Document of The World Bank FOR OFFICIAL USE ONLY Report No. 122699-NA INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP STRATEGY FOR THE REPUBLIC OF NAMIBIA FOR THE PERIOD FY14-FY17 March 8, 2018 Southern Africa Country Management Unit, Africa Region International Finance Corporation Multilateral Investment Guarantee Agency 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 The date of the last Country Partnership Strategy was June 26, 2013 FISCAL YEAR [April 1 – March 31] CURRENCY EQUIVALENTS (Exchange rate as of September 20, 2017) Unit of Currency = Namibian Dollar (N$) US$ 1 = N$13.26 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank AIDS Acquired Immune Deficiency Syndrome ASA Advisory Services and Analytics BON Bank of Namibia CMA Common Monetary Area CPF Country Partnership Framework CPS Country Partnership Strategy DPL Development Policy Loan EFTA European Free Trade Agreement EU European Union FDI Foreign Direct Investment FSAP Financial Sector Assessment Program FY Fiscal Year GDP Gross Domestic Product GEF Global Environmental Facility GNI Gross National Income GRN Government of the Republic of Namibia HIV Human Immuno-Deficiency Virus IBRD International Bank for Reconstruction and Development ICEMA Integrated Community-Based Ecosystem Management IMF International Monetary Fund IFC International Finance Corporation ISN Interim Strategy Note MDG Millennium Development Goal MET Ministry of Environment and Tourism MIGA Multilateral Investment Guarantee Agency MOF Ministry of Finance MTEF Medium-Term Expenditure Framework NaCC Namibia Competition Commission NACOMA Namibia Coastal Management Project NDP National Development Plan NDP4 Fourth National Development Plan ii NHIES Namibia Household Income and Expenditure Survey NLFS Namibia Labor Force Survey NPC National Planning Commission NSA Namibia Statistics Agency ODA Official Development Assistance OECD Organization of Economic Cooperation and Development PPP Public-Private Partnership RAS Reimbursable Advisory Services SACU Southern Africa Customs Union SADC Southern Africa Development Community SAIS Southern Africa Innovation Support Program SCD Systematic Country Diagnostic SME Small and Medium Enterprise SOE State-Owned Enterprise SWAPO South West Africa People's Organization TA Technical Assistance UN United Nations UNDP United Nations Development Program UNICEF United Nations Children Fund USAID United States Agency for International Development WBI World Bank Institute WDI World Development Indicators WEF World Economic Forum WHO World Health Organization yoy year-on-year IBRD IFC MIGA Regional Vice President: Makhtar Diop Sérgio Pimenta Keiko Honda Country Director: Paul Noumba Um Oumar Seydi Merli Baroudi Task Team Leader: Emmanuel Noubissie Saleem Karimjee Gero Verheyen Ngankam iii PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP STRATEGY FOR THE REPUBLIC OF NAMIBIA TABLE OF CONTENTS I. INTRODUCTION................................................................................................. 1 II. MAIN CHANGES IN COUNTRY CONTEXT ................................................. 2 Political Developments ........................................................................................... 2 Macroeconomic and Debt Developments ............................................................... 3 Poverty/Inequality and Climate Change: Namibia’s Persistent Challenges ........... 5 III. SUMMARY OF PROGRAM IMPLEMENTATION ....................................... 6 IBRD ....................................................................................................................... 6 IFC and MIGA ........................................................................................................ 8 IV. EMERGING LESSONS ....................................................................................... 9 V. ADJUSTMENTS TO COUNTRY PARTNERSHIP FRAMEWORK ............ 9 Additions to Program 1: Economic Management Program .................................. 10 Additions to Program 2: Environment and Natural Resources Management Program ................................................................................................................. 11 Additions to Program 3: Statistical Capacity Program ......................................... 11 Additions to Program 4: Health and Nutrition Program ....................................... 11 Additions to Program 5: Institutional Environment for a Competitive Private Sector Program...................................................................................................... 12 Additions to Program 6: Investments in Productive Capacity and Infrastructure Program ................................................................................................................. 12 Adjustments to the Results Matrix........................................................................ 13 VI. RISKS................................................................................................................... 13 Annex 1: Updated CPS Results Matrix ........................................................................ 15 Annex 2: Matrix of Changes to Original CPF Results Matrix ................................... 19 Annex 3: Summary of Progress on CPS Objectives .................................................... 22 List of Tables Table 1: Select Economic Indicators, 2014 – 2020 ................................................................. 3 Table 2: Status of Original CPS Activities, by CPS Pillar ...................................................... 7 Table 3: Risk Assessment for CPS Outcomes ....................................................................... 14 iv PERFORMANCE AND LEARNING REVIEW OF THE REPUBLIC OF NAMIBIA-WORLD BANK GROUP (WBG) COUNTRY PARTNERSHIP STRATEGY FOR FY14-17 I. INTRODUCTION 1. This Performance and Learning Review (PLR) assesses implementation progress under the Namibia-WBG Country Partnership Strategy (CPS) for FY14-17, and makes proposals for the World Bank Group’s ongoing engagement in the country. The FY14-17 CPS is the first full WBG country strategy for Namibia. The CPS was developed within the framework of Namibia’s National Development Plan 4 (NDP4) and included carefully calibrated expectations and program objectives that were not overreaching – reflecting both sides’ limited experience/knowledge concerning what role (if any) the WBG might play in supporting Namibia’s development efforts. The aim was to gradually develop a deeper understanding of Namibia’s medium-term challenges and priorities and explore new modalities for cooperation that might enable the country to derive greater benefits from its membership in the WBG. The advisory, technical assistance (TA) and knowledge products envisaged in the CPS program are grouped within two focus areas: (i) improving capacity for policy design and implementation in strategic areas; and (ii) increasing the private sector’s ability to generate jobs and income. 2. Originally planned activities have been delivered successfully for the most part and the experience has prompted the Namibian Government to request WBG cooperation for additional activities within the existing CPS focus areas, which are fully aligned with the priorities laid out in the Government’s National Development Plan 5 (NDP5) (2017/18-2021/22). Given this, and since the new requested activities will deepen cooperation in key areas for Namibia’s development such as transport, financial sector strengthening and health, the PLR proposes to extend CPS implementation through FY20. Such an extension would also align a follow-on CPF to the next presidential and general elections, which are scheduled for the last quarter of 2019, and allow time to develop a Systematic Country Diagnostic (SCD), building on a series of new poverty data and analyses which will be available over the next two years and the growing partnership with authorities in a range of sectors. Preparation of the CPF would, however, be brought forward in the event of a material change in the nature of support requested by Government (such as requests for IBRD lending or guarantees). 3. Continued engagement in Namibia is fully consistent with the WBG’s overarching mission of promoting poverty reduction and shared prosperity. Despite its relatively high per capita income of US$4,415 and good access to international capital markets, Namibia’s historical legacy of highly skewed distribution of income, wealth, and human resource capacity means that a large portion of the population remains severely disadvantaged. While the proportion of poor (extreme poor) in total population fell from 28.7 (15.3) percent in 2009/10 to 17.1 (11.0) percent by 2016 due to effective redistribution policies, Namibia nevertheless remains one of the most unequal countries in the world. Continued progress in combatting poverty and providing essential social and infrastructure services will be challenging in the short- to medium-term, due to a deceleration in growth since 2016 which, inter alia, highlighted the Namibian economy’s vulnerability to commodity price fluctuations and economic developments in neighboring countries. WBG experience in other countries facing similar challenges should prove useful in 1 supporting Namibia to return to higher, more inclusive, growth while continuing to identify and implement sustainable redistribution efforts. II. MAIN CHANGES IN COUNTRY CONTEXT Political Developments 4. Namibian politics continued to be dominated by the South West Africa People’s Organization (SWAPO), which has enjoyed wide popular support since independence in 1990. In the November 2014 general elections, Hage Geingob, a former Prime Minster and senior member of the SWAPO, won the presidency with 87 percent of the vote. The SWAPO party also won 77 of 96 seats in the National Assembly. In November 2017, SWAPO held its sixth elective congress to choose the party’s president and members of the bureau. Hage Geingob, the current President of the Republic, was elected as chairman, and as per the party’s succession policy, will therefore automatically become the SWAPO candidate in the 2019 national presidential election. 