FOR OFFICIAL USE ONLY Report No: PAD3379 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF SDR 95.1 MILLION (US$130 MILLION EQUIVALENT) FROM THE CRISIS RESPONSE WINDOW TO THE REPUBLIC OF MOZAMBIQUE FOR THE CYCLONE IDAI AND KENNETH EMERGENCY RECOVERY AND RESILIENCE PROJECT September 17, 2019 Social, Urban, Rural, and Resilience Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Exchange Rate Effective August 31, 2019 Currency Unit = New Mozambique Metical (MZN) MZN 64.250 = US$1 US$1 = SDR 0,7308125 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank AIAS Water and Sanitation Infrastructure Administration (Administracao de Infra-estruturas de Agua e Saneamento) BBB Building Back Better BCR Benefit-Cost Ratio CERC Contingent Emergency Response Component CERRP Cyclone Idai and Kenneth Emergency Recovery and Resilience Project CPF Country Partnership Framework CRW Crisis Response Window CUT Single Treasury Account (Conta Única do Tesouro) DA Designated Account DALY Disability-Adjusted Life Year DRF Disaster Recovery Framework DRIVE Development Related Infrastructure Investment Vehicle DRM Disaster Risk Management e-SISTAFE Integrated Financial Management Information System ERR Economic Rate of Return ESF Environmental and Social Framework ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan ESMS Environmental and Social Management System EU European Union FM Financial Management FMS Financial Management Specialist FY Fiscal Year GBV Gender Based Violence GDP Gross Domestic Product GREPOC Post-Cyclone Idai Reconstruction Office (Gabinete de Reconstrução Pos Ciclone Idai) GoM Government of Mozambique GP Global Practice GRM Grievance Redress Mechanism GRS Grievance Redress System IDA International Development Association IFC International Finance Corporation IFR Interim Financial Report IGF General Inspectorate of Finance (Inspeção Geral das Finanças) IMF International Monetary Fund INTOSAI International Organization of Supreme Audit Institutions IRM Immediate Response Mechanism ISSAI International Standards of Supreme Audit Institutions KfW German Development Bank (Kreditanstalt für Wiederaufbau) LNG Liquefied Natural Gas M&E Monitoring and Evaluation MAF Financial Administration Manual (Manual de Administração Financeira) MOPHRH Ministry of Public Works, Housing, and Water Resources (Ministério de Obras Públicas, Habitação e Recursos Hídricos) MSMEs Micro, Small, and Medium Enterprises MZN New Mozambique Metical NGO Nongovernmental Organization NPV Net Present Value PALPOC Post Cyclone Housing Recovery Plan (Plano de Alojamento Pós Ciclones) PDNA Post-Disaster Needs Assessment PDO Project Development Objective PFI Participating Financial Institution PFS Project Financial Statement PIU Project Implementation Unit POM Project Operations Manual PPP Purchasing Power Parity PPSD Project Procurement Strategy for Development RAP Resettlement Action Plan RPF Resettlement Policy Framework RVO Netherlands Enterprise Agency SASB Beira’s Autonomous Sanitation Services (Serviços Autónomos de Saneamento da Beira) SDR Special Drawing Rights SEP Stakeholder Engagement Plan SME Small and Medium Enterprise TA Technical Assistance UN United Nations USAID U.S. Agency for International Development Regional Vice President: Hafez M. H. Ghanem Country Director: Mark R. Lundell Regional Director: Ede Jorge Ijjasz-Vasquez Practice Manager: Meskerem Brhane Task Team Leaders: Michel Matera, Brenden Jongman The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) TABLE OF CONTENTS DATASHEET ........................................................................................................................... 1 I. STRATEGIC CONTEXT ...................................................................................................... 7 A. Country Context................................................................................................................................ 7 B. Situations of Urgent Need of Assistance or Capacity Constraints .................................................... 8 C. Sectoral and Institutional Context .................................................................................................. 12 D. Relevance to Higher Level Objectives ............................................................................................ 15 II. PROJECT DESCRIPTION.................................................................................................. 16 A. Project Development Objective ..................................................................................................... 16 B. Project Components ....................................................................................................................... 16 C. Project Beneficiaries ....................................................................................................................... 23 D. Results Chain .................................................................................................................................. 23 E. Rationale for World Bank Involvement and Role of Partners......................................................... 25 F. Lessons Learned and Reflected in the Project Design .................................................................... 26 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 27 A. Institutional and Implementation Arrangements .......................................................................... 27 B. Results Monitoring and Evaluation Arrangements......................................................................... 28 C. Sustainability................................................................................................................................... 28 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 29 A. Technical, Economic, and Financial Analysis (if applicable) ........................................................... 29 B. Fiduciary.......................................................................................................................................... 31 C. Legal Operational Policies ............................................................................................................... 32 D. Environmental and Social ............................................................................................................... 32 V. GRIEVANCE REDRESS SERVICES ..................................................................................... 35 VI. KEY RISKS ..................................................................................................................... 35 VII. RESULTS FRAMEWORK AND MONITORING ................................................................... 38 ANNEX 1: Implementation Arrangements and Support Plan .......................................... 46 ANNEX 2: Financial Intermediary Financing - Project Design Details ............................... 53 ANNEX 3. Economic Analysis ......................................................................................... 56 ANNEX 4: Status of GBV Risk Rating and Recommended Actions ................................... 64 ANNEX 5: Project Map .................................................................................................. 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Mozambique Mozambique: Cyclone Idai & Kenneth Emergency Recovery and Resilience Project Environmental and Social Risk Project ID Financing Instrument Process Classification Urgent Need or Investment Project P171040 High Capacity Constraints Financing (FCC) Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s) [✓] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [✓] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) Expected Approval Date Expected Closing Date 30-Sep-2019 30-Sep-2024 Bank/IFC Collaboration Joint Level Yes Complementary or Interdependent project requiring active coordination Proposed Development Objective(s) The Project Development Objective is to support the recovery of public and private infrastructure and livelihoods while strengthening climate resilience in the areas most affected by Cyclones Idai and Kenneth. Page 1 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Components Component Name Cost (US$, millions) Recovery and Reconstruction of cyclone-affected areas 80.00 Building Climate Resilience 123.00 Project Implementation, Monitoring and Evaluation 7.00 Contingent Emergency Response Component (CERC) 0.00 Organizations Borrower: Ministry of Economy and Finance Implementing Agency: Water and Sanitation Infrastructure Administration (AIAS) Post-Cyclone Idai Reconstrution Office (GREPOC) PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 210.00 Total Financing 190.00 of which IBRD/IDA 130.00 Financing Gap 20.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 130.00 IDA Grant 130.00 Non-World Bank Group Financing Other Sources 60.00 NETHERLANDS: Min. of Foreign Affairs / Min. of Dev. Coop. 60.00 Page 2 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount Mozambique 0.00 130.00 0.00 130.00 Crisis Response Window 0.00 130.00 0.00 130.00 (CRW) Total 0.00 130.00 0.00 130.00 Expected Disbursements (in US$, Millions) WB Fiscal Year 2020 2021 2022 2023 2024 2025 Annual 7.73 25.68 35.88 22.44 24.92 13.35 Cumulative 7.73 33.41 69.29 91.73 116.65 130.00 INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Urban, Resilience and Land Finance, Competitiveness and Innovation Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of Yes country gaps identified through SCD and CPF b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or Yes men's empowerment c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ Substantial Page 3 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) 2. Macroeconomic ⚫ High 3. Sector Strategies and Policies ⚫ Low 4. Technical Design of Project or Program ⚫ Moderate 5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial 6. Fiduciary ⚫ Substantial 7. Environment and Social ⚫ High 8. Stakeholders ⚫ Moderate 9. Other 10. Overall ⚫ Substantial COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Page 4 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance Assessment and Management of Environmental and Social Risks and Impacts Relevant Stakeholder Engagement and Information Disclosure Relevant Labor and Working Conditions Relevant Resource Efficiency and Pollution Prevention and Management Relevant Community Health and Safety Relevant Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities Cultural Heritage Relevant Financial Intermediaries Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). Legal Covenants Sections and Description Financing Agreement Schedule 2, Section I.A.1: Not later than 60 days after the Effectiveness Date, the Recipient shall and shall cause GREPOC to create and thereafter maintain until the completion of the Project a unit within MOPHRH (the GREPOC-PIU), responsible for the management, coordination, supervision, monitoring and evaluation of Part 1 and 3(ii) of the Project. Sections and Description Financing Agreement Schedule 2, Section I.A.3: Without limitation of the provisions of Section 3.01 of this Agreement, the Recipient, through GREPOC, shall, and shall cause AIAS, no later than 30 days after the Effective Date to prepare and thereafter carry out the Project in accordance with the Project Operations Manual (POM). Page 5 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Conditions Type Description Effectiveness The AIAS Subsidiary Agreement have been executed on behalf of the Recipient and AIAS, in accordance with terms and conditions satisfactory to the Association. Type Description Disbursement Notwithstanding the provisions of Part A above, no withdrawal shall be made under Category (1) unless: (i) the ESMF, LMP, and RFP are prepared, adopted, and disclosed in form and substance satisfactory to the Association; (ii) the Recipient has adopted the Housing Reconstruction Manual in a manner satisfactory to the Association; and (iii) the environmental and social specialists referred to in Section 1.A.1(b) of Schedule 2 to this Agreement have been hired in a manner satisfactory to the Association. Type Description Disbursement Notwithstanding the provisions of Part A above, no withdrawal shall be made under Category (2) unless the Recipient: (i) has adopted the Matching Grants Manual in a manner satisfactory to the Association; (ii) the ESMF, LMP, and RFP have been prepared, adopted, and disclosed in form and substance satisfactory to the Association; and (iii) the environmental and social specialists referred to in Section 1.A.1(b) of Schedule 2 to this Agreement have been hired in a manner satisfactory to the Association. Type Description Disbursement Notwithstanding the provisions of Part A above, no withdrawal shall be made under Category (3) unless: (i) each of the PFIs have put in place an ESMS acceptable to the Association; (ii) the ESMF, LMP, and RFP have been prepared, adopted, and disclosed in form and substance satisfactory to the Association; and (iii) the environmental and social specialists referred to in Section 1.A.1(b) of Schedule 2 to this Agreement have been hired in a manner satisfactory to the Association. Type Description Disbursement Notwithstanding the provisions of Part A above, no withdrawal shall be made under Category (5) unless evidence has been submitted to the Association that the Recipient and the Co-financer have entered into the Co-financing Agreements. Type Description Disbursement Notwithstanding the provisions of Part A above, no withdrawal shall be made under Category (6) unless; (i) the ESMF, LMP, and RFP have been prepared, adopted, and disclosed in form and substance satisfactory to the Association; and (ii) the environmental and social specialists referred to in Section 1.A.1(b) of Schedule 2 to this Agreement have been hired in a manner satisfactory to the Association. Page 6 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) I. STRATEGIC CONTEXT A. Country Context 1. Mozambique has achieved significant economic development since the end of the civil war in 1992, but important challenges remain that have been aggravated by the recent hidden debt crisis. Real annual growth of the gross domestic product (GDP) averaged around 8 percent over the past two decades. Robust growth was made possible by several large-scale foreign investment projects in the extractives sector, political stability, and significant donor support. However, falling commodity prices, climate shocks, fiscal tightening, and slowdown in foreign direct investments in the aftermath of the US$1.4 billion hidden-debt disclosure caused economic growth to drop to 4.3 percent and inflation to peak at 26 percent in 2016. While inflation decreased to 5 percent by August 2018, growth dipped to an average of 3.8 percent in 2016 and 2017. External debt remained at an unsustainably high level (estimated 85 percent of GDP)1 and the economy remains exposed to external shocks given its dependence on a few commodities for foreign exchange earnings. Potential large revenues from liquefied natural gas (LNG) projects may increase government earnings in the coming years. Moreover, upcoming general elections (planned for 2019) could amplify political tensions between the main parties to control resources, which have been compounded by the changing political economy with the discovery of LNG reserves. To date, the International Monetary Fund (IMF) has not resumed its program in Mozambique and, in 2017, the country was classified as being in a ‘fragile situation’ by the World Bank. 2. While the country has achieved growth over the past years, the number of poor people is growing as is the level of inequality. According to the latest official figures, poverty has fallen from 54 percent in 2002 to 46 percent in 2014. International comparison data (using the US$1.9 per day 2011 purchasing power parity [PPP] poverty line) show a similar trend with poverty in Mozambique falling from 79.3 percent to 62.9 percent over the same period. However, the number of people living in poverty using the US$1.9 per day 2011 PPP poverty line has increased from 13.26 million in 1996 to 17.12 million in 2014. The population share of the poor (using the US$1.9 per day 2011 PPP poverty line) is projected to decline by less than 1 percentage point from 60.8 percent to 59.9 percent between 2017 and 2020. Such stagnation of poverty is expected because GDP growth in per capita terms is anemic and is dominated by extractive industries and urban areas, where poverty is less concentrated. Due to high population growth and the absence of adequate safety nets, the number of the poor is expected to increase. Growth has become less inclusive in recent years, raising the levels of inequality. The Gini index fell from 0.54 in 1996 to 0.47 in 2002, then slid to 0.46 in 2008, and reached the level recorded in the late 1990s of 0.54 again in 2014. The relationship between growth and poverty reduction has weakened due to a transition toward capital-intensive public and private investment projects and fewer people have been benefitting. The recent economic downturn may also have had a negative effective on poverty reduction. While inflationary pressures have subsided, relative food price levels are high and household consumption remains strained. 1IMF (international Monetary Fund). 2018. Republic of Mozambique: Debt Sustainability Analysis. USL: IMF https://www.imf.org/external/pubs/ft/dsa/pdf/2018/dsacr1865.pdf Page 7 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) 3. The limited fiscal space and social vulnerabilities in Mozambique are exacerbated by climate and disaster shocks affecting growth and development on a regular basis. Disaster and climate shocks are frequent in the country. A catastrophe risk modeling study estimates that Mozambique faces average annual losses of US$440 million due to floods alone.2 Emerging international evidence shows that disasters have disproportional impacts on poor and vulnerable populations, such as women, with limited capacity to cope with shocks, further driving inequality and poverty in exposed regions.3 Recent poverty analysis4 conducted in Mozambique shows that cyclone, flood, or drought can lead to a drop of up to 25– 30 percent in per capita food consumption and that affected households also cut back on expenditures in basic non-food items. The negative effects on consumption resulted in a poverty increase of 12 and 17.5 percentage points in two of the three events analyzed. Also, the provinces cyclically most affected by disasters tend to show higher levels of poverty compared to those least affected. In addition, the public resources allocated ex ante for emergency response and recovery have systematically been significantly lower than the funds needed to cope with catastrophic events. These financial constraints and the resulting need to mobilize ex post resources lead to inefficient response operations and prolonged and uncertain recovery processes, which further exacerbates the negative economic impacts of disasters. Without changes in climate and disaster risk management (DRM) and financing policy, climate change is expected to cause economic damages of between US$2.3 billion and US$7.4 billion during the period 2003–2050 (discounted and in 2003 prices).5 Mozambique’s development process therefore needs to address poverty goals in an inclusive and resilient manner. 4. The effects of climate change are already evident in Mozambique and are expected to lead to further rises in disaster losses. The mean annual temperature in Mozambique increased by 0.6˚C between 1960 and 2009, while average rainfall totals declined over the same period.1 Sea level rise is likely to exceed half a meter by the 2090s, with significant consequences for the 60 percent of Mozambicans who are living in low-lying areas. A national study showed that, if no further adaptation actions are undertaken, sea level rise could increase economic flood losses in Mozambique’s major coastal cities by a factor of five between 2012 and 2030. Intensification of droughts is expected to reduce crop yields by an average of 11 percent (up to 30–40 percent in some provinces) and reduce general water availability and river floods may become more intense across the main basins due to increases in extreme precipitation during the rainy seasons. B. Situations of Urgent Need of Assistance or Capacity Constraints 5. In March and April 2019, Mozambique was struck by two consecutive major cyclones with significant impacts on local populations, business, and core infrastructure. More than 1.7 million people were affected, with damages and losses amounting to US$3 billion and an estimated US$3.4 billion of total cost for recovery and reconstruction.6 The first event, Cyclone Idai, affected more than 1.5 million people (5.4 percent of Mozambique population) causing 603 fatalities and 1,600 injuries. Cyclone Idai also had significant impacts in neighboring countries, Malawi and Zimbabwe. The second event, Cyclone 2 World Bank. 2018. Financial Protection Against Disaster in Mozambique. 3 Hallegatte et al. 2017. Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters. World Bank. 4 Baez et al. 2018. Extreme Weather and Household Well-being: Evidence from Multiple Shocks in Mozambique . World Bank. 5 World Bank. 2010. The Economics of Adaptation to Climate Change – Mozambique. Arndt, C., Paul Chinowsky, Kenneth Strzepek, and James Thurlow. 