FOR OFFICIAL USE ONLY Report No: PAD4954 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 148.8 MILLION (US$200 MILLION EQUIVALENT) TO THE REPUBLIC OF MOZAMBIQUE FOR A MOZAMBIQUE DIGITAL ACCELERATION PROJECT June 10, 2022 Digital Development Global Practice Eastern and Southern Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective April 30, 2022) Mozambican Currency Unit = Metical (MZN) US$1 = MZN 64.10 US$1.= SDR 0.74 FISCAL YEAR January 1 - December 31 Regional Vice President: Hafez M. H. Ghanem Country Director: Idah Pswarayi Riddihough Regional Director: Christine Zhenwei Qiang Practice Manager: Isabel Neto Task Team Leader: Casey Torgusson ABBREVIATIONS AND ACRONYMS 2G Second Generation 3G Third Generation 4G Fourth Generation A4Ai Alliance for Affordable Internet CAPEX Capital Expenditures CBA Cost-Benefit Analysis CE Citizen Engagement CERC Contingent Emergency Response Component CLR Completion and Learning Review CMC Community Multimedia Center CNI Critical National Infrastructure CNII Critical National Information Infrastructure CIIP Critical Information Infrastructure Protection CITT Center for Research and Technology Transfer for Community Development CO2 Carbon Dioxide COVID-19 Corona Virus Disease 2019 CPF Country Partnership Framework CSIRT Computer Security Incident Response Team CSO Civil Society Organization DE4A Digital Economy for Africa DIME World Bank’s Development Impact Evaluation DAAS Device Affordability and Access Scheme E&S Environmental and Social EASSy Eastern Africa Submarine System EDGE Mozambique Digital Governance and Economy Project EdTech Educational Technologies ESF Environmental and Social Framework ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan FCV Fragility, Conflict and Violence FM Financial management FSAU Universal Access Service Fund FY Fiscal Year GBV Gender-Based Violence GDP Gross Domestic Product GEMS Geo-Enabling Initiative for Monitoring and Supervision GHG Green House Gas GIL Africa Region Gender Innovation Lab GNI Gross National Income GoM Government of Mozambique GovNet Government Network GRID Green, Resilience and Inclusive Development GRM Grievance Redress Mechanism GRS Grievance Redress Service GSMA Global System for Mobile Communications Association IBRD International Bank for Reconstruction and Development ICT Information and Communications Technology ID4D Identity for Development IDA International Development Association IDP Internally Displaced Persons IFC International Finance Corporation IFR Interim Financial Report INAGE National e-Government Institute INCM Mozambique National Institute of Communications INE National Institute of Statistics INTIC National Institute of Information and Communications Technologies IPF Investment Project Financing IRU Indefeasible Rights of Way ISP Internet Service Provider IT Information Technology ITU International Telecommunications Union LAN Local Area Network LNG Liquified Natural Gas M&E Monitoring and Evaluation MCTES Ministry of Science, Technology, and Higher Education MDA Ministry, Department and Agency MDAP Mozambique Digital Acceleration Project MEGCIP Mozambique e-Government, Communications and Infrastructure Project MFD Mobilizing Finance for Development MINEDH Ministry of Education and Human Development MNO Mobile Network Operator MoU Memorandum of Understanding MTC Ministry of Transport and Communications MZN Mozambican Metical NGO Non-Governmental Organization NOC Network Operation Center NPV Net Present Value OPEX Operating expenditures PARPA Action Plan for the Reduction of Absolute Poverty PCM Private Capital Mobilization PIM Project Implementation Manual PIU Project Implementation Unit PLR Performance and Learning Review PPP Public-Private Partnership PPSD Project Procurement Strategy for Development PQG Programa Quinquenal do Governo PRA Prevention and Resilience Allocation ProEnergia+ Sustainable Energy and Broadband Access in Rural Mozambique Project PSC Project Steering Committee QoS Quality of Service RRA Risk and Resilience Assessment SADC Southern African Development Community SCD Systematic Country Diagnostic SDG Sustainable Development Goals SDR Special Drawing Rights SEA/H Sexual Exploitation, Abuse and Harassment SEP Stakeholder Engagement Plan SOC Security Operations Center SOE State-Owned Enterprise STEM Science, Technology, Engineering and Mathematics TA Technical Assistance TESCO Telecom Energy Services Company TC Technical Committees ToR Terms of Reference TVET Technical and Vocational Education and Training UN United Nations UNCTAD United Nations Conference on Trade and Development UNDESA United Nations Department of Economic and Social Affairs VPN Virtual Private Network WBG World Bank Group WDR World Development Report The World Bank Mozambique Digital Acceleration Project (P176459) TABLE OF CONTENTS DATASHEET ........................................................................................................................... 1 I. STRATEGIC CONTEXT ...................................................................................................... 6 A. Country Context................................................................................................................................ 6 B. Sectoral and Institutional Context .................................................................................................... 8 C. Relevance to Higher Level Objectives............................................................................................. 15 II. PROJECT DESCRIPTION.................................................................................................. 18 A. Project Development Objective ..................................................................................................... 18 B. Project Components ....................................................................................................................... 18 C. Project Beneficiaries ....................................................................................................................... 27 D. Results Chain .................................................................................................................................. 31 E. Rationale for Bank Involvement and Role of Partners ................................................................... 32 F. Lessons Learned and Reflected in the Project Design .................................................................... 33 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 35 A. Institutional and Implementation Arrangements .......................................................................... 35 B. Results Monitoring and Evaluation Arrangements......................................................................... 36 C. Sustainability................................................................................................................................... 37 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 38 A. Technical, Economic and Financial Analysis ................................................................................... 38 B. Fiduciary.......................................................................................................................................... 40 C. Legal Operational Policies ............................................................................................................... 41 D. Environmental and Social ............................................................................................................... 41 V. GRIEVANCE REDRESS SERVICES ..................................................................................... 43 VI. KEY RISKS ..................................................................................................................... 43 VII. RESULTS FRAMEWORK AND MONITORING ................................................................... 45 ANNEX 1: Implementation Arrangements and Support Plan .......................................... 54 ANNEX 2: Climate Adaptation and Mitigation Aspects ................................................... 61 The World Bank Mozambique Digital Acceleration Project (P176459) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Mozambique Mozambique Digital Acceleration Project Project ID Financing Instrument Environmental and Social Risk Classification Investment Project P176459 Substantial Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Enhanced Implementation Support (HEIS) Expected Approval Date Expected Closing Date 30-Jun-2022 31-Jul-2028 Bank/IFC Collaboration No Proposed Development Objective(s) To increase digital adoption and inclusion, and to support selected foundations for accelerated digital transformation Components Component Name Cost (US$, millions) Component 1: Digital Access and Inclusion 90.00 Page 1 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Component 2: Foundations for Accelerated Digital Transformation 102.00 Component 3: Project Management, Institutional Coordination and Citizen 8.00 Engagement Component 4: Contingent Emergency Response Component 0.00 Organizations Borrower: Republic of Mozambique Implementing Agency: Ministry of Transport and Communications PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 200.00 Total Financing 200.00 of which IBRD/IDA 200.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 200.00 IDA Credit 200.00 IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount Mozambique 200.00 0.00 0.00 200.00 National PBA 200.00 0.00 0.00 200.00 Total 200.00 0.00 0.00 200.00 Expected Disbursements (in US$, Millions) Page 2 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) WB Fiscal Year 2022 2023 2024 2025 2026 2027 2028 2029 Annual 0.00 6.00 13.00 30.00 45.00 55.00 46.00 5.00 Cumulative 0.00 6.00 19.00 49.00 94.00 149.00 195.00 200.00 INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Digital Development Education Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance  Moderate 2. Macroeconomic  Substantial 3. Sector Strategies and Policies  Substantial 4. Technical Design of Project or Program  Substantial 5. Institutional Capacity for Implementation and Sustainability  Moderate 6. Fiduciary  Substantial 7. Environment and Social  Substantial 8. Stakeholders  Substantial 9. Other  Substantial 10. Overall  Substantial Page 3 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance Assessment and Management of Environmental and Social Risks and Impacts Relevant Stakeholder Engagement and Information Disclosure Relevant Labor and Working Conditions Relevant Resource Efficiency and Pollution Prevention and Management Relevant Community Health and Safety Relevant Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities Cultural Heritage Relevant Financial Intermediaries Not Currently Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). Legal Covenants Page 4 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Sections and Description The Recipient, not later than 60 days after Effective Date, shall prepare and adopt, in accordance with terms of reference acceptable to the Association a Project implementation manual (“PIM”) setting out detailed guidelines, methods and procedures for the implementation of the Project, as described in the Financing Agreement (Schedule 2.I.B.1). Sections and Description The Recipient, not later than 6 months after the Effectiveness Date, shall recruit a Project accountant, as part of the fiduciary staff of the PIU, under terms of reference acceptable to the Association, as described in the Financing Agreement (Schedule 2. I. A. 2. (iii)). Conditions Type Financing source Description Disbursement IBRD/IDA No withdrawal shall be made for payments under Category (2), unless and until the Recipient has furnish to the Association the approved Device Affordability and Access Scheme Operational Rules, in a manner satisfactory to the Association. Type Financing source Description Disbursement IBRD/IDA No withdrawal shall be made for Emergency Expenditures under Category (3), unless and until all of the following conditions have been met in respect of said expenditures: (A) that the Recipient has determined that an Eligible Crisis or Emergency has occurred, and has furnished to the Association a request to withdraw Credit amounts under Category (3); and (B) the Association has agreed with such determination, accepted said request and notified the Recipient thereof; and the Recipient has adopted the CERC Manual and Emergency Action Plan, in form and substance acceptable to the Association. Page 5 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) I. STRATEGIC CONTEXT A. Country Context 1. With a Gross Domestic Product (GDP) per capita of US$449 in 20201, Mozambique is among the poorest countries in the world and faces a number of structural constraints that hinder its socio-economic development . It has significant natural-resource endowments2 and a strategic location3 within the region, but the economy is relatively undiversified, concentrated in capital-intensive ‘mega’ projects and low-productivity subsistence agriculture 4. The 31 million population is predominantly rural and geographically spread out5, creating significant infrastructure gaps and challenges in providing public services. Weak institutions and the unfinished process of state-building are reflected in the low quality of public services, an erosion of confidence in the state, lack of political and social inclusion, uneven state presence, limited administrative capacity, and systemic corruption6. These challenges are compounded by high vulnerability to exogenous shocks and natural disasters, as well as high population growth rates 7 which put pressure on job creation and service delivery8. Together, all constitute a fabric of intertwined and mutually reinforcing fragility drivers9. 2. Recurrent cycles of conflict and violence have undermined Mozambique's economic development . Since the end of the civil war in 1992, the country has experienced periodic armed confrontations and outbreaks of violence. The Maputo Peace and Reconciliation Accord signed in 2019 have so far successfully brought a close to the long-running politico-military conflict between Mozambican National Resistance (RENAMO) and the Government. However, Mozambique is now also grappling with conflict in the northern province of Cabo Delgado. Among the driving forces behind the insurgency is the systematic sense of exclusion and grievances that have been exploited by extremist groups. The conflict in Cabo Delgado remains volatile despite a noticeable decrease of violent incidents since the arrival of Rwandan and Southern African Development Community (SADC) regional troops. The insurgency threatens the economic potential of liquified natural gas (LNG) investments in the region. It has also destroyed human and physical capital, resulting in a mounting humanitarian and displacement crisis, with 5,500 people killed 10 and under one million people displaced from their homes11. The flow of Internally Displaced Persons (IDPs) has spread to other provinces in the North, putting additional pressure on the limited infrastructure amidst growing demand for access to essential services. 3. The Corona Virus Disease 2019 (COVID-19) pandemic reached Mozambique as it was attempting to recover from earlier shocks. The previous high growth rate trajectory was interrupted in 2016 with the discovery of undisclosed 1 World Bank, 2020. https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=MZ 2 Mozambique is endowed with three seaports, vast arable land, water, energy, mineral resources, and recently discovered offshore natural gas. 3 Four of the six countries it borders being landlocked and hence dependent on Mozambique for access to global markets. 4 The agriculture sector employs about 75 percent of the population and accounts for 25 percent of the GDP. It remains the primary source of livelihood in rural Mozambique, but productivity and value addition are low. Food and Agriculture Organization, 2022. 5 63 percent of the population residing in rural areas in 2020. World Bank, 2020. 6 According to Transparency International's 2019 Corruption Perceptions Index, Mozambique ranks 146th out of 180 countries. 7 The fertility rate was of 4.9 children per woman in 2018. World Bank, 2020. 8 According to current demographic trends, 500,000 youth will join the labor force every year between 2018 and 2050. Searching for the demographic dividend in Mozambique: an urgent agenda, World Bank, 2016. 9 Risk and Resilience Assessment (RRA) for Mozambique, World Bank, 2020. 10 International Crisis Group, 2022. 11 UN OCHA, February 202. https://reports.unocha.org/en/country/mozambique/ Page 6 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) public debts12, and the economic situation further deteriorated in 2019 after tropical cyclones Idai and Kenneth caused significant damage to infrastructure and livelihoods. Average annual growth dropped from 7.7 percent in 1994-2015 to 2.1 percent in 2016-201913. The COVID-19 health crisis thus hit Mozambique at an already vulnerable time. Real GDP contracted by 1.3 percent in 2020, as external demand fell, domestic lockdown measures disrupted supply chains and depressed domestic demand, and LNG investments were delayed14. The economy has since begun to recover moderately, with GDP growth of 2.2 percent in 2021, and medium and long-term growth prospects are largely positive, although still subject to considerable risks, including a new wave of COVID-19, new climate shocks and the re-emergence of the conflict in the North, which could lead to a surge in the prices of key commodities. Mozambique’s economy is also likely to be adversely affected by the global impact of the war in Ukraine, though some export sectors may benefit 15. 4. The high incidence of poverty is associated with low human capital endowment and high inequality. Mozambique's development model has been driven by extractive-led, capital-intensive sectors, with limited linkages to the local economy. As a result, growth has not translated into broad poverty reduction, nor has it been shared evenly. The poverty rate has stagnated at around 62-63 percent during the period 2016-2021 while the number of people living in extreme poverty has increased from 17.2 to 20.4 million16. These effects have been exacerbated by ongoing fragility, combined with the effects of COVID-19, conflict in the North, and weather shocks, which have reversed some of the social gains that the country had made at the beginning of the decade. The country ranks 181 st out of 189 countries in the United Nations (UN)'s Human Development Index for 2020, reflecting the poor provision of basic services in critical areas such as education and health. The country also remains one of the most unequal countries, with the 6 th highest Gini index in the world in 2020. Public service delivery does not provide adequate access for vulnerable groups, especially in remote and conflict-afflicted areas. There are significant geographic disparities, with development outcomes in the North and the Center significantly lagging those in the South. Likewise, poverty levels are exceptionally high in rural areas compared with urban areas17. The situation of women and girls in particular is characterized by deep inequalities. Boys still progress faster through school and have higher literacy rates (male literacy rate of 60 percent versus 28 percent for females) 18. Women participate in the labor market at a lower rate than men, are underrepresented in business and entrepreneurship activities19, and are less likely to own a financial account20. Youth, many of whom have low levels of education and skills, are confronted with limited opportunities for formal sector employment 21. 5. As highlighted in the 2021 Mozambique Economic Update22, the country needs to press ahead with the process 12 Non-concessional debt of US$1.3 billion accumulated between 2009 and 2014 by issuing guarantees to state-controlled companies. Systematic Country Diagnostic Update for Mozambique, World Bank, 2019. 13 Systematic Country Diagnostic (SCD) Update for Mozambique, World Bank, 2019. 14 World Bank, 2021. Growth prospects are more positive for the medium-term, with GDP expected to grow by 2.3 percent in 2021 and 4.5 percent in 2022. 15 Higher commodity prices favored exporting sectors, including coal, aluminum, and electricity. However, the country’s import bill is rising due to increases in fuel and food prices. World Bank, 2022. 16 International poverty line of US$1.90 per day. An estimated one million people slipped back into poverty in 2020 on account of the pandemic. SCD for Mozambique, World Bank, 2021. 17 Income levels in rural and urban areas have shown no signs of convergence. In the 2002/03-2014/15 period poverty declined faster in urban centers (23.2 percent) that in rural villages (18.8 percent). SCD for Mozambique, World Bank, 2021. 18 USAID, 2021, https://www.usaid.gov/mozambique/education 19 20.0 percent of the employed Mozambican men had salary-based jobs, compared to only 3.8 percent of employed Mozambican women. Global Majority E-Journal, based on World Bank data, 2019. 20 Only 33 percent of women owning a financial account relative to 51 percent for men. Findex, 2017. 21 Mozambique's overall literacy rate is 47 percent, USAID, 2020. The literacy rate of youth in the age 15-24 is currently below 70 percent. 22 Mozambique Economic Update 2021, Setting The Stage for Recovery, World Bank, 2021. Page 7 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) of structural transformation to set the stage for an inclusive recovery . In the short term, measures to support viable firms and households should be prioritized, while in the recovery phase, policies to support economic transformation and job creation, especially for youth and women, and to strengthen key drivers of inclusion, would be critical. Mozambique needs to diversify away from the current mega project-driven growth toward a more interconnected and competitive economy, including by harnessing the power of digital technologies. This vision is aligned with the Government of Mozambique (GoM)'s National Economic Development Strategy 2015–2025, which focuses on promoting a diversified and competitive economy based on the development of productive sectors with the potential to increase income generation and job creation. Infrastructure sectors, such as digital and energy, have been recognized as key to achieving these priorities as cross-cutting enablers. 6. Enhancing Mozambique’s resilience to climate shocks will also be critical given the high vulnerability to climate change. Mozambique is one of the world's most affected countries to impacts of extreme weather events, suffering repeated floods, occurring almost every year during the rainy season, droughts, particularly common in the central and southern regions, and tropical cyclones, common along the coastline. These events are likely to increase in both frequency and intensity due to climate change23. High vulnerability to climate change is aggravated by low readiness to face the threat. Mozambique ranks 154th out of 192 countries in the 2021 Notre Dame Global Adaptation Index24. Climate-related disasters are increasing pressures on infrastructure, public services, and humanitarian assistance. More than 60 percent of the population, including many of its poorest communities, live along the coast, facing increasing exposure to sea level rise, storms and cyclones. Climate change will touch most aspects of Mozambican life, most notably the agricultural sector, which is highly vulnerable to increasing rainfall variability and drought and consequently raises the risk of chronic food shortages. Investments in climate-smart infrastructure and the transition towards economy-wide digitalization will be a key driver of improved resilience and adaptation. This includes reduced vulnerability and greater ability to respond to shocks through enhanced and uninterrupted digital access to basic services and public assistance in times of emergencies and a shift away from climate vulnerable natural resources as the basis of growth and employment. Mitigation will also be enhanced as digitized communications and processes can help lower greenhouse has (GHG) emissions, including reducing the need to travel to provide or access services, work and to engage in commercial and social transactions. B. Sectoral and Institutional Context Harnessing Digital Transformation as a Driver of Growth, Job Creation, And Resilience 7. Development of the digital economy offers an opportunity for Mozambique to achieve faster, more inclusive, greener and more resilient economic growth25, provide greater access to innovative products and services, and create jobs, especially for youth. Widespread adoption of broadband services and internet connected devices, along with digitization and automation of tasks and processes can greatly enhance productivity, reduce transaction costs, and unlock 23 World Bank (2021), Climate Risk Profile: Mozambique. 24 Notre Dame Environmental Change Initiative (ND-GAIN) (2021) Country Index, Vulnerability and Readiness. 25 Studies have shown that broadband deployment in developing countries boosts economic growth, with an average impact on the GDP per capita growth of 0.9 to 1.5 percent per 10 percentage points (p.p.) increase in broadband penetration. World Bank, 2016. Exploring the Relationship Between Broadband and Economic Growth. Background Paper for the 2016 World Development Report: Digital Dividends; While a consensus is still emerging on how to define and measure the digital economy, the internet economy in Africa was worth around 3.9 percent of GDP in 2020, and its share of African GDP will continue to grow and may outpace the overall growth of the overall economy. e-Conomy Africa report, IFC and Google, 2020. Page 8 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) opportunities across vital sectors. Digital technologies can also be harnessed to support poverty reduction and socio- economic inclusion by expanding access to basic services. 