The World Bank Trade and Logistics Services Competitiveness Project (P158982) REPORT NO.: RES40310 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF TRADE AND LOGISTICS SERVICES COMPETITIVENESS PROJECT APPROVED ON MAY 4, 2017 TO REPUBLIC OF TOGO FINANCE, COMPETITIVENESS AND INNOVATION AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Coralie Gevers Regional Director: Elisabeth Huybens Practice Manager/Manager: Consolate K. Rusagara Task Team Leader(s): Martin Maxwell Norman, Anne Cecile Sophie Souhaid The World Bank Trade and Logistics Services Competitiveness Project (P158982) ABBREVIATIONS AND ACRONYMS AEO Authorized Economic Operator AWPB Annual Workplan and budgeting CITA International Motor Vehicle Inspection Committee (Comité International de l’Inspection Technique Automobile) CNE Cellule Nationale d'Évaluation DLI Disbursement-Linked Indicator DRRT Directorate of Road and Rail Transport (DTRF – Direction des Transports Routiers et Ferroviaires) EFI Equitable Growth, Finance and Institutions ERA European Research Area GP Global Practice GUCE Single Window for Foreign Trade (Guichet Unique du Commerce Electronique) IRU International Road Transport Union (Union Internationale des Transports Routiers) MTR Mid-term review NFC National Francophone Committee (CNF in French for ‘Commission Nationale de la Francophonie’) NTFC National Trade Facilitation Committee (CNFE – Comité National de la Facilitation des Echanges) OTR Office Togolais des Recettes PDO Project Development Objective PIU Project Implementation Unit TFA Trade Facilitation Agreement ToR Terms of Reference TRS Time Release Study UNOPS United Nations Office for Project Services WCO World Customs Organization WTO World Trade Organization The World Bank Trade and Logistics Services Competitiveness Project (P158982) BASIC DATA Product Information Project ID Financing Instrument P158982 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 04-May-2017 30-Jun-2022 Organizations Borrower Responsible Agency Republic of Togo Ministry of Economy and Finance Project Development Objective (PDO) Original PDO The proposed project aims to improve the efficiency of trade logistics services in Togo. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-60310 04-May-2017 16-Aug-2017 13-Dec-2017 30-Jun-2022 18.00 10.13 9.06 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Trade and Logistics Services Competitiveness Project (P158982) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Performance of the Components The project was approved on May 04, 2017, became effective on December 13, 2017; and is scheduled to close on June 30, 2022. The PDO of the project is to improve the efficiency of trade logistics services in Togo. During the mid-term review mission in November 2019, the Project team conducted an analysis of the Project's ongoing relevance and determined that the Project is still very relevant to country priorities and is particularly and directly aligned with the National Development Plan's (2018-2022) strategic pillar 1, to make Togo a logistical hub of excellence and first-rate business center in the sub-region. However, the mid-term analysis identified a slowing implementation and a nearly stagnant disbursement which was at 17% in November 2019. In addition, the mission identified 2.7 million euros of activities under Component 2 to certain non-strategic activities – primarily workshops and study tours – which were also deemed not to be a priority for achieving the PDO. Therefore, as a result of the mid-term review the project was down-graded to moderately unsatisfactory. Since the mid-term review, project implementation has significantly improved. Disbursement is already at 53% due to a lump procurement through UNOPS of strategic equipment and services, and the PIU has taken strides to trim down non-strategic activities in favor of strategic studies and business climate improvements that lay the foundation for enhancing implementation and achieving the PDO. These improvements were noted during the implementation support mission (a virtual mission) of May/June 2020, and the Project ratings for both the PDO and implementation progress have been upgraded to moderately satisfactory. The Project status by component is as follows: 1. Component 1: Strengthening the road transport and logistics services sector (US$10.7 million; component disbursement to date US$ 7,3 million): To date, the results obtained under the component are: (a) adoption of the law on leasing in June 2019, by the National Assembly; (b) capacity building of banks and road transport stakeholders on leasing in January and March 2019; (c) validation of the diagnosis of the road transport sector and component 1 of the Consulting company (IRU – Union Internationale des Transports Routiers) mission on June 25, 2019; (d) definition and formulation of the stakeholders' vision in October 2019; (e) approval of the contract for the technical assistance mission for the improvement of the vehicle technical inspection system in April 2019, assigned to Automobile consulting company (CITA – Comité International de l’Inspection Technique Automobile and started in May 2019; (f) subsequent accomplishments of CITA in increasing the scope of the vehicles inspection system in the country; (g) drafting of the options review in July 2019; (h) development of standards for inspectors in July 2019; (i) development of standards for vehicle technical inspection facilities in August 2019; and (j) acquisition of computer equipment for the Road Safety Authority in October 2019. 