The World Bank Investing in Human Capital DPF II (P171460) Program Information Document (PID) Concept Stage | Date Prepared/Updated: 28-Jan-2021| Report No: PIDC30558 Page 1 of 6 The World Bank Investing in Human Capital DPF II (P171460) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Project Name Parent Project ID (if any) Madagascar P171460 Investing in Human Capital P168697 DPF II (P171460) Region Estimated Board Date Practice Area (Lead) Financing Instrument AFRICA EAST Sep 06, 2021 Health, Nutrition & Development Policy Population Financing Borrower(s) Implementing Agency Ministry of Population, Ministry of Economy and Finance (MEF) Social Protection and the Promotion of Women (MPPSPF),Ministry of National Education (MEN),Ministry of Public Health (MSP) Proposed Development Objective(s) The development objective of the proposed second DPF in this series is to support the Government of Madagascar’s efforts to prioritize and sustain effective human capital development through two pillars: (i) more and better social services for under-served households and improved protection for women and children and (ii) more transparent and predictable investments in human capital. Financing (in US$, Millions) FIN_SUMM_PUB_TBL SUMMARY Total Financing 100.00 DETAILS -NewFin3 Total World Bank Group Financing 100.00 World Bank Lending 100.00 Decision The review did authorize the preparation to continue Page 2 of 6 The World Bank Investing in Human Capital DPF II (P171460) B. Introduction and Context Country Context With the economic and social impacts of COVID-19, Madagascar risks a reversal of gains in reducing poverty that were made after the constitutional crisis of 2009-2013 and a recession of similar magnitude as during the earlier crisis. An economic revival and structural reforms were underway after the prolonged political instability and economic stagnation of 2009-13. With the COVID-19 pandemic, global trade and travel disruptions as well as domestic containment measures are expected to result in a recession comparable to the 2009-2013 crisis, with GDP predicted to contract by 4.2 percent in 2020. Tax revenues will be severely curtailed by the impact of the crisis, contributing to fiscal deficits widening to more than 5 percent of GDP in 2020-21. Public debt will increase from 37.4 percent of GDP in 2019 to an estimated 49.7 percent of GDP in 2021 but is expected to remain in coming years below the risk threshold for a medium debt-carrying-capacity country like Madagascar. The COVID-19 crisis could reverse progress in poverty reduction and deepen fragility, as both formal and informal employment is being affected. Extreme poverty ($1.90 a day) is predicted to increase in 2020 to 77.4 percent from an already high level of 74.3 percent in 2019, likely undoing all gains achieved since the return to constitutional order in 2013. Vulnerable populations in urban areas, notably women and youth, are particularly exposed. The economic and social impacts of the crisis remain highly uncertain in a rapidly evolving and risk-filled context. Assuming successful containment measures, economic conditions should stabilize by the end of 2021. This proposed Development Policy Financing (DPF) supports Madagascar in mitigating the impact of the COVID-19 pandemic while continuing to invest in human capital, which is a critical priority. The Human Capital Index (HCI) 2020 estimates that a child born today in Madagascar will be only 39 percent as productive as an adult than if he or she enjoyed complete education and full health. Contributing to a weak HCI score, the stunting rate (height for age) is very high at 42 percent and education outcomes are also weak. Children who enter school at age 4 can expect to get 8.4 years of schooling, but when adjusted for learning, they can only expect to get 4.7 years. With children unable to reach their potential, the country will not have the future labor force to fuel a productive economy that can create jobs, boost prosperity, and reduce poverty in the long-term. Moreover, despite some recent progress in gender equality and the protection of women and children, the existing gaps are daunting. Against this backdrop, weak—and now disrupted— social service delivery in Madagascar is a serious concern. By January 20, 2021, Madagascar reported totally 18,301 cases and 273 official deaths, putting Madagascar in the category of moderately affected countries. A Multisectoral Emergency Plan is in place, comprising health and safety measures, and cash transfer programs. Nevertheless, the pandemic has severely affected maternal and child health services in primary health care centers, with a drop in vaccinations, for example. In the education sector, over 7 million learners in Madagascar have been affected by the pandemic, together with 244,000 teachers. Schools were closed from late March until the end of October 2020. The lockdown measures have affected vulnerable households living in cities, in the absence of any social safety net. Sustained reforms to enable human capital development remain critical in Madagascar to address longstanding financing, service delivery, and transparency challenges as well as to enable a stronger response to the COVID-19 crisis and increase resilience for the future. Relationship to CPF The policy reforms supported under this DPF2 contribute to four objectives in the Country Partnership Framework (CPF FY17-21)1 and prepares the institutional ground for several World Bank human development operations. DPF2 is expected to contribute to the following CPF objectives: (i) investing in