5. Government business continued uninterrupted throughout party campaigning in the run-up to the SWAPO elective congress, attesting to Namibia’s high level of political stability. Namibia continued its legacy of peace, political stability, and rule of law during the CPS period. The 2014 elections were described as free and fair by Southern Africa Development Community (SADC) and African Union observers. According to the Global Peace Index, Namibia in 2016 ranked 55th out of 163 countries, 8th in sub-Saharan Africa, and 2nd among Southern Africa Customs Union (SACU) nations. On the Ibrahim Index of African Governance, a proxy for rule of law, Namibia’s score rose from 66.9 in 2012 to 69.8 in 2016, which is the 5th highest score of 54 African nations. 6. Political stability has contributed to continuity in terms of development strategy and policies as seen in NDP4 and NDP5, which are mutually reinforcing and contribute towards Namibia’s Vision 2030. Following completion of the NDP4 in 2016, President Geingob launched NDP5 in May 2017, continuing the country’s commitment to employment creation and effective public services as the principal means of tackling poverty and inequality. The NDP5 notes the positive trajectory of Namibia since independence and its many advantages -- political stability, rich natural resources, environmental protection, popularity among tourists, and stable economy. It also emphasizes the need to address persistent high unemployment, paucity of human capital and inequitable access to social and infrastructure services. The NDP5 carries forward most of the emphases of its predecessor (NDP4), albeit with refinements in light of recent experience. It is built around four pillars aimed respectively at: (i) economic diversification/transformation away from mineral-dependence and towards a job-creating, inclusive knowledge/services economy; (ii) intensified investment in social transformation including education and skills, universal health care and safety nets for the poor; (iii) environmental sustainability focused on sustainable protection/management of natural resources and climate resilience; and (iv) continued efforts to promote good governance, including transparency and accountability in State-Owned Enterprises (SOEs), strengthened service delivery and stronger statistical capacity for results focused monitoring and evaluation. 2 Macroeconomic and Debt Developments 7. Following strong real Gross Domestic Product (GDP) growth in the early years of the CPS period (2014-15), Namibia experienced a sharp drop in the growth rate in 2016. GDP growth had averaged 5.7 percent from 2010 to 2015, fueled by strong commodity prices, public sector spending, burgeoning credit to the private sector, strong consumption, and construction in mining and housing. On the production side, growth had been driven by a thriving mining sector and expanding tertiary sector activities. Several factors combined to place a strong brake on GDP growth in 2016, causing a steep decline to just 1.1 percent, namely: (i) decline in construction activity due to completion of the large Husab uranium mine and facilitated by reduction in public capital expenditures; (ii) lower mineral prices, which in turn, caused the postponement of operations of the same mine; and, (iii) reduced demand from Angola for Namibian services. Growth was also affected in the last quarter of 2016 by the start of a fiscal consolidation process, as the Government sought to address the country’s growing fiscal imbalances (see below). This imposes significant fiscal challenges in medium-term future in a period of expected lower SACU receipts, vulnerability of commodity exports and hence, lower mineral revenues in the budget, and constrained borrowing space. Table 1: Select Economic Indicators, 2014 – 2020 2014 2015 2016 2017f 2018f 2019f 2020f Income and Economic Growth GDP growth (annual %) 6.4 6.0 1.1 1.7 3.0 3.5 3.8 Real GDP per capita growth (annual 3.9 3.6 -1.1 -0.5 0.9 1.4 1.5 %) GDP per capita- nominal (US$) 5823 6031 5962 5933 5985 6071 6192 Private consumption (% of GDP) 71.1 75.0 79.3 79.4 79.3 79.4 79.6 Gross fixed investment (% of GDP) 38.8 39.8 29.4 26.1 26.1 26.4 26.5 Money and Prices Inflation, consumer prices (annual 5.4 3.4 6.7 7.1 6.3 5.5 5.3 %, end of year) Nominal exchange rate (Period 10.9 12.8 14.7 13.3 13.6 13.9 14.2 average) Real exchange rate Index (pd avg) 129 148 162 142 142 141 141 (2010=100) Fiscal Overall Fiscal Balance- including -6.0 -7.0 -6.5 -4.5 -3.5 -3.0 -2.9 Grants (% of GDP) Primary Fiscal Balance (% of GDP) -4.5 -5.5 -4.3 -3.5 -1.9 -1.5 -1.4 Total Public Debt (% of GDP) 23.6 38.2 40.7 41.5 42.9 43.5 43.6 External Public Debt (% of GDP) 8.5 14.5 15.8 16.2 16.9 17.7 18.1 External Accounts Export Growth (%, yoy) 1.7 -12.6 -2.8 19.6 21.7 20.4 20.8 Import Growth (%, yoy) 10.2 -4.8 -10.3 7.8 16.8 16.3 17.2 Current account balance (US$ -1146 -1700 -1289 -992 -913 -1039 -1048 millions) Current account balance (% of GDP) -9.0 -14.7 -11.8 -8.4 -6.9 -7.0 -7.3 Foreign Direct Investment, (current 496 443 401 438 478 542 546 US$ millions) Memo GDP (current LCU, billions) 138.8 147.6 161.0 170.1 182.3 197 214 GDP (current US$, billions) 12.8 11.6 10.9 11.8 13.2 14.9 15.1 3 8. The expansionary fiscal policy in the five years preceding 2016, coupled with depreciation of the Namibian Dollar, resulted in a sharp increase of the public debt. Public debt as a share of GDP rose from 23.6 percent in 2014 to 40.7 percent in 2016, exceeding the national cap of 35 percent. Large Government borrowing on the domestic market drained up liquidity, crowding out private sector access to credit. Government also accumulated substantial arrears to private suppliers (estimated between 2-2.5 percent of GDP). In turn, this situation led to downgrades of the economic outlook by Fitch in mid-2016 and of the sovereign credit rating by Moody’s in August and Fitch in November 2017. With the excessive borrowing by Government on the domestic market and the accumulation of fiscal risks, private financial institutions lost interest in bidding for government issued debt instruments and the state-owned pension fund became the largest bidder on government auctions. By the end of 2016, virtually no space remained for further fiscal expansion, prompting the Government to shift from an expansionary to a contractionary fiscal stance. In a speech at the ruling party's 2017 congress, President Geingob emphasized the need for continued fiscal adjustment/consolidation and pledged heightened vigilance to ensure efficient use of taxpayer funds. 9. The Government has been implementing a fiscal consolidation program since November 2016 with some positive results to date. The program includes annual expenditure cuts (mostly on capital investments) averaging 2 percent of GDP from FY2016/17 to FY2019/2020. It also prioritizes efficiency gains in the management of public enterprises, and in public service delivery, which together capture the lion’s share of current expenditures. Inflation pressures, resulting from droughts and currency depreciation, led the Bank of Namibia to tighten monetary policy in 2016. By mid-2017, inflation fears had started to dissipate, providing scope for modest loosening. The Balance of Payment current account deficit, which had reached 14.7 percent of GDP in 2015, narrowed to 11.8 percent in 2016 due to lower aggregate and import demand. Since the beginning of the FY2017/18, liquidity problems have begun to ease, due, in large measure, to the budget support provided by the African Development Bank (AfDB). In addition, with the most recent mid-term budget review in November 2017, the Government clearly acknowledged the accumulated arrears and provided a commitment and plan for their clearance in the next two fiscal years. 10. Continuation of the fiscal consolidation process will be crucial for further public debt reduction; it will also be particularly challenging as Government will need to be mindful of protecting spending for poverty reduction and inclusive growth. A strong policy commitment for continuation of the fiscal consolidation process will be a key factor. Even so, the pace of fiscal consolidation process will be constrained by lower SACU receipts and will be vulnerable to shocks in commodities’ markets. In addition, due to the sovereign credit rating downgrades of the country, the space for further borrowing on the international financial markets will remain limited. Increased diversification is expected over time to widen the tax base and improve fiscal sustainability as well as reducing dependency on mineral and SACU revenue. In the shorter run, authorities see the need and opportunity to: (i) strengthen the economic governance of public enterprises; (ii) rely more extensively on Public-Private Partnership (PPP) for infrastructure, water for agriculture and connecting infrastructure for domestic and regional integration in value chains; (iii) develop competition, including through better targeting key sectors, notably energy and ICT; and (iv) improve the cost-effectiveness of service delivery and social protection. Combined with ongoing efforts to improve the doing business environment and promote financial inclusion, these reforms are expected to stimulate job creation while reducing the current fiscal pressures. 4 11. Real GDP growth is estimated to be 1.7 percent for 2017 and is projected to increase to about 3.5 percent by 2019. Growth will be driven mainly by an increase in mining production -- diamonds and uranium -- as global demand continues to recover. The services sector is also expected to contribute significantly to a recovery, as key regional trading partners (such as Angola) slowly recover. A further boost, albeit with more limited impact, should derive from recuperation in agricultural production following the droughts of 2015-16. The expected increase in mining exports and depressed domestic demand is expected to narrow the current account deficit to about 6.9 percent of GDP by 2018. However, Namibia still faces significant downside risks of lower growth in mining, further declines in commodity prices and SACU revenues, and corrections in housing prices -- which may be difficult to weather given the country’s limited fiscal buffers. Moreover, structural changes of the type contemplated in NDP5 will be crucial as, thus far, economic growth has not always translated to progress on jobs and poverty reduction Poverty/Inequality and Climate Change: Namibia’s Persistent Challenges 12. Inequality, unemployment and, poverty remain the fundamental challenges that Namibia needs to address in the coming years. At 17.1 percent of the population in 2015/16, poverty based on the international poverty line of US$1.90 is high for an upper middle-income country, reflecting the extremely high levels of inequality (see below). Poverty rates are highest within the transboundary Okavango basin, upstream of the Okavango Delta in Botswana (one of the world’s biodiversity hot-spots). Expansion of the country’s social safety net helped reduce poverty and enable improvements in shared prosperity indicators in the decade of the 2000s. Between 2000 and 2010, real incomes of the bottom four deciles (shared prosperity indicator) grew by 3.2 percent compared to 1.9 percent for the upper three quintiles. 