2. The reform process is inclusive and participatory with a real commitment of the various actors to the various activities of the reform. The implementation of the component also benefits from complementarity with the project to support the governance of the road sector financed by the European Union. The World Bank Trade and Logistics Services Competitiveness Project (P158982) 3. The mid-term review identified major challenges in the implementation of this component attributable to the delay in the submission of Terms of References (ToRs) and technical specifications, as well as delays with the approval of the main technical assistance contracts for IRU and CITA. Since the mid-term review mission in November 2019, these two prime contracts have since been approved and these two contractors have made significant strides in accomplishing the goals of their contracts. The component rating was maintained at Moderately Satisfactory both during the mid-term review mission and the virtual mission of May/June 2020. . 4. Component 2: Improving trade facilitation (US$4.8 million; component disbursement to date US$ 0.5 million) – Improvement in administrative procedures and Public Private Dialogue. The main results achieved under this component are: (a) participation in WTO meetings on the Trade Facilitation Agreement in February 2019; (b) training of National Trade Facilitation Committee (NTFC) CNFE – Comité National de la Facilitation des Echanges) members on the Trade Facilitation Agreement (TFA) in April 2019; (c) training of members of the NTFC on techniques for developing the ERA Roadmap in July 2019; (d) development of the NTFC 2020-2022 roadmap for the implementation of the TFA in September 2019, (e) Single Window for Foreign Trade (GUCE - Guichet Unique du Commerce Electronique) follow-up at points of entry in August and October 2019, (f) acquisition of rolling stock (a pick-up for the NTFC and a 30-seat bus for the National Francophone Committee (CNF – Commission Nationale de la Francophonie) in October 2019; and (g) support for the operation of the NTFC. 5. Other achievements include: (a) training of 500 actors on the new Customs Code between August and October 2019; (b) production of the new Customs Code in July 2019; (c) beginning of a study on the time required for the release of goods (time release study or TRS) with the support of the experts of the World Customs Organization (WCO) from August 2019; (d) training of the actors on the use of the TRS software; (e) development of customs clearance mapping with the support of the WCO experts in September 2019; (f) capacity building of customs officers on trade facilitation in July 2019; (g) exchange mission to Morocco for the implementation of the WTO's status as Authorized Economic Operator (AEO) in September 2019; and (h) training on trade facilitation at the National Customs School of Tourcoing in November 2019. 6. During the mid-term review, the major difficulties in implementing this component that were identified were the absence of an NCT roadmap, the delay in the submission of the ToRs and the delay in the implementation of key activities, especially those under the Office Togolais des Recettes (OTR) which is responsible for both taxes and customs. In addition, it was noted that more than half of the funds allocated to this component have not yet been assigned to activities. Finally, workshops constitute many of the activities programmed under the component, which the team has determined are not all strategic to achieve the objectives of the project for trade logistics services. During the mid-term review the Bank team and the PIU decided that most of the workshops and events planned were not strategic to the accomplishment of the Project Development Objective (PDO) and most of these will be cancelled through this restructuring, and only those activities already underway will continue. 7. Given the above constraints, the programming of too many non-strategic workshops and study tours, the delays with developing required ToRs, and the slow implementation, especially of OTR activities, the component rating was downgraded after the MTR mission from satisfactory to Moderately Unsatisfactory . 8. After the mid-term review mission in November 2019, the PIU responded positively to the recommendations from the review by limiting the Component 2 activities to those already in implementation, as per MTR recommendations, The World Bank Trade and Logistics Services Competitiveness Project (P158982) accelerating these activities that were underway, and discontinuing plans for workshops and study tours not deemed to be strategic. In addition, disbursement for this component has improved from 12% at mid-term to 21% as of June 2020. Given the improved and accelerated implementation, the taking into account of MTR recommendations, and the improved disbursement, the rating for this component has been upgraded to Moderately Satisfactory. 9. Component 3: Project Management (US$ 2.5 million; component disbursement to date US$1,2 million): Achievements are: (a) 2017 and 2018 financial and accounting audit of the project in April and May 2019; (b) preparation of the administrative, financial and accounting procedures manuals, procurement of rolling stock and IT in 2018; (c) revision of the results framework in preparation for the Level 2 Restructuring; (d) review of the implementation of the 2019 AWPB in September 2019; and (e) development of the AWPB 2020 and the development of the 2020 Work Plan. However, the delays and lack of strategic direction for Component 2 activities at the time of the MTR mission led the team to downgrade the rating for this component from Satisfactory to Moderately Satisfactory., and to maintain the rating at moderately satisfactory through the implementation support mission of May/June 2020. Once this restructuring has been processed and the PIU has had an opportunity to improve project management under the new streamlined activities and budget reallocations, the next mission will evaluate whether to upgrade the rating for Component 3. 10. In addition to the components above, the mid-term review of the project conducted in November 2019 determined that effectiveness the implementation of activities of the project continued to remain low even when flagged as such during the previous mission, and that disbursement rate was at 17 percent at mid-term indicating very low disbursement. The strategy for the project during Q3 and Q4 of FY20 was to accelerate procurement of many of the pending items, especially by processing a bulk procurement of equipment and goods through UNOPS in order to improve the disbursement figures. This strategy has paid off, the disbursement is currently at 53% which is deemed to be acceptable at this stage of project implementation. B. Rationale for Restructuring 11. The mid-term review (MTR) of the project which took place from November 4 to 15, 2019, resulted in the following conclusions which were reconfirmed during the virtual mission from May 27 to June 2, 2020: - The Project team (the PIU and the World Bank team) determined that the Project team (PIU) has the capacity to achieve the development objectives of the Project, that is to improve the efficiency of logistics services for trade in Togo. In addition, through the progress recorded by the activities of Component 1, its objectives are achievable. - Likewise, the MTR noted several major accomplishments of the Project to date, such as: (a) approval of the leasing law on July 17, 2019, and the approval of the implementing decree on August 8, 2019; (b) improvements in the inspection system in Togo as a result of the support of the consultant International Motor Vehicle Inspection Committee (CITA) to the Directorate of Road and Railway Transport (DRRT); (c) signing of the agreement between the Customs administrations of Burkina Faso, Niger and Togo for the interconnection of their respective management information systems; (iv) signing of the Memorandum of Understanding between the chambers of commerce and industry of Burkina Faso and Togo. The World Bank Trade and Logistics Services Competitiveness Project (P158982) - The low rate of disbursement identified at midterm (17%; US$3,7 million out of US$18 million), as well as the slow implementation of activities and the fact that many of the activities, especially those under Component 2 dealt with workshops, seminars and study tours were not strategic to the achievement of the PDO, were all clear red flags that a restructuring was needed. In addition, other donors have major programs to support the Togolese office of receipts ( OTR – Office Togolais des Recettes) and CNE (Cellule Nationale d'Évaluation) for similar activities to those of Component 2, which could easily be covered by other projects (OTR has received $40 million along since 2011 from other donors for their activities). Together with the PIU, the World Bank team discussed each project activity, and formulated a strategy to accelerate the implementation and disbursement of the project. A keystone of an improved project disbursement and implementation is a major grouped procurement to be done during the fourth quarter of the fiscal year equipment for more than $4 million under United Nations Office for Project Services (UNOPS). This has since been completed, and the PIU has taken the measures recommended during the MTR mission, and this has greatly improved disbursement (currently at 52.6%) and streamlined activities. II. DESCRIPTION OF PROPOSED CHANGES The following changes would be affected through the restructuring: A. Component 2: Improvement of trade facilitation - cancellation of activities: - The elimination of workshops, primarily, relating to “best practice” and those designed to identify constraints (which can be accomplished by the PIU with a more streamlined approach) and study tours, while other activities such as training for the customs code and the time release study will continue. The projected value of these activities from this Component is 2.7 million euros. This will have no implications for the Financing Agreement given the general lists of kinds of activities that might take place under this component. B. Reprogramming of funds: In light of the above-mentioned cancellation of activities, there will be a corresponding shift of funds: - 2 million euros will be shifted from Component 2 to Component 1 for the preparation of studies and provision of technical assistance which will serve the dual purpose of contributing to the PDO of the transport aspects of the Project and the preparation of the Transport Corridor Project to be jointly run by EFI and the Transport GP. - 700,000 Euros will remain under Component 2, and will support business climate reforms, especially those that will improve the country’s Doing Business rankings. The following table summarizes the changes to be made: Activity Original Original Total after restructuring allocation (US$) allocation (euros) (euros) Component 1 Component 1 a 4,600,000 4,221,590 4,221,590 Component 1 b 3,100,000 2,844,980 2,844,980 Component 1 c 3,000,000 2,753,210 2,753,210 Studies and TA related to transport 2,000,000 Total 10,700,000 9,819,780 11,819,780 Component 2 The World Bank Trade and Logistics Services Competitiveness Project (P158982) Activity Original Original Total after restructuring allocation (US$) allocation (euros) (euros) Component 2 – OTR 4,800,000 4,393,620 1,693,620 Component 2 – CNFE Doing Business Reforms (DB) 700,000 Total 4,800,000 4,393,620 2,393,620 Component 3 Project Management 2,500,000 2,294,340 2 294 340 Total 2,500,000 2,294,340 2 294 340 Total 18,000,000 16,507,740 16,507,740 C. Results Framework: The following changes will be made to the Results Framework 1. PDO indicators (a) ”Number of logistics businesses compliant with the reformed legal and regulatory environment” : interim targets will be modified to be more realistic (b) “Median transit time from port of Lome to Cinkanse border” is being changed to “Median transit time between the issuance of T11 for the declarations under the Lome Port transit regime and their clearance at Cinkanse” in order to make it more precise in terms of exactly what is being measured and interim targets changed to be more realistic. 2. “Predictability of transit time” is being modified to “Typical gap between the time between the issuance of T1 for the declarations under the Lome Port transit regime and their clearance at Cinkanse” to be more exact, in terms of which predictabilty measure is used. Intermediate Result indicators (a) ” Number of trucks scrapped per year” is being eliminated, given that, under this project, only diagnostics and preparatory action will be taken toward a truck scrapping operation, but the operation itself will not begin until after the project is over. The original delays with the contracts for the activity and a perhaps overly optimistic scenario for actually getting to the point where operationalizing the activity are the reasons why this will not happen. (b) “Number of recommended laws/regulations/amendments/codes enacted or government policies adopted” is being changed to “Number of new legal texts adopted in the area of road transport, services, and leasing” in order to make it more precise in terms of exactly what is being measured and both interim and the final targets will be changed to reflect the emphasis on the new National Customs Code, the leasing law, and the framework law on road transport (3). (c) “Certification programs for transport sector professionals established” is being modified to “Certification programs for road transport sector professionals established” to explain that it is only road transport sector professionals who will be measured. 1Document delivered to each driver leaving Togo with transit cargo confirming that Togolese customs have cleared his cargo at the border The World Bank Trade and Logistics Services Competitiveness Project (P158982) (d) Interim and final targets for the indicator “Number of trips per truck per year on Lome-Ouagadougou corridor” is being modified to establish a more realistic target for the project. (e) “Number of companies officially registered as part of the "trusted traders program"” is being modified to “Number of companies officially registered as part of the ‘program for companies worthy of confidence’” to reflect the correct name of the program, and both interim and final targets modified downward to be more realistic. (f) “Average port dwell time” is being modified to “Average time between the completion of offloading of containers in transit and their departure from the port ” to be more exact, in terms of what exactly is being measured. (g) “Transport and logistics businesses reporting satisfaction with key aspects of consultation” is being modified to “Actors in the logistics and transport value chain reporting satisfaction with key aspects of consultation” to be more exact, in terms of which businesses will be consulted. (h) Addition of a new indicator: “Number of people trained through the certification program established for road transport professionals.” There are no changes relating to safeguards, financial management, institutional arrangements or procurement. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ The World Bank Trade and Logistics Services Competitiveness Project (P158982) EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Strengthening the road Strengthening the road transport 10.70 Revised transport and logistics services 12.80 and logistics services sector sector Improving trade facilitation 4.80 Revised Improving trade facilitation 2.70 Project management 2.50 No Change Project management 2.50 TOTAL 18.00 18.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2017 0.00 0.00 The World Bank Trade and Logistics Services Competitiveness Project (P158982) 2018 1,369,211.49 1,369,211.49 2019 873,658.69 873,658.69 2020 5,085,709.92 7,062,500.00 2021 6,171,419.78 7,000,000.00 2022 4,500,000.00 1,694,629.82 2023 0.00 0.00 2024 0.00 0.00 . The World Bank Trade and Logistics Services Competitiveness Project (P158982) . Results framework COUNTRY: Togo Trade and Logistics Services Competitiveness Project Project Development Objectives(s) The proposed project aims to improve the efficiency of trade logistics services in Togo. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Improve the efficiency of trade logistics services in Togo Number of logistics businesses compliant with the reformed legal and 0.00 0.00 0.00 0.00 10.00 20.00 20.00 regulatory environment (Number) Rationale: Action: This indicator has The interim targets have been revised given the delays with the activities of the component to be more realistic - 0 to date because the regulations still need to been Revised be drafted and approved and then measurement will begin. Median time lapsed between the issuance of the T1 declaration under the 8.00 8.00 8.00 6.00 6.00 6.00 6.00 transit regime of the Port of Lome and its clearance at Cinkanse (Days) Action: This indicator has Rationale: been Revised The World Bank Trade and Logistics Services Competitiveness Project (P158982) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 This modification makes the indicator more precise in terms of exactly what it is measuring and indicates which interim steps will be measured. The target remains the same. Predictability of time lapsed between the issuance of the T1 declaration under the 28.00 28.00 28.00 25.00 25.00 20.00 20.00 transit regime of the Port of Lome and its clearance at Cinkanse (Days) Rationale: Action: This indicator has The change is to sync this indicator with the previous indicator. been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Strengthening the road transport and logistics services sector “Number of new legal texts adopted in the area of road 0.00 1.00 2.00 3.00 3.00 3.00 3.00 transport, services, and leasing (Number) Rationale: Action: This indicator has Only the values (both interim and target) will be modified, given that only three legal texts are projected to be achieved, such as the law on the new customs been Revised code, the law on the credit guarantee and the law /framework on road transportation. Hence, the final target of four is being reduced to three. The World Bank Trade and Logistics Services Competitiveness Project (P158982) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Certification programs for road transport sector No No No No Yes Yes Yes professionals established (Yes/No) Action: This indicator has been Revised Number of trucks scrapped 0.00 0.00 0.00 10.00 15.00 20.00 100.00 per year (Number) Rationale: Action: This indicator has This is being deleted, because the project is only supporting the diagnostics for the truck breaking operation, and the activity of actually breaking down trucks is been Marked for Deletion not expected to begin by the end of the project. Number of trips per truck per year on Lome- 1.70 1.70 1.70 1.70 6.00 6.00 6.00 Ouagadougou corridor (Number) Rationale: Action: This indicator has This indicator will also now take into account the trucks leaving the port platform and the other points in the customs territory with declarations under the been Revised transit procedure, which was not the case before. Improving trade facilitation Number of companies officially registered as part of the "Program of 0.00 0.00 5.00 5.00 7.00 8.00 8.00 companies worthy of confidence" (Number) The World Bank Trade and Logistics Services Competitiveness Project (P158982) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Rationale: The name of the certification program has been changed to reflect how the L'Office Togolais des Recettes (OTR - Togolese office of receipts) calls the program - Action: This indicator has "programme des commercants dignes de confiance". It also revises the target value downward to 8, which coincides with the number that the OTR believes will been Revised be part of the program. In the next ISR, the actual measure will be corrected to a revised estimate from the OTR of 5. Average time between the completion of offloading of containers in transit and 14.20 14.00 14.00 14.00 14.00 13.00 13.00 their departure from the port (Days) Rationale: Action: This indicator has Since there are multiple interim steps for processing the movement of containers to, within and from the port, this edit makes it more accurate and indicates been Revised exactly what is being measured. The baseline is therefore different, and the target set at what the PIU believes to be achievable by the end of the project. Actors in the logistics and transport value chain reporting satisfaction with 0.00 0.00 0.00 50.00 50.00 80.00 80.00 key aspects of consultation (Percentage) Rationale: The change in the wording of this indicator reflects a desire to open up the survey to all companies which are involved in the transport and logistics value chain, Action: This indicator has broadly speaking. The revised interim target values reflect the belief that it will take more time to get the approval of the actors in this sector, given the project been Revised activities. Number of people trained through the certification 0.00 0.00 0.00 0.00 30.00 100.00 100.00 program established for The World Bank Trade and Logistics Services Competitiveness Project (P158982) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 road transport professionals (Number) Rationale: Action: This indicator is This will allow for the measurement of the critical training activity supported by the project within the reform framework of road transportation. The Training New Center will be constructed by this project. IO Table SPACE The World Bank Trade and Logistics Services Competitiveness Project (P158982)