The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) LATIN AMERICA AND CARIBBEAN | Honduras | IBRD/IDA | Investment Project Financing (IPF) | FY 2019 | Seq No: 11 | Archived on 27-Nov-2024 | ISR01869 Implementing Agencies: Secretaría de Agricultura y Ganadería 1. OBJECTIVE 1.1 Development Objective Original Development Objective (Approved as part of Approval package on 26-Jun-2019) The PDO is to improve access to markets and climate-smart practices and contribute to the economic inclusion of targeted beneficiaries in select agricultural value chains. Has the Development Objective been changed since Board Approval of the Project Objective? No 2. COMPONENTS Name Support to enhance the competitiveness, resilience, and innovation of agribusiness initiatives:(Cost 115,400,000.00) Support to the modernization of Honduras’ agribusiness enabling environment:(Cost 22,400,000.00) Project management support:(Cost 9,100,000.00) Contingency Emergency Response Component (CERC):(Cost 0.00) 3. OVERALL RATINGS Name Previous Current Progress towards achievement of PDO Moderately Satisfactory Moderately Unsatisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Unsatisfactory Overall Risk Rating Substantial Substantial 4. KEY ISSUES & STATUS Nov 27, 2024 Page 1 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) 4.1 Implementation Status and Key Decisions The COMRURAL II project's Implementation Status Report (ISR), based on the findings of a September 2024 mission and ongoing communications, shows significant delays and lack of progress on key performance indicators, with disbursements remaining at 33% compared to the previous report. The project has made progress with 5,733 farmers adopting improved technology, a 46% increase in gross sales from business plans, and the creation of 9,175 full-time jobs. However, slow business plan ratification and implementation pace may prevent meeting the March 2026 closing date, leading to a recommendation to downgrade the project's success level. The Project Implementing Unit (PIU) has hired 85% of its staff, but key milestones remain unmet, risking $36.3 million in cancellations. Component 1 faces delays in contracting firms for subprojects, potentially requiring some projects to be shifted to COMRURAL III. Component 2 has allocated 99% of its 2024 budget to procurement, with full awards expected by December 15, 2024. Component 3 has hired 54 staff, with 9 positions vacant, and faces contract renewals by December. The World Bank suggested the proactive fund cancellation and project restructuring to meet realistic goals, with a proposal expected in the fourth quarter of 2024. It is also suggested that the Government of Honduras (GOH) partially cancels the project as the plan agreed upon in April (previous MTR mission) did not meet its goals. However, on November 15, 2024 the Ministry of Finance requested the reallocation and withdrawal of US $25 million from COMRURAL II to the Honduras Second Disaster Risk Management Development Policy Credit with a Catastrophe Deferred Drop Down Option. If this reallocation of $25 M is implemented, then COMRURAL II will need to be restructured to reduce the scope of the results framework in accordance with remaining funds and remaining time for implementation. 5. SYSTEMATIC OPERATIONS RISK-RATING TOOL Rating at Approval Last Approved Rating Risk Category Approval Package - ISR Seq. 010 - 29 May Proposed Rating 27 Jun 2019 2024 Political and Governance Substantial Substantial Substantial Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Substantial Substantial Substantial Institutional Capacity for Implementation and High Substantial Substantial Sustainability Fiduciary High Substantial Substantial Environment and Social Substantial Substantial Substantial Nov 27, 2024 Page 2 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) Stakeholders Substantial Substantial Substantial Overall Substantial Substantial Substantial Nov 27, 2024 Page 3 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) 6. RESULTS 6.1 PDO Indicators by PDO Outcomes Implementation of climate-smart agriculture practices in project areas Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year Farmers implementing 0.00 Jun/2019 3,904.00 12-Apr-2024 5,733 04-Sep-2024 12,600.00 Mar/2026 improved agricultural Comments on The number is expected to rise as Window 1 starts implementation in January 2025. technology (Number) achieving targets Farmers implementing 0.00 1,589.00 2,152.00 3,150.00 improved agricultural technology - Female (Number) Farmers implementing 0.00 2,315.00 3,581.00 9,450.00 improved agricultural technology - male (Number) Improved access to markets of project beneficiaries Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year Increase in real gross sales 0.00 Jun/2019 39.00 12-Apr-2024 45.83 04-Sep-2024 20.00 Mar/2026 generated by business plans in execution (Percentage) Improved economic inclusion Indicator Name Baseline Actual (Previous) Actual (Current) Closing Period Page 4 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) Value Month/Year Value Date Value Date Value Month/Year 0.00 Jun/2019 8,880.00 12-Apr-2024 9,175.00 04-Sep-2024 9,700.00 Mar/2026 Comments on Until now, the share of female permanent employment has not been collected by the PIU. achieving targets However, following guidance from the Task Team, the PIU will begin collecting gender- disaggregated data for this indicator. Jobs (full-time) created under The task team notes that the achievementf the indicator appears high if compared with the business plans financed by small number of business plans currently under implementation. The mission checked these the project (Number) numbers and they appear to be those actually provided by the RPOs, as validated by the PSDEs. The figure is in any case aligned with the experience in the previous COMRURAL I Project, where 121 business plans created an estimated 24,673 permanent and temporary jobs. Nonetheless, the team expects that this indicator will change in the next ISR, where the Results Framework will be measured using the clear guidance in the new indicator sheets that the PIU just completed with support fromhe task team. Percentage women 0.00 0.00 0.00 25.00 (Percentage) Sustainability of project design Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year Rural Producer Organizations 0.00 12-Apr-2024 60 04-Sep-2024 80.00 Mar/2026 working under a productive Comments on Revised in August 2024. alliance approach 18 months achieving targets after first disbursement (Percentage) Farmers continuing to adopt 0 12-Apr-2024 0 04-Sep-2024 80 Mar/2026 improved agricultural Comments on Added in August 2024. Page 5 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) technology two months after achieving targets completion of their business plan (Percentage) 6.2 Intermediate Results Indicators by Components Support to enhance the competitiveness, resilience, and innovation of agribusiness initiatives Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year 0.00 Jun/2019 70.00 12-Apr-2024 77.00 04-Sep-2024 370.00 Mar/2026 Comments on The target 370 business plans include subprojects under window 1 (subsistence agriculture, achieving targets target 240 BPs), window 2 (transition agriculture, target 100 BPs), and window 3 (commercial agriculture, target 30 BPs) of the Project. The 70 BPs that are ongoing arell under window 2, and the PIU committed to ratifying the remaining by September 30 but only managed to ratify 7. It is expected additional 5 BPs will be ratified by December 15, 2024 and the rest under evaluation Business plans financed under will transfer to COMRURAL III. the project (Number) Reallocation of funds from window 3 to window 1 and a different implementation mechanism for window 3 was approved in October, so the Project has a new target of 293 BPs for subsistence agriculture and 5 (but larger) BPs for commercial agriculture. For window 1, the Project has already pre-identified 120 BPs that can start as soon as the implementing firms are hired by November 30, 2024. For window 3, the Project already received 13 applications that are currently under review. Rural Producer Organizations 0.00 Jun/2019 0.00 12-Apr-2024 27.02 04-Sep-2024 70.00 Mar/2026 that reach the goals defined Comments on To date, the first 70 business plans are being executed as originally planned and 2 are in process in the Business Plans achieving targets of closing. Reporting of early results will be carried out in coming months. Page 6 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) (Percentage) Beneficiaries participating in 0.00 Jun/2019 6,842.00 12-Apr-2024 7,428.00 04-Sep-2024 18,000.00 Mar/2026 business plans under the Comments on The number is expected to rise significantly as Window 1 and 3 start implementation in the project (Number) achieving targets thirs quarter of FY 25. 0.00 31.90 32 25.00 Percentage women Comments on This indicator measures the percentage of women beneficiaries participating directly in (Percentage) achieving targets business plans under the project. 0.00 14.90 15 10.00 Percentage youth Comments on This indicator measures the percentage of youth directly participating in business plans under (Percentage) achieving targets the project. 0.00 10.40 12.50 10.00 Percentage Indigenous Comments on This indicator measures the percentage of indigenous people directly participating in business (Percentage) achieving targets plans under the project. 0.00 0.17 2 5.00 Percentage Afro- Comments on This indicator measures the percentage of Afro-descendants directly participating in business descendant achieving targets plans under the project. Implementation of Window 1 starting in Quarter 3 FY25 in the Atlantic (Percentage) Coast is expected to significantly increse the share of Afrohondurans participating in BPs. Percentage covered 0.00 0.00 0.00 10.00 under GoH social Comments on This indicator measures the percentage of beneficiaries directly participating in business plans protection programs achieving targets under the project who are currently registered under any of the GoH social protection (Percentage) programs. Private Capital Mobilized 0.00 Jun/2019 13,870,000.00 12-Apr-2024 15,055,904.32 04-Sep-2024 53,500,000.00 Mar/2026 (funds from the private financial partner, commercial alliance, plus contributions from the RPOs) (Amount(USD)) Page 7 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) Beneficiaries with approved 0.00 Jun/2019 93.00 12-Apr-2024 93.00 04-Sep-2024 80.00 Mar/2026 business plans satisfied with the technical and financial assistance received under the project (Percentage) Beneficiaries satisfied with 0.00 Jun/2019 41.00 12-Apr-2024 41.00 04-Sep-2024 80.00 Mar/2026 the communication and consultation processes on their business plan by the RPO (Percentage) Percentage of beneficiaries 0.00 Jun/2019 87.50 12-Apr-2024 87.50 04-Sep-2024 80.00 Mar/2026 who report that they received Comments on 1 complaint received in 2023 is still in process, pending legal action against the equipment satisfactory response to their achieving targets supplier led by the RPO. grievances reported through the GRM (Percentage) Support to the modernization of Honduras’ agribusiness enabling environment Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year 0 Aug/2024 0 19-Aug-2024 0 04-Sep-2024 15 Mar/2026 Comments on This indicator aims to simplify, through the existing Digital Social Sector of the Economy (SSE Reduction in the average time achieving targets Digital) platform, the incorporation of a new module that will reduce the time required in required for business processes for updating and restructuring the Boards of Directors in the legalization and legalization at SENPRENDE (at administrative procedures of commercial enterprises and enterprises in the social sector of the least one process reduced in economy (Entrepreneurs, Micro, Small and Medium-sized Enterprises/MSMEs). time) (Percentage) Activities that lead to reductions of processing time started in October and are expected to start yielding results by the end of the second semester of FY25 No Aug/2024 No 19-Aug-2024 No 04-Sep-2024 Yes Mar/2026 Construction of SENASA Comments on This indicator measurea the construction of the new SENASA facilities. facilities (Yes/No) achieving targets Construction of facilities is expected to start during the third quarter of FY25. Page 8 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) Number of prioritized tests 0 Aug/2024 0 19-Aug-2024 0 04-Sep-2024 650 Mar/2026 (increase in analytical Comments on This indicator provides information on the analytical capacity of the Food Control Laboratory capacity) in the determination achieving targets (LABCA), based on the analyses carried out using the inputs and equipment acquired under the of protein in food and nitrites project. in meat products/ARSA Activities that will produce increase in analytical capacity will be implemented during the (Number) second semester of FY25. Number of people trained in 0 Aug/2024 0 20-Aug-2024 0 04-Sep-2024 180 Mar/2026 agribusiness topics through Comments on The training activities are expected to be implemented during the second semester of FY25 the Agribusiness Units /SAG achieving targets (Number) Reduction in average time 0 Aug/2024 0 20-Aug-2024 0 04-Sep-2024 15 Mar/2026 required to expedite Comments on Activities that will lead to processing time reductions are expected to be implemented during environmental achieving targets the second semester of FY25. licenses/SERNA (Percentage) Contingency Emergency Response Component (CERC) Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year CERC established and ready to N/A 19-Aug-2024 N/A 04-Sep-2024 Yes Mar/2026 provide access to financial Comments on This indicator is only activated in the event of an eligible emergency. resources to Honduras in the achieving targets event of an eligible emergency. (Yes/No) Page 9 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) 7. DATA ON FINANCIAL PERFORMANCE 7.1 Cumulative Disbursements 7.2 Disbursements (by loan) Loan/Credit/TF Status Original Revised Cancelled Disbursed Undisbursed % Disbursed Historical Disbursed IDA-64480 Effective 75.00 75.00 0.00 25.00 50.00 33.33% 75.00 7.3 Key Dates (by loan) Loan/Credit/TF Status Approval Signing Effectiveness Orig. Closing Rev. Closing IDA-64480 Effective 27-Jun-2019 11-Apr-2020 04-May-2020 30-Sep-2024 31-Mar-2026 8. KEY DATES Nov 27, 2024 Page 10 of 11 The World Bank Implementation Status & Results Report Integrating Innovation for Rural Competitiveness in Honduras - COMRURAL II (P168385) Key Events Planned Actual Approval 27-Jun-2019 27-Jun-2019 Effectiveness 04-May-2020 04-May-2020 Mid-Term Review No. 01 22-Mar-2024 12-Apr-2024 Operation Closing/Cancellation 31-Mar-2026 9. RESTRUCTURING HISTORY Restructuring Level 2 Approved on 13-Dec-2022 Restructuring Level 2 Approved on 03-Oct-2024 Restructuring Level 2 Approved on 25-Jan-2024 10. ASSOCIATED OPERATION(S) There are no associated operations Nov 27, 2024 Page 11 of 11