2012. “Climate Change, Growth and Infrastructure Investment: The Case of Mozambique.” Review of Development Economics 16 (3): 463–475. 6 Government of Mozambique. 2019. Post Disaster Needs Assessment. Page 8 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Kenneth, affected around 250,000 people and caused 45 casualties. Both events destroyed and damaged houses, business, and core infrastructure. Given the severity of the impacts of the two cyclones in Mozambique, the World Bank’s proposed response combines the strategic use of IDA resources on multiple fronts to enable a response at scale, drawing from resources under ongoing projects where possible, activation of Contingency Emergency Response Component (CERC)/Immediate Response Mechanism (IRM) components, and a proposed crisis response window (CRW) allocation. 6. The impacts of Cyclones Idai and Kenneth are concentrated in the provinces of Sofala, Zambezia, Manica, Nampula, Tete, and Cabo Delgado (see annex 5). Cyclone Idai caused extraordinary levels of impact in Sofala, Zambezia, and Manica. Idai’s U-shaped path passed over Zambezia, Nampula, and Tete provinces in the first week of March. It then came back through Sofala, Manica, and Tete during the end of the second week making landfall near the city of Beira, in the Sofala province. The city, Mozambique’s fifth largest with a population of over 530,000, was hit hard by both cyclone-level wind speeds (greater than 175 km per hour) as well as torrential rainfall and storm surge. The cyclone caused massive destruction from both flooding and very strong winds, resulting in severe economic and social impacts for affected populations. Six weeks after, Cyclone Kenneth, a Category 4 cyclone considered the strongest cyclone to ever hit the African continent, brought winds of up to 220 km per hour causing massive destruction to homes and infrastructure in the districts of Ibo, Macomia, and Quissanga. Kenneth slowly moved south toward the city of Pemba, population 200,000, causing major flooding in its path. 7. A Post-Disaster Needs Assessment (PDNA) was conducted in April and May 2019 in partnership with Government and nongovernment actors, quantifying the damages, losses, and negative repercussions on poverty and economic growth. The PDNA was carried out in collaboration with the Government of Mozambique (GoM), United Nations (UN), African Development Bank (AfDB), European Union (EU), and World Bank, covering the entire affected areas, including those affected by Cyclone Kenneth. In addition, the World Bank conducted a remote ‘Global Rapid Post-Disaster Damage Estimation (GRADE)’ impact assessment, and the Municipality of Beira conducted a citywide assessment process with support from the Dutch Government and other international partners. The PDNA shows the highest damages and losses in the productive (US$1,191 million), infrastructure (US$797 million), and social (US$693 million) sectors. These impacts will lead to an increase in poverty rate and inflation, and a decrease in economic growth, likely worsening the food insecurity. It is estimated that the poverty rate may rise to 79 percent in affected areas, up from 64 percent. Preliminary forecasts for GDP point to a decrease in real GDP growth from 4.7 percent to 2.4 percent. 8. Both cyclones caused serious damage to housing and public buildings leading to displacement and disruption of key public sector services, including markets, schools, and health facilities with possible long-term negative impacts on people’s lives. An estimated 240,000 houses were damaged or destroyed by Cyclone Idai, with an estimated cost of US$410 million and an additional 50,000 houses by Cyclone Kenneth. Both cyclones caused mass displacement with 230,000 people displaced post Idai and 20,000 people displaced post Kenneth. Months after Cyclone Idai, people were still living in camp sites around the affected areas increasing the risk of waterborne diseases and epidemics. The cyclones and subsequent flooding wiped out or damaged a large share of the core infrastructure, including roads and bridges, electricity and water networks, hospitals, schools, and telecommunication. An estimated 29 percent of the national road network was damaged and 20 bridges were damaged or destroyed by Cyclone Idai. In Cabo Delgado, 14 roads were cut off and five bridges collapsed due to Cyclone Kenneth. Across areas affected by Cyclones Idai and Kenneth, public sector buildings have been damaged, affecting service Page 9 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) delivery in health and education, among other sectors. In total, over 340,000 students were affected as 4,700 classrooms were damaged by the cyclone. Cyclone Idai caused damages on 92 health facilities, including the emergency room of the Beira Central Hospital, which was rendered nonfunctional. Cyclone Kenneth caused damages in half of the health facilities in Cabo Delgado. Finally, many municipal markets were also damaged, affecting economic activity, especially for small-scale enterprises. 9. Impacts of Cyclones Idai and Kenneth will exacerbate existing vulnerability in the provinces that were most affected, namely, Sofala, Zambezia, Manica, and Cabo Delgado. The four provinces have a total population of 11 million people, which represents 36.5 percent of the country’s total population, accounting for 27 percent of national GDP. The province of Sofala, where the city of Beira is located, has about 2.1 million inhabitants and represents 10 percent of national GDP. It was the hardest hit province by Cyclone Idai with damages and losses close to US$2 billion, representing over 150 percent of provincial GDP. The province of Cabo Delgado, worse hit by Cyclone Kenneth, experienced losses and damages representing 34 percent of provincial GDP. Poverty rates in Sofala and Cabo Delgado are at 50 percent in both provinces, which is slightly above the national average of 46 percent. Estimates combining exposure and population data in areas affected by Cyclone Idai suggest that about 60 percent of the affected were poor. Consequently, levels of poverty and vulnerability are likely to increase in affected areas due to the cyclone. 10. Due to the strategic importance of the Beira corridor for international trade, the damages to critical infrastructure and logistics in and around Beira are expected to have ripple effects on neighboring countries, in addition to the negative effects on the local economy. The Beira corridor is a trading route for countries, including Malawi, Zambia, and Zimbabwe, that links hinterland countries to the ocean through the port of Beira. Cyclone winds and floods destroyed or damaged critical infrastructure, such as roads and bridges, as well as buildings in Beira used to facilitate trade, such as warehouses. Thus, the capacity of the region to facilitate trade is expected to decrease as a consequence of Cyclone Idai. This will have long-term impacts, as businesses search for alternative trading routes during the disruption. Some may not return when services have recovered. Local businesses have suffered major damages and losses. In addition to the direct costs associated with damages to facilities and equipment, local enterprises suffered from the indirect effects of infrastructure disruptions, as well as demand and supply shocks. 11. In 2017, Mozambique was classified as being in a ‘fragile situation’ by the World Bank due to the ongoing situation in the affected province of Cabo Delgado. Cabo Delgado is the fourth poorest province in Mozambique in terms of GDP per capita and poverty rate. The province will also be the location for considerable investments in infrastructure to support extraction of petroleum, natural gas, and mining. The gas investments in particular—estimated at around US$50 billion in the next 15 to 20 years—have been anticipated for the last 10 years but have only started recently, with therefore limited current impact on the existing population, fueling perceptions that the local population is excluded from reaping the benefits of extraction industries. Such grievances, along with poverty and widespread youth unemployment, have led to the rise of extremism. Mocimboa da Praia, one of the areas affected by Cyclone Kenneth, has been at the center of Islamist radicalization, which has resulted in violent attacks in Cabo Delgado over the past two years. Since October 2017, attacks by unidentified armed groups have caused at least 200 deaths in Cabo Delgado, with one of the bloodiest attacks which killed 16 people on May 31, 2019. The wave of violence is also causing mass displacement due to arson and destruction of property across three districts in Cabo Delgado. If not adequately and promptly addressed, the impact of Page 10 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Cyclone Kenneth could fuel the narrative that the province of Cabo Delgado has been forgotten. Should such a narrative gain further traction, the province could become a fertile territory for further destabilization. 12. The GoM activated mechanisms to respond to the emergency of both cyclones with extensive donor support. Following the landfall of Cyclone Idai, the Government launched a major rescue operation while providing humanitarian aid to affected population and on March 19, 2019 the Government declared a state of national emergency. On April 24, before the landfall of Cyclone Kenneth, the Government declared a red alert in the northern region which triggered additional allocation of funds and resources from the government and partners. The post-disaster response was carried out by the National Institute for Disaster Management (Instituto Nacional de Gestão de Calamidades), a Government agency, with support from the UN system and multilateral and bilateral organizations. The UN launched flash appeals after Idai and Kenneth of US$282 and US$103.7 million, respectively, which were only partly funded. The Government completed a PDNA supported by the EU, UN, AfDB, and World Bank covering the entire affected areas, including those affected by Cyclone Kenneth. The PDNA was coordinated by the Ministry of Public Works, Housing, and Water Resources (Ministério de Obras Públicas, Habitação e Recursos Hídricos, MOPHRH) and the outcomes were presented at the Donor Conference on June 1, 2019. The PDNA also included a wider government response strategy to address the identified needs. To support the government response, pledges of US$1.08 billion were made by the donor community during the June 1st Donor Conference, comprising US$470 million of World Bank resources and US$609.7 million from other donors. The World Bank support primarily includes restructuring of existing projects (US$60 million), activation of the IRM/CERC7 (US$55 million) of ongoing projects and additional support through the CRW (US$140 million). 13. To help address short- and long-term needs after Cyclones Idai and Kenneth, the World Bank mounted a comprehensive response package of more than US$470 million implemented collaboratively across nine global practices (GPs). To address the most urgent humanitarian and reconstruction needs, World Bank support included (a) a rapid strategic disbursement of the IDA DRM and Resilience Program- for-Results (P166437); (b) mobilization of US$60 million from existing projects across various GPs; (c) activation of the IDA IRM for US$55 million for emergency repairs of roads (Transport GP), water supply systems (Water GP), and emergency agriculture and rural livelihood support (Agriculture and Environment GPs). The objective of these streams of financing is to provide immediate support for the first three–six months after the cyclones, including livelihood support in agriculture and fisheries, restore infrastructure in parks, and access to power and water supply and public health services in affected areas. A combined US$365 million, comprising US$350 million from the CRW and US$15 million freed up through cancelations from ongoing projects have been used for Additional Financing to replenish CERC-activated projects and provide additional recovery and reconstruction financing. Included in the CRW package is also the current Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (CERRP), which is focused on the medium to long-term reconstruction and resilience building needs for Beira and other affected areas. 7 US$35 million from the Integrated Feeder Road Development Project (P158231), US$10 million from the Water Services and Institutional Support (WASIS II) Project (P149377), and US$10 million from the Agriculture and Natural Resources Landscapes Management (SUSTENTA) Project (P149620). Page 11 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) 14. The CERRP focuses on delivering support to the most affected sectors while complementing the ongoing projects aligned with the Government’s program to rapidly address recovery and reconstruction. Despite generous contributions from donors, the funding gap remains at US$2.3 billion. In some affected areas, including Beira, the immediate response is now transitioning to longer-term recovery and reconstruction. The recovery of roads, water, sanitation, electricity, health, and education infrastructure is needed to limit the long-term effects of the disaster on humanitarian and poverty outcomes. The Government faces a substantial financing gap to fulfill these reconstruction needs across sectors. This emergency project is critically needed to help restore basic productive capacities, rehabilitate public services and build back better to strengthen the resilience of affected communities. Project preparation was closely coordinated with donors and the GoM. The project is closely aligned with the Disaster Recovery Framework (DRF) under preparation by the Government, offers a platform for coordination, linked with the existing donor’s coordination mechanism. The proposed CERRP is designed to provide a response across those priority areas. Project interventions were selected based on a prioritization of emergency needs in sectors that were hardest hit and that have so far not been covered by other projects. C. Sectoral and Institutional Context Public Buildings and Infrastructure 15. Cyclones Idai and Kenneth had significant impacts on public infrastructure, including public administration, markets, and water and sanitation. The cyclones damaged public buildings where technical and administrative services operate rendering them nonfunctional. Damages and losses to public buildings add up to US$16.6 million in Sofala province alone. Other government buildings that were damaged include public markets which are critical for the local economy. Public buildings are often used as shelters in case of disasters. This was observed during and after Cyclones Idai and Kenneth as well. Rapid and resilient recovery of public assets is therefore important not only for the functioning of the community and for the delivery of fundamental public services, but also to mitigate impacts of future disasters. Disruption to water and sanitation services have large human impacts and damages caused by Cyclones Idai and Kenneth will have longer-term effects on the levels of poverty in the country. About 190,000 sanitation units were damaged in Cyclone Idai and 211,000 people were left with restricted water access. Unless safe water and sanitation options are provided or restored, the lack of access will have negative impacts on health and well-being for affected populations. Housing 16. An estimated 240,000 houses were damaged or destroyed by Cyclone Idai and an additional 50,000 by Cyclone Kenneth. It is estimated that about 8,000 families are living in temporary accommodation camps and will need support in relocating to new resettlements. Additionally, 225,000 households will need support to rebuild their homes. The impacts demonstrate that the majority of houses in Mozambique are built with inadequate materials and not to resilient standards. Indeed, data of the 2017 household census shows that more than the 64 percent of people in the country live in houses Page 12 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) with adobe, wooden sticks and bamboo as predominant materials.8 Most of the cyclone damage to housing was caused by wind. In addition, flooding of rivers and coastal storm surge damaged houses in low-lying flood zones. Even without major disasters, the gap of adequate housing in Mozambique is estimated to be more than 400,000 units per year.9 The largest needs for recovery and reconstruction are in the housing sector with a total of US$688 million, of which 97 percent is needed in the short term. Currently, housing construction is done at the individual and municipal level, and there is no appropriate institutional setup for the reconstruction of cyclone-affected housing. However, the rapid and resilient reconstruction of housing is of high importance to poverty outcomes, especially for families living below the poverty line in informal housing. In addition, families in temporary camps or in inadequate houses are at risk of waterborne diseases and epidemics, with long-lasting negative effects especially for children and pregnant women. Private Sector 17. Cyclone Idai alone caused an estimated US$115 million damage to the private sector, with at least 356 companies facing significant disaster impacts.10 Private sector recovery is critical to sustain or increase employment in a post-disaster context and ensure livelihoods are restored. Enterprises in areas affected by the cyclones suffered damages to warehouses, offices, manufacturing facilities, and equipment. In the province of Sofala, it was found that 90 percent of the warehouses in the industrial park were partially damaged. The most affected sectors overall were industry, agro-business, commerce, and transport and logistics. The disaster also caused a sudden inflation of the prices for construction materials (including roofing materials) due to increased demand, scarcity, and rent seeking. In the agriculture sector, firms reported the need to replace stock (cattle) that was decimated by disaster. Inputs for production in other sectors likely face similar constraints. Firms with government contracts have also expressed concern that there would be delays in payments given fiscal constraints and disaster recovery needs. Liquidity needed to finance emergency investment and working capital can be difficult to obtain by smaller firms as access to finance is a major constraint in the country. According to the World Bank Enterprise Survey, access to finance is a ‘major’ to ‘very severe’ obstacle to doing business for more than 50 percent of firms. Financial Sector Response to the Cyclones 18. Banks and microfinance institutes active in areas affected by Cyclone Idai acted in response to the disaster. Commercial banks responded to the disaster by extending loan maturities and providing grace periods, but none provided refinancing at lower interest rates. One bank operating in the area has provided fresh credit lines equivalent to MZN 1 billion (US$15.7 million) to 24 clients in the period immediately following the disaster. Some banks have observed an increase in their ratio of nonperforming loans and have responded by offering their clients payment moratoriums and term extensions. The microfinance sector responded by extending their portfolio of microcredits to low-income clients affected by the cyclone to facilitate reconstruction and recovery. 8 Government of Mozambique. 2019. IV Recenseamento Geral da Populaçao e Habitaçao 2017. Resultados definitivos Moçambique. 9 Government of Mozambique. 2019. Post Disaster Needs Assessment. 10 Government of Mozambique. 2019. Post Disaster Needs Assessment. Page 13 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Flood Protection 19. Flooding has been a primary hazard in areas affected by Cyclones Idai and Kenneth, resulting in loss of life and damage to infrastructure, housing, and productive sectors. The city of Beira is particularly exposed to flooding due to its low-lying setting in a delta area. Beira was affected by widespread rainfall- induced flooding in January 2019 and faced both fluvial and coastal flood hazard during Cyclone Idai. Urban flood events are frequently associated with cholera outbreaks; this problem is most chronic and grave in the city of Beira where large populous informal settlements are located in low-lying flood-prone neighborhoods. The city has a vulnerable coastal protection system due to lack of maintenance and insufficient investment, as well as an inadequate drainage system, which is poorly maintained and in urgent need of expansion due to rapid urbanization. 20. Cyclone Idai highlighted the severe drainage problems of the city of Beira. Vast areas of Beira suffered from delayed runoff of storm water, resulting in urban flooding and waterlogging. Satellite information combined with population data shows that 36.2 percent of the city was flooded due to Cyclone Idai, affecting 217,000 people many of whom had been affected by the January 2019 flooding. Cyclone Idai also showed that investing in drainage pays off. The areas that had benefited from drainage rehabilitation investments under the Cities and Climate Change Project (P123201)11 suffered little to no flood damage compared to areas not serviced by rehabilitated drainage systems. 