The World Bank Competitiveness for Tourism Development (P146666) REPORT NO.: RES45564 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF COMPETITIVENESS FOR TOURISM DEVELOPMENT APPROVED ON MAY 10, 2016 TO MINISTÉRIO DAS FINANÇAS FINANCE, COMPETITIVENESS AND INNOVATION AFRICA WEST Regional Vice President: Ousmane Diagana Country Director: Nathan M. Belete Regional Director: Abebe Adugna Dadi Practice Manager/Manager: Consolate K. Rusagara Task Team Leader(s): Cristina Navarrete Moreno The World Bank Competitiveness for Tourism Development (P146666) BASIC DATA Product Information Project ID Financing Instrument P146666 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 10-May-2016 31-May-2021 Organizations Borrower Responsible Agency Ministério das Finanças Unidade de Gestao de Projectos Especiais (UGPE) Project Development Objective (PDO) Original PDO The project development objective is to create the conditions necessary to increase investment into and diversification of the tourism sector. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-58010 10-May-2016 17-Jun-2016 15-Nov-2016 31-May-2021 5.00 4.06 1.11 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Competitiveness for Tourism Development (P146666) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. Overall, three months away from the original loan closing date (i.e. May 2021), the project is progressing satisfactorily towards achieving its development objective. The Project ratings are Satisfactory and Moderately Satisfactory in project development objective (PDO) and Overall Implementation (IP), respectively. The first PDO indicator, the value of the catalyzed investment, is already beyond the target, standing at around US$136 million against the US$35 million target. The second PDO indicator, number of certified MSMEs, is also above target, mainly thanks to the considerable number of trainings associated with the COVID-19 response currently underway and even if the number of MSMEs with the quality seal certification may end being lower than originally planned. 2. As far as intermediate result indicators, an important number of these have already been achieved and most of the remaining should be reached by project closure. Under component 1, four of the six indicators have already been achieved, except only the promulgation of the tourism code and the number of organized investment forums (two instead of three) not achieved. Under component 2, progress is somewhat less satisfactory. The indicators related to training and certification activities are progressing and should be achieved by the end of the project. The establishment of a movable collateral registry, accessible online, is underway but has not yet been concluded. This ambitious and potentially transformative activity involved the streamlining and digitization of the registration process workflow for movable assets; the backbone IT solution is now in advanced stages of development and early testing but will likely need additional buffer time for full deployment and live testing. Finally, the national certification company has not yet been established and it is not clear whether this indicator will be achieved by the project's closure (see Annex 1 for summary of progress on project results framework). 3. Notwithstanding the good overall progress, the global disbursement rate stands at 75 percent of total funding, well below the expected rate at this stage. The budget execution rate for the first half of the current fiscal year represented 35.5 percent of the planned execution. The project has suffered from a significant slowdown in disbursement pace compared to previous years due to challenges brought on by the COVID-19 pandemic. Notwithstanding the good progress occurring in the pace of ongoing activities, especially those related to the response to the pandemic that have already been completed or are in progress. The December 2020 mission also identified about USD 312,000 of uncommitted funds which the government seeks to allocate, mostly to new or expanded COVID-19 response activities and to reinforce the capacity of the Tourism Institute of Cabo Verde (ITCV). 4. Responding to the protracted crisis induced by the COVID-19 pandemic in the tourism sector, the project has included a series of private sector support activities. According to the National Statistics Institute, about 83 percent of firms in Cabo Verde suffered a reduction in business turnover following the declaration of a state of emergency in March 2020 whereas 43 percent reduced the effective workforce during the second quarter of 2020. In the tourism sector, 77 percent of firms reported being temporarily closed during the same period. The outlook for tourism remains especially uncertain as the main source markets are undergoing another wave of contagion, and any significant recovery of tourism flows may not happen before the 2nd or 3rd quarter of 2021. In this context, the project included throughout the second half of 2020 a series of response activities, namely a “safe and clean” training and certification program for tourism operators; training courses for guides and taxi drivers during the halt period; and revamped outreach and marketing efforts to position the destination for recovery. B. Rationale for the Level II Restructuring The World Bank Competitiveness for Tourism Development (P146666) 5. In order to optimize and extend the ongoing COVID-19 response activities, authorities have requested a seven- month extension of the closing date of the project, from May 31st, 2021, to January 31st, 2022. Considering that the tourism halt is extending well into 2021 beyond the original scenarios, authorities are looking to expand COVID-19 related measures to support affected MSMEs in the tourism sector. Under Component 2 of the project, authorities are looking to expand and conclude a series of activities in the added timeframe, including, inter alia: (a) Expansion of the Clean and Safe Certification Program nationwide (beyond the islands of Sal and Boa Vista), including respective promotional and outreach material. (b) Building local capacity by training of local consultants to provide continuous support to the Safe & Clean Program. (c) Revamping National Tourism Marketing Strategy for the post-pandemic context. (d) Tourism industry professional training courses (tour guides, taxi drivers, chefs and bakers). In addition, under Component 1, the project will include additional technical support to the Tourism Institute of Cabo Verde, especially in the context of a new national tourism strategy and the support to the COVID-19 task force. WB will only finance activities relating to trainings and will not finance any activities that involve environmental and social risks and impacts (such as infrastructures, or other activities that would require an E&S follow-up). 