The World Bank Implementation Status & Results Report Financial Sector Development & Regionalization Project I (FSDRP I) (P121611) Financial Sector Development & Regionalization Project I (FSDRP I) (P121611) AFRICA | Africa | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2011 | Seq No: 15 | ARCHIVED on 19-Jun-2019 | ISR37173 | Implementing Agencies: EAC Secretariat, EAC Secretariat, East African Community, East African Community Key Dates Key Project Dates Bank Approval Date: 31-Jan-2011 Effectiveness Date: 20-Jun-2011 Planned Mid Term Review Date: 30-Nov-2012 Actual Mid-Term Review Date: 22-Oct-2012 Original Closing Date: 30-Mar-2014 Revised Closing Date: 30-Sep-2019 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) To establish the foundation for financial sector integration among EAC Partner States. Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured) To establish the foundation for financial sector integration among EAC Partner States. For the purposes of this additional financing the "foundation of financial sector integration  refers to formulating a regional approach to financial inclusion, furthering legal and regulatory harmonization and building institutional capacity to manage the increasingly integrated financial sector in the EAC. Components Table Name Financial inclusion and strengthening of market participants:(Cost $4.30 M) Harmonization of financial laws and regulations:(Cost $4.23 M) Mutual recognition of supervisory agencies:(Cost $0.70 M) Integration of market infrastructure:(Cost $3.75 M) Development of regional bond market Institution Building:(Cost $12.10 M) Project Management:(Cost $1.10 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions 6/19/2019 Page 1 of 5 The World Bank Implementation Status & Results Report Financial Sector Development & Regionalization Project I (FSDRP I) (P121611) (1) The ratings for progress towards PDO and Implementation Progress were maintained at Moderately Satisfactory. Since the previous Implementation Support Mission (ISM), the project’s total disbursement for fiscal year (FY) 2019, from July 2018 to May 2019, was $2,931,062 against the FY 2019 budget of $5,118,198, resulting in an absorption rate of 57.3%. Once committed funds ($1,396,123.44) are included, the disbursement ratio increases to 84.6% against the FY 2019 budget. In terms of the overall project funds granted by the WB, the disbursement ratio is 80% as of May 2019, with overall disbursement of the Additional Financing fund at 57%. (2) The project made considerable progress on activities under each AF component. The PAT submitted a progress report detailing the 52 activities undertaken between August 2018 and June 2019. The progress report also provided information on the Monitoring and Evaluation (notably the project results matrix), FM and Procurement functions of the project. (3) CMI activities made some good progress, particularly in activities intended to ensure Partner State readiness for integration. Some implementation delays affected progress by the CMI vendor, Infotech, before the expiration of the CMI contract. The PAT has developed a revised implementation workplan with new timelines that all the vendors have endorsed. A new contract addendum is being prepared to govern the next steps in the CMI implementation. In addition, the PAT is planning regular meetings with all the vendors to ensure that all workplans are harmonized and to provide additional milestones that mitigate further slippage in implementation progress. (4) Four of the tracked indicators in the project results matrix registered significant improvement by the June 2019: (i) Number of accounts within regulated institutions (Banks and MFIs) (number) increased from 73.4 million in December 2017 to 78 million in December 2018 (exceeding the estimated target for December 2018 of 73 million); (ii) Number of legal instruments relating to financial sector harmonization in the EAC (Number) increased from 14 in December 2018 to 23 in June 2019; (iii) Development of implementation strategies for certification programs (Number) increased to 2 in December 2018, achieving the target set by project closure (September 2019); and (iv) The number of policy papers prepared by the Project Administrative Team (PAT) and presented to the Steering Committee increased to 13 in June 2019 from 8 in December 2018 (exceeding even the estimated target by project target of 10 papers). (5) Challenges in aligning the project annual budget with the EAC Secretariat budget cycle continue to affect the ability to roll over unutilized funds from one fiscal year to another. These challenges could affect implementation progress during the last months of the project, so the WB task team recommended that the PAT carefully reexamine the planned workplan for the final months of the project and seek support from the EAC executive to fast track internal procedures to further accelerate implementation, given a current closure date of September 2019. It should be noted that a request to extend the project closing date extension was submitted in May 2019 and the World Bank is currently reviewing the feasibility of this request. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Substantial Substantial Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Low Low Technical Design of Project or Program -- Moderate Moderate Institutional Capacity for Implementation and Sustainability -- Substantial Substantial Fiduciary -- Moderate Moderate Environment and Social -- Low Low Stakeholders -- Moderate Moderate Other -- -- -- Overall -- Moderate Moderate Results PDO Indicators by Objectives / Outcomes 6/19/2019 Page 2 of 5 The World Bank Implementation Status & Results Report Financial Sector Development & Regionalization Project I (FSDRP I) (P121611) Project Development Objective: To establish the Foundation for Financial Sector Integration IN00705141 ►Number of accounts within regulated institutions (Banks and deposit-taking MFIs) (Number (Thousand), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 57,370.00 73,400.00 78,000.00 75,000.00 Date 31-Oct-2016 08-Aug-2018 03-Jun-2019 30-Sep-2019 We don’t have the figure for June 2019, so the December 2018 figure was used instead. Comments: IN00705142 ►Number of trades executed through EAC CMI IT platform (Number (Thousand), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 30.00 30.00 30.00 900.00 Date 31-Oct-2016 08-Aug-2018 03-Jun-2019 30-Sep-2019 The operation of the CMI system has not yet started. Comments: IN00705143 ►Number of legal instruments relating to financial sector harmonization in the EAC (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 14.00 14.00 23.00 25.00 Date 31-Oct-2016 08-Aug-2018 03-Jun-2019 30-Sep-2019 The following 14 Council Directives (CD) were presented to the Council of Ministers 1.CD of the EAC on Public Offers for Equity Securities; 2. CD of the EAC on Public Offers for Fixed Income Securities; 3. CD of the EAC on Public Offers for Asset Backed Securities (ABS); 4. CD of the EAC on Collective Investment Schemes (CIS); 5. CD of the EAC on Corporate Governance for Market Intermediaries; 6. CD of the EAC on Admission to Trading on a Secondary Exchange; 7. CD of the EAC on Regional Listings in the Securities Market; 8 CD on Licensing Market Intermediaries; 9 CD on Investor Compensation Comments: Scheme; 10 CD on Takeovers and Mergers; 11 CD on Investor Education and Protection; 12 CD on Anti- Money Laundering in the Securities Market; 13 CD of the EAC on Self- Regulatory Organization; and 14 CD of the EAC on Conduct of Business for Market Intermediaries. Other six Other six 6 council directives, 1 Bill on the establishment of the Financial Services Commission, 1 EAC guideline for Consumer Protection for the Pension sector and 1Principal for regulation and supervision of the Pension Sector were approved by the SCFEA. Intermediate Results Indicators by Components Component 1: Financial Inclusion and Strengthening of Market Participants IN00705144 ►Development of implementation strategies for certification programs (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 2.00 2.00 6/19/2019 Page 3 of 5 The World Bank Implementation Status & Results Report Financial Sector Development & Regionalization Project I (FSDRP I) (P121611) Date 21-Jul-2016 08-Aug-2018 03-Jun-2019 30-Sep-2019 Component 3: Institution Building IN00705145 ►Number of policy papers prepared by the PAT (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 7.00 11.00 13.00 10.00 Date 21-Jul-2016 08-Aug-2018 03-Jun-2019 30-Sep-2019 The following 7 policy papers were presented to the FSDRP Executive and Steering committee meetings; 1. Mobile and agency banking in EAC countries; 2. Determinants of household savings mobilization; 3. Assessment against IOSCO Principle 38; 4. Assessment against IOSCO new principles; 5. Assessing EAC financial integration (focus on Banking sector); 6.Risk based supervision for EAC Securities Market; and 7. Draft EAC Insurance Policy. Other five (5) policy papers were presented in the Executive and Steering Committee meeting in November 2017. Those policy papers are; 1. EAC Retirement Benefits Comments: Policy; 2. Insurance Policy; 3.Draft EAC Microfinance Policy & Implementation Strategy; 4. Financial Sector Capacity Building Policy and Implementation Strategy for Rwanda and Burundi; and 5. Burundi Capital Market Policy. One policy paper on extending the Pension coverage to informal sector and the policy paper on the establishment of the Financial Services Commission were approved by the SCFEA in May 2019. IN00705146 ►Harmonized statistics for financial subsectors represented in the database (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3.00 3.00 3.00 5.00 Date 21-Jul-2016 08-Aug-2018 03-Jun-2019 30-Sep-2019 Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P121611 IDA-D1410 Effective USD 10.50 10.50 0.00 6.54 4.10 61% P121611 IDA-H6410 Closed USD 16.00 15.48 0.52 14.91 0.00 100% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P121611 IDA-D1410 Effective 30-Sep-2016 11-Nov-2016 15-Feb-2017 30-Sep-2019 30-Sep-2019 P121611 IDA-H6410 Closed 31-Jan-2011 14-Feb-2011 20-Jun-2011 30-Mar-2014 30-Nov-2016 6/19/2019 Page 4 of 5 The World Bank Implementation Status & Results Report Financial Sector Development & Regionalization Project I (FSDRP I) (P121611) Cumulative Disbursements Restructuring History Level 2 Approved on 28-Feb-2014 ,Level 2 Approved on 18-Jun-2015 ,Level 2 Approved on 25-Feb-2016 ,Level 2 Approved on 28-Sep-2016 Related Project(s) P160770-EAC Financial Sector Development and Regionalization Project I: AF 6/19/2019 Page 5 of 5