62740 v1 Document of The World Bank MULTI DONOR TRUST FUND (MDTF-SS) RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SOUTH SUDAN PRIVATE SECTOR DEVELOPMENT PROJECT TO THE GOVERNMENT OF SOUTHERN SUDAN June 16, 2011 ABBREVIATIONS AND ACRONYMS MDTF-SS Multi-Donor Trust Fund-Southern Sudan MCI Ministry of Commerce and Industry M&E Monitoring and Evaluation PSD Private Sector Development SSTTF Southern Sudan Transitional Trust Fund 2 Regional Vice President: Obiageli Katryn Ezekwesili Acting Country Director: Ian Bannon Sector Manager: Michael J. Fuchs Task Team Leader: Alwaleed Alatabani 3 Restructuring Data Sheet RestructuringStatus: Draft Restructuring Type: Level two Last modified on date : 06/08/2011 1. Basic Information Project ID & Name P102319: Southern Sudan Private Sector Development Project Country Sudan Task Team Leader Alwaleed Fareed Alatabani Sector Manager/Director Michael J. Fuchs Country Director Ian Bannon Original Board Approval Date 05/10/2007 Original Closing Date: 06/30/2011 Current Closing Date 06/30/2011 Proposed Closing Date [if applicable] 01/31/2012 EA Category C-Not Required Revised EA Category C-Not Required-Not Required EA Completion Date Revised EA Completion Date 2. Revised Financing Plan (US US$m) Source Original Revised BORR 0.60 0.60 MDTF-SS 8.46 8.46 Total 9.06 9.06 3. Borrower Organization Department Location Ministry of Finance and Economic Planning 4. Implementing Agency Organization Department Location Ministry of Commerce and Private Sector Development Juba Industry 4 5. Disbursement Estimates (US US$m) Actual amount disbursed as of 06/06/2011 8.41 Fiscal Year Annual Cumulative 2011 2.60 8.46 Total 8.46 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured projects trigger any new safeguard policies? If yes, please select N from the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The PDOs are to develop the enabling environment for private sector development, and support formal private sector growth. 7b. Revised Project Development Objectives/Outcomes [if applicable] 5 SUDAN- SOUTHERN SUDAN MULTI-DONOR TRUST FUND FOR PRIVATE SECTOR DEVELOPMENT PROJECT P102319 TF090186 Restructuring paper 1. The Closing Date for the South Sudan Private Sector Development Project, MDTF-SS, and Project ID: P102319 will be extended from June 30, 2011 until January 31, 2012. 2. Activities in project components are progressing well and project objectives continue to be achievable. The project development objective and overall implementation progress are rated as Moderately Satisfactory and Satisfactory, respectively. The framework for creating a conductive environment for private sector growth has been initiated. A trade and investment policy and a national microfinance policy were prepared and are in the process of being finalized, a draft Mining Bill and accompanying regulations have been completed, and five trade-related Bills have been drafted. An industrial competitiveness strategy has also been completed. In the area of access to finance and building entrepreneurship among Southern Sudanese, loanable funds and technical assistance for capacity building have been availed to Microfinance Institutions and block collateral has been provided for loans from Kenya Commercial Bank-Sudan to 44 entrepreneurs who emerged winners in the Business Plan Competition. The collateral will eventually be turned into equity for the entrepreneurs who successfully pay off the initial loans. The design of the Juba food wholesale market has been completed but construction of the market has been postponed due to shortage of funds in the MDTF following a request for additional financing. In terms of disbursements, the project has disbursed US$7.58 million out of a total of US$8.46 million, representing a disbursement rate of 90 percent (while the loan overview shows a disbursement rate of 99.4 percent, aside from the US$52,000 undisbursed, there is an additional US$822,569 available in the special/deposit account in the form of advance as shown in Annex 1). 3. There is a discrepancy between the development objective of the project in its Final Project Proposal and the Grant Agreement (GA). In the Final Project Proposal, the objective is to establish the enabling environment for private sector development, and support formal private sector growth. In comparison, in the Grant Agreement, the objective is to develop an enabling environment, and to sustainably increase formal employment in Southern Sudan. The objective of the Grant Agreement remains. 