The World Bank Lowlands Livelihood Resilience Project (P164336) REPORT NO.: RES42001 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LOWLANDS LIVELIHOOD RESILIENCE PROJECT APPROVED ON MAY 23, 2019 TO FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA (FDRE) AGRICULTURE AND FOOD AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Carolyn Turk Regional Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Holger A. Kray Task Team Leader(s): Vikas Choudhary, Esayas Nigatu Gebremeskel The World Bank Lowlands Livelihood Resilience Project (P164336) ABBREVIATIONS AND ACRONYMS The World Bank Lowlands Livelihood Resilience Project (P164336) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P164336 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 23-May-2019 10-Oct-2025 Organizations Borrower Responsible Agency Federal Democratic Republic of Ethiopia (FDRE) Ministry of Peace Project Development Objective (PDO) Original PDO To Improve Livelihood Resilience of Pastoral and Agro-Pastoral Communities in Ethiopia OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-64120 23-May-2019 03-Jun-2019 21-Nov-2019 10-Oct-2025 280.00 11.76 260.95 IDA-D4600 23-May-2019 03-Jun-2019 21-Nov-2019 10-Oct-2025 70.00 0 68.90 The World Bank Lowlands Livelihood Resilience Project (P164336) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. Lowlands Livelihood Resilience Project (LLRP) is financed with International Development Association (IDA) credit of US$280 million and grant amount of US$ 70 million. The Project Development Objective is “to improve livelihood resilience of pastoral and agro-pastoral communities in Ethiopia”. The project was approved by the World Bank board on May 23, 2019 and it became effective on November 20, 2019. The expected closing date of the project is 10 October 2025. 2. International Fund for Agriculture Development (IFAD) is co-financing the project, in the amount of US$90 million. The co-financing was approved by the IFAD board in September 2019 and the co-financing was declared effective on 20 May 2020. 3. Project status: The project is in its 7 month of implementation. The national launch of the project was held in December 5, 2019 and since then, the project has been launched in four regions, except Gambella and B’Gumez. First virtual Joint Review and Implementation Support (JRIS) mission for Lowlands Livelihood Resilience Project (LLRP) was conducted from May 4 to May 8, 2020. Due to the COVID-19 pandemic, no field visits or in-person meetings were held, and the entire mission was organized though web-conferencing facilities. 4. Since the effectiveness of LLRP in November 2019, the Ministry of Peace (MoP) and the project team have been exerting efforts towards effectively managing the launch stage of the project. Encouraging preparatory activities have been initiated, including establishment of Project Coordination Units (PCUs) at federal and regional levels, recruitment of some staff and developing and or adoption of implementation guidelines and operation manuals for respective component activities. The mission was also pleased to see the commencement of some component activities such as: establishment of Task Forces for the implementation of component one activities, conducting Training of Trainers (ToT) on Rangeland Management and Investment Plans (RMIP) preparation for the core project staff and task force members across the six project regions, identification of Shelf- projects that can potentially be financed under the strategic investments, identifying and establishing institutional partnership with key implementing partners. Overall, the project has made good efforts since its effectiveness and the Implementation Progress of the project is rated as Moderately Satisfactory. 5. FPCU and regional PCUs are in the process of establishing an environmental and social management system that will help to comply with the environmental and social safeguard’s requirements of the project at all levels. The social and environmental safeguard rating of the project is Moderately Satisfactory. The mission noted that the existing system within the project provides reasonable assurance that the project funds are used for intended purposes. Financial reports are submitted timely and Bank accounts have been opened at all levels. The Financial Management is rated as Moderately Satisfactory. The federal PIU has prepared the main project procurement manual and the CDD procurement manual. The federal PCU has also established a dedicated Bid Endorsing Committee in accordance with the agreed procurement arrangement. However, the mission is concerned on the overall procurement management of the project. Among others, the mission learnt with great concern that as of April 30,2020, none of the PIUs hired procurement expert as per the agreed arrangement. As a result, the project could not implement much of the planned procurement activities planned and procurement management was rated as Moderately Unsatisfactory. The World Bank Lowlands Livelihood Resilience Project (P164336) 6. To date, approximately US$11.76 million, or 3.44% of the total IDA allocated funds of US$350 million, has been disbursed. 7. Rational for restructuring: The Government of Ethiopia has requested for supplementary budget support for Second Ethiopia Growth and Competitiveness Development Policy Operation (DPO II) to Cope-up with the Macroeconomic impact of CoVID 19 on Ethiopia. Financial resources worth US$250 million for the supplementary DPO will be made available by cancelling portion of the Budget under IDA financed ongoing projects. This includes cancelling of US$125 million from the recently effective Lowlands Livelihood Resilience Project. This cancellation of US$125 million will be replenished in FY24 out of IDA20 or earlier out of IDA19, therefore there is no change in scope or scale or any other aspect of LLRP. II. DESCRIPTION OF PROPOSED CHANGES 8. Restructuring summary: This restructuring entails cancellation of US$125 million or SDR 91.58 million, comprising of US$63.72 million or SDR 46.68 million from IDA credit (6412-ET) and US$61.28 million or SDR 44.89 million from IDA grant (D460-ET). This is summarized below: I. Change in amount allocated to Category schedule (i) Category 1: Goods, works, non-consulting services, and consulting services for the Project and Operating Costs has been changed from the original credit (198,440,000 SDR) and grant (48,650,000 SDR) to now credit (151,752,524.73 SDR) and grant (3,750,306.27 SDR) to accommodate cancellation of US$125 million. III. SUMMARY OF CHANGES Changed Not Changed Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ The World Bank Lowlands Livelihood Resilience Project (P164336) Safeguard Policies Triggered ✔ 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_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' S REQUEST IDA-64120- Disburs 200,300,000.0 153,612,524.7 XDR 46,687,475.27 26-May-2020 FOR 001 ing 0 3 COUNTRY REASONS BORROWER' S REQUEST IDA-D4600- Effectiv XDR 50,100,000.00 44,899,693.73 26-May-2020 5,200,306.27 FOR 001 e COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed The World Bank Lowlands Livelihood Resilience Project (P164336) IDA-64120-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GDs,Wks,NCS,CS for th prjct & OC 198,440,000.00 412,048.52 151,752,524.73 0.00 151752524.73 iLap Category Sequence No: 2 Current Expenditure Category: Svngs Lverag Grts RUSACCOS Prt 2.2c 1,450,000.00 0.00 1,450,000.00 0.00 1450000 iLap Category Sequence No: 3 Current Expenditure Category: PPF REFINANCING 410,000.00 23,486.88 410,000.00 410000 Total 200,300,000.00 435,535.40 153,612,524.73 IDA-D4600-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GDs,Wks,NCS,CS for th prjct & OC 48,650,000.00 0.00 3,750,306.27 0.00 3750306.27 iLap Category Sequence No: 2 Current Expenditure Category: Svngs Lverag Grts RUSACCOS Prt 2.2c 1,450,000.00 0.00 1,450,000.00 0.00 1450000 Total 50,100,000.00 0.00 5,200,306.27 .