21. Strengthening coastal protection and drainage are a priority in Beira to strengthen its resilience to future shocks. Beira is expected to double in size in the next 10–15 years and has been suffering from coastal erosion since the 1950s. The coastal protection system that was put in place in the 1960 has degraded gradually and is currently not providing enough support to protect the city from storm surge. Cyclone Idai exposed vulnerabilities of the rapidly growing city of Beira and caused damage to the coastal protection system and coastal roads. According to the Beira Municipal Recovery and Resilience Plan, coastal protection and drainage are priorities to the city with estimated investment needs of US$284 million. Expert assessments indicate that damages to both coastal protection and the city of Beira would have been much higher had Idai struck Beira during spring tide conditions. A significant improvement of the coastal protection scheme is needed to provide sufficient protection for Beira against coastal hazards in the future. Institutional Framework 22. Reconstruction office. On April 11, 2019, the Council of Ministers established a dedicated Post- Cyclone Idai Reconstruction Office (Gabinete de Reconstrução Pós Ciclone Idai, GREPOC) under the MOPHRH to coordinate the reconstruction in areas affected by Cyclones Idai and Kenneth. It coordinated the PDNA and organization of the Beira Donors’ Conference on May 31 and June 1, 2019, as well as development of a four-year recovery and reconstruction strategy, including monitoring of program implementation. 23. The MOPHRH is responsible for the strategic management of water resources in Mozambique. A specialized central agency, the Administration for Water and Sanitation Infrastructure (Administracao 11World Bank. 2012. Mozambique - Cities and Climate Changes Project. Washington, DC: World Bank. https://hubs.worldbank.org/docs/imagebank/pages/docprofile.aspx?nodeid=159288 Page 14 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) de Infra-estruturas de Agua e Saneamento, AIAS), was created in 2009 under the authority of the MOPHRH to manage urban water and sanitation investments, including drainage. This agency implemented recent investments in the drainage system financed by the World Bank. 24. Emergency management and risk reduction. Recognizing the magnitude of climate and disaster risks, the GoM has made disaster prevention and mitigation a policy priority and achieved considerable improvements in its DRM policy and institutional framework, ranging from its first Disaster Management Policy in 1999 to a more comprehensive Disaster Management Law in 2014 complemented by regulations in 2016. The law also recognizes the need for dedicated financial protection instruments The GoM’s Five- Year Development Program 2015–2019 (Programa Quinquenal do Governo 2015–2019) recognizes that climate resilience not only mitigates the negative impact of disasters but is also inextricably linked to poverty reduction of populations who are most exposed to such disasters. 25. To support the GoM’s efforts in DRM and climate change, the following World Bank initiatives are also being implemented: (a) Mozambique Disaster Risk Management and Resilience Program (P166437) that strengthens the GoM's program to finance and prepare for disaster response; (b) Mozambique Climate Change Technical Assistance Project (P131195) that strengthens the institutional and technical capacity of the GoM to mainstream climate resilience into key economic sectors; (c) Mozambique - Maputo Peri-urban Sanitation Project (P132551) that pilots improvements of the sanitation conditions and practices; (d) the Cities and Climate Change Project (P123201) that strengthens municipal capacity for sustainable, climate-resilient urban infrastructure, and environmental management; (e) Climate Resilience: Transforming Hydro-Meteorological Services Project (P131049) that reinforces hydrological and meteorological information services to deliver reliable and timely climate information to local communities; and (f) Enhancing Spatial Data for Flood Risk Management Project (P149629) that supports flood risk assessment in the Limpopo and Zambezi Basins. D. Relevance to Higher Level Objectives 26. The proposed project is in line with the World Bank Group’s Country Partnership Framework (CPF, Report No. 104733-MZ) for Mozambique for FY17–21. By supporting the recovery of key affected sectors and provinces after the Idai and Kenneth cyclones, the project will reduce negative indirect impacts to sustainability of growth and poverty reduction in Mozambique. The project will support housing and public infrastructure reconstruction considering Building Back Better (BBB) principles in line with the CPF program that underscore the need for resilient infrastructure in the country. Through private sector recovery in Component 1, the project will contribute to CPF Objective 3 on improving the business environment for job creation. Building resilience in coastal protection and drainage in Beira will be instrumental to achieving CPF Objective 11 on improving management of climate risk and natural resources. 27. Moreover, it will contribute toward the World Bank’s twin goals, its Climate Change Action Plan (2016–2020), and its Gender Equality Strategy (2016–2023). Disasters often disproportionally affect the poor and their impact can throw vulnerable people back into poverty. The project will contribute to the elimination of extreme poverty and boosting shared prosperity by enabling a rapid recovery and reconstruction with BBB principles and building future resilience, thus reducing the indirect impacts of both cyclones as well as preventing future impacts. Combining exposure and population data suggest that Page 15 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) about 60 percent of the affected population were poor, which suggests that primarily poor people were affected. Consequently, levels of poverty and vulnerability are likely to increase in affected areas due to the cyclone. In line with the World Bank Group’s plan to enhance action toward resilience to climate change that does not leave anyone behind (Climate Change Action Plan, Priority III, high-impact area vi), the project will pay special attention to people living in extremely vulnerable areas, including women and children. II. PROJECT DESCRIPTION A. Project Development Objective PDO Statement 28. The Project Development Objective is to support the recovery of public and private infrastructure and livelihoods while strengthening climate resilience in the areas most affected by Cyclones Idai and Kenneth. PDO Level Indicators 29. The project is expected to achieve the following results: a) People benefiting from resilient housing repaired or reconstructed under the project (Number), of which women (Number) b) People benefiting from repaired, reconstructed or new public infrastructure (Number), of which women (Number) c) Beneficiaries reached with financial services (Number) d) Small and Medium Enterprises (SMEs) with a loan or line of credit (Number) e) People protected by restored or improved climate resilience infrastructure (Number) B. Project Components 30. The proposed project addresses short- and medium-term reconstruction needs while strengthening long-term resilience of the affected areas. The proposed reconstruction interventions follow the priorities as identified in the PDNA, focusing on (a) reconstruction of resilient housing and selected public infrastructure assets and recovery of the private sector and (b) investments in the recovery and strengthening of climate-resilient infrastructure. 31. The project will address recovery needs in the coastal provinces most affected by Cyclones Idai and Kenneth and will support climate resilience investments in the city of Beira. The coastal provinces of Sofala and Cabo Delgado have borne the brunt of Cyclones Idai and Kenneth; thus, the project will prioritize recovery of housing and public and climate-resilient infrastructure across these two provinces. Being one of the most important and fastest-growing centers of economic activity in Mozambique, the city of Beira in the province of Sofala accounts for a large share of the economic impact of Cyclone Idai. Other areas affected by the cyclones, such as Manica, Tete, and Zambezia, will also benefit from the intervention but to a lesser extent. Page 16 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Component 1: Recovery and Reconstruction of Cyclone-affected Areas (US$80 million equivalent IDA) 32. The activities to be financed under this component include (a) the repair and reconstruction of housing for selected vulnerable communities; (b) the repair and reconstruction of key public infrastructure; and (c) the recovery of the private sector and economic activities. Subcomponent 1.1: Housing (US$42 million IDA; of which US$37 million for Housing Grants and US$5 million for TA) 33. The subcomponent will finance the partial or complete reconstruction of approximately 15,000 housing units for an estimated 75,000 cyclone-affected beneficiaries through a community-based and owner-driven resilient reconstruction approach, as well as relevant technical assistance (TA) activities to ensure that the housing stock is more resilient. The housing reconstruction activities will prioritize affected areas in Sofala and Cabo Delgado. 34. TA activities financed under this subcomponent are designed to ensure that the housing reconstruction process follows a transparent, fair, and community-based approach, that include (a) social, environmental, and technical support for beneficiary households; (b) training of artisans and Beneficiaries; (c) communication and outreach; (d) supervision and certification of compliance with multi-hazard resistant standards and of completion of multi-hazard resilient core housing units; (e) implementation of the environmental and social management framework including identified safeguard mitigation measures; (f) development of a grievance redress mechanism; (g) support to community planning activities, and (h) technical studies. The system’s design will be based on similar data tracking systems developed in other post-disaster housing reconstruction programs, including in the Nepal Earthquake Housing Reconstruction Project (P155969). 35. The need for support to recovery of housing and settlements in affected areas far exceeds the resources currently available. To help the Government address this situation, the project will take two actions: (a) assist GREPOC and other relevant government agencies in designing a housing recovery strategy and an operational Housing Recovery Manual that can attract other funding over time, with this subcomponent supporting the initial phase; and (b) target its resources to optimize project impact. The objective is to target the affected population and prioritize vulnerable communities and households, such as female-headed households. The targeting will be based on general criteria identified in the Housing Recovery Strategy, the Housing Reconstruction Manual, and specific procedures included in the Project Operations Manual (POM). GREPOC will complete the Housing Recovery Strategy in the first months of implementation. Other support to GREPOC will include assessments and studies, including (a) a housing assessment to identify damage typologies and appropriate repair and reconstruction options; (b) a social assessment of affected households that will collect data regarding the households’ composition, economic situation, tenure status, and reconstruction investments to date; and (c) a value chain analysis to assess the market conditions for housing reconstruction and flag potential limitations related to land, labor, materials, and so on. Activities under the Government’s wider reconstruction program that address settlements-related needs identified in the PDNA (such as school reconstruction) will be coordinated with the activities of this subcomponent, whenever possible. 36. The implementation arrangements, including financing flows, will be based on the housing reconstruction strategy and will be subject to World Bank approval before implementation. Also, the Page 17 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) construction will be implemented through a hybrid approach involving homeowner- and/or community- managed reconstruction, technical support to homeowners and builders from nongovernmental organizations (NGOs) and UN organizations, and conditional grants for housing recovery through GREPOC and the banking system. The Housing Reconstruction Manual will guide the operational implementation of the selected approach based on the Housing Reconstruction Strategy. Reconstruction activities will be preceded by community-level planning to identify risks and service deficits and will be consistent with local development and land use plans. At the household level, allocation of resources will be governed by pre-established eligibility criteria, identified in the housing reconstruction strategy. Participants will be registered and required to enter a participation agreement before accessing any resources or support provided in the program. The participation agreement will detail the conditions on which the beneficiary is receiving support. All beneficiaries will be disclosed publicly using the tracking system developed in the TA activity described. 37. To ensure that the approach used to carry out the activities under this subcomponent will allow housing reconstruction to be scaled up with additional financial contributions, the World Bank will work with the Government and partners in developing the Post-Cyclone Housing Recovery Plan (Plano de Alojamento Pós Ciclones, PALPOC). This process will include agencies with an interest in housing and settlements, such as the United Nations Human Settlements Programme (UN-Habitat) and the U.S. Agency for International Development (USAID). Subcomponent 1.2: Public Infrastructure (US$16 million IDA) 38. This subcomponent will finance the recovery and reconstruction of key public infrastructure damaged by Cyclones Idai and Kenneth and the construction of new, more resilient public infrastructure. Specific activities financed may include the repair and reconstruction of markets, government buildings, public water and sanitation units, community investments identified in Subcomponent 1.1, and multifunctional elevated flood evacuation sites and cyclone wind shelters. It will also finance the investments to restore services and reduce risk in affected areas where housing reconstruction and repair are occurring. 39. The process of identification, prioritization, and selection of public infrastructure that will benefit from this subcomponent will be defined by the DRF and the community planning exercises conducted under Subcomponent 1.1. GREPOC will lead the development of the DRF in close collaboration with the EU, the UN, and the World Bank. The framework will directly inform the interventions to be financed under this subcomponent. 40. The activities financed under this subcomponent will be constructed in a climate-resilient, inclusive, and gender-informed fashion, by using resilient design standards, incorporating female-friendly aspects in shelter design, and prioritizing public infrastructure that offers services and employment to women, such as markets. A technical support program will be established to build capacity for BBB approaches across government and nongovernment agencies, building on the expertise developed under the Emergency Resilient Recovery Project (P156559) and Disaster Risk Management and Resilience Program (P166437). To make sure implementation of the project follows a transparent, fair, inclusive, and community-based approach, the subcomponent will benefit from TA activities planned under Subcomponent 1.1. Page 18 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Subcomponent 1.3: Private Sector Recovery (US$22 million IDA) 41. This subcomponent will have the following three activities: (a) matching grants to support micro, small, and medium enterprise (MSME) recovery; (b) credit line to enhance access to finance; and (c) TA to MSME and SME to support effective utilization of funds obtained. This component will target informal, micro, and small-size firms affected by the disaster. This would complement the US$110 million International Finance Corporation (IFC) Mozambique and Malawi Emergency Facility (IMMEF) under preparation; however, it is not dependent on the IFC operation which targets medium-size firms. This subcomponent is being coordinated in collaboration with other donors focusing on private sector support, such as USAID. (a) Matching grants to support the recovery of MSMEs (US$5 million). Under this activity, the proposed project will finance activities to assist the private sector in recovering from natural disaster by supporting the purchase of equipment and materials to enable MSMEs to restore operating capacity/equipment as part of their overall recovery effort and provide TA to eligible MSMEs. To maximize the impact of the grants, eligibility will be designed in a way that supports vulnerable populations, such as women-owned businesses. A negative list12 will detail excluded uses of the matching grants, due to potential social and environmental implications. The World Bank has previous experience from implementing matching grants in Mozambique through the Integrated Growth Poles Project (P127303). This activity will build on those experiences. (b) Credit line to enhance access to finance (US$15 million). To facilitate access to liquidity for small to medium enterprises in the aftermath of the disaster, this activity focuses on enabling participating financial institutions (PFIs) to offer beneficial credit options to firms affected by the disaster. The activity allows selected financial institutions to access credit with beneficial interest rates, such as the rate commercial banks pay to access the central bank’s permanent deposit facility (10.25 percent as of June 24, 2019) or another benchmark. As a result, the financial institutions can then offer cheaper credits to firms. Selected institutions must have a strong track record of working with small and medium enterprises— eligibility criteria are outlined in annex 2.13 The financing would provide temporary liquidity for working capital and investment financing during the emergency recovery phase (defined as 6–24 months following the disaster). (c) TA on implementation design (US$2 million). TA will be provided to support the effective implementation of the matching grants and credit lines. On the matching grants, TA will focus on participating firms to verify eligibility and provide support to beneficiaries from the point of matching grant application to implementation of their project. On credit lines, the TA will assist PFIs to tailor emergency response and recovery products to the specific needs 12 Business involving activities that are likely to have significant adverse environmental impacts that are sensitive, diverse, or unprecedented will not be eligible to financing, including (but not limited to) activities that demand involuntary resettlement, may result in the degradation of critical habitats, have significant air emissions compromising ambient air quality, have significant wastewater/effluents generation compromising water quality, produce noise above permitted levels, may pose physical, chemical, biological, and radiological hazards, or any treat to the community health and safety. The final negative list will be detailed in the Operations Manual. 13 No disbursements will be made under this subcomponent until the appropriate due diligence of the PFI has been conducted. Page 19 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) of eligible firms. The TA will draw from relevant Finance, Competitiveness, and Innovation (FCI) experiences including the Mozambique Integrated Growth Poles Project (P127303) and Madagascar Financial Inclusion Project (P161491). 42. In terms of sequencing, the matching grant could move relatively quickly, drawing on previous matching grant projects implemented in the context of Mozambique. The TA to support PFIs would be undertaken in parallel and result in the development of a menu of financial services tailored to the needs of firms affected by the natural disaster. The goal would be to have a credit line supporting private sector recovery within six months of initiation. Component 2: Building Climate Resilience (US$63 million equivalent IDA plus US$60 million co-financing from Development Related Infrastructure Investment Vehicle (DRIVE) Program) 43. The proposed project presents a holistic and strategic approach to reconstruction aimed at reducing the vulnerability of the city of Beira, an important economic hub that suffered large losses due to Cyclone Idai, to climate-related hazards. Building on existing World Bank engagements in climate change adaptation in Beira through the Cities and Climate Change Project (P123201), this component will strengthen the resilience of the city of Beira to future climate hazards, by (a) repairing and significantly strengthening coastal protection and (b) expanding the rehabilitated drainage system to reduce flooding in vulnerable parts of the city. As part of these investments in climate resilience, the component also includes building capacity of the city administration in operation and maintenance. The preparation of the resilience investments in Beira included in this component was closely coordinated with the Netherlands Enterprise Agency (RVO) and the German Kreditanstalt für Wiederaufbau (KfW). 