FOR OFFICIAL USE ONLY Report No: PAD3248 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT AND CREDIT IN THE AMOUNT OF SDR 14.6 MILLION (US$20 MILLION EQUIVALENT) [IDA GRANT OF SDR 7.3 MILLION (US$10 MILLION EQUIVALENT) AND IDA CREDIT OF SDR 7.3 MILLION (US$10 MILLION EQUIVALENT)] TO THE REPUBLIC OF MALDIVES FOR AN ENHANCING EMPLOYABILITY AND RESILIENCE OF YOUTH PROJECT May 24, 2019 Education and Finance, Competitiveness, and Innovation Global Practices South Asia 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, 2019) Currency Unit = Maldivian Rufiyaa (MVR) MVR 15.5 = US$1 US$1.3857600 = SDR 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank BCC Business Corporation Centers BDC Business Development Center BDS Business Development Service BPC Business Plan Competition CERC Contingent Emergency Response Component CoA Chart of Accounts CPF Country Partnership Framework CSR Corporate Social Responsibility CQS Selection based on the Consultants’ Qualifications PMU Coordination Support Unit DA Designated Account DHE Department of Higher Education EEDP Enhancing Education Development Project ESMF Environmental and Social Management Framework FM Financial Management GDP Gross Domestic Product GoM Government of Maldives GRM Grievance Redress Mechanism GRS Grievance Redress Service HDI Human Development Index HIES Household Income and Expenditure Survey IAC Island Administrative Council ICB International Competitive Bidding ICT Information and Communication Technology ILO International Labour Organization IPF Investment Project Financing IRR Internal Rate of Return IT Information Technology IUFR Interim Unaudited Financial Report MEERY Maldives Enhancing Employability and Resilience of Youth M&E Monitoring and Evaluation MF Management Firm MACI Maldives Association of Construction Industry MATI Maldives Association of Tourism Industry MIS Management Information System MIT Maldives Institute of Technology MMA Maldives Monetary Authority MNQF Maldives National Qualification Framework MNU Maldives National University MoE Ministry of Education MoED Ministry of Economic Development MoF Ministry of Finance MoHE Ministry of Higher Education MoU Memorandum of Understanding MPI Maldives Polytechnic Institute MQA Maldives Qualification Authority NCB National Competitive Bidding NEA National Environmental Authority NEET Not in Employment, Education, or Training NPV Net Present Value PD Project Director PDO Project Development Objective PFR Public Finance Regulations PMU Project Management Unit POM Project Operations Manual PP Procurement Plan PPSD Project Procurement Strategy for Development PSC Project Steering Committee SMEs Small and Medium Enterprises SMoHE State Minister for Higher Education SoE State-owned Enterprise STEP Systematic Tracking of Exchanges in Procurement TC Technical Committee TTT Train-the-Trainers TVETA Technical Vocational Education and Training Authority TVET Technical and Vocational Education and Training UNDP United Nations Development Programme Regional Vice President: Hartwig Schafer Country Director: Idah Z. Pswarayi-Riddihough Senior Global Practice Director: Jaime Saavedra Chanduvi Practice Manager: Mario Cristian Aedo Inostroza Shobhana Sosale, Adja Mansora Dahourou, and Task Team Leader(s): Harsha Aturupane TABLE OF CONTENTS DATASHEET ........................................................................................................................... 2 I. STRATEGIC CONTEXT ...................................................................................................... 8 A. Country Context................................................................................................................................ 8 B. Sectoral and Institutional Context .................................................................................................... 8 C. Relevance to Higher Level Objectives............................................................................................. 12 II. PROJECT DESCRIPTION.................................................................................................. 13 A. Project Development Objective ..................................................................................................... 13 B. Project Components ....................................................................................................................... 14 C. Project Beneficiaries ....................................................................................................................... 20 D. Results Chain .................................................................................................................................. 21 E. Rationale for Bank Involvement and Role of Partners ................................................................... 23 F. Lessons Learned and Reflected in the Project Design .................................................................... 23 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 24 A. Institutional and Implementation Arrangements .......................................................................... 24 B. Results Monitoring and Evaluation Arrangements......................................................................... 25 C. Sustainability................................................................................................................................... 26 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 26 A. Technical, Economic, and Financial Analysis .................................................................................. 26 B. Fiduciary.......................................................................................................................................... 27 C. Safeguards ...................................................................................................................................... 29 V. KEY RISKS ..................................................................................................................... 32 A. Overall Risk Rating and Explanation of Key Risks ........................................................................... 32 VI. RESULTS FRAMEWORK AND MONITORING ................................................................... 34 ANNEX 1: MALDIVES EMPLOYMENT, ENTREPRENEURSHIP, AND SKILLS DEVELOPMENT ECOSYSTEM ......................................................................................................................... 42 ANNEX 2: IMPLEMENTATION ARRANGEMENTS AND SUPPORT PLAN ................................... 52 ANNEX 3. ECONOMIC AND FINANCIAL ANALYSIS ................................................................. 54 ANNEX 4. FINANCIAL MANAGEMENT ................................................................................... 63 ANNEX 5. PROCUREMENT .................................................................................................... 68 ANNEX 6. CLIMATE CO-BENEFITS ASSESSMENT .................................................................... 76 ANNEX 7. COMMUNICATIONS STRATEGY FOR THE MEERY PROJECT ..................................... 80 MAP .................................................................................................................................... 81 Page 1 of 81 DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Maldives Maldives: Enhancing Employability and Resilience of Youth Project Project ID Financing Instrument Environmental Assessment Category Investment Project P163818 B-Partial Assessment Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s) [ ] Disbursement-linked Indicators (DLIs) [✓] 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) Expected Approval Date Expected Closing Date 18-Jun-2019 31-Dec-2024 Bank/IFC Collaboration No Proposed Development Objective(s) The Project Development Objective (PDO) is to improve the relevance of technical and vocational skills and foster entrepreneurship to promote youth employment in priority sectors. Components Component Name Cost (US$, millions) Page 2 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Fostering skills development and entrepreneurship in priority sectors 10.00 Promoting entrepreneurship and employment through skills Development and 5.45 eLearning Strategy Project Coordination, Monitoring and Evaluation 4.55 Contingent Emergency Response Component 0.00 Organizations Borrower: Republic of Maldives Implementing Agency: Ministry of Higher Education PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 20.00 Total Financing 20.00 of which IBRD/IDA 20.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 20.00 IDA Credit 10.00 IDA Grant 10.00 IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount National PBA 10.00 10.00 0.00 20.00 Total 10.00 10.00 0.00 20.00 Expected Disbursements (in US$, Millions) Page 3 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) WB Fiscal Year 2019 2020 2021 2022 2023 2024 2025 Annual 0.00 0.92 1.51 2.62 4.44 6.55 3.96 Cumulative 0.00 0.92 2.42 5.05 9.49 16.04 20.00 INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Finance, Competitiveness and Innovation, Jobs, Poverty and Education Equity Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of Yes country gaps identified through SCD and CPF b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or Yes men's empowerment c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ Substantial 2. Macroeconomic ⚫ Moderate 3. Sector Strategies and Policies ⚫ Moderate 4. Technical Design of Project or Program ⚫ Substantial 5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial 6. Fiduciary ⚫ Substantial Page 4 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) 7. Environment and Social ⚫ Moderate 8. Stakeholders ⚫ Moderate 9. Other 10. Overall ⚫ Substantial 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 Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✔ Performance Standards for Private Sector Activities OP/BP 4.03 ✔ Natural Habitats OP/BP 4.04 ✔ Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔ Physical Cultural Resources OP/BP 4.11 ✔ Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔ Safety of Dams OP/BP 4.37 ✔ Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔ Legal Covenants Sections and Description Schedule 2, Section I (A) 1 (a). The Recipient shall establish, by no later than one (1) month after the Effective Date, and thereafter maintain, throughout the implementation of the Project, a Steering Committee, and with Page 5 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) membership (including, but not limited to MoF), functions and terms of reference satisfactory to the Association, as set forth in the Operations Manual. Without limitation on the foregoing, the said committee shall be co-chaired by the Minister from MoHE and the Minister from MoED or their respective designates, respectively: (i) support the PMU in providing inter-agency/inter-ministerial cooperation and coordination; (ii) ensure timely decision-making and address any implementation delays; (iii) oversee the carrying out of Project activities; and (iv) endorsing the Annual Work Plans and Budget. Sections and Description Schedule 2, Section 1 (A) 1 (b). The Recipient shall establish, by no later than one (1) month after the Effective Date, one (1) technical committee to focus on the implementation of Part 1 and Part 2 of the Project. Sections and Description Schedule 2, Section 1 (A) 1 (c). The Recipient shall further to the provisions of the MoU to be entered into between MoHE and MoED, no later than one (1) month after the Effective Date, carry out the day-to-day management of Project activities through MoHE and, to this end, shall maintain at all times during the period of implementation of the Project, a PMU within the said ministry, with functions and resources satisfactory to the Association, and with staff in adequate numbers and with qualifications, experience and terms of reference satisfactory to the Association. Without limitation on the foregoing, the said unit shall be headed by the Project Director within MoHE and supported by a Project coordinator, deputy Project coordinator based in MoED, an operations officer, a financial management specialist, an environmental safeguards officer and a social safeguards officer, and shall be responsible for, inter alia: (i) preparing the Annual Work Plans and Budgets for endorsement by the Steering Committee; (ii) carrying out the overall coordination and supervision of the execution of the Project; (iii) overseeing and guiding the administration of all coordination, management, procurement, financial management, and environmental and social safeguards management activities under the Project; (iv) carrying out the overall monitoring and evaluation of the Project; and (v) reporting to the said Steering Committee and liaising with the Association on any matters related to the progress of the Project and the use of the proceeds of the Financing. Sections and Description Schedule 2, Section 1 (A) 1 (d). In furtherance of the provisions of paragraph (c) of Schedule 2, Section 1 (A) 1, the Recipient shall, by not later than three (3) months from the Effective Date: (i) acquire and install, a Comprehensive Record Keeping System and a Project Management Software for the Project, in a manner satisfactory to the Association; and (ii) recruit an internal auditor to the PMU for the Project with suitable qualifications, experience and terms of reference satisfactory to the Association. Sections and Description Schedule 2, Section 1 (B) 1. During the implementation of the Project, the PMU shall prepare and furnish to the Project Steering Committee for approval and thereafter to the Association no later than November 30 of each year for its no-objection (or such later date as the Association may agree) for the Association’s approval, a consolidated work plan and budget containing all eligible Project activities and expenditures proposed to be included in the Project for the Recipient’s following fiscal year, including the activities and expenditures proposed to be financed from the Recipients counterpart funding contribution, and the environmental and social safeguard measures taken or planned to be taken in accordance with the provisions of Section I.D. of Schedule 2 of the Financing Agreement. Sections and Description Schedule 2, Section 1 (B). The Recipient shall finalize and adopt, within three (3) months after the signature date of Page 6 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) the Financing Agreement, a Grants Manual as part of the Project Operations Manual to support winners of the Business Pitch Competitions with terms and conditions including specifications regarding how due diligence would be carried out to ensure that the Grants are utilized for the intended purposes and satisfactory to IDA. Conditions Page 7 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) I. STRATEGIC CONTEXT A. Country Context 1. Maldives, an archipelago nation of spectacular natural beauty, is a middle-income country with a gross domestic product (GDP) per capita of US$10,536 in 2017. Maldives consists of nearly 1,200 islands and a population of about 436,330 inhabitants as of 2017: approximately 373,330 Maldivians and 63,000 expatriate workers. More than 30 percent of the population live in the capital city Malé, while the rest are distributed among just under 200 other inhabited islands. Basic human development indicators are high. Maldives ranks 101 out of 189 countries in the Human Development Index (HDI) for 2017,1 the second- highest HDI rank in South Asia after Sri Lanka. The adult literacy rate is 98.6 percent, life expectancy is 77.6 years, the infant mortality rate is 7.3 per 1,000 live births, and the maternal mortality ratio is 68 out of 100,000 live births. The Government of Maldives (GoM) is seeking to accelerate human capital accumulation, increase employment opportunities for young people, and promote equitable economic and social progress in the country. 2. The Maldivian economy experienced average economic growth of 6.9 percent in 2017. The economy is dependent on a small number of sectors, with the following contribution to GDP in 2018: tourism (19.9 percent), government administration (11 percent), communication (11 percent), transport (11.6 percent), construction (8.9 percent), real estate (8 percent), wholesale and retail trade (4 percent), manufacturing (4 percent), education (4 percent), and several other relatively small sectors. The high share of tourism in the economy is both a strength and a limitation. The rapid rise in economic standards and living conditions in Maldives over the last three decades has been driven by fast growth in tourism. However, it also makes the Maldivian economy highly vulnerable to fluctuations in global economic and social conditions through their effects on tourism and the direct and indirect transmission of these effects to other sectors. Periods of global recession, when tourist arrivals have fallen, have been particularly difficult for Maldives. The high dependence on tourism, and its economic benefits and risks, are typical of small island economies. 3. The GoM is emphasizing decentralization and the development of the atolls to facilitate improved service delivery for citizens. The GoM is seeking to improve the efficiency and effectiveness of public services, promoting enclave development where necessary, while also exploiting economies of scale and scope in larger urban areas to enable agglomeration benefits. This can benefit Maldivian youth, provided they are sufficiently educated and skilled to identify and exploit economic opportunities in the atolls. In addition, there is evidence that fast-growing urban areas can create conditions for increased criminal activities. Thus, improving employability and employment prospects for the youth is particularly important to reduce their idleness. B. Sectoral and Institutional Context 4. The findings of four key background analysis and studies have informed the design of the proposed Project: (a) ‘Maldivian Labor Market: Spotlight on youth, tourism, and fisheries: Analysis based on census 2014 data’ May 30, 2017; Report No. 115743/AUS16493, (b) ‘Bringing the Spotlight on Youth: 1 UNDP (United Nations Development Programme), 2018. Statistical Update, Human Development Index Reports. Page 8 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Labor Market Snapshot in the Maldives: An Analysis Based on HIES 2016 ’, (c) ‘Enhancing Employability and Resilience for Youth in the Maldives through a Behavioral Approach’ World Bank Advisory Services and Analytics, P163376 and P170088 KP; and (d) ‘Youth in the Maldives: Shaping a New Future for Young Women and Men through Engagement and Empowerment’ dated October 3, 2014; Report No.93949. 5. This sub-section provides a summary analysis of the sectoral and institutional context. Details on the employment, entrepreneurship, and skills development ecosystem are provided in annex 1. 6. Labor-market Demand and Supply. Several aspects of the Maldives’ recent development pattern highlight imbalances between labor demand and supply. Public sector jobs are predominantly in the civil service with the rapid expansion of cadres in the 1990s and 2000s. However, with the increasing standard of living over time, the labor market has become more challenging for Maldivians in general. Increasing educational attainment among the younger generation and expectations have coincided/collided with the rapid growth in low-skill service jobs associated with tourism and construction, leading to a mismatch in skills supply and demand. 7. Key challenges for a better educated young labor force. Despite the high levels of growth and labor-market conditions in public investments, tourism, fisheries and non-tradable tourism related activities, important challenges remain for young Maldivians. These relate to (a) the need for greater inclusion and productive employment for youth, especially for those who cannot rely on public sector jobs (because of a sharp reduction of public sector employment) or who are from the most vulnerable segments of the population, and (b) an increasing reliance on foreign labor in important sectors such as tourism and construction services and limited opportunities for women. 8. Multiple factors limit the extent to which Maldivians participate in the labor-market, including (a) a high reservation wage; (b) lack of technical, managerial, and soft skills; (c) social norms inconsistent with the need to live in dormitories on resort islands or to work in proximity to foreigners with different traditions; (d) lack of adequate transport (resorts that are close to inhabited islands and have good transport links have a much higher proportion of Maldivian workers); (e) the high cost of housing for employees who are outside their home islands; the high price of real estate contributes to significant costs for employers in the Maldives; and (f) the perception that tourism-related work does not constitute a ‘good’ job for women as well as for men. The absence of role models and low self-confidence and limited understanding of processes and procedures hinder the pursuit of ideas and innovation, especially for women, who often do not look for or apply for job vacancies. 9. Many Maldivian youths are discouraged workers who have effectively exited the labor force and are best characterized as not in employment, education, or training (NEETs). About 22 percent of working- age Maldivian youths fall into this category. Youth in Malé indicate that the key reasons for unemployment are the lack of economic opportunities in the island of residence and inability to find suitable employment that matches their respective education or training. About 50 percent of young women are NEET because of household chores and childcare. Finally, the reasons differ between residents of Malé and other atolls. For young males in Malé, low pay was the foremost reason followed by transportation difficulties. 10. A government-imposed quota requiring 55 percent of employees in tourism to be Maldivian nationals is customarily unmet, although the participation of Maldivian nationals in tourism increased significantly between 2006 and 2014. With the tourism sector contributing directly in 2017 to about one- Page 9 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) fifth of total employment in the country, only 55 percent of the 34,500 jobs created were filled by Maldivian staff. The lack of participation in tourism jobs is particularly limited among Maldivian women, who account for only 7 percent of labor in the industry. This is partly because of: (a) the availability of high-level jobs that require higher qualifications in areas such as accounting and management that most Maldivian women do not possess, (b) the perception of ‘good’ versus ‘bad’ jobs, and (c) socio-cultural barriers that prevent women from participating in the tourism and construction industry. The growth of mostly luxury tourism services has outpaced the capacity of the Maldivian labor market to provide internationally competitive skills required by employers—technical, vocational, and soft skills. Young Maldivians are disadvantaged in seizing high-skilled jobs as their levels of education and skills accumulation are lower than those of high-skilled foreign workers. 