4. The development objective of the project continues to be achievable despite the initial delays in start-up operations of the project. The proposed extension is necessary to help the project complete outstanding activities. The Ministry of Industry and Commerce has prepared an action plan including an implementation plan to meet the revised project closing date. 6 5. This will be the first extension of the project. ANNEX 1 Balance in Designated Account Note: Balance in designated account as of June 8, 2011 7 ANNEX 2 Revised Results Framework and Monitoring Revisions to the Results Framework Comments/ Rationale for Change PDO indicators Current (PAD) Proposed change 1. Number of businesses registered in Number of businesses registered in For initial indicators, data for Southern Sudan (target: 25% increase Southern Sudan (target: 8,900): (Revised) baseline not easily available hence per year over five years). it is difficult to calculate percentages. Business registration expected to be extended to four other States (Business Hubs) in 2010/11. 2. Number of licenses issued in Streamline number of steps to register a Original indicator dropped as data Southern Sudan. business (target: 4 steps): (New) on licenses issued is not yet available in Southern Sudan 3. Increase in formal employment by Formal employment by the enterprises Indicator modified as baseline formal registered private sector in supported by the BPC loans (target: 40 employment data for private sector Southern Sudan (target: 10% increase jobs): (Revised) firms not easily available hence it per year over five years) is difficult to calculate percentages. People with access to finance through New indicator to measure progress targeted MFIs and BPC (disaggregated by in access to finance. gender): (New) Of which the beneficiaries are female: New indicator to measure gender (New) impact of project Intermediate Results indicators Current (PAD) Proposed change* Component One 1. PSD strategy endorsed by Cabinet This indicator has been dropped A draft PSD strategy was developed by the MCI internally without involvement of the project 2. Land policy developed and adopted These indicators have been dropped The land policy and registries are 3. Property registry in use out of the control of the project 4. Business registry in use 5. Microfinance policy and regulatory Microfinance Policy presented to Cabinet; Indicator revised to include framework developed and adopted (Revised) timeframe and feasibility 6. Industrial policy developed and This indicator has been dropped UNIDO was not able to carry out adopted this activity in time. 7. Public-Private Dialogue Forum Not changed established 8. M&E system in use M&E systems developed are functioning Indicator revised to emphasize and regularly updated by the MCI: sustainability of the system. 8 Revisions to the Results Framework Comments/ Rationale for Change (Revised) 9. Starting a business, time (days) Original indicators 9 to 16 have 10. Starting a business, cost (% of been dropped due to either lack of income per capita monitoring data or being out of the 11. Dealing with licenses, time (days) scope of the project. 12. Dealing with licenses, cost (% of income per capita) Number of businesses supported through New indicator to measure the 13. Registering property, time (days) Business Plan Competition (Target: 45): funding for entrepreneurs 14. Registering property, cost (% of (New) income per capita) 15. Time for export (days) Laws to improve the enabling environment The laws include, Competition 16. Time for import (days) for business are presented to Cabinet Law, Property Rights Law, (Target: 5): (New) Microfinance Law, Insurance Law and Financial Institutions Instruments Law. Component Two 1. Southern Sudan Microfinance Not changed Development Facility established 2. Number of new microfinance Not changed institutions (MFIs) operational in Southern Sudan (target : 4) 3. Number of MSMEs recipients Moved to the PDO level The original indicator has been (target 8,000 new clients). moved to the outcome indicator level. • Number of loans by gender (Target: 25,000 for women and 16,000 for New Indicators to measure men): New effectiveness of the support to the financial sector. • Value of loans by gender(Target: 5 SDG million for women and 9 SDG million for men): New PAR is currently at 19%. SSMDF is supporting MFIs to improve the • Portfolio at Risk (PAR) (Target: 12% portfolio quality. by end of the Project): (New) Component Three 1. Number of start-ups established The first two original indicators through business plan competition were not for this component and each year (target 10). have been dropped. They should 2. Number of start-ups established have been in Component One. through business plan competition that Industrial Competitiveness strategy is New indicators have been survive after one year in operation completed :(New) identified (target 5). 3. Number of business and trade Mining Act and supporting regulations are associations that receive training developed: (New) Staff of the MCI and Ministry of Energy and Mining (MEM) are trained (Target: 30 staff): (New) Component 4 9 Revisions to the Results Framework Comments/ Rationale for Change 1. Fruit and vegetable wholesale 1. Design of wholesale market is Due to funding constraints, market established (y/n) completed: (New) construction of the wholesale 2. Southern Sudanese wholesalers market has been dropped from the operating in the market (target: at least project. The initial indicators are 50 wholesalers.) no longer relevant. 