8. The COVID-19 pandemic has highlighted the need for accelerating digital adoption in Mozambique to boost resilience. Digital technologies offer the opportunity to cope with social distancing and reduce disruptions in times of crisis, e.g., by supporting business continuity via e-commerce, digital payments and voice/video communications and by ensuring uninterrupted delivery of critical public services such as via distance learning and e-health solutions 26. However, in Mozambique, weak and uneven digital access and use, coupled with the unreliable quality and high costs of broadband services, underscored difficulties in ensuring the continuous provision of public and commercial services and distance education. This experience has underscored the urgency of the digitization agenda, and it has exposed the stark digital divide between the connected and unconnected. Moving forward, prioritizing measures that increase access to reliable and affordable digital connectivity and the adoption of digitally enabled services and applications will help boost Mozambique's resilience to future public health, climate or economic shocks. Mozambique is only capturing a Fraction of its Digital Transformation Potential 9. Mozambique's digital economy remains nascent.27 It ranks relatively low globally and among regional peers in terms of connectivity and accessibility, digital use, e-administration, and e-commerce: 151/170 on Global System for Mobile Communication Association (GSMA)'s 2019 mobile connectivity index, 150/176 on ITU's 2017 Information and Communications Technologies (ICT) Development Index, 163/193 on UNDESA's 2020 e-Government Index, and 136/152 on UNCTAD's 2020 e-Commerce Index. Many of the foundations needed to propel digital transformation are still under- developed. In particular, the country's performance across all connectivity enablers (infrastructure, affordability, consumer readiness, and content and services) is below the regional average. Low levels of broadband adoption by consumers, businesses, and the GoM mean that the country is still ill-equipped to leverage digitally enabled solutions and that the digital economy has thus far had a limited impact on growth, job creation, and expanded service delivery. 10. Mozambique's national development plans and sectoral ICT policy both acknowledge the importance of investing in digital technology, but much work remains to achieve the key objectives. The National Development Strategy 2015-2035 identifies ICT infrastructure as critical to the country's growth and decentralization process and highlights the need to promote the use of ICT to drive innovation and technological development. The 2017 National Broadband Strategy and the 2018 Information Society Policy aim to operationalize this vision, providing concrete benchmarks and targets to be achieved to maximize ICT's contribution to wider development goals. However, these strategies have remained largely aspirational due to limited financing and implementation of key initiatives at scale. 11. Governance of the ICT sector straddles two ministries, two regulators and several specialized agencies . These include: (i) the Ministry of Transport and Communications (MTC), responsible for the telecommunications and broadcasting sector, supported by the Mozambique National Institute of Communications (INCM), responsible for telecommunications regulation; (ii) the Ministry of Science, Technology, and Higher Education (MCTES), responsible for promoting and overseeing the implementation of the ICT/Information Society policy and the e-Government strategy, supported by the National Institute of Information and Communications Technologies (INTIC), the ICT regulator. Also under the aegis of MCTES, the national e-Government Institute (INAGE) supports digitization of government operations and provides IT support services to all MDAs, while the Center for Research and Technology Transfer for Community Development (CITT) focuses on technology transfer and innovation for communities. In addition, the Universal Access 26 Africa’s digital solutions to tackle COVID-19, European Investment Bank, 2020. 27 World Bank, Mozambique Digital Economy Assessment, 2019. Page 9 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Service Fund (FSAU) was created in 2007 to expand ICT services to rural areas. The establishment of specialized institutions demonstrates the Government’s commitment to the digital agenda but it has also increased challenges of coordination and harmonization. Mozambique needs to improve Digital Access and Inclusion, starting with wider Adoption and improved Affordability of Broadband Bringing more Mozambicans online is a critical first step toward reaping the dividends of greater technology adoption. 12. While growing quickly, overall broadband penetration remains low. According to the GSMA, mobile broadband penetration reached 30 percent in 202128, more than doubling since 2015. Despite this progress, more than two-thirds of the population still do not have access. Fixed broadband penetration, critical for higher speed and higher productivity use, remains very low, with a household penetration rate of under 2 percent in 2018 29. Mozambique’s penetration rates are below regional comparators (see Figure 1). Figure 1: Unique mobile broadband subscriptions (per 100) for Mozambique and selected comparators South Africa 58% Mauritius 58% Seychelles 57% Namibia 47% Botswana 45% Angola 37% Kenya 35% Zambia 33% Mozambique 32% Zimbabwe 32% Malawi 24% Madagascar 22% Source: GSMA, 2021 (projection) 13. The landing of a new submarine cable in the North and South of the country will provide an enormous opportunity, if gaps in middle and last mile access can be solved. In addition to two existing international undersea links (SEACOM and EASSy), a third is under development (2Africa) which will include the country’s first landing point in the north, in Nacala. Taking advantage of the massive increase in international capacity and falling international connectivity, prices expected will require competitive, high-capacity terrestrial backbone and access networks to carry the traffic around the country and to Mozambique’s landlocked neighbors. The country currently lacks a robust, unified, affordable, open-access backbone infrastructure, with existing links concentrated primarily in major urban areas and inter-city routes, with fiber reach limited in the rest of the country. Mozambique has limited metro/access networks, and wireless networks are the primary technology for last-mile access. High speed broadband services are limited to provincial capitals, major cities and development and tourism centers along the coast. 3G or higher network signals reach only around 61 percent of the population.30 About 200 villages, representing a population of approximately 1.97 million people, still have no cellular coverage,31 and the Northern provinces, in particular, are underserved. 28 GSMA, unique mobile broadband subscriptions per 100 inhabitants, 2021. 29 TeleGeography, Mozambique country report, 2019. 30 GSMA Intelligence, 2021. 31 List of villages provided by MTC, 2020. Page 10 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) 14. Several factors hamper operators' ability and willingness to invest in network upgrades and expansion in rural areas. High deployment costs due to the difficult terrain and lack of supporting infrastructure, including electricity 32 and roads, coupled with low expected commercial returns due to low population density and incomes, render services commercially unviable in many rural areas. In addition, a legacy of operators investing in proprietary network deployments and lack of adherence to infrastructure quality and robustness standards has prevented widespread adoption of infrastructure sharing, despite recent enabling regulations. The result has been duplication of infrastructure on heavily trafficked routes, while others are left unserved. 15. While the regulatory environment has progressively become more enabling, a number of policy, legal, and regulatory issues continue to hamper sector investment, competition and affordability. Key first-generation reforms have led to increased market liberalization and competition33, including introduction of the second and third mobile operator licenses34. However, segments of the market remain concentrated, with Vodacom commanding the largest share in mobile, and Tmcel, the state-owned operator35, maintaining a large share in fixed broadband infrastructure and services. Several areas could be optimized to promote greater investment in digital infrastructure, reduce the costs of infrastructure deployment and improve the affordability of broadband services. These include: (i) strengthening of pro- competition policies and regulations, with emphasis on the middle mile and mobile market segments, (ii) strengthening of policies and operationalization frameworks to incentivize sharing of infrastructure36, (iii) optimization of spectrum allocation management policies, and (iv) optimization of the sector taxation regime.37 16. A number of demand-side barriers also explain low service adoption and low demand for digital infrastructure and services expansion. Around half of the population that have access to broadband networks do not currently use the services. More than 70 percent of this group cite affordability of services and devices as a primary barrier, given low purchasing power (see Figure 238). While Internet data tariffs are trending downward, the price of 1 GB of data as a share of the average monthly income was 8.7 percent in 202039 - well above the global affordability target of 2 percent (see Figure 3). Prices of Internet-compatible devices are also unaffordable to most Mozambicans, with an entry-level smartphone costing 39.8 percent of the average monthly income in 2021 (see Figure 4)40, resulting in very low ownership of smartphones and computers (at 7 percent and 2 percent, respectively in 2019).41 Low levels of basic digital literacy is also a significant barrier, with 14 percent of those offline stating that they do not know how to use the internet. The perceived value proposition is also a challenge given limited availability or knowledge of relevant digital content and services available in local languages. Incentivizing investment on the supply-side will need to go hand-in-hand with initiatives that seek to boost demand to stimulate uptake and productive use of digital technologies.42 Digital financial 32 Only 26 percent of the population has access to electricity in Mozambique. World Bank, 2020. 33 The Telecommunications Act in 2016 established safeguards against anti-competitive behavior to foster fair competition and spur investments. 34 Vodacom in 2003 and Movitel in 2011. The introduction of the 3rd license was facilitated through technical assistance under the IDA financed Mozambique e-Government and Communications Infrastructure Project (MEGCIP). 35 Created from the merger of state-owned wireless operator mCel and fixed line operator Telecomunicações de Moçambique (TDM). 36 A regulation (Decree n65/2018) has been passed, but has not led to significantly enhanced infrastructure sharing. 37 Taxes represent 46 percent of the total cost of mobile ownership, which is high compared to peer countries. GSMA Intelligence, 2019. 38 2018. The digital literacy category includes: “do not know what internet is” and “do not know how to use internet”; affordability includes: “no access device” and “too expensive”; the relevance category includes: “No interest/not useful” and “no relevant content in local language”. 39 Alliance for Affordable Internet (A4AI), 2020. 40 This is mainly owing to low purchasing power, as Vodacom offers smartphones as low as US$13, A4AI, 2021. 41 International Development Research Centre, After Access Survey, 2019. 42 UNESCO, 2018. Digital Inclusion for Low-Skilled and Low-Literate People: A Landscape Review. Page 11 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) services, could be a driver of wider digital adoption with, one third of adults already making or receiving digital payments.43 Figure 2: Reasons for not using the Internet for Mozambique and selected comparators - Percent of adults that do not use internet, while being covered by a broadband network, WDR 2021, based on After Access Survey, 2018 Source: World Development Report 2021, based on After Access Survey, 2018 Figure 3: Average price of 1GB (% of monthly GNI per capita) for Figure 4: Price of Entry-Level Smartphone (US$ and % of Mozambique and comparators monthly GNI per capita) for Mozambique and comparators Madagascar 34.3 85.1 Malawi 56.7% Mozambique 13.5 39.8 Madagascar 22.0% 39.351.3 Angola Mozambique 8.7% 34.4 50.1 Kenya Angola 2.8% Zambia 25.5 18.5 Botswana 2.5% Namibia 22.9 86.9 Zambia 1.4% South Africa 14.6 66.8 Namibia 1.3% Mauritius 13.0 99.9 Seychelles 1.1% Seychelles 10.1 74.4 South Africa 1.0% Botswana 6.8 36.4 Kenya 0.7% Mauritius 0.3% Price as % of GNI per capita Price in USD Source: Cable.co.uk, 2020 Source: A4AI, 2021 A strong push is needed to ensure that everyone benefits from the digital revolution, and no one is left behind. 17. Significant digital divides remain along urban-rural and socio-economic lines . People in rural areas were found to be four times less likely to use the Internet44. Many of the barriers highlighted above are starker for Mozambique's lowest-income households and other vulnerable groups. In addition to the lack of infrastructure (digital, electricity) in rural areas, the primary determinants of digital exclusion are education and income.45 The lack of affordability of 43 World Bank 2021, Mozambique: Financial Inclusion and Stability Project Implementation Status & Results Report. 44 International Development Research Centre (IDRC), After Access research project, 2019. 45 International Development Research Centre (IDRC), After Access research project, 2019. Page 12 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) broadband services and digital devices relative to household incomes is more severe in rural areas and for those at the bottom of the pyramid. Digital literacy is an even steeper challenge for those who are illiterate and the elderly. Without interventions targeting remote areas, and the marginalized, the benefits of digital infrastructure deployment could further entrench inequalities46. 18. The gender digital divide is particularly high, as general gender inequalities are reflected in women's low access to digital technologies and services. As women are over-represented among the poor and have lower rates of access to education and secure income generation opportunities, they are less likely to reap the benefits of digital technologies. Traditional gender roles, biases and stereotypes, such as the notion that women cannot use technology or should fear for their safety online compound the problem. As a result, a recent survey47 revealed a very high gender disparity among internet users, at 39 percent. 56 percent of men have mobile phones as compared to 46 percent of women. Although quantitative data is scarce, qualitative insights point to a high gender gap in digital literacy levels. These gaps mean that women are largely left out of the digital economy and benefits of being online. Likewise, development of online learning could put girls at a disadvantage, due to disparities in access and digital literacy. Urgent need to develop the Foundations for Accelerating Digital Transformation Digital technologies can play a key role in modernizing public administration and supporting structural transformation of the economy, but only if the essential building blocks are put in place. 19. A number of barriers prevent the state from effectively deploying digital technologies to improve operational efficiency and service delivery. These include (i) lack of access to robust and reliable connectivity among public institutions and at public service delivery/access points, (ii) lack of a robust and integrated data infrastructure, governance framework and standards for trusted data sharing, hosting and processing, as well as (iii) lack of adequate digital safeguards to create the trust and security to move critical operations and services to the digital realm. Gaps in these critical building blocks partially explain why digital government is underdeveloped. They also explain the fragmented and low levels of digital technology adoption and transformation across social and economic sectors. 20. The Government Network (GovNet) requires an overhaul to provide robust connectivity for Ministries, Departments and Agencies (MDAs), civil servants and frontline service providers. GovNet48 currently runs as a virtual network, with the underlying infrastructure and services provided primarily by Tmcel. It suffers from underinvestment and problems of operational performance and reliability, resulting in poor provision of connectivity services. Local area networks (LANs) within buildings or campuses are also often outdated or not well maintained creating further bottlenecks. MDAs with sufficient resources often procure internet services from other providers to circumvent GovNet bandwidth and quality issues, resulting in better services for the individual MDA but at much higher aggregate cost and fragmentation and security gaps for the overall network. MDAs which cannot afford an alternative are often forced to limit digitization of operations and public services. There is a need to revisit the current GovNet model, with the aim to improve performance and reach and lower unit costs for connectivity services. 21. Increasing the number and quality of public digital services offered will require stronger Government capacity for safely storing and sharing data. The primary Government data center located in the Parque de Ciência e Tecnologia 46 Urgent efforts in SSA are required to ensure affordable, reliable and universal access to broadband and avoid further “exclusion of already marginalized segments of the population from the benefits of connectivity”. World Bank, 2020. Africa Pulse: Charting the Road to Recovery. World Bank, 2021. Africa Pulse. Covid-19 and the Future of Work in Africa. Both available at: https://www.worldbank.org/en/publication/africa-pulse. 47 GSMA, The Mobile Gender Gap Report 2020, 2020. 48 GovNet is managed by INAGE. Page 13 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) de Maluana has the capacity to host a significant number of Government information systems. However, it is significantly underutilized, with most MDAs maintaining their information systems on their premises, in part due to lack of reliable connectivity to the datacenter. On-premise hosting practices result in significantly higher aggregate costs and energy consumption, pose severe security and operational risks and make cross-Government data sharing and utilization difficult. While the primary datacenter is far more robust than localized solutions, it nonetheless lacks a robust backup data storage or cloud solution to ensure security and resilience of critical data and systems in the event of a climate related or other disruption. Mozambique has a small but growing private market for data and cloud services and infrastructure, and the GoM aspires to develop it as part of its implementation of the Information Society Policy. 22. GoM lacks a robust data management and governance framework and practices to better leverage data for improved policy making and service delivery. Data management practices across government remain fragmented, including how systems are integrated and data is shared, due to gaps in existing data formatting and standardization, interoperability of systems, and security, which has prevented efforts to enable data sharing and analytics. Interoperability and integration will be supported for a number of foundational registries and information systems through the Mozambique Digital Governance & Economy Project (EDGE, P172350, ongoing), but further work will be needed to build upon this effort. A more holistic, transparent, and standards-based approach to data management across Government would improve administrative and cost efficiency, reduce errors, help prevent vendor and technology lock- in, and ensure that adequate governance arrangements are in place to appropriately protect citizens’ data and reduce the risk of data breaches or misuse. 23. The GoM will also need to enhance cybersecurity and data protection capabilities to reduce growing vulnerabilities and risks to government networks, systems, applications and data and to build trust in online transactions and services. Mozambique currently lacks comprehensive data protection and privacy or cybersecurity laws, as well as corresponding regulatory and implementation capacity, though existing laws and Constitutional provisions do address some elements of personal data protection, cybercrime, computer fraud, data interference, computer misuse and electronic transactions. The EDGE project will provide support to strengthen the legal framework on cyber and data protection, but gaps will remain with respect to corresponding regulatory frameworks and implementation capacity. This includes identification and protection of critical infrastructure and systems and establishment or capacity building for priority sectorial Computer Security Incidence Response Teams (CSIRTs) in addition to strengthening the capacity of the national CSIRT as identified in the National Cyber Security Strategy. Mozambique's ability to benefit from increased digital transformation will depend on building the required human capital and developing the digital skills of the future workforce. 24. Ensuring that all Mozambicans have the right skills is critical to unlocking digital transformation, promoting inclusive labor markets, and driving innovation, productivity, and growth. Demand for digital skills among employers is strong and is expected to grow further. By 2030, digital skills will be required for 20-25 percent of jobs in Mozambique, or the equivalent of about 3.7 million workers, across various sectors of the economy 49. Most of the requirements are expected to be for foundational skills – i.e., general ICT skills for workers to be able to use digital technologies and collaborate in an ICT-based environment, followed by intermediate skills. Advanced and highly specialized skills will be mostly needed in the oil and gas, ICT and e-commerce sectors. A digitally competent workforce is not only necessary to 49Demand for Digital Skills in Sub-Saharan Africa, IFC and World Bank, 2020. As of 2019, the number of workers that are digitally trained are approximately: 0.4 million in the agricultural sector, 0.1 million in the industry sector, 0.7 million in the services sector, 7,000 in the ICT sector, and 80 in the e-commerce sector. In 2030, it is forecasted that the demand for the number of workers that are digitally trained will be: 1.3 million in the agricultural sector, 0.6 million in the industry sector, 1.9 million in the services sector, 16,000 in the ICT sector, and 1,200 in the e-commerce sector. Page 14 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) support the installation of digital infrastructure but also to drive the deployment and adoption of digital applications and services more broadly. While there are existing providers offering digital skills training across various levels in Mozambique, the scale of these programs is too low relative to projected future needs. GoM will thus need to invest in the educational system and improving ICT access to support the development of digital skills across all levels and to unlock greater private sector provision of digital skills development. A Digital Skills Country Action Plan is currently being prepared with support provided under the Partnership for Skills in Applied Sciences, Engineering and Technology, to inform this endeavor. 25. While Mozambique's low level of education is a binding constraint on the development of digital skills , digitization in the education sector also represents a huge opportunity to improve learning and education outcomes . Under 50 percent of Mozambicans complete primary education, 15.5 percent secondary, and only 7 percent attend university50. Educational technologies (EdTech) can play a crucial role in providing new and innovative forms of support for teachers, students, and the learning process more broadly, to strengthen education inclusion and quality, with benefits for development of the digital skills needed for the future workforce. Such opportunities include online and distance learning for students and teachers, and new ways to introduce learners to science, technology, engineering, and mathematics (STEM), including for remote and marginalized populations. The main bottlenecks that limit the use of EdTech in the education system are lack of access to internet and internet connected devices in schools, higher education institutions, and technical and vocational education and training (TVET) institutions due to high costs, and limited incentives to further promote the use of digital technologies. For instance, the Mozambique Research and Education Network (MoRENet)51 currently provides broadband connectivity to 18 universities and 29 TVETs, but the amount of bandwidth (5.9 Gbps) is well below the minimum required for the current enrollment of 240,000 higher education students, which is approximately 240 Gbps (based on a minimum of 1 Gbps per 1,000 students). Teachers also lack the skills and confidence to use technology to improve their own professional skills and their students' learning. C. Relevance to Higher Level Objectives 26. The proposed project is aligned with the GoM's five-year development plan, the Programa Quinquenal do Governo (PQG) 2020-2024, which sets economic diversification, promotion of competitiveness and job creation as its main objectives. The stimulation of sectors with income and employment potential, including ICT/digital, is the main mechanism for achieving these objectives. The project offers a comprehensive program to support emergence of a digitally-enabled economy, society, and Government, with the ultimate aim of promoting economic and social opportunity, increasing access to services, and improving the quality of life for citizens. In particular, the project contributes to two of the PQG’s priorities - (i) economic growth, productivity and job creation, by expanding broadband infrastructure and harnessing digital technologies to improve the efficiency of services, facilitate access to information and markets, and improve the business environment, which will, in turn, promote greater productivity and growth economy-wide; and (ii) human capital development and social justice, by enhancing the digital skills base and enabling digitization of classrooms and teaching. 50UNESCO Institute for Statistics, 2020. 51National data communication network that interconnects Mozambican academic institutions of higher education, research and technical vocational education, administered by INAGE Page 15 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) 27. The project is also aligned with the World Bank Group (WBG) Country Partnership Framework (CPF), FY17-21 52, adjusted under a Performance and Learning Review (PLR) in 202053 and extended to cover FY22, and is a direct contributor and cross-cutting enabler of the pathways for growth and poverty reduction identified in the 2021 Systematic Country Diagnostic (SCD)54. Digital transformation will act as a cross-cutting enabler of the CPF's core objective of creating more inclusive growth through employment promotion and improving productivity and competitiveness in a sustainable manner. More specifically, the project will support the first CPF Focus Area - Promoting Diversified Growth and Enhanced Productivity, and the second CPF Focus Area - Investing in Human Capital, which mirror the PQG’s priorities. Goals such as improved service delivery in critical sectors – e.g., education, financial inclusion, social protection, all require intensive use of digital technologies. Lastly, the COVID-19 pandemic has illustrated that digital adoption is foundational to greater resilience. The project is thus critical to Enhancing Sustainability and Resilience, the third CPF Focus Area. A Country Learning Review (CLR) was conducted in 2021 to inform the next CPF (under preparation), which will span FY23-27. Lessons learned highlighted in the CLR underscore the centrality of structural (economic and spatial) transformation, and the need to help the GoM unlock additional private investments and potential productivity gains that could accelerate growth and inclusion, which will form the basis for the next CPF. The reforms and investments supported by the project to boost the development of the digital economy will address these recommendations and help achieve the proposed objectives under the upcoming CPF, in particular High Level Objective (HLO) 2 - Increased inclusive job creation, by promoting productivity growth and structural transformation, and HLO 3 - Improved human capital and women's empowerment, thanks to its focus on digital skills and digital inclusion, including from a gender perspective. 