11. In the services sector related to tourism, the demand for skilled labor has also been easily met by foreign workers who are present throughout Maldives in great numbers and accept significantly lower wages. There are still unrealized opportunities for linking tourism to local communities (including, but not limited to, local providers of fish and agriculture products), while opportunities for service-provision links are more limited. This is in part because many resorts already own and operate their support services and ancillary functions, because of both geo-spatial challenges (given islands’ remote locations) and inadequate quality of local service provision. 12. Small-scale sectors—heritage handicrafts. Opportunities for linking to the local economy are limited to a small number of services in which Maldivians have a competitive advantage and are in demand by the tourism sector, such as authentic and cultural heritage-based excursions and handicrafts. While these are small-scale sectors, the potential economic impact for local communities is significant. In the guesthouse sector, which has emerged in recent years on islands with Maldivian populations, there are higher shares of local employment (75 percent Maldivian compared to 45 percent at resorts) through demand for local goods and services. The guesthouse subsector has grown rapidly since the Government’s policy change and currently has nearly 240 facilities with around 3,600 rooms. Moreover, the sector is projected to double in the next three years as global travel trends shift from luxury toward mid-level travel services with a growing use of self-catering accommodations instead of traditional large hotels. 13. ICT-enabled Services. Job creation potential exists in information and communication technology (ICT) services, transport, and construction, given Maldives’ sustained GDP and per capita income growth. ICT services are growing because of widespread Internet connectivity across the inhabited islands, and ICT jobs are especially well suited for women who prefer to work from home, for example. Additionally, new goods and services may be nurtured in Malé to leverage the urban entrepreneurship talent, especially in sectors with high labor intensity. Beyond a macro focus on job creation, opportunities for skills in Information Technology (IT)-enabled services, entrepreneurship and self-employment could engender a stronger micro focus. IT-enabled services would be particularly attractive to youth with higher levels of education and skills. However, they might lack the know-how to create, manage, and sustain small and medium enterprises (SMEs). 14. Behavioral aspects and social norms impinging on labor demand and supply. From the demand side, employers indicate that there are significant challenges with hiring Maldivian youth. The lack of appropriate soft skills (absence of proper work ethics, the lack of discipline and commitment, and inadequate socio-emotional, interpersonal, customer service, and communication skills), and inadequate technical/vocational skills are cited as some of the key challenges in recruiting Maldivian employees. From Page 10 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) the supply side, there are misperceptions. The persistence of traditional gender roles and the narrow scope of occupations deemed acceptable by young women and especially their parents have limited the female labor supply, particularly for many job openings in tourism-related services. Job preferences among women center around desk work in front offices, administration, and human resource management over other jobs such as housekeeping and room service in resorts. In addition, gender stereotyping narrows the opportunities for women compared to men. The combination of a lack of skills, social norms, and perceptions deter Maldivian youth, especially women, from applying for the jobs. Maldivians also tend to have a high level of job turnover relative to foreign labor. 15. A nascent and challenging entrepreneurship ecosystem. To generate jobs, however, the private sector requires a strong ecosystem that combines an enabling regulatory environment, adequate support services to emulate entrepreneurship and a financial sector that provides the necessary means to businesses at each stage of their life-cycle. The absence of sufficient numbers of local entrepreneurs in the Maldivian SME space is also noteworthy. The limited supply of business support services and seed funding/start-up capital seems to be constraining entrepreneurial activities. Such an environment would benefit from entrepreneurship skills and competencies combined with a menu of seed funds in key sectors that could foster the setting up of SMEs. Equally, SMEs would require a pool of skilled and semi-skilled workers with technical and vocational know-how in different trades (carpentry, plumbing, machine operators, and so on.). The GoM has proactively fostered entrepreneurship for the past five years in the atolls by establishing a framework to support entrepreneurship in regional centers through the creation of seven Business Development Centers (BDCs). However, these centers need to be strengthened. Remedial measures could be instituted through ongoing skills support, counseling, and business support services. 16. A new path for youth employment. The Maldivian economy has arrived at a new juncture, one in which the skills of new labor force entrants need to be better aligned to available private sector jobs, to relieve the pressure and reliance solely on public sector jobs. Policy makers in Maldives are aware of these challenges and appreciate the importance of enhancing employment opportunities for youth through increasing human capital and diversifying the skills of future and recent labor force entrants to meet private sector labor demand and developing and encouraging entrepreneurship, particularly in the services sector. The proposed project will support the GoM to enhance youth employability. The GoM is seeking to provide Maldivian youth with labor-market relevant skills in the technical, vocational, and entrepreneurship domains to enable Maldivian youth to compete for local jobs that are increasingly being taken by expatriate labor. 17. There is an urgent need to address socio-cultural and perception issues among youth regarding available jobs in the market. The mindset aspects require transformative interventions as early as the schooling stage for parents and students. Employer associations such as the Maldives Association of Tourism Industry (MATI) and the Maldives Association of Construction Industry (MACI) and specific resort managers have expressed their interest to work with the government, education and training institutions, communities, youth and parents to demystify some of the misconceptions about careers in tourism, and to expose youth to available opportunities. 18. Gender gap analysis: The 2016 Gender Gap Report (World Bank 2016) states that the unemployment rate among young women in the Maldives is at 77 percent compared to 33 percent for young men. The overall female labor force participation rate is only 44.2 percent. Reasons for the large Page 11 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) gap include the following: (a) cultural and attitudinal factors relating to perceptions about what constitutes a ‘good’ job for young Maldivian women; unless jobs are of an administrative nature, they are not pursued and jobs within the Tourism sector are considered unsuitable for women because of negative perceptions of the work environment and the stereotyping of women engaged within the sector, (b) expectations that young women will prioritize household chores and provide childcare within the family unit, (c) the absence of female role models to engage with and encourage young women to participate in the formal labor workforce, and (d) limited understanding of processes and procedures among young women that hinder their pursuit of ideas and innovation. At a macro level, contributing factors that create obstacles for female youth employment participation include: (a) the lack of access to information and resources to establish SMEs partly because of less access to digital information and lower digital literacy; while specific data on Maldives are unavailable, it is widely acknowledged globally that there is a growing gap in digital literacy between young women and men2, (b) lack of enabling and safe environments for women to participate productively in the Tourism and ICT sectors, and (c) lack of availability of safe transportation between the atolls in the archipelago. 19. Selectivity and scope of the proposed Project. The sectoral and institutional issues surrounding the skills and employment landscape in Maldives are multi-layered. The economic, social, educational, and behavioral aspects intersect. The project scope takes the following factors into consideration: (a) the GoM’s mandate and imperatives, (b) the institutional feasibility, (c) economic and financial rationale for interventions, and (d) implementation feasibility. B. Relationship to the CPF 20. Recognizing the importance of developing the youth sector to enable Maldives to transition from an upper-middle-income country to a high-income country, the World Bank Country Partnership Framework (CPF; Report No. 103724-MV) FY16–FY19 proposes to finance the Maldives Enhancing Employability and Resilience of Youth (MEERY) project. The proposed MEERY operation is fully aligned with the CPF’s strategic goal to “contribute to enabling more inclusive and sustainable gro wth through better use of the country’s assets, including human capital, natural resources, and financial resources” and its first objective of “enhancing employability and economic opportunities” and cross-cutting themes of youth, gender, and governance. By promoting employment through human capital development and entrepreneurship promotion, the project will help increase economic opportunities for young people and promote equitable economic and social development in the country. C. Relevance to Higher Level Objectives 21. The higher-level objective of the proposed project is to meet the labor-market demand for skills in specific areas and foster innovation where there are skill shortages that are negatively affecting the country’s development and economic growth and its aspirations to reach upper-income status. The proposed project aims to support the Government’s efforts to enhance the long-term capacity of the education and skills development, and entrepreneurship systems to produce new graduates in priority skills, subject areas relevant for employability and development, and fortify the resilience of youth to labor-market cycles. 2 Refer https://www.ey.com/en_gl/workforce/how-fixing-the-bug-can-close-the-digital-gender-gap, accessed on April 10, 2019. Page 12 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) 22. The approach: The project design is oriented to: (a) Finance integrated skills development with labor demand in the priority sectors of tourism and construction, and ICT-enabled services, (b) Evaluate the pilots in terms of employment outcomes (wage and/or self-employment) for youth ages 16-35 years. The pilot interventions and evaluations would be focused by two groups: ages 16-25 years and ages 26-35 years, and (c) Assess the potential for scale-up. These pilot interventions will be based on small-scale, island- specific labor-market surveys using appropriate tools to assess the local labor demand in the tourism and construction, and ICT-related services sectors. 23. Curriculum in technical and vocational education and training (TVET) and entrepreneurship will be modified in line with demand, skills service delivery will be based on an assessment of the public and private sectors’ capacity, and pedagogy through face-to-face interaction, and its impact evaluated will be assessed through agile evaluations. The priority sectors (tourism and construction and ICT-related services) have been selected for the pilot interventions because they account for about two-thirds of the labor force. 24. Rationale for the project structure. The project has four components: (1) fostering skills development and entrepreneurship in priority sectors, (2) promoting entrepreneurship and employment through skills development and eLearning strategy, (3) project coordination, monitoring and evaluation, and (4) contingent emergency response component (CERC). Component 1 comprises pilot interventions of skills delivery and support for entrepreneurship development. These would be administered and evaluated during the first three years of project implementation. Beneficiary satisfaction surveys following each pilot intervention will help to inform the efficacy of the pilot interventions and changes to be made and link up with labor demand assessment. A virtuous cycle would be instituted. Progressively the findings from the pilots will serve as the foundations for the systemic reform agenda that will be developed through Component 2—development of the 21st Century skills development strategy and diversification of skills programs, new delivery modes around eLearning, and career hubs for education-industry links through a jobs platform. Component 2 activities will commence concurrently with Component 1 activities because the elements for developing the skills development strategy encompass additional aspects: the setting up of the eLearning platform and its use, of digital skills laboratories, and career hubs that require immediate attention. II. PROJECT DESCRIPTION A. Project Development Objective 25. The Project Development Objective is to improve the relevance of technical and vocational skills and foster entrepreneurship to promote youth employment in priority sectors. PDO level indicators 26. The key results would seek to bring about a better match between the demand and supply of Page 13 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) labor. This would be reflected in the following project indicators: • Relevance: Employers satisfied with graduates from the skills development programs in the project priority sectors (Percentage). • Youth employment: Targeted trained youth in wage employment in an area relevant to technical and vocational skills within six months of graduation (Percentage), of which females (Percentage). • Entrepreneurship: New businesses registered by targeted trained youth after receiving business support services (Number), of which females (Number). B. Project Components Component 1: Fostering Skills Development and Entrepreneurship in Priority Sectors (Total costs including contingencies = US$10 million equivalent IDA financing) 27. The objective of this component is to pilot interventions to improve the labor market outcomes of Maldivian youth with a focus on improving female labor force participation. This will be achieved by supporting the links between labor demand and supply in the tourism and construction, and ICT-related services sector and by building the entrepreneurial culture and capacity among young men and women alike. This component comprises four subcomponents: (a) labor-market assessment and analysis for demand-driven skills identification, (b) revision of skills (TVET and entrepreneurship) among others, soft skills, and socio-cultural norms and awareness aspects, (c) face-to-face skills delivery of pilot skills development programs, and (d) support for entrepreneurship development. 28. Activities proposed to address gender gaps include the following: (a) Pilot interventions will consider the recommendations from labor market surveys conducted to identify gendered barriers that prevent young women who are NEETs from accessing certain employment opportunities and pursuing entrepreneurship. The pilot interventions will address the recommendations through appropriately tailored TVET training and entrepreneurship development curriculum including information on women’s networks and associations that support women entrepreneurs, options for accessing financing, etc. In addition, curricula will explore ways to increase women’s use of IT facilities, facilitate information dissemination regarding accessing information on financial services, develop entrepreneurship skills among young women and create opportunities to discuss attitudes of women and men around expected traditional roles of women as caregivers and so on. (b) A mentoring and coaching program targeted to young women that would be inspired by successful business women and men. (c) Assessing options such as flexible working hours and the provision of creches for creating safe and enabling environments for young women in the tourism and ICT-enabled services sectors to increase female labor force participation. Page 14 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) (d) Introduction of information, education and communication campaigns around positive imaging of women within the Tourism sector that include details around creating enabling and safer work environments for women using social and mass media. For monitoring and evaluation (M&E) aspects of the gender-focused activities see paragraph 49. 29. Project-specific definitions: (a) Pilot interventions in connection with this project: These include entrepreneurship and employment- focused skills development with incentives for (i) employers to absorb trainees, build human capital, and nurture talent, and (ii) individuals with innovative and creative ideas, risk and resilience bearing capacity to become entrepreneurs. (b) Skills development in the Tourism and construction sector across the value chain: This includes development of skills, for example, from hospitality, management, accounting, to back-office (construction related plumbing, welding, electricians, electronics, masonry, carpentry, green buildings, materials management, and so on). (c) Skills development in the ICT-related services sector across the value chain: This includes development of skills, for example, from basic digital literacy to programming skills, and development of applications. All programs’ curricula will include modules on entrepreneurship skills, personal initiative, and soft skills, climate-smart investments—renewables, water conservation mechanisms, solid waste recycling, techno-waste management, and climate resilience-oriented livelihoods. (d) Localized approach to address spatial heterogeneity challenges. This includes ‘go global’ initiatives to adapt to the local and diffuse from local markets to global markets. Subcomponent 1.1: Labor-market Assessment and Analysis for Demand-driven Skills Identification (Total costs including contingencies = US$1 million equivalent IDA financing) 30. The objective of the subcomponent is to identify the skills needs from the employers (demand) and youth (supply) perspectives in the tourism and construction, and ICT-related services sectors. The project will finance: (a) two (2) localized rapid labor-market surveys in the Priority sectors which will also identify gendered barriers towards employment and entrepreneurship, and (b) localized rapid labor- market surveys of training providers to assess service delivery capacity. Subcomponent 1.2: Revision of Skills Development (TVET and Entrepreneurship) Curriculum (Total costs including contingencies = US$0.8 million equivalent IDA financing) 31. The objective of the subcomponent is to customize the skills development curriculum in the technical and/or vocational and entrepreneurship skills development areas to address the findings of subcomponent 1.1 on the rapid labor-market demand surveys. The subcomponent will finance: (a) a review of the existing skills development curriculum in TVET and entrepreneurship skills development areas to customize the curriculum as necessary upon the recommendations of the rapid labor-market survey analyses, including addressing the recommendations to address women’s participation, (b) the Page 15 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) preparation of training modules that include modules on TVET, entrepreneurship, soft skills, environment and climate change awareness modules, and (c) the design and convening of workshops to the business development service (BDS) trainers. Assessors will be trained to assess the trainees on the competency- based assessment approach. Entrepreneurship-related training, including personal initiative training will be introduced. Subcomponent 1.3: Face-to-Face Skills Delivery (Total costs including contingencies = US$3 million equivalent IDA financing) 32. The objective of the subcomponent is to deliver the pilot interventions using the curriculum prepared under Subcomponent 1.2 in the project priority sectors. The project will finance: (a) skills delivery/provision through public and/or private providers of the pilot(s) for short-term skills development (not exceeding 12 months), and assessment of TVET and entrepreneurship training provided, awarding of Level 3 or Level 4 Certification from the Maldives Qualification Authority (MQA) as appropriate for the Priority Sectors to trainees, and (b) provide non-financial incentives for employers for internships and on-the-job training, for the delivery of pilot interventions by the target candidates in the Priority Sectors. Subcomponent 1.4: Support for Entrepreneurship Development (Total costs including contingencies = US$5.2 million equivalent IDA financing) 33. The subcomponent will support the enhancement of the entrepreneurship ecosystem and foster innovative interventions to stimulate young men and women to develop an entrepreneurship mind-set and business ideas. The subcomponent will finance: (a) a survey to identify gender barriers preventing NEET women from undertaking employment and entrepreneurship and recommend socio-culturally sensitive actions, (b) enabling the capacity development of BDS providers using a train-the trainers’ (TTT) approach, (c) conducting personal initiative training, (d) supporting and operationalizing the government’s incubation program for entrepreneurship through the establishment of a model incubation center within the premises of MoHE and/or MoED or such government-owned premises as necessary, and (e) sponsoring business plan pitch competitions (BPC) to award Start-Up Fund Awards for proposals focusing on the Priority Sectors. The target audience will be youth ages 16–353 years and women. The BPC will be piloted through a first call for proposals, focusing on innovative tourism and construction (guesthouses excluded) and ICT-related services. By mid-term review, the first pilot will be tested and evaluated, and an additional pilot will be launched based on the satisfactory assessment of the first pilot. 34. Eligibility criteria for the BPC. Young entrepreneurs (men and women) applicants to be considered for funding would need to meet the following criteria: • They must be enrolled with the BPC-management firm (MF). 3This will include youth who have participated in the training programs under Subcomponent 1.3 and who are interested in becoming self- employed. Page 16 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) • They have received notification that their business plan has passed the BPC selection process set forth in the Project Operations Manual (POM) and will be awarded a prize. • The prize award must be at least US$10,000 and no more than US$30,000 (equivalent in Maldivian Rufiyaa at the prevailing Central Bank rate as at date of ‘No Objection’ from the World Bank); unregistered 4 entrepreneurs or firms will receive awards disbursement only if they show evidence of a formal business registration at the time of the grant agreement signature and the business has a valid bank account. • They must be operating in Maldives and in any of the project target sectors or any activities related to one of these sectors. • The project funding must be requested for utilization on eligible costs or activities. • The firm must satisfy the requirements on environmental and social compliance. • They will become eligible to participate in the training bootcamp. 