental risks or impacts. The project cash transfer is minimal (US$5 per person per month) with hardly any savings for investment by the beneficiary families to get involved in the implementation of activities potentially affecting the environment. Under the World Bank’s ESF, the environmental risk of the project is low. Given that the environmental risk of the project is low, the client is not expected to develop an environmental risk management instrument. 82. The social risk of the project is considered Substantial; mainly due to the countrywide coverage of the operation and social risks related to (a) social exclusion of beneficiaries in remote and conflict- driven areas; (b) security concerns for SFSP workers and beneficiaries; (c) insufficient community engagement, elite capture, and social tensions; (d) GBV; (e) operational concerns due to remoteness and security, including monitoring and supervising as well as grievance redress, and (f) weak implementation capacity with limited prior experience to handle the risks in this large-size operation. An additional item to consider are population movements, above all in relation to forced displacement and related grievances by displaced beneficiaries and/or host communities. A noncomprehensive list encompasses illiterate people not accessing project information, people not linked to government systems having problems with getting registered, people in conflict-prone areas where cooperation with the GoS poses a security risk, people with disabilities and the elderly not being able to access cash distribution points, and so on. These aspects will be captured along the Environmental and Social Standards (ESS) 4, 7, and 10. 83. To mitigate/reduce these social risks, the client has established the following social risk management documents: i) a GBV risk assessment with mitigation action plan, (ii) Labor Management Procedures, (iii) a Stakeholder Engagement Plan, (iv) an Esential Social Assessment encompassing the country overall as well as a specific section for remote areas/areas were SSAHUTLC are present; a more comprehensive and long-term study on ESS7 is currently being prepared under the parent project. The (v) Assessment on Privacy Rights; and (vi) a Security Management Plan are equally under preparation as part of the parent project. All instruments will have equal relevancy for the AF. The Environmental and Social February 23, 2021 Page 31 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) Commitment Plan and Stakeholder Engagement Plan were prepared, consulted upon and disclosed in country on December, 20, 2020 and at the World Bank’s External Website on December 18, 2020. 84. A GRM is implemented to provide an avenue for complaints regarding registration and enrollment, targeting, payments, and other operational matters. The GRM will include mobile-phone based applications and in-person centers for complaint registration and resolution, as well as a free hot line linked with a call center. The GRM will address each area of the feedback value chain: (i) uptake, (ii) sort and process, (iii) acknowledge and follow up, (iv) verify, investigate, and act, (v) monitor and evaluate, and (vi) provide feedback to the complainant as well as to project management. It will be important to ensure the functioning of the GRM also in the new states addressed by the AF. 85. In case UN organizations are used to implement parts of the project, they will implement activities in line with the provisions outlined in those documents, while differentiated procedures may be applicable as long as they follow the provisions outlined in the environmental and social instruments prepared. V. WORLD BANK GRIEVANCE REDRESS 86. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service . For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org February 23, 2021 Page 32 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) VI SUMMARY TABLE OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Implementing Agency ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ VII DETAILED CHANGE(S) COMPONENTS Current Component Name Current Cost Action Proposed Component Proposed Cost (US$, (US$, millions) Name millions) Component 1: Provision of 350.00 Revised Component 1: Provision 765.00 Cash Transfers of Cash Transfers Component 2: Establish 40.00 No Change Component 2: Establish 40.00 Delivery Systems and Build Delivery Systems and Institutional Capacity Build Institutional Capacity Component 3: Project 10.00 Revised Component 3: Project 15.00 Management, Monitoring Management, and Evaluation, and Monitoring and Learning Evaluation, and Learning February 23, 2021 Page 33 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) TOTAL 400.00 820.00 LOAN CLOSING DATE(S) Ln/Cr/Tf Status Original Closing Current Proposed Proposed Deadline Closing(s) Closing for Withdrawal Applications IDA-D7350 Effective 31-Dec-2022 31-Dec-2022 30-Jun-2023 30-Oct-2023 TF-B4259 Effective 31-Dec-2022 31-Dec-2022 30-Jun-2023 30-Oct-2023 Expected Disbursements (in US$) DISBURSTBL Fiscal Year Annual Cumulative 2020 0.00 0.00 2021 300,000,000.00 300,000,000.00 2022 400,000,000.00 700,000,000.00 2023 100,000,000.00 800,000,000.00 2024 20,000,000.00 820,000,000.00 SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Latest ISR Rating Current Rating Political and Governance  High  High Macroeconomic  High  High Sector Strategies and Policies  Substantial  Substantial Technical Design of Project or Program  High  High Institutional Capacity for Implementation and  High  High Sustainability Fiduciary  High  High Environment and Social  Substantial  Substantial Stakeholders  High  High Other  High  High Overall  High  High February 23, 2021 Page 34 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) LEGAL COVENANTS2 LEGAL COVENANTS – Additional Financing - Sudan Family Support Project (P176154) Sections and Description The Recipient shall not later than nine (9) months from the Effectiveness Date of the Original Project, establish and thereafter maintain throughout Project implementation, the Digital Economy Agency (DEA) under Minister of MoFEP, with a composition, mandate and resources satisfactory to the Association. Conditions Type Description Effectiveness The Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it (other than the effectiveness of this Agreement) have been fulfilled. February 23, 2021 Page 35 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) VIII. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Sudan RESULT_NO_PDO Additional Financing - Sudan Family Support Project Project Development Objective(s) The objective is to deliver cash transfers and improve safety net systems to support the Sudanese families in the Recipient's territory affected by expected economic reforms and other short-term shocks. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline End Target Deliver cash transfer to Sudanese families affected by econimic reforms and short-term shocks Number of families receiving cash/income support (Number) 0.00 4,400,000.00 Action: This indicator has been Revised of which females are heads of families (Percentage) 0.00 2.40 Number of beneficiaries of SFSP (Number) 0.00 24,700,000.00 Action: This indicator has been Revised of which female (Percentage) 0.00 50.00 February 23, 2021 Page 36 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline End Target Improve Sudan's safety net systems National registry platform that functions across the country is National platform is functioning, but has low coverage and National registry platform is covering 80% of the strengthened (Text) needs efficiency improvements. population in the regions covered by the project. PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline End Target Component 1: Provision of Cash Transfers Average number of days for funds to reach beneficiary accounts (Days) 0.00 15.00 Number of beneficiaries enrolled in basic bank accounts 0.00 3,600,000.00 (Number) Action: This indicator has been Revised Time in days between generation of payroll and fund transfer to PSPs (Days) 8.00 5.00 Number of beneficiaries enrolled in mobile money (Number) 0.00 2,350,000.00 Action: This indicator has been Revised Component 2: Establish Delivery Systems and Build Institutional Capacity SFSP MIS system has been developed and deployed (Yes/No) No Yes February 23, 2020 Page 37 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline End Target National data protection and privacy law is submitted to No Yes governing council (Yes/No) Number of states covered by the SFSP program (Number) 0.00 12.00 Action: This indicator has been Revised SFSP branded as a national, well-defined and quasi universal program (Yes/No) No Yes Communication campaigns have been launched (Yes/No) No Yes A hybrid system for tracking enquiries, complaints, and No Yes grievances (GRM) has been established (Yes/No) Percentage of complaints resolved in 15 days or less through 0.00 80.00 GRM (Percentage) Gender-focused behavioral science integrated into the community strategy for the SFSP in areas where women are not No Yes designated primary beneficiaaries (Yes/No) Component 3: Project Management, Monitoring and Evaluation, and Learning ME&L impact evaluation baseline & follow-up survey conducted. (Yes/No) No Yes ME&L lessons drawn from Sudan’s experience in an evaluative No Yes report (Yes/No) IO Table SPACE February 23, 2020 Page 38 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) Monitoring & Evaluation Plan: PDO Indicators Mapped Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection SFSP Database, MIS Reporting, PSP SFSP Delivery System, MoF/Digital Number of families receiving cash/income Quarterly database, available data from SFSP Transformation Agency support PSPs MIS and PSPs database PMU reconciliation report of which females are heads of families Progress reports, SFSP SFSP Delivery System, Database, & , Quarterly available data from SFSP MoFEP Number of beneficiaries of SFSP PSPs MIS and PSPs database reconciliation report Progress reports, SFSP SFSP Delivery System, Database, & , Quarterly available data from SFSP MoFEP of which female PSPs MIS and PSPs database reconciliation report Twice Regular M&E, National registry platform that functions during the Regular monitoring. PIU/DEA registry data. across the country is strengthened project life. February 23, 2020 Page 39 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Mapped Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection SFSP Database, MIS Reporting, PSP SFSP Delivery System, Program office at MoFEP Average number of days for funds to Quarterly database, available data from SFSP and PSPs reach beneficiary accounts PSPs MIS and PSPs database reconciliation report Number of beneficiaries enrolled in basic bank accounts SFSP Database, MIS Reporting, PSP SFSP Delivery System, Time in days between generation of Monthly database, available data from SFSP Program office at MoFEP payroll and fund transfer to PSPs PSPs MIS and PSPs database reconciliation report SFSP Database, MIS Reporting, PSP SFSP Delivery System, Program office at Number of beneficiaries enrolled in Quarterly database, available data from SFSP MoFEP, PSPs. mobile money PSPs MIS and PSPs database reconciliation report February 23, 2020 Page 40 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) IT Program office at MoFEP vendor/contra Technical assessment, and PSPs, IT SFSP MIS system has been developed and Annual ctor reports progress reports vendor/contractor, WB deployed and progress TA reports Regular Program office at MoFEP National data protection and privacy law Annual Progress reports monitoring and PSPs is submitted to governing council SFSP Database, NCR database, Sudan Central SFSP enrollment centers, Bureau of SFSP Delivery System, semi- Implementing agency, Number of states covered by the SFSP Statistics available data from NCR annually Community leaders, program (CBS) data, and CBS NCR, CBS MIS Reporting, Community surveys Communicatio n products, publications, Quality check, pre and Semi- SFSP branded as a national, well-defined target post-test Survey & Communications team annual and quasi universal program beneficiaries, discussion groups key stakeholders Potential and Surveys, progress Local authorities, SFSP Communication campaigns have been Quarterly active reports, regular Team, Communication launched beneficiaries monitoring Team February 23, 2020 Page 41 of 42 The World Bank Additional Financing - Sudan Family Support Project (P176154) Database of SFSP Team, A hybrid system for tracking enquiries, Quarterly complaints Regular monitoring,MIS Communication Team, complaints, and grievances (GRM) has and responses Community Committees been established Percentage of complaints resolved in 15 Quarterly MIS Regular monitoring SFSP team days or less through GRM SFSP communications monitored for whether Communicatio gender Bsci employed in ns products at least 50% of print and Gender-focused behavioral science Communications team, semi- including digital integrated into the community strategy Program Office at annually videos and media. Communications for the SFSP in areas where women are MoFEP print and reviewed and scored for not designated primary beneficiaaries digital media whether Gender Bsci used or not by a communications analyst. Twice over Project ME&L impact evaluation baseline & the life of progress Regular reporting MoF follow-up survey conducted. the project reports Progress ME&L lessons drawn from Sudan’s One-time Regular monitoring MoF reports experience in an evaluative report ME IO Table SPACE February 23, 2020 Page 42 of 42