13. Namibia’s current Gini Index of about 61 is the second highest in the world and has remained high since independence. There was a small decline in inequality between 2004 and 2010 – when the Gini Index fell from 63.3 to 61 – but it has remained virtually unchanged since then. High inequality reflects the fact that labor markets do not work for a large fraction of the population. The economy is characterized by a dichotomous structure comprising a skilled and educated class better linked to economic opportunities, and a largely excluded majority population, that is frequently unemployed or dependent on low-skilled jobs in agriculture and the informal sector. About 31 percent of employment is in low productivity sectors, such as agriculture, fishing, and forestry. The informal sector represents about 41 percent of employment, which has contributed to income insecurity and vulnerability and close to 30 percent of the labor force is unemployed (over 60 percent of them enduring long term unemployment). 14. As in many countries, unemployment is especially high among women and youth. According to the 2014 Labor Force Survey, unemployment among women and youth stood at 31.7 percent and 39.2 percent respectively, versus 24.3 for men. The gender divide is centered around the relative exclusion of women from industrial jobs, which include mining, manufacturing and other industrial work. Differences across gender clearly exist with females less likely to be wage and salary workers and more likely to be own-account operators in the informal sector. Also, males are rarely unpaid family workers. Earnings for females were also significantly lower than males but not on the order of magnitude as the urban/rural or informal sector/formal sector divides. Median earnings were 25 percent higher for males as compared to females 5 15. On Climate Change there has been an increasing recognition of the challenges ahead, both in the short and longer terms. As part of its commitment to the Paris Agreements, Namibia submitted its Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015. The NDC draws attention to Namibia’s high vulnerability to the impacts of climate change and its economic dependence on highly sensitive natural resources sectors such as agriculture, fisheries and mining. In addition, Namibia’s NDC notes that addressing the effects of climate change could contribute to reducing the country’s high- income inequality, as the population relying on subsistence agriculture is deeply affected by droughts and associated food insecurity. 16. The four-pillar NDP5 strategy could go a long way towards increasing shared prosperity and reducing poverty in Namibia and is a good basis for continued Namibia-WBG cooperation in the medium-term. The NDP5 pillars -- economic progression, social transformation, environmental sustainability and good governance (para 5) -- are interlinked, mutually reinforcing and address the key challenges facing the country. Both the ongoing and new CPS activities are designed to further NDP5 objectives, albeit on a highly selective basis. III. SUMMARY OF PROGRAM IMPLEMENTATION IBRD 17. The FY14-17 CPS had the calibrated objective of advancing the WBG-Namibia partnership by providing a flexible but limited package of TA and knowledge services in support of the NDP4. CPS support was channeled through two engagement areas: (i) Improve the state’s capacity to design, implement, and monitor policies on strategic issues, reflecting that policy outcomes often fall short due to shortcomings in analysis, data, skills, and organizational structures and processes; and, (ii) Increase the private sector’s ability to generate jobs and incomes, reflecting that faster and more inclusive growth requires investments in new productive capacities and infrastructure. Nested within each area, the CPS laid out several programs of proposed activities, with specific products to be determined during CPS implementation on the basis of client demand, stakeholder consultations, the WBG’s previous engagement and comparative advantages, and potential for spillover and scale-up. The CPS did not anticipate IBRD lending but sought to explore new cooperation modalities, such as Reimbursable Advisory Services (RASs). 18. The CPS has delivered on most of the planned advisory activities within its limited program and achieved some important results as detailed in Annex 3. The status of CPS activities by CPS pillar and program area are summarized in Table 2. Knowledge services and TA were funded mainly by Trust Funds (TFs), such as the Institutional Development Fund (IDF), the Trust Fund for Statistical Capacity Building (TFSCB), and the Financial Sector Reform and Strengthening Initiative (FIRST). Under Pillar 1, delivery of CPS products and results has been strong, including in economic management (debt management, budget transparency, procurement and PPP legal framework), statistical capacity building and poverty analysis. The report on fiscal policy and inequality jointly produced by the Namibia Statistical Agency and the World Bank in FY17 received wide attention from policymakers and the media. Under Pillar 2, the pace of deliveries has been good in the competitive private sector program area (financial sector, 6 investment climate, competition), and substantial progress was made in the infrastructure program, which mainly featured activities of International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA). Table 2: Status of Original CPS Activities, by CPS Pillar (bold=completed; plain=ongoing, italics=dropped) Pillar I: Improve the state’s capacity to Pillar II: design, implement, and Increase the private sector’s ability to generate monitor policies on strategic issues jobs and incomes Economic Management Program Institutional Environment for a Competitive • TA on Debt Mgmt. and Analysis (completed) Private Sector Program • TA on Financial Mgmt. and Systems to City • Implementation Complementation Report - Report of Windhoek (completed) on the Observance of Standards and Codes • Financial Sector Assessment Program (FSAP) (completed) review (completed) • Crisis Management Framework TA (completed) • Central Securities Depository TA (completed) • National Competition Policy Assessment and inputs to National Competition Law (completed) Env. and Natural Resource Mngt. • Doing Business Reform Memorandum (completed) Program • Namibia Enterprise Survey (completed) • Namibia Coastal Management 2 – support for environmental plans incorporating biodiversity issues (GEF, completed) Investments in Productive Capacity and • GEF Investments in Climate Change (dropped) Infrastructure Program • Regional: CIWA Okavango Multisector • Case Study of Nature Conservancy-Tourism Joint Investment Opportunity Analysis (ongoing) ventures (completed) • WBG (WB-IFC-GIF) advisory support for the Statistical Capacity Program legal framework for Infrastructure PPPs • IDF Grant for Performance Monitoring (completed) (completed) • Support for PPP policy and associated • TFSCB Grant for Institutional Development Procurement Law (completed) (completed) • Assessment of options for private operator for the new • ESW/TA on poverty and equality (ongoing) container terminal at Walvis Bay and expansion of • Regional Statistical Capacity Building Hosea Kutako International Airport (ongoing) (completed) • Comprehensive Transport Strategy (ongoing) • Identity Management Systems Analysis • IFC Investment in Trustco, Purros, and Bank Report (completed) Windhoek (ongoing) Health and Nutrition Program • IFC TA for PPP for Kudu Gas Project (ongoing) • Health Sector TA – Nutrition Policy, Tobacco • MIGA support for agribusiness (ongoing) Control, Cervical Cancer (completed) 19. The quality of TA and knowledge services has largely been satisfactory and WBG products are increasingly gaining attention and creating impact within Namibia – in turn, sparking renewed Government interest in cooperation in some key sectors. In some cases, especially in the early years of the CPS, impact was sometimes curtailed by limited attention from senior policymakers. For example, some programs, such as the IDF’s support for performance 7 monitoring, were delayed or altered given changes in senior leadership and shifts in client focus. More recently, however, WBG staff observations and quality ratings in grant reports suggest that WBG assistance has become more effective in building client capacity, including in important areas such as poverty, economic management, and health/nutrition. Clients have praised WBG support for South-South Knowledge Exchange programs, including study tours. In light of these results, the Government has indicated a renewed interest in engaging further with the WBG in these and important additional areas such as SOE reform, universal health care and infrastructure development within the framework of this CPS. IFC and MIGA 20. IFC’s engagement in Namibia has focused mainly on the finance, education, fishing, and tourism sectors. During the current CPS, IFC added substantial new investments with a total commitment value of US$103.4 million of IFC’s own account. These investments covered education and training, and the banking sectors. With respect to banking, IFC concluded an investment of N$180m (approximately US$12m) into Purros Investments, a special purpose vehicle created to support employee share ownership in Standard Bank Namibia Limited (SNB). Purros acquired 10 percent of SBN from its parent, Standard Bank Group, to benefit the bank’s employees classified as historically disadvantaged. Financing was extended via issuance of the inaugural 5-year Namib bond listed on the Namibia Stock Exchange. This IFC financing offers long-term local currency funding, expands Namibia’s domestic bond market, and accelerates the development of the non-sovereign sector. In addition, IFC committed an approximately US$69m credit line to Bank Windhoek, Namibia’s only indigenous bank, to diversify this bank’s funding base, improve its maturity profile, and strengthen its liquidity and lending. IFC views this investment as the start of a partnership to strengthen the banking sector, as Bank Windhoek’s reach in the market makes it an ideal partner to expand access to finance for thousands of small-scale enterprises. As foreseen in the CPS, IFC expanded its investments in Trustco, a Namibia-based company with a focus on micro finance services to previously excluded communities, especially micro insurance and microfinance for education. By supporting Trustco’s corporate bond program, IFC is encouraging deeper capital markets critical to developing Africa’s corporate sector. IFC had no Advisory projects in Namibia over the CPS period, and has none in the pipeline. 