44. The geographical scope of this component specifically targets the most vulnerable parts of Beira, due to the increasing priority of the city as a regional economic hub and the fact that Beira suffered the major share of the combined economic losses from the two cyclones. Subcomponent 2.1: Coastal Resilience (US$30 million IDA, plus US$30 million co-financing) 45. Beira’s coastline remains vulnerable to storm events and continuous erosion. The main flood protection system intended to shield the city from coastal hazards was constructed more than 50 years ago and has deteriorated with limited maintenance since its construction. Cyclone Idai damaged this already weakened coastal protection infrastructure and caused US$2 million in damage to coastal infrastructure.14 However, because landfall occurred at low tide, the city escaped widespread coastal flooding. Cyclone Idai was therefore a strong wake-up call for the repair and rehabilitation of the coastal protection system. 46. In the aftermath of Cyclone Idai, the GoM, with support from the Government of the Netherlands, conducted a comprehensive assessment of the vulnerabilities in the coastal protection system.15 The assessment quantified damages, losses, and needs and concluded that the coastal protection system urgently needs rehabilitation and strengthening to protect the city from coastal 14 Beira Municipal Recovery and Resilience Plan (2019) https://www.dutchwatersector.com/news/beira-municipal-recovery- and-resilience-plan 15 Beira Municipal Recovery and Resilience Plan (2019) https://www.dutchwatersector.com/news/beira-municipal-recovery- and-resilience-plan Page 20 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) flooding. The total needs for repairs and upgrades to the coastal protection system are estimated at US$90.9 million, which includes the repair and reconstruction of existing groynes, flood walls and dunes, and the rehabilitation of degraded beaches. 47. This subcomponent will address key gaps in Beira’s coastal protection system , by (a) repairing damage to the coastal protection and coastal road caused by Cyclone Idai; (b) rehabilitating and strengthening the groynes, dunes, and flood walls; and (c) conducting strategic sand nourishment to replenish the sand balance across the target area. 48. The works under this subcomponent will be co-financed on a 50/50 basis by the Government of the Netherlands, through the DRIVE program. The Government of the Netherlands will finance half of the firm contract under this subcomponent to a maximum of US$30 million. The World Bank already has experience working with the DRIVE program in Mozambique. It was agreed with the Netherlands that all World Bank procedures (procurement and environmental and social) will be applicable. A Letter of Intent has been sent and a separate grant agreement will be signed between the Government of the Netherlands and the GoM. Because both sources of funds will be necessary to achieve the objectives of Subcomponent 2.1 and to avoid implementation delays, the signing of the co-financing agreement will be included as a condition of disbursement for the works. Subcomponent 2.2: Drainage Rehabilitation (US$30 million IDA, plus US$30 million co-financing) 49. This subcomponent will repair cyclone-induced damages to the drainage works and implement Phase 2 of the drainage rehabilitation. Cyclone Idai caused minor damages to the current drainage system that will be repaired under this subcomponent. The works completed to date only covered Phase 1 of the drainage rehabilitation needs of Beira. Phase 1 was financed under the Cities and Climate Change Project. It was recognized in 2015, upon completion of the detailed design of the Phase 1 works, that this investment needed urgent follow-up with the study and implementation of Phase 2. Consequently, this subcomponent will directly build on other World Bank engagements in Beira. Phase 2 will focus on Chota and Estoril and deal with the rehabilitation of canals A1 and A3, including an additional retention basin and outlet to the eastern coast. The AIAS has already commissioned a study to demonstrate the feasibility of these Phase 2 drainage works, before the availability of funding and before the passage of Cyclone Idai. 50. The works under this subcomponent will be co-financed on a 50/50 basis by the Government of the Netherlands through the DRIVE program. The DRIVE program will finance half of the firm contract under this subcomponent to a maximum of US$30 million. The World Bank has already experience working with the DRIVE program in Mozambique. It was agreed with the Netherlands that all World Bank procedures (procurement and environmental and social) will be applicable. A Letter of Intent has been sent and a separate grant agreement will be signed between the Government of the Netherlands and the GoM. Because both sources of funds will be necessary to achievement of the objectives of Subcomponent 2.2 and to avoid implementation delays, the signing of the co-financing agreement will be included as a condition of disbursement for the works. Subcomponent 2.3: Design, Implementation and Supervision Support (US$3 million) 51. This subcomponent will finance the feasibility studies and design for the drainage works (Subcomponent 2.2) and the implementation and TA required for the overall Component 2. The Page 21 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) feasibility studies and design for the coastal protection investments (Subcomponent 2.1) will be covered by the Government of the Netherlands. The activities under this component will be implemented by the AIAS. 52. TA will be provided to the AIAS to strengthen their capacity on sustainable coastal management and the implementation of coastal resilience interventions. Because coastal management is a relatively new area of activity in Mozambique, the TA will strengthen the AIAS’ technical capacity in this field. The activity will also review and identify ways to improve existing regulations for sediment management and to introduce concepts such as building with nature (dune management, seagrass, and natural habitat management). Regulating sand mining, requiring sand bypass as part of environmental management of coastal infrastructure, and targeted dump of sediment from dredging to areas needing sediment, are measures that prevent coastal erosion. To promote long-term resilience of the targeted coastal areas, investments in coastal protection need to be accompanied by sound regulation and adequate environmental management procedures. 53. TA will be provided to Beira’s Autonomous Sanitation Services (SASB) to strengthen their capacity in drainage operation and maintenance. The project will continue building the operations and maintenance capacity of the SASB, which was initiated under the Cities and Climate Change Project (P123201) and Phase I of the drainage rehabilitation project. Component 3: Project Implementation, Monitoring and Evaluation (US$7 million equivalent IDA) 54. This component will support the implementation of all project activities, through establishing and strengthening the capacity of GREPOC and the AIAS (responsible for implementing Components 1 and 2, respectively), covering technical, fiduciary, safeguard, project management, and citizen engagement capacities. Subcomponent 3.1: Project Implementation, Monitoring and Evaluation – AIAS (US$3 million) 55. This subcomponent will support the implementation of project activities under the responsibility of the AIAS (Component 2), through (a) technical capacity for the implementation of reconstruction and resilience interventions; (b) fiduciary (that is, financial and procurement management); (c) environmental and social safeguards management; (d) preparation of project reports; and (e) monitoring and evaluation (M&E). Subcomponent 3.2: Project Implementation, Monitoring and Evaluation – GREPOC (US$4 million) 56. This subcomponent will support the implementation of project activities under the responsibility of GREPOC (Component 1), through (a) technical capacity for the implementation of reconstruction and BBB interventions; (b) fiduciary (that is, financial and procurement management), (c) environmental and social safeguards management; (d) preparation of project reports; and (e) M&E. 57. This subcomponent will also support tailored training and capacity-building activities related to the best practices in post-disaster reconstruction following the BBB approach, to strengthen the implementation of all components. Page 22 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Component 4: Contingent Emergency Response Component (CERC) (US$0 million) 58. This component will provide immediate response to an eligible crisis or emergency, as needed. This would finance emergency works in the case of another disaster event by including a ‘zero-dollar’ CERC. This would help recover damaged infrastructure, ensure business continuity, and enable early rehabilitation. In parallel, following an adverse event that causes a major disaster, the GoM may request the World Bank to channel resources from this component into an IRM. The IRM would enable the use of up to 5 percent of uncommitted funds from the overall IDA portfolio to respond to emergencies. This IRM has already been established for Mozambique and already activated twice, including in response to Cyclone Idai. Specific details around this component (including activation criteria, eligible expenditures, and specific implementation arrangements as well as required staffing for the coordinating authority) are defined in the IRM Operations Manual. C. Project Beneficiaries 59. The proposed investments and activities will target vulnerable populations in areas affected by Cyclones Idai and Kenneth. The two consecutive cyclones affected an estimated 1.7 million people in Mozambique with widespread flooding and cyclone speed winds. The different project components in the proposed project are designed to target some of the most heavily affected and vulnerable communities with recovery and resilience interventions. In total, an estimated 250,000 beneficiaries will be targeted with project activities. The impact of the project could be leveraged to reach additional beneficiaries if other donors follow the framework, for example, housing, that is used by the project. 60. The operation will make specific efforts to address needs of women and vulnerable subgroups in the target areas. Women and other vulnerable group, such as people with disabilities, are known to be disproportionally affected by the impact of disasters. The World Bank’s disability strategy calls for all reconstruction projects that finance public facilities to ensure that they are accessible to people with disabilities. In addition, the operation will address the needs of women by (a) targeting female-headed households as part of the housing reconstruction projects; (b) ensuring that cyclone shelters and any water and sanitation infrastructure are constructed in female-friendly ways; (c) rebuilding markets and other public areas offering employment opportunities for women; and (d) targeting women-owned businesses as part of the grant matching activity under the private sector recovery component. D. Results Chain 61. The project follows a holistic approach toward reconstruction and resilience building to reduce the development impacts of the recent cyclones while strengthening the resilience of communities against future disaster shocks. Between Components 1 and 2, the project addresses recovery, reconstruction, and resilience in a holistic way. The recovery and reconstruction will be informed by hazard-resilient building standards and climate change projections to ensure that the investments will better withstand future cyclone and flood events. Resilient building standards have already been developed for some public infrastructure classes in Mozambique, most notably flooding, ensuring that this can be implemented swiftly. The investments in climate resilience infrastructure will complement the reconstruction works by providing protection of development gains to coastal and urban flooding in the rapidly growing city of Beira. Page 23 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Figure 1. Proposed Theory of Change for the Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project Activities/ Outputs/Interme Results areas Outcomes Inputs diate Results 1. Number of houses repaired or reconstructed 1. Housing 2. Number of public Recovery of reconstruction buildings repaired or Recovery and reconstructed public and 2. Rebuild public reconstruction infrastructure 3. Number matching private of cyclone- grants and credit lines infrastructure 3. Support signed with MSMEs affected areas private sector 4. Number of people of affected recovery trained in resilient areas reconstruction and community resilience 1. Area provided with new/improved drainage services 1. Strengthen 2. Length of Climate Building climate coastal resilience coastline protected resilience resilience 2. Rehabilitate by strengthened strengthened drainage climate resilience infrastructure 62. Subcomponent 1.1 will address urgent recovery needs in housing and public services, which will help restore livelihoods and reduce immediate health, education, and poverty negative outcomes. Safe and appropriate housing is one of the key foundations of livelihoods. Cyclones Idai and Kenneth have caused over US$430 million damages to housing across central and northern Mozambique, inflicting financial, health, and safety burdens on vulnerable communities. This component will also strengthen community-level resilience through training and TA on safe building practices, local risk mapping, and resilience planning. 63. The reconstruction, rehabilitation, and new construction of key public infrastructure will support livelihoods and provide shelter in future disasters. The two consecutive cyclones have destroyed and damaged key public infrastructure assets that provide services for communities across the country. The activities under this subcomponent will strategically repair and rebuild public infrastructure that supports the local economy (that is, markets), water, and sanitation, as well as infrastructure offering protection against future disasters (that is, wind and flood shelters). The interventions will support the Page 24 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) recovery of livelihoods and economic activity, while reducing the humanitarian impact during future events. 64. The private sector interventions under Subcomponent 1.3 will provide rapid relief to small and medium businesses, with trickle-down effects for employment and economic development. The activities under this subcomponent will target businesses negatively affected by Cyclones Idai or Kenneth. The businesses benefiting from private sector support will be better placed to thrive economically and offer employment to members of the local community. The support to the private sector will increase the speed and scope of the economic recovery. 65. Component 2 reduces the vulnerability of communities to future disasters by strengthening their resilience against flooding. Cyclones Idai and Kenneth are only the latest in a long series of climate- related disasters in Mozambique that demonstrate the severe impact of extreme events on the poor. Studies globally16 as well as specifically on Mozambique17 show that the poor are disproportionally exposed to disasters and that major shocks cause long-lasting effects on income and poverty outcomes. In addition, the impact of disasters on coastal infrastructure poses a significant cost on the economy.18 The construction and maintenance of coastal and inland flood protection infrastructure in Mozambique has suffered from a severe lack of financing, which worsens the impact of cyclones such as Idai and Kenneth. The impact of such disasters will get gradually worse as the climate is warming. The climate resilience investments under Component 2 will address a major gap in the coastal and urban flood control system in Beira. The investments will secure a minimum protection level in the target areas for several decades, which will save lives and livelihoods and enable resilient economic development in large parts of Beira. 66. All interventions will consider climate change in their design. Climate change may make storm surge, flooding, and cyclones more intense and more frequent. Both the reconstruction and retrofit (Component 1) and resilience (Component 2) interventions will be designed with specific incorporation of climate change aspects. The climate change co-benefits for this project are estimated at 65 percent. E. Rationale for World Bank Involvement and Role of Partners 67. The funding gap for recovery and resilience is substantial. The PDNA conducted after Cyclones Idai and Kenneth shows reconstruction needs of US$2.8 billion and US$224 million, respectively, which is in addition to an existing substantial funding gap on climate resilience infrastructure and unrepaired damages from previous climate disasters. The Donor Conference for the two cyclones that was held on May 31–June 1, 2019, resulted in a total pledging amount of US$1.2 billion, including the US$470 million made available by the World Bank. The proposed project is a critical component of the international and domestic response to the disasters and has the potential to bring in further co-financing from partners. 68. The World Bank value added is significant, with a long-standing policy dialogue with Mozambique and extensive experience in ‘BBB’ operations. The World Bank has extensively supported Mozambique in developing its approach to risk management, risk financing, and emergency recovery. On 16 World Bank. 2016. Shockwaves. 17 Baez et al. 2018. Disaster Shocks and Poverty in Mozambique. 18 World Bank. 2019. Lifelines. Page 25 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) emergency recovery, the World Bank has worked with the GoM in the successful development and implementation of the Emergency Resilient Recovery Project for the Northern and Central Regions (P156559). Furthermore, only days after the landfall of Cyclone Idai, the World Bank Board approved the first-ever IDA Disaster Risk Management and Resilience Program PforR (P166437) for Mozambique. This operation included the development and capitalization of the national DRM fund, which was a key pillar in the Government’s disaster response effort. In Beira, the World Bank has financed the Cities and Climate Change Project (P123201), which implemented the first phase of the drainage rehabilitation works that proved effective in minimizing the impacts of Cyclone Idai in the target areas. The proposed new operation will provide a natural continuation and further upscaling of the World Bank’s collaboration with the GoM on disaster risk reduction, financing, and recovery. Finally, the proposed operation builds upon decades of experience in the World Bank on cyclone recovery and resilience. The project will draw lessons from the Caribbean, the Pacific, and beyond to develop and implement a holistic and effective set of activities. 69. The project is expected to benefit from substantial co-financing from development partners, most notably the Government of the Netherlands. The project has the potential to leverage co-financing from other donors on both the recovery and resilience components. The Government of the Netherlands has expressed its intention to co-finance the proposed investments in drainage and coastal protection (Component 2) alongside this proposed project, on a 50/50 basis, for a maximum of US$60 million. The grant agreement is expected to be signed shortly after project effectiveness and is a disbursement condition for the works under Component 2. It is also expected that additional donors would cover the US$20 million funding gap under Component 2. In case co-financing is not obtained, the funding gap will be covered under IDA 19 financing window. F. Lessons Learned and Reflected in the Project Design 70. The project design considers lessons learned from previous emergency and non-emergency operations in Mozambique, as well as from other recovery and resilience operations across the World Bank portfolio. The design and implementation of the project will be informed by recent experience implementing disaster management and recovery projects in Mozambique, including the Emergency Resilient Recovery Project (P156559) and the Mozambique Disaster Risk Management Program (P166437). The project will draw specific lessons for the different activities. On housing, the project considers lessons learned in previous housing reconstruction projects in Indonesia, Nepal, Pakistan, and the Caribbean. On climate resilience, the project builds upon the Cities and Climate Change Project (P123201) in Mozambique while also considering lessons learned from flood management projects around the world. 