The World Bank Northern Uganda Business Support Program (P147258) REPORT NO.: RES29340 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NORTHERN UGANDA BUSINESS SUPPORT PROGRAM APPROVED ON DECEMBER 31, 2015 TO REPUBLIC OF UGANDA SOCIAL PROTECTION & JOBS GLOBAL PRACTICE AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Carlos Felipe Jaramillo Senior Global Practice Director: Michal J. Rutkowski Practice Manager: Robert S. Chase Task Team Leader: Michael Mutemi Munavu The World Bank Northern Uganda Business Support Program (P147258) ABBREVIATIONS AND ACRONYMS CBAs Community Business Advisors CBP Capacity Building Partner CIG Community Interest Groups DEC District Executive Committee DTPC District Technical Planning Committee HISP Household Income Support Program IHISP Improved Household Income Support Program JSDF Japan Social Development Fund JSDFP Japan Social Development Fund Project LIS Livelihood Investment Support M&E Monitoring and Evaluation MIS Management Information System NDO NUSAF Desk NUBSP Northern Uganda Business Support Project NUSAF Northern Uganda Social Action Fund OM Operational Manual OPM Office of the Prime Minister PDO Project Development Objective RF Results Framework SHGs Self Help Groups SLP Sustainable Livelihoods Pilot TST Technical Support Team UGX. Uganda Shillings US$ United States Dollars VLIC Village Livelihoods Improvement Committee VRF Village Revolving Fund The World Bank Northern Uganda Business Support Program (P147258) BASIC DATA Product Information Project ID Financing Instrument P147258 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 31-Dec-2015 31-Dec-2018 Organizations Borrower Responsible Agency Republic of Uganda Office of the Prime Minister Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 2.86 Total Financing 0.00 Financing Gap 0.00 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The main development objective of this project is to improve and sustain household income of the vulnerable poor through provision of business management support services to the existing and new Community Interest Groups (CIGs) in the four pilot districts (Kitgum, Gulu, Nebbi, and Soroti). OPS_TABLE_PDO_CURRENTPDO The World Bank Northern Uganda Business Support Program (P147258) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A2643 31-Oct-2016 31-Oct-2016 31-Oct-2016 31-Dec-2018 2.86 1.46 1.39 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Background The development objective of the original project is to improve and sustain the household income of the vulnerable poor by providing business management support services to existing and new community interest groups (CIGs) in the four pilot districts (Gulu, Soroti, Kitgum, Nebbi). The project development objective is expected to be achieved by providing business training, small grants, and follow-up business advisory services to existing and new CIGs. The main beneficiaries are the existing and new CIGs formed by poor and vulnerable households located in Kitgum, Gulu, Nebbi, and Soroti districts. The existing CIGs were formed under the Household Income Support Program (HISP) of the NUSAF 2 Project, and the new CIGs are being formed under this project. The members of the new CIGs belong to poor and vulnerable groups such as female-headed households, people with disabilities, and vulnerable youths, among others. The grant was designed to benefit 120 existing and 240 new CIGs.1 The members of these CIGs complete training in management and technical skills development and produce business plans. The existing CIGs to benefit from this pilot initiative are being selected from those supported by the NUSAF 2 Project, while the new CIGs are being formed through a participatory process that was previously used by NUSAF 2 in the formation of the existing CIGs. The project is envisaged to have 4,680 direct beneficiaries within the 360 CIGs and ensuring that at least 50 percent of members of the new CIGs are women (the existing CIGs consist of more than 50 percent women). PROJECT STATUS The project is being implemented in 128 villages across 4 districts - Gulu, Soroti, Kitgum, Nebbi/Pakwach. As of June 2018, the project has supported 461 Self-Help Groups (SHGs2), which comprise of 11,875 beneficiaries. Around 74.66% of these 1 The average number of members in a CIG is 13, with most CIG having between 10 to 15 members. 2 CIG means a self-help group (SHG) The World Bank Northern Uganda Business Support Program (P147258) beneficiaries are females. In order to provide handholding and business development support to SHGs, 32 Community Business Agents (CBAs) have been selected and trained in four districts, and all SHGs have received series of trainings including business planning and business plan development. The SHGs as part of the project design have been saving their own money on a weekly basis, and as a result 461 SHGs have so far saved approximately USD 667,000. In addition to this, Village Livelihoods Improvement Committees (VLICs), which comprise of two SHG representatives have been established in all the target villages. The village revolving fund management training has been provided to VLIC members, and the PIU has disbursed around USD 1,280,000 to four project districts for establishing village revolving funds in 128 villages. RATIONALE FOR RESTRUCTURING The restructuring of the project is being undertaken at the request of the Government of the Republic of Uganda through a letter dated December 12, 