35. The details on the organization of the BPCs are laid out in a Grants Manual that will be prepared and adopted within three months after the signature date of the Financing Agreement. The Grants Manual comprises part of the overall POM. The BPC will include criteria pertaining to climate adaptation co- benefits for target beneficiaries of the interventions if they are assessed to be vulnerable to the impact of climate change. The vulnerability context will be provided for this population, along with the intent, and the link to the activities. Component 2. Promoting entrepreneurship and employment through skills Development and eLearning Strategy (Total costs including contingencies = US$5.45 million equivalent IDA financing) 36. The objective of the component is to draw from lessons being learned through the pilot interventions in Component 1 and build synergies with the Ministry of Higher Education (MoHE) and the Ministry of Economic Development (MoED) skills needs assessment to identify skills gaps that employers are facing. This would lay the foundation for preparing the 21st century skills development strategy during project implementation. The goal is to support the GoM to complete, endorse, and adopt the strategy before project completion. The project will: (a) finance technical assistance to prepare the 21st century skills development strategy, (b) upgrade the IT infrastructure for skills development including the institution of an eLearning management system and jobs platform, and (c) develop career hubs to create education-industry linkages and entrepreneurship promotion, linking up with the jobs platform. Subcomponent 2.1: Strategy Development, Strengthening and Diversifying Skills Development Programs (Total costs including contingencies: US$2.3 million equivalent IDA financing) 37. The objective is to support the GoM to prepare a 21st century skills development strategy to do the following: 4 Not registered or incorporated formally. Page 17 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) (a) Move from the current static and fragmented training model to a dynamic and coherent workforce readiness model that is synchronized with the economic pathways for the country and is in line with international standards. (b) Assess and reorganize skills as a continuum from foundational skills (reading and writing) at the basic education level, to mid-level vocational, technical, and entrepreneurship skills for career readiness, culminating in higher-order or advanced technical and professional skills at university level, and where remedial skills can facilitate school-to-work transition. (c) Map existing skills programs along the skills continuum of lower level to advanced level skills by competencies and attributes. (d) Identify new public and private sector partnerships and service delivery modes. (e) Strengthen the IT infrastructure for skills development to keep abreast of the latest developments in the IT-related domains. (f) Network the career hubs to support a continuous education-industry links. (g) Link up with MoED to update the strengthened jobs platform under Subcomponent 2.2. (h) Assess the cost-effectiveness and cost-efficiency of instituting a dynamic skills development strategy to improve the competitiveness of the Maldivian economy. 38. The project will finance technical assistance in the Priority Areas to (a) inform the preparation of the Skills Development Strategy, (b) develop an economic and financial simulation model to generate cost efficiency and risk assessment, (c) assess the skills competencies and attributes of the 16-35 year age group across learning domains, (d) carry out civil work for rehabilitating facilities and laboratories to align with the curriculum at the identified Technical Training Institutes, (e) convene workshops to build consensus among stakeholders to finalize and enable the adoption of the Skills Development Strategy, and (f) incorporate industry-/work-based training and skills development into academic and technical/vocational programs, and develop new and revised curricula to align with employer requirements with the assistance of private sector parties. 39. The activities would be progressively completed during project implementation. The interim outputs would be completed by co-constructing/co-creating with private sector employers, incorporating industry-/work-based training and skills development into academic and technical/vocational programs, and developing new and revised curricula to align with the needs of a dynamic economy. To improve the alignment, the Employment Sector Councils5 will be reactivated with the participation of private sector employers to ensure that the curriculum in priority sectors are reviewed, readjusted, and rolled out in line with the needs of the sectors and the requirements of the National Qualifications and Accreditation Standards. The strategy would be completed, endorsed, and adopted before project completion. 5Employment Sector Councils were established for the following five sectors: transport, fisheries and agriculture, tourism, construction, and social. However, these are currently no longer active. Page 18 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Subcomponent 2.2: IT infrastructure for Skills Development and Jobs Platform (Total costs including contingencies: IDA US$1.15 million equivalent IDA financing) 40. The objective of this subcomponent is to develop market clearing interventions for job matching using technology-based platforms. The project will finance the following activities: (a) Purchasing and adapting an eLearning platform, including a Learning Management System, and skills development content. Maldives has embarked on developing, implementing, and supporting technology-enabled solutions for various programs in education and skills development. Because of the geographical dispersion of the country, the GoM plans to promote eLearning services as a mechanism to foster quality access to digital content for students. Being an island nation with about 200 inhabited islands, it is challenging to provide physical library services for all the inhabited islands. This would require relevant digital infrastructure and skills to manage digital resources. New economy skills would be needed to manage and sustain the digital infrastructure. (b) Strengthening the IT infrastructure for job matching and program support to operationalize and expand the scope of web-based job search and the job-matching platform to meet the requirements of the youth, including women, and the private sector. In this connection the GoM, through financing from the Enhancing Education Development Project (EEDP) has already developed the job-matching platform (www.guraha.mv). This is now operational. The project will finance further development to enhance features of the platform. The platform, which is in the pilot phase, is currently designed to allow stakeholders (students, youth, and private sector) to register and provide/have access to timely and accurate information on vacancies. The goal is to make the platform a repository of labor- market data, which can be used in the future for analyzing the trends of demand and supply of skills in the market. The platform will also include a career guidance, coaching, mentoring and counseling module that will be easily accessible by all women and youth interested in attaining their career pathways and goals. Subcomponent 2.3: Career Hubs for Education-Industry links and Entrepreneurship Promotion (Total costs including contingencies: US$2 million equivalent IDA financing) 41. The objective of the subcomponent is to set up career hubs for education-industry linkages and entrepreneurship for youth. The career hubs will be in at least one service delivery node to provide a physical space for youth to access face-to-face and/or online information on career paths including entrepreneurship. The project will finance the setting up of career hubs in each facility where training is provided, and providing information on career opportunities open to youth including entrepreneurship opportunities and having in place career hub facilitators for the same. Component 3: Project Coordination, Monitoring and Evaluation (Total costs including contingencies = US$4.55 million equivalent IDA financing) 42. The MEERY Project will support the GoM to coordinate the project, undertake M&E, and provide Page 19 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) technical assistance. The project activities will be coordinated by a team of experts in operations, M&E, procurement, financial management (FM), and environmental and social safeguards, if needed. This coordination support team will assist with the efficient implementation and monitoring of project activities. Monitoring of activities will take place regularly throughout the life of the project. For this purpose, a project management information system (MIS) will be developed early in project implementation and a functioning MIS will be the goal. The purpose of monitoring will be formative and to support implementation by identifying problems and facilitating actions to resolve issues and remove bottlenecks to efficient implementation. It will also help assess the results of the project, including through beneficiary feedback information. Technical assistance will be available to support the activities under the first two components of the project and policy analyses, especially on the labor market, including the evaluation of the pilot interventions. This component will also support the communication and dissemination of project information to stakeholders, including policy makers, government officials, associations of employers and entrepreneurs, skills development institutions, and the public. Component 4. Contingent Emergency Response Component (CERC) (Total costs including contingencies = US$0 equivalent IDA financing) 43. This component has been added to permit rapid reallocation of project proceeds in the event of a natural or man-made disaster or crisis that has caused or is likely to imminently cause a major adverse economic and/or social impact. It would be triggered if/when the GoM declares a state of emergency or a state of a disaster or provide a statement of fact justifying the request for the activation of the use of emergency funding. To allocate funds to this component, the GoM may request the World Bank to reallocate project funds to finance and support response and reconstruction efforts. If the World Bank concurs with the assessment/determination of the disaster and associated response needs, the proposed component would draw resources from the categories primarily financing Components 1 and 2 and/or allow the Government to request the World Bank to recategorize and reallocate financing from any other project subcomponents to cover emergency response and recovery costs. Disbursements will be made against a positive list of critical goods or the procurement of works and consultant services required to support the immediate response and recovery needs. The reallocation of funds would be done to achieve the key indicators in the Results Framework. An Emergency Operations Manual will be applicable to this component, which will be part of the POM, and will detail FM, procurement, safeguards, and other necessary implementation arrangements. C. Project Beneficiaries 44. The direct beneficiaries of the project will be: (a) young men and especially young women in the 16-35 years age group, who will benefit from new, revised, accredited, and innovative skills development programs (including personal initiative, life skills, career guidance and counselling programs); (b) faculty and staff from participating TVET and higher education institutions who will benefit from increasing their pedagogical capacity and facilities; (c) public and private institutions who will benefit from strengthened capacity and quality improvement measures aligned with regional standards; and (d) the existing and new entrepreneurs who will benefit from BDS, coaching, mentoring, networking, market links facilitation, and grants. The project is also likely to yield some spillover benefits. Indirect beneficiaries will be potentially through new jobs being created in the communities supporting TVET and higher education institutions, and through facilities support such as technological infrastructure; distance learning (software including Page 20 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) content development, programming, and so on); management and administration of learning laboratories; and other services. D. Results Chain 45. Theory of change and results chain. The theory of change espoused by the project is that employability for young men and especially women could be promoted by improving the relevance of skills development and extending entrepreneurship support. The relevance would be measured by employers’ satisfaction of those employees in wage employment, youth employment would be enhanced by targeted training, and entrepreneurship would be fostered as new businesses are registered after youth receive business support services. Beyond the project implementation period, strengthened institutional capacity of both the private and public sectors would serve as the reinforced foundation for continued implementation of dynamic demand-led technical, vocational, and entrepreneurship programs. Further, there would be improved collaboration and coherence in assessing labor demand. The theory of change pathway is tracked in figure 1. Page 21 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Figure 1. MEERY: Theory of Change Page 22 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) E. Rationale for Bank Involvement and Role of Partners 46. The World Bank has been one of the key development partners in the education sector and skills development in Maldives through the Enhancing Education Development Project (EEDP). The MEERY Project will build on the experience and lessons learned from the EEDP and other skills and entrepreneurship development projects in small-island nations to strengthen the World Bank’s support for the project. In addition to education and skills development, the World Bank has the technical expertise in private sector development, public-private partnerships, and maximizing finance for development. These are key and strategic partnerships necessary to foster and support the preparation of a 21st century skills development strategy for the Maldives. Other development partners such as the Asian Development Bank (ADB) support specific aspects of the general education sector and entrepreneurship development. United Nations agencies, specifically the United Nations Educational, Scientific, and Cultural Organization, UNDP; and United Nations Children's Fund, are also active in the sector, mainly through technical assistance activities. The MEERY Project will assist the youth sector with US$20 million, using an Investment Project Financing (IPF) approach. F. Lessons Learned and Reflected in the Project Design 47. The design of the MEERY Project draws on lessons learned from previous education and skills projects in the Maldives, and international experience in promoting entrepreneurship from previous and ongoing analytical and lending projects. The key lessons and their incorporation into the design are as follows: • Sustained leadership and commitment are critical for raising awareness of skills development and making it a priority in the country’s economic development plan. The Minister of Finance and the Ministers in the MoHE and MoED have explicitly stated the Government’s strong commitment. • A market-driven, responsive skills development system is critical to the relevance of public training programs and to enabling diversity and excellence in training provision through private sector participation. The project will support close links between training institutions and industry to increase private sector participation both in training design and delivery and in providing feedback on skills demanded. • Linking the demand for and supply of skills is important to ensure that appropriate and adequate skills are developed. The project supports the development and strengthening of these links in a strategic manner. The project will support close links between TVET content producers, training service delivery/providers, and industry. Training design, delivery, and feedback on skill demand will bring together the three aspects. Through the labor demand and supply assessments, employers’ and associations will help in the identification of skills needs and delivery of short‐term training. • Complex and challenging initiatives and innovations are best introduced in stages and as pilot activities. This provides time to learn lessons from the pilots so that the program can be fine- tuned and strengthened as it is rolled out to larger programs. A good communications Page 23 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) strategy, where the objectives and performance of the project are communicated widely to policy makers and stakeholders including the private sector and beneficiaries, is very helpful to strengthen commitment and understanding of the project among the public. • Engaging vulnerable groups (unemployed and underemployed youth and women) in entrepreneurship activities is critical to achieve poverty reduction and shared prosperity. Entrepreneurship promotes diversification of income opportunities especially in rural areas and remote islands. At the same time, knowledge in some areas such as traditional souvenirs and crafts often exist outside well-developed value chains and have limited market access. Various measures for bringing in beneficiaries with such skills and micro and small entrepreneurs will be supported to provide them with opportunities to improve on their products and access markets. Promoting new and existing entrepreneurs in local islands will have long-term positive consequences, contributing to overall social and economic empowerment. • Tailoring micro and small entrepreneurs training content and skill development based on local research and evidence combined with market survey at the outset of the projects significantly improves the quality of project interventions. Before revising and creating the training modules, the project aims to conduct an entrepreneurs’ ecosystem assessment and labor- market analysis on the market gaps. The surveys will also identify gender barriers that prevent women from accessing certain employment opportunities and pursuing entrepreneurship. Recommendations from the surveys will inform the project pilots. • Expanding the supply of training provided does not automatically ensure that there will be demand for these courses. The project will include the strengthening of the career guidance and counselling system, and life-skills training in schools to better equip the students in readiness for the job market. III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 48. The Ministry of Finance (MoF) will be the executing agency and the MoHE and MoED will co- implement the project for all technical aspects. MoHE and MoED will sign a Memorandum of Understanding (MoU) during negotiations to formalize the project co-implementation responsibilities. MoHE will house the Project Management Unit (PMU) and will be responsible for all fiduciary and safeguards aspects. Details of institutional and implementation arrangements are provided in annex 2. A POM will set out the detailed implementation arrangements, including fiduciary and safeguards requirements and M&E aspects. Figure 2 shows the institutional and implementation arrangements for the project. Page 24 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Figure 2. Institutional and Implementation Arrangements B. Results Monitoring and Evaluation Arrangements 49. The M&E activities will assess progress toward intermediate and development outcomes and will aim to (a) track implementation progress, (b) assess the results achieved under each project pilot intervention, (c) inform any relevant changes to project implementation, and (d) assess whether the lessons learned are incorporated into the skills development strategy under Component 2. The overall project monitoring activities will be undertaken by the PMU which is housed in the MoHE. As co- implementing entity, the MoED will monitor activities under its mandates and furnish results to the PMU for aggregation. Project performance will be monitored through periodic supervision missions. Procurement would be based largely on post-reviews except for capacity-building aspects. During the early years of the project, the emphasis on project performance will concentrate mainly on implementation progress, especially in relation to processes and intermediate outcomes. During the later years of the project, performance assessment will focus more on the achievement of results and outcomes. Funds release will be based on a biannual basis following a review of integrated financial reports, procurement progress, and implementation pace. 50. M&E of gender-focused activities. The impact of the gender-focused activities in narrowing the gap in young women’s labor force participation will be measured using the following indicators: (a) percentage of targeted trained youth in wage employment in an area relevant to technical and vocational skills within six months of graduation, of which are females; (b) number of new businesses registered by Page 25 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) targeted trained youth after receiving business support services, of which are females; and (c) launch of a social media campaign on positive imaging around women working in the Tourism sector and enabling safer work environments for women in this sector, and the role of parents and young men as partners. 51. M&E of citizen engagement. The project will also monitor the implementation of the citizen engagement approach with two beneficiary feedback indicators: percentage of beneficiaries satisfied with the skill development training; and employers satisfied with graduates from the skills development programs in the project priority sectors. C. Sustainability 52. The MoHE and MoED’s capacities for project design and management will be strengthened through the project development and implementation processes. Their capacity will be further strengthened during the process of preparing the 21st century skills development strategy. Some of the key PMU staff, and technical committee (TC) staff are employees of the MoHE and MoED. The Government’s capacity has been developed during the project preparation process. During implementation, capacity will be further strengthened. The Government has an ongoing entrepreneurship program. However, it is at a relatively nascent stage. In addition, private sector players are already offering internship and apprenticeship programs. These programs will be strengthened and complemented through the project, especially for supporting women. Other firms will also benefit from the spillover benefits. The strengthened government programs will continue beyond the lifetime of the project. IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic, and Financial Analysis 53. The project is expected to significantly expand and improve the performance of the Maldivian labor market. The economic justification for investment in market-oriented skills and tertiary education is well recorded in modern development literature. Estimates from the 2016 Household Income and Expenditure Survey (HIES) show that investment in human capital has a positive impact on income at all levels of education and training, for both men and women in Maldives. For instance, compared to the primary or lower category, on average, attainment of lower secondary degree increases an individual’s monthly income by about 22 percent (27.8 percent for men and 19.4 percent for women). The corresponding figures for higher levels of education are 30.6 percent, 33.6 percent, and 70 percent, respectively, for upper secondary, vocational education/diploma (less than six months), vocational education/diploma (more than 6 months), and tertiary education. Returns to investment in technical and vocational skills are higher than that of secondary education. It reflects the labor-market requirements of Maldives where there is a premium for knowledge and technical skills.  