71. Housing reconstruction. Previous housing reconstruction projects demonstrate the need for a transparent, data-driven, and socially sensitive approach in the targeting. The project will consider this by basing the targeting on a clear set of complimentary social and housing assessments according to the subcomponent description and by building the capacity of the implementing agency for data management and systematic program implementation. Based on previous experiences, the project will also apply a community-based reconstruction approach that will focus on rural areas where the most vulnerable population groups are located and where reconstruction can happen in a more transparent way. 72. Private sector. One of the principal constraints to private sector recovery following a natural disaster is the lack of liquidity for working capital and reconstruction activities and the high cost of finance. Page 26 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) The lack of liquidity and affordable finance makes it difficult to bring forward investments, rebuild damaged infrastructure, and support continuity of business including payment of employee salaries. Firms rely on retained earnings to finance operations and replace lost assets. All firms operating in these areas were affected. Firms with outstanding loans face annual interest rate expenses above 25 percent. Despite efforts to restructure loans by extending maturities and offering grace periods, there has been little to no refinancing of existing loans at more affordable rates. III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 73. The project will be implemented by the MOPHRH through the AIAS and by GREPOC. GREPOC was created in the aftermath of Cyclone Idai as a response by the Government to the need to coordinate the reconstruction process and donor relations. GREPOC will lead the implementation of Component 1 for the recovery and reconstruction of affected areas, including the TA subcomponent on ‘BBB’. It will also be the agency responsible for overall project coordination, planning, and monitoring. Because the activities under Component 1, plus overall coordination of the post-disaster reconstruction support, fall under the mandate of GREPOC, it is an opportunity to include it in this project to build its capacity as a newly created agency, while drawing on the experience of the AIAS. The AIAS will be responsible for the implementation of all climate resilience investments (stormwater drainage and coastal protection) under Component 2. The AIAS has a strong PIU with proven capacity to manage large contracts (more than US$50 million). The AIAS’s comparative advantage is in large infrastructure projects in drainage and coastal protection. Implementation costs for both PIUs, including project coordination, procurement, financial management (FM), environmental and social safeguards, will be financed by Component 3. 74. Not later than 60 days after the project effectiveness, a new PIU will be established at GREPOC to manage Component 1, reporting directly to the executive director. It will be composed of at least a project coordinator, a deputy project coordinator, a procurement specialist, an FM specialist (FMS), an M&E specialist, an environmental specialist, and a social specialist. The PIU will be established at the GREPOC offices in Beira and will have a liaison office located in Maputo, as well as in Pemba to support the implementation of the recovery and reconstruction activities in Cabo Delgado and Nampula provinces. An infrastructure specialist and a housing reconstruction specialist will be contracted for both the Beira and Pemba offices. 75. For the private sector interventions (Subcomponent 1.3), a financial sector specialist will be recruited by GREPOC to administer the matching grant, who will be responsible for drafting the Matching Grants Manual which is important to strengthen the capacity of the PIU, ensure project ownership, and guarantee that processes are flexible. The manual will detail the process for grant application, evaluation, disbursement, and monitoring. It will also outline the procurement rules for contracting of good and services under matching grants. The manual will be a working document that can be adjusted during project implementation according to circumstances. The Matching Grants Manual will outline the selection mechanism for the matching grant beneficiaries. While there is no clear evidence of the best way to select projects and investments for matching grants, a competitive mechanism with specific time- bound windows for applications is useful for limiting availability and for enabling choice among several Page 27 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) competing projects. The due diligence on potential PFIs based on clear eligibility criteria, which will be described in the POM, will be undertaken during implementation. 76. The AIAS will maintain the PIU that was established to implement the Cities and Climate Change Project (P123201), which closes in December 2019. The AIAS has acquired considerable experience with World Bank projects; the World Bank has carried out an assessment of the capacity of the existing PIU and concluded that it meets the minimum requirements for implementing the project. The PIU comprises at least a project coordinator, a deputy project coordinator, a procurement specialist, an FMS, and an environmental and social specialist. Given the nature of the works and the health and safety risk, the AIAS PIU will be reinforced with a social safeguards specialist to be based in Beira. 77. All project implementation arrangements will be detailed in the POM, which should be prepared and adopted no later than 30 days after project effectiveness. B. Results Monitoring and Evaluation Arrangements 78. The two implementing agencies will be responsible for M&E of their respective components: GREPOC for Component 1 and the AIAS for Component 2. Their respective PIUs will include an M&E specialist who will be responsible for collecting, processing, and presenting the monitoring information and preparing the progress reports. GREPOC will have the overall responsibility to prepare a consolidated progress report on a semiannual basis. 79. The project will support the development and implementation of a web-based and geo- referenced Recovery and Reconstruction Monitoring and Evaluation System at GREPOC for the overall reconstruction program, following open-source and open-data standards. Such a system will also be used for the monitoring of the project progress. C. Sustainability 80. The proposed project is fully aligned with the recovery strategy principles developed by GREPOC, endorsed by the Council of Ministers, and presented in the PDNA. It emphasizes that a reconstruction program should include sectoral and local actions, be evidence driven, target vulnerable populations, align with local plans for adaptation and resilience, encourage community participation in the reconstruction process, and, finally, be guided by BBB principles. Public and private infrastructure and housing will be rebuilt to withstand more intense events, in accordance with climate-resilient design. The TA activities funded under Component 1 support the systematic integration of these principles in the recovery and reconstruction activities 81. The investments in climate resilience in Beira will be implemented with a long-term and sustainable perspective. The technical design of the investments will ensure that they (a) provide protection with robust and low-maintenance design and (b) are effective under reasonable climate change projections. From the experience with the implementation of the drainage works under the Cities and Climate Change Project (P123201), it is clear that maintenance of upgraded canal system and its gates is of key importance for the sustainability of these investments. A capacity-building program will be put in place to ensure that implementing agencies have the capacity to maintain the coastal and urban climate resilience systems. Page 28 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic, and Financial Analysis (if applicable) 82. Cyclones Idai and Kenneth destroyed infrastructure, housing, public services, and coastal protection. The disasters caused widespread damage and recovery needs across sectors and showed that investments in climate protection to reduce future disaster impacts are urgent. Housing, public services, and recovery of the local economy are seen as priorities for the disaster recovery process according to the Government’s PDNA. 83. The project components are designed to address some of the most urgent needs for recovery and reconstruction, while investing in long-term climate resilience in preparation of future events. The project components have been designed to balance rapid recovery of housing, public infrastructure, and private sector activities, with longer-term investments in climate resilience in the city of Beira. Economic Justification 84. The project’s economic impact will be beneficial and significant. Cyclones Idai and Kenneth affected over 1.7 million people, with damages and losses amounting to US$3 billion and an estimated US$3.4 billion of total cost for recovery and reconstruction. The project addresses some of the key government interventions aimed at reducing the indirect economic and human impacts of both cyclones due to delay in recovery and reconstruction. The results of the economic analysis performed show an overall net present value (NPV) of US$208 million and benefit-cost ratio (BCR) of 2.1 for the project (see annex 3 for more details). A 5 percent discount rate is assumed throughout the analysis,19 but the intervention will be beneficial and significant even at a 10 percent discount rate. It is important to notice that due to the urgent nature of the operation, the estimations are based on a simplified and preliminary economic analysis of the project. Table 1. Summary Table of Estimated Cost-Benefit Analysis Result Discount rate Components 0% 5% 10% 1. Recovery and reconstruction of cyclone-affected areas a. Cost 84 74 66 b. Benefits 164 106 75 c. NPV 80 32 9 d. BCR 1.9 1.4 1.1 e. ERR 14% 2. Building Climate Resilience of Beira a. Cost 126 107 92 b. Benefits 716 283 164 c. NPV 590 176 72 19 World Bank (2017). Risk-Adjusted Discount Rates in Economic Analysis of Investment Projects. Mahul et al. Page 29 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) d. BCR 5.7 2.6 1.8 e. ERR 29% Overall Project a. NPV 670 208 81 b. BCR 4.2 2.1 1.5 Note: NPV = Net Present Value (US$ millions), BCR = Benefit-Cost Ratio; and ERR = Economic Rate of Return. *Includes US$10 million of project implementation and monitoring (component 2.3 and 3). 85. The interventions in recovery and reconstruction (Component 1) address urgent recovery needs of households and firms, reducing indirect impacts. The provision of timely and effective recovery and reconstruction, through identified institutions and mechanisms, allow households and business to cope better in the post-disaster phase. For the households, housing recovery reduces their negative welfare impact associated to live in inadequate settlements and reduce possibility of diseases. For the private sector, support through the project allows to continue their operations in the market with positive spillovers of employment to households in their localities. For the economy in general, the recovery of public infrastructure (such as markets, government buildings, public water and sanitation, and so on) is key for the recovery of livelihoods and business activity. An investment of US$84 million over 5 years will achieve discounted benefits from US$106 million over 20 years, equivalent to a BCR of 1.4 and an ERR of 14 percent. 86. Building resilience in coastal protection and drainage in Beira protects households, increases future resilience, and increases health quality. The intervention in Beira aims to generate cumulative and long-term benefits. Floods and cyclones directly place households and infrastructure at risk. Additionally, such events affect quality of health as floods increase the occurrence of vector-borne diseases. For the Government, the proposed intervention can generate savings by reducing the physical impacts on infrastructure. For the targeted communities, it can protect households and prevent long-term impacts caused by disability of diseases. An investment of US$126 million (including implementation support) over 5 years will achieve discounted benefits from US$283 million over 50 years, equivalent to a BCR of 2.6 and an ERR of 29 percent. 87. Supporting the project through the provision of public funds is appropriate. There is a clear rationale for public intervention in the aftermath of a disaster. Even though housing and business are private goods, the economic and social benefits of housing and private sector recovery justify government involvement. Government support in housing recovery is especially important when households are poor and have no access to insurance or other means for recovery. In the case of the private sector, rapid recovery is important to support most vulnerable firms that have limited access to finance the replacement of damaged capital. Structural disaster risk reduction interventions such as the ones implemented under the project involve projects with wide public welfare benefits and without market mechanisms, the classic case for public funding. Clear examples are coastal protection and drainage where benefits are difficult to restrict to only those who pay. Page 30 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) B. Fiduciary (i) Financial Management 88. An FM assessment was undertaken to evaluate the adequacy of the proposed project FM arrangements. The assessment was carried out in accordance with the Directives and Policy for Investment Project Financing (IPF); the World Bank Guidance on FM in World Bank IPF Operations issued on February 28, 2017; and Guidance Note on FM in Rapid Response to Crises and Emergencies issued by Operations Policy and Country Services (OPCS) on November 1, 2015, and updated on June 1, 2015. The AIAS, has experience in managing World Bank-financed operations, and it is currently managing the Emergency Resilient Recovery Project (P156559) and Cities and Climate Change (P123201). No major FM issues were raised under these projects. For GREPOC, the FM arrangements (budgeting and planning, accounting staff and systems, internal control produces, and project external auditors) are not yet in place at this newly established agency. The AIAS FM team will support GREPOC for the implementation of this proposed project until the recruitment/deployment of GREPOC FM staff is completed. The overall FM arrangements were assessed to be adequate. The overall FM risk is Substantial due in part to country risk, capacity issues in the country, and the decentralized nature of the project. 89. The project funds, expenditures, and resources will be accounted for using the Government’s integrated FM information system (e-SISTAFE) and the basis of accounting will be Financial Reporting under Cash Basis. The IDA funds will be disbursed on transaction basis (statements of expenditures) using the following methods: (a) reimbursement; (b) advances; (c) direct payments; and (d) special commitments. GREPOC and the AIAS will prepare quarterly unaudited interim financial reports (IFRs) and provide such reports to the World Bank within 45 days of the end of each calendar quarter to which they relate. The project financial statements (PFS) will be audited annually by the Administrative Tribunal, the country’s Supreme Audit Institution, in accordance with International Standards of Supreme Audit Institutions (ISSAIs) issued by International Organization of Supreme Audit Institutions (INTOSAI). The audit report together with the Management Letter will be submitted to the World Bank no later than six months after the end of each fiscal year. (ii) Procurement 90. Procurement arrangements and capacity. The proposed procurement activities for the project will be managed independently by two agencies within the MOPHRH: GREPOC and the AIAS. GREPOC will be the agency responsible for overall project coordination, planning, and monitoring. It will also lead the implementation of Component 1. The AIAS will be responsible for the implementation of all climate resilience investments under Component 2. GREPOC is an agency being established as a response to Cyclone Idai and does not yet have any fiduciary capability. This capacity will be created soon, and the World Bank will advise GREPOC on how to meet World Bank minimum fiduciary requirements. On the other end, the AIAS has experience with the World Bank and it is implementing two operations at present, and the personnel associated with the Cities and Climate Changes Project (P123201) will support the implementation of Component 2. 91. Procedures. Procurement for the proposed operation will be carried out in accordance with the ‘World Bank Procurement Regulations for Borrowers under IPF’, dated July 1, 2016, revised August 2018, and the provisions stipulated in the Financing Agreement. Furthermore, the ‘Guidelines on Preventing and Page 31 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’, dated October 15, 2006, and revised in January 2011 and July 2016, will apply. 92. Capacity within GREPOC is not yet available for a smooth start of implementation of required project activities. Mitigating measures for GREPOC and the AIAS will include (a) recruiting a procurement specialist for the PIU at GREPOC; (b) ensuring that capacity available at the AIAS is retained for the project and supports the establishment of GREPOC capacity; and (c) ensuring that all major works and TA activities, particularly under Component 2, have contract management plans. 93. Project procurement strategy. In view of the nature of the project and the streamlined preparation, the Project Procurement Strategy for Development (PPSD) will be completed early into the implementation period of the project. 94. Current country practices for making payments abroad from the designated account (DA) held at the Central Bank may also affect the performance of the procurement function of the project as when a contract is entered with a foreign supplier/contractor/consultant, there is a need of a clearance from the Ministry of Economy and Finance (Repartição de Assuntos Júricos e Contratos) and the Central Bank (Banco de Moçambique), before payments abroad can be authorized. Furthermore, the fulfillment of the requirements of the Attorney General’s office and the Administrative Tribunal may lead to delays for contract signing, after the completion of the evaluation process and of the contract award. It is instrumental that the time required for these processing’s is carefully considered in the activities planning process. 95. The overall procurement risk associated with the implementation of the project is rated High. This is in view of the capacity to implement Component 1, the large-value contracts under Component 2 which will require robust contract management and the country practices mentioned above. .C. Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No . . D. Environmental and Social . Environmental Risks and Impacts: The project will support activities, including (i) technical assistance, (ii) financial support to aid the recovery of the private sector, (iii) reconstruction of housing and public infrastructure assets and (iv) rehabilitation of the Beira coastal protection system and implementation of the second phase of the Beira drainage system. The environmental risk of the project is considered High under the ESF in consideration of the potential environmental impacts and risks related to the proposed construction works in Beira. Anticipated environmental implications of the technical assistance on housing and infrastructure standards and practice are limited. The potential impacts of the support to private sector recovery are mostly low to moderate risk, as this component will provide mainly working capital and funds of acquisition of materials and equipment, which by implication includes support for SME operations. The Page 32 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) reconstruction of housing, public infrastructure and drainage works will encompass mainly small works, and, occasionally, ones with a higher potential of environmental impacts (e.g. infrastructure recovery and drainage) that are expected to be limited, site-specific and temporary and can be effectively minimized and/or mitigated with the adoption of proper environmental and social impact management procedures. AIAS will be the implementing agency for Component 2, and it has gathered considerable experience and technical capacity to handle effectively environmental management system, such as the large construction works in Beira. While the environmental risk level is considered High, at this stage, due to the potential environmental, health and safety implications inherent to the nature and scale of the works planned for Beira, the risk rating will be reviewed upon the completion of the detailed environmental assessments. Social Risks and Impacts: The Project’s activities will benefit a range of Cyclone hit communities, businesses and vulnerable people. Support to housing re-construction and public infrastructure will ensure that displaced and vulnerable people can resettle and reconstruct their lives. The Project will, thus, have largely beneficial social impacts on communities. However, under Component 2, the project is expected to require land acquisition and resettlement. The exact scale of resettlement is unclear at this stage and will be clarified during implementation. Construction works in Beira are also expected to lead to negative impacts on coastal livelihoods. The construction works in this Component will take place close to an informal settlement with increased risk of impacts from labor influx, however small. Further, under Component 1, the rehabilitation of public infrastructure and support for housing construction are expected to require some land (albeit to a limited extent). Although the public infrastructure to be rebuilt will consist of existing, damaged structures, some temporary land taking may be required for re-routing, storage or redesign of infrastructure. Housing reconstruction will require an assessment of land requirements and ensure land tenure security. Further, grants to businesses may also include land taking unless processes to screen for land taking/land use are in place to ensure that, if land needs are supported under the project’s funds, these are screened adequately, and any resettlement issues are addressed. The Project’s infrastructure component will require use of manual/construction labor most, if not all, of which is expected to come from local communities. However, labor management procedures will need to be in place and implemented. The Project must also undertake a Gender Based Violence (GBV) risk assessment and based on the level of risk, support the requisite interventions to manage this risk. A strong Grievance Redress Mechanism adapted to use by disaster-hit communities will be in place. The Project’s social risk is rated as High. The risk stems from several factors. First, the potential land acquisition and resettlement due to construction of drainage and coastal protection works in Beira and redesign of some infrastructure. The exact extent of land acquisition and associated resettlement due to construction works in Beira is not clear as this stage but its location close to an informal settlement can lead to adverse impacts not only on displaced persons but also on residents several of whom may derive their livelihoods from coastal resources. Further, the risks of labor influx in remote areas is expected to raise the risk of GBV and among vulnerable communities, especially women, already recovering from a natural disaster. In Beira, the existence of a slum area close to the construction site is expected to raise the risk of GBV due to potential labor influx however limited it might be. AIAS has experience with implementing World Bank safeguards. However, this capacity . must be further strengthened and applied in a disaster-hit situation and area. 96. The project activities will benefit a range of cyclone-affected communities, businesses and vulnerable people, but may also generate potential social and environmental impacts. All Environmental Page 33 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) and Social Standards (ESS) are applicable to the project, except for ESS7 (Indigenous People). The preparation of instruments to assess and manage environmental and social risks and impacts (ESS1) would include (1) an Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF) covering all activities supported by the project; (2) a Social Impact Assessment to support the definition of the housing recovery strategy; (3) a Gender-Based Violence risk assessment and action plan; and (4) specific social and environmental impact instruments (Environmental and Social Impact Assessment (ESIA), Environmental and Social Management Plan (ESMP), Resettlement Action Plan (RAP) for the large construction works. The Stakeholder Engagement Plan (SEP) shall be reviewed and revised continuously and will be implemented throughout project implementation (ESS10). The labor management procedures will be designed in line with the provisions of the World Bank’s ESS2. Community Health & Safety (ESS4) will be object of specific measures, including the adoption of strict GBV/SEA risk management procedures. No significant conversion or degradation of natural habitat (ESS6) are expected, but the ESMF and specific environmental impact assessment instruments will set principles, rules and guidelines aiming to avoid/mitigate potential impacts on natural habitats. The private sector recovery component will be implemented in accordance with procedures to be defined in the ESMF and implementation of specific ESMSs for the responsible financial intermediaries (FIs) (ESS9). 97. Citizen engagement. The Component 3 will promote community and citizen engagement to contribute to the identification, design, implementation, and monitoring of key project activities, as part of the overall DRF under development. The project considers community and citizen engagement as a cross-cutting issue for all subcomponents and activities, particularly in the design of the housing reconstruction subcomponent which will follow a community-based and owner-driven resilient reconstruction approach and will engage communities early in project planning and implementation. The Stakeholder Engagement Plan (SEP) developed, consulted upon, adopted, and disclosed during project preparation will ensure the participation and the commitment of all stakeholders of the project to (a) understand the needs of the affected populations; (b) ensure coordination between Government entities, Project Implementation Units (PIUs), and communities; (c) receive feedback and comments as well as grievances from all stakeholders on project design and implementation; and (d) provide transparent and accountable mechanisms on all aspects of project design and implementation. The SEP sets the nature and periodicity of stakeholder consultations and includes regular beneficiary feedback surveys during and after implementation. 98. The project will ensure that a robust Grievance Redress System (GRS) is put in place to manage issues that may arise during implementation. The GRS will be designed to address concerns and complaints promptly and transparently with no cost or discrimination toward project-affected communities. The GRS works within existing legal and cultural frameworks, providing an additional opportunity to resolve grievances at the local, project level. Consequently, at the community level, attention will be given to embedding the Grievance Redress Mechanism (GRM) within existing community structures, building on traditional conflict resolution practices. Intense community sensitization and awareness raising regarding all aspects of project operation will be undertaken to ensure full understanding by all stakeholders. Efforts will be made to ensure that implementing staff and local-level coordination structures understand their roles and responsibilities and can address grievances, particularly around exclusion and manipulation of targeting and entitlements. Channels will be developed to allow for community M&E of the construction process through means such as public hearings or citizen feedback platforms enabled by information and communication technology (ICT). Taken together, this is Page 34 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) expected to help deepen citizen engagement and reinforce community cohesion. Moreover, because of improved functionalities, the GRS is also expected to provide early warnings on emerging social risks based on effective analysis of the trends of grievances reported. V. GRIEVANCE REDRESS SERVICES Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. VI. KEY RISKS 99. Overall, the risk of the project is assessed to be Substantial. The macroeconomic and environmental and social risks are assessed to be High, while political and governance, institutional capacity for implementation, and sustainability and fiduciary risks are Substantial. The main risks and challenges relate to the GoM’s strained financial situation because of the hidden debt crisis and technical aspects. 100. The macroeconomic risk is High due to economic downturn and the continued fiscal effects of the hidden debt crisis. After registering 7 percent of GDP growth on average since 2011, Mozambique’s economic performance experienced a sharp downturn, triggered by falling commodity prices, adverse climate conditions, a tense political environment, and the discovery of US$1.4 billion in previously undisclosed public debt, which had dramatic consequences on the macroeconomic and fiscal environment. The shift from a fast-growing economy to a more modest pace of growth seems to be the most foreseeable scenario for the years to come. This is likely to be accompanied by a tight fiscal context, with both credit and investment levels continuing at a low point. A tightened fiscal policy could have implications for the project by affecting implementation support, as well as the quality of maintenance and optional support of investments. 101. The political, governance, and fiduciary risks are Substantial. Mozambique is having general elections on October 15, 2019 the outcome of which may change political leadership and the related government ownership of the project. However, given the post-emergency nature of the project and the wide social support for reconstruction, the project will likely see limited effects. In addition, there are fiduciary and governance risks around the use of the project funds. This risk seems particularly high as financial pressures on public entities in the wake of the undisclosed debt scandal remain high. There is also a risk that the system for identifying, reporting, investigating, and prosecuting cases of fraud and Page 35 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) corruption, while formally in place, may not function effectively in practice. All components, specifically the housing and public infrastructure reconstruction, will be carefully monitored to ensure effective and efficient use of funds. 102. The risks related to the institutional capacity for implementation and sustainability are Substantial. To mitigate the risk associated with low institutional capacity of the implementing ministry, the World Bank will create a PIU staffed by contracted personnel with project management and World Bank project experience. To promote sustainability of investments carried out under Component 2, capacity building of local maintenance and operations agencies will be carried out. 103. Environmental risks related to the reconstruction of housing (Subcomponent 1.1) and construction of climate resilience investments in the city of Beira (Component 2) are High. On the housing reconstruction subcomponent, there are risks associated with the choice of material used for reconstruction. For example, timber, sand, and quarried stone could result in forest and land degradation. To mitigate environmental impacts, consultations with NGOs and local experts will be held before deciding on a specific housing reconstruction strategy. Consultation could happen through, for example, a workshop before agreeing on the strategy with the PIU. On the large climate resilience investments in Component 2, negative environmental impacts may arise during, mainly, the development phase, which could be caused by the cleaning and rehabilitation of existing drainage channels, excavated material disposal, vibration, noise, and air pollution caused by the operation of earth moving and excavation equipment. The disposal of excavated material will be preceded by a detailed analysis for verifying potential contamination, to accurately inform the treatment process that will be required. There is a low probability of major threats to the protection of natural habitats and ecosystem services, as most construction areas have already been urbanized and/or degraded. Previous construction works in Beira for the first phase of the stormwater drainage system rehabilitation demonstrated that operations must follow strict standards for safeguarding the community health and safety, notably traffic safety procedures in the operation of trucks and heavy equipment. The implementing agency has capacity and experience to implement an effective environmental management system for the works to be developed in Beira, but the environmental risk level was considered High at this stage, due to the environmental and health and safety implications inherent to large-scale construction works. The World Bank will closely work with the PIU to strengthen its capacity in terms of staffing and improved procedures to handle large- scale civil works. 104. The social risk is rated High because the project has varied social impacts and can lead to resettlement. Rehabilitation of public infrastructure and support for housing construction are expected to require some land. Land taking may be required for rerouting, storage, or redesign of infrastructure. New construction and extension of the drainage system may lead to resettlement. Housing reconstruction will require an assessment of land requirements and ensure land tenure security. In addition, housing programs can create friction between beneficiaries and those not participating in the program and between communities that may receive different levels of assistance. The tracking system, which will be developed in the TA of the housing subcomponent, will enable a transparent selection process, which, when coupled with clear eligibility criteria for selection, can mitigate friction between participants and nonparticipants. Finally, the project’s infrastructure component will require use of manual/construction labor most, if not all, of which is expected to come from local communities. However, labor management procedures will need to be in place and implemented. A strong GRM adapted to use by disaster-hit Page 36 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) communities will be in place. While the PIU has experience with implementing World Bank safeguards, this capacity must be further strengthened and applied in a disaster-hit situation and area. . Table 1. Risk Mitigation Measures Risk Mitigation Measure Political and • Continuous monitoring of political and governance risks. governance • Routine briefing and coordination with the GoM. Macroeconomic • Continuous monitoring of macroeconomic risks. Institutional • Selecting a strong PIU with previous experience of World Bank project management. capacity • Capacity building of relevant local operation and maintenance agencies to promote sustainability of project benefits. Environmental • Appointing two senior environment and social officers, one for each component, to be and social dedicated full time to the project. standards • The Environmental and Social Framework (ESF) will outline screening procedures and participatory community/voluntary approaches to land donation. • Coordinating all rehabilitation with cross-sectoral committees or working groups. • Preparing an ESMF which establishes procedures for screening environmental and social risks and impacts of Component 1. • Preparing site-specific Environmental and Social Impact Assessment for each of the subcomponents of Component 2, including management and monitoring of mitigation measures, Contractor Environmental and Social Management Plans (CESMPs), and Environmental Codes of Practices satisfactory to the World Bank. • Developing and implementing a SEP (draft SEP prepared) and set aside budget to manage community expectations and relationships. • Developing and implementing the arrangements for the grievance mechanism, as part of the SEP. • Developing and implementing environmental and social procedures for managing contractors and subcontractors. • Holding a workshop with relevant stakeholders on how to mitigate negative environmental impacts of a housing reconstruction program (choice of sustainable materials, and so on) to feed into the program strategy. • Developing a tracking system of beneficiaries to guarantee transparency in the selection process in the housing reconstruction subcomponent. . • Establishing a strong GRM. Page 37 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) VII. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Mozambique Mozambique: Cyclone Idai & Kenneth Emergency Recovery and Resilience Project Project Development Objectives(s) The Project Development Objective is to support the recovery of public and private infrastructure and livelihoods while strengthening climate resilience in the areas most affected by Cyclones Idai and Kenneth. Project Development Objective Indicators RESULT_FRAME_TBL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 Rapid and inclusive recovery of cyclone-affected areas Number of people benefiting from resilient housing repaired or reconstructed under the 0.00 10,000.00 75,000.00 project (Number) Of which women (Number) 0.00 2,000.00 37,500.00 People benefiting from repaired, reconstructed or 0.00 20,000.00 75,000.00 new public infrastructure (Number) Of which women (Number) 0.00 10,000.00 37,500.00 Beneficiaries reached with financial services (CRI, 0.00 10,000.00 20,000.00 Number) Number of SMEs with a loan or line of credit 0.00 2,000.00 (CRI, Number) Strengthening the climate resilience of affected areas Page 38 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) RESULT_FRAME_TBL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 People protected by restored or improved climate 0.00 200,000.00 resilience infrastructure (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 1. Recovery and reconstruction of cyclone-affected areas Number of houses reconstructed or repaired under the project according to resilience 0.00 5,000.00 15,000.00 standards (Number) Number of houses reconstructed or repaired - 0.00 1,500.00 5,000.00 Female headed households (Number) Number of public buildings reconstructed, repaired or constructed under the project 0.00 150.00 (Number) Number of matching grants and credit lines signed 0.00 1,000.00 with MSMEs (Number) Number of people trained in resilient reconstruction and community resilience under 0.00 50,000.00 80,000.00 the project (Number) Number of people trained in resilient reconstruction and community resilience - 0.00 10,000.00 40,000.00 Female (Number) 2. Building Climate Resilience Area provided with new/improved irrigation or drainage services (CRI, Hectare(Ha)) 0.00 200.00 1,000.00 Page 39 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) RESULT_FRAME_TBL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 Length of coastline protected by strengthened climate resilience infrastructure (Meter(m)) 0.00 500.00 2,500.00 3. Project Implementation, Monitoring and Evaluation Grievances registered related to project that are actually addressed (Percentage) 0.00 100.00 IO Table SPACE UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Reconstruction progress will be recorded in an Integrated integrated data system Number of people who reconstructio for housing receive technical and n data reconstruction, to be Number of people benefiting from financial support through system, developed in the first Annual Reconstruction Office resilient housing repaired or the project in the managed by year. Number of people reconstructed under the project reconstruction of their the are estimated by house damaged by Cyclone Reconstructi multiplying the number Idai or Kenneth on Office of targeted households by 5 (the estimated average number of people per household) Page 40 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Integrated reconstructio n data Reconstruction Number of women receiving system to be progress will be financial and technical Annual Reconstruction Office Of which women managed by recorded in the support through the project the integrated data system in housing reconstruction Reconstructi on Office Integrated reconstructio Reconstruction Number of people n data progress will be benefiting from services People benefiting from repaired, system monitored in the provided by the public Annual Reconstruction Office reconstructed or new public managed by integrated infrastructure assets infrastructure the reconstruction data repaired, reconstructed or Reconstructi system. built under the project on Office Integrated reconstructio Reconstruction Number of women n data progress recorded in benefiting from repaired, system Annual integrated Reconstruction Office Of which women reconstructed or new public managed by reconstruction data infrastructure financed the system. under the project Reconstructi on Office Beneficiaries reached with financial services Financial Reconstruction Office Number of SMEs with a loan or line of Annual Reconstruction Office information will track and manage credit received financial data received Page 41 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) from banks from Banks and and Government government, and managed by the Reconstructi on Office A hazard and impact model will be developed to calculate the number of people exposed to flooding People benefiting from Model and and coastal risks prior protection offered by project and post the project People protected by restored or improved recovered and strengthened Annual implementati AIAS interventions. The climate resilience infrastructure coastal resilience and urban on progress in protection drainage infrastructure supervision against climate risks under the project. can be tracked using this approach at different time steps as the works progress. ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Number of houses reconstructed or Housing units repaired or Integrated Reconstruction Annual Reconstruction Office repaired under the project according to reconstructed under the reconstructio progress will be resilience standards project according to n data recorded in the Page 42 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) resilience standards system reconstruction data system Integrated reconstructio Reconstruction Number of reconstructed or n data progress will be tracked Number of houses reconstructed or repaired housing units that Annual system, by the Reconstruction Reconstruction Office repaired - Female headed households are headed by female managed by Office using the household heads reconstructio integrated data system n office Integrated Number of public buildings reconstructio across various categories n data Reconstruction and (incl local administration system recovery progress will Number of public buildings reconstructed, buildings, markets, shelters, Annual Reconstruction Office managed by be tracked in the repaired or constructed under the project water and sanitation units) the integrated data system. repaired, reconstructed or Reconstructi constructed under the on Office project. Reconstruction Office Number of matching grants Financial will have a financial or credit lines signed tracking specialist working with between financial Number of matching grants and credit Annual system of the Banks and Reconstruction Office intermediaries and Micro, lines signed with MSMEs Reconstructi Government to track all Small and Medium on Office financial transactions Enterprises in disaster under the project affected areas Number of government Integrated Tracking of trainings Number of people trained in resilient officials, local community Annual reconstructio and participation by the Reconstruction Office reconstruction and community resilience members and development n data Reconstruction Office under the project partners trained on resilient system Page 43 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) reconstruction practice. managed by Reconstructi on Office Integrated Trainings and reconstructio participation will be n data Number of people trained in resilient Number of women trained recorded in the Annual system Reconstruction Office reconstruction and community on resilient reconstruction integrated managed by resilience - Female guidelines and practices reconstruction data Reconstructi system on Office This indicator measures the total area of land provided with irrigation and drainage services under the project, Review of supervision including in (i) the area Supervision Area provided with new/improved Annual reports and verification AIAS provided with new irrigation consultant irrigation or drainage services in field and drainage services, and (ii) the area provided with improved irrigation and drainage services, expressed in hectare (ha). Length of coastline benefiting from investments Supervision consultants Length of coastline protected by in cyclone damage repairs Supervision Annual report and verification AIAS strengthened climate resilience and strengthening of coastal consultant in the field infrastructure flood and erosion protection infrastructure under the project. Grievances registered related to project Percentage of grievances Annual Grievance Analysis of Grievance AIAS and Reconstruction that are actually addressed related to the project Redress Redress Mechanism Page 44 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) sufficiently addressed out of Mechanism (GRM) data office all registered grievances in (GRM) the GRM ME IO Table SPACE Page 45 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) ANNEX 1: Implementation Arrangements and Support Plan Financial Management 1. An FM assessment was undertaken to evaluate the adequacy of the proposed project FM arrangements. The assessment was carried out in accordance with the Directives and Policy for IPF; the World Bank Guidance on FM in World Bank IPF Operations issued on February 28, 2017; Guidance Note on FM in Rapid Response to Crises and Emergencies issued by OPCS on November 1, 2015, and updated on June 1, 2015. The AIAS, has experience in managing World Bank-financed operations, and it is currently managing the Emergency Resilient Recovery Project (P156559) and Cities and Climate Change (P123201). No major FM issues were raised under these projects. For GREPOC, the FM arrangements (budgeting and planning, accounting staff and systems, internal control produces, and project external auditors) are not yet in place at this newly established agency. The AIAS FM team will support GREPOC for the implementation of this proposed project until the recruitment/deployment of GREPOC FM staff is completed. The overall FM arrangements were assessed to be adequate. The overall FM risk is Substantial due in part to country risk, capacity issues in the country, and the decentralized nature of the project. Table 1.1. Risk Assessment and Mitigation Measures Conditions of Negotiations, Residual Risk Factors/Description of Risk Risk Mitigating Measures Board or Risk Risk Rating Incorporated into the Project Design Effectiveness Rating (Yes or No) Inherent Risk Country-level: Shortage of H • The GoM is committed to No S human resources and limited implement further reforms of the capacities for key FM country’s public FM with support functions. from the World Bank and other development partners. Entity-level: GREPOC is a H • Qualified and experienced No S newly established agency project FMS. and may not be able to meet • The AIAS will provide necessary the World Bank FM support to GREPOC. requirements • FM Manual will be developed. Project-level: H • Clearly defined funds flow, No S Project design relatively accountability and reporting complex since it involves procedures in the Manual. activities at provinces and • Frequent World Bank FM other stakeholders implementation support. Control Risk: Budgeting: GREPOC may not S • The Project Operations Manual No S be able to produce realistic (POM) including FM procedures and comprehensive budget will be developed. due to capacity constraints • Core staff involved in the budget Page 46 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Conditions of Negotiations, Residual Risk Factors/Description of Risk Risk Mitigating Measures Board or Risk Risk Rating Incorporated into the Project Design Effectiveness Rating (Yes or No) preparation will be trained. • The World Bank will review the draft budget as well the IFR and provide comments. Accounting: S • The AIAS has a good accounting No S Weak capacity of the project system in place. accounting staff. • The project will make use of the The accounting system may Government IFMIS (e-SISTAFE). not generate reliable data to The project accounting policies enable better monitoring of and procedures will be the project. documented in the POM. The AIAS is accounting for • The AIAS FM capacity will be two projects and may be strengthened by the confused in handling record appointment of additional of the additional project project accountant. transactions. Internal control: H • The project will follow the No S Noncompliance with key procedures documented in the project internal control Manual de Administração procedures due to weak Financeira (MAF), which has been internal control environment designed to mitigate internal and oversight mechanisms in control risk and those to be the country. documented in the POM. • The oversight body General Inspectorate of Finance (Inspeção Geral das Finanças, IGF) will be required to include the project in its work program depending on the risk. • Regular supervision will be carried out by the World Bank. Funds flow: S • The disbursement arrangements No M Delays to release funds to will be documented in the POM. finance project activities as Lower minimum threshold for the this is an emergency use of direct payments and operation. reimbursement method of disbursement will be applied. Financial reporting: The new S • GREPOC will use the Government No M implementing agency may IFMIS (e-SISTAFE) to account for fail to produce timely the project funds, expenditures, and project financial reports. resources. The AIAS may not be able to • Qualified FMS to be recruited by produce IFRs timely as it will GREPOC. be managing additional • The AIAS staff are to coach and Page 47 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Conditions of Negotiations, Residual Risk Factors/Description of Risk Risk Mitigating Measures Board or Risk Risk Rating Incorporated into the Project Design Effectiveness Rating (Yes or No) project. support the GREPOC staff if required. • The AIAS FM capacity will be strengthened by the appointment of additional project accountant. • The World Bank will provide support to ensure that the required financial reports are produced on time. Auditing: Delays in M • Draft audit terms of reference No M submission of audit reports. will be reviewed by the FMS and discussed with the Administrative Tribunal. • Qualified FM staff and e-SISTAFE would enable timely production of the PFS and then, the audit. H • Project FM arrangements No S (including annually audit of project accounts and World Bank Governance and FM supervision including review accountability. Possibility of of transactions and asset corrupt practices, including verification) designed to mitigate bribes, abuse of the fiduciary risks in addition to administrative and political the implementing agencies authority. overall internal control systems. • Citizen engagements, including beneficiary feedback to be developed in the POM OVERALL FM RISK S S Note: H = Higher; S = Substantial; and M = Moderate. 2. To mitigate FM risks, the measures mentioned in table 1.2 should be taken. Table 1.2. FM Action Plan No. Action Responsibility Completion date 1 Develop the POM including FM procedures, GREPOC and No later than 30 days after processes, and procedures for matching grants AIAS project effectiveness 2 Appointment of a qualified and experienced project GREPOC No later than 60 days after FMS project effectiveness 3. Budgeting. Budget preparation and monitoring budget execution will follow national procedures and those to be documented in the POM. GREPOC and the AIAS will prepare annual budgets based on the Page 48 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) annual work plans and the approved Procurement Plans. It is expected that GREPOC and the AIAS will prepare annual budgets that cover activities proposed to be carried out in each fiscal year. Each entity will be responsible for producing variance analysis reports comparing planned with actual expenditures on a quarterly basis. These quarterly variance analysis reports will be part of the IFRs that will be submitted to the World Bank on quarterly basis. 4. Staffing. GREPOC and the AIAS will be responsible for the fiduciary aspects of the project. Both agencies have administrative and financial autonomy under the MOPHRH. The AIAS has a project FMS with acceptable skills and experiences to handle FM and disbursement matters of the World Bank- financed operations. The AIAS FM capacity will be strengthened by hiring an additional project accountant. GREPOC will be staffed with a project FMS and an accountant with acceptable skills and competences. The GREPOC project FMS should be appointed within 60 days after the project effectiveness. 5. Internal control. Internal controls system and procedures of the project will be based on national procedures, defined in the MAF and the POM. The finance and administrative procedures to be employed by the agency in the implementation of the project should be documented in the FM section of the POM. The project may also be subject to the review of the IGF based at the Ministry of Economy and Finance. For this project, alternative measures such as regular supervision through desk review and field visits (that include expenditures and asset reviews) should be carried out by the World Bank to ensure that the implementing agency is maintaining adequate systems of internal controls and key procedures are complied with. 6. Accounting. Both the implementing agencies will account for all project funds, expenditures, and resources using the Government’s e-SISTAFE used for most World Bank-financed operations in Mozambique portfolio. The project will follow e-SISTAFE’s internal control procedures laid down in the Government’s FM regulations. Fraudulent activities with e-SISTAFE under a World Bank-financed operation took place last year. The entity managing the e-SISTAFE, the Center for Development of Information Systems and Finance, took measures to address the fraudulent activities, including additional control mechanisms, additional checks, and strong collaboration with commercial banks. In addition, an IT audit is planned for the second semester of the current year. 7. Financial reporting. Each implementing agency will prepare quarterly IFRs for the project in form and content satisfactory to the World Bank, which will be submitted to the World Bank within 45 days after the end of the quarter to which they relate. At the end of each fiscal year, the agencies will also produce annual PFS in accordance with Financial Reporting under Cash Basis of Accounting. In addition, the PFS’s components will be outlined in the terms of reference for audit of this proposed project. 8. Disbursement. Two DAs in U.S. dollars will be opened at the Bank of Mozambique (Central Bank) to receive funds from IDA. From the DAs, funds will be transferred to the Single Treasury Account (Conta Única do Tesouro [CUT]) based on the request from GREPOC and the AIAS to the National Directorate of Treasury. Payment of eligible project expenditures will be made from CUT to providers of goods and services. All payments to local suppliers and consultants will be made strictly in local currency in compliance with Mozambique rules and regulations. Figure 1.1 shows funds flow mechanism for the project activities. Page 49 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Figure 1.1. Fund Flow Mechanism for the Project Activities Request from the IDA Direct Payments Bank of Mozambique Bank of Mozambique Borrower GREPOC – DA (US$) AIAS – DA (US$) upon CUT CUT Contractors, Suppliers, and Consultants 9. Disbursement arrangements. Disbursements of IDA funds will be done on a transaction basis. An initial advance representing a six-month expenditure forecast will be made into each DA upon the effectiveness of the Financing Agreement. 10. The option of disbursing the IDA funds through direct payment, reimbursement, and special commitment will also available. To facilitate the payments of contractors, suppliers, and consultants, a lower minimum threshold for the use of direct payment and reimbursement methods of disbursement will be applied for this operation. The World Bank will issue the Disbursement Letter and Financial Information Letter which will specify the additional instructions for withdrawal of the proceeds of the IPF. 11. Auditing. The Administrative Tribunal (the country’s supreme audit institution) is mandated to audit all Government funds, including donors-financed projects. As such, the PFS will be audited by the Tribunal in accordance with ISSAIs issued by INTOSAI. The audit report together with the Management Letter will be submitted to the World Bank within six months after the financial year end. 12. Dated covenants. The following FM actions are dated covenants: (a) appointment of the GREPOC project FMS with acceptable skills and experience acceptable to the World Bank within 60 days after project effectiveness. 13. Implementation support plan. Based on the current overall FM risk of this operation, the project will be supervised twice a year. In addition to desk-based reviews, the FM will perform field visit to ensure that the project’s FM arrangements operate as intended. Procurement Page 50 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) 14. Applicable procedures. Procurement for the project will be carried out in accordance with the ‘World Bank Procurement Regulations for Borrowers under IPF’, dated July 1, 2016, revised August 2018, and the provisions stipulated in the Financing Agreement. Further, the ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’, dated October 15, 2006, and revised in January 2011 and July 2016, will apply. 15. Procurement strategy. In view of the limited time frame for the preparation of the project, the PPSD will be completed in the initial three months of the project’s implementation, which is instrumental for the implementation of the contracts under the Component 2. 16. Procurement arrangements. Activities to be procured under the project are generally not complex. However, large-value contracts are anticipated under Component 2 and these may require additional capacity in contract management not available currently at the AIAS. The procurement officer who will support GREPOC will be recruited under terms and conditions satisfactory to the World Bank to ensure that the implementation of the project and application of the applicable procedures will not be compromised. 17. Procedures for selection of consultants. Quality- and Cost-Based Selection will be the main method for the selection of firms for assignments such as (a) design and supervision of the rehabilitation of the coastal protection system; (b) supervision of the expansion the drainage system; (c) social assessments; and (d) housing assessment of Idai damages. Occasionally, consulting services may be procured through Selection Based on the Consultants’ Qualifications and Least-Cost Selection procedures, whenever its complexity justifies the adoption of such methods in accordance with the PPSD. 18. Procedures for procurement of works. Works, including (a) repair and rehabilitation of the coastal protection system and (b) expansion of the drainage system will be procured through international competition, with the adoption of the World Bank’s Procurement Regulations, to ensure adequate competition and value for money, in accordance with the PPSD. Other works contracts, for the rehabilitation of housing and Government infrastructure will be procured through Open Competitive Procedure, the Request for Bids, consistent with the Mozambique Procurement Regulation (Decree 5/2016 of March 8, 2016) and limited to the local market. 19. Procurement Implementation Manual. A Project Procurement Manual will be prepared by both GREPOC and the AIAS to provide guidance through the implementation of the project and it will summarize the main procurement provisions applicable to the project. The manual will be updated from time-to-time to incorporate lessons throughout the implementation. The manual includes separate chapter to detail the procurement procedures that will apply for the matching grants to be awarded under Component 1. 20. The procurement planning will be individualized for each of the implementing agencies, GREPOC and the AIAS. Each agency will manage its own activities separately, through the World Bank’s tracking system Systematic Tracking of Exchanges in Procurement (STEP), with direct submission and interactions with the World Bank. 21. Contract management capability. High-value contracts will be awarded by the AIAS and a robust contract management capacity to monitor the implementation and performance of these contracts, as Page 51 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) well as timely contract management issues resolution is required to be created early in the project life before major contracts are awarded. 22. Review by the World Bank of procurement decisions. Table 1.3 indicates the initial values for prior review by the World Bank. All activities estimated to cost below these amounts shall be treated as post review and will be reviewed by the World Bank during the implementation support missions under post procurement review exercises. Direct Contracting/Single-Source Selection will be subject to prior review only for contracts estimated to cost more than the amounts indicated in table 1.3. The World Bank may, from time-to-time, review the amounts based on the performance of the implementing agencies. Table 1.3. Prior Review Thresholds Prior Review (US$) Procurement Type GREPOC/AIAS Works and supply and installation 5,000,000 Goods and non-consulting services 1,500,000 Consultants (firms) 500,000 Individual consultants 200,000 23. Assessment of national procedures. The Mozambique Procurement Regulation, the Decree 5/2016 of March 8, has been assessed as required under the World Bank’s Procurement Framework. The assessment indicated that the country’s regulations are generally consistent with international best practice for the following reasons: (a) there is adequate advertising in national media; (b) the procurement is generally open to eligible firms from any country; (c) contracts documents have an appropriate allocation of responsibilities, risks, and liabilities; (d) there is publication of contract award information in local newspapers of wide circulation; (e) the national regulations do not preclude the World Bank from its rights to review procurement documentation and activities under the financing; (f) there is an acceptable complaints mechanism; and (g) there is a maintenance of records of the procurement process. 24. However, the RFBs/request for proposals document shall require that bidders/proposers submitting bids/proposals present a signed acceptance at the time of bidding, to be incorporated in any resulting contracts, confirming application of, and compliance with, the World Bank’s Anti-Corruption Guidelines, including without limitation the World Bank’s right to sanction and the World Bank’s inspection and audit rights. 