2017. The rationale for the restructuring is that, although the design of this project started before the completion of the Uganda NUSAF 2, which it was intended to complement, its approval was delayed. Following the JSDF approval, NUSAF 3 was approved and began implementation of a sustainable livelihood pilot (SLP). In view of this, the Government of the Republic of Uganda requested to restructure the JSDF project to align with SLP, specifically in the terminology change from CIGs to SHGs. The restructuring of JSDF and its harmonization with SLP is expected to further improve the impact of the JSDF and increase the number of beneficiaries almost three-fold and ensure sustainability of access to finance and strong community-based institutions. The restructuring further improves the impact of the JSDF and increase the number of beneficiaries almost three-fold to ensure sustainability of access to finance and strong people institutions. II. DESCRIPTION OF PROPOSED CHANGES The main changes proposed under this Level 2 restructuring are as follows: a) The target districts in the PDO are being revised to include Pakwach as a pilot district instead of Nebbi. Pakwach district is actually not a new addition. It was part of Nebbi district at the time of the JSDF approval but, due to recent territorial changes made by Government to increase the number of districts in the country, Pakwach was carved out as a separate district. Pakwach was carved out of Nebbi district. Since Pakwach was a new district with limited resources and required more support, the Nebbi district government chose Pakwach to be the pilot district. b) Both CIGs and SHGs have the same meaning, i.e. an organized group of persons living within a village, a parish or sub-county located in a Pilot District, who meet the eligibility criteria specified in the Operations Manual, and which group is a recipient of a Micro-credit for purposes of implementing Subprojects, all in accordance with the provisions of the Operations Manual. At approval, the JSDF used the term CIGs but the NUSAF 3 has adopted SHGs. In order to be consistent, SHGs are used interchangeably with CIGs. This change has been reflected in the definition in the Grant Agreement (GA). The results framework is not being revised as this definition clarifies that the term CIGs is interfaceable with SHGs. c) Reallocation of funds within disbursement Category 4, i.e. from (i) micro-grants to Category 4(ii) micro-credits. The reason for this reallocation is that Sub-Grants under the Project were agreed to be provided to CIGs/SHGs only as micro-credits through village revolving funds. As part of the original design, micro-grants were also included, however, to harmonize the JSDF with the structure of the NUSAF 3 Sustainable livelihood pilot, funds will be put into village revolving fund (VRF) rather than being provided as grants. Micro-grants will not be provided to CIGs/SHGs. CIGs/SHGs will receive micro-credit from VRF. This way the project is able to support more The World Bank Northern Uganda Business Support Program (P147258) beneficiaries with the same budget, thereby reducing the cost per beneficiary and creating a greater impact in target villages by covering more poor households. As a result, the direct beneficiaries of the projects have increased from 4,680 to 11, 875. No disbursements have been made under the micro-grants category, so the full amount will be reallocated to the micro-credits category. In addition, a reallocation of $272,000 is being proposed from Category (2) Training and Workshops to cover the overdraft of the same amount under Category (4) ii Micro Credits as the total disbursed is US$ 1.232 million and exceeds the initial allocation of $960,000. No further micro- credits are expected to be provided for the remainder of the duration of the project. III. SUMMARY OF CHANGES Changed Not Changed Project's Development Objectives ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) The World Bank Northern Uganda Business Support Program (P147258) OPS_DETAILEDCHANGES_PDO_TABLE PROJECT DEVELOPMENT OBJECTIVE Current PDO The main development objective of this project is to improve and sustain household income of the vulnerable poor through provision of business management support services to the existing and new Community Interest Groups (CIGs) in the four pilot districts (Kitgum, Gulu, Nebbi, and Soroti). Proposed New PDO The main development objective of this project is to improve and sustain household income of the vulnerable poor through provision of business management support services to the existing and new Community Interest Groups (CIGs) in the four pilot districts (Kitgum, Gulu, Pakwach, and Soroti). OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed TF-A2643-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: Consultant services 529,000.00 0.00 529,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Training and Workshops 1,140,000.00 0.00 868,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: Goods 80,000.00 0.00 80,000.00 100.00 100.00 iLap Category Sequence No: 4(I) Current Expenditure Category: Micro-grants 480,000.00 0.00 0.00 100.00 0 iLap Category Sequence No: 4(II) Current Expenditure Category: Micro-credits 480,000.00 0.00 1,232,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: Operating Costs The World Bank Northern Uganda Business Support Program (P147258) 148,000.00 0.00 148,000.00 100.00 100.00 Total 2,857,000.00 0.00 2,857,000.00