6. The additional timeframe for the implementation of these activities will provide an important contribution to a safe and clean tourism reopening outcome for the tourism industry. Although estimates remain uncertain as the situation is fast-changing, authorities are hoping for a robust pickup in tourism flows in the second semester of the year. The national vaccination plan, funded through a World Bank funded project approved in February 2021, is expected to prioritize front line tourism workers as a key enabling condition. The preparation of tourism operators in hospitality and restaurants for a new demanding context, under safe sanitary practices, is a necessary condition to assure confidence for a safe environment for tourists and market-making tour operators. Individual operators such as tour guides and taxi drivers are also key contact points for tourists that are benefiting from expanded capacity building under this extension. Additionally, the revamped tourism marketing strategy will tackle and transmit the safe destination in the outreach and promotional activities and positioning, expected to be led and operationalized by the Tourism Institute – this entity will also benefit from enhanced technical assistance to support the finetuning and deployment of the tourism recovery strategy. 7. The extension will also allow proper completion of important ongoing structural activities of the project, namely the establishment of the online-based movable collateral registry, the ramp-up of quality seal for small accommodations program, and the publication of the white paper of the Tourism Code. Regarding the first activity, the development of the platform by the selected contractor is already well advanced. However, considering the complexity of the process workflow, the risk of delays is substantial, and it will also be important to safeguard the need for maintenance and improvement of the platform for at least six months, which is beyond the current contract. The seven- month extension will significantly mitigate these risks. Concerning the small accommodations program, the extension will allow the project to accompany the on-the-ground ramp-up of activities, only possible in a post-pandemic context, especially the crucial technical assistance to the accommodations expected to be fielded by IGQPI. Finally, regarding the White Paper on the Tourism Code, the extension will allow for its completion, specifically finalizing the draft already produced and proceeding with its dissemination and official publication. II. DESCRIPTION OF PROPOSED CHANGES A. Extension of the Closing Date The World Bank Competitiveness for Tourism Development (P146666) 8. The Project Closing Date will be set to January 31st, 2022, and the Workplan for 2021 will be amended accordingly, with no changes to the results framework nor to components and costs. The original Work Plan for 2021 which was approved by the project steering committee in March 2021, was discussed with the Bank team during the December 2020 implementation support mission. In the face of the current extension, the Work Plan has been revised to: i) include all new COVID-19 response measures under relevant activities approved through Level 2 restructuring dated June 11, 2020, as well as all ITCV technical assistance expansion; ii) allocate the identified uncommitted funds amongst approved activities; and iii) adjust all the activity closing dates accordingly, providing extensions to those ongoing contracts deemed of high risk of delays and benefiting from further implementation time. The plan has been approved in a timely manner to ensure that there are no delays and prior to the current restructuring. The results framework and the project components are aligned with the proposed activities; thus, these won’t be changed. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ The World Bank Competitiveness for Tourism Development (P146666) Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-58010 Effective 31-May-2021 31-Jan-2022 31-May-2022 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2016 0.00 0.00 2017 400,000.00 400,000.00 2018 375,000.00 375,000.00 2019 843,000.00 843,000.00 2020 1,800,000.00 1,650,000.00 2021 1,300,000.00 1,000,000.00 2022 282,000.00 732,000.00 OPS_DETAILEDCHANGES_SORT_TABLE SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating at Approval Current Rating Political and Governance  Moderate  Moderate Macroeconomic  Substantial  Moderate The World Bank Competitiveness for Tourism Development (P146666) Sector Strategies and Policies  Moderate  Moderate Technical Design of Project or Program  Moderate  Low Institutional Capacity for Implementation and  Moderate  Moderate Sustainability Fiduciary  Moderate  Moderate Environment and Social  Moderate  Moderate Stakeholders  Moderate  Moderate Other Overall  Moderate  Moderate . The World Bank Competitiveness for Tourism Development (P146666) Annex 1: Status of CTD project results PDO Indicators by objectives/outcomes Baseline Actual Target Value of Investment catalyzed (disaggregated by islands and type of investors) 0 273 35 Number of MSMES certified (with Quality Seal or ISO/HACCP or Safe & Clean) 0 116 40  Of which women (%) 0 45 33 Intermediate results indicators by component Component 1: Enhancing governance framework of the tourism sector Start-up of operations of the Tourism Institute No Yes Yes Development of a national tourism strategy No Yes Yes Number of Tourism Master Plans adopted 0 7 7 Number of Tourism Zoning Plans (POTs) adopted 0 6 6 Tourism Code enacted by the Government No No Yes Number of Investment Forums organized 0 2 3 Component 2: Diversify tourism sector and increase inclusiveness of tourism-led growth by strengthening the competitiveness of local MSMEs Number of small accommodations that benefited from technical assistance 0 53 50 under the project 0 235 100 Number of MSME representatives who benefited from training activities supported by the Project 0 25 35 Of which women (%) National Certification Company established No No Yes Technical and Feasibility Study of Mindelo´s Oceanarium approved No Yes Yes Legal Framework for Insolvency and Collateral Registry approved No Yes Yes Establishment of a moveable collateral registry No No Yes