54. In Maldives, although women represent over 50 percent of the working-age population, their labor force participation rate is very low at 44.2 percent compared to 80.2 percent for men. Despite the low participation rate, there is a positive relationship between education and female labor-market outcomes. Women with higher levels of education have higher labor force participation rate and lower unemployment and NEET rates. Although the overall unemployment rate (using standard International Page 26 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Labor Organization [ILO] definition) is low in Maldives (6.1 percent), the unemployment rate for the youth (ages 15 to 24) is more than four times higher than that of the adult working-age population (ages 25–64) with the highest unemployment rates among those with tertiary degree at 21 percent followed by those with upper secondary degree. 55. The high unemployment rates among the youth with higher education represent the labor market rigidity at entry caused by high reservation wage and heavy reliance on public sector jobs, leading to long waiting periods to find jobs. Considering the discouraged workers, who are available for work but are not actively looking, the broad unemployment figure presents a much higher rate of unemployment. They represent the potential labor capacity that can be enabled to increase the productive level of the country. Broad unemployment rates are highest for those with lower secondary or lower degrees. Although sectors such as tourism have an abundance of jobs, employers are forced to import foreign labor as Maldivians often lack the technical and socio-emotional skills needed for such jobs. Thus, the project will provide youths with skills that are closely linked to economic growth sector needs to be able to compete in the labor market. 56. Results of an economic cost-benefit analysis applied to estimate the economic benefits for Sub- component 1.1 of the project show that the present discounted value of benefits and costs for the base scenario is US$16.33 million and US$10.5 million, respectively. The corresponding net present value (NPV) of the benefits is US$ 4.04 million and the associated internal rate of return (IRR) is 16.9 percent. The key assumptions underlying the estimated IRR and NPVs have to do with the discount rate, employment rate, quality premium, and earning increment associated with the technical education and skills development training. The base scenario assumes a discount rate of 12 percent, an employment rate of 50 percent, quality premium of 1 percent of the average lower secondary earnings, and annual wage differential of US$1,277. The NPV ranges from US$ -2.06 million in the low case scenario to US$7.48 million in the high case scenario. Similarly, the associated IRR varies between 9.3 percent and 20.9 percent. These are conservative lower-bound estimates, given that they do not account for other potential benefits including the social benefits of education and training. The total economic and social impact on the project is likely to exceed the economic benefits, which are nonetheless very considerable. These results suggest that sub-component is expected to yield positive economic returns and thus economically viable. A detailed discussion on the regression results and IRR calculations is provided in annex 3. B. Fiduciary (i) Financial Management 57. The FM arrangements for the project include planning, budgeting, accounting, internal controls, funds flow, financial reporting and auditing. These will be in line with fiduciary requirements of Operations Policy (OP) 10.00. Details of the FM arrangements for the project are specified in annex 4. It is envisaged that the PMU set up under MoHE will be responsible for overall FM coordination and monitoring of activities for the project. The PMU will maintain FM arrangements for all project implementation levels including, the compliance with the financial covenants of the Financing Agreement. The detailed FM arrangements will be reflected in the POM. 58. The project risk rating is Substantial from an FM perspective. The rating is consistent with a risk- Page 27 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) based approach to FM supervision. The current MoHE used to be part of the Ministry of Education (MoE). The PMU in the MoHE has prior experience with implementing a World Bank project under the MoE. The performance of the project has been satisfactory. There were no accountability or FM issues. Based on this assessment it is deemed that the MoHE will also be capable of handling the present project. It is envisaged that the MoHE will appoint FM staff including a FM specialist, and any other supporting staff assessed to be necessary, and satisfactory to the World Bank. The FM specialist appointed for the project will manage and coordinate the overall FM arrangements pertaining to the Project. The MoHE will be responsible for budgetary allocations for the entire Project based on annual budget estimates. 59. Project disbursements will be reports-based using interim unaudited financial reports (IUFRs). A Designated Account (DA) denominated in US dollars will be set up at the Maldives Monetary Authority (MMA) for the MoHE to receive IDA funds. Advances to the DA will be made based on six-monthly projected expenditures. The funds will be used solely to finance eligible expenditures. Actual expenditures incurred will be tracked and recorded in the IUFRs prepared by the PMU and will be submitted on a quarterly basis to the World Bank, and within 45 days after the end of each quarter. 60. The Project will be subject to an internal audit. The external audit of the project will be carried out by the Auditor General’s Office of Maldives. The PMU would need to submit the audited financial statements to the World bank within six months following the end of each financial year throughout the project implementation period. 61. Retroactive Financing not exceeding SDR 60,000 (about US$83,145) is for eligible expenses under Category 1, and the payments for which are made to the government not more than 12 months before the expected date of the signing of the Financing Agreement for the World Bank financing. Adequate documentation of payments will accompany the expenditures. The procurement will be in accordance with principles and procedures described in the Procurement Manual and FM Manual for the project. (ii) Procurement 62. The World Bank Procurement Regulations for IPF Borrowers (Procurement in Investment Project Financing: Goods, Works, Non-Consulting and Consulting Services, dated July 2016 and revised in November 2017 and August 2018) introduced by the World Bank under the Procurement Framework will be used for carrying out project procurements under the IPF component. The GoM procurement procedures will be clearly identified in a Procurement Chapter of the POM, which will be appraised and reviewed by the World Bank. The detailed Project Procurement Strategy for Development (PPSD) will also be annexed to the POM. The manual will be reviewed regularly and updated to meet the project needs in consultation with the World Bank. 63. The procurement risk for the project has been assessed as Substantial. Capacity constraints pose specific challenges. Procurement in Maldives is largely governed by the Public Finance Regulations (PFR). However, the PFR does not comprehensively cover the procurement rules applicable to all entities. More specifically, the state-owned enterprises (SoEs) are not addressed in the PFR although substantial amounts of procurement are being carried out through the SoEs. The project is one of the first to adopt the Procurement Framework in Maldives. This may pose a risk for implementation as the PMU and project affiliated implementing entities’ staff might not be familiar with the applicability of the Procurement Page 28 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Framework. Previous engagements with the country through World Bank-financed projects manifest an implementation challenge specifically in procuring goods, works, and non-consulting services and hiring of consultants locally. The project procurement details are provided in annex 5. C. Safeguards 64. Environmental Safeguards. Environmental assessment operational policy/business practice (OP/BP 4.01) has been triggered as the project is expected to finance physical interventions associated with improvements or rehabilitation to existing infrastructure for skill development both in the Greater Malé Region and outer atolls. It is expected that these activities will take place on the existing inhabited Islands. The expected rehabilitation is assessed to be of medium scale and in potential locations where anthropogenic activities have already altered the natural environment. The exact sites where these interventions will be implemented, and technical designs will only be available during project implementation. Rehabilitation activities may have potential site-specific environmental impacts during the rehabilitation phase. These include the need for natural resources such as sand, water and aggregates, land clearing, dust, noise, occupational and public health and safety issues, as well as operational issues about such facilities which include the management of waste and effluents such as sewage and waste water, which can be managed with inbuilt due diligence and design. On interventions that will be undertaken in association with the private sector on skills development, there will be no physical interventions associated with the proposed activities. In addition, the project will focus on promoting environmental management through its skills development component, which is a positive impact the project will generate. It is confirmed that the project may not have large-scale significant irreversible environmental impacts and is categorized as Environmental Category B. 65. As the exact locations of project financed rehabilitation will be known only during project implementation, as a risk mitigation measure, the GoM has prepared an Environmental and Social Management Framework (ESMF) to guide project implementation in terms of both Environmental and Social safeguards due diligence requisites as per the World Bank Safeguards Policies, World Bank Group Environmental Health and Safety Guidelines and Environmental Regulatory requirements of the GoM. On a precautionary basis, the Natural Habitats operational policy/business practice (OP/BP 4.04) has also been triggered to ensure that any possible impacts to natural habitats or sensitive environments are avoided/mitigated and will be covered in the ESMF. The ESMF will include guidance on conducting environmental screening, preparation of environmental assessments and management plans as well as on monitoring, which will be key elements in ensuring sound environmental practices during the implementation of physical interventions. Under the activities that will be conducted to support entrepreneurship development it is expected that all business proposals will be of medium-scale and will be screened in line the World Bank safeguards’ requirements as eligibility criteria, and environmental and social sustainability and management will be screened as key elements. Once the process is strengthened the Project will develop an Implementation Manual that will replicate the guidance provided in the ESMF. The PMU has prior experience with implementing World Bank safeguards and has hired an environmental and social safeguards specialist to focus on the implementation of the ESMF. The ESMF has been disclosed by the GoM on March 11, 2019 and on the World Bank’s external website on March 12, 2019. 66. Climate and Disaster Screening. The project has been screened for climate change impacts and Page 29 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) disasters. Maldives is affected by several natural hazards, including (a) geological hazards: earthquakes and coastal erosion; (b) meteorological hazards: tropical cyclones, tropical storms, and thunder storms; (c) hydrological hazards: storm surges, swell waves, udha, tsunamis, heavy rainfall, and drought; and (d) climate change-related hazards: sea level rise, changes in precipitation, sea surface temperature rise, storm activity, and swell waves. The high-frequency events are monsoonal flooding, coastal erosion, salt- water intrusion, and sea level rise. The impact rating is Moderate in the project’s physical infrastructure and assets and the soft component. 67. The project exposure rating is Moderate, impact rating is Moderate, and the outcome/service delivery rating is Low as the impacts can be mitigated by integrating appropriate risk reduction measures. Maldives is highly vulnerable to natural hazards and extreme climate events because of its fragile ecological profile and low elevation, combined with its economic dependence on limited sectors. The consequences of high-frequency events such as monsoonal flooding, coastal erosion, salt-water intrusion, and sea level rise, as well as less frequent events such as earthquakes, thunderstorms, flash floods, and prolonged dry periods pose a real threat to lives and the economy of Maldives. 68. Climate co-benefits. The project will finance rehabilitation of classrooms, libraries, laboratories, and so on under Components 1 and 2 in the existing skills development premises in the Maldives. These will be rehabilitated according to the Building Act regulation considering the resilient features that can withstand the impacts of climate change-induced disasters and impacts. For example, skills development/training facilities will be reinforced with additional flood defense mechanisms to improve resilience considering the future projections of increased precipitation. Further, energy-efficiency improvements in the existing training facilities that will house digital learning facilities will be taken into consideration. Making the facilities ‘climate safe’ can provide opportunities to develop new partnerships among the private sector, educators, community leaders, emergency relief organizations, and government disaster risk management authorities. Ensuring safe water supply for students, educators, and marginalized populations during storms and in the event of any water shortage and helping prioritize needed improvements in water and sanitation will also make the communities more resilient. Finally, the BPC will include criteria pertaining to climate adaptation co-benefits for target beneficiaries of the interventions if they are assessed to be vulnerable to the impact of climate change. The vulnerability context will be provided for this population, along with the intent, and the link to the activities. 69. The project includes soft components, capacity enhancement, emergency preparedness plans, awareness raising, and evacuation drills for target beneficiaries under Components 1. The project also includes support for diversification out of climate-sensitive livelihoods under Components 1. Together, these features will reduce the anticipated risk from climate and geophysical hazards. The main skill gaps are in the urban development (construction) and tourism sectors. The construction industry needs skills and knowledge about building codes and green buildings and needs skills in operations and maintenance of such facilities to make the buildings more resilient to climate change impacts. 70. The corporate social responsibility (CSR) programs in the tourism sector focuses on green buildings and disaster risk reduction and can contribute to adaptation co-benefits while renewable energy sources can contribute to mitigation co-benefits. The CSR programs could also include mobile desalinization units or other mechanisms that help the inhabitant island communities during water shortages. These can open job opportunities in the private sector for youths and women. Compared to Page 30 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) the tourism sector, jobs on climate/environment and so on might not require women to directly engage with the tourists and these are more like office jobs. On the policy side, if there is a way a CSR officer can be made mandatory for the resorts, it can create more jobs. Moreoever, skills can be matched with this and youths/women can be trained toward this. The awareness raising-type jobs are more acceptable than tourist guide-type jobs. Therefore, the tourist guide jobs could be renamed as climate/environment awareness officers and so on. The training and capacity building will include an additional module on climate adaptation and mitigation. Training certificates will be awarded only upon participants successfully completing the courses. Finally, the project will include a CERC that will allow the GoM to efficiently respond to disasters during the project implementation period. This will also contribute to climate co-benefits. Other details on climate co-benefits assessment are provided in annex 6. 71. Social Safeguards. The project is expected to yield significant social benefits by promoting access to quality skills to youth and enhancing their employability. Because the focus of the project is primarily on ‘soft interventions’ such as development of courses, skills development training, capacity development of Maldives Polytechnic Institutes (MPIs), strenghtening of entrepreneurhsip capacity of trainsers, and so on, adverse impacts associated with physical interventions are expected to be minimal, if any. Any civil works carried out to rehabilitate infrastructure facilities will be limited to the existing land/premises of the concerned institution, and will not involve any land acquisition. Further, there is no evidence suggesting the presence of inidgenous people in Maldives. Thus, the project does not trigger the social safeguards policies, OP/BP 4.10 ‘Indigneous People’ or OP 4.12 ‘Involuntary Resettlement’. To address potential impacts during rehabilitation, for example, labor influx, access restrictions, and public inconveniences, the ESMF prepared under the project includes detailed guidelines that will be followed to identify, assess and mitigate against such risks, including preparation of site-specific Environmental and Social Management Plans as described earlier. 72. Gender-based Violence Risk Assessment. A gender-based risk assessment and screening has been carried out for the project. Based on the findings the risk is rated as Low. Consultations with women’s groups will be carried out in connection with finalizing the ESMF. Based on the socio-economic, cultural, religious and demographic qualities of the local community, it is likely that the presence of incoming workers or interactions with the local community could create adverse impacts. The risk will be mitigated through a functioning and robust grievance redress mechanism (GRM), code of conduct for workers, worker camp management plan and measures to address gender-based violence, in the civil works contract. Further, citizen engagement measures would be a continual aspect of project implementation. 73. Citizen engagement. The project has a robust citizen engagement approach that includes stakeholder feedback surveys, consultations, and a project-specific GRM. The stakeholder feedback surveys will cover private and public-sector employers, students and staff of tertiary education institutions, and policy makers and officials, with a focus on obtaining views of the ultimate beneficiaries, mainly Maldivian youth and women. For instance, under Component 1, beneficiary satisfaction surveys will follow each pilot intervention on skills delivery and support for entrepreneurship development, and the results of the survey will be used to inform the subsequent pilots. These surveys will enable the needs of the stakeholders to be articulated and communicated to the relevant levels of the project implementation system. The analysis of feedback surveys will be disaggregated by gender to assess if there are emerging gender-related issues to ensure that timely action can be taken to address them. The stakeholder needs and management responses will be incorporated in the project development plans. Page 31 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Relevant information regarding the implementation of these plans will be shared with the stakeholders. Based on need, the project will also conduct consultations during implementation to gather stakeholders’ and beneficiaries’ views and experiences about the effectiveness of the project interventions. Finally, the project is planning to implement a GRM that enables beneficiaries to voice their concerns and grievances about the project implementation. For M&E aspects of the citizen engagement see paragraph 50. Annex 7 includes a communications strategy that closes the information loop on stakeholder engagement and advocacy aspects. (i) Grievance Redress Service 74. Communities and individuals who believe that they are adversely affected by a World Bank- supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, because of WB 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 Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (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. V. KEY RISKS A. Overall Risk Rating and Explanation of Key Risks 75. The overall risk rating is Substantial considering the risk mitigation measures. Key risks of the MEERY Project relate to technical design, institutional capacity for implementation, fiduciary aspects, and stakeholder responsibility during implementation. 76. The technical design of the project is a Substantial risk. Coordination challenges and implementation issues could arise since the project design entails multiple themes and implementation by a variety of implementing agencies and stakeholders including the MoED and the MoHE and its various departments, the MPI, the Maldives National University (MNU), TVET training providers in the private sector, and private providers of tertiary education. However, the Government is committed to accelerating human capital accumulation to increase employment opportunities for young people and promote equitable economic and social progress in the country. The project concept is technically sound and is based on considerable experience from education projects in Maldives including the recently closed Enhancing Education Development Project (EEDP). The Results Framework would be closely tracked, reviewed, and readjusted at the midterm, if necessary. 