3. Wholesale market throughput (tons) (target: 18,800 tons per year) 4. Produce from at least three Southern Sudanese states traded in wholesale market 5. Market price information collected and disseminated (number of radio announcements and SMS sent) 6. Three assembly markets established 10 Revised Project Results Framework Baselin Cumulative Target e Values Progress To Origina January Responsibilit Date Frequenc Data Source/ PDO Level Results Indicators UOM l 2012 y for Data Comments (December y Methodology Project Collection 2010)1 Core Start (2007) 1. Number of businesses Business Numbe Half registered in Southern Sudan 0 8,807 8,900 Registry/operational MCI/PCU r yearly (REVISED) records Business 2. Streamline number of steps to Numbe Half 10 4 4 Registry/operational MCI/PCU register a business (NEW) r yearly records 3. Formal employment by the Numbe None KCB-Sudan/Loan enterprises supported by the BPC N/A 40 Quarterly MCI/PCU r existent Monitoring loans (NEW) 4. Growth in the number of clients Moved from Numbe served by MFIs (REVISED) 7,0962 38,864 39,000 Quarterly SSMDF Reviews MCI/PCU Intermediate r results Beneficiaries 5a. People with access to finance KCB-Sudan/Loan 44 (BPC) 44(BPC) through targeted MFIs and BPC Numbe None Monitoring 2,540 3,000 Quarterly MCI/PCU (NEW) r existent (MFIs) (MFIs) SSMDF Reviews KCB-Sudan/Loan 25 (BPC) 25 (BPC) 5b. of which the beneficiaries are Numbe None Monitoring 1,967 2,000 Quarterly MCI/PCU female (NEW) r existent (MFIs) (MFIs) SSMDF Reviews 1 Estimates from latest ISR 2 Estimate by Sudan Agriculture Enterprise Program November 2007 11 Intermediate Results and Indicators Baseline Target Values Progress To Unit of Original Responsibilit Date January Frequenc Data Source/ Intermediate Results Indicators Measure- Project y for Data Comments (December 2012 y Methodology Core ment Start Collection 2010) (2007) Intermediate Result 1: Develop a national microfinance policy and supporting regulations Policy presented to 1. Microfinance policy is presented None Draft has been Half Cabinet and BOSS reports MCI/PCU to Cabinet (REVISED) available developed yearly framework drafted Intermediate Result 2: Establish an efficient investment climate 1. Public-Private Dialogue Forum is None PPD has been PPD has been Half MCI Reports MCI/PCU established existent established established yearly M&E 2. M&E systems developed are None systems Half functioning and regularly updated by MCI Reports MCI/PCU existent functioning yearly the MCI (REVISED) well KCB-Sudan/ 3. Number of businesses supported Number 0 44 45 Quarterly Loan MCI/PCU through BPC (NEW) Monitoring 4. Laws to improve the enabling 5 laws MOLACD None 5 laws being environment for business are Number presented to Quarterly and MCI MCI/PCU Existent drafted presented to Cabinet (NEW) Cabinet Reports Intermediate Result 3: Develop viable microfinance institutions 1. Southern Sudan Microfinance SSMDF has SSMDF has None Half SSMDF Development been been MCI/PCU existent yearly Reviews Facility is established (NEW) established established 12 Intermediate Results and Indicators Baseline Target Values Progress To Unit of Original Responsibilit Date January Frequenc Data Source/ Intermediate Results Indicators Measure- Project y for Data Comments (December 2012 y Methodology Core ment Start Collection 2010) (2007) 2. Number of new microfinance SSMDF institutions (MFIs) operational in Number 0 2 3 Quarterly MCI/PCU Reviews Southern Sudan Women: Women: Women: 3. Number of loans by gender 3,548 23,318 25,000 SSMDF Number Quarterly MCI/PCU (NEW) Men: Men: Men: Reviews 3,550 15,546 16,000 Women: SDG 1.75 Women: 4.56 Women: 5 SSMDF 4. Value of loans by gender (NEW) Quarterly MCI/PCU Million Men: Men: 8.83 Men: 9 Reviews 1.90 A combinat of factors le deterioratio initially: we SSMDF 5. Portfolio at Risk (NEW) % 3 19 12 Quarterly MCI/PCU systems, Reviews demolition markets, hig staff turnov etc. Intermediate Result 4: Facilitate creation of higher value-added industries Directorate of 1. Industrial Competitiveness None Strategy being Strategy Quarterly Industry, MCI/PCU Strategy is completed existent prepared completed MCI/Reports Work is in Mining Act Ministry of progress on the 2. Mining Act and supporting None and Energy and Mining Act Quarterly MCI/PCU regulations are developed existent Regulations Mining/ and are developed Reports regulations 13 Intermediate Results and Indicators Baseline Target Values Progress To Unit of Original Responsibilit Date January Frequenc Data Source/ Intermediate Results Indicators Measure- Project y for Data Comments (December 2012 y Methodology Core ment Start Collection 2010) (2007) 3. Staff of the MCI and MEM are PCU Progress trained (NEW) Number 0 22 30 Quarterly PCU Reports Intermediate Result 5: Facilitate the establishment of a functioning wholesale market Ministry of 1. Design of the wholesale market is None Completed Completed Quarterly Finance of MCI/PCU completed (NEW) existent CES 14 15