children’s human development; (ii) enhanced and effective decentralization; (iii) enhanced transparency and accountability; and (iv) increased fiscal capacity to finance priority social and infrastructure spending. Reforms are aligned with the cross-cutting CPF objective of advancing gender equality and with the COVID-19 adjustments made to the CPF. The DPF2 policy reform program is 1 Report number: 114744-MG Page 3 of 6 The World Bank Investing in Human Capital DPF II (P171460) coordinated with the COVID-19 Response DPF (P174388), which helps finance the Government’s Multisectoral Emergency Plan in response to the pandemic. The reforms will also help prepare the institutional grounds for several pipeline World Bank human development operations. C. Proposed Development Objective(s) The proposed operation has been adjusted to consider the effects of the pandemic and ensure timely and transparent budget execution in the social sectors. The Program Development Objectives (PDO) of this proposed second DPF in the series is to support the GoM’s efforts to prioritize and sustain effective human capital development through two pillars: (i) a stronger COVID response with lasting improvements in social services for under-served households and protection for women and children and (ii) more transparent and predictable investments in human capital. Key Results The proposed reforms are expected to result in a better qualified teacher and health professional workforce delivering higher quality services especially in rural areas; better-resourced schools with sufficient and timely operational funds that will reduce the financial burden on parents and help retain students in school; and increased awareness of the need to end child marriage as well as a coordination mechanism at the local level for prevention and monitoring of GBV. Reforms will help institutionalize the SSN program at the FID and commit more government financing to expand coverage to 30,000 poor households. Similarly, increasing funding for primary health facilities will improve the availability of services and benefit the poor who seek care in CSBs. Reforms to improve budget transparency, reduce tax exemptions and increase fees on mining will help government raise and manage additional domestic revenues to help finance these reforms in the social sectors, which will ultimately help Madagascar increase its Human Capital Index to a level that is comparable to other countries in the region. D. Concept Description The reforms under Pillar A are designed to improve Madagascar’s social service delivery for under-served households and protect women and children, which is critical for human capital development as well as to help reinforce a stronger COVID-19 response. The reforms under pillar B support Madagascar’s objective to ensure transparent and predictable financing for investing in human capital. Together, the proposed package addresses key bottlenecks that have impeded the development of human capital in Madagascar, including a low-capacity workforce in education and health, severe service delivery challenges in rural areas, and inadequate social safety net coverage. Policy and institutional actions through DPF2 are expected to improve the effectiveness of future investment in human capital in Madagascar, whether from domestic or development partner resources. E. Poverty and Social Impacts, and Environmental, Forests, and Other Natural Resource Aspects Poverty and Social Impacts A Poverty and Social Impact assessment has been completed for this DPF. It highlights that improving the quality of social delivery systems and transparent financing will be central in protecting the poor and vulnerable. Both pillars of the operation imply significant benefits for poor and vulnerable populations in under-served areas, including women, and contribute to a higher Human Capital Index in Madagascar. Environmental, Forests, and Other Natural Resource Aspects The reforms supported by this operation are unlikely to have significant negative impacts and risks on Madagascar's natural assets. All the actions supported through this operation are policy oriented; they do not support direct investment Page 4 of 6 The World Bank Investing in Human Capital DPF II (P171460) in environmentally impactful projects or involve policy actions with significant environmental consequences. The Government has in place adequate environmental legislation and adequate experience and capacity implementing environmental impact assessment procedures, as well as ongoing advisory support by development partners to mitigate any risks arising from, for example, the need for greater medical waste management, or a return to normal operation in the mining sector. . CONTACT POINT World Bank Pia Helene Schneider, Marc Stocker Lead Economist Borrower/Client/Recipient Ministry of Population, Social Protection and the Promotion of Women (MPPSPF) Patricia Miarisoa Rakotonirina General Secretary sg.mppspf@gmail.com Ministry of National Education (MEN) Felamboahangy Ratsimisetra General Secretary sg.men20@gmail.com Ministry of Public Health (MSP) Fanjambololoniaina Dominique Rasamoelina General Secretary paisofanja@yahoo.fr Implementing Agencies Ministry of Economy and Finance (MEF) Rindra Hasimbelo Rabariniranirison General Secretary rindra.sgmef@gmail.com Page 5 of 6 The World Bank Investing in Human Capital DPF II (P171460) FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Task Team Leader(s): Pia Helene Schneider, Marc Stocker Approved By APPROVALTBL Country Director: Idah Z. Pswarayi-Riddihough 18-Feb-2021 Page 6 of 6