77. The institutional capacity for implementation and sustainability is a Substantial risk. While the MoHE has substantial previous experience in implementing World Bank projects, other stakeholders, have not participated in a World Bank-financed project. This is specifically in the case of the MoED. A mitigation measure is that the MoHE and MoED will sign an MoU regarding the governance roles and responsibilities Page 32 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) for the project. The project also includes several innovative activities. Therefore, there may be a longer learning period. The MEERY Project will invest significant resources in coordination, innovations, capacity building for planning, administration, M&E, policy research, beneficiary feedback, and communication. For the innovative approaches including those based on behavioral approaches to public policy, the project will support pilots before scaling them up. 78. Fiduciary risk rating is Substantial. Fiduciary capacity will be strengthened at different levels during project implementation. 79. Finally, the stakeholder risk rating is also Substantial. The project design relies on strong coordination and harmonization among various stakeholders with overall implementation responsibility in the MoHE. Capacity building for the project activities will be conducted, supported by intensive consultations with participating stakeholders to ensure that project activities and targets are realistic. . Page 33 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) VI. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Maldives Maldives: Enhancing Employability and Resilience of Youth Project Project Development Objectives(s) The Project Development Objective (PDO) is to improve the relevance of technical and vocational skills and foster entrepreneurship to promote youth employment in priority sectors. Project Development Objective Indicators RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline End Target Access to labor-market relevant vocational, technical & entrepreneurship skills in priority sectors Relevance: Employers satisfied with graduates from the skills development programs in the project priority sectors 0.00 60.00 (Percentage) Youth employment: Targeted trained youth in wage employment Total: 0.00 % Total: 50.0 % in an area relevant to technical and vocational skills within six months of graduation, of which females (Text) Females: 0.00 % Females: 25.0 % Entrepreneurship: New businesses registered by targeted Total Number: 0.00 Total Number: 40.00 trained youth after receiving business support services, of which females (Text) Of which number by Females: 0.00 Of which number by Females: 15.00 PDO Table SPACE Page 34 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Intermediate Results Indicators by Components RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline End Target Component 1. Fostering skills development and entrepreneurship in priority sectors Labor market surveys carried out (Number) 1.00 3.00 Curricula and National Competency Standards developed/revised to include entrepreneurship and for pilot interventions in the 0.00 100.00 project priority areas (Number) Trainers, instructors and assessors on revised curricula and competency based standards (Number) 0.00 125.00 Targeted youth completing market-relevant short-term vocational, technical, entrepreneurship, personal initiative, and soft skills development training in priority sectors supported by 0.00 3,000.00 the project (Number) Business development service (BDS) providers trained (Number) 0.00 30.00 Youth benefitting from BDS services (Number) 0.00 100.00 Business plan competitions held (Number) 0.00 2.00 Component 2. Promoting entrepreneurship & employment through skills Development & eLearning Strategy 21st century skills development strategy adopted (Yes/No) No Yes Basic and intermediate ICT-based teaching and learning packages for digital skills developed and utilized through eLearning 0.00 10.00 Platorm/eLibrary (Number) Job seekers and employers registered on the jobs platform (Number) 4,922.00 6,000.00 Component 3. Project coordination, monitoring and evaluation, and technical assistance Employer satisfaction survey completed (Number) 0.00 4.00 Total: 0 Total: 3,500 Direct project beneficiaries (Number), of which female (%) (Text) Females: 0% Females: 40.0% A social media campaign on positive imaging around young No specific social media campaign to address the issue. A social media campaign to address the issue that has Page 35 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline End Target women in the tourism sector. (Text) elicited some positive results. Component 4. Contingent Emergency Response Component Beneficiaries satisfied with the skill development training, BDS services or other project activity (Percentage) 0.00 80.00 IO Table SPACE UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Employer satisfaction Percentage of employers survey Relevance: Employers satisfied with satisfied with graduates reports, Employer satisfaction Annual MoHE, MoED, PMU. graduates from the skills development from the skills development Project survey programs in the project priority sectors programs in the project implementati priority sectors. on progress report. Project supported (targeted) trained youth in wage Project Youth employment: Targeted trained employment in an area Implementati youth in wage employment in an area relevant to area relevant to Annual. on Progress Tracer study MoHE, MoED, PMU. relevant to technical and vocational skills technical and vocational report; within six months of graduation, of which skills within six months of .Project MIS females graduation. Numerator: Number of Page 36 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) project supported trained youth in wage employment in an area relevant to area relevant to technical and vocational skills within six months of graduation. Denominator: Number of project supported youth who graduated from market-relevant technical and vocational skills development training program in priority sectors. New businesses that have Project been formally registered by Entrepreneurship: New businesses Implementati youth who have received registered by targeted trained youth after Years 3 and 5 on Progress MoED, MoHE, PMU. business support services receiving business support services, of report, through the project. EOP which females Project MIS. target is a cumulative target. ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Localized labor market Labor market surveys carried out. Year 2 and survey Administering localized MoHE, MoED, PMU. Labor market surveys carried out Baseline: Training needs Year 4. reports, labor market surveys assessment carried out by Project MoHE and MoED. implementati Page 37 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) on progress report. Curricula and/or National Competency Standards revised and/or developed in priority sectors to reflect employer requirements and Project Curricula and National Competency will include modules on Maldives Polytechnic, Implementati Standards developed/revised to include entrepreneurship and soft Annual. TVETA/Skills Authority, on Progress entrepreneurship and for pilot skills. Revision or MoHE, MoED, PMU. Report interventions in the project priority areas development of curricula and/ or National Competency Standards will also include revision or development of associated teaching learning materials. Number of trainers, Project instructors and assessors Implementati TVETA/Skills Authority, Trainers, instructors and assessors on trained on the new and/or Annual. on Progress Maldives Polytechnic, revised curricula and competency based revised curriculum and Report, MoHE, MoED, PMU. standards competency standards. Project MIS. Number of youth completing market-relevant Project Targeted youth completing market- short-term vocational, Implementati relevant short-term vocational, technical, technical and soft skills Annual. on Progress MoHE, MoED, PMU. entrepreneurship, personal initiative, and development training in Report, soft skills development training in priority priority sectors supported Project MIS. sectors supported by the project by the project Target age group: Youth Page 38 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) ages 16-35 who are not in employment, education or training. Project BDS providers who are Implementati trained as ToT and to Business development service (BDS) Annual on Progress MoED/BCs, MoHE, PMU. provide services to the new providers trained Report, and existing entrepreneurs. Project MIS. Project Number of youth benefiting Implementati Annual MoHE, MoED/BCs, PMU. Youth benefitting from BDS services from BDS services. on Progress Report Project Years 3 and Implementati Number of business plan MoED/BCs, MoHE, PMU. Business plan competitions held 5 on Progress competitions held. Report 21st century skills development strategy 21st century skills document, 21st century skills development strategy MoHE, MoED, PMU. development strategy Project adopted adopted Implementati on Progress Report, Project MIS. Page 39 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Basic and intermediate ICT- Project Basic and intermediate ICT-based based teaching and learning Implementati MoHE, Maldives teaching and learning packages for digital packages for digital skills Annual. on Progress Polytechnic, MoED, PMU. skills developed and utilized through developed and utilized Report, eLearning Platorm/eLibrary through eLearning Project MIS. Platorm/eLibrary. Number of job seekers and employers registered on the jobs platform. Baseline: job seekers registered - 4,878 Project businesses Implementati Job seekers and employers registered on registered - 44 Annual. on Progress MoED, MoHE, PMU. the jobs platform EOP Target: job seekers Report, jobs- registered - 5,000 (in portal addition to the baseline figures) businesses registered - 100 (in addition to the baseline figures) Employer Years 2,3, 4 Administration of satisfaction Employer satisfaction survey and 5 of employers satisfaction MoHE, MoED, PMU. Employer satisfaction survey completed survey completed the project. survey(s). reports Direct beneficiaries are people or groups who Beneficiary directly benefit from project survey(s), Project Implementation Direct project beneficiaries (Number), of Annual. interventions (youth stakeholder Progress Reports, PMU. which female (%) graduating from improved focus groups. skills development programs, youth receiving Page 40 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) market-relevant short-term skills development training, instructors, teachers and assessors who receive training, youth receiving BDS services, BDS providers and trainers who receive training, etc). A social media campaign on positive imaging around Media women working in the campaign Bi-annual project A social media campaign on positive tourism sector and enabling Quarterly. firm; social monitoring and MoHE, MoED, PMU. imaging around young women in the safer work environments for media evaluation reports. tourism sector. women in this sector, and tracking. the role of parents and young men as partners. Beneficiary satisfaction Percentage of beneficiaries survey Administering Beneficiaries satisfied with the skill satisfied with the skill Years 2, 3, reports, beneficiary satisfaction PMU development training, BDS services or development training, BDS 4, 5, and 6 Project survey other project activity services or other project Implementati activity on Progress Report ME IO Table SPACE Page 41 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) ANNEX 1: MALDIVES EMPLOYMENT, ENTREPRENEURSHIP, AND SKILLS DEVELOPMENT ECOSYSTEM 1. Introduction. Several aspects of Maldives’ recent development pattern highlight imbalances between labor supply and demand. First, increasing educational attainment among the younger generation and expectations of an ‘office job’ has coincided with the rapid growth in low-skilled service jobs associated with tourism and construction. This has (or seems to have) resulted in unmet expectations of Maldivian job seekers in relation to available jobs. Unrealistic expectations have been exacerbated by the rapid expansion of the civil service in the 1990s and 2000s. Recent improvements in household wealth, declining poverty, and the introduction of generous social pensions have also raised the reservation wage of young labor force entrants. Second, the enclave model of tourism development—one resort, one island—has increased the imbalance between labor supply in the inhabited islands and the demand for skilled and unskilled labor in nearby island resorts. The growth of mostly luxury tourism services has outpaced the capacity of the Maldivian labor market to provide internationally competitive skills required by employers—both technical and soft skills. 2. The persistence of traditional gender roles and the narrow scope of occupations deemed acceptable by young women, and especially their parents, have limited the female labor supply, particularly for many job openings in tourism-related services (World Bank 2016). The demand for labor has been easily met by foreign workers, who are present throughout Maldives in great supply and accept significantly lower wages. There is an emerging concern over discouraged male youth because of their rising NEET rate, an indication of the youth who are at risk of being excluded from the social fabric and being drawn to undesirable activities. The reasons for being out of school and unemployed vary by gender. This annex sets out the labor market, entrepreneurship, and skills ecosystem in Maldives. The analyses have served to define the scope and design of the project. 3. The findings of the recently concluded National Training Needs Assessment (MoHE March 2019) show that the unemployment rate in the country is about 11.7 percent. As of 2018 there are about 107,000 registered expatriates. Maldives is fast moving from a secondary to a service-oriented economy. Tourism is the highest contributor to the GDP at 19.9 percent, followed by transport at 11.6 percent, and construction at 8.9 percent. The domestic market is small in scope and the resources are limited. About 56 percent of tertiary industry is in Malé, and an equal percentage of primary industry is in the outer islands. Gender representation analysis shows that more women are in health and social work, household employment, and education. 4. Labor-market outcomes. Although, the overall unemployment rate is low in Maldives, youth (ages 15–24) are almost five times more likely to be unemployed compared to adults (ages 25 –64). In 2016, the unemployment rate for youth was 15.2 percent compared to the unemployment rate of 3.2 percent for adults. The unemployment rate of young men is 1.5 times higher than that of young women and six times higher than that of their adult counterparts. Table 1.1 shows the breakdown of employment and unemployment by gender. Page 42 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Table 1.1. Labor Force Indicators Total Men Women Population (ages 15+) 263,311 123,354 139,956 Labor force (Number, %) 151,706 (57.6) 92,659 (75.1) 59,047 (42.2) Employment (Number, emp-pop ratio) 142,422 (54.1) 86,701 (70.3) 55,721 (39.8) Labor underutilization (Number, %) 47,689 (18.0) 18,815 (15.3) 28,875 (20.6) • Time related underemployment 14,270 6,243 8,027 • Unemployed 9,284 5,958 3,326 • Potential labor force 24,135 6,613 17,522 Unemployment rate (ages 15+, %) 6.1 6.4 5.6 • Unemployment rate (ages 25–64) 3.2 3.0 3.6 • Unemployment rate (ages 15–24) 15.2 18.3 11.3 Broad unemploymenta (ages 15–24) 39.1 36.2 42.7 Source: 2016 HIES Employment Report, National Bureau of Statistics, Maldives and Bringing the Spotlight on Youth: Labor Market Snapshot in the Maldives: An Analysis based on 2016 HIES, World Bank. Note: a. Broad unemployment includes those looking and wanting to work but not actively seeking. 5. The share of Maldivian youth who are NEET is high at 23 percent. Of this, about 56 percent are female. Figure 1.1a shows the changes during 2006–2016 and the gender breakdown in the Maldives labor market. While the share of female NEET has declined over time, the share of male NEET has increased. The reasons for this is that NEET is different for male and female youth: 26.5 percent of male youth are NEET because of unemployment, 23.8 percent are discouraged, whereas the remaining 49.6 percent are not active in the labor market (figure 1.1.b). Most women are NEET because of inactivity. Transportation difficulties and long working hours are cited as some of the main challenges to employment for young women in the Malé area, whereas for those in the atolls the lack of willingness to work is the main reason behind inactivity. For young men, the main reasons for unemployment are low pay and transportation difficulties. Figure 1.1. Labor-market Profile in Maldives by Gender (2006, 2014, and 2016) Figure a. NEET Rate by Gender (2006, 2014, 2016) Figure b. Reason for Being NEET by Gender (2016) Source: Data for 2006 and 2014 taken from the report - Maldives Labor Market: Spotlight on Youth, Tourism, and Fisheries based on Census 2014 data. 2016 data are from 2016 HIES Maldives based on the World Bank staff’s calculations. Page 43 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) 6. Sectoral profile of youth employment. Figures 1.2 and 1.3 show the gender breakdown of employment by sector for youth and adults. In Maldives, the sectoral composition of employed youth differs from that of employed adults. Fewer youth are employed in public administration, agriculture, and manufacturing whereas the youth employment share in the service sector is higher. 7. The public sector is the largest employer of women across all age groups. According to the HIES 2016 data, of those employed, 31.4 percent were employed in the health and education sectors and around 10 percent in public administration. The corresponding figures for adult women stood at 33 percent and 13 percent, respectively. However, compared to their adult counterparts, more young women are employed in the service sector. Employment in trade represents about 27 percent of young women. The corresponding employment figures for adult women is at 13 percent. Female youth employment in tourism-related service sectors such as food and accommodation and transport, although low, is higher than that of their adult counterparts. 8. The public sector is also the largest employer of adult men with about 17 percent being employed in the sector. Young men are primarily employed in the service sectors. They represent more than 40 percent of those employed in sectors such as trade, food and accommodation, and transport. Figure 1.2. Sector of Employment for Youth by Gender, 2016 30.0 26.7 25.2 25.0 20.0 17.0 14.6 15.0 11.0 9.9 9.8 8.5 10.0 4.7 6.0 6.3 5.2 6.2 3.8 4.4 4.1 3.5 3.1 3.1 4.4 5.0 2.3 2.0 1.11.5 2.0 1.3 0.3 0.7 0.0 Male Female Source: 2016 HIES Maldives, WB staff’s calculation. Figure 1.3. Sector of Employment for Youth and Adults, 2016 25-64 15-24 21.5 16.5 14.1 12.2 12.1 10.4 10.7 9.5 8.7 9.1 7.2 6.5 5.5 6.0 4.9 4.3 4.3 4.2 3.6 2.6 2.8 2.1 2.1 2.7 2.5 1.2 0.9 1.3 Source: 2016 HIES Maldives, WB staff’s calculation. Page 44 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) The Entrepreneurship Ecosystem 9. Maldives has a nascent entrepreneurial ecosystem that is struggling to take off. Very few youth entrepreneurs’ initiatives have developed in Malé. There is a small network of players with narrow areas of foci and noteworthy gaps. The specific day-to-day challenges for entrepreneurs vary and depend heavily on where the entrepreneurs are operating. In general, young entrepreneurs in the Maldives share many of the same challenges as in other parts of Asia, including access to capital and establishing good governance. However, there are also additional factors that entrepreneurs are dealing with when starting and/or running their companies: (a) limited access to finance, (b) constraints with doing business, (c) a complex tax system, (d) lack of skills and talent adaptation, (e) a generalized and light support ecosystem, and (f) absence of a mentoring program. The constraints are explained in the following paragraphs. a. Limited access to finance. A key element to facilitate the emergence of a strong entrepreneurship tissue in the economy is access to capital. Successful entrepreneurs/start- ups require adequate and timely funding from varied sources, which is tailored to their needs and stages of growth. Maldives lacks richness in financing actors who are active in the entrepreneurship ecosystem. This is both in terms of numbers and versatility. The traditional financial sector comprises seven commercial banks and only two local banks. These do not cater to the needs of start-ups. Given the country’s land scarcity, the request for hard collateral for the existing SMEs makes it even more difficult for them to access financing. Seed funding or equity funding is a novel concept that is not widespread and is not in favor of young entrepreneurs. Public funding is scarce, and the geographic coverage of existing programs is limited. The GoM is actively involved in supporting the business start-up ecosystem. It has launched initiatives such as the Get Set Program for start-ups. That program has been transformed into a larger initiative with the creation of the SME Financing and Development Corporation. This financial institution was launched in March 2019. It aims to provide loans to young entrepreneurs, women entrepreneurs, and people with special needs. Four areas of support are envisioned: island tourism, farming and manufacturing, IT, and fisheries. b. Business regulations. Recent developments in the country point to the Government’s efforts to ease the barriers for doing business in Maldives. The MoED hosts the service center for businesses. Services include business registration of all types of businesses, investment, companies, and intellectual properties among other trade-related entities. Despite these initiatives, there are still areas where Maldives ranks low in the ease of doing business, especially in the areas of overall Distance to the Frontier (54.42) which is below the regional average in South Asia (53.64). The country ranks lower compared to other high-income countries in several areas that have a specific impact on management of SMEs such as getting credit, paying taxes, and trading across borders. c. A complex tax system. The Maldivian tax system is difficult to navigate for entrepreneurs. It is not designed to include incentives or tax reliefs for small enterprises. d. Unadapted skilled talent. Despite high general education standards in Maldives, the curricula in current certification, diploma, and degree programs are not designed around or encompass content to prepare students to cope with market needs, set up their own Page 45 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) enterprises, and create employment opportunities for other youth. Graduates from the country’s secondary and tertiary institutions often have generalized skills, but notably lack marketable skills. The private sector deems fresh graduates as generally unemployable because of the absence of critical soft skills (communication skills, self-presentation skills, and motivation) necessary especially for the services sectors. In general, the public university and private training institutes are not (i) supporting enough research to continually assess labor demand and supply gaps, (ii) using the research to improve the curricula and technical capabilities of youth, and (iii) building ties with industry to spur ideas that would attract entrepreneurial interest. e. Limited and generalized support for the entrepreneurship ecosystem. There are only a few local BDS providers in Maldives. The country accounts for only a handful of organizations/consultancy firms in certain areas.6 There are many freelance individual consultants. However, they are inexperienced, just as the companies they are trying to support. They are searching for a business model themselves often with inexperienced and uninformed staff. People working for these organizations are passionate about supporting companies. However, they often do not use a programmatic approach and provide concerted assistance that helps the companies succeed. A greater number of practitioners and experienced business support services, strengthened through international good practice models, can help build an effective and relevant support system. f. Few incubators and accelerator programs. There is only one existing private sector-led tech- entrepreneur accelerator program in Maldives. This is managed by the telecom company, Ooredoo. The accelerator program called ‘NIRU Accelerator’ was established in 2018. A Hackathon, organized in partnership with Ideamart by Dialog Axiata PLC, resulted in six teams entering the accelerator program. Four of the six were selected to enter the accelerator program. The teams were connected with experienced mentors. They attended an intensive 16-week training session that provided them with business, management, marketing, FM, product development, and other soft skills. In addition, the short-listed teams were provided access to a large network of international experts through Ideamart. This helped the team work on their technology initiatives. The accelerator program hosted its first Demo Day in March 2019, showcasing the accomplishments of three innovative start- ups7 that participated in the 16-week accelerator program. The teams will receive seed funding of about US$15,000 each from Ooredoo. Any financing gap will be bridged through investments from the financial markets for the three start-ups. Other attempts to create a government-backed incubator can be seen in the Foamulah Island. The MoED is preparing a new strategy to create incubator programs and roll them out throughout the country. g. Underdeveloped mentoring programs. Young entrepreneurs struggle to identify mentors to support them and receive guidance. The former government’s Get Set Program was intended to support start-ups and pair young entrepreneurs with mentors from business 6 A sample list of consultancy firms and areas of expertise are provided in table 1.4 at the end of this subsection. 