The World Bank Implementation Status & Results Report Supporting Innovation in Small and Medium Enterprises Project (P127306) Supporting Innovation in Small and Medium Enterprises Project (P127306) MIDDLE EAST AND NORTH AFRICA | Lebanon | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2013 | Seq No: 15 | ARCHIVED on 04-May-2021 | ISR46481 | Implementing Agencies: Lebanese Republic, Kafalat Key Dates Key Project Dates Bank Approval Date: 31-Oct-2012 Effectiveness Date: 03-Feb-2015 Planned Mid Term Review Date: 20-Feb-2017 Actual Mid-Term Review Date: 20-Mar-2017 Original Closing Date: 30-Jun-2018 Revised Closing Date: 30-Jun-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The project’s development objective is to encourage the equity investment market to increase the supply of early stage investment finance for financially viable, new, and existing innovative firms. Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured) The new project’s development objective is to increase the supply of early stage finance for financially viable, new, and existing innovative firms, and support the capability of firms to respond to the COVID -19 crisis. Components Table Name Innovation in SMEs (iSMEs) Funding Program:(Cost $22.00 M) Project Management:(Cost $2.50 M) Emergency Financing Facility (iSME-COVID) Funding Program:(Cost $5.50 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating High High Implementation Status and Key Decisions The Supporting Innovation in SMEs (iSME) project is a US$ 30 million investment lending program that (a) increases the supply of early stage finance for financially viable, new, and existing innovative firms, and (b) supports the capability of firms to respond to the COVID -19 crisis. The project is implemented by Kafalat through three components (including the new Component 3 added through last restructuring as part of the GOL COVID-19 response): 5/4/2021 Page 1 of 6 The World Bank Implementation Status & Results Report Supporting Innovation in Small and Medium Enterprises Project (P127306) • Component 1: The Innovation in SMEs (iSME) Funding Program (US$ 22 Million). iSME Funding Program has two facilities that encourage the equity investment market by increasing the supply of early stage investment finance for financially viable, new, and existing innovative firms, namely (i) the Concept Development Grants (CDGs) facility, and (ii) the Equity Investment facility. • Component 2: Project Management (US$ 2.5 Million). This component supports PMU operations, Project management and implementation, and carrying out marketing and outreach activities. • Component 3: The Emergency Financing Facility (iSME-COVID) Funding Program (US$ 5.5 Million). iSME-COVID Funding Program aims at increasing the supply of domestically produced medical supplies, equipment and services through the support of targeted beneficiaries. This new component will finance the following activities: (a) provision of grants to eligible recipients for the purpose of covering the costs incurred for research and development (R&D), technology adoption, commercialization and technical assistance services; and (b) provision of soft loans to eligible recipients for the purpose of financing the costs incurred for working capital, imports of raw materials or intermediate goods needed for production, equipment and light civil works within existing premises of the eligible recipient. Despite the different setbacks it has faced since its effectiveness in 2013; mainly delay in loan ratification and delays in overall flow of funds, the project has been able to advance on key results and the achievement of the Project Development Objective (PDO). To date, iSME’s co-investment fund has invested $13.6M across 27 investments representing 71.6% of the co-equity facility. Investments were made directly in 18 companies ($11.8M) and 9 investments through 4 angel funds ($1.85M) at an overall average investment ticket of $618k. As for the Grant component ($3M), 175 grantees were selected and awarded a total sum of $2.5M, representing 83.3% of the Grant facility. In total, the iSME program in both its instruments (grants and equity co-investments) has managed to leverage at least $58.7 million from other sources, thereby indicating a leverage ratio of 3.65, demonstrating the fund’s ability to crowd in private sector financing in line with maximizing finance for development principles. The iSME-COVID Funding Program has been ratified by the Parliament (3/12/21), signed by the Presidency (4/8/21) and published in the Official Gazette (4/15/21). Kafalat is currently preparing the launch of this new activity. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- High High Macroeconomic -- High High Sector Strategies and Policies -- Substantial Substantial Technical Design of Project or Program -- Substantial Substantial Institutional Capacity for Implementation and -- Moderate Substantial Sustainability Fiduciary -- Moderate Substantial Environment and Social -- Moderate Moderate Stakeholders -- Low Low Other -- -- -- Overall -- High High Results PDO Indicators by Objectives / Outcomes 5/4/2021 Page 2 of 6 The World Bank Implementation Status & Results Report Supporting Innovation in Small and Medium Enterprises Project (P127306) Increase supply of early stage finance for financially viable, new, and existing innovative firms IN00986496 ►Total number of firms receiving equity financing leveraging investors and the iSME funding program (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 85.00 85.00 95.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986498 No. of beneficiary firms, women owned (Number, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 10.00 10.00 10.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986499 ►Total amount of equity financing received (leveraged) leveraging investors and the iSME funding program (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 39,571,000.00 46,571,000.00 40,000,000.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986500 ►Number of new jobs created in beneficiary firms (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 265.00 265.00 250.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986501 No. of new jobs created, of which % are filled by women (Number, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 47.38 47.38 30.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 Support the capability of firms to support the response to COVID-19 crisis IN00986497 ►Percent of beneficiary firms reporting sales of new medical goods and services sales (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 70.00 Date 31-Mar-2020 08-Sep-2020 27-Apr-2021 30-Jun-2022 5/4/2021 Page 3 of 6 The World Bank Implementation Status & Results Report Supporting Innovation in Small and Medium Enterprises Project (P127306) Intermediate Results Indicators by Components Innovation in SMEs (iSMEs) Funding Program IN00986502 ►Intermediate Result Indicator 1: No. of eligible firms applying for proof of concept grants (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 298.00 298.00 360.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986504 ►Intermediate Result Indicator 2: No. of firms receiving proof of concept grants (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 175.00 175.00 200.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986506 ►Intermediate Result Indicator 3: Vol. of proof of concept grants (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2,500,000.00 2,500,000.00 3,000,000.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986507 ►Intermediate Result Indicator 4: Vol. of equity investments mobilized by Grantees (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 13,100,000.00 13,100,000.00 13,500,000.00 Date 02-Mar-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986508 ►Intermediate Result Indicator 5: No. of firms successfully receiving equity (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 24.00 24.00 25.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 IN00986509 ►Intermediate Result Indicator 6: Vol. of equity investments mobilized as co-investments in portfolio of companies (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target 5/4/2021 Page 4 of 6 The World Bank Implementation Status & Results Report Supporting Innovation in Small and Medium Enterprises Project (P127306) Value 0.00 26,495,000.00 33,495,000.00 26,500,000.00 Date 04-Feb-2015 08-Sep-2020 27-Apr-2021 30-Jun-2022 Emergency Financing Facility (iSME-COVID) Funding Program IN00986505 ►Intermediate Result Indicator 7: No. of firms receiving funding from the COVID19 financing facility (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 11.00 Date 31-Mar-2020 08-Sep-2020 27-Apr-2021 30-Jun-2022 Project Management IN00986503 ►Intermediate Result Indicator 8: Percent of firms reporting that iSME funding contribute to jobs protection during the economic crisis and COVID-19 outbreak (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 80.00 Date 31-Mar-2020 08-Sep-2020 27-Apr-2021 30-Jun-2022 Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P127306 IBRD-82020 Effective USD 30.00 30.00 0.00 23.01 6.99 77% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P127306 IBRD-82020 Effective 31-Oct-2012 13-Feb-2013 03-Feb-2015 30-Jun-2018 30-Jun-2022 Cumulative Disbursements 5/4/2021 Page 5 of 6 The World Bank Implementation Status & Results Report Supporting Innovation in Small and Medium Enterprises Project (P127306) PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC Restructuring History Level 2 Approved on 02-May-2018 ,Level 2 Approved on 20-Mar-2020 ,Level 2 Approved on 05-Apr-2020 ,Level Approved on 09-May-2020 Related Project(s) P171910-Lebanon Supporting Innovation in SMEs Project Additional Financing 5/4/2021 Page 6 of 6