28. Underpinning WBG goals of boosting shared prosperity and reducing poverty, the project is aligned with key WBG and partner strategies. In particular, the project is aligned with:  The UN Sustainable Development Goals (SDG), particularly SDG 9.8 “Significantly increase access to information and communications technology and strive to provide universal and affordable access to the Internet in least developed countries” by 2030.55  IDA19 policy commitments, including (i) building client capacity in fragile and conflict-affected states to use digital tools; (ii) supporting adoption of government technology solutions; (iii) helping to close the digital infrastructure gap, and double broadband penetration; (iv) supporting digital skills development and women’s access to higher productivity jobs; and (v) supporting women’s increased access to and usage of digital services.  The WBG’s Gender Strategy 2016-2023, with interventions supporting the strategic objectives of (i) improving human capital endowments (by building digital skills among women); (ii) removing constraints to more and better jobs (by engaging in outreach activities that address the gender digital divide and increase women's access to digital services, technologies, and markets), and (iii) removing barriers to women's ownership and control of assets (by increasing women's access to digital devices)  The World Bank’s Digital Economy for Africa (DE4A) initiative, which contributes to the operationalization of the African Union’s Digital Transformation Strategy for Africa and sets key targets related to broadband access, e-services delivery and digital skills development56. 52 Report Number 104733-MZ 53 Report Number 144024-MZ 54 Mozambique Second-Generation Systematic Country Diagnostic, Coming Together for a Better Future, World Bank 2021. 55 https://sdgs.un.org/goals/goal16 56 The AU’s Strategy sets out a bold vision that calls for every African individual, business, and government to be digitally enabled by 2030, to drive the digital transformation of Africa and ensure its full participation in the global digital economy. Page 16 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) 29. The project also supports the WBG’s Strategy for Fragility, Conflict, and Violence (FCV) 2020-2025, and the IDA19 Prevention and Resilience Allocation (PRA)57 Strategy. In a context characterized by fragility and conflict in parts of the country, the project will contribute to mitigation of several conflict drivers as identified in Mozambique's Risk and Resilience Assessment (RRA)58 and eligibility note to the PRA: (i) high perception of inequality, marginalization and exclusion from resources and opportunities for large parts of the population – the project will focus on the integration of youth59, women and vulnerable groups, including through digital skills training and other interventions to foster social and digital inclusion; (ii) perceptions of stark regional disparities in public service delivery and crisis of trust in state institutions – by equipping local Government structures with modern digital tools and services and supporting the development of a data governance framework, the project will enable the use of digital technologies to strengthen the effectiveness of the GoM, bring services closer to citizens and restore trust; (iii) lack of inclusiveness in political life – the project will promote digital opportunities to support citizen engagement; and (iv) impacts of climate change placing additional stress on resources and stoking violent conflict – the project will leverage ICT to mitigate the effects of climate change and build resilience. The project will use spatial and beneficiary targeting to reach most vulnerable groups (see Section C) and will integrate a reflection on services and uses to be developed in a fragile context, to best address the specific needs and vulnerabilities of populations and not to reinforce inequalities between groups in underserved areas. 30. The project supports Green, Resilient and Inclusive Development (GRID). This includes activities that support Mozambique’s efforts to (i) enhance climate change adaptation and mitigation, (ii) improve the country’s readiness and resilience to future pandemics and shocks, and (iii) accelerate development by supporting greater adoption of next generation, climate-smart and energy-efficient digital technologies, while ensuring that (iv) no-one is left behind, placing an emphasis on digital inclusion that will allow low-income households, rural communities and women to equally participate in the digital economy. 31. The project is also aligned with the WBG’s COVID-19 Crisis Response Approach Paper . It supports Pillar 2 (Protecting Poor and Vulnerable People) through targeted support for poor households for purchasing digital devices, alongside digital literacy and broadband access schemes tailored to groups with higher access barriers, including women and poorer rural communities, Pillar 3 (Ensuring Sustainable Business Growth and Job Creation) by supporting the development of the enabling environment and critical foundations for digital transformation, and Pillar 4 ( Strengthening Policies, Institutions, and Investments for Rebuilding Better ) by expanding access to digital infrastructure and strengthening GoM's capacity for digital service delivery. 32. In addition, the project complements and builds on synergies with ongoing World Bank projects. First, it will build on improvements to the telecoms enabling environment, enhanced connectivity and e-gov services developed under the Mozambique e-Government, Communications and Infrastructure Project (MEGCIP, P111432, closed in FY16), and pilot programs to support rural mobile connectivity and digital device affordability under the Sustainable Energy and Broadband Access in Rural Mozambique Project (ProEnergia+, P175295, ongoing). Second, it will complement the EDGE project (P172350, ongoing) and the Financial Inclusion and Stability Project (P166107, ongoing), which focus on identification, interoperability/data exchange and digital payments. Third, the operation will establish the digital 57 The PRA is a World Bank facility intended to provide enhanced support for countries at risk of falling into high-intensity conflict or large-scale violence. 58 Risk and Resilience Assessment for Mozambique, World Bank, 2020. 59 Young people are often excluded from the benefits of the country’s resource wealth in the form of employment or improved basic services. Without connections and access to credit and technical know-how, they have little hope of forging an entrepreneurial path. They may become vulnerable to recruitment into criminal gangs or extremist groups or operating in the illicit economy. By focusing on their digital and social integration, the project will reduce risks of radicalization. Page 17 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) foundations that existing and future sectoral projects can build on to develop appropriate digital solutions to maximize their impact. In particular, the project will collaborate directly with existing operations in the Social Protection, Education and Private Sector Development portfolios, enhancing the effectiveness and impact through complementary digital investments, across the country in general and with a focus on the northern and central regions. II. PROJECT DESCRIPTION A. Project Development Objective To increase digital adoption and inclusion, and to support selected foundations for accelerated digital transformation. PDO-level indicators To increase digital adoption and inclusion  Mobile broadband penetration rate (Percentage) (overall, for women)  Beneficiaries obtaining a certificate in digital literacy under the project (Number) (of which female beneficiaries, of which beneficiaries under 25) To support selected foundations for accelerated digital transformation  Civil servants in MDAs/public institutions connected to broadband internet services (Percentage)  Students benefitting from new or improved access to learning thanks to digital technologies (Number) (of which female students) B. Project Components 33. The Mozambique Digital Acceleration Project is designed to increase digital adoption and inclusion, and accelerate country-wide digital transformation, focusing on critical digital foundations and enablers. It is built around three mutually reinforcing components and a contingent emergency response component (see Table 1 and below for a breakdown of the components). Table 1: Components and Financing Allocation Components (US$ million) Component 1: Digital Access and Inclusion 90.0 Subcomponent 1.1: Enabling environment for digital investment, inclusion and resilience 7.5 Subcomponent 1.2: Rural digital connectivity and access 42.5 Subcomponent 1.3: Digital inclusion initiatives 40.0 Component 2: Foundations for Accelerated Digital Transformation 102.0 Subcomponent 2.1: Core digital infrastructure for Government and private sector 65.0 Subcomponent 2.2: Data governance, data protection, cloud readiness and cybersecurity 15.0 Subcomponent 2.3: Digital technology adoption and skills development in the education sector 22.0 Component 3: Project Management, Institutional Coordination and Citizen Engagement 8.0 Component 4: Contingent Emergency Response Component 0.0 TOTAL 200.0 Page 18 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Component 1: Digital Access and Inclusion (US$90 million IDA equivalent) 34. Component 1 aims to expand digital access and inclusion so that more Mozambicans can benefit from the digital revolution and be socially and economically included through access to digital technologies. This includes (i) making Mozambique a more attractive and competitive place for digital investment, and (ii) expanding availability, affordability and uptake of digital services and technologies, particularly in rural areas and among underserved communities and disadvantaged groups. Interventions under this component will target both the supply side and demand side constraints. Subcomponent 1.1: Enabling environment for digital investment, inclusion and resilience (US$7.5 million) 35. This subcomponent aims to strengthen the enabling environment for the telecom/broadband market to drive competition, investment, service quality and affordability while strengthening the climate resilience and mitigating the climate and environmental impact of digital infrastructure and devices. It will finance the following activities: (a) 1.1.1. Strengthening the legal, regulatory, policy frameworks and capacity for governing the telecommunications and broadband sector, including but not limited to technical assistance (TA) and other support in the following areas60: (i) strengthening of pro-competition policies and regulations, with emphasis on wholesale regulation of facilities and bandwidth, open access and interconnection to newly deployed submarine cables, regulation of significant market power, licensing and encouragement of new entrants and reforms of State-Owned Enterprises (SOE) in relevant market segments61; (ii) review and development of policies and an operationalization framework to incentivize sharing of network infrastructure to lower deployment costs between telecom actors and across sectors; (iii) review and development of spectrum allocation and management policies to stimulate investments; (iv) operationalization of a telecom services price index62; (v) strengthening capacity for management and enforcement of Quality of Service (QoS) and consumer protection standards; (vi) strengthening FSAU’s operational capacity and transparency to deliver on the universal service agenda; and (vii) capacity and institution building support for relevant Ministries and regulatory institutions and officials, including in next generation policy and regulatory issues. (b) 1.1.2. Developing digital access and inclusion analytics and action plans, including (i) undertaking a national household survey on the usage of digital services, with a focus on demand-side barriers to digital adoption and development of corresponding targets and an action plan to address the barriers which will inform the design and targeting of digital access schemes under subcomponent 1.3; and (ii) a digital affordability study, exploring various policy and regulatory options to bring down the costs of handsets and IT equipment as well as services (with implementation support under subcomponent 1.3). (c) 1.1.3. Developing climate informed policy and regulation in the ICT sector and leveraging digital technologies for climate adaptation and mitigation, including: (i) a strategy to minimize the environmental impact of ICT infrastructure, devices and services (including e-waste management), leverage digital solutions to ‘green’ the economy, and to enhance resilience to climate related shocks; and (ii) review of network and data infrastructure 60 While initial priorities have been identified, flexibility will be needed to make adjustments during project implementation as new issues arise due to rapid technology, business model and market evolution in this space. 61 E.g., looking at a more flexible licensing regime – going as far as a general authorization regime, introduction of asymmetric regulation, number portability and unbundling of the network to stimulate new business models, e.g., Virtual Network Operators. 62 Aligned with A4AI and ITU approaches. Page 19 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) construction guidelines and services regulations63 and support for planning and preparedness to ensure the resilience and recovery of essential digital infrastructure and services in the event of climate related shocks. Subcomponent 1.2: Rural digital connectivity and access (US$42.5 million) 36. This sub-component aims to address last mile broadband network infrastructure and services gaps in rural areas and among underserved and vulnerable communities. It will complement the measures to increase sector competitiveness and investment through regulatory and other 'soft' mechanisms under subcomponent 1.1, by leveraging public financing to encourage further investment and business model innovation under a Maximizing Finance for Development (MFD) approach. It is expected to help close geographic disparities and improve resilience and access to services and livelihoods opportunities in the targeted areas. Activities to be financed include: (a) 1.2.1. Expanding the coverage of broadband connectivity networks to selected rural areas characterized by market failures. The project will finance (i) financial incentives and/or Government contribution to public-private partnerships (PPPs) to encourage mobile operators or infrastructure service providers to extend data-enabled (3G or higher) network coverage to areas that are unserved by any mobile cellular signal and to upgrade services in areas only served by voice services (2G) networks64; and (ii) the recruitment of an independent monitoring firm to ensure compliance in technical, environment and social and service level requirements during both construction and operations phases. Based on experience with similar initiatives in the region, it is likely that a ‘reverse-auction’ model65 or similar arrangement will be identified for competitive award of one-time subsidies to bridge the financing gap for deployment of infrastructure and services, in a framework where the deployed infrastructure will be financed, operated, maintained, and owned by the selected bidder(s). However, the model will be informed by a mapping, feasibility and PPP options study66 and corresponding pilot program to be financed under the ProEnergia+ project. Site selection will be based on objective criteria including lack of existing or planned broadband connectivity infrastructure and services, expected demand, feasibility and safety of engaging in on-site interventions, impact on vulnerable populations, and value-add for economic activity, growth and service provision (see Section C for more detail on the targeting methodology). As the project will mobilize private funds in a financing gap model, the project would ensure compliance with key MFD principles, including through: (i) targeting market failures (i.e. areas that operators do not currently and do not intend to do so in the medium term, even with enhancement of the legal and regulatory framework); (ii) aligning 63 ITU, 2014. Requirements for Network Resilience and Recovery. Available at: https://www.itu.int/en/ITU-T/focusgroups/drnrr/Documents/fg- drnrr-tech-rep-2014-6-NRR-requirement.pdf. 64 Provisions will be included to ensure continuity of legacy services (e.g., 2G and 3G) to ensure customers without access to more advanced digital devices will not lose access to services. 65 Interested bidders (such as mobile operators, cell tower companies, high-altitude platform services, and so on) would be invited to bid competitively for the lowest viable subsidy to capital expenditure (CAPEX) that would be required for them to provide service in the designated zones. The selected bidder is the one that request the least amount of subsidy and will provide the most efficient technical solution, incl. in terms of budget, to connect the selected unserved areas and meet specified service requirements. The selected bidder will be responsible for the installation, operation, and maintenance of the network access infrastructure on an open-access basis, in exchange for a capital subsidy paid after the works are completed and validated by a commission established to accept such works. 66 The TA will include a technical survey, a PPP options study and a mapping looking at current infrastructure and service availability, demand typology and quantification for digital services (voice and data) to address end-users needs, and existing and potentially planned investments in digital infrastructure by the private and public sector. This will notably help refine the specific modalities of the PPP model(s) – type of infrastructure (only active or active and passive), type of services, etc. Page 20 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) interventions with the principle of general interest as set out by the WBG’s twin goals and the PDO (striking a balance between targeting areas with the maximum economic impact, and the areas with the poorest and most vulnerable populations); (iii) limiting public funding to the minimum necessary (ensuring the best 'value for money' through use of a competitive tender or alternative process to select the 'most economically advantageous offer'); (iv) maintaining technological neutrality to allow the selected bidder(s) to identify and deploy the most cost-effective solutions, provided that they meet or exceed identified service level specifications 67; and (v) promoting infrastructure sharing, open access and retail level competition (requirements for resulting infrastructure and/or roaming services to be made available to other licensed telecoms operators on an open, transparent and non- discriminatory basis). In addition, the project will ensure: (i) requirements for renewable energy solutions (e.g., solar or wind power and battery storage) to power the resulting infrastructure, to the extent possible, and identification of opportunities for co-deployment of green energy solutions/mini grids to power both towers and local communities simultaneously; (ii) compliance with ‘Green ICT Standards’68 and specific infrastructure robustness requirements to increase resilience to climate shocks and reduce GHG emissions. (b) 1.2.2. Expanding public access in underserved areas and communities. To further help connect the unconnected and bridge the digital divide, the subcomponent will also support provision of internet connectivity services for community access points (Community Multimedia Centers [CMC]69 and ‘digital plazas’70) and other relevant locations such as local marketplaces, particularly in remote rural areas. Open air public Wi-Fi hotspots will be included where relevant to maximize availability. The project will finance bulk purchase of connectivity services and provision and maintenance support for corresponding equipment from selected providers over an extended period. This activity will leverage support under the EDGE project to offer a suite of core e-government services at selected access points. Subcomponent 1.3: Digital inclusion initiatives (US$40 million) 37. This subcomponent aims to accelerate broadband uptake and increase participation and inclusion in the digital economy, by addressing demand-side barriers to uptake of digital tools and services . Particular attention will be given to ensuring that the most impoverished communities, including in remote rural areas and areas vulnerable to climate stress, women, and marginalized groups, are prioritized. Activities will target areas covered by broadband network expansion under subcomponent 1.2, as well as some secondary cities and peri-urban areas where connectivity networks and digital services exist but a significant usage/uptake gap remains. They would first be tested as pilots in selected communities, adopting an iterative approach before expanding operations. Activities to be financed include: 67 This is likely to result in deployment of 4G technologies given prevailing market trends and pricing, but availability of legacy technologies will be ensured given the current lack of 3G+-enabled smartphones in the country. 68 ITU-T, Green ICT Standards and Supplements. https://www.itu.int/net/ITU-T/lists/standards.aspx?Group=5&Domain=28. 69 The CMC Program is coordinated by the MCTES and is managed by the CITT. Each center hosts a computer room with internet access, a community radio and a public space for basic ICT skills training. A Memorandum of Understanding (MoU) was signed in 2017 between the CITT and the INCM to build new CMCs in rural areas with funds from the FSAU and develop radio programs. Other MoUs were signed with partner organizations (the Provincial Digital Resource Centers, Radio Mozambique, Social Communication Institute as well as local governments) to help maintain the facilities and supervise the network of volunteers who work in the centers. 73 CMCs are currently in service. 70 Digital plazas are WiFi access points in squares or gardens that provide free internet to communities, funded by the FSAU. The FSAU aims to provide each provincial capital with a digital plaza. 91 digital plazas are already in place. Page 21 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) (a) 1.3.1. Promoting internet connected device access and affordability. Support will be provided to facilitate wider internet connected device access and ownership (smartphones, tablets, laptops) 71 among targeted lower-income youth and other vulnerable or disadvantaged groups (women, people with disability 72, IDPs and host communities, communities vulnerable to climate stress). Given the maturity of the market, subsidy-based schemes will be used. 73 A phased approach will be followed, starting with a feasibility study, followed by pilot projects in selected regions before scaling up74. The targeting, eligibility and subsidy levels and modalities will be determined by the feasibility study. Targeting of different household/beneficiary categories will consider factors such as level of financial need, scope for productive use, and perceived value of the device, with the aim of maximizing the coverage, inclusion, and impact. Opportunities for asset-bundling and pre-installation of commercial and public digital applications will be explored, in addition to crowding in the private sector (e.g., telecommunication operators, banks, microfinance institutions, etc.) and other strategic partners. The program will leverage synergies with concurrent initiatives, including the review of taxation of digital devices (1.1.2), as well as financing for solar home systems and appliance bundles under ProEnergia+, basic digital literacy training (1.3.2) and possibly other use cases (e.g., cash transfer programs) to ensure that critical complements (ability to charge and use devices, recognition of the intrinsic value in the device) maximize the impact and sustainability, and reduce the risk of beneficiaries reselling devices on the local secondary markets. In parallel, a study will be conducted to explore possibilities for developing non-subsidy- based schemes more in line with market-based approaches in the medium term as readiness will increase 75. Specifically, the project will finance: (i) a feasibility and sustainability study to determine the best model or models for the device affordability and access scheme (DAAS); (ii) support for development of the operating procedures of the DAAS76; (iii) capacity development of key stakeholders to manage the DAAS; (iv) funding and operationalization of the DAAS; (v) third-party implementation, monitoring and verification support; and (vi) stakeholder engagement, communications and outreach. (b) 1.3.2. Building digital awareness, literacy and skills. The project will finance digital literacy programs provided for the general population, with an emphasis on youth and marginalized groups (women and girls, people with disability, IDPs and host communities, communities vulnerable to climate stress). Training courses will be designed to enhance basic digital literacy capabilities to enable beneficiaries to confidently "get connected" and gain entry- level user skills allowing them to access digitally-enabled services (including digital financial services and the public 71 The type of device will be informed by the feasibility study. However, the majority of devices will likely be system-neutral feature phones or entry- level smartphones. Laptops or tablets may be provided to specific groups (e.g., women entrepreneurs). 72 Devices will include in-built accessibility features for persons with disability (e.g., vision or hearing impaired), where appropriate. 