7 The three tech start-ups are (a) Ideanize, which creates customized conversation agents for businesses helping them digitalize and streamline operations; (b) Kumbu, a centralized sea-transfer management system to locate vessels, book tickets, or hire an excursion vessel without any hassle; and (c) B2B Maldives, which launched supply.mv, an online platform that provides integrated logistics and supply solutions for businesses. Page 46 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) centers. However, anecdotal evidence revealed that the mentors neither had the time nor the experience to provide adequate advice. A pool of experienced mentors (knowledgeable serial entrepreneurs) who are able to provide insights to start-ups and young entrepreneurs will add value to their success. 10. Entrepreneurship and incubator programs would add value and elicit results if some prerequisites are met: (a) a mature and strong local entrepreneurship ecosystem with technical and soft skills services to anchor SMEs and facilitate a pipeline of young entrepreneurs through targeted activities; (b) appropriate scope and definition of programs that consider national versus regional disparities between islands that can either support or be detrimental to incubator/accelerator programs; (c) strong leadership teams that are competitively selected from the private sector, with clear objectives, and rigorous selection criteria for start-ups entering incubators to support and ensure that the young entrepreneurs develop the right mentality and strength to go through the incubation phase; and (d) establishment of an extensive network to link the start-ups with experienced national and/or international practitioners. Table 1.2 presents a sample of local consultancy firms in Maldives. Table 1.2: Sample of local consultancy firms in Maldives No. Company name Area of expertise 1 RIYAN Architecture 2 FJS Consulting Business Management 3 SINAF 4 CROWE Accounting firm 5 MCDGI Capacity development and governance 6 PBSS Maldives Business Management 7 Gedor Consulting Pvt Lmt Consultant 8 CDE Consulting, Surveying and Engineering Construction 9 CTP Strategies LLP Law firm 10 Optimum Management Solutions Business Management Skills Development: The Supply side Nexus with the Labor Market 11. System governance. The newly created MoHE is responsible for all formal public sector TVET in Maldives. The Technical Vocational Education and Training Authority (TVETA), under the MoHE, is the main agency responsible for regulating entry-level technical and vocational skills development programs. The TVETA is responsible for developing and updating competency standards in cooperation with the five Employment Sector Councils, conducting assessments and awarding certificates. The Employment Sector Councils were formed with the support of the ADB project.8 However, they are no longer functioning. The current government has expressed an interest in making them functional. 12. Service delivery of TVET. Based on latest available information,9 there are 117 public institutions and 12 private institutions registered with the TVETA as training providers offering certificate levels 3 and 4 programs.10 The TVETA is the main agency responsible for developing and regulating certificate levels 3 8 Maldives Employment Skills Training Project (2004–2012). 9 Information provided by TVETA. 10 Certificate level 3 program is for a minimum 15-week duration. Certificate level 4 program is for a minimum 1-year duration. Page 47 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) and 4 TVET programs. The TVETA is responsible for updating curricula and introducing new courses in cooperation with the ESCs, conducting examinations, and awarding certificates. Table 1.3 shows the enrollment by type of institution and gender. Table 1.2. Enrollment by Gender in TVET Programs, 2018 Male Female Total Public institutions 479 364 853 Private institutions 288 135 423 Maldives polytechnic 411 75 486 Sources: TVET Authority, MPI. 13. In 2018, schools and private institutions had an enrollment of 1,276 students (table 1.4). All the schools registered with the TVETA offer apprenticeship programs known as the Dhaasvaru Program. Grade 10 students are eligible for the programs. The program leads to certificate level 3. The Dhaasvaru Program was initiated in 2015 under the former government’s ‘No child left behind policy’ and mostly targets at-risk students. Table 1.3. Enrollment Figures 2016 2017 2018 Schools (Dhaasvaru Program) 414 214 853 Private training institutions 792 192 423 14. To date, the TVETA has developed more than 90 competency standards in different trades. Most of the competency standards have not been reviewed and/or revised since they were first developed. The programs are circumscribed within the Maldives National Qualification Framework (MNQF). Certificate levels range from 1 to 4. The entry criteria and minimum credits required for MNQF levels 1 to 4 are presented in table 1.5. Table 1.4. Entry Criteria for MNQF Qualifications Source: MNQF. 15. The MPI is the main public sector institution offering technical and vocational skills development programs. It offers up to diploma-level programs (equivalent to MNQF level 5 certification). Through its main campus in Malé, MPI and four regional campuses together offer 35 courses. All courses are offered free of cost. Enrollments have fluctuated over the years, indicating less-than-optimum utilization of the Page 48 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) MPI’s capacity. In addition, on average, only about 50 percent of the trainees enrolled in the MPI complete the courses and graduate (figure 4). Figure 1.4. Enrollment and Graduation Figures Enrolled Graduated 817 740 486 459 365 249 2016 2017 2018 Source: MPI, 2019. 16. In addition to the polytechnic and the institutions registered with the TVETA, higher education institutions such as the MNU and eight private higher education institutions (Villa College, Mandhu College, MI College, Avid College, MAPS College, College of Defense and Security Studies, Clique College, and Cyryx College) also provide certificate levels 3 and 4 programs (Department of Higher Education [DHE] 2017). The institutions do not maintain an MIS that provides accurate and timely enrollment data on the trainees. Based on the latest available information, in 2018, a total of 3,972 trainees (table 1.6) graduated with certificate levels 3 and 4.11 Table 1.5. Number of Graduates, 2017 and 2018 MNQF Qualification Level Number of Graduates 2017 2018 Certificate level 3 1,497 2,320 Advanced certificate level (Level 4) 943 1,652 Total 2,440 3,972 Source: DHE under the former MoE; MNQF; and MQA, 2019 in the National Training Needs Analysis, 2019.MoHE. 17. National Training Needs Assessment. In March 2019, the MoHE completed a National Training Needs Assessment. In December 2018, skills development was the central mandate for the newly elected government. The vision of the TVETA is to be a leading partner in the development of the Maldivian skilled workforce with world--class competencies and positive work values. The key findings of the National Training Needs Assessment in the tourism and construction and ICT-related services sectors are set out in tables 1.7, 1.8, and 1.9. The labor market and training needs assessment serve as the foundation for the first year of project implementation pilots and evaluation. 11 These include graduates of the polytechnic- and the TVETA-registered public and private institutions. Page 49 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Table 1.6. Tourism Sector Analysis Current Situation Training and Development Practices - 1.3 million tourists in 2017 - Large-scale operations have in-house training and development facilities - 2000+ annual average beds in operation - Public sector can get access to short-term training overseas - Associations, guest houses, resorts, liveaboards, travel agencies - Few private and public organizations invest in human resources - Large-scale and small-scale operations Training Requirements Challenges Soft skills Guesthouse House keeping Welders - Job hoppers; gender imbalance; management - Job-study-life imbalance ICT skills eCommerce and Culinary arts and Mechanics - Lack of awareness/career guidance digital marketing food production Language Financial literacy Event Plumbers - Lack of international exposure and book keeping management Safety Tourism inspection Tour guides Electricians - Lack of a series of projects implementation-Industry damage Water sports Photography Waiters Engineers - Expatriate employment Law Gardeners - Lack of public-private sector dialogue Source: MoHE. National Training Needs Assessment, March 2019. Table 1.7. Construction Sector Analysis Current Situation Training Requirements - Change in socioeconomic culture and exposure to TVET and home science - Architects, structural engineers, building maintenance - Associations of contractors and construction companies with big market share - Road engineers, structural engineers - Large-scale and small-scale operators - Coastal engineers, environmental engineers - Project managers, project coordinators, programmers Training Requirements Challenges Soft skills Surveyors Real estate Welders - Political affiliations with the associations and work management ethics ICT skills Civil engineers Building Mechanics - Discrepancies in job structures maintenance Language Procurement Construction Plumbers - Lack of increments; lack of awareness specialists management Safety Inventory Facility Electricians - No private-public sector participation/partnerships management management Draftsman Bar benders Heavy vehicle Engineers - Lack of industry link-up programs operators Law Laborers Masons Urban and - Significant financial implications for growth spatial planners Source: MoHE. National Training Needs Assessment, March 2019. Table 1.8. ICT-related Services Analysis Current Situation Training and Development Practices - As of 2017 there were 20,373 fixed lines - Large-scale operations have in-house training and development facilities - 900,120 mobile subscriptions; about three times the size of the population - Public sector can get access to short-term training overseas - 312,874 internet subscriptions - Few private and public organizations invest in human resources Training Requirements Challenges Soft skills Procurement IT auditing Technology - Job hoppers and gender imbalance governance - Job-study-life imbalance ICT skills Product related skills IT security Artificial - Lack of awareness/career guidance intelligence Language Customer service System Journalism - Lack of international exposure administration Safety Fire safety Big data analysts Media - Lack of series of projects implementation-industry damage management Law Computer science Networking Broadcast - Expatriate employment media Computer Technology - Lack of public-private sector dialogue engineering auditing Source: MoHE. National Training Needs Assessment, March 2019. Page 50 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) References Association of Women’s Chamber of Commerce. El-Horr, Jana and Rohini Prabha Pande. 2016. Understanding Gender in Maldives: Towards Inclusive Development. Directions in Development: Regions and Countries Series. The World Bank. Washington, DC. Ministry of Higher Education. Master Plan for Higher Education (2017–2022). DHE 2017. Former Department of Higher Education. Malé, Maldives. Ministry of Higher Education. National Training Needs Analysis. March 2019. Malé, Maldives. MoE. 2016. Statistical Yearbook. Ministry of Education, Malé, Maldives. National Chamber of Commerce. World Bank. 2017. Maldivian Labor Market: Spotlight on Youth, Tourism, and Fisheries: Analysis Based on Census 2014 Data. Report No. 115743/AUS16493. May 30, 2017. World Bank. Maldivian Labor Market: Spotlight on youth, tourism, and fisheries: Analysis based on census 2014 data. Report No. 115743/AUS16493. May 30, 2017. _________. Bringing the Spotlight on Youth: Labor Market Snapshot in the Maldives: An Analysis Based on HIES 2016. __________. Enhancing Employability and Resilience for Youth in the Maldives through a Behavioral Approach. (P163376). __________. Youth in the Maldives: Shaping a New Future for Young Women and Men through Engagement and Empowerment. October 3, 2014. Page 51 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) ANNEX 2: IMPLEMENTATION ARRANGEMENTS AND SUPPORT PLAN National Level 1. On behalf of the GoM, the Ministry of Finance (MoF) will be the executing agency and the MoHE and MoED will be co-implementing the project for all technical aspects. MoHE and MoED will sign an MoU during negotiations to formalize the project co-implementation responsibilities. In keeping with the demand-led approach to the project design, the co-implementing ministries will implement the project through their respective institutions, In addition, implementation will factor the regulations of the National Environmental Authority, project-relevant commercial banks, the Physical Facilities Development Division, and the Procurement section of the MoHE (see table 2.1). 2. The institutions will implement the activities of the project in line with their respective mandates and responsibilities. Project implementation will be led by a Project Steering Committee (PSC) co-chaired by the MoHE and MoED and will comprise representatives/members from the MoF; Ministry of Communications, Science, and Technology; and the TVET/Skills Development Authority. The MoHE or MoED will convene the PSC. In addition to the PSC, a TC will be established to focus on the two main components of the project. The State Minister for Higher Education (SMoHE) will be the Project Director (PD). The SMoHE will coordinate the various agencies to forge synergies and establish and maintain consistency. The PD will be supported by a fully staffed PMU to help coordinate, implement, and monitor the day-to-day activities of the project and for all fiduciary and safeguards aspects of the project. The PMU will include (a) a project coordinator heading the PMU housed in the MoHE, (b) a deputy project coordinator housed in the MoED, (c) an M&E specialist, (d) an operations officer, (e) a procurement specialist, (f) an FM specialist, (f) an environment safeguards officer, and (g) a social safeguards officer. The MoHE and MoED will select a project coordinator and a deputy coordinator respectively, to oversee and coordinate the activities of the project and ensure smooth collaboration between the MoHE, MoED, and the PMU. Decentralized Level 3. The project will follow the principal of subsidiarity, where power and responsibility are devolved to the maximum extent possible to the front-line service delivery agencies, the implementing partners (in this case the skills development/training institutions), schools, the MPI and its regional training centers, the BDCs/business corporation centers (BCCs), specific resorts, and other private sector entities. The island administrative councils (IACs), city councils, island women’s committees and other administrative levels will support the MoHE/PMU and MoED as required with the M&E activities. Table 2.1: Key Activities and Responsible Agencies Key Activities Responsible Agencies Component 1. Fostering Skills Development and Entrepreneurship in Priority Sectors 1.1 Labor-market Assessment and Analysis for Demand-driven PMU/TC/MoHE/MoED Skills Identification 1.2 Revision of Skills Development (TVET and PMU/TC/TVET Authority/MQA/MPI and its regional training Entrepreneurship) Curriculum centers, public and private vocational and technical training institutions 1.3 Face-to-Face Skills Delivery PMU/MoHE/MoED Page 52 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) 1.4 Support for Entrepreneurship Development MoED/PMU Component 2. Promoting Entrepreneurship and Employment through Skills Development and eLearning Strategy 2.1 Strategy Development, Strengthening and Diversifying PMU/TC/TVET Authority/MQA/MPI and its regional training Skills Development Programs centers, public and private vocational and technical training institutions 2.2 IT infrastructure for Skills Development and Jobs Platform MoED/MoHE/PMU 2.3 Career Hubs for Education-Industry links MoHE/MoED/PMU in collaboration with the MoED/BCC (event management firm to manage logistics) Component 3. Project Management, Monitoring and Evaluation MoHE/PMU, and MoED Component 4. Contingency Emergency Response Component MoF, MoHE, MoED Project Operations Manual 4. A draft POM satisfactory to the World Bank has been prepared by the PMU to guide the implementation of the project by the various agencies. The POM includes a brief description of education sector issues that the project is expected to address, the detailed description of project components, implementation strategies and cost estimates, and the time schedule of activities. Additionally, the POM includes the project design and management structure; outcome and intermediate indicators; and procurement, FM, and environmental safeguards arrangements. 5. Figure 2.1 presents the institutional and implementation arrangements for the project. Figure 2.1: Institutional and Implementation Arrangements Page 53 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) ANNEX 3. ECONOMIC AND FINANCIAL ANALYSIS 1. This annex provides the economic rationale for investment in skills and entrepreneurship development in Maldives. The GoM recognizes that increasing and deepening human capital is vital to sustain growth and improve access to quality jobs for young people. The GoM is aware of the challenges in the tertiary education sector, especially TVET, and has sought the World Bank’s support to address some of the key priorities that could correct the imbalances between labor supply and demand and increase youth employability. The project will support the Government’s efforts to enhance the long-term capacity of the education and skills development system to produce more graduates in priority skills demanded by the private sector in priority areas and strengthen the self-employment/entrepreneurial ecosystem to foster diverse and sustainable enterprises. It will do so through two components: (a) Fostering Skills Development and Entrepreneurship in Priority Sectors and (b) Promoting Entrepreneurship and Employment through Skills Development and eLearning Strategy. Given the nature of the project activities, the economic analysis uses a combination of quantitative and qualitative approaches. The economic analysis presents a prospective assessment of the cost-benefit analysis, where feasible, and relies on qualitative evidence, where quantitative assessment is not possible. Rational for Investing in Education and Skills Development 2. Human capital is central to economic well-being and social advancement for any country with education and skills levels of the population being the most important factor in determining its economic performance [Hanushek and Welch (2006), Hanushek and Woessmann (2008)]. Education is not only associated with improved productivity and income, but it also plays an important role in women’s increased participation in the economy, which has far-reaching economic and social impacts. 3. Estimates from the 2016 HIES show that investment in human capital has a positive impact on income, at all levels of education, for both men and women in Maldives, as shown by the Mincerian regression where the coefficients for all education levels are positive and statistically significant (table 3.1). Furthermore, coefficients are higher for a higher level of education, indicating that a higher level of education is associated with better earnings. For instance, compared to the primary or lower category, on average, attainment of lower secondary degree increases an individual’s monthly income by about 22 percent (27.8 percent for men and 19.4 percent for women). The corresponding figures for higher levels of education are 30.6 percent, 31.6 percent, 33.6 percent, and 70 percent, respectively, for upper secondary, vocational education/diploma (less than six months), vocational education/diploma (more than six months), and tertiary education. There are progressive returns to investment in higher education levels, reflecting that the Maldives labor market puts a premium on knowledge and technical skills. 