The World Bank Implementation Status & Results Report Financial Sector Support Project. (P151816) Financial Sector Support Project. (P151816) AFRICA EAST | Kenya | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2015 | Seq No: 12 | ARCHIVED on 26-Jan-2021 | ISR44996 | Implementing Agencies: Republic of KENYA, Directorate of Budget & Fiscal & Economic Affairs Key Dates Key Project Dates Bank Approval Date: 30-Apr-2015 Effectiveness Date: 10-Jul-2015 Planned Mid Term Review Date: 28-Feb-2018 Actual Mid-Term Review Date: 19-Feb-2018 Original Closing Date: 31-Jul-2020 Revised Closing Date: 30-Apr-2021 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The project's development objective is to strengthen the legal, regulatory and institutional environment for improved financial stability, access to and provision of, affordable and long term financing. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1: Strengthening Institutions:(Cost $23.30 M) Component 2: Enabling Efficient Financial Intermediation:(Cost $6.40 M) Component 3: Mobilizing Long-Term Finance:(Cost $5.30 M) Component 4: Supporting Project Management:(Cost $1.30 M) Contingency:(Cost $0.70 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions The Financial Sector Support Project (FSSP) became effective on July 10, 2015, with an expected closure date of April 2021. FSSP was built on previous financial sector reforms and gains realized through the Financial and Legal Sector Technical Assistance Project (FLSTAP). The project development objective is to strengthen the legal, regulatory and institutional environment for improved financial stability, access to and provision of, affordable and long-term financing. The FSSP project is expected to support Kenyan financial sector authorities in further developing regulatory and supervisory frameworks that continue to be effective in mitigating the new risks associated with the financial sector’s rapid development, deepening expansion across sectors, and across borders. It supports the upgrade of the supervisory, regulatory, and institutional framework to keep pace with more complex markets and products with the overall objective of enhancing stability. 1/26/2021 Page 1 of 6 The World Bank Implementation Status & Results Report Financial Sector Support Project. (P151816) FSSP’s project components and key interventions include: Component 1: Strengthening Financial Institutions This component focuses on the overarching reform, modernization, and capacity support to the financial sector institutional framework. This component delivers technical assistance to the various beneficiaries, mostly in the form of consultancies, to design roadmaps and action plans, and implementation support to realize the planned reforms. It also supports the upgrade of IT systems and delivers capacity support to ensure a more effective functioning of the financial architecture. Under this component, the project has primarily assisted financial sector regulators in strengthening their supervision and surveillance systems, through both IT upgradation and advisors and technical assistance on the implementation of risk-based supervision; and helped develop frameworks for deposit guarantees and deposit insurance for the non-bank sectors. Beneficiaries of this component include the Central Bank of Kenya (CBK), the Insurance Regulatory Authority (IRA), the SACCO Societies Regulatory Authority (SASRA), the Kenya Deposit Insurance Corporation (KDIC) and the Capital Markets Authority (CMA) Component 2: Enabling Efficient Financial Intermediation This component accelerates the financial inclusion agenda in the Republic of Kenya with a focus on strengthening financial infrastructure and making more transparent the pricing of financial intermediation (savings and lending) so that more businesses and individuals have access to affordable financial products. The component supports consultancies, training and IT purchases. Under this component, the Project has committed to support the implementation of a collateral registry system, and provide technical assistance in shoring up the legal and regulatory framework for movable property. Additionally, the Project is supporting strengthening of the Insolvency Framework through technical assistance, and providing assistance in assessing and strengthening the credit reporting system in Kenya. Key beneficiaries under this component include the Office of the Attorney General, and National Treasury. Component 3: Increasing Availability of Long-term Finance This component focuses on strengthening the demand for and supply of long-term funds so that Kenya’s growing development finance needs for long-term projects in infrastructure, housing, etc. can be met. The component includes support via consultancies, training and IT purchases. Under this component, the Project is supporting the development of a range of products for long term finance, including around informal pensions, new capital market products, and new insurance products. Additionally, this component will assist regulators in upgrading systems and modernizing financial infrastructure for issuing long term debt. Key beneficiaries include the National Treasury – Public Debt Management Office (PDMO). Retirement Benefits Authority (RBA), Insurance Regulatory Authority (IRA), Capital Markets Authority (CMA), and Central Bank of Kenya (CBK). Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Moderate Moderate Macroeconomic Moderate Moderate High Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Low Low Low Sustainability Fiduciary Moderate Moderate Moderate Environment and Social Low Low Low Stakeholders Low Low Low Other -- -- -- Overall Moderate Moderate Moderate 1/26/2021 Page 2 of 6 The World Bank Implementation Status & Results Report Financial Sector Support Project. (P151816) Results PDO Indicators by Objectives / Outcomes Improved financial stability IN00937345 ►Implement Kenya Deposit Insurance Corporation (KDIC) bank resolution/crisis management operational framework (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No Yes Yes Date 24-Aug-2018 30-Jun-2020 31-Dec-2020 30-Apr-2021 Indicator changed from progress towards achieving compliance with Essential Criteria of Basel Core Comments: Principles. Enabling effecient intermediation IN00937343 ►Reduced net interest margin (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 Enhanced access to long term financing IN00937344 ►Long-term assets held by pension funds (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 47.00 52.00 50.00 52.00 Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 Intermediate Results Indicators by Components Strengthening institutions IN00937380 ►Crisis simulation training and practice sessions undertaken regularly to activate KDIC operational framework for crisis management (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 1.00 3.00 1/26/2021 Page 3 of 6 The World Bank Implementation Status & Results Report Financial Sector Support Project. (P151816) Date 05-Nov-2018 30-Jun-2020 31-Dec-2020 30-Apr-2021 One (1No.) training was held in December 2015 where 30 officers drawn from the Financial Sector Regulators were trained. Indicator changed from Mapping exercise of Financial Conglomerates. Comments: The contract with the Toronto Center to support KDIC undertake crisis simulation training and practice sessions could not be signed due to disruptions caused by travel restrictions related to the COVID-19 pandemic. IN00937382 ►Number of MDAs services using electronic payment instruments (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 290.00 312.00 1,500.00 Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 Enabling Effecient Financial Intermediation IN00937376 ►Depth of credit information index (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 8.00 8.00 3.00 Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 IN00937378 ►Increase in banked retail investor Accounts (MAkiba) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 15,000.00 573,504.00 580,020.00 150,000.00 Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 IN00937383 ►Draft legal framework for a secured transactions regime (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 The Secured Transaction Regime Act was assented into law on 16th May 2017. Comments: Indicator achieved Mobilizing long-term Financing IN00937377 ►Increase in Insurance coverage (Percentage, Custom) 1/26/2021 Page 4 of 6 The World Bank Implementation Status & Results Report Financial Sector Support Project. (P151816) Baseline Actual (Previous) Actual (Current) End Target Value 2.80 2.90 2.34 3.57 Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 IN00937379 ►Draft framework for sub-national entities on debt management (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Ongoing Ongoing Yes Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 Assessment of financing gaps for counties has been concluded. The draft report is under review. Comments: IN00937381 ►Draft framework / regulation for new long term products (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 2.00 2.00 Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 IN00937384 ►Increase in Pension coverage (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 15.00 20.00 22.00 20.00 Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 IN00937385 ►Increase in volume of secondary market transactions of government debt (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N/A Yes Yes Yes Date 01-May-2015 30-Jun-2020 31-Dec-2020 30-Apr-2021 Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed 1/26/2021 Page 5 of 6 The World Bank Implementation Status & Results Report Financial Sector Support Project. (P151816) P151816 IDA-56270 Effective USD 37.00 37.00 0.00 21.67 15.51 58% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P151816 IDA-56270 Effective 30-Apr-2015 04-Jun-2015 10-Jul-2015 31-Jul-2020 30-Apr-2021 Cumulative Disbursements 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 09-Nov-2018 ,Level Approved on 28-Jul-2020 Related Project(s) There are no related projects. 1/26/2021 Page 6 of 6