73 Subsidy-based schemes could include: “cash subsidies” (e.g., vouchers to purchase a device, or rebates provided by the seller that the project would complement, or partial or full reimbursement of the purchase of a device - with the beneficiary providing the proof of purchase), and “non- cash subsidies” (e.g., providing directly the equipment, with or without a pre-purchased connectivity plan). 74 An impact assessment will be conducted with the World Bank's Development Impact Evaluation department (DIME) and Africa Region Gender Innovation Lab (GIL) - several options will be piloted and tested to see what works best in the Mozambican context. The activity will be informed by global knowledge currently being developed on the topic, including an ongoing global study on device affordability (P173751) and a related pilot program funded by the Digital Development Partnership (DDP) Trust Fund, an affordable device pilot under the ProEnergia+ project in Mozambique, and the Rwanda Digital Acceleration project (P173373). 75 Non-subsidy-based schemes could include credit guarantees, insurance, lines of credit in order to help de-risk installment-based payments or secure credit in cases where customers lack funding for the upfront purchase and the credit history and/or collateral allowing for credit-based purchases. A national guarantee fund will notably be developed under the Mozambique: Access to Finance and Economic Opportunities project (P178658, pipeline), which could be used for device financing. 76 Detailing financial instruments implemented, disbursement mechanisms, eligibility criteria and administration requirements Page 22 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) digital services to be supported under EDGE77) and livelihoods opportunities. The activity will be anchored in the forthcoming Mozambique Digital Skills Country Action Plan. The project will be informed by a feasibility and sustainability study that will assess and compare several models in terms of effectiveness and sustainability 78. Courses will be delivered in Portuguese and where appropriate in local languages, and curricula and approaches tailored to distinct user groups and regional specificities. In particular, a gender-sensitive approach will be applied to ensure accessibility and relevance to women and considerations will also be made to support learning needs for persons with disabilities79. The trainings will also include modules on online safety, targeting both women and men, to mitigate potential risks that arise from online violence and harassment. The trainings will also emphasize the importance of digital tools and services as an adaptation mechanism in case of climate shocks. Where feasible, CMCs, ‘digital plazas’ and other facilities will be utilized to save costs and maximize synergies with other programs. Awareness campaigns will take place in parallel to support cultural and behavioural change as well as change of perceptions towards digital technologies. Ways to link trainings to use cases such as trade or entrepreneurship and to connect training graduates to employment/self-employment opportunities will also be explored. Specifically, the project will finance: (i) a feasibility and sustainability study to assess the best program delivery model(s), (ii) services of training service providers for the training; (ii) equipment; (iii) establishment of a shared digital skills training platform that all relevant partners and stakeholders can contribute to and utilize to facilitate content creation; (iv) the development of a usage data collection feature to measure user engagement with course materials, achievement of learning outcomes and to seek feedback which will be incorporated into further iterations of the courses; and (v) awareness and outreach campaigns. Component 2: Foundations for Accelerated Digital Transformation (US$102 million IDA equivalent) 38. Component 2 aims to build the critical digital foundations for the Government, economy and jobs of the future, including (i) spurring development of digital infrastructure, (ii) better utilization of data for policymaking and service delivery, (iii) improving trust and security of online transactions, sensitive data and infrastructure/systems, and (iv) leveraging digital connectivity and technologies to improve learning outcomes and impart students with digital skills. Subcomponent 2.1: Core digital infrastructure for Government and private sector (US$65.0 million) 39. This subcomponent will aim to increase the geographic reach, capacity, reliability, and security of GovNet as a means to improve public administration and digital service delivery, while simultaneously using the GoM’s purchasing power to spur investment to develop a unified, robust, open access backbone infrastructure across the country. It will be based on a new approach that infuses greater competition in the provision of underlying services to Government by commercial operators. The sub-component will finance: (i) a competitive tender for pre-purchase of high-speed connectivity and associated enterprise services to connect MDAs and other priority public institutions at central, provincial and district level throughout the country and establishment of an associated virtual private network (VPN); (ii) 77 This notably includes access to a single platform to provide information and services to citizens and businesses through multi-channel solutions (web, USSD, inbound and outbound call-center), which will be developed under EDGE. 78 A model that will be assessed is a model based on "digital champions" who are trained and then impart digital skills and raise awareness at the community level. The champions may be selected, with a gender balance, from among young graduates of universities or TVET graduates of ICT qualifications in the same zones, then trained potentially with the help of engineers/professors from other universities, including Maputo, and subsequently deployed to communities in targeted areas to directly train citizens in basic digital literacy. 79 Gender- and disability-sensitive approaches to digital skills programs will be adopted (e.g., leveraging female-trainers, gender-appropriate locations, provision of required assistive tools such as screen readers). The activities will leverage ‘women in technology’ networks to target women and girls, as well as women’s centers, youth organizations, non-governmental organizations (NGOs), and community associations whose aim is to help vulnerable groups, including people with disabilities, to fully meet the training needs of these groups and ensure their equitable participation. Page 23 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) financing for provision or upgrade of local area network (LAN) equipment and services at selected beneficiary institutions; and (iii) TA, capacity building and associated equipment and services to support network planning, deployment and management, including upgrading the Network Operations Center (NOC). The activities will be informed by a GovNet feasibility study, master plan and bidding documents to be developed under the EDGE project80. Requirements will be included to ensure that any new off-grid network infrastructure is energy-efficient and powered by renewable sources to the extent possible, and that any existing network infrastructure contributing to significant GHG emissions (e.g., diesel generators) will be gradually transitioned to renewable sources over a specified transition period. Requirements will also be included to ensure resiliency, redundancy and continuity of critical network infrastructure and services in the event of future climate, public health or other shocks. 40. This competitive, service-based approach would meet the GoM’s growing connectivity needs while bringing multiple additional benefits. These include capitalizing on economies of scale to lower the unit costs for connectivity services and shifting the CAPEX and OPEX costs and risks of constructing, operating and maintaining network infrastructure to the private sector. The large-scale and long-term purchase of internet bandwidth/services is expected to provide the demand guarantee needed to incentivize private sector investment. Private sector actors are expected to invest in new or upgraded middle and last mile infrastructure needed to both provide the contracted services to government while also simultaneously serving private wholesale and retail customers utilizing the same infrastructure. Consistent with the MFD approach, it is expected to leverage significant private capital investment for network buildout and upgrading. The contract will include requirements for the service provider(s) to make dark fiber and/or wholesale transit services on the resulting networks available to all other licensed mobile operators and ISPs on an open access, non-discriminatory pricing basis.81 This will help ensure that the resulting infrastructure lowers the cost, increases competition and eases market entry for retail connectivity services throughout the country, particularly in presently underserved and rural areas. Subcomponent 2.2: Data governance, data protection, cloud readiness and cybersecurity (US$15 million) 41. This subcomponent will aim to (i) improve national data governance, regulation and management practices, (ii) strengthen GoM’s data hosting, accessibility, and integration capabilities, while laying the groundwork for development and adoption of a Government Cloud and stimulating development of the private cloud services market, and (iii) enhance cybersecurity. Stronger capacity for managing, sharing and safeguarding Government data will play an integral role in enhancing GoM’s ability to expand and improve its e-service offerings . The activities aim to strike a balance between data safeguards - data protection and privacy considerations, and enablers, i.e., making more data available and exchangeable to enable digital service delivery, innovation, and data analytics. Activities to be financed include: (a) 2.2.1. Developing a data governance and management framework in the public sector . This will include support for: (i) a review of existing data governance and management practices, (ii) classification of public sector data by sensitivity and business impact to identify governance requirements and (iii) development of a data governance 80 The feasibility study will include assessing GovNet from a technical, operational, financial, legal and regulatory perspective; assessing future needs; undertaking a feasibility and options analysis for upgrade and expansion of the network/extension of network services to public institutions and locations, including identification of potential public-private partnership (PPP) models and opportunities to spur greater private sector investment in digital infrastructure and competitiveness in the broadband market; and determining best approach for improving the network topology and increasing the number of Internet Exchange Points in the country. 81 Requirements will be included to ensure that the selected service provider(s) make wholesale transit or dark fiber on the resulting networks open to other Mobile Network Operators (MNOs) and Internet Service providers (ISPs) on an open access, competitive and non-discriminatory basis. Page 24 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) framework and implementation roadmap, including the definition of shared principles, norms and standards for data governance, data policies and strategies and a shared approach to data management and hosting. (b) 2.2.2. Supporting cloud readiness and transition for GoM and the environment for growth of the data infrastructure and cloud services market. This will include: (i) a market review and policy/regulatory gap assessment to identify ways to foster the development of the cloud and data infrastructure services market; (ii) development of a GoM cloud policy, strategy and operationalization plan including identification of opportunities to leverage private infrastructure and services where appropriate; (iii) support for implementation of priority initiatives identified in the cloud operationalization plan including procuring associated hardware, software and services and migration of priority data, information systems, applications and services to the shared data hosting infrastructure or cloud; and (iv) development of user guides, sensitization and capacity building support for relevant MDAs and user groups. Leveraging private sector data backup and cloud services to complement the national data center could meet the Government's needs while stimulating private investment and promoting the development of a data infrastructure/cloud services market in the country. Migrating data hosting to a centralized, efficient infrastructure will increase resilience of critical data, systems and services in the event of a climate related event affecting a stand-alone server or datacenter (flood, fire, etc.), and is also expected to result in significant energy savings. In addition, any new infrastructure to be developed or cloud services to be purchased will include requirements for robustness, energy-efficiency and renewable power sources, to the extent possible. (c) 2.2.3. Strengthening data protection capacity. This will include: (i) support for capacity development and operationalizing a Data Protection Office in line with requirements of data protection legislation and regulation to be developed under the EDGE project, including providing assistance with formulating data protection regulation and deploying requisite IT systems for registration of data controllers/processors and processing complaints and compliance workflows; (ii) advisory services, training and awareness raising of key public and private stakeholders; and (iii) awareness campaigns for the public at large. (d) 2.2.4. Strengthening cybersecurity resilience and bolstering the protection of critical information infrastructure (CII). Building on reforms initiated under the EDGE project, this sub-component will support the enhanced protection of central cybersecurity capacities and sector specific CII, including Government’s information systems and networks, and will enhance threat intelligence, monitoring, prevention, and response capacities. It will include support for: (i) enhancing the institutional and governance framework for overall cybersecurity and CII protection in Mozambique, including national information security standards and compliance frameworks; (ii) enhancing technical and operational capabilities through investments in hardware, software, platforms, systems and office space for the National CSIRT, the Government CSIRT, other sectorial CSIRTs and associated Security Operations Centers (SOCs), including support for the definition of software needs and associated training; (iii) design and delivery of capacity building and awareness raising programs for various audiences, including training for key stakeholders, facilitation of cybersecurity professional certifications, exchange programs and participation at industry conferences; and (iv) establishing international partnerships and collaboration with other cybersecurity agencies, CSIRTs or relevant associations. Subcomponent 2.3: Digital solutions for improved learning and digital skills development (US$22.0 million) 42. This subcomponent will support digital transformation in the education sector, with a focus on upper secondary, TVET and higher education levels. The objective is twofold: (i) improving the efficiency and efficacy of education service delivery, through incorporation of ICTs in teaching and learning, while boosting resilience by ensuring Page 25 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) continuity of service delivery through distance learning in case of shocks and; (ii) improving the digital competencies of students to prepare them for future workforce opportunities. The subcomponent is aligned with the 2018 Information Society Policy, including the first axis on education and human development. It will complement other digital education initiatives, including the Improvement of Skills Development Project (P167054, ongoing) and Improving Learning and Empowering Girls in Mozambique (P172657, ongoing)82, and interventions from other development partners. The subcomponent will include the following activities: (a) 2.3.1. Supporting digital connectivity in the education sector. This will include: (i) provision of broadband connectivity services for underserved upper-secondary schools and distance learning centers (including provision and maintenance of internal networks and green energy solutions as relevant); (ii) provision of IT equipment for teaching and learning such as multimedia studios or IT labs 83; (ii) financing and TA to support INAGE/MoRENet to provide more robust connectivity services and connect additional higher education institutions and TVETs, support modernization of campus networks, improve network security and management, and review of MoRENet’s business plan to enhance sustainability; (iii) financing of programs for access to digital devices84, focusing on specific segments such as teachers and higher education students (including an emphasis on female students), and (iv) TA to support MCTES to negotiate with mobile operators and ISPs to provide low cost internet data packages for the secondary/tertiary students and teachers, and/or support for preferential access to online educational and academic systems and platforms. (b) 2.3.2. Supporting the integration of ICT in the learning and teaching process and the development of digital competencies. This will include support to: (i) update academic curricula and programs in line with the forthcoming Mozambique Digital Skills Country Action Plan, with a focus on upper secondary education level, as well as development or upgrading of intermediate/advanced digital skills at TVET and higher education levels 85; (ii) design and rollout of a digital technology use and digital skills development training program for teachers and key MINEDH/MCTES/TVET staff at central, provincial and district level; (iii) implementation of an e-learning and knowledge sharing platform for the academic and scientific community, leveraging existing open source platforms, content and partnerships with experienced institutions where feasible 86; and (vi) development of a strategy for scaling up online learning, in both distance learning and in brick and mortar settings. Activities will be implemented in close collaboration with private sector to ensure the relevance of the skills developed and the eventual employability of graduates, and the exploitation of existing digital materials and content that could be adapted for Mozambique. The project will also identify, customize and deploy gender-sensitive digital learning content. 82 These two projects provide some support for connectivity (for MoRENet and some schools, primary and first cycle of secondary, respectively) and devices for students, but on a relatively small scale. The project will scale up interventions to reach more institutions and students/teachers throughout the country. It will also expand support, e.g., by supporting campus network upgrades and campus-level IT readiness, and will also include funding for IT equipment for teaching and learning. 83 Multimedia studio model used under P172657; IT lab model drawing on lessons learnt from the Smart Classrooms model implemented in several countries, including Rwanda 84 Following a similar approach to 1.3; Digital content and applications may be pre-loaded to enable offline access as needed. 85 This would complement the MozSkills project, which is supporting in TVETs the inclusion of basic digital skills for most qualifications and intermediate digital skills for selected programs related to industrial maintenance and services. 86 The implementation of the platform would also entail training key stakeholders in the use of the platform. Page 26 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Component 3: Project Management, Institutional Coordination and Citizen Engagement (US$8 million IDA equivalent) 43. The component will support project management and implementation functions and strengthen the GoM's coordination and management capacity. This includes operating and staff costs of the PIU and the recruitment of expert consultants in key areas, such as project management, procurement and financial management (FM), environmental and social (E&S) management and technical specialists relevant to the various project components. It will also include support for inter-ministerial and stakeholder coordination efforts, citizen engagement including development of a grievance redress mechanism and communications. Component 4: Contingent Emergency Response Component (CERC) (US$0 million) 44. A CERC is included in accordance with Investment Project Financing (IPF) Policy, paragraphs 12 and 13, for Situations of Urgent Need of Assistance and Capacity Constraints. This will allow for rapid reallocation of uncommitted funds in the event of an eligible emergency as defined in OP 8.00, including climate or natural disasters and public health emergencies. An Annex to the Project Implementation Manual (PIM) (‘CERC Annex’) will guide the activation and implementation of the CERC, and the Project’s Environmental and Social Management Framework (ESMF) includes the CERC environmental and social assessment and initial requirements. For the CERC to be activated, and financing to be provided, the Government will need (i) to submit a request letter for CERC activation as well as the evidence required to determine eligibility of the emergency, as defined in the CERC Annex; and (ii) an Emergency Action Plan, including the emergency expenditures to be financed; and (iii) to meet the environmental and social requirements as agreed in the Emergency Action Plan and Environmental and Social Commitment Plan. 45. The implementation of the various components will be closely coordinated to maximize synergies between the sub-components. For example, the development of an open access backbone, facilitated by the government connectivity interventions under Sub-component 2.1, will support the expansion of rural connectivity under Sub-component 1.2. Similarly, the device schemes for the general population under Sub-component 1.3 will be implemented alongside the device schemes for students and teachers under Component 2.3. The project will also attempt to develop a common and shared approach to extending connectivity for GovNet, under 2.1, and MoRENet, under 2.3, and for developing digital skills of various target groups, under 1.3 and 2.3. Finally, the reforms supported through technical assistance aspects of the project (subcomponents 1.1 and 2.2) will strongly complement the investment activities and boost the overall impact. C. Project Beneficiaries 46. The following beneficiaries will be targeted through the project interventions:  The entire population of Mozambique will benefit from increased digital affordability and access - thanks to an improved enabling environment for the telecommunications/broadband sector, investments in an open access national fiber backbone, as well as enhanced privacy and safety of transacting in a trusted digital environment.  1.6 million people residing in historically underserved areas, including fragile and conflict-affected areas in the northern and central provinces, will have increased availability of broadband networks and services.  More than 330,000 individuals will benefit from wider opportunities to participate in the digital economy and access digital services through activities that promote uptake and inclusion. These include individuals accessing digital literacy training (30,000) and receiving support to acquire an internet connected device (300,000), and those residing near connectivity access points, particularly in rural areas. Youth, women and girls, persons with disabilities, IDPs and host communities, communities vulnerable to climate stress and other marginalized and Page 27 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) vulnerable groups are specifically targeted, with gender and location disaggregated data used to track progress.  Targeted telecommunications companies, IT services and equipment providers and digital skills providers contracted under various project activities will directly benefit. The telecommunications sector more broadly, including smaller local internet service providers (ISPs) will broadly benefit because the project will enable a reduction in the costs of network deployment and development of an open access fiber backbone, more competitive markets, and boosted consumer demand for broadband and other digital services.  Government institutions and civil servants will enjoy faster, lower cost and more secure connectivity and data hosting and exchange capabilities to support improved communications, public administration and policymaking, and opportunities to digitize public service delivery. 47. While the project will have a national approach, some interventions will be more geographically focused and will involve prioritization of underserved areas, with particular attention paid to conflict and fragile contexts , as shown in Table 2. Some activities will require prioritization in areas with lower broadband connectivity and higher needs for interventions to address demand-side barriers, primarily located in lagging regions in the northern and central regions of the country. Rural connectivity programs will target areas with market failures - where there are gaps in coverage, while digital inclusion programs (devices, digital skills, Edtech) will also include poor secondary cities and peri-urban areas 87 along growth corridors, where there is a large usage gap and a large concentration of poor people who could benefit from new economic opportunities through digital technologies, i.e., areas that have a high potential to stimulate growth. Regardless of the geographical area, the project will seek to actively address the digital inclusion of vulnerable or marginalized populations through proactive targeting of these groups and a granular approach to beneficiary selection, differentiated by region, which will be informed by a number of feasibility studies. The spatial targeting methodology will be based on geo-spatial analysis to identify key priority locations based on need/demand and impact potential to maximize the catalytic impact of investments. It will be aligned across certain activities (e.g., villages where schools could be connected under subcomponent 2.3 will be prioritized for the rural connectivity schemes under 1.2) where possible to maximize synergies. In addition, spatial and beneficiary targeting will be refined to complement other World Bank- funded projects, such as the Northern Mozambique Urban Development Project (P175266, ongoing) and the Northern Mozambique Rural Resilience Project (P174635, ongoing), in order to facilitate more productive use of internet- connected devices among beneficiaries and enable them to access new supported services or mobile money transfers. Table 2: Targeting methodology by subcomponent Subcomponent Targeting methodology Subcomponent 1.1: Enabling No targeting. National reach. environment for digital investment, inclusion and resilience Subcomponent 1.2: Rural Rural areas with evidence of market failures will be targeted. As part of the feasibility study, sites digital connectivity and access will be selected based on objective criteria as follows: an overall lack of infrastructure and absence of future expansion plans by telecom operators; an expected minimum demand for digital services; the feasibility and safety of engaging in on-site interventions, considering security risks in parts of the country as determined by Security Management Plan; areas that experience 87 The UN Habitat report Analysis of Multiple Deprivations in Secondary Cities in Sub-Saharan Africa calls for the recognition of secondary towns and cities as current and future frontiers of growth and development in sub-Saharan Africa. https://unhabitat.org/analysis-of-multiple-deprivations- in-secondary-cities-in-sub-saharan-africa. Secondary cities and towns emerge as powerful entry points for absorbing the poor, concentrated in hinterlands, in their labor markets, provided these cities are strengthened in their capacity to develop themselves. Page 28 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Subcomponent Targeting methodology vulnerability, including high levels of poverty, a high number of displaced persons or exposure to climate stress; and value-added for investment, in the sense that there are complementary economic or social activities and programs ongoing or planned. Based on preliminary analysis, the provinces of Tete, Zambezia, and Nampula, Niassa and Cabo Delgado will contain most sites. Subcomponent 1.3: Digital Activities proposed will target areas covered by infrastructure investments under subcomponent inclusion schemes 1.2, and key secondary cities and peri-urban areas along growth corridors where connectivity networks and digital services exist but a significant usage/uptake gap remains, and that are home to relatively large numbers of poor and have strong growth potential. Geo-spatial analysis will be used to refine targeting. Possible indicators to be used as layers include availability of broadband network coverage, availability of mobile money agents, existence of economic activity (e.g., local markets), population density, poverty levels, displacement levels, and exposure to climate stress. Subcomponent 2.1: Core Selection of administrative subdivisions will be based on GoM demand, expected demand for digital services infrastructure public services, strategic areas to facilitate infrastructure development/reach of an open access for Government and private backbone, feasibility and safety as determined by Security Management Plan and impact on sector vulnerable populations. Subcomponent 2.2: Data No targeting. National reach. governance, data protection and cybersecurity Subcomponent 2.3: Digital Activities proposed will target in priority the main urban centers in provinces and districts of technology adoption and skills the central and northern regions, where educational outcomes are lower as relevant. development in the education sector Alignment with Corporate Commitments 48. Gender. The project addresses specific gender gaps in broadband access, device ownership, digital literacy, and education, through a number of actions that are aligned with the three pillars of the WBG's 2016-2023 gender strategy , Pillar 1: Improving Human Endowments; Pillar 2: Removing Constraints to More and Better Jobs; and Pillar 3: Removing Barriers to Women’s Ownership and Control of Assets. Specific interventions include: (i) promoting women's access to broadband services by providing public access in safe spaces that women and girls disproportionately access, promoting the affordability of internet use and developing outreach and communication activities targeted at women; (ii) promoting access to digital devices by supporting policy and regulatory strategies to improve their affordability and developing subsidy schemes specifically for women to facilitate purchase of internet connected devices; (iii) promoting digital literacy by conducting women-friendly digital literacy trainings that specifically address women's concerns and needs and by working with female mentors and advisors to help women overcome social and cultural norms and gender-related barriers; and (iv) providing equitable and inclusive access to digital learning resources in the education/higher education sector and integrating a gender-sensitive lens to distance learning curriculum. The project will also strengthen gender- disaggregated data monitoring to measure and inform actions to close the digital gender gap. The results framework includes several gender-disaggregated indicators to monitor progress in reducing the identified gender gaps, most notably ‘Mobile broadband penetration rate for women’. 49. Citizen engagement. Citizen engagement has been incorporated throughout the project design. In addition to the establishment of a project-specific Grievance Redress Mechanism (GRM), the project will support interactive communication with the general population to increase understanding of the project, adoption of digital tools, and to solicit feedback to inform prioritization and refinements to design and implementation approach. Notable activities include (i) studies to identify barriers to digital access and adoption, in order to inform prioritization of specific regulations Page 29 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) or programs, and (ii) user research and consultations with stakeholders and beneficiaries, including marginalized groups, to collect feedback on the design and implementation of the device affordability and training schemes, in order to ensure adapted solutions and increased usage. The results framework will track the ‘Percentage of grievances registered related to delivery of project benefits that are actually addressed’. 50. Climate change adaptation and mitigation. The project includes activities that aim to support climate change adaptation and mitigation in alignment with the WBG's Climate Change Action Plan 2020-2025. Activities supported are informed by the climate and disaster risk screening conducted for the project, which noted Mozambique’s increased vulnerability to severe climate shocks – most notably floods, droughts and tropical cyclones, and which confirmed risks to physical infrastructure elements of the project and the high potential of digital tools to support adaptation and mitigation. The activities will also be informed by the forthcoming Country Climate and Development Report for Mozambique. The approach is aligned with Mozambique’s National Climate Change Adaptation and Mitigation Strategy for 2013-2025, which highlights the need to ensure that infrastructure investments are more resilient to climate change, and that energy efficiency is increased. The Results Framework includes a specific climate indicator ‘Newly built or upgraded infrastructure that is resilient to climate related shocks and follows energy efficiency and renewable energy standards (Percentage)’. Activities will include the following (see Annex 2 for more details): (a) Climate adaptation: (i) TA to support ICT-enabled adaptation of the economy and build resilience and emergency response capacity for digital infrastructure, including development of industry climate standards with respect to digital infrastructure planning and deployment; (ii) climate-proofing actions for activities focused on expanding broadband networks, such as protocols to ensure infrastructure robustness and emergency response coordination; (iii) digital skills trainings emphasizing the importance of digital tools and services as an adaptation mechanism in case of climate shocks; (iv) strengthened digital resilience capabilities of the GoM, with improved and more resilient connectivity, and with enhanced data hosting and recovery capacities; and (v) investments to support digitization of service delivery in the education sector that help enhance resilience capacity to climate events through distance learning. (b) Climate mitigation: (i) TA to increase policy development, strategic planning, and capacity building to minimize the environmental impact of ICTs and to ‘green’ the economy through ICT, including regulatory guidelines for climate-smart and energy-efficient digital infrastructure and a strategy to develop e-waste collection to reduce emissions and wider environmental harm; (ii) inclusion of energy-efficiency standards and renewable energy requirements for all digital infrastructure and services procurements financed; (iii) TA to support improved data exchange and consolidated hosting capable of generating significant energy efficiency gains; and (iv) TA to develop incentives for infrastructure sharing that will help avoid the duplication of civil works and network operations leading to GHG emissions. In addition, increased digital capabilities and enhanced use of digital services can significantly decrease the need to travel long distances to access services, communicate or transact or even the need to commute to an office or school, reducing fuel consumption and minimizing CO 2 emissions88. 88 See: https://www.weforum.org/agenda/2019/01/why-digitalization-is-the-key-to-exponential-climate-action/ WEF highlights that digital services have the potential to reduce the use of energy and materials across the economy and directly enable a third of the emissions reductions needed by 2030. Likewise, a recent report concludes that compared to the global carbon footprint of mobile networks themselves, the level of avoided emissions enabled by mobile communications technologies is 10 times greater – a tenfold positive impact. See: The Enablement Effect - The impact of mobile communications technologies on carbon emission reductions. GSMA and the Carbon Trust, 2019. Page 30 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) 51. Mobilizing finance for development. The project draws upon the MFD framework to enable private capital mobilization, in particular for digital connectivity and cloud infrastructure and services. The project first supports policy and regulatory reforms to encourage private sector investment in infrastructure and services (Subcomponent 1.1). Public financing will then be used to incentivize private sector investment in digital service and infrastructure expansion (Subcomponents 1.2, 2.1, 2.2 and others) through PPPs or in response to government stimulated demand for services. Finally, by addressing barriers such as access to digital devices and skills (Subcomponents 1.3 and 2.3), the project is expected to drive demand and create a growing user-base that can increase and sustain commercial investments. The amount of private investment expected to be leveraged as a result of the project is difficult to estimate upfront, as it will be determined by competitive bidding during implementation and the technical designs and additional infrastructure needs identified by the private partners, but it is likely to be substantial and will be tracked in the results framework. D. Results Chain 52. The key elements of the Results Chain that will ensure achievement of the PDO are: (a) strengthening the enabling environment for the telecom/broadband, sector (b) increasing digital connectivity for rural users, (c) improving digital skills and device affordability; (d) developing core digital infrastructure to serve the GoM; (f) strengthening data safeguards and enablers; (g) promoting the use of digital technologies in the education/higher education system. Figure 5 represents the results chain of the project and contributions to the PDO. The results chain assumes GoM’s willingness to pursue key reforms and follow a competitive, private sector driven approach to meet its connectivity and data hosting needs. It is also assumed that the private sector would be willing to participate in the connectivity and digital inclusion skills. Achievements in the areas noted above will result in improved access to affordable broadband, accelerated adoption of digital services and increased digital skills resulting in increased participation and inclusion in the digital economy, as well as robust and secure infrastructure and data-driven solutions that improve the efficiency of digitally- enabled public services and support accelerated digital transformation across all sectors. Page 31 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Figure 5: Mozambique Digital Acceleration Project's Theory of Change E. Rationale for Bank Involvement and Role of Partners 53. World Bank financing is appropriate as it will be used to (i) address market failures, (ii) support digital public goods, and (iii) stimulate and/or crowd in private sector investment, consistent with the principles of MFD. First, the project will provide financing for activities aimed at addressing market failures that prevent private sector investments in the absence of public sector funding or de-risking. These include areas such as access to last-mile connectivity in underserved areas, where the expected commercial returns are too low, or risks are too high, to encourage private sector infrastructure expansion without public support or incentives. In these cases, interventions will be designed to support private capital mobilization (PCM), where possible, using mechanisms such as reverse auctions for network expansion. This principle equally applies to the issue of mobile device access, where low purchasing power, high interest rates and high default credit risks prevent a purely private sector solution to the issue. In doing so, the proposed project will bring valuable economic and social benefits to a portion of the Mozambican population that would otherwise remain excluded. Digital services have increasingly become a necessity for households, yet they stay out of reach for many due to accessibility or affordability. Reducing this digital divide can thus significantly close the opportunities gap between population segments. Second, the project will focus on core digital public goods. For instance, GoM needs enhanced connectivity to carry out its duties efficiently, effectively, and transparently. Other public goods supported under the project also include critical digital foundations such as data integration and trust frameworks, which are needed to unlock private sector innovation in areas such as digital financial services. Third, the project will actively stimulate private sector Page 32 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) development through TA for upstream policy, legal and regulatory reform that can enable scaled investment in broadband market development and digital services. Accelerated development of local services and applications will also strengthen the economic return for the connectivity infrastructure supported by Component 1 and further help develop a competitive digital economy. 54. Mozambique's geostrategic location also means that the reforms and connectivity investments supported by the project will serve the wider Southern Africa region. In particular, the development of a more competitive and vibrant broadband infrastructure and services market will benefit not only Mozambique but also its neighboring landlocked countries, notably Malawi, Zambia, Zimbabwe, which will gain better access to international connectivity, resulting in turn in significant reductions in prices and better quality of services for end-users. Improvement of the legal and regulatory framework for telecommunications and data protection and cybersecurity and harmonization with that of the Southern African Development Community (SADC) could also advance the progressive development of a single digital market in the region. 55. The World Bank is well-positioned to support the digital sector in Mozambique, given its technical knowledge as well as prior track-record of advising the Client and investing in the main areas covered by the project. For example, the WBG is home to dedicated Communities of Practice on “Digital Infrastructure 2.0”, Cybersecurity, and Digital and Climate Change, which can draw on experts in the field, cutting edge research and mobilize support from partners in industry and academia. Moreover, the World Bank has a track-record of supporting digital development in Mozambique, including MEGCIP, and similar operations regionally. The ecosystem approach proposed and the focus on the enabling foundations of the digital economy have been developed and tested through WBG programs in other countries. This contrasts with the more siloed or smaller-scale approaches supported by other institutions in this space that may not be able to bring together all sectors and arms of Government, the cross-cutting expertise and financial resources necessary to achieve comprehensive digital transformation. 56. The project identifies, leverages, and complements work done by other partners that support digital development in Mozambique, thereby capitalizing on synergies and lessons learnt. For example, the World Bank has worked closely with the United Nations Children’s Emergency Fund and International Telecommunication Union (ITU) on school connectivity, under the GIGA initiative. Support for GovNet complements ongoing support by the Italian Agency for Development Cooperation, which aims to expand wireless access for MDAs in the districts. Similarly, support for digital skills development, digital inclusion and integration of ICT in the education/higher education sector will leverage existing or planned interventions by the European Union, the Italian Agency for Development Cooperation and the German Development Agency. F. Lessons Learned and Reflected in the Project Design 57. Overall approach: The project takes a comprehensive approach to stimulating digital adoption and supporting digital transformation. Global lessons point to the need for layered interventions that tackle all key access barriers related to affordability, readiness, and relevance, including accessible broadband services access points, affordable data services, digital literacy, leveraging digital public services, while building ‘digital foundations’ over the long term. Likewise, experience in other countries have demonstrated that the ICT sector is rapidly changing, creating the need for ongoing innovation, upgrading of skills and infrastructure, and constant vigilance and proactivity to prevent regulatory and competition backsliding. Page 33 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) 58. Digital infrastructure and connectivity: Connectivity elements of the proposed project leverage lessons learnt from a comparative analysis study of 70+ last-mile connectivity deployments89, and the implementation of IDA financed projects which have successfully leveraged similar models for pre-purchasing broadband capacity for public institutions (e.g., Digital Malawi Project (P160533)), and expanding rural connectivity through subsidies designed to attract private sector investment. Moreover, the WBG has wide-ranging experience of working with countries to reform their telecom sectors, and developing regulatory capacity in emerging markets, featuring more recent projects in countries such as Colombia, Ghana, Malaysia, Pakistan, and India. 59. Device affordability: Project design regarding device affordability will leverage lessons learned on targeting, instrument mix and implementation modalities from related schemes in-country and elsewhere, including a global study on Affordable Devices (P173751) and the Rwanda Renewable Energy Fund Project (REF, P160699). It will also draw on research conducted with partners such as GSMA, Facebook Connectivity, and from experience of smartphone subsidy schemes90, including related interventions in social protection projects91. Related research shows that access to devices is becoming a major barrier to access, even where a network exists.92 60. Digital skills and capacity-building: The project will benefit from lessons learned from programs supporting digital skills across the WBG portfolio and pipeline including e-Burkina (P155645) and e-Gabon (P132824) as well as a digital skills program in Kaduna State (Nigeria) under the Innovation Development and Effectiveness in the Acquisition Of Skills Project (P166239) that provides a successful case study for training of youth and vulnerable women in partnership with a local non-profit organization and connecting participants with local employment opportunities. Rwanda’s Digital Ambassadors Program also offers interesting lessons93. Key lessons include: (i) the benefits of carrying out multiple smaller trainings over time rather than a massive one-off training to incorporate feedback and make improvements and offer opportunities for knowledge refresh; (ii) enhancing public promotion and community outreach; (iii) providing adequate internet infrastructure, relevant devices and digital tools for digital skills programs; (iv) encouraging linkages between the program and other ecosystem support services; (v) reinforcing local technology ecosystem to prepare/adapt and deliver training content; (vi) incorporating local language and content/knowledge into programs; (vii) employing differentiated instruction and personalization of delivery; and (viii) ensuring sensitivity to socio-cultural and religious norms that create barriers to participation. 89 World Bank (2020), Innovative Business Models for Expanding Fiber-Optic Networks and Closing the Access Gaps study. 90 Examples include: Full price of a device called Ascend Y21 was reverse subsidized by MTN Ghana, in the form of voice and data services over a 12-month period; Columbia allocated US$90 million for data and smartphones subsidies for low-income households; Malaysia launched a national program to encourage youth to purchase 3G-enabled smartphones with a rebate on certain phones reducing the cost by 40 percent. 91 Examples include: “Plan Mobile Internet Access,” offering a 12-month instalment plan to incentivize 8 million citizens to switch from 2G feature phones to 4G smartphones in Pakistan - a partnership between Tameer Bank, Telenor, and the Government of Punjab; Microfinance institutions in India offering 9-12-month loans at 18-22 percent interest to low-income women micro entrepreneurs to purchase smartphones. 92 GSMA (2017), Accelerating affordable smartphone ownership in emerging markets. See: https://www.gsma.com/mobilefordevelopment/wp- content/uploads/2017/07/accelerating-affordable-smartphone-ownership-emerging-markets-2017.pdf 93 Digital Opportunities Trust (2019), DAP Proof of Concept and Final Evaluation. See: https://www.dotrust.org/media/2019/06/2019-01-04-DAP- Proof-of-Concept-Final-Evaluation-Executive-Summary.pdf Page 34 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 61. The project implementation arrangements reflect the need for coordination and engagement of a wide range of agencies involved in the design and delivery of project activities. They also reflect the need for close coordination with complementary World Bank-financed projects, including EDGE and ProEnergia+, with inter-related implementation arrangements and governance oversight. The proposed arrangements (see Figure 6) include a high-level Project Steering Committee (PSC) – whose role is oversight, high level decision-making, and coordination. This PSC will stem from the existing EDGE Steering Committee, which will be expanded to also cover this project, with the Ministers of MCTES and MTC taking on co-chair roles. MCTES, MTC and Ministry of Economic and Finance will form the core membership of the PSC and enjoy a decision-making role, while the other technical stakeholder MDAs will have an advisory role. This arrangement will help ensure coherence and coordination of governmental agencies across both projects and across the wider digital development agenda. More specifically, the mandate of the PSC will include (i) approval of annual budgets and work plans; (ii) quarterly review of project progress; and (iii) provision of strategic guidance and recommendations related to project implementation. In addition, the PSC will also serve as the Government’s advisory body on data management and governance in support of integrated service delivery and public administration. The Terms of Reference (ToR) for the PSC will be detailed further in the PIM. Figure 6: Project Institutional Arrangements 62. Overall project implementation will be supported by a project implementation unit (PIU) housed within MTC . The project will rely on a PIU that supports all the World Bank-financed projects implemented under the ministry to Page 35 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) capture efficiencies and enable sharing of procurement, financial management (FM), environmental and social (E&S), communications and other functions and procedures. A dedicated project coordinator, deputy coordinators and technical specialists will be embedded in the shared PIU. Two deputy coordinators will be responsible for coordination of activities under components 1 and 2 respectively. The deputy coordinator for component 1 will have a dual role for oversight of the connectivity related aspects of the Pro-Energia+ project. The deputy coordinator for component 2 will have a dual reporting arrangement to both the PIU at MTC and to MCTES. Technical experts hired under the project will be required to transfer knowledge and provide hands-on training to GoM staff to build capacity and ensure sustainability after project closure. The PIU will be represented on the PSC in an advisory capacity. 63. The PIU will work closely with technical stakeholder MDAs as the primary technical lead for project activities that fall within their respective mandates – MTC, MCTES, MINEDH, INCM, FSAU, INAGE/MoRENet, INTIC, CITT and the National Vocational Education Authority. The lead technical stakeholder MDAs are expected to contribute technical inputs on a day-to-day basis, working closely with the project coordinator, deputy coordinators and other PIU staff, including supporting technical aspects of procurement-related processes, aiding in quality assurance and validation of key deliverables, providing input needed to support effective M&E framework management and reporting and leading adoption of legal, policy and regulatory instruments developed under the project. Technical committees (TCs) may be formed as needed to support implementation of activities that require collaboration across multiple technical stakeholders or to respond to advise the PIU, Steering Committee and wider Government on ad hoc technical issues that may arise. The PSC, and as relevant TCs, will further coordinate with the Digital Budget and Spending Controls Committee to be created under EDGE, which will be anchored at the Ministry of Finance and will have the mandate to align digital- related expenditures government-wide. 64. Detailed roles and responsibilities, and terms of engagement will be captured in the PIM. Project stakeholders including MTC, MCTES, INCM, INAGE and INTIC are accustomed to IDA financed projects with hybrid or cross-ministry implementation models, including under MEGCIP and EDGE. B. Results Monitoring and Evaluation Arrangements 65. Progress toward the achievement of the overall PDO will be monitored by the PIU, based on the Results Framework detailed in section VII. The PIU, led by the project coordinator will be responsible for coordinating collection of M&E data centrally and ensuring that an adequate M&E system is established based on the M&E plan detailed in section VI. The PIU will be responsible for developing specified standard protocols and guidelines for data collection and use for the duration of the project, and will organize trainings for relevant stakeholders in the M&E plan. The status of project implementation will be documented in progress reports prepared by the PIU on a semi-annual basis and submitted to IDA for review. These will include an update on (a) physical and financial progress achieved against agreed implementation and disbursement indicators; (b) issues and problem areas, including comments on actions to address identified problems; (c) work programs and budget, including forward-looking estimates and (d) progress in respect to RF PDO and intermediary indicators. In addition, the IDA team will conduct a mid-term evaluation to review the progress against results indicators, based on data supplied by the PIU, and the project will further conduct an impact evaluation on the device affordability activities, looking at overall achievements and gender aspects, supported by the World Bank’s Development Impact Evaluation (DIME) and Africa Region Gender Innovation Lab (GIL). 66. For real-time data collection and analysis, the project will implement the Geo-Enabling Initiative for Monitoring and Supervision (GEMS) where relevant. The GEMS method enables project teams to use open-source tools for in-field Page 36 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) collection of structured digital data that automatically feeds into a centralized M&E system. Data sources can include tailor-made forms, photos, audio, videos, time and date stamps, and GPS coordinates that allow for automated geo- mapping of the information. Using these tools systematically allows the project to enhance the transparency and accuracy of M&E and increase the accountability of third-party monitoring. Moreover, it provides a platform for remote supervision, real-time safeguards monitoring, and portfolio mapping for coordination across projects and partners. Relevant PIU and technical stakeholder representatives will be trained to benefit from the extensive experience gathered through GEMS in other projects. 67. In-built systems for tracking results and satisfaction surveys will be leveraged to support citizen engagement and solicit beneficiary feedback. Related tools will be embedded directly into project delivery to ensure feedback in real time, using digital tools and systems to register beneficiaries and report their feedback (e.g., using tablet-based or rapid mobile/short message service survey tools). Beneficiary focus groups will also be leveraged to inform design and track progress over time. C. Sustainability 68. Sustainability will be ensured through (i) use of private sector-led and market-based mechanisms for resource allocation and investments in digital infrastructure to expand broadband access and data hosting solutions, and (ii) investment in shared public infrastructure, platforms and services that can be re-used and reduce the long-run costs of public service delivery. The MFD approach will ensure the financial and economic viability of the connectivity investments, as the purpose is to optimize the use of public funding to make the investment commercially viable in the long term. In addition, investing in human capital through skill development programs and knowledge transfers, including with Government staff under Subcomponent 1.1, will help build capabilities that will also outlive the project’s lifecycle. While many international firms/contractors will be hired to support the various technical activities envisioned, heavy emphasis will be placed on knowledge-transfer to ensure that local teams are able to maintain systems and solutions introduced. Lastly, key decision makers will be sensitized to opportunities for self-sufficiency after project closure and the need for adequate planning for recurring public financial and operational support, particularly around public access points, the government network and investments in connectivity and technologies in schools. Table 3: Sustainability Mechanisms by Component Component Sustainability Mechanisms Component 1  Legal, regulatory, and institutional support will be focused on creating an enabling environment, and competition in the broadband market, that will outlive the project’s lifecycle.  Capacity building (for MTC, INCM, FSAU, MCTES, etc.) and sensitization of high-level Government officials will support their continued application of skills and knowledge developed beyond the project lifecycle.  The reverse subsidy auction model adopted for rural connectivity will maximize private financing through competitive bidding, ensuring the highest possible value for money, while shifting financial risk and operational responsibility associated with operation/maintenance of infrastructure to private providers.  A plan will be developed to leverage public funds for recurrent expenditure for connectivity of public access points, while developing a business model to generate supplementary revenue for complimentary services, equipment, repairs, etc. where possible (e.g., by partnering with private sector actors and/or by charging for specialized technical training courses).  Digital access initiatives, including public connectivity access points, schemes for affordable smart devices and digital skills programs will form a critical mass of digitally enabled citizens that can improve the financial viability of the investments made by operators in ‘white’ and ‘gray’ areas and for continued investment in Page 37 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Component Sustainability Mechanisms network upgrades, expansion, and maintenance commercially viable. Related public revenue raised on the back on private sector expansion can in turn be re-invested in new public access and services schemes.  Digital literacy scheme launched will aim at crowding in additional partners (including private and non-profit providers, donors).  A stronger FSAU can help replicate or ensure sustainability of activities utilizing future service fund revenues. Component 2  Pre-purchase of capacity for GovNet, schools and MoRENet will ensure connectivity access for Government MDAs and educational institutions, based on a medium-term horizon, and use of commercial service providers will shift responsibility of operation/maintenance of infrastructure to private sector. Wider use of GovNet can provide more affordable broadband services for Government through bulk-purchase.  The shared data infrastructure approach will allow for significant savings compared with each MDA maintaining independent IT infrastructure, and will allow for significant long-term savings, through economies of scale and continued re-use of shared infrastructure (e.g., reducing the incremental costs of launching each new digital service).  Investments made in areas of cybersecurity and data governance/management will secure and sustain key digital investments. TA and capacity building in these areas will also be retained after project closing. Component 3  Implementation will leverage existing structures/teams/processes wherever possible to avoid creating an additional burden on the Government.  Technical support to select MDAs within the Government will allow for sustainable continuation of the activities beyond the project lifecycle.  Citizen engagement activities will ensure ownership by involving the end users/beneficiaries in the design of the proposed interventions. IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic and Financial Analysis 69. The Project is expected to contribute to sustainable economic growth, through long-term cost-savings, efficiency, and productivity gains, fueled by greater digital adoption by citizens, businesses, and Government 94. Greater adoption of digital technologies can enable inclusion, as people gain access to new and improved services that were previously out of reach, enabling wider participation in an increasingly digitized economy. It can also help improve efficiency, by reducing the transaction and operational costs associated with both delivering and accessing public and commercial services. Digital innovation and adoption of technology among citizens and businesses can support deployment of new business models that increase competition, productivity, and consumer welfare. 70. Increased broadband adoption, supported under component 1 and subcomponents 2.1 and 2.3, is estimated to stimulate GDP and job growth95. Research suggests that a 10 percent increase in mobile broadband penetration in African countries is associated with a 2.46 percent increase in the GDP growth rate. Likewise, the ITU 96 estimates that the number of jobs is expected to increase between 0.2 and 0.4 percent for every 1 percent increase in broadband penetration. 71. In addition to the net economy-wide gain from the increased access to affordable, high-quality internet services 94 World Bank (2016). World Development Report: Digital Dividends. 95 How broadband, digitization and ICT regulation impact the global economy. Global econometric modelling. November 2020. ITU Publications. 96 ITU (2019). Economic Contribution of Broadband, Digitization, and ICT Regulation: Econometric Modelling for Africa. Page 38 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) and digital devices, the project is expected to mobilize significant private capital, as a result of (i) the reverse auction instruments for rural underserved areas and (ii) the long-term contracts to supply connectivity services to Government/public institutions, which will stimulate investment in the national backbone due to reliable demand. For example, under the RCIP-3 Tanzania project (P111432) some US$30 million in IDA funding mobilized around US$70 million in private sector investment under similar rural connectivity reverse auction schemes. There will also be secondary benefits to competition, including lower deployment costs for last-mile infrastructure (especially in rural areas) due to creation of an open access backbone available to all mobile operators and smaller ISPs. With the growth of the subscriber base and the extended range of services offered, the GoM can also expect a boost in sales taxes and other fees (for example, annual license fees, excise taxes on handsets, universal service contributions, spectrum fees, corporation taxes) stemming from a larger and revitalized market, as well as the commercial utilization of public spectrum resources. 72. The improvement of national data governance and strengthening of the Government cloud environment supported under subcomponent 2.2, are expected to yield cost savings and efficiency gains. Developing a data governance and management framework and an adequate data hosting solution for the GoM are expected to reduce transaction costs by lowering the time spent on manual data processing, allowing public sector staff to focus on higher value tasks, and citizens and businesses to spend less time and resources when interacting with the GoM. Numerous examples of savings from a reduction in errors, fraud and corruption97 are also expected to apply. In addition, each dollar invested in cybersecurity is expected to yield an economic return of approximately 9.1 percent 98. 73. The project-level economic and financial analysis undertaken follows a standard Cost-Benefit Analysis (CBA) approach and reveals a positive Net Present Value (NPV). The model relies on available secondary data and reasonable assumptions, based on prior experience, but also additional evidence sourced from consultations and interviews conducted. The model was used to run a cash flow and financial analysis that features three different scenarios: Optimistic, Pessimistic and Neutral. Where possible, the model also ran sensitivity assessments to quantify the benefits and costs attributable to the project against current baseline indicators. Based on this CBA, the overall NPV for the project in the neutral scenario is estimated at US$30.55 million and is expected to demonstrate an Internal Rate of Return (IRR) of 26 percent over a ten-year period. In optimistic and pessimistic scenarios, the NPV is expected to be US$64.97 and US$ -3.74 million, respectively99, whereas the IRR is expected to be 35 percent and 16 percent, respectively. In addition, the reverse auction economic calculations for the 200 sites expected to be deployed in rural areas under the project estimate that US$30 million in IDA funding will mobilize US$30 million in private sector investment. This public-private contribution increases the financial viability of such an intervention, rendering higher IRR (12.7 percent without public investment and 21.9 percent with public investment) and positive NPV (-US$13.2 million without public investment and US$9.3 million with public investment). Furthermore, the GoM can also expect an increase in VAT due to the growth of the subscriber base in rural areas, and job creation to operate and maintain the sites deployed. 97 ID4D (2018). Public Sector Savings and Revenue from Identification Systems: Opportunities and Constraints. Report. Washington, DC: World Bank Group. 98 Integrating cost–benefit analysis into the National Institute of Standards and Technology Cybersecurity Framework via the Gordon–Loeb Model. Journal of Cybersecurity. March 2020. https://academic.oup.com/cybersecurity/article/6/1/tyaa005/5813544?login=true 99 17.10% Source: World Bank Data, Lending Interest Rate in Mozambique (deposit rate + spread) Page 39 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) B. Fiduciary (i) Financial Management 74. Financial Management (FM) Risks, Arrangements and Capacity. The overall residual FM risk is assessed to be substantial. The FM assessment evaluated whether the project meets the World Bank’s minimum FM requirements in Directive and Policy for IPF of September 7, 2021. The PIU within the MTC handling existing IDA financed operations was assessed to have acceptable capacity to manage the project FM. However, the project will involve a number of beneficiary institutions and the PIU will manage more than one project, which could compromise its ability to manage the projects effectively. The PIU will be strengthened by hiring an additional project Accountant. The following actions should be implemented to ensure adequate FM arrangements are maintained throughout project implementation: (i) develop and adopt a PIM including a section on the FM procedures, no later than 60 days after project effectiveness; and (ii) recruit an additional Project Accountant for the PIU no later than six months after project effectiveness. 75. Disbursement and financial arrangements. IDA funds will be disbursed on a transaction basis (statement of expenditures) using the following methods: (i) reimbursement; (ii) advances; (iii) direct payment; and (iv) special commitments. The PIU will prepare quarterly unaudited interim financial reports (IFR) and provide to IDA within 45 days after each calendar quarter. The project will be audited annually by the Tribunal Administrative. The audit report together with a management letter will be submitted to IDA no later than six months after the end of each fiscal year. (ii) Procurement 76. Procurement Risks, Arrangements and Capacity. Procurement risk is assessed as high. While the project will leverage the existing capacity of the shared PIU, risks remain high due to the large number of project beneficiaries which will require strong coordination and given that several projects will be managed concurrently by the same PIU. The procurement team will be strengthened with additional resources during implementation and once the full implementation team has been appointed, the risk rating will be reassessed. 77. The World Bank Procurement Regulations for IPF Borrowers (dated November 2020 and amended from time to time) (Procurement Regulations) and the provisions of the Financing Agreement will apply. Furthermore, the Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants (dated October 15, 2006 and revised in January 2011 and July 2016) will apply. Procurement procedures will be reflected in the procurement section of the PIM. 78. Country practices. Payments to foreign Consultants and Service Providers may delay the implementation of contracts, as has occurred in other projects, as there is a need to obtain Government authorizations (including the Ministry of Economy and Finance and the Central Bank) before payments abroad can be authorized. Furthermore, the implementing agency should be proactive in ensuring that work permits for foreign consultants and service providers are issued expeditiously. In addition, the requirements of the Attorney General’s Office and the Administrative Tribunal for the legal vetting of contracts may lead to delays in contract signing, after the contracts are awarded. It is imperative that the potential constraints are considered in planning for the activities. 79. Project Procurement Strategy for Development (PPSD). A PPSD was prepared by MTC. The PPSD reviewed the market for the proposed project activities and summarized the key contracts to be financed by the project for the initial Page 40 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) 18 months and recommend the most suitable, fit for purpose procurement approaches, with the aim of achieving value for money and efficiency, while maximizing the market participation. .C. Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No . D. Environmental and Social 80. The overall E&S risks are deemed Substantial. Main E&S risks are related to: the MTC’s shortage of knowledge and expertise of the new Environmental and Social Framework (ESF), including on specific Project’s topics, such as GBV/SEA/SH prevention and response, and labor standards; risks and impacts associated with occupational health and safety concerns; the investment in infrastructure activities, which might result in land acquisition, involuntary resettlement and labor influx issues; risks of GBV/SEA/SH; community health and safety; and social inclusion aspects, such as issues related to new digital services accessibility. 81. The environmental risk rating is Substantial. Infrastructure investments, including the deployment of fiber networks, mobile telecommunications towers, antennas, and related equipment, are likely to have environmental impacts that will need to be proactively managed. For most activities with civil works expected, the choice of infrastructure and technology will be determined by the selected bidder in order to provide contracted services to Government. The bidders will determine the infrastructure and technology solutions best suited to meet the service levels and standards specified (to be determined through feasibility studies) and taking into account their existing network infrastructure and projected future needs for providing services to the wider market. Key environmental risks and impacts expected during construction phase are associated with (i) occupational health and safety concerns, including physical and biological hazards, injuries and accidents; (ii) community health and safety issues including road traffic and communicable diseases (e.g., HIV, COVID-19); (iii) vegetation clearing, habitat loss and fauna disturbance; (iv) air pollution and dust emissions from vehicle fleet and generators; (v) noise and vibration; and (vi) construction waste management. During the implementation phase there are also occupational risks specific to optical fiber cables such as eye damage due to exposure to laser light during cable connection and inspection activities and exposure of workers to microscopic glass fiber shards. Some of these risks and impacts are expected to be significant but mostly are temporary, predictable and/or reversible with lower effects on areas of high value or sensitivity. Other risks and impacts stemming from components 1 and 2 are associated with the collection, transport and disposal of e-waste during construction and operation phases and hazards like fire and electric shock risks due to presence of flammable materials and electrical cables or e-waste from promoting smart device access and affordability and from improving learning and digital skills development. These impacts are however, expected to be mostly temporary, predictable, site-specific and manageable through E&S mitigation measures. 82. The social risk rating is Moderate. The project will have positive impacts as it will allow more Mozambicans to be online and reduce geographical and societal digital divides, by supporting wider access and adoption of broadband and data enabled services among rural unserved and underserved communities and the most marginalized. However, there Page 41 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) are potential adverse social risks and impacts attributable to project activities under components 1 and 2, which are mainly related to: i) the investment in infrastructure activities, which might result in land acquisition, involuntary resettlement and labor influx and cultural heritage issues; ii) labor influx risks; iii) risks of GBV/SEA/SH; iv) workers and community health and safety; v) risks and impacts on cultural heritage as the exact location of project interventions are yet to be determined; and vi) social inclusion aspects, such as issues related to new digital services accessibility, and elite capture of benefits. There is also an institutional risk, particularly regarding limited capacity of the implementing agencies to manage social risks. A preliminary screening of the risks related to sexual exploitation and abuse/sexual harassment (SEA/SH) has been conducted utilizing the World Bank online screening tools resulting in moderate risk. An in-depth GBV/SEA/SH assessment will be developed as part of the ESMF to further assess these risks and propose mitigation measures to address them in a specific GBV/SEA/SH Action Plan. The project will seek to actively address digital inclusion of vulnerable or marginalized populations through proactive targeting of specified groups under broadband and digital device access, digital skills and digital services programs as well as high level efforts to extend broadband and digital services to underserved and lagging areas. The project will also ensure that the needs and voices of vulnerable people are heard through inclusive participation. Finally, the PIM will detail the measures taken for the digital inclusion schemes supported under the project to ensure that the risks of online gender-based violence and online abuse against children/adolescents that may result from increased digital adoption are mitigated, in line with the do-not-harm principle. 83. E&S instruments and institutional set up. To address the afore-mentioned risks and impacts, the Borrower has prepared, publicly consulted and disclosed the following instruments: (i) an Environmental and Social Commitments Plan (ESCP); (ii) a Stakeholder Engagement Plan (SEP); (iii) an ESMF; (iv) Labor Management Procedure; and (v) Resettlement Policy Framework (RPF). The ESMF includes, among others, GBV/SEA/SH Risk Assessment and Mitigation Action Plan; Codes of Practice for e-Waste Management; Resource Efficiency and Pollution Prevention and Management Plan; Chance Finds Procedure; Occupational Health and Safety Plan (including COVID-19 Protocol); Emergency Response Plan; and Security Risk Assessment. The ESCP, ESRS and SEP were disclosed on the World Bank’s external website on April 30, 2022, and the RPF on May 9, 2022. All the instruments were disclosed on the Borrower’s website on May 11, 2022. During implementation stage, site specific Environmental and Social Impact Assessments (ESIAs) and Environmental and Social Management Plans (ESMPs) will be developed based on the screening guidance and risk level of each specific activity. The project will apply, among others, the requirements of the Environmental Health and Safety Guidelines for telecommunication and general EHS guidelines. The Borrower will ensure that the PIU recruits and maintains at least one Environmental and Social Specialist to support environmental and social risks management. 84. The project will set up a dedicated Grievance Redress Mechanism (GRM) for people to report their concerns or complaints before project activities commence. The project will ensure that the GRM is equipped to register and respond to complaints related to project activities, including resettlement (if any), and suited to addressing more sensitive grievances, including those related to gender-based violence and sexual exploitation and abuse. A grievance committee will address complaints, which will be logged, tracked, and promptly resolved during and after project implementation. Page 42 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) V. GRIEVANCE REDRESS SERVICES 85. Communities and individuals who believe that they are adversely affected by a Word Bank-supported project may submit complaints to existing project-level grievance redress mechanisms or the World Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the World Bank’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of World Bank non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and World Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate GRS, please visit http://www.worldbank.org/en/projects- operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. VI. KEY RISKS 86. Overall project risk is rated as substantial. The specific areas outlined below reflect risk categories considered to be substantial or higher after mitigation measures are taken into account. • Macroeconomic risks are rated as substantial. The GoM is in debt distress and the overall macro environment is fragile, despite improvements to macroeconomic policy and tentative GDP growth trajectory. This fragility could affect GoM's fiscal capacity, impacting growth and sustainability of ongoing IT and digital services investments after project closure. Likewise, the macroeconomic situation could reduce the private sector’s ability and willingness to make significant investments in network expansion, operations and maintenance linked with components 1.2, 2.1 and 2.3. However, these risks will be factored into feasibility studies and the design of interventions, including long term service contracts and flexible subsidy levels to respond to market needs/risks. • Sector strategies and policies risks are rated as substantial. While support for the digital agenda has been articulated as a GoM priority, critical policy issues pose risks, such as the presence of SOEs in the telecoms market. For instance, there may be resistance to the competitive, market-based approach to provision of connectivity services to GovNet under subcomponent 2.1, which could challenge the current position of state-owned Tmcel as the near exclusive provider to Government. Likewise, independent regulation and policy-making and enforcement can be more difficult given the presence of Tmcel and other state-backed ISPs in the telecoms market. However, TA to support a more enabling environment and reforms of SOEs in relevant market segments under subcomponent 1.1 will help to reduce these risks. • Technical design risks are rated as substantial. There are a significant number of individual project activities, and the project deploys a number of components related to supply of connectivity services and digital devices that hinge on a robust private sector response/investment to be successful, rather than a more ‘traditional,’ purely public sector driven approach. To mitigate the latter risk, the project will carry out extensive feasibility studies and upstream dialogue with potential private investors to assess the relevant market landscape and take into account relevant views in the technical and operational specifications designed to attract a positive market response. The use of pilots, phased rollout, technical assistance, and quality assurance provided by the World Bank will help refine the activities’ design and mitigate these risks. Page 43 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) • Fiduciary risks are rated as substantial. The combined rating reflects a substantial risk related to FM and high risk related to procurement. MTC’s capacity for FM and procurement is relatively weak and will be challenged with implementation of multiple new World Bank projects launching simultaneously. Additional dedicated FM and Procurement capacity for the PIU will be recruited utilizing project funds and may lead to a reduction of the risk levels during implementation. See section B of the Appraisal Summary – Fiduciary for further details. • Combined Environmental & Social risks are rated as substantial. Environmental risks are rated as substantial. Infrastructure investments, including the deployment of fiber networks, mobile telecommunications towers, antennas, and related equipment, are likely to have environmental impacts that will need to be proactively managed. Environmental risks relate to habitat alteration from civil works, safe disposal of hazardous waste from hardware and digital devices, energy consumption, and noise pollution. Social risks are rated as moderate as they are expected to be low in magnitude, site-specific, predictable, and temporary, and managed thorough appropriate E&S mitigation measures as outlined in the project’s E&S instruments. These risks include: temporary or permanent physical and/or economic displacement and small-scale land acquisition; potential impacts on the cultural heritage; safety hazards for civil workers and local communities in construction sites; labor influx and GBV/SEA/SH risks; and risks related to social inclusion aspects and to limited institutional capacity in managing social risks and impacts. While the specific locations are yet to be identified, GoM will prepare safeguard instruments to address the afore- mentioned risks and impacts (see D. Environmental and Social) and efforts will be made through the project design to minimize environmental impact and to promote social inclusion. • Stakeholders risks are rated as substantial. Due to its multisectoral focus, the project has a complex stakeholder landscape. Weak inter-ministerial coordination could pose a risk to effective project implementation, though this will be mitigated through a cross-cutting, high-level project steering committee and dedicated project coordinators representing the two key stakeholder groups affiliated with MTC and MCTES. The project will also actively seek civic engagement throughout project implementation, leveraging digital tools to gain stakeholder feedback. A GRM will also be established. • Other risks associated with security concerns are rated as substantial. Insecurity and conflicts in the Northern Provinces could affect access to some project sites and security for staff, including implementing agencies, contractors, and the World Bank (mainly for the rural connectivity and digital inclusion schemes under subcomponents 1.2 and 1.3). Interventions in this area will be implemented by seeking to collaborate with stakeholders who have extensive experience working in fragile contexts and in the northern region of Mozambique in particular. These include UN agencies and NGOs, who will help identify beneficiaries and implement project activities in a manner that is responsive to the context and needs of these communities. In addition, the ESIAs will outline a Security Assessment Plan to inform project implementation procedures and selection of sites will be subject to evaluation of the security risks. GEMS will also be used during supervision. • Other risks associated with cybersecurity and data protection are rated as substantial. Cybersecurity technical risks involve breaches of government systems and the potential compromise of personal data. Substantial effort and resources will be placed on measures, tools, audits, tests, and capacity building to bolster prevention. In addition, focus will be placed on strengthening incident response through capacity building of the national cybersecurity authority to handle attacks and breaches in real time, control damage and recover as quickly as possible. Nevertheless, since systems cannot be fully protected and as cyber-attacks are on the rise, residual risks . remain substantial. Page 44 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) VII. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Mozambique Mozambique Digital Acceleration Project Project Development Objectives(s) To increase digital adoption and inclusion, and to support selected foundations for accelerated digital transformation Project Development Objective Indicators RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 To expand digital adoption and inclusion Mobile broadband penetration rate 32.00 34.00 37.00 40.00 43.00 46.00 50.00 (Percentage) Mobile broadband penetration rate for 25.00 45.00 women (Percentage) Beneficiaries obtaining a certificate in digital literacy 0.00 0.00 1,000.00 8,000.00 14,000.00 18,000.00 20,000.00 under the project (Number) Of which female 0.00 0.00 500.00 4,000.00 8,000.00 9,500.00 12,000.00 beneficiaries (Number) Of which under age 25 0.00 0.00 600.00 4,000.00 7,500.00 11,000.00 12,000.00 (Number) To support selected foundations for accelerated digital transformation Page 45 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Civil servants in MDAs/public institutions connected to broadband 20.00 23.00 26.00 30.00 42.00 50.00 60.00 internet services (Percentage) Students benefitting from new or improved access to 0.00 0.00 3,000.00 5,000.00 10,000.00 13,000.00 15,000.00 learning thanks to digital technologies (Number) Of which female 0.00 0.00 1,200.00 2,000.00 4,000.00 6,000.00 7,000.00 students (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Component 1: Digital Access and Inclusion Retail price of 1 GB per month of pre-paid mobile 3.33 3.06 2.67 2.10 1.53 1.05 0.77 data (Amount(USD)) Retail price of 1 GB per month of pre-paid mobile data as a 8.70 8.00 7.00 5.50 4.00 3.00 2.00 percentage of monthly GNI per capita (Percentage) Villages, previously with no 0.00 0.00 30.00 70.00 120.00 160.00 200.00 mobile broadband Page 46 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 coverage, connected to telecommunications and broadband networks under the project (Number) Private sector investment leveraged in response to schemes deployed under 0.00 0.00 10,000,000.00 20,000,000.00 30,000,000.00 40,000,000.00 50,000,000.00 the project (Amount(USD)) Newly built or upgraded infrastructure that is resilient to climate relate shocks and follows energy 0.00 0.00 60.00 70.00 80.00 85.00 90.00 efficiency and renewable energy standards (Percentage) Beneficiaries able to own a broadband compatible 0.00 0.00 1,000.00 100,000.00 200,000.00 250,000.00 300,000.00 device through the project (Number) Of which female 0.00 0.00 600.00 60,000.00 120,000.00 150,000.00 175,000.00 (Number) Beneficiaries accessing skills training schemes under the 0.00 0.00 500.00 10,000.00 20,000.00 25,000.00 30,000.00 project (Number) Component 2: Foundations for Accelerated Digital Transformation Government offices and public institutions benefitting from new or improved access to 0.00 0.00 100.00 300.00 500.00 850.00 1,200.00 broadband internet services through GovNet as a result of project interventions Page 47 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 (Number) Strategy for enhanced national data governance No No No Yes Yes Yes Yes adopted by GoM (Yes/No) Number of regulations issued by Data Protection 0.00 0.00 0.00 1.00 2.00 2.00 3.00 Office (Number) Number of individuals trained on cybersecurity 0.00 0.00 50.00 200.00 300.00 400.00 500.00 under the project (Number) Number of educational institutions using digital 0.00 0.00 0.00 100.00 200.00 400.00 500.00 technologies for improved learning (Number) Component 3: Project Management, Institutional Coordination and Citizen Engagement Grievances registered related to delivery of project benefits addressed 0.00 50.00 60.00 70.00 80.00 90.00 100.00 within the stipulated service standards for response times (Percentage) IO Table SPACE UL Table SPACE Page 48 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Number of unique mobile broadband subscribers (3G and above, using GSMA GSMA Data to be consolidated Annual PIU Mobile broadband penetration rate definition) divided by the Intelligence by PIU total population (UN Population Division projections) Share of female adult GSMA and population with an active INCM, based broadband internet on data from subscription. Baseline data Twice during Data to be consolidated Mobile broadband penetration rate operators PIU to be collected (estimated project by PIU for women and/or present value based on the household gender gap in other digital survey dimensions, e.g. Internet use, GSMA data.) Number of beneficiaries obtaining a certificate in Training Data to be consolidated Beneficiaries obtaining a certificate in Annual PIU digital literacy after providers by PIU digital literacy under the project completing digital skills trainings under the project Number of female Training Data to be consolidated Annual PIU Of which female beneficiaries beneficiaries obtaining a providers by PIU certificate in digital literacy Number of beneficiaries Training Data to be consolidated Annual PIU Of which under age 25 under 25 obtaining a providers by PIU certificate in digital literacy Page 49 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Percentage of civil servants Data to be consolidated Civil servants in MDAs/public institutions in government offices, Annual INAGE PIU by PIU connected to broadband internet services schools, hospitals, etc., connected to internet Number of students in secondary schools, higher MINEDH, Students benefitting from new or education institutions or Data to be consoldiated Annual INAGE, PIU improved access to learning thanks to TVETs benefitting from new by PIU MCTES digital technologies or improved access to learning thanks to digital technologies Number of female students MINEDH, benefitting from new or Data to be consolidated Annual INAGE, PIU Of which female students improved access to learning by PIU MCTES thanks to digital technologies ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Retail price of mobile Data to be consolidated Retail price of 1 GB per month of pre-paid broadband sub-basket, Annual Cable.co.uk PIU by PIU mobile data prepaid handset-based, 1 GB (3G and above), in US$ Retail price of mobile Retail price of 1 GB per month of pre- broadband sub-basket, Data to be consolidated Annual Cable.co.uk PIU paid mobile data as a percentage of prepaid handset-based, 1 by PIU monthly GNI per capita GB (3G+), as a percentage of GNI per capita Page 50 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Count of villages PIU, Villages, previously with no mobile Number of villages provided included in tenders telecommuni broadband coverage, connected to with enhanced mobile Annual which are subsequently PIU cations telecommunications and broadband cellular coverage under the served with a mobile operators networks under the project project broadband coverage Monitoring, project Private sector investment in documents Private sector investment leveraged in digital infrastructure and Reporting requirements Annual and data PIU response to schemes deployed under the services leveraged in in the contracts from project response to project Universal supported activities Access Fund Newly built and upgraded Reporting infrastructure under the from project subject to quality providers Newly built or upgraded infrastructure standards, including having Data to be consolidated that is resilient to climate relate shocks compliance with Annual deployed PIU by PIU and follows energy efficiency and requirements for disaster infrastructur renewable energy standards response and climate e with change mitigation (to be project elaborated in bidding financing documents) Number of beneficiaries of Partners the device asset financing involved in Data to be consolidated Beneficiaries able to own a broadband scheme. Devices include Annual asset PIU by PIU compatible device through the project smartphones, laptops, financing tablets or other internet- scheme connected device Female beneficiaries Annual Stakeholders Data to be consolidated PIU Of which female benefitting from the device involved in by PIU Page 51 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) affordability scheme under the device the project affordability scheme Number of beneficiaries Training Data to be consolidated Beneficiaries accessing skills training Annual PIU benefiting from the digital providers by PIU schemes under the project skills trainings Public institutions (govt. Government offices and public offices, schools, universities, institutions benefitting from new or INAGE, Data to be consolidated TVETs, hospitals, etc.) Annual PIU improved access to broadband internet MINEDH by PIU benefitting from services through GovNet as a result of connectivity services under project interventions the project Based on the development of a data governance Data to be consolidated Strategy for enhanced national data framework, whether GoM Annual MCTES PIU by PIU governance adopted by GoM has elaborated and adopted strategy for enhanced national data governance Once the DPO is established Data to be consolidated Number of regulations issued by Data and operational, number of Annual INTIC/DPO PIU by PIU Protection Office regulations it has issued on data protection INTIC/Cybers Number of individuals ecurity Data to be consolidated Number of individuals trained on trained on cybersecurity Annual PIU Training by PIU cybersecurity under the project skills and awareness under Center the project Number of educational MINEDH, Data to be consolidated Number of educational institutions using institutions using digital Annual MCTES, PIU by PIU digital technologies for improved learning technologies for improved INAGE learning thanks to Page 52 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) connectivity and/or equipment and digital tools supported under the project Percentage of grievances Grievances registered related to delivery responded to and/or Data to be consolidated of project benefits addressed within the resolved within the Annual PIU PIU by PIU stipulated service standards for response stipulated service standards times for response time ME IO Table SPACE Page 53 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) ANNEX 1: Implementation Arrangements and Support Plan Financial Management 1. A virtual Financial Management Assessment was conducted at the MTC to evaluate the adequacy of the proposed project financial management arrangements. The Assessment was carried out in accordance with the Directives and Policy for Investment Project Financing (IPF) and the Bank Guidance on FM Manual in World Bank IPF Operations issued on September 7, 2021. The overall FM was assessed with Substantial FM residual risk rating as the project will finance infrastructure, the shared PIU needs to be strengthened, and considering the overall country fiduciary risk. 2. As the outcome of the FM assessment is to ensure adequate FM arrangements throughout the project implementation, the following FM actions should be implemented to ensure existence of adequate FM arrangements throughout project implementation: (i) develop and adopt Project Implementation Manual (PIM) including a section on the FM procedures within two months after the project effectiveness; (ii) appoint project Accountant within six months after the project effectiveness. Table 1.1: Risk assessment and mitigation measures Residual Risk Risk Mitigating Measures Incorporated into the Project Risk factors/Description of Risk Risk Rating Design Rating Country level: Shortage of human H The Government is committed to implementing further S resources, limited capacities for key FM reforms of the country’s PFMs with support from the World functions, and overall weak public finance Bank and other development partners. management control environment may The World Bank has a number of initiatives and projects negatively impact the implementation of under preparation that will strengthen the FM systems. the proposed project expenditures. Entity level: The PIU experience in handling S The PIU financial staff has experience in handling Worlds S FM matters of World Bank-financed Bank-financed operations and capacity will be strengthened project. However, the fact that the PIU will by recruitment of additional accountants. manage an additional operation poses a The World Bank will continue to provide FM support to the risk as this could jeopardize its ability to PIU, including training as needed. satisfactorily implement all the projects. Project level: The project will finance IT S Develop the project Implementation Manual (PIM) that will S equipment and infrastructures, which include the implementation arrangements of the project. poses a risk of irregularities in procurement The goods to be purchased will be included in Procurement and financial management. Plan and the processes will be documented in the PIM. The World Bank team will supervise the implementation of the project. Budgeting: The PIU may not be able to M The PIM including FM procedures will be developed. M produce a realistic and comprehensive Core staff involved in the budget preparation will be budget due to capacity constraint and the trained. nature of the project. The World Bank will review the draft budget as well as the IFR and provide comments. Page 54 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Accounting: Project funds, expenditures, S The PIU will make use of the automated accounting package S and resources are not properly recorded to account for project funds, expenditures and resources. since the PIU is accounting for other The PIU capacity will be strengthened by hiring additional projects and may be confused in handling accountant. record of the project transactions. Internal control: Non-compliance with key S The project will follow the procedures documented in the S project internal control procedures due to Manual de Administração Financeira, which has been weak internal control environment and designed to mitigate internal control risk, and those to be oversight mechanisms in the country. documented in the PIM. The PIM will include the process of approval of progress certificates and processing of payments. Regular supervision will be carried out by the World Bank. Funds flow: Delays may occur in the flow of S The disbursement arrangements will be documented in the S funds and affect implementation of the PIM. The core FM staff will be trained in World Bank project activities. Disbursement procedures. Financial reporting: The PIU may fail to M The PIU will use automated accounting software to account M produce timely the project financial reports for project funds, expenditures, and resources. due to nature and coverage of the project. The PIU have experience in producing financial reports for World Bank-financed project. Auditing: Delays in submission of audit S The World Bank will monitor audit submission compliance S reports and delays in implementing the and ensure implementation of Management Letter recommendations of the Management recommendations. Letter. Governance and Accountability: Possibility S Robust FM arrangements (including a comprehensive S of corrupt practices including bribes, abuse internal and external audit of the project operations, World of administrative and political positions, Bank FM supervision including review of transactions and mis-procurement and misuse of funds and asset verification) designed to mitigate the fiduciary risks in so on, are a critical issue. addition to agencies overall internal control systems. Citizen engagements, including beneficiary feedback. To be developed in PIM. Clear protocol for sanctions or remedies for misuse of project funds should be determined and well publicized. OVERALL FM RISK S S Note: H = High, S = Substantial; M: Moderate 3. To mitigate FM risks, the following measures should be taken. Table 1.2: FM action plan. No. Action Responsibility Completion date 1 Develop and adopt the Project Implementation Manual MTC Within two month after including FM procedures effectiveness 2 Recruitment of one additional accountant for the PIU MTC Within six months after effectiveness 4. FM arrangements. The MTC/PIU current Budgeting, accounting and internal control arrangements will apply to the project. An additional project Accountant will be hired to strengthen the PIU FM capacity. The PIU/MTC will prepare quarterly IFRs for the project in form and content satisfactorily to the World Bank and to be submitted within 45 days after the end of the calendar quarter to which they relate. At the end of each fiscal year, the PIU will also produce annual Page 55 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) project financial statements (PFS) in accordance with Financial Reporting under Cash Basis of Accounting. In addition, the PFS’s components will be outlined in terms of reference for audit of this proposed project. 5. Funds Flow and Disbursement Arrangements. To Figure 1.1: Funds Flow Mechanism facilitate the implementation of the project activities, the MTC/PIU will establish and maintain a segregated Designated Account (DA) to receive advances from IDA, in U.S. dollars at Central Bank (Bank of Mozambique). Funds in the DA will be used to finance the project’s eligible expenditure in accordance with the Financing Agreement and the Disbursement and Financial Information Letter. Figure 1.1 below depicts the funds flow mechanism for the project activities to be financed by IDA funds. 6. Disbursement arrangements. Disbursements of IDA funds will be done on a transaction basis. An initial advance will be made into the Designated Accounts upon project effectiveness, based on the DA ceiling and at the request of MTC/PIU. The option of disbursing the IDA funds through direct payment, reimbursement, and special commitment will also be available. The World Bank will issue the Disbursement and Financial Information Letter which will specify the additional instructions for withdrawal of the proceeds of the IPF. 7. Auditing. The Administrative Tribunal (the country’s supreme audit institution) is mandated to audit all Government funds, including donors-financed projects. As such, the tribunal will be responsible for auditing project financial statements (PFS). The PFS will be audited by the Tribunal in accordance with International Standards of Supreme Audit Institutions issued by INTOSAI. The audit report together with Management Letter will be submitted to the World Bank within six months after the financial year-end. 8. Governance and accountability. To prevent the possibility of fraud and corrupt practices including bribes, mis- procurement and misuse of funds, adequate FM will be put in place to ensure that funds are used for the purposes intended and to prevent material errors and fraud. The World Bank will review adequacy of project FM during the implementation review mission and the GoM will have to ensure that adequate FM is maintained through the implementation of the project. The project activities will be reviewed by the IGF, and the project Financial Statements will be audited annually by the Administrative Tribunal. In addition, the Government has adopted a number of initiatives to fight corruption although further efforts are necessary to ensure that those measures are implemented effectively. An Anti-Corruption Law exists since 2004 and a specific strategy was adopted in 2006, and significant progress was made with the enactment of various laws. Corruption repression is the responsibility of the Central Anti-Corruption Bureau (GCCC), established in 2005, which is part of the Public Prosecutors’ Office. While still suffering from capacity constraints, the GCCC has prosecuted several anti-corruption cases, and it has extended its presence in the provinces. 9. FM Implementation support plan. Based on the current FM risk, the project will be supervised twice a year. In addition to desk-based reviews, the FM will perform field visits to ensure that Project’s FM arrangements operate as intended. Page 56 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Procurement 10. Applicable procedures. Procurement will be carried out in accordance with the World Bank Procurement Regulations and the provisions stipulated in the Financing Agreement. Moreover, the ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’, dated October 15, 2006, and revised in January 2011 and July 2016, will apply. 11. Procurement strategy for the project. A PPSD has been prepared by the MTC. The PPSD captures the key contracts to be financed by the project for the initial 18 months and recommends the most suitable approaches for the implementation of a fit-for-purpose procurement, achieving value for money with efficiency. Recommendations of the PPSD will be incorporated into the procurement section of the PIM. These will guide the MTC in carrying out procurement in accordance with World Bank Procurement Regulations. The PPSD will also enable the MTC to create the activities in the World Bank’s Systematic Tracking of Exchanges in Procurement (STEP) system and initiate procurement implementation. It is envisaged that implementation will commence before credit effectiveness. 12. The procurement activities for the project will be managed by the MTC . The agency does have exposure and experience in the implementation of World Bank-funded operations, as there are currently other World Bank funded projects recently prepared and in implementation. The World Bank reviewed the procurement capacity of MTC to implement the project and it was found to be adequate. There is availability of qualified capacity in procurement, in addition to other technical specialties, in a manner satisfactory to the World Bank. Nevertheless, as and when required, the existing MTC capacity may be enhanced to ensure adequate implementation of all on-going projects. Furthermore, the PIM will detail the applicable procedures for procurement processing. 13. World Bank support and additional implementation arrangements . The World Bank, as part of the implementation support, will carefully monitor the implementation of the project and provide support and guidance throughout. The MTC has developed a draft PIM, which includes a section on procurement, the procurement manual. The procurement manual details the applicable procurement arrangements for the project and will help the MTC and the project beneficiaries carry out procurement in accordance with the World Bank Procurement Regulations, in addition to providing a division of roles throughout the procurement processing and management. The World Bank will continue to offer support to ensure adequate and timely implementation of agreed activities and will encourage the implementing agencies to leverage the use of technology, while limitations are being imposed by COVID-19, through promoting streaming of the opening of bids and proposals and submission of bids/proposals through electronic means. 14. Procedures for the selection of consultants. Quality- and Cost-Based Selection will be the main method for the selection of consulting firms, including: Technical Assistance to strengthen ICT policies and regulations; supervision of the construction mobile communications towers and services; independent monitoring firm; support for network planning, deployment and management; development and operationalizing a Data Protection Office; drafting of Cybersecurity and Cybercrime regulation; updating academic curricula; e-learning and knowledge sharing platform for the academic and scientific community, among others. Occasionally, consulting services may be procured through Selection Based on the Consultants’ Qualification and Least-Cost Selection procedures, whenever the complexity and cost of the assignments justify the adoption of such methods in accordance with the PPSD. 15. Procedures for goods and non-consulting services. Goods and non-consulting services will be procured as recommended by the PPSD, with Request for Bids as the main method, including for the procurement of information technology equipment; internet connectivity for public access points; supply of digital equipment; purchase of Page 57 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) connectivity services for community access points; high-speed connectivity and associated enterprise services to connect MDAs, among others. The Mozambique Procurement Regulation (Decree 5/2016 of March 8, 2016) can be used under the project as it has been assessed and generally meets the World Bank core procurement principles. 16. Procedures for works. While the project does not envisage many works contracts, these will be procured according to the procedures recommended by the PPSD, with Request for Bids as the main method. The Mozambique Procurement Regulation, as stated in paragraph 20, can be used for the local market approach of civil works procurement. 17. Use of technology. With the limitations being imposed by COVID-19 and with the aim of fostering competition, the MTC and World Bank will assess the use of virtual tools (such as Skype) to increase the participation of bidders in bid openings and pre-bid meetings or site visits, as required, as well as to allow the electronic submission (e-mail) of bids/proposals. 18. Procurement Plan. The MTC developed a Procurement Plan covering at least the first 18 months of the project implementation, as informed by the PPSD, and agreed between the recipient and the World Bank. Furthermore, the Procurement Plan will be updated from time to time to guide implementation of the procurable components of the project. The processing of these activities will be done in real time through the World Bank’s tracking system—STEP. 19. Review by the World Bank of procurement decisions. Table 1.3 below indicates the initial values for prior review by the World Bank. All activities estimated to cost below these amounts shall be treated as post review and will be reviewed by the World Bank during the implementation support missions under a post procurement review exercise. Direct Contracting/Single-Source Selection will be subject to prior review only for contracts estimated at a cost equal to, or more than, the amounts indicated in the table. The World Bank may, from time to time, review the amounts, based on the performance of the implementing agencies. Table 1.3 - Value Thresholds for Prior Review Procurement Type Prior Review (US$) Thresholds Works 5,000,000 Goods and non-consulting services 1,500,000 Consulting services (firms) 500,000 Individual consultants 200,000 20. Assessment of national procedures. The Mozambique Procurement Regulation, approved by the Decree 5/2016 of March 8, 2016, has been assessed, as required under the World Bank’s Procurement Framework. The assessment indicated that the country’s regulations are generally consistent with international best practices for the following reasons: (a) there is adequate advertising in national media; (b) the procurement is generally open to eligible firms from any country; (c) contract documents have an appropriate allocation of responsibilities, risks, and liabilities; (d) there is publication of contract award information in local newspapers of wide circulation; (e) the national regulations do not preclude the World Bank from its rights to review procurement documentation and activities under the financing; (f) there is an acceptable complaints mechanism; and (g) there is maintenance of records of the procurement process. 21. Bidding process. The Request for Bids/Request for Proposals document shall require that bidders/proposers present a signed acceptance at the time of bidding, to be incorporated in any resulting contracts, confirming application of, and compliance with, the World Bank’s Anti-Corruption Guidelines, including, without limitation, the World Bank’s right to sanction and the World Bank’s inspection and audit rights. Page 58 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) 22. Use of local procedures. With the incorporation of the abovementioned provision, the Mozambique Procurement Regulation will be acceptable to be used under procurements not subject to the World Bank’s prior review, according to the thresholds indicated in Table 1.3 or any updates indicated by the World Bank in the Procurement Plan created in STEP. 23. Project risks affecting procurement. While there is capacity to implement the proposed project, there are risks that may affect implementation of the project and these are summarized in Table 1.4, including the proposed mitigation measures. Table 1.4 - Procurement Risk Assessment and Mitigation Measures Risk Description Risk Description of Mitigation Residual Rating Risk Availability of qualified personnel to High  The MTC to ensure that qualified personnel, under Substantial support procurement terms satisfactory to the World Bank, are retained to implementation support the procurement function. This arrangement should be retained throughout the life of the project.  The World Bank procurement team will work closely with the MTC to enhance the available capacity Limited coordination between the High  Operations Manual to detail the roles and High MTC and the beneficiaries of the responsibilities of all stakeholders. project  Senior leadership of key implementing agencies to regularly monitor the implementation of their respective activities Lengthy internal procurement High  While these are portfolio-wide issues, the adoption of Substantial review process that may cause sound operational procedures for project delays. Country procedures for implementation, with responsibilities and timeline payments abroad may also affect requirements for procurement activities, will reduce the the performance of procurement. impact. Limited participation of bidders due High  The MTC to assess use of technology/online tools (pre- High to COVID-19 bid meetings, bid openings, bid submissions, and negotiations) to minimize disruption due to COVID-19 24. The overall procurement risk associated with the project is High . This risk assessment takes into consideration that the MTC is concurrently implementing other projects at present, which may not prioritize the needs of the project and the number of beneficiaries involved with the project that will require considerable coordination effort for timely implementation and strategic planning of the activities. Implementation Support plan 25. The proposed strategy and approach for Implementation Support has been tailored to strengthen the capacity of MTC, MCTES and other technical stakeholders. There will be strong coordination between the PIU at MTC in relation to the day-to-day administrative management and implementation of the project. Formal implementation support missions (ISMs) and field visits will be carried out, jointly with the Government, every six months, with more frequent missions to be considered in the first year of implementation. Initially, these missions will focus on strengthening project management and fiduciary capacity at MTC, development of operational guidelines and preparation of the first phase of activities planned. Later, missions will focus on reviewing implementation progress, achievement of results and Page 59 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) sustainability. A mid-term review will be carried out 18 months after credit effectiveness to take stock of progress and make any needed adjustments to project design. Targeted technical, FM and procurement-related review missions will be undertaken. Ongoing dialogue with the MTC, MCTES and technical stakeholders including through video conferences and e-mail, will ensure continuous support and monitoring. The implementation support plan will be reviewed on an annual basis to ensure that it is adequately aligned with support needs. The estimated level of annual support required by the World Bank team is identified in Table 1.5. Table 1.5: Implementation support and skills required Resource Time Focus Skills Needed Estimate (US$) First 1. Supporting speedy project effectiveness and 1. TTL 220,000 twelve recruitment of core PIU positions (coordinator, 2. Technical Specialists: Digital months deputy coordinators, accountant, procurement Infrastructure; Digital Regulation; assistant, and other positions as needed to reinforce Cybersecurity & Data; Digital the shared PIU) Government; Digital Skills; Device 2. Technical Assistance for Development of key legal and Affordability/Financing regulatory instruments 3. Fiduciary Specialists 3. Technical assistance for strategies, studies, and (FM/procurements Disbursement) implementation roadmaps 4. ESF Specialists 4. Technical assistance for development of Terms of Reference/Bidding Docs for major activities (feasibility studies/options assessments for rural connectivity, GovNet, etc.) Annually 1. Ongoing technical support for Components 1. TTL 200,000 2. Fiduciary, E&S Standards, and project management 2. Technical Specialists: Digital support Infrastructure; Digital Regulation; 3. Continued policy dialogue/support for sector reforms; Cyber & Data; Digital Skills; Device link to WBG policy lending. Affordability/Financing 3. Fiduciary Specialists 4. ESF Specialists Page 60 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) ANNEX 2: Climate Adaptation and Mitigation Aspects 1. Mozambique is highly vulnerable to climate change. As highlighted by the World Bank's climate risk assessment 100, it faces a range of natural hazards, the most important of which are floods - occurring almost every year, droughts - particularly common in the central and southern regions, and tropical cyclones - with strong winds, storm surges, and heavy rainfall, common along Mozambique's exposed coastline. In addition to Cyclones Idai and Kenneth in 2019, the country was hit by nine severe droughts between 1998 and 2020. Climate change is expected to become an increasingly important threat to the country's development. Studies indicate that since 1960, average temperatures across the country have increased by an average of 0.9°C and are expected to increase by a further 1.4-3.7°C by 2060, with the warming being more rapid in the southern and coastal regions101. The number of heavy precipitation events is expected to also increase, along with more frequent and intense cyclones and storm surges. Hydrological modeling indicates that some northern areas will experience more frequent flooding. The central region is likely to experience all types of natural hazards, including floods and droughts, more frequently as climate change intensifies. Sea-level rise and increasing storm surge intensity are expected to inundate low-lying areas and eroding shorelines, notably in urban areas. 2. The project is expected to positively impact Mozambique's adaptive capacity and to support climate change mitigation. It places an emphasis on investments in climate-smart infrastructure and capacity building that help increase response capacity and reduce Mozambique’s climate footprint. In addition, transitioning towards economy-wide digital transformation will be a key driver of improved resilience and adaptation through enhanced and uninterrupted access to basic services and public assistance in times of emergencies, continuity of critical communications and commerce and supporting a transition away from natural resource intensive and climatically vulnerable sources of growth and job creation. The approach is aligned with Mozambique’s National Climate Change Adaptation and Mitigation Strategy for 2013-2025, which is structured around three core themes: (i) adaptation and climate risk management; (ii) mitigation and low carbon development (iii) cross cutting issues, including institutional and legal reform for climate change, research on climate change, and training and technology transfer. In particular, the strategy states the need to ensure that infrastructure investments are more resilient to climate change, and that energy efficiency is increased. Table 2.1: Climate change risks, capacity gaps, related project interventions and potential impact Adaptation Corresponding project interventions (and amount as incremental cost of embedding Climate change risks linked to the project climate adaptation solutions) Component 1: Digital access and inclusion Subcomponent 1.1: Enabling environment for digital investment, inclusion and resilience Mozambique often faces climate shocks – Enabling policy, regulatory and standards development for climate change adaptation, including floods, droughts, and tropical resilience and emergency response in the telecom sector(US$0.6 million) : cyclones. When these occur, there are  TA and capacity-building for emergency response planning and preparedness, significant gaps in the GoM's capacity to integrating climate data and risk analysis into digital infrastructure planning and respond to shocks in the telecom sector, deployment, and developing climate smart digital infrastructure guidelines 102. and more broadly to manage climate  TA to build critical communication infrastructure resilience, through (i) assessment of change risks adequately. the resilience and vulnerability of critical infrastructure, and (ii) development of network construction guidelines to ensure robustness and redundancy. Subcomponent 1.2: Rural digital connectivity and access 100 World Bank (2021), Climate Risk Profile: Mozambique. 101 Mozambique - Climatology | Climate Change Knowledge Portal 102 For example: ITU, 2014. Requirements for Network Resilience and Recovery Page 61 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Natural disasters – in particular floods Climate-resilient and climate-proof digital infrastructure investments (US$7.5 million) : and tropical cyclones, are expected to Subcomponent 1.2 will expand broadband networks and services in rural areas through damage existing and future critical digital CAPEX public subsidies to operators to expand network coverage. The following actions will infrastructure, resulting in network and be taken to ensure the infrastructure financed by the project is climate-proof: service outages that leave communities  Subcomponent 1.2 will provide support for network planning and deployment of unconnected, and adversely impact the enhanced network management solutions, based on the location-specific climate cost of infrastructure maintenance. In the change and natural disaster risks. event of extreme rainfall and flooding, as  Technical and design specifications for the tenders will be developed factoring in well as storm surges and cyclones, climate data, climate-induced risks, and resilience measures, e.g., related to site telecommunications infrastructure such as selection. Bidders will be required to have have protocols to ensure infrastructure underground fiber optic cables and robustness and a contingency plan in the event of a flood or storm. telecom towers could be affected. For  Infrastructure funded through the project will thus (i) allow data traffic to be re-routed instance, in 2019, when Cyclone Idai made in the event of damage caused by extreme weather conditions in order to enhance landfall near Beira, the telecommunication resilience, (ii) incorporate mitigation measures for climate risks, e.g., by relocating infrastructure was severely damaged. critical assets if areas are at a high risk of floods, and (iii) follow the standards developed Widespread power, telephone, and under 1.1 to reinforce digital infrastructure robustness (e.g., investments in flood internet outages have left at least 500,000 barriers, more resilient ducts and towers, etc.). people in the dark103. Subcomponent 1.3: Digital inclusion initiatives Low levels of digital skills mean that the Support for digital skills development to leverage digital solutions in case of shocks (US$ 1 population is ill-equipped to leverage million): Under subcomponent 1.3, digital skills trainings will facilitate the adoption of digital digital solutions in case of shocks. The services by end-users, and in particular vulnerable groups, enabling them to access basic adoption of digital services (e.g., mobile services available online in the event of a natural disaster or pandemic. The curriculum will money for remittances and cash transfers) be tailored to include training on leveraging digital tools and services as an adaptation are conditioned by the ability to use them. mechanism in case of climate shocks. Component 2: Foundations for accelerated digital transformation Subcomponent 2.1: Core digital infrastructure for Government and private sector GoM cannot ensure continuity of Robustness of infrastructure and networks to ensure continuity of public delivery (US$ 9.8 operations, critical communications and million): Subcomponent 2.1 will provide more resilient connectivity for Government and the services in the event of climate shocks. wider telecommunications sector, ensuring continuity of operations and services (including Risks include flooding of server rooms or critical social protection services/e-payments) in the event of a shock. The feasibility study the GovNet operations center; duct and silt will define bidding specifications to ensure fully redundant networks, robust equipment, damage; scoured cables and damaged availability of surplus/interchangeable processes, system interoperability, capabilities, and foundations; cable heave from uprooted response pathways. It will also define requirements to support disaster response such as trees stemming from flooding and sufficient bandwidth for peaks in demand, the ability to quickly restore services, good landslides, downed overhead cables and management of network congestion, continuity of Government and critical service functions; towers from wind/trees, etc. etc. Subcomponent 2.2: Data governance, data protection, cloud migration and cybersecurity Current data hosting practices elevate the Support for improved data management and data hosting capacities to increase resilience risks of data loss in the context of extreme (US$2.1 million): Subcomponent 2.2. will increase climate change adaption by strengthening whether events such as flooding and the GoM’s data hosting and management capacities. All storage solutions (whether new landslides, due to absence of adequate infrastructure or services) will follow good practices for mitigating climate-related risks back-up and fragmented data hosting (removing servers out of flood plains, cooling systems, etc.) and providing for automated practices. Many Government records are backup and disaster recovery to avoid data loss in the event climate events, including hosting still paper-based or hosted on single servers critical systems across multiple sites/cloud. Support for use of cloud services to host and are thus highly vulnerable to wind, fire, Government data and services will also include migration from existing arrangements of floods and overheating and may not be fragmented storage at the level of individual MDAs to the selected platform/infrastructure available in the event of a climate shock. selected, which will reduce vulnerability. 103 https://reliefweb.int/report/mozambique/convoy-hope-responds-cyclone-idai Page 62 of 63 The World Bank Mozambique Digital Acceleration Project (P176459) Subcomponent 2.3: Digital technology adoption and skills development in the education sector Recurrent climate shocks boost demand Digitization of service delivery in the education sector to enable distance learning in case for distance learning. But low connectivity of climate shocks (US$2.2 million): Subcomponent 2.3 will contribute to adaptation, allowing for schools and other education institutions distance learning through support to digital connectivity for the education/higher education leave Mozambique ill-equipped to leverage sector, including distance learning access points and the integration of ICT in the learning and digital technologies for distance learning. teaching process. Mitigation GHG mitigation Corresponding project interventions (and amount as incremental cost of embedding climate mitigation solutions) potential Component 1: Digital access and inclusion Subcomponent 1.1: Enabling environment for digital investment, inclusion and resilience Policy support and Legal, regulatory, and institutional capacity for “greening” the digital sector and reducing the climate footprint technical stemming from the telecoms sector (US$0.6 million): Mozambique does not have any policy or regulatory guidelines assistance for to encourage climate-smart and energy-efficient investment in digital infrastructure. Subcomponent 1.1 will include: climate change - The development of a “Greening ICT strategy” to (i) minimize the climate and environmental impact of ICTs; mitigation related and (ii) leverage digital technologies to reduce the climate and environmental impact of the overall economy. to ICT - TA to support the development of regulatory guidelines to guide planning and design to ensure network infrastructure expansion e.g., includes relevant energy efficiency requirements in tenders. Subcomponent 1.2: Rural digital connectivity and access Renewable energy Green energy solutions (US$7.5 million). Under Subcomponent 1.2, green energy solutions (such as solar and battery generation storage) will be required to power all mobile towers and equipment, replacing traditional diesel generator power. Energy efficient Energy-efficient digital infrastructure investments (US$5 million): Tenders for all digital connectivity infrastructure telecoms networks deployed as a result of project funding will follow climate-smart and energy-efficiency guidelines (see above under 1.1), including encouraging a shift away from high-energy-consuming legacy technologies such as coaxial cables toward more energy-efficient alternative network technologies such as fiber optics. Component 2: Foundations for accelerated digital transformation Subcomponent 2.1: Core digital infrastructure for Government and private sector Digitalizing service Improved access to digital connectivity and services for reduced GHG emissions (US$9.8 million) : Accessing services delivery and or undertaking transactions with government currently requires travel/physical presence in most cases, leading to internal GHG emissions. Subcomponent 2.1 will expand the reach and reliability of the Government communications operations, networks, which is a core building block for scaling e-service delivery. It is expected that it will expand the availability leading to a of end-to-end digitized services (either intra-governmental or citizen e-services) and remote working and meeting reduction in travel capabilities, thereby allowing more transactions and operations to be carried out online, reducing the need to travel or material use and use of paper and contributing to reduced GHG emissions. Subcomponent 2.2: Data governance, data protection, cloud migration and cybersecurity Energy-efficient Improved data exchange and consolidated hosting capable of generating significant efficiency gains (US$2.1 data management million): Subcomponent 2.2 will support the design and implementation of the data governance framework for the and hosting public sector to ensure better data management and exchange platforms and support the gradual transition toward systems a cloud environment – capturing significant energy-efficiency gains through use of more efficient data hosting and computing infrastructure (modern, large scale, efficient data centers or cloud services running on renewable energy sources compared with individual, low efficiency servers and corresponding cooling infrastructure utilized currently). Energy efficiency and renewable energy requirements will be included for all tenders for cloud/data hosting services. Subcomponent 2.3: Digital technology adoption and skills development in the education sector Energy efficient ICT Energy-efficient broadband-enabled devices, hardware and software (US$1.5 million): The subcomponent will equipment facilitate ownership of broadband-enabled devices for students and teachers, as well as IT equipment, hardware and software for secondary schools, TVETs and universities Energy efficiency considerations, for example standards, will be considered when procuring equipment, hardware and software, and will be reflected in the related tenders. Page 63 of 63