4. In addition to the categorical dummies of education and skills level, a separate estimate of returns to education using years of education shows that one additional year of education is associated with an average of 4.7 percent increase in monthly earnings of an individual (4.6 percent for women versus 4.9 Page 54 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) percent for men). These findings are consistent with the notion that investment in human capital is an important determinant of the economic well-being of individuals12. Table 3.1. Education and Income Variables Male Standard Error Female Standard Error Constant 8.838*** [0.046] 7.487*** [0.106] Age 31–40 0.346*** [0.023] 0.107*** [0.029] 41–50 0.322*** [0.026] 0.123*** [0.036] 51–60 0.213*** [0.032] 0.108** [0.045] 61–70 0.056 [0.052] 0.014 [0.077] 71 and above −0.069 [0.094] −0.248** [0.109] Education Lower secondary 0.278*** [0.025] 0.194*** [0.036] Upper secondary 0.298*** [0.043] 0.392*** [0.056] Vocation education/diploma (< 6 0.379*** [0.047] 0.334*** [0.055] months) Vocation education/diploma (> 6 0.410*** [0.031] 0.402*** [0.038] months) Tertiary 0.749*** [0.038] 0.801*** [0.044] Type of Employment Employee 0.105*** [0.036] 1.321*** [0.100] Employer or owner (with employee) 0.536*** [0.050] 1.597*** [0.126] Own account worker/contributing −0.159*** [0.042] 0.264*** [0.100] family worker Observations 5,104 3,633 Adjusted R-squared 0.304 0.548 Source: World Bank staff estimates, based on Maldives HIES 2016. Note: The model was controlled for location-fixed effects. Robust standard errors in brackets. *** p<0.01, ** p<0.05, * p<0.1. 5. In Maldives, although women represent more than 50 percent of the working-age population, their labor force participation rate is very low at 44.2 percent compared to 80.2 percent for men. Despite the low participation rate, there is a positive relationship between education and female labor-market outcomes. Women with higher levels of education have higher labor force participation rates and lower unemployment and NEET rates (table 3.2). 12 Psacharopoulos, George, and Harry Anthony Patrinos. 2018. “Returns to Investment in Education: A Decennial Review of the Global Literature.” Policy Research Working Paper, World Bank, Washington, DC. https://openknowledge.worldbank.org/handle/10986/29672. Page 55 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Table 3.2. Female Labor-market Outcomes Labor-market Outcomes Education Level Labor Force Participation Unemployment NEET Rate Rate Primary/No certificate 33.3 5.6 49.1 Lower secondary 39.5 7.9 47.3 Upper secondary 53.1 10.7 24.3 Vocational education/diploma (< 6 54.5 2.7 33.3 months) Vocational education/diploma (> 6 74.6 2.9 17.3 months) Tertiary education 83.7 4.1 16.6 Overall 44.2 5.8 41.5 Source: World Bank staff estimates, based on Maldives HIES 2016. 6. The relationship between education and female labor force participation is also presented in table 3.3. Education has a high and significant positive effect on female labor force participation in Maldives. The likelihood of labor force participation rises with the level of education for all women including those who are married. There are likely to be two sets of reasons for the higher labor force participation probabilities of women with a higher education level. First, there are self-selection effects, as women who acquire higher levels of education are likely to possess greater ability and motivation to work. Second, well-educated women enjoy higher life-cycle earning prospects. Hence, the opportunity cost of nonparticipation is greater for well-educated women. Table 3.3. The Impact of Education on Female Labor Force Participation Rate, Marginal Effect Standard Only Ever Standard Variables All Females Error Married Error Education Lower secondary 0.123*** (0.019) 0.073*** (0.022) Upper secondary 0.293*** (0.036) 0.176*** (0.051) Vocational education/diploma (< 6 months) 0.199*** (0.040) 0.168*** (0.041) Vocational education/diploma (> 6 months) 0.437*** (0.028) 0.413*** (0.031) Tertiary 0.592*** (0.042) 0.548*** (0.045) Marital status Married −0.101*** (0.028) 0.076** (0.032) Divorced 0.019 (0.036) 0.196*** (0.038) Widowed −0.171*** (0.042) Observations 8772 7336 Pseudo R2 13.5 12.6 Prob>Chi2 0.00 0.00 Source: World Bank staff estimates, based on Maldives HIES 2016. Note: The profit model was controlled for other factors affecting female labor force participation, such as age, location (atoll dummies), and household characteristics (household size, household head’s education). Standard errors in brackets. *** p<0.01, ** p<0.05, * p<0.1. 7. Focused public investment on extending education and access to skills development has led to successful expansion in access to school education attaining near universal primary-level enrollment. The Page 56 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) net enrollment rate at the lower secondary level has reached 90.5 percent (figure 3.1). However, upper secondary enrollment is low, with the net enrollment rate at this level being only 44.5 percent. While there is almost 100 percent transition rate from the primary to lower secondary level, only about 36 percent of those who complete the lower secondary level transition to the upper secondary level.13 Of those who do not pursue upper secondary education, some opt for technical and vocational education provided through the technical institutions and polytechnics. But a large proportion of the youth completing lower secondary education exit the education system each year. Figure 3.1. Net Enrollment Rates Net Enorllment Rate Net Enrollment Rate, 2018 96.2 95.5 92.9 120 100 87.8 100 80 80 60 50.4 60 38.9 40 40 20 20 0 0 2008 2010 2012 2014 2016 2018 Primary Lower Secondary Higher Secondary Source: Maldives School Statistics 2018 and the MoE. Note: Indication of net enrollment rate above 100 percent is a result of using estimated population in the calculation and data duplication from schools. 8. In Maldives, although the overall unemployment rate (using standard ILO definition) is low in Maldives (6.1 percent), the unemployment rate for the youth (ages 15–24) is more than four times higher than that of the adult working-age population (ages 25–64) with the highest unemployment rates among those with tertiary degree at 21 percent followed by those with upper secondary degree (figure 3.2). The high unemployment rates among the youth with a higher education level represents the labor-market rigidity at entry caused by high reservation wage and heavy reliance on public sector jobs, leading to long waiting periods to finds jobs. Taking into account the discouraged workers, those who are available for work but are not actively looking, the broad unemployment figure presents a significantly higher rate of unemployment. They represent the potential labor capacity that can be enabled to increase the productive level of the country. Broad unemployment rates are highest for those with lower secondary or lower levels of education. Although sectors such as tourism have an abundance of jobs, employers are forced to import foreign labor as Maldivians often lack the technical and socio-emotional skills needed for such jobs or are not interested in job opportunities in the tourism sector. Thus, this project will provide 13 Transition rate from lower secondary to upper secondary has remained around 36 percent for the last five to six years. Page 57 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Maldivian youth with skills that are in demand in high-growth sectors to prepare them to compete in the labor market. Figure 3.2. Unemployment Rates (ILO and Broad Definition)14 for Working-age Population and Youth, 2016 0.38 0.36 0.40 0.31 0.25 0.30 0.24 0.20 0.19 0.21 0.16 0.20 0.15 0.17 0.18 0.16 0.16 0.09 0.09 0.10 0.10 0.04 0.04 0.05 0.05 0.04 0.02 0.01 0.00 Primary/No Cert. Lower Sec Upper Sec Voc. Edu/Diploma Tertiary Total Broad Def 25-64 Broad Def 15-24 ILO Def 25-64 ILO Def 15-24 Source: WB Staff estimates, HIES 2016 9. The main objective of the project is to improve the labor-market outcomes of Maldivian youth by strengthening the labor demand and supply links. The project will finance activities such as (a) labor- market assessment and analysis for demand-driven skills identification, (b) revision of skills (TVET and entrepreneurship) including, among others, soft skills and sociocultural norms and awareness aspects, (c) face-to-face skills delivery of pilot skills development programs, (d) support for entrepreneurship development, (e) development of a new skills development strategy, (f) development of IT infrastructure for skills development and jobs platform, and (g) establishment of career hubs for education-industry links and entrepreneurship promotion. Cost-Benefit Analysis 10. The project activities are introduced as pilot activities. This section discusses the benefits and costs associated with face-to-face skills delivery of short-term technical and vocational skills development activity supported by the project under the assumption that the target set under the project will be achieved. To assess the impact, the analysis assumes a counterfactual ‘business as usual’ scenario and compares the benefits and costs of the program to the with-program counterfactual scenario. Economic costs include project costs and private costs that comprise direct household outlays and opportunity costs for attending technical institutions/polytechnics. Similarly, the benefits are considered to include changes in the quantity and quality of technical education because of the project and incremental higher wage 14ILO definition of unemployed: available and activity looking for job. Broad definition includes discourages workers as well – those available for work but not actively looking for one. Page 58 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) accruing as a result of the training. The HIES 2016 and Ministry of Education statistics (various years) are the main sources of data used in the analysis. 11. The project is expected to directly benefit (a) the current and future youth who will graduate from the strengthened and reformed TVET system, and (b) 3,000 youth (particularly those who are NEET) through the provision of market-relevant short-term technical and skills development training in priority sectors. Benefit Stream 12. Three benefit streams are considered for the analysis: (a) Increased number of graduates from the improved TVET system. Through the project interventions, access will be increased to quality job-oriented TVET in priority areas, resulting in a stream of workers in the future with the required technical skill and knowledge and higher earnings as a result. It is assumed that 250 additional youth will graduate from the improved TVET system during the project period. Higher earning is estimated by taking into account the difference in earnings of the youth (ages 14–24) between those with lower secondary degree and those with a vocational education/diploma certificate; earning is allowed to grow at the rate of inflation. The benefit stream accruing from higher earnings for the additional graduates would commence from the fourth year of the project and is assumed to sustain for 25 years into the future. (b) Improved quality of TVET. The project will support improvements in the quality and market relevance of programs in priority sectors, resulting in higher chances of finding a quality job and higher productivity and earnings for everyone who completes the TVET. Given that there is no obvious way of quantifying the quality premium, the analysis assumes a 1 percent increase in the average annual earning of those with lower secondary degree as a measure of quality premium, allowing it to grow at the rate of inflation. The benefit stream accruing from improved quality for the graduates would commence from the fourth year of the project and is assumed to sustain for 25 years into the future. (c) Incremental higher wages for the 3,000 NEET youth trainees. The project will support short- term technical and skill development training in priority areas for 3,000 NEET youth. The project benefits arise from incremental higher wages accruing as a result of the training. The wage difference between those with a lower secondary degree and those with a vocational education/diploma is taken as the wage increment. This is allowed to grow at the rate of inflation. The benefit stream accruing from higher earnings for the trainees starts from the second year of the project and is assumed to sustain for 25 years into the future. Page 59 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Cost Stream 13. The total cost comprises direct project cost for the component (US$6 million) and indirect costs including private household costs and opportunity costs of attending technical institutions/polytechnics. The average private household costs associated with attending a technical institution is estimated to be MVR 13,000 (approximately US$839) and the opportunity cost (forgone earnings) per year while attending a technical institution is estimated to be MVR 94,844 (about US$6,118). The opportunity cost is estimated using the average earnings of the youth (ages 15–24) with a lower secondary degree. The total incremental private household education cost for the 250 additional students is estimated at US$1.6 million and the total opportunity cost for the project period, considering the 250 additional students and 3,000 NEET youth, is estimated at US$11.1 million. NPVs of Benefits, Costs, and IRR 14. The following additional assumptions underpin the base scenario for IRR estimations: a. Discount rate. Discount rate is assumed to be 12 percent. b. Inflation adjustment. The inflation rate for 2019–2023 is based on estimates from the International Monetary Fund’s World Economic Outlook 2018 and is assumed to be 2.3 percent thereafter. c. Exchange rate. The Exchange rate of MVR 15.5 per US$ is used. d. Employment rate. It is 50 percent (based on the employment-to-population ratio of 54 percent observed in the 2016 HIES). 15. Based on the discount rate and benefit and cost assumptions detailed earlier, the present discounted value of benefits and costs for the base scenario is US$16.33 million and US$10.5 million, respectively. The corresponding NPV of the benefits is US$4.04 million and the associated IRR is 16.7 percent. The key assumptions underlying the estimated IRR and NPVs have to do with the employment rate, quality premium, and earning increment associated with the technical education and skills development training. The base scenario assumes an employment rate of 50 percent, quality premium of 1 percent of the average lower secondary earnings, and annual wage differential of US$1,277. Tables 3.4 and 4.5 present the results of the sensitivity analysis of changing these parameters. 16. As indicated in table 4.4, the NPV ranges from US$−2.06 million in the low case scenario to US$7.48 million in the high case scenario. Similarly, the associated IRR varies between 9.3 percent and 20.9 percent (table 3.5). These are conservative lower-bound estimates, given that they do not account for other potential benefits including the social benefits of education and training. The total economic and social impact on the project is likely to exceed the economic benefits, which are nonetheless very considerable. These results suggest that the subcomponent of the project is expected to yield positive economic returns and thus economically viable. Page 60 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Table 3.4. Sensitivity Analysis of NPV of Benefits under Various Scenarios Annual earning Employment Quality Premium Increment rate 0.5 percent 1 percent 2 percent USD 1000 40% -2.06 -1.22 -0.35 USD 1000 50% 0.6 1.11 2.2 USD 1277 50% 3.5 4.04 5.13 USD 1500 40% 2.56 3.0 3.87 USD 1500 50% 5.83 6.38 7.48 Table 3.5. Sensitivity Analysis of IRR under Various Scenarios Annual earning Employment Quality Premium Increment rate 0.5 percent 1 percent 2 percent USD 1000 40% 9.3 10.4 11.6 USD 1000 50% 12.1 13.4 1.47 USD 1277 50% 16.3 16.7 18.2 USD 1500 40% 15.1 15.7 16.7 USD 1500 50% 19.0 19.7 20.9 17. The project proposes strengthening the entrepreneurial ecosystem to create better conditions for youth to consider entrepreneurship as an alternative career option and for business to thrive. It is well established that entrepreneurship is a key enabler of stronger and more inclusive growth and private sector jobs, especially for women and youth. Countries with vibrant entrepreneurship ecosystems tend to witness higher productivity rates and more robust job creation. Although youth entrepreneurship is a relatively new concept for Maldivians, understanding the role of entrepreneurship in the development of an economy, the GoM in the last five to six years has proactively engaged in fostering entrepreneurship. The GoM has introduced different loan schemes to help set up new business and expand existing businesses. However, these existing programs have confronted some challenges: (a) inadequate pool of qualified business support services, (b) the absence of innovative ideas and well-prepared business plans, (c) low success rate of the businesses that have received support, and (d) low repayment rates. 18. Consequently, the project will (a) support capacity building for BDS providers; (b) contribute to establishment of the incubation program; (c) support managerial and technical training, including personal initiative training for the existing and new entrepreneurs; and (d) sponsor business plan pitch competitions. In addition, the interventions are designed to address some of the key entrepreneurship constraints in Maldives and enhance the entrepreneurship skills and practices. This integrated approach is expected to boost new business creation and survival, improve sales, and generate employment. 19. The targeted beneficiaries are the existing and new BDS providers and trainers and new and existing entrepreneurs. The project is expected to create a demonstration effect of successful new and existing entrepreneurs by accessing the necessary entrepreneurial support mechanisms. The project is expected to benefit about 100 BDS providers and trainers, about 100 existing and new entrepreneurs, and Page 61 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) 1,000 youth and women who will have access training, coaching, mentoring, and networking opportunities. 20. The project benefits result from improved capacity of a large pool of BDS providers who are capable of providing quality services to stimulate business initiation, survival, and expansion. The pool of BDS TTT will ensure continuous improvement of the quality of BDS providers and the services that entrepreneurs access to keep up with market changes and needs. The support to the incubation program will ensure that the good practices guarantee the success of the incubation center and that entrepreneurs have access to quality services aligned to their needs. Moreover, the training, coaching, mentoring, and networking are expected to stimulate youth and women to become innovative in developing business ideas and hence increase the likelihood of starting a business and their survival thereafter. 21. Most of these benefits are not quantifiable at this stage of the project because relevant and compete data on characteristics of potential beneficiaries are lacking. Nevertheless, the World Bank Group has implemented many similar technical assistance programs that have demonstrated significant effect on stimulating entrepreneurship and enhancing the performance and survival of enterprises to achieve sustainable enterprise development. BDS help remove important obstacles to firm growth and lead to a more competitive SME sector. Access to BDS enables enterprises/entrepreneurs to better fulfill conditions to access financing and increases the likelihood to survive and expand and hence generate more incomes and employment, contributing to economic growth and development. BDS providers offering high-quality services to a large pool of entrepreneurs will also earn higher incomes and continuously improve the quality of their services. 22. Other Beneficiaries. The project will also benefit youth job seekers, including those outside the TVET system, through the improved online job matching service/platform. In addition, the project will also support activities to address the sociocultural and perception issues among the youth and island communities about the jobs available in the market, particularly focusing on demystifying the general public’s negative perception of jobs in the tourism industry. These activities can potentially bring about social change and in the future increase Maldivians, both men and women, taking up jobs in the tourism sector, resorts in particular, where most of the industry’s labor demand is currently met through foreign labor. 23. Additional social and economic benefits are expected from the proposed interventions to enhance women participation in the job market. Addressing social and cultural barriers to higher labor force participation, especially for women, is expected to increase women’s engagement in the job market and earnings and improve contribution to their family livelihoods. They will be able to better support their families and the community welfare improvement, leading to better socioeconomic outcomes for their family, especially children. Page 62 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) ANNEX 4. FINANCIAL MANAGEMENT 1. The FM arrangements for the project include planning, budgeting, accounting, internal controls, funds flow (figure 4.1), financial reporting, and auditing. These would be aligned with the fiduciary requirements of OP 10.00. The PMU, set up under the MoHE, will be responsible for overall FM coordination and monitoring of activities of the project. The PMU will maintain FM arrangements at all project implementation levels, including (a) ensuring compliance with all financial covenants in the Legal Agreement; (b) obtaining funds from the World Bank and managing such funds in an efficient, effective, and transparent manner; (c) providing financial reports and project audit reports to the World Bank; (d) overall management of payments and accounting functions of the project; (e) managing the internal and external audit processes and the follow-up on audit issues; and (f) responding to any other requests relating to FM made by the World Bank team. Considering the risks identified and the mitigation measures, the FM rating is Substantial. 2. FM staffing. Formerly, the DHE was part of the MoE. It was designated as a separate MoHE in 2018. Therefore, the FM assessments carried out for the MoE were considered in assessing the MoHE as well. The FM assessments carried out for prior World Bank projects for which the MoE was the implementing agency were found to be satisfactory. There are no overdue audit reports and ineligible expenditures outstanding from the MoE and MoHE for the World Bank projects. The PMU for the project will be set up in the MoHE. The PMU will need to be established with adequate, qualified, and experienced FM staff to manage the project’s FM arrangements. It is envisaged that the same PMU with FM staff established for the EEDP will be absorbed into the MoHE, this PMU will carry out the FM functions of the new project. The FM performance of the PMU under the EEDP was consistently satisfactory. Other relevant and associated implementation support entities such as the IACs, city councils, island women’s committees, and other administrative levels will be strengthened to carry out the project-related FM arrangements, thereby providing reasonable assurance that the funds will be used for the intended purposes. However, there will be no funds transfer to the decentralized levels. The FM specialist at the PMU will be the focal point for the World Bank in all FM-related matters. 3. Budgets. An overall work plan will form the basis for the annual budget preparation. The PMU will prepare the annual work plans and related budgets. The overall work plan will serve as the basis for annual budget preparation. The project will prepare annual work plans-based budgets. The MoHE’s annual budget estimates will include budgetary allocations for the project. The PSC will approve the consolidated budget. On behalf of the MoHE and the project, all project-related expenses will be centralized at the PMU. There will be no fund transfers to any other agency. The budgeting calendar has been agreed upon during project preparation. This will be incorporated in the POM. 4. The World Bank loan proceeds will be used to finance eligible expenditures necessary to meet the development objectives of the project, with due attention to efficiency and cost-effectiveness. If the World Bank determines that the loan has been used to finance ineligible expenditures, the amounts used for such expenditures shall be refunded to the World Bank by the GoM. It is agreed that all fund transfers would be between bank accounts and that no cash transfers would take place. 5. Accounting. The implementing agency for the project, the MoHE, follows the government accounting system. This system is well documented in the GoM’s Financial Rules. Government accounting Page 63 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) is being carried out in SAP. The PMU will record and maintain the project’s books of accounts in an off- the-shelf acceptable accounting software such as QuickBooks, which is accepted in Maldives. 6. The PMU will be the only accounting entity for the project. The PMU will make all payments and prepare the project accounts. The project accounts will be maintained in a double entry system of accounting and will follow the cash basis of accounting. The PMU will record and maintain the project books of accounts in an accounting system. A Chart of Accounts (CoA) will be developed considering the needs of the accounting system and World Bank reporting requirements. The CoA would be designed to facilitate reporting by components and activities. 7. The project is fully financed through IDA funds. There will be no counterpart funding. All counterpart contributions will be in-kind. All project expenditures will be inclusive of taxes and duties as applicable. These will be recorded at the actual U.S. dollar expenditure at the date of the payment. Disbursements will be report based using IUFRs. Advances will be made based on six months’ projected expenditure and these funds will be solely used to finance eligible expenditures. The actual expenditures incurred will be tracked and recorded in the IUFRs in the prescribed format. The PMU will prepare and submit the IUFRs on a quarterly basis to the World Bank within 45 days of end of quarter. The IUFRs will disclose receipts and utilization of project funds during the quarter by year-to-date and project-to-date. The IUFRs will be based on project accounts and will be reconciled with the bank accounts. 8. Internal audit. The PMU internal auditor will conduct regular internal audits of the project. The internal audit will assess whether the funds have been disbursed on time and have reached the intended recipient and whether evidence of internal control checks has been maintained and used effectively and efficiently for the intended purposes. The six-monthly internal audit report will be shared with the World Bank. 9. The PMU will form an Audit Committee. The PD will head the Audit Committee and review the audit observations of the internal and external auditors. The Audit Committee will meet at least once in every six months. 10. External audit. Financial statements of the project will be prepared by the PMU and will be audited annually by the Auditor General’s Office of Maldives, which is acceptable to the World Bank. This statutory audit report will provide the consolidated project financial statements along with audit observations (table 4.1). The audited financial statements, the auditor’s report, and the responses from the project on audit observations will be submitted to the World Bank within six months following the end of the fiscal year. In keeping with the World Bank’s Access to Information Policy, the audit report will be disclosed publicly on the World Bank’s website. The audit report will be monitored in the World Bank’s Portfolio and Risk Management System. Table 4.1. Audit Report Implementing Agency Audit Report Auditor Date PMU Project annual financial Auditor General of Maldives June 30 each year statements 11. Financial covenants. The financial covenants are the following: (a) audited annual project financial statements to be submitted to the World Bank no later than six months following the end of the Page 64 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) fiscal year and (b) consolidated project IUFRs to be submitted to the World Bank no later than 45 days following the end of the reporting quarter. Disbursements 12. Funds flow/disbursements. A DA in U.S. dollars will be set up at the MMA for the MoHE to receive funds from the World Bank. The World Bank will advance an amount to the DA to meet the estimated expenditures for the first six months. The DA will be used to make payments to suppliers, vendors, consultants, and incremental operating costs. With respect to large international payments, the PMU will have the option of requesting the World Bank to make direct payments to the suppliers. FM will be centralized at the PMU, and all payments will be made directly by the MMA with the supporting documents from the PMU. It is agreed that no other entity will be involved in handling project funds and in executing payments. The MoF will provide a list of authorized signatories. Therefore, the MoF will have authorizing rights for requesting disbursements against IDA Grant proceeds from the World Bank. All relevant documentation for such requests will be channeled from the PMU to the MoF. 13. Under Component 1, project payments would be made as a fee to contractors for services rendered and as stipulated in the contractual agreement between the PMU and the selected service provider. The FM arrangements for the IDA Grant portion of the component have been discussed with the government counterparts. Under subcomponent 1.4 business pitch competition winners/grantees who receive Start-up Funds Awards will report on the expenditures of the Grant to the PMU. These expenditures would be included in the IUFRs to be submitted to the Bank. The detailed Grants mechanism will be reflected in the Grants Manual to be annexed to the POM. 14. Disbursement categories. The World Bank will finance 100 percent of eligible expenditures including taxes for goods, works, non-consulting services, consulting services, training and workshops, incremental operating costs of the project, and start-up funds awards under subcomponent 1.4. The GoM will assume responsibility for paying the salaries and allowances of civil servants who will be working for the project. The proceeds of the IDA Credit and the IDA Grant will be disbursed against eligible expenditures in the categories given in table 4.2 to be finalized during negotiations. Table 4.2. Disbursement Categories Amount of the Amount of the % of Expenditures to Credit Allocated Grant Allocated be Financed Category (expressed in (expressed in (including Taxes and US$ millions) US$ millions) Duties) (1) Goods, works, non-consulting services, consultants’ services, 10.00 8.50 100% incremental operating cost, and training under Parts 1, 2, and 3 of the project (2) Start-up Funds Awards under 0.00 1.50 100% Schedule 1, Part 1 (1.4 )(v) of the project (3) Emergency expenditures for the CERC 0.00 0.00 Total 10.00 10.00 100% Page 65 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) 15. Implementation support plan. The project risk rating is ‘Substantial’ from an FM perspective. The rating is consistent with a risk-based approach to FM supervision. A substantial portion of the supervision activities will comprise desk reviews of internal and external audit reports including verifying the adequacy of the resolution of major audit observations and reviewing quarterly financial reports. The desk review will be supplemented by dialogue with the PMU/project staff as needed, especially in the initial years. The supervision activities will include an FM supervision mission at least once every six months. Other FM supervision tools and resources such as transaction reviews and site visits will be used to periodically monitor the adequacy of the FM arrangements. 16. Retroactive financing. Based on Government requests, two tranches of retroactive financing have been approved for the project from the IDA Grant in the amount of US$76,907 (that is, US$32,240 in July 2018, and US$44,666.57 in March 2019). The financing is for eligible expenses under Category 1, and the payments for which are made to the Recipient not more than 12 months before the expected date of the signing of the Financing Agreement for the World Bank financing. Adequate documentation of payments will accompany the expenditures. The procurement will be in accordance with principles and procedures described in the Procurement Manual and Financial Management Manual for the project. 17. The FM Action Plan is provided in table 4.3. Table 4.3. FM Action Plan Activity Time Frame 1 FM Section of the Operations Manual Before negotiations 2 Fund flow arrangements with the PMU Before negotiations 3 Appointment of the FM specialist Before negotiations 4 Opening of a DA Within 2 weeks of project effectiveness 5 Procurement of FM software Within 3 months of project effectiveness 6 Appointment of an internal auditor Within 3 months of project effectiveness Page 66 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Figure 4.1. Funds Flow Chart for the Project Page 67 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) ANNEX 5. PROCUREMENT 1. The World Bank fiduciary assessment has been completed, as part of which a comprehensive analysis of the country, sector, and institutions has been carried out. This has facilitated the identification of risks and the recommendation of appropriate mitigation measures to overcome implementation challenges. 2. The PMU has prepared the PPSD to determine the optimum procurement strategy to achieve the project procurement results. The detailed Procurement Plan (PP) of activities for the first 18 months of project implementation will be completed by appraisal. 3. The PMU will use the World Bank’s new procurement tracking tool Systematic Tracking of Exchanges in Procurement (STEP) to prepare and submit the PP for World Bank review and ‘no objection’. STEP will enable the communication of procurement-related transactions. The PP will be updated periodically and, as required, to reflect the actual project implementation needs in agreement with the World Bank. The PPSD and the PP would be prepared by negotiations. 4. Being a recently designated new ministry, the MoHE has no previous experience with implementing World Bank-financed projects. However, some of the staff assigned to the PMU have prior experience, having worked on the previous World Bank EEDP operation. Therefore, they are familiar with the World Bank procurement procedures to some extent. Nevertheless, the capacity of all the project affiliated agencies to effectively carry out the procurement activities of the MEERY Project will be developed once the PMU procurement staff are on board. A few PMU staff are already familiar with STEP, having used it for the recently concluded EEDP operation. To ensure smooth and efficient procurement support, a senior procurement officer will be contracted in the PMU by negotiations. S/he will be assisted by staff with prior experience in projects financed by international agencies. Retroactive financing would be used for certain contracts. The contracts are required to be identified and agreed upon with the World Bank before World Bank Board approval of the MEERY. Considering the risks identified and the mitigation measures, the procurement rating is Substantial. The procurement performance will be reviewed during the project implementation period and the procurement risk rating will be adjusted accordingly. 5. Procurement of all works, goods, non-consulting services, and consultancy services envisaged in the project will be carried out in accordance with the ‘World Bank Procurement Regulations for IPF Borrowers’ (Procurement in Investment Project Financing- Goods, Works, Non-Consulting, and Consulting Services, July 2016 Revised November 2017 and August 2018) introduced by the World Bank under the Procurement Framework (hereafter referred to as the ‘Procurement Regulations’) and the provisions stipulated in the Financing Agreement. For procurement under the project, the MoHE has developed the Procurement Arrangements (to be included in the POM), conforming to the World Bank’s Procurement Framework, and acceptable to the World Bank. In case of any inconsistency between the procurement arrangements and the World Bank’s Procurement Framework (revised 2018), the latter shall prevail. Page 68 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Procurement of Works 6. The PPSD forecasts the rehabilitation of seven polytechnic campuses as the key small works contracts to come up in the project. Procurement of Goods 7. The major contract for goods as reflected in the PPSD are office furniture and equipment for the polytechnic campuses to be rehabilitated under the project funds. Selection of Consultants 8. There are a number of consultancies projected in the PPSD: the development of training packages; development of new competency standards; review/revision of the training packages including learning materials, physical, and online materials; assessment of resource books; administration of surveys in the project priority areas—tourism, IT-enabled services, urban development/construction—for job opportunities; information on training mismatch; situation of working environment; and other consultancies. In addition, consultancies would also involve awareness creation and information-sharing sessions in atolls and regions for establishing job opportunities, business opportunities, attracting locals to the jobs, information-sharing sessions on career guidance and information sharing regarding training opportunities for locals, creation of a job sponsoring mechanism (by job providers) for those who have attained TVET certificates, training workshops for assessors and training coordinators, provision of online library service to the tertiary education stakeholders, and developing National Core Standards for academic higher education programs. Incremental Operating Cost 9. This includes the reasonable cost incurred by the borrower for the purposes of managing and supervising the project. This will capture project implementation costs and related other costs of a recurring nature. Ineligible Expenditures 10. All expenditures envisaged under the project cost estimates are subject to the World Bank’s conflict of interest, eligibility, and fraud and corruption principles. Any expenditure incurred that is not in accordance with the said conditions during the project cycle will be financed from the Governments’ own resources. PP and STEP 11. A PP of has been prepared/consolidated by the by the PMU as part of the negotiation package. The PP has been approved by the World Bank on March 11, 2019. 12. The PP reflects the procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame for each activity. The PP will be updated on an annual basis in agreement with the World Bank task team, or as required to reflect the actual project implementation needs and improvements in institutional capacity. Page 69 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) 13. The PP will be created using the online procurement management system, STEP, and will be updated, as required, to reflect the actual project implementation needs in agreement with the World Bank. Initial training on the operation of STEP will be provided to the PMU staff. Country Procurement Assessment 14. Procurement in Maldives is by and large governed by the PFR. However, the PFR does not comprehensively cover the procurement rules applicable to all entities. More specifically, the SoEs are not addressed in the PFR although substantial amounts of procurement are being carried out through the SoEs. The project is one of the first few projects that will adopt the Procurement Framework in Maldives. Therefore, this may pose a risk during implementation as the staff are not familiar with the applications of the Procurement Framework. Previous engagements with the country through World Bank-financed projects manifested implementation challenges with the procurement of goods, works, non-consulting services, and hiring local consultants. 15. Based on the findings of the procurement assessment, experience through the implementation of the EEDP, and the follow-on post-review audits conducted, the following issues are highlighted: (a) limited availability of procurement professionals in the country and high staff turnover in procurement, (b) lack of knowledge about Procurement Regulations and limited experience of staff who handle procurement, (c) a volatile political environment that is likely to have an adverse impact on the project procurement process, (d) poor specifications, (e) market constraints surrounding small state issues, (f) inadequate capacity of national contractors or goods suppliers, (g) weak contract administration, (h) poor planning and delays in finalizing PPs leading to extensive delays in the award of contracts, (i) inherent weaknesses in transparency and fairness of procurement processes, and (f) delays in procurement decisions. Most of these risks are by and large applicable to this project. Assessment of the MoHE/PMU Capacity to Undertake Procurement Activities 16. The PMU in the MoHE will oversee the project procurement activities in the MoHE and in the other identified project-associated ministries and agencies. Being a recently designated new ministry, the MoHE has no previous experience with implementing World Bank-financed projects. However, some of the staff assigned to the PMU have prior experience, having worked on the previous World Bank EEDP operation. Therefore, they are familiar with the World Bank procurement procedures to some extent. Nevertheless, the capacity of all the project-affiliated agencies to effectively carry out the procurement activities of the ECHED Project will be developed once the PMU procurement staff are on board. The MoHE unit will also have to provide advisory and broader capacity-building support to the other agencies, if required. 17. Based on the assessments conducted potential risks have been identified and corresponding mitigation measures have been outlined. These are provided in table 5.1. Table 5.1. Risks and Mitigation Risk Description Description of Mitigation Lack of knowledge on Procurement Regulations • Strengthen the PMU with procurement skills to carry and limited experience of the staff who handle out procurement and the expected advisory and procurement, except for the staff who were monitoring functions in the PMU. associated closely with the World Bank-financed • Hiring of procurement specialist by negotiations. Page 70 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Risk Description Description of Mitigation EEDP operation. • Agreeing on the procurement section in the POM by negotiations. Limited availability of procurement professionals • A well-structured capacity-building program will be in the country and high staff turnover in designed covering all the tiers involved in procurement. procurement Their knowledge and capacity will be strengthened. The capacity at the PMU would also be strengthened to disseminate know-how and operational aspects to the tiers involved in procurement. Although planning processes are in place and • Implementation of appropriate procurement planning time schedules are realistic, the absence of mechanisms and diligent monitoring through the World technology support has adversely affected Bank’s STEP effective monitoring Limited availability or lack of knowledge of • Preparation, review, and agreements will be reached appropriate standard documents particularly for regarding acceptable standard documents before small-value activities. project effectiveness. 18. The GoM’s procurement procedures will be clearly identified in a procurement chapter of the POM, which will be appraised and reviewed by the World Bank. The detailed PPSD will also be annexed to the POM. The POM will be reviewed regularly and updated to meet the project needs in consultation with the World Bank. Under these arrangements, the PMU is fully responsible for the entire procurement cycle, from bid document preparation and invitation to contract signing and contract management for procurement under the project. The PMU will ensure timely procurement according to the PP prepared by the project or according to the annual action plan. Disclosure 19. The following documents shall be disclosed on the MoHE website (that is, the project web page): (a) PP and updates, (b) specification for goods and equipment as soon as these are prepared, (c) invitation for bids for goods and works for all (national and international) as well as Request for Quotation method, (d) request for expressions of interest for selecting/hiring of consulting services, (e) contract awards of goods and works procured using International Competitive Bidding (ICB) and National Competitive Bidding (NCB) procedures, (f) list of contracts/purchase orders placed by the PMU using shopping procedure on a quarterly basis, (g) short list of consultants, (h) contract award of all consultancy services including individual consultants, (i) list of contracts following Direct Selection on a quarterly basis, and (j) action taken report on the complaints received on a half-yearly basis. 20. The following details will be provided to the World Bank for publishing on the United Nations Development Business website: (a) invitation of bids for the procurement of goods and works using ICB procedures; (b) request for expressions of interest for consulting services with estimated cost greater than US$200,000; (c) contract award details for all procurement of goods and works using ICB procedure; (d) contract award details for all consultancy services with estimated cost more than US$200,000; and (e) the list of contracts/purchase orders placed following Direct Selection or Selection based on the Consultants’ Qualifications (CQS) procedures on a quarterly basis. Page 71 of 81 The World Bank Maldives: Enhancing Employability and Resilience of Youth Project (P163818) Methods of Procurement 21. The procurement methods indicated in table 5.2 will be used for procurement under the project. Appropriate thresholds applicable to project with a Substantial risk rating have been provided. Table 5.2. Procurement Methods to Be Used in the Project Expenditure Contract Value Procurement Method Contracts/ Category (threshold) Processes Subject to Prior Review ≥US$100,000 Open International All contracts over US$500,000