25. With the incorporation of the above provision, the Mozambique Procurement Regulations will be acceptable to be used under those procurements not subject to the World Bank’s prior review, according to the thresholds indicated in table 1.3 or any updates indicated by the World Bank in the Procurement Plan. Page 52 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) ANNEX 2: Financial Intermediary Financing - Project Design Details Fiduciary Issues and Flow of Funds Flow of Funds 1. The project will support direct financial intermediary financing with funds flowing only to the PFI as intermediary according to figure 2.1. Figure 2.1. Flow of Funds for Financial Intermediary Financing with a PFI Government guarantees PFI’s repayment to the World Bank World Bank extends credit line to PFI World Bank (IDA) Government PFI extend loans to sub- PFIs pay a guarantee fee to the borrower at own credit risk Government Retailer (private) Sub-borrower 1 Sub-borrower 2 Sub-borrower n Financial Management 2. The PIU will be responsible for all the fiduciary issues related to the matching grant and TA to PFIs (Subcomponents 1.3 (a) and 1.3 (b)). The PFI will be responsible for disbursement, FM, and auditing of the credit line as well as compliance with the World Banks’s environmental and social safeguard policies. The PFI would report back to the PIU on a regular basis and would be provided with close World Bank implementation support. Procurement 3. The PIU will be subject to all applicable World Bank Procurement Guidelines. For subloans made by the PFIs to eligible beneficiaries, the beneficiaries may carry out the procurement of goods, works, and nonconsulting services, and the selection of consultants, in accordance with well-established private sector procurement methods or commercial practices as outlined in OP 11.00 (Procurement). Page 53 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Disbursement Arrangements 4. There are typically three types of disbursements arrangements that could be considered for financial intermediary financing: (a) Back-to-back. Financing or refinancing of an eligible subloan portfolio which has been initially approved by the PFIs’ credit committee. The disbursement of funding is made against eligible subloans on a back-to-back basis, for example, matching the sub-loan amounts and maturities (length). (b) Fixed-term financing. Financing or refinancing of an eligible subloan portfolio which has been initially approved by the PFIs’ credit committee. The disbursement of funding is made against eligible subloans on pre-established loan terms and conditions. (c) Advance. If a strong business case is made, an advance can be disbursed to the PFI institution in line with the project’s eligibility criteria (this is also the riskiest approach and requires close monitoring). This type of disbursement arrangement has been used in microfinance projects where there is limited initial funding available to kick-start the project. Environmental and Social Management 5. The PFIs will be required to monitor and manage the environmental and social risks and impacts of their portfolio and financial intermediary subprojects, in accordance to the World Bank ESF. The PFIs shall put in place and maintain an Environmental and Social Management System (ESMS)20 to identify, assess, manage, and monitor the environmental and social risks and impacts of financial intermediary subprojects on an ongoing basis. The ESMS will be commensurate with the nature and magnitude of environmental and social risks and impacts of financial intermediary subprojects, the types of financing, and the overall risk aggregated at the portfolio level. 6. The financial intermediary will provide a safe and healthy working environment, adopting appropriate labor management procedures, including procedures relating to working conditions and terms of employment, nondiscrimination, and equal opportunity, grievance mechanisms, and occupational health and safety. 7. A short negative list21 will detail excluded uses of the matching grants to support the recovery of MSMEs due to potential social and environmental implications. The matching grants shall focus mainly on 20 The financial intermediaries’ ESMS will include the following elements: (a) environmental and social policy; (b) clearly defined procedures for the identification, assessment, and management of the environmental and social risks and impacts of subprojects; (c) organizational capacity and competency; (d) monitoring and review of environmental and social risks of subprojects and the portfolio; and (e) external communications mechanism. 21 Business involving activities that are likely to have significant adverse environmental impacts that are sensitive, diverse, or unprecedented will not be eligible to financing, including (but not limited to) activities that demand involuntary resettlement, which may result in the degradation of critical habitats, have significant air emissions compromising ambient air quality, have significant wastewater/effluents generation compromising water quality, produce noise above permitted levels, may pose physical, chemical, biological, and radiological hazards, or any treat to community health and safety. The final negative list will be detailed in the Operations Manual. Page 54 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) activities which do not require environmental and social assessment, classified as Category C according to Mozambique Legislation (Decree 54/2015). Monitoring and Evaluation 8. Reasonable targets will need to be established based on SME census. This should track the additionality of support to firms, including the number able to engage in business activities that would not have otherwise been possible. The PIU will be responsible for M&E. For the credit line, the PIU will also be responsible for gathering relevant financial soundness indicators for the PFI including capital adequacy, profitability, portfolio quality, and other indicators as determined by the World Bank. Eligibility Criteria for PFIs 9. The PFIs will need to comply with all Mozambique financial sector laws and regulations and would need to be appraised by the World Bank against the following eligibility criteria. The main elements of that appraisal would need to be summarized in the POM. 10. The proposed PFI will be expected to comply with the following requirements related to core financial soundness indicators. These include capital adequacy ratios comfortably above the regulatory minimum of 8 percent, nonperforming loans at manageable levels (that is, less than 3 percent), enough loan loss provisions (that is, 70 percent), and adequate liquidity. The assessment of profitability, capital, and portfolio quality will be undertaken based on a review of the proposed PFI’s audited financial statements prepared in accordance with accounting and auditing principles acceptable to the World Bank. 11. The assessment will also include a review of loan collection processes and practices. It will also assess the PFI’s managerial capacity, including implementation of lending technology, adequate reporting systems/management information systems, staffing, and ability to conduct subloan/project appraisal (including environmental and social assessment and for supervising subloan project implementation). It will also assess the proposed PFI’s capacity to mobilize domestic resources. Lastly, the assessment will determine the degree of managerial autonomy and commercially oriented governance and evaluate the relevant prudential policies, administrative structure, and business procedures. Page 55 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) ANNEX 3. Economic Analysis 1. A cost-benefit analysis was conducted to assess the economic feasibility of the components under the CERRP. The analysis relies on the NPV of the cost and benefits to assess the net returns accruing from the implementation of the proposed project. Based on a recent comparative assessment of discount rates,22 a discount rate of 5 percent is assumed throughout the economic analysis. It is important to notice that due to the urgent nature of this operation, the following section presents a simplified and preliminary economic analysis of the project. 2. The project’s economic impact will be beneficial and significant. The results of the economic analysis performed show an overall NPV of US$208 million and BCR of 2.1 for the project. Both the NPV and BCR quantify positive benefits to the affected households and firms showing that the project is economically viable by conservative estimates. Results are summarized in table 3.1, regardless of the discount rate chosen (5 percent), the NPV and the BCR are estimated for 0 percent and 10 percent discount rate. Table 3.1. Summary Table of Estimated Cost-Benefit Analysis Result Discount Rate Components 0% 5% 10% 1. Recovery and Reconstruction of Cyclone-affected Areas a. Costsa 84 75 66 b. Benefits 164 111 77 c. NPV 80 36 11 d. BCR 1.9 1.5 1.2 e. ERR 14% 2. Building Climate Resilience of Beira a. Costsa 126 106 91 b. Benefits 716 283 164 c. NPV 590 177 73 d. BCR 5.7 2.7 1.8 e. ERR 29% Overall Project a. Costs* 210 181 157 b. Benefits 880 389 238 c. NPV 670 208 81 d. BCR 4.2 2.1 1.5 e. ERR Note: NPV in US$ millions. a. Includes US$10 million implementation and monitoring (Component 2.3 and 3). 22 World Bank. 2017. Risk-Adjusted Discount Rates in Economic Analysis of Investment Projects. Mahul et al. Page 56 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Component 1: Recovery and Reconstruction of Cyclone-affected Areas 3. Component 1 will address urgent recovery needs in housing, public infrastructure and business, which will help to restore livelihoods and economic activity to reduce the impacts on welfare, health, income and output in the cyclone-affected areas. Timely recovery and reconstruction is important as it reduces immediate health, education and poverty negative outcomes, moreover it is associated with lower impacts in economic output and growth due to ripple effects in the economy. The total cost of this component is US$84 million, including US$4 million for implementation and monitoring. The estimations suggest the intervention will be beneficial and significant with an NPV of US$31 million and BCR of 1.4. As explained in more detail in the next section, these figures are based on conservative scenarios, thus the potential benefits can be expected to be higher. Table 3.2. Component 1 - Summary Table of Estimated Cost-Benefit Analysis Result Discount Rate Component 1 0% 5% 10% Subcomponent 1.1: Housing a. Cost* 44 39 34 b. Benefits 105 58 35 c. NPV 61 19 1 d. BCR 2.4 1.5 1.0 e. ERR 10% Subcomponent 1.2: Public Infrastructure a. Cost* 17 15 13 b. Benefits 22 19 16 c. NPV 5 3.8 3 d. BCR 1.3 1.3 1.2 e. ERR 32% Subcomponent 1.3: Private Sector Recovery a. Cost* 23 20 18 b. Benefits 36 29 24 c. NPV 13 8 6 d. BCR 1.6 1.4 1.3 e. ERR 26% Component 1 a. NPV 80 31 9 b. BCR 1.9 1.4 1.1 c. ERR 14% Note: NPV in US$ millions.*Includes US$4 implementation, and monitoring (Component 3). Subcomponent 1.1: Housing 4. Cyclones Idai and Kenneth destroyed around 240,000 houses. The project will finance the reconstruction of approximately 15,000 units with hazard-resilient features. Housing recovery in the aftermath of a disaster is a key concern of governments. Literature points out that access to adequate housing is tied to a household’s health, education, and economic stability. The loss of a house deeply Page 57 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) affects the earning capacity of a household as well as the health and well-being of its members.23 Since it is difficult at this stage to make any assessment of benefits from resilient housing in terms of protection from future hazards, the analysis here takes a more straightforward approach of calculating the returns to the households living in a resilient home. Thus, considering the welfare of living in a house (implicit cost of living in temporary units) and the benefits to avoid health issues compared to them not receiving any benefits to jump-start their post-disaster life. (a) Cost. The project is expected to finance the reconstruction of 15,000 hazard-resilient housing units with a total cost of US$44 million over five years, including US$2 million in implementation. The approximate unit cost is US$2,800. The cost will be distributed as 5 percent in year 1, 42.5 percent in years 2 and 3, and 5 percent in years 4 and 5. (b) Rental value of new houses (welfare). To estimate the benefits, it is assumed that in the absence of the project, no new houses will be built. In other words, the potential beneficiaries will continue to live in temporary structures that have no significant shadow rental value. The shadow rental value of housing is the imputed welfare benefit of living in a house (or the absence of shadow rental value as an implicit cost of living in temporary structures). Thus, the main benefit component of this project is the shadow annualized rental income from the newly built multihazard resilient housing units. Other benefits such as the prevention of death and injuries in the case of hazards and poverty alleviation through livelihood support are not considered in this economic analysis. Therefore, the resulting quantitative indicators of economic benefits from the project are conservative. Assumptions for the benefit estimations are (i) the average value of a multihazard resilient new home will be equal to US$4,000,24 (ii) the price to rent ratio is equal to 3.62,25 and (iii) the new homes will have the useful life of 20 years beginning the year after the unit was built. The discounted benefit is estimated at US$54 million. (c) Reduced health impacts. Without the project, it is assumed the households will live in temporary or inadequate settlements at risk of health epidemics with negative long-lasting effects. This intervention will contribute to reduce the diseases generated by contagion in the without-project scenario. Cost-benefit analysis in the health sector is often based on the reduction in disability-adjusted life years (DALY) associated with the cases of diseases the intervention could avert. DALY measures the number of years lost due to ill-health, disability or early death due to disease. National estimations of DALY26 are used in tuberculosis and it is assumed that the intervention will avoid 20 percent of the beneficiaries from tuberculosis contagion (15,000 people)27 and prevent on average 0.04 DALY per person. The estimated 23 Mukherjhy, A. 2017. Post-Disaster Housing Recovery. Oxford Research. 24 In the study of Centre of Affordable Housing in Finance in Africa, it is mentioned that a three-bedroom house located in outer Maputo is listed on US$12,500. We choose a most conservative number considering most households in the country have an annual income of around US$800–US$2,400. Using the price-to-rent ratio, the annual rent is approximated as US$1,657 per household. In addition, it is assumed that a pre-cyclone rural housing unit was US$3,000. 25 Centre for Affordable Housing Finance in Africa. 2016. Understanding Mozambique´s Housing Finance Market. 26 Institute for Health Metrics and Evaluation: http://www.healthdata.org/mozambique 27 Even though when it is difficult to estimate exactly what type of illness the operation can avert, World Bank operations in housing recovery have shown positive results in avoiding cholera cases (that is, the Haiti project for housing recovery in its completion report points out the avoided cases). Page 58 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) benefits of the project on health are evaluated based on the number of DALY that could be saved per person due to the intervention. Housing recovery would avert at least 600 DALY equivalent to a discounted value of US$3.4 million (costed at the level of gross national income per capita per 20 years). 5. The subcomponent for housing recovery and reconstruction yields a positive NPV of US$19 million with a 1.5 BCR and an ERR of 10 percent. Subcomponent 1.2: Public Infrastructure 6. Timely recovery of public infrastructure is important as delays compound impacts in economic output and growth due to ripple effects. Specific activities financed in this subcomponent may include the repair and reconstruction of markets, Government buildings, public water and sanitation units; and the construction of multifunctional elevated flood evacuation sites and cyclone wind shelters. To estimate the benefits of the intervention in public infrastructure, the avoided indirect losses have been quantified in output due to delays in the replacement of damaged capital. (a) Cost. The cost of the intervention will be US$16 million. An additional US$1 million will finance TA and project implementation, M&E over five years (Component 3). The cost will be distributed as 5 percent in year 1, 42.5 percent in years 2 and 3, and 5 percent in years 4 and 5. (b) Reduced indirect losses in output. Without the project, it is assumed that timely rehabilitation and reconstruction will not be possible in the targeted areas. In the literature, timely recovery is associated with lower impacts in economic output and growth due to ripple effects in the economy. Indeed, in a macroeconomic model, it is simulated that US$1 of direct loss in productive capital is translated into US$1.4 total losses amplified by the disruption of basic services and the duration of reconstruction.28 Assuming benefits are realized 1 year forward the investment, the discounted benefits for reducing indirect losses in output due to the replacement in capital will be US$19 million. We consider this amount as a lower bound as resilience building in the public infrastructure is not yet quantified in this analysis. 7. The subcomponent for public infrastructure recovery is expected to generate a positive NPV of US$3.8 million with a 1.3 BCR and an ERR of 32 percent. Subcomponent 1.3: Private Sector Recovery 8. This intervention will stimulate the rapid recovery of the private sector, which will help sustain informal SMEs and secure jobs and economic activity in the affected provinces. The proposed intervention includes a range of business´ support instruments during the emergency reconstruction phase from proving short-term liquidity to finance working capital and investment until to strengthen firms and financial institutions’ capabilities. In the aftermath of a disaster, the economy is characterized by disruption in the supply (higher cost of production) and demand side (lower demand, particularly 28 Hallegate, S. 2015. Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience. Page 59 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) liquidity). The disruption of production due to physical damage turns to a reduction on the demand of labor and other inputs if productive assets are not replaced or if working capital is not available. In the demand side, firms are affected by a decrease in the demand as the impact of the disaster creates a decline in income, and particularly in the liquidity. We evaluate the benefits of the intervention by considering the reduced loss in income due to employment destruction. (a) Cost. The investment to support firms is being commuted as US$22 million over 5 years. An additional US$1 million will finance TA and the project implementation, M&E over 5 years (Component 3). The cost will be distributed as 5 percent in year 1, 42.5 percent in years 2 and 3, and 5 percent in years 4 and 5. (b) Reduced loss of income (employment). To cope with the effects of disasters most vulnerable firms, as informal, micro, small, and medium firms, reduce their labor demand. The reduction of employment is one of the direct impacts this subcomponent will support to reduce. We assume the intervention can reach 10 percent of firms in the affected provinces (1,503 firms)29 and without the intervention, firms will operate at a lower capacity, thus reducing their number of employees by three with an average annual salary of US$2,688.30 The benefits will last until three years assuming that, without the intervention, after this period firms can return to their pre-disaster capacity. The total discounted benefits will be US$29 million. The estimations are conservative as other benefits can be estimated as the avoided losses in the supply chain. 9. The subcomponent on private sector recovery is expected to generate a positive NPV of US$9 million with a 1.4 BCR and an ERR of 26 percent. Component 2: Building Climate Resilience 10. This component will reduce the vulnerability of communities in Beira to future disasters by strengthening their resilience against flooding. The intervention in rehabilitation of coastal protection and drainage will avert future damages and losses due to flooding and long-lasting negative effects due to diseases and welfare. The total cost of this component is US$120 million plus an implementation cost of US$6 million. The intervention is expected to be positive with an NPV of US$176 million and BCR of 2.6. Table 3.3. Component 2 - Summary Table of Estimated Cost-Benefit Analysis Result Discount Rate Component 2 0% 5% 10% Subcomponent 2.1. Coastal Resilience a. Cost 63 53 46 b. Benefits 614 194 92 c. NPV 551 141 46 d. BCR 9.7 3.6 2.0 e. ERR 20% Subcomponent 2.2. Drainage Rehabilitation 29 Instituto National de Estadistica. 2017. Indicadores económico-financeiros das empresas 2016. 30 Based on Instituto National de Estadistