Page 1 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE I. Basic Information Date prepared/updated: 01/16/2009 Report No.: AC4132 1. Basic Project Data Country: Armenia Project ID: P115109 Project Name: Access to Finance for Small and Medium Enterprises Task Team Leader: Michael Edwards Estimated Appraisal Date: January 20, 2009 Estimated Board Date: February 26, 2009 Managing Unit: ECSPF Lending Instrument: Financial Intermediary Loan Sector: Micro- and SME finance (100%) Theme: Small and medium enterprise support (P) IBRD Amount (US$m.): 50.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 0.00 0.00 Environmental Category: F - Financial Intermediary Assessment Simplified Processing Simple [X] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies) Yes [ ] No [ ] 2. Project Objectives To maintain or improve Armenian small and medium enterpr ises’ access to medium-term finance 3. Project Description This is to be a single component operation, focused on providing wholesale funding to qualified banks for on-lending to SMEs. 4. Project Location and salient physical characteristics relevant to the safeguard analysis Yerevan, Armenia 5. Environmental and Social Safeguards Specialists Mr Bernard Baratz (EASTE) Ms Darejan Kapanadze (ECSSD) Mr Satoshi Ishihara (ECSSD) Ms Lela Shatirishvili (ECSPF) Page 2 6. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: No social safeguards are triggered by the project. No activities are planned in disputed areas. The project will not finance any investments implying involuntary acquisition of land. Private SMEs will be eligible to become project beneficiaries under the condition that they have not acquired and/or would not acquire land for the needs of activities to be supported with the project proceeds through a process which involved and/or would involve officially supported expropriation. Additionally, WB funds will not support loans to any sub-borrower who would use it to invest in an enterprise which would require the involuntary displacement of existing occupants or economic users of any plot of land, regardless of its current ownership, or loss of or damage to assets including standing crops, kiosks and fences. Operational Manual will define a screening procedure to be filled by PFIs, and the Project PIU will closely monitor the screening procedure, with the support of Bank task team. With these restrictions in place, the project does not trigger OP/BP 4.12 Involuntary Resettlement. OP/BP 4.01 Environmental Assessment is triggered by the project. Environmental due diligence will be applied through the procedures for the selection and implementation of investments agreed between the Bank and the Borrower. An environmental framework document was prepared to outline the guiding principles of environmental screening, ranking, review, management, and monitoring of sub-loans as well as to describe roles and responsibilities in carrying out the environmental work in the course of the project implementation. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: As the project will support small and medium enterprises, it is not expected that any proposed activities will cause multiple, significant, and irreversible adverse environmental and/or health impacts. The screening procedures specified in the Page 3 framework are designed to eliminate any subprojects where these aspects may pose any risk. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. Despite a low likelihood of occurrence, sub-projects which would qualify for Category A for environmental assessment purposes are excluded from the activities eligible for the project support. Approval of higher risk Category B sub-projects (B+) will require prior review and clearance by the PIU. The PIU will work closely with PFIs to assist them with environmental work to ensure that PFIs are adequately applying environmental screening, review, approval, and monitoring procedures. The status of environmental compliance will be reported by each PFIs to the PIU on regular basis and the PIU will provide this information to the Bank as a part of general progress reporting. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Environmental screening of sub-project proposals will be essential to ensure that they are properly categorized and respective environmental review is carried out for them. Environmental Management Plans (EMP) will be developed to provide guidance on the application of mitigation measures and a system of monitoring will be introduced to ensure compliance of sub-project implementation with EMPs. This mechanism of environmental screening, review, approval, and supervision of sub- projects, including roles and responsibilities of all agencies involved in it, is described in the environmental framework document and included in the Operations Manual of the project.. According to the established environmental framework, sub-loan applicants will be required to carry out adequate type of environmental assessment of the proposed sub- projects and to obtain environmental permits as prescribed by the national legislation. PFIs will be responsible for environmental screening of sub-loan applications, attaching relevant environmental categories to them, reviewing environmental assessment reports submitted by sub-loan applicants, approving them, and carrying out environmental monitoring in the course of sub-project implementation. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The key stakeholders are the Central Bank of Armenia, the Ministry of Economy, selected PFIs and SME borrowers. The implementation agency is the CBA's PIU. The PIU’s capacity to carryout environmental work required for the implementation of the project is limited and will require enhancement. Although PIU has extensive experience of administering a donor-assisted sub-lending scheme similar to the one proposed by this project, the environmental oversight practiced for it is mostly limited to excluding non- eligible activities and does not focus on mainstreaming environmental good practice into the implementation of approved sub-projects. Page 4 Therefore, PIU’s capacity is to be strengthened either through training or in-house staff of recruitment of a knowledgeable specialist in order to adequately handle its tasks. Environmental good standards applied by potential PFIs are diverse. Due diligence of some commercial banks is limited to checking compliance of their borrowers with the national legislation. Others have their corporate environmental policies in place as well. Despite the current practice, all PFIs will require introduction to the main principles of the Bank’s environmental safeguards and to the project OM through a start-up workshop or a similar short-term training. Bank task team will closely monitor the screening process to support the PIU to ensure no loan will be provided that will trigger OP 4.12. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal? Yes Date of receipt by the Bank 01/11/2009 Date of "in-country" disclosure 01/14/2009 Date of submission to InfoShop 01/16/2009 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) Page 5 OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? Yes If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Yes Are the cost and the accountabilities for the EMP incorporated in the credit/loan? Yes The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Yes Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? Yes All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Yes Have costs related to safeguard policy measures been included in the project cost? Yes Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Yes Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? Yes D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Michael Edwards 01/15/2009 Environmental Specialist: Ms Darejan Kapanadze 01/16/2009 Social Development Specialist Mr Satoshi Ishihara 01/16/2009 Additional Environmental and/or Social Development Specialist(s): Mr Bernard Baratz 01/15/2009 Approved by: Regional Safeguards Coordinator: Ms Agnes I. Kiss 01/16/2009 Comments: Sector Manager: Mr John Daniel Pollner 01/13/2009 Comments: