$ Report No: RES00678 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region APPROVED ON 04-May-2018 TO Banque des Etats de l'Afrique Centrale (BEAC) Finance, Competitiveness and Innovation Western And Central Africa Regional Vice President: Ousmane Diagana Regional Director: Abebe Adugna Dadi Country Director: Boutheina Guermazi Practice Manager: Mehnaz S. Safavian Task Team Leader(s): FNU Besong Joseph Neiville Agbor, Jean Michel Lobet, Michael Corlett The World Bank Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region (P161368) ABBREVIATIONS AND ACRONYMS The World Bank Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region (P161368) @#&OPS~Doctype~OPS^dynamics@restrhybridbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name Strengthening the Capacity of Regional Financial P161368 Institutions in the CEMAC Region Product/Financing Instrument Geographical Identifier Investment Project Financing (IPF) Western and Central Africa Approval Date Current Closing Date 04-May-2018 30-Dec-2024 Original EA Category Not Required (C) (PAD Approval Package-04 May 2018) Organizations Borrower Responsible Agency Commission Bancaire de l'Afrique Centrale - COBAC, Groupe d' Banque des Etats de l'Afrique Centrale (BEAC) Action contre le Blanchiment d' Argent en Afrique Centrale (GABAC) @#&OPS~Doctype~OPS^dynamics@restrhybridoperationstatus#doctemplate OPERATION STATUS Project Development Objective (DO) Original Development Objective The Project Development Objective (PDO) is to strengthen the capacity of selected CEMAC regional financial institutions to implement their mandates in the areas of financial stability, inclusion and integrity. Disbursement Summary (in USD million) i The World Bank Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region (P161368) Source of Funds Net Commitment Disbursed Undisbursed % Disbursed IBRD -- -- -- 0 IDA 32.39 28.58 4.41 86.64 Grants -- -- -- 0 Policy Waivers Does this restructuring trigger the need for any policy waiver(s)? No @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate ii The World Bank Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region (P161368) TABLE OF CONTENTS I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING ........................................................................................1 II. DESCRIPTION OF PROPOSED CHANGES ....................................................................................................................2 III. PROPOSED CHANGES ................................................................................................................................................2 IV. DETAILED CHANGE(S) ...............................................................................................................................................3 The World Bank Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region (P161368) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Project Status 1. The Strengthening the Capacity of Financial Regional Institutions in the CEMAC Region Project (P161368) was approved on May 4, 2018, in the amount of US$ 35 million (US$ 25 million IDA credit and US$ 10 million IDA grant) and became effective on October 24, 2018. The Project Development Objective (PDO) is to strengthen the capacity of selected CEMAC regional financial institutions to implement their mandates in the areas of financial stability, inclusion, and integrity. 2. Progress towards achievement of the PDO and overall implementation progress is rated moderately satisfactory. Seven years after effectiveness, the project is currently on track to meet its development objectives. Three out of 4 development indicators (Increased capacity of GABAC to comply with the FATF membership requirements, and the Economic, Financial and Monetary database and the regional Banking and MFI reporting system going live by December 30, 2024) have been achieved. The DLI-based component of the project (component 4) has been very successful. All DLIs on credit bureau (namely, adoption of credit bureau regulation and launching tendering process for identification of private credit bureau operator) and on exchange regulations have been achieved. 3. The project has made robust progress since the mid-term review which in turn have allowed better disbursement performance (currently at 87%). These include: a. Field work and data collection as well as the data processing tool for the statistical component (operationalization of the BDEFM database and development of the ICAE index) is on track to be completed by December 30, 2024. b. The regional financial inclusion strategy has been drafted and formally adopted in December 2023. c. The software development for SYSTAC 2 (the regional payment system infrastructure) has been completed and tested on a cloud platform. The physical equipment to operate the SYSTAC 2 system has also been delivered and installation will be completed by December 30, 2024. However, the testing of SYSTAC 2 in the BEAC environment and training of staff will go beyond December 30, 2024 as a result of multiple delays. The real time gross settlement system SYGMA has also been upgraded to the lasted version but its installation in the BEAC environment will not be completed before December 30, 2024 owing to equipment delays. d. COBAC has finalized important activities including the redesign of the regulatory framework of the regional deposit guarantee scheme (FOGADAC). The upgrade of SPECTRA, the regional IT supervisory system covering both banks and microfinance institutions, will be completed and be fully operational by December 30, 2024. e. GABAC has completed the six National Risk Assessments and six Mutual Evaluations in CEMAC. 4. Despite the substantial progress, the implementation of the new regional payment systems infrastructure has faced multiple delays resulting from COVID 19, as well as slow and complex procurement and delays on equipment delivery (disruption of supply chains, customs clearance and installation). Rationale for Restructuring Page 1 The World Bank Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region (P161368) 5. This restructuring proposes to extend the closing date of the project by 6 months from December 30, 2024, to June 30, 2025; this is the third extension of the closing date of the project. 6. Extension of closing date. Following the November 2024 implementation support mission, it was determined that while most IDA-financed activities are expected to be completed by December 30, 2024, significant delays in the implementation of the SYSTAC 2 and SYGMA payment system infrastructures make this deadline unattainable. The equipment, delivered to BEAC in early November 2024, requires substantial technical work due to the complexity of the systems. Attempting to rush implementation would introduce considerable risks, potentially leaving the regional authorities with an incomplete and non-operational IT system. This outcome could compromise the long-term sustainability of the financed activities. As a result, an extension of the project’s closing date is both necessary and justified. 7. An extension of the project's closing date until June 30, 2025, would allow for the full installation and operationalization of SYSTAC 2 and SYGMA. The World Bank team and client agreed on the following: • Firm commitment of the BEAC at the highest level. The BEAC committed to ensure the installation and operationalization of SYSTAC 2 and SYGMA before the new deadline of June 30, 2025. • The extension of the project only applies to SYSTAC 2 and SYGMA projects. All other outstanding activities will be completed and closed by December 30, 2024 as originally scheduled. • Enhanced monitoring: The BEAC has committed to holding bi-monthly technical meetings and monthly steering committee meetings for close monitoring of the implementation of the work. 8. Financial reallocations: No reallocation is requested. 9. Updated M&E framework. No update of M&E requested. II. DESCRIPTION OF PROPOSED CHANGES 10. The following amendment will be made to the loan agreement and operational documents: - Amendment of closing date. The closing date of the project will be extended from December 30, 2024, to June 30, 2025. This will be the third extension of the project. The implementation schedule will be revised to reflect the new closing date and ensure the timely completion of all remaining activities. @#&OPS~Doctype~OPS^dynamics@restrhybridsummarychanges#doctemplate Summary changes III. PROPOSED CHANGES Page 2 The World Bank Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region (P161368) Operation Information Proposed Changes Operation Information Proposed Changes Development Objective No Loan Closing Date Extension Yes Safeguard Policies Triggered No Loan Cancellations No ISDS No Reallocations No MFD/PCE No Financial Management No Results No Procurement No Risks No Institutional Arrangement No Legal Covenants No Implementation Schedule No Conditions No Implementation Modalities No Disbursements Estimates No Disbursements Arrangements No DDO No Clients No Appraisal Summary No Components No @#&OPS~Doctype~OPS^dynamics@restrhybriddetailedchanges-disclose#doctemplate IV. DETAILED CHANGE(S) COSTS & FINANCING Private Capital Facilitation Is this an MFD-Enabling Project (MFD-EP)? Is this project Private Capital Enabling (PCE)? LOANS Loan Closing Page 3 The World Bank Strengthening the Capacity of Regional Financial Institutions in the CEMAC Region (P161368) Original Revised Proposed Proposed Deadline Loan/Credit/Trust Status Closing Closing(s) Closing for Withdrawal Fund Applications IDA-62290-001 Effective 04-Jul-2023 30-Dec-2024 30-Jun-2025 30-Oct-2025 IDA-D3030-001 Effective 04-Jul-2023 30-Dec-2024 30-Jun-2025 30-Oct-2025 Page 4