21. The quality of IFC investments has generally been strong, though IFC has faced constraints in engaging in Namibia, and had difficulties with the Trustco Group. Factors limiting IFC’s work in Namibia include lack of opportunities and timely responses from the Government, and client perceptions of a higher costs of complying with IFC policies, especially in mining sector. In addition, IFC was not comfortable with the Sponsor’s intent to bring in a new venture (alluvial diamond mining) into the Trustco Group. After IFC consultations, the Trustco Group agreed not to take control of the mine while IFC was an investor, though after this agreement the Group announced a plan to acquire another mine in West Africa. IFC continues to engage with the Trustco Group to ensure an acceptable outcome. 22. MIGA has remained open for business in Namibia across all its political risk insurance product lines, including transfer restriction, expropriation, breach of contract, and war and civil disturbance and the non-honoring of sovereign obligations. During the CPS period, MIGA pursued opportunities to support private sector investment in Namibia, with one project in the agribusiness sector (table grapes company in Aussenkehr region); negotiations for this project are ongoing. 8 MIGA has issued equity contracts for two solar Photovoltaics (PV) projects (the corresponding non-shareholder loan contracts are expected in the spring of 2018) and is exploring potential capital support for the Agricultural Bank of Namibia, Development Bank of Namibia, and Ministry of Finance through MIGA’s credit enhancement product. IV. EMERGING LESSONS 23. CPS implementation has yielded some preliminary lessons that have been taken into account in the design of the CPS program for FY18-20. Prime among these, is the experience that while knowledge products alone can have significant impacts on development efforts, they are only instrumental in policy/program changes when they are timely and tightly aligned to Government’s own priorities. For example, the preparation of the public expenditures and poverty study in the midst of Government’s own efforts to address its growing fiscal problems meant that the World Bank study got very wide attention from senior policy-makers as well as the wider public and its recommendations influenced budget formulation. However, in areas where there was no perceived urgency on the part of the Government, e.g., IDF-supported performance monitoring, there was little traction in terms of spurring policy changes. Providing timely and highly relevant Advisory Services and Analytics (ASA) products is also very valuable in building trust and a closer partnership – especially in a country such as Namibia which has historically been wary of the Bretton Woods institutions. Activities included in the CPS for FY18-20 have been carefully selected to support key areas of Government’s policy agenda. 24. Apart from ensuring alignment with the Government’s policy agenda, another lesson concerns the need to better coordinate IBRD, IFC and MIGA interventions to improve impact. In the past few years of CPS implementation, there were some missed opportunities in areas such as PPP and SOE reform where more concerted action among the WBG arms might have yielded positive results in promoting reforms. Given the impetus provided by the fiscal consolidation effort, Government is now itself interested in pursuing PPPs offering a new opportunity for the WBG to leverage the comparative advantages of its constituent institutions to demonstrate tangible results through a “Maximizing Finance for Development” approach. 25. The WBG should employ its convening power to support South-South Knowledge sharing and exchanges. To date, the Namibian authorities have appreciated the value of learning from other countries, such as on M&E practices applicable to monitoring the NDP4. The exchanges have enhanced the buy-in and skills of Government officials and staff for the implementation of new development approaches as well as fostered trust and dialogue between the World Bank and the Government. Going forward the WBG should continue to promote South- South exchanges in relevant areas, possibly expanding the approach to include private sector participants when feasible and appropriate. V. ADJUSTMENTS TO COUNTRY PARTNERSHIP FRAMEWORK 26. As noted in previous sections, the six program areas of the CPS remain relevant to client priorities under NDP5 and form a suitable basis for an extension of the CPS period to FY20. The engagement areas of Pillar 1 of the CPS, which include economic management, environment management, statistical capacity building, and health and nutrition, are all important emphases of NDP5. Work under Pillar 2, notably in fostering a more competitive private sector and facilitating 9 select investments in production and infrastructure, also remain highly relevant to NDP5 goals. This continued relevance, coupled with Government’s interest in pursuing new activities within the existing program areas, is the principal rationale for extending the CPS to FY20. The extension also enables a deepening of the (relatively young) Namibia-WBG partnership before determining longer-term priorities for the SCD/Country Partnership Framework (CPF) cycle. Finally, given that presidential and general elections are scheduled for November 2019, the extension to FY20 provides adequate time to reconfirm emphases/directions with the newly-elected Government before finalizing a new CPF. 27. While the Government and the WBG agreed to maintain some degree of flexibility in the CPS program to enable just-in-time responses to emerging opportunities and/or challenges, an initial set of activities was identified for FY18-20. These new activities (which are summarized below) were the result of intensive dialogue with Government during a World Bank mission to Namibia in mid-2017. Most of the activities were subsequently formally confirmed at a roundtable discussion in Windhoek in November 2017 where the Ministry of Finance and key line ministries discussed their needs as well as the WBG’s role and instruments of support. An increasing emphasis is proposed to be given to climate change in recognition of Namibia’s high vulnerability. The approach would be to systematically incorporate climate change considerations into ongoing and new TA activities, thereby helping to build evidence around the impacts of climate change for the upcoming SCD and future country partnership framework. Additions to Program 1: Economic Management Program 28. Building on work already undertaken during FY14-17, additions to the CPS’ Economic Management Program will focus on fiscal issues and continued support to the Bank of Namibia (BON) to increase the resilience of the financial sector. In terms of managing fiscal pressures (as well as improving the enabling environment for private sector development), a key emphasis of the NDP5 is improved management of SOEs many of which are in distress. A recently established Corporate Advisory Reform Unit is charged with improving oversight of Namibia’s 86 SOEs and its parent ministry, the Ministry of Public Enterprises has requested that the World Bank support its work through provision of TA to restructure specific SOEs and improve their operations and management. Another key activity in support of Government’s fiscal consolidation efforts is a proposed in-depth review of social protection expenditures aimed, inter alia, at identifying means of reducing program fragmentation and improving means testing to both increase efficiency in the use of public funds and improve protection of the most vulnerable groups, including those most vulnerable to the impacts of climate change. With regard to the financial sector, the Government and the World Bank are considering possible CPS support to follow-up on recommendations of the recently-completed FSAP. Among the areas being considered, provided funding can be obtained, are support for restructuring of specific State-Owned Financial Institutions, strengthening the financial safety net, enhancing the regime for financial consumer protection, establishment of a central securities depository and addressing weaknesses in the Anti Money Laundering/Combating the Financing of Terrorism regime. 10 Additions to Program 2: Environment and Natural Resources Management Program 29. Within the Environment and Natural Resources Program and in the wake of the El Nino drought, a principal new focus of the CPS is to support the Government in identifying and analyzing possibilities for water desalination using renewable energy including possible South- South exchanges to benefit from desalination experience in the Middle East. The World Bank will also continue to support the Permanent Okavango River Basin Water Commission (OKACOM) through financing from the multi-donor trust fund for Cooperation in International Waters in Africa (CIWA). On-going participatory stakeholder consultations have helped identify investment opportunities through a Multi-Sector Investment Opportunities Analysis (MSIOA) to help support a socially just, economically prosperous, and environmentally healthy development of the Cubango-Okavango River Basin. The World Bank will also continue to provide technical advice to the OKACOM Secretariat regarding the possible establishment of an endowment fund dedicated to the future protection and sustainable development of the basin. To help improve management of the mining sector, the World Bank will include Namibia in a planned regional study covering, inter alia, macroeconomic and fiscal management of the mining sector, beneficiation, environment, and artisanal mining. Additions to Program 3: Statistical Capacity Program 30. The World Bank’s Southern Africa Regional Statistical Capacity Building Program has been well received in Namibia thus far and has already played a part in strengthening capacity for poverty monitoring and analysis, via a US$500 thousand recipient executed grant. A Namibia- specific distributional analysis of fiscal policy was completed in FY17 and widely disseminated in the country. Over the next 2-3 years, the World Bank will continue to support Namibia to improve and deepen poverty data collection and analysis including through preparation of: (i) a poverty update to monitor trends in poverty; (ii) a poverty map report to link census data with household survey information; (iii) an inequality report to systematically examine causes of income inequality, wealth distribution, polarization and inequality of access to basic services; and (iv) a labor analysis aimed at better understanding the role of labor markets in poverty and inequality reduction. Additions to Program 4: Health and Nutrition Program 31. As part of its commitment to address poverty and inequality, including protection of vulnerable groups, the Government is committed to seeking ways to implement a policy of Universal Health Care (UHC). The CPS program will support this aim, focusing on specific elements of UHC design -- including analyzing the ability of the economy to sustain UHC, reviewing the suitability of the current structural framework of the health system for UHC, and assessing the internal capacity of the Government to manage a proposed UHC system. The planned work will build on existing studies supported by the Namibian Social Security Commission and a number of external partners including AfDB, World Health Organization (WHO), United States Agency for International Development (USAID). 11 Additions to Program 5: Institutional Environment for a Competitive Private Sector Program 32. To support availability of credit for the private sector, the IFC will explore options for supporting core capital of Bank Windhoek. IFC will also cooperate with the Development Bank of Namibia (DBN) to strengthen project finance, especially with respect to obtaining security and collateral. MIGA will continue to seek opportunities to grow its engagement to support private sector development in the country. MIGA has been working closely with the Namibian Government and WBG colleagues to support private sector development. In particular, the electricity regulator ECB invited MIGA to give a workshop to public stakeholders including the Ministry of Finance (MoF) PPP Unit, Nampower, and the Ministry of Energy to discuss MIGA, its products, and benchmarking risk allocation in Independent Power Providers. Subsequently the MoF PPP Unit invited MIGA to speak at a PPP conference in November. The World Bank has just received a Letter of Request for Reimbursable Advisory Services (RAS) in areas of Doing Business and Investment Climate, from the Government of Namibia. The focus of the RAS is improving the Doing Business and broader Business Environment reforms in Namibia. The Ministry of Industrialization, Trade and Small and Medium Enterprise (SME) Development (MoIT) is keen to receive technical assistance in order to reduce time, cost and red tape to local SMEs to enter, operate and exit business. Additions to Program 6: Investments in Productive Capacity and Infrastructure Program 33. The NDP5 focuses on developing Namibia’s potential as a regional logistics hub as part of the Government’s effort to promote economic diversification. For example, it seeks to accommodate the potential export of manganese from operational mines in the Northern Cape Province of South Africa by: (i) further expanding and improving the existing road and rail infrastructure and services to support development of the port of Walvis Bay; (ii) constructing new port facilities at Lüderitz; and (iii) improving the railway line from the border with South Africa to Lüderitz and construct a new tunnel. These projects, plus construction of a new container terminal at Walvis Bay, are all in various stages of development and Government has requested WBG support (TA for PPP development and possible guarantees) for its efforts under this Program of the CPS. The CPS also includes support for a PPP analysis of Hosea Kutako International Airport, with the aim of attracting private investment for the expansion of the airport while also increasing commercial revenue and improving passenger services. A number of other transport projects including road construction or improvement and commuter rail may also be developed via PPP approaches and may be selected for WBG TA or financial support over the course of CPS implementation. MIGA will also continue working with the World Bank and IFC on potential support for a port and a road, with assistance from the GIF upstream facility. Finally, given a high incidence of road accidents and fatalities, the World Bank will likely undertake a road safety assessment during this CPS period. In addition to transport, the CPS program will increase WBG involvement in the energy sector, principally via IFC support. In 2015, Namibia invited the IFC to present Scaling Solar to representatives from the Ministry of Mines and Energy, the Ministry of Finance, NamPower and the ECB. Although there was initial enthusiasm, discussions suggested that Scaling Solar will not address Namibia’s energy need for baseload supply. As such, officials have expressed interest in exploring the viability of a concentrated solar power (CSP) plant. 12 34. In both transport and energy, the WBG would seek to assist Namibia to leverage the private sector for growth and sustainable development by adopting the “Maximizing Finance for Development” approach. This implies drawing on private financing and sustainable private sector solutions to provide value for money and meet the highest environmental, social, and fiscal responsibility standards, while reserving scarce public financing for those areas where private sector engagement is not optimal or available. WBG teams would work with Government to assess whether a project is best delivered through private sector solutions (private finance and/or private delivery) while limiting public liabilities, and if not, whether WBG support for an improved investment environment or risk mitigation could help achieve such solutions. The WBG would also provide sustained support at the sector and country level to strengthen the enabling environment for private sector solutions—including in developing domestic capital and financial markets to expand local currency financing for development. This complements efforts to bolster domestic resource mobilization and improve the efficiency and effectiveness of public financing where this is the optimal solution, and to reduce illicit financial flows. Adjustments to the Results Matrix 35. The PLR proposes adjustments to the results matrix to reflect the extension through FY20 (see Annex 2). The adjustments more accurately reflect client demand; delays in achieving certain milestones; scope of IFC and MIGA assistance; and expected results over the extended period. Among other changes, the updated results matrix features revisions to the timeframe and scope of indicators testifying to increased capacity of the National Planning Commission (NPC) to monitor the NDP4, and proposes new outcomes related to IFC investments in energy and the financial sector. VI. RISKS 36. Risks identified at the start of the CPS program remain largely valid today – with the overall risk level assessed as moderate. As previously discussed in detail, macroeconomic and fiscal risks – deriving from commodity price declines, the drop in SACU receipts, and the impact of the El Nino drought—increased in 2016, but Government’s recent fiscal consolidation measures (including resorting to PPP approaches to reduce fiscal pressures) are having some positive impact. Moreover, the continued emphasis on economic diversification, if sustained, will likely reduce vulnerabilities over time. In any event, to the extent that this CPS program does not include significant financial support, the impact of adverse economic events on program implementation per se is expected to be relatively small. Furthermore, whilst the country may face increased risks due to the impacts of climate change and natural disasters, risks to the WBG’s proposed program under this CPS are expected to be moderate. Weak capacity within Government agencies, including many SOEs, is another risk that affects Namibia’s development efforts and could impact the knowledge-focused program included in this CPS. However, to the extent that much of the TA and other ASA products foreseen under this CPS are directly aimed at building and/or bolstering policy and program development/implementation capacity, the risk is deemed to be moderate overall. 13 Table 3: Risk Assessment for CPS Outcomes Risk Categories Rating Political and governance Moderate Macroeconomic Moderate Sector strategies and policies Moderate Technical design of project or program Low Institutional capacity for implementation and sustainability Moderate Fiduciary Low Environment and social Moderate Stakeholders Low Overall Moderate 14 Annex 1: Updated CPS Results Matrix Government Milestones and Outcomes Issues and Obstacles CPS Outcomes Outputs WBG Activities Pillar 1: Improve the state’s capacity to design, implement, and monitor policies on strategic issues Economic Management The 2005 Sovereign Debt Debt management and analysis Training provided in use AAA Activities: Program Management Strategy has expired. capacity increased of IMF-WB debt • MOF Economic Management Debt and macroeconomic policies not • 2014: debt strategy informed by analytical tools (FY14) TA NDP4 investments are made fully informed by debt analytics. risk-cost analysis • TA to City of Windhoek on without jeopardizing • 2015: MOF fiscal framework BOOST tool delivered financial management macroeconomic stability includes results of DSA (FY14) • Accounting and Auditing through greater use of PPPs. Cabinet has approved a PPP policy, • 2015: BON economic outlook ROSC (if requested) (NDP4) but no institutional capacity yet exists includes results of DSA • Social Protection Expenditure to implement it. Review Government must improve Capacity to manage PPP created Technical advice on • TA for SOE restructuring internal efficiency (2013 • WBG comments on PPPs delivered to MOF • FSAP and follow-up TA budget speech) Public auditing and accounting Procurement law (2015) (FY15–16) systems do not fully comply with • WBG comments on PPP policy Partners: Fundamental pillar of international standards; SOEs’ and (2015) Authorities: MOF, BON, NPC FY13/14-15/16 MTEF is to municipalities’ lack of audited City of Windhoek rebuild fiscal buffers, including financial statements hinders their City of Windhoek’s financial International: EU, IMF, MEFMI stabilizing growth in public ability to obtain financing for management capacity increased (New) Audit of City of Trust funds: Gates Foundation, debt infrastructure investments and • Analytical report of Windhoek’s Asset PPIAF municipal services register completed. Windhoek’s financial systems completed (2015) Need for fiscal consolidation while Efficiency measures are put in (New) Social protection maintaining protections for poorer place to reduce fiscal pressures expenditure review individuals and households • Social Protection (SP) completed and programs are rationalized and recommendations better targeted as evidenced by disseminated elimination of at least one duplicative program • At least one SOE is being (New) Analysis of one restructured in line with WBG SOE’s operation and recommendations management completed Environmental Management Most sources of economic growth National Policy on Coastal Strategic studies and Activities: Program depend on Namibia’s fragile Management is implemented and consultations delivered • NACOMA 2 GEF project ecosystems and are vulnerable to the integrated coastal zone (FY14–16) (US$ 1.92 million) Promote sustainable economic, climate change. There is especially management approach is • Okavango Multi-Sector social and cultural intense competition along the coast. mainstreamed: Educational materials Investment Opportunity opportunities while • The number of plans and and communications and Analysis (FY18) strategies in the coastal area that training programs 15 maintaining biodiversity and The National Policy on Coastal incorporate biodiversity issues provided for policy South-South study tours to the ecological integrity (NDP4) Management has been approved by increases to 53 by 2015 from 47 makers (FY14–16) Middle-East to review the cabinet but still needs to be in 2012 desalination experience Conserve, use sustainably and implemented. mainstream the biodiversity of Expanded economic opportunities Matching grants to the Namibian coast (National in sustainable use activities finance investments in Partners: Policy on Coastal • Employment in sustainable use coastal protected areas Authorities: GRN: MET, Management) activities increases to 21,975 by (FY14–16) Integrated Coast Zone 2015 from 18,795 in 2012 Management Committee A feasibility study for a Increase access to water Severe drought as a result of El Nino Increased knowledge of options to desalination plant fueled Trust Funds: through desalination impact address access to water and by renewable energy GEF investment opportunities on sources has been Cubango-Okavango River Basin completed Explore sustainable investment opportunities for the Cubango- Completion of a Multi- Okavango River Basin. The Sector Investment Cubango-Okavango River Opportunities Analysis Basin is one of the world’s for the Cubango- most important wetland Okavango River Basin. environments and as such is of global interest Statistical Capacity Program Activities: Improve NDP execution The quality and frequency of Increased capacity of NSA to Training in data • IDF grant to NPC for through improved performance producing many official statistics are gather and release statistics in dissemination and performance monitoring monitoring and evaluation low by international standards. Some accordance with international analysis tools (ADP, • TFSCB grant to NSA for mechanisms, including have never been produced. Release of standards. Progress indicated by ADePT, etc.) (FY14). improving the national statistics to the public has been slow increases in score on WB Index of institutional development statistics system to enhance the and incomplete. Statistical Capacity Delivery of technical • Regional statistical capacity quality of data. (NDP4 Desired • 2012: 56 advice on multi-topic training (if approved) Outcome 10) Policies often are not developed • 2015: 67 household surveys and • ESW/TA on poverty and through public debate based on policy economic statistics. • 2018: 78 inequality analysis (if Increase research on the root analysis. (FY14–16). requested) causes of extreme poverty (part of NDP4 Desired Outcome 4) Systems for using data to monitor Completion of poverty NPC’s capacity to monitor NDP4 Partners Authorities: policy implementation and inform map and NDP5 increased NSA, NPC, MOF revisions or evaluation are weak • 2014: sectoral baseline indicators compiled International: • 2017: national M&E framework OECD/Paris 21, resident UN finalized agencies Trust Funds: TFSCB, IDF 16 Health and Nutrition Health service delivery systems are Increased integration of systems Advisory work to fully Activities: Program fragmented (by type of disease) and for addressing communicable and cost the nutrition strategy • Health Sector Policy Dialogue Namibians have access to a access to health care is still non-communicable diseases delivered (FY14) TA quality health system (NDP inadequate. • 2014: national nutrition plan • Follow-up TA in support of desired outcome 3) launched Technical support on UHC policy MOHSS is faced with challenge of • 2015: tobacco control cervical cancer systems financing programs currently funded framework strengthened (FY14) Partners by external grants. • 2015: cervical cancer control Namibia included in Authorities: MOHSS, OPM measures incorporated into regional tobacco trade Child malnutrition and stunting rates HIV/AIDS programs community of practice. International and other UN are very high. (FY14) agencies: WHO, UNICEF, Draft UHC policy has been UNAIDS; USAID; IMF prepared by the Ministry of Health, (New) Study on UHC drawing on recommendations of policy completed Trust Funds: Gates Foundation, Bank study Bloomberg Foundation Pillar 2: Increase the private sector’s ability to generate jobs and incomes Institutional Environment for Increased investments in financial a Competitive Private Sector sector actors with potential to Program catalyze private sector activity and Activities: Namibia is falling behind other investment, as indicated by: • Financial Sector Reform and By 2017, Namibia is the most countries in Doing Business, Global • New IFC investments in Bank Strengthening Initiative: Crisis competitive economy in Competitiveness Index and other Windhoek Management Plan SADC, as measured by the competitiveness rankings. • Expanded IFC investments in • TA to NaCC (FY14) WEF CGI (NDP4 desired Trustco • ICR ROSC (FY14) outcome 1) High transaction costs, unclear • Central Securities Depository insolvency regime, vulnerability to TA (FY14) By 2021, Namibia has an shocks, and weak price discovery • TA to implement Doing effective, efficient, stable, discourage financial sector Business Reform (New) RAS to competitive, resilient and deepening. Memorandum implement Business inclusive financial system. recommendations (if Environment and Doing (Financial Sector Strategy Regulatory barriers stifle requested, FY14) Business reforms goals) competition; the competition legal implemented (just framework requires further requested in Feb 2018) improvements to tackle the most Partners harmful anticompetitive practices and Authorities: BON, NAMFISA, regulation; and there is a need to MOF, MOJ/Law Reform and ensure a level playing field in markets Development Commission, where SOEs and private firms can NaCC, MTI compete. International: IMF, GIZ Trust Funds: FIRST 17 Investments in Production and Infrastructure Program The scale of investment needed in (New) WBG supports at NDP4 Desired Outcomes public infrastructure exceeds GRN Strengthen capacity to undertake least one PPP transaction Activities relevant to possible WBG and SOE’s capacity. Private sector projects in energy, including in transport sector • FPD-IFC study on joint activities: financing must be mobilized, but: through PPPs, as indicated by: ventures with communal • Namibia shall have a well- • Many potential investments require • IFC delivers TA on PPP for (New) IFC concludes conservancies functioning, high quality complex government-parastatal- Kudu Gas project investment in Purros • IFC investment in Trustco transport infrastructure private sector arrangements that • MIGA develops projects in Investments. (proposed) connected to major local and can be difficult to organize. energy (contingent on client • WBG TA for PPP approaches regional markets as well as • Lenders are reluctant to lend to demand; implementation next (New) IFC explores in the transport sector linked to Walvis Bay (DO SOEs even with sovereign CPS period) viability of supporting 5.1) guarantees. Strengthen productive capacity in Concentrated Solar Partners • Namibia will have in place tourism and agriculture, as Power Plant Authorities: MET, MTI, MOF, adequate base load energy to Potential investors in tourism joint indicated by: MME, MWT support industry ventures with communal - MIGA completes project in (New) MIGA explores development, with conservancies lack information about agribusiness additional support in port NGOs: WWF, Walvis Bay generation capacity increased the sector. - Case study completed on and road sectors (based Corridor Group, NACSO to 750 megawatts (DO 5.2) on client demand) communal conservancy tourism • Increased access to water for New livestock producers lack Trust funds: Umbrella Trade expertise, information about auctions joint ventures GRN concludes human consumption to 100% Facility of the population (from 85%) and marketing arrangements. PPP approach adopted for new agreement with IFC to as well as sufficient water container terminal at Walvis Bay organize at least one PPP reserves for industrialization port investment. (by FY17) (DO 5.3) • The Port of Walvis Bay has PPP approach analyzed for MIGA services used by become the preferred African at least one investor. expansion of Hosea Kutako West coast port and logistics International Airport corridor for southern and IFC makes at least one central African logistics new investment. (FY14) operations. (DO 6) • Namibia is the most Case study on communal competitive tourist conservancy tourism destination in Africa by joint ventures presented 2017, as measured by the at Adventure Travel WEF. (DO 7) World Summit (FY14). • The contribution of general manufacturing in constant Namibian dollar terms has increased by 50 percent over 2010. (DO 8) • Agriculture experiences average real growth of 4 percent per annum over the NDP4 period (DO 9) 18 Annex 2: Matrix of Changes to Original CPF Results Matrix This Annex details changes to the original CPS results matrix to enhance clarity and align with client demand. The table below indicates revised, new, and consolidated CPS outcomes, and dropped or added CPS milestones and outputs. Changes to CPS Program Milestones & Reason for changes to CPS Outcomes Outputs CPS Outcome or Original CPS Outcome(s) (Revised, New, Dropped) (Dropped or Added) Milestones Pillar 1: Improve the state’s capacity to design, implement, and monitor policies on strategic issues Improved expenditure analysis capacity Technical support provided for MOF’s Client lacked interested in RAS • 2016: PERs underway for 3 (Dropped) sectoral PERs (FY14–16) (dropped) program expected to support this ministries CPS outcome and output. Capacity to manage PPP created (Revised) Capacity to manage PPP increased Align with client demand and • 2015: pipeline of PPPs developed • WBG comments on Procurement law (2015) No change extent of the CPS’s technical • 2016: evaluation guidelines • WBG comments on PPP policy (2015) assistance. adopted NPC’s capacity to monitor NDP4 increased • 2014: sectoral baseline indicators (Revised) NPC’s capacity to monitor NDP4 Better reflect timeframe of increased No change compiled expected progress by client. • 2014: sectoral baseline indicators compiled • 2015: national M&E framework adopted • 2017: national M&E framework finalized South-South knowledge sharing Ambiguous outcome in nutrition through (Dropped) program; deletion adds clarity (New) City of Windhoek’s financial (New) Audit of City of Windhoek’s Asset Capture CPS engagement in this None management capacity increased register completed. area not included in original matrix Analytical report of Windhoek’s financial systems completed (2015) 19 (New) Efficiency measures are put in place to reduce fiscal pressures (New) Need for fiscal consolidation • SP programs are rationalized and better (New) Social protection expenditure review targeted as evidenced by elimination of at completed and recommendations disseminated while maintaining protections for To reflect additional CPS activities poorer individuals and households least one duplicative program (New) Need for fiscal consolidation (New) At least one SOE is being restructured in (New) Analysis of one SOE’s operation and while maintaining protections for To reflect additional CPS activities line with WBG recommendations management completed poorer individuals and households (New)Complete a feasibility study for a (New) Increase access to water desalination plant fueled by renewable energy through desalination sources To reflect additional CPS activities (Existing) Increase research on the root causes of extreme poverty (part (New) Complete poverty mapping exercise To reflect additional CPS activities of NDP4 Desired Outcome 4) (Existing) Namibians have access to (New) Draft UHC policy has been prepared by a quality health system (NDP desired the Ministry of Health drawing on (New) Study on UHC policy completed To reflect additional CPS activities outcome 3) recommendations of Bank study Pillar 2: Increase the private sector’s ability to generate jobs and incomes (New) Increased investments in financial sector actors with potential to catalyze private sector activity and investment, as indicated by: • New IFC investments in Bank Windhoek (New) WBG supports at least one PPP • Expanded IFC investments in Trustco transaction No original CPS Outcome for “Investments in Production and (New) IFC concludes investment in Purros (New) Strengthen capacity to undertake Infrastructure Program” Investments. projects in infrastructure, including through Better reflect scope of one WBG Engagement Area PPPs, as indicated by: cascade approach and Maximizing (original results matrix featured only (New) IFC explores viability of supporting outputs) • WBG supports at least one PPP transaction Finance for Development (MFD) Concentrated Solar Power Plant • MIGA develops 1-2 projects in energy (contingent on client demand; (New) MIGA explores additional support in implementation next CPS period) port and road sectors (based on client demand) (New) Strengthen productive capacity in tourism and agriculture, as indicated by: - MIGA completes project in agribusiness 20 - Case study completed on communal conservancy tourism joint ventures (Revised) Strengthen Namibia’s competition policy framework, as indicated by: • 2015: Delivery of the Competition Policy Competition policy framework Analysis of price competition in key markets Assessment delivered (FY14) (dropped) strengthened • 2015: WBG comments provided on • 2015: NaCC incorporates market Align to revised scope of WBG Namibia’s Procurement Bill Policy note delivered on restrictive product analysis into decisions activities and client demand. • 2016: WBG comments provided on market regulations (FY15) (added) Namibia’s draft Competition Law PPP approach adopted for new container (Existing) Namibia shall have a well- terminal at Walvis Bay port functioning, high quality transport WBG TA for Walvis Bay and Hosea Kutako infrastructure connected to major to reflect additional CPS activities PPP approach analyzed for expansion of Hosea PPPs completed local and regional markets as well as Kutako International Airport linked to Walvis Bay (DO 21 Annex 3: Summary of Progress on CPS Objectives Government Outcomes Activities, Instruments and Supported by the CPS (with Obstacles and Issues CPS Milestones, Outputs, Outcomes Partners sources) Pillar 1. Build State Capacity Economic Management Program Outcomes: Debt management and analysis capacity increased 2014: debt strategy informed by risk-cost analysis The 2005 Sovereign Debt 2015: MOF fiscal framework includes results of DSA Management Strategy has expired. 2015: BON economic outlook includes results of DSA Partially Achieved: The WBG provided analytical support and AAA Activities Debt and macroeconomic policies trainings to build the MOF’s capacity in debt analysis and • MOF Economic not fully informed by debt management, and the MTDS exercise informed Namibia’s 2015 Management TA NDP4 investments are made analytics. Sovereign Debt Management Strategy. The DSA may have informed • TA to City of Windhoek on without jeopardizing the MoF’s fiscal framework and the BoN’s economic outlook, but financial management macroeconomic stability through MOF lacks capacity to these outcomes need confirmation from the GRN. • Accounting and Auditing greater use of PPPs. (NDP4) systematically analyze expenditure ROSC (if requested) efficiency. Government must improve Improved expenditure analysis capacity internal efficiency (2013 budget Cabinet has approved a PPP policy, 2016: PERs underway for 3 ministries Not achieved: The client was not interested in the modality of a Partners: speech) but no institutional capacity yet proposed RAS program to undertake sector-based PERs. Authorities: MOF, BON, NPC exists to implement it. City of Windhoek Fundamental pillar of FY13/14- Capacity to manage PPP created 15/16 MTEF is to rebuild fiscal Public auditing and accounting 2015: pipeline of PPPs developed International: EU, IMF, buffers, including stabilizing systems do not fully comply with 2016: evaluation guidelines adopted MEFMI growth in public debt international standards; SOEs’ and Partially Achieved: The WBG commented on a draft PPP policy and municipalities’ lack of audited the draft PPP law, which has been submitted for legal drafting within Trust funds: Gates Foundation, financial statements hinders their the MOF. The MOF did not show interest in an expected to RAS PPIAF ability to obtain financing for program to support development of a pipeline of PPPs and infrastructure investments and evaluation guidelines. The MOF established a PPP Unit and hired municipal services consultants to work in these areas. The WBG provided complementary advice on the content of the 2015 Procurement Act. 22 Government Outcomes Activities, Instruments and Supported by the CPS (with Obstacles and Issues CPS Milestones, Outputs, Outcomes Partners sources) Outputs: Training provided in use of IMF-WB debt analytical tools (FY14) Achieved BOOST tool delivered (FY14) Achieved: WBG delivered BOOST tool and trainings, and BOOST tool [has been made available on public website?] Technical support provided for MOF’s sectoral PERs (FY14–16) Not Achieved Technical advice on PPPs delivered to MOF (FY15–16) Achieved Pillar 1. Build State Capacity Environmental Management Program Outcomes: National Policy on Coastal Management is implemented and the integrated coastal zone management approach is mainstreamed • The number of plans and strategies in the coastal area that Activities: Most sources of economic growth incorporate biodiversity issues increases to 53 by 2015 from 47 in • NACOMA 2 GEF project Promote sustainable economic, depend on Namibia’s fragile 2012 (US$ 1.92 million) social and cultural opportunities ecosystems and are vulnerable to Achieved: WBG assistance contributed to, inter alia, the GRN’s • GEF investments in while maintaining biodiversity climate change. There is especially adoption of a National Policy on Coastal Management, preparation of climate change and trans- and ecological integrity (NDP4) intense competition along the an ICM Bill, and proclamation of three protected national parks boundary conservation, if coast. covering about 11 million hectares. The number of national, regional, requested) Conserve, use sustainably and and local plans and strategies incorporating biodiversity issues rose mainstream the biodiversity of the from 0 in 2012 to 58 in 2015. Partners: Namibian coast (National Policy The National Policy on Coastal Authorities: GRN: MET, on Coastal Management) Management has been approved by Expanded economic opportunities in sustainable use activities Integrated Coast Zone the cabinet but still needs to be • Employment in sustainable use activities increases to 21,975 by Management Committee implemented. 2015 from 18,795 in 2012 Achieved: The number of people engaged in sustainable use activities Trust Funds: GEF increased from 18,975 in 2011 to 33,396 in 2015 23 Government Outcomes Activities, Instruments and Supported by the CPS (with Obstacles and Issues CPS Milestones, Outputs, Outcomes Partners sources) Outputs: Strategic studies and consultations delivered (FY14–16) Achieved: Multiple WBG consultations and studies led to preparation of regional and coastal land use management plans, and an integrated land use plan for the Tsieb conservancy. WB advisory support to OKACOM secretariat via Multisector Investment Opportunity Analysis for the sustainable development of the Cubango-Okavango river basin. (FY18??) Educational materials and communications and training programs provided for policy makers (FY14–16) Achieved: Since 2013, 260 people were trained in Integrated Coastal Zone Management (ICZM) and related policies, and 172 people were trained in park management, tourism management, and environmental assessment. 56 communication or awareness activities were implemented since 2013. Matching grants to finance investments in coastal protected areas (FY14–16) Achieved: Matching grants funded 12 investments in pilot areas to improve coastal management, rehabilitate land, and support sustainable tourism. 24 Pillar 1. Build State Capacity Statistical Capacity Program Outcomes: Increased capacity of NSA to gather and release statistics in accordance with international standards. Progress indicated by increases in score on WB Index of Statistical Capacity 2012: 56 2015: 67 2018: 78 Activities: Partially Achieved: The WBG provided a comprehensive TA program • IDF grant to NPC for to program to build the NSA’s capacity to analyze and publish performance monitoring The quality and frequency of development statistics, but the score on the WB Index of Statistical • TFSCB grant to NSA for producing many official statistics Improve NDP execution through Capacity Building fell from 56.7 in 2012 to 47.8 in 2015, though has institutional development are low by international standards. improved performance risen to 58.9 in 2016. • Regional statistical Some have never been produced. monitoring and evaluation capacity training (if Release of statistics to the public mechanisms, including improving NPC’s capacity to monitor NDP4 increased approved) has been slow and incomplete. the national statistics system to 2014: sectoral baseline indicators compiled • ESW/TA on poverty and enhance the quality of data. 2015: national M&E framework adopted inequality analysis (if Policies often are not developed (NDP4 Desired Outcome 10) Partly achieved: Improved baseline and target indicators have been requested) through public debate based on developed and adopted in Namibia’s 2015 Medium-Term Expenditure policy analysis. Plan and sector budgets. Namibia has developed an Integrated Increase research on the root Partners causes of extreme poverty (part of National Performance Framework, but tis adoption is pending. Authorities: NSA, NPC, MOF Systems for using data to monitor NDP4 Desired Outcome 4) policy implementation and inform Outputs: International: OECD/Paris 21, revisions or evaluation are weak. Training in data dissemination and analysis tools (ADP, ADePT, etc.) resident UN agencies (FY14) Achieved Trust Funds: TFSCB, IDF, Delivery of technical advice on multi-topic household surveys and economic statistics. (FY14–16). Achieved: WBG TA included workshops on survey sampling, multi- topic surveys, and data analysis in Mauritius and South Africa. 25 Pillar 1. Build State Capacity Health and Nutrition Program Outcomes: Increased integration of systems for addressing communicable and non-communicable diseases 2014: national nutrition plan launched 2015: tobacco control framework strengthened 2015: cervical cancer control measures incorporated into HIV/AIDS programs Activities: Achieved. The GRN launched a national nutrition plan; adopted • Health Sector Policy policies to better control tobacco use; and supported measures to Dialogue TA Health service delivery systems prevent and control cervical cancer within HIV/AIDS programs • Follow-up TA if are fragmented (by type of requested disease). South-South knowledge sharing through By 2017, Namibians have access to a Partners: MOHSS is faced with challenge quality health system (NDP desired Outputs: Authorities: MOHSS, OPM of financing programs currently outcome 3) Advisory work to fully cost the nutrition strategy delivered funded by external grants. (FY14) International: WHO, UNICEF, Achieved UNAIDS and other UN Child malnutrition and stunting agencies; USAID; IMF rates are very high. Technical support on cervical cancer systems provided in conjunction with Pink Ribbon/Red Ribbon global partnership Trust Funds: Gates Foundation, (FY14) Bloomberg Foundation Achieved Namibia included in regional tobacco trade community of practice. (FY14) Achieved 26 Pillar 2. Private Sector Development Institutional Environment for a Competitive Private Sector Program Financial sector more resilient and supportive of investment 2014: financial sector crisis management plan adopted 2017: central securities depository established Partly achieved: A FIRST-funded grant supported the BoN and partners (MoF, NAMFISA) to develop a Crisis Management Plan (CMP), including a systemic risk framework, Activities: communications strategy, and recommendations on deposit • TA to NaCC (FY14) insurance, and to engage in a crisis simulation. The WBG • ICR ROSC (FY14) provided recommendations on establishing a central securities • Central Securities Namibia is falling behind other depository. Depository TA (FY14) countries in Doing Business, • FSAP (FY15–16) Global Competitiveness Index By 2017, Namibia is the most Competition policy framework strengthened • TA to implement Doing and other competitiveness competitive economy in SADC, as 2015: NaCC incorporates market analysis into decisions Business Reform rankings. measured by the WEF CGI (NDP4 Partly achieved: The WBG completed two policy notes on Memorandum desired outcome 1) restrictive policy market regulations and Namibia’s anti-trust recommendations (if High transaction costs, unclear legal framework, which were combined into a Competition requested, FY14) insolvency regime, vulnerability Policy Assessment disseminated to diverse stakeholders, By 2021, Namibia has an effective, to shocks, and weak price including sector regulators. The WBG commented on Namibia’s efficient, stable, competitive, resilient Partners: discovery discourage financial Procurement Law and draft Competition law. However, it is and inclusive financial system. Authorities: BON, NAMFISA, sector deepening. unclear the extent to which the NaCC has incorporated market (Financial Sector Strategy goals) MOF, MOJ/Law Reform and analysis into decisions. Development Commission, Firms and SOEs with market NaCC, MTI power dampen competition. GRN proposes regulatory reforms that reduce documents needed to start a business and days needed to import a container International: IMF, GIZ, 2012: 10 documents to start a business; 25 days to import a container (DB2013) Trust Funds: FIRST 2017: 5 documents to start a business; 16 days to import a container (RSA levels in DB2013) Partly achieved: This will need Phil’s input…the indicators are not readily available on Doing Business site… 27 Outputs: Analysis of price competition in key markets delivered (FY14) Not Achieved: This analytical work was expected as a third component of the TA program for the NaCC, but was dropped as required data from a 2015 enterprise survey was not available in adequate time. Insolvency and Creditor/Debtor Regime ROSC delivered (FY14) Achieved: The WBG delivered in FY14 a comprehensive ROSC diagnostic report benchmarking Namibia’s practices against international standards, and highlighting areas where Namibia is strong (e.g., enforcement of claims), but also vulnerabilities. Technical advice provided on central securities depository (FY14–15) Achieved Policy note on anti-trust legal framework delivered (FY15) Achieved FSAP delivered (FY16) This has been delayed but done. The main mission took place in September 2017 and the Financial Sector Assessment will be sent to the Board most likely by the end of 2017 28 Pillar 2. Private Sector Development Investments in Production and Infrastructure Program NDP4 Desired Outcomes relevant to possible WBG activities: • Namibia shall have a well- functioning, high quality transport infrastructure connected to major The scale of investment needed in local and regional markets as well as public infrastructure exceeds linked to Walvis Bay (DO 5.1) Outputs: GRN and SOE’s capacity. Private • Namibia will have in place adequate Case study on communal conservancy tourism joint ventures sector financing must be base load energy to support industry presented at Adventure Travel World Summit (FY14). Activities mobilized, but: development, with generation Achieved: Case study completed in 2013 and findings shared at • FPD-IFC study on joint • Many potential investments capacity increased to 750 megawatts global event in Namibia with more than 300 public and private ventures with communal require complex government- (DO 5.2) sector representatives. Led to publication of a follow-on report: conservancies parastatal-private sector • Increased access to water for human “Getting Financed: 9 Tips for Community Joint Ventures in • IFC investment in arrangements that can be Tourism”. consumption to 100% of the Trustco (proposed) difficult to organize. population (from 85%) as well as • Lenders are reluctant to lend sufficient water reserves for Partners to SOEs even with sovereign GRN concludes agreement with IFC to organize at least one PPP industrialization (DO 5.3) Authorities: MET, MTI, MOF, guarantees. • The Port of Walvis Bay has become investment. (by FY17) MME, MWT the preferred African West coast port Not Achieved Potential investors in tourism and logistics corridor for southern NGOs: WWF, Walvis Bay joint ventures with communal MIGA services used by at least one investor. (by FY17) and central African logistics Corridor Group, NACSO conservancies lack information Partly Achieved (Agribusiness) operations. (DO 6) about the sector. • Namibia is the most competitive Trust funds: Umbrella Trade tourist destination in Africa by 2017, IFC makes at least one new investment. (FY14) Facility New livestock producers lack Achieved, including investments in Purros Investments and as measured by the WEF. (DO 7) expertise, information about • The contribution of general Bank Windhoek auctions and marketing manufacturing in constant Namibian arrangements. dollar terms has increased by 50 percent over 2010. (DO 8) • Agriculture experiences average real growth of 4 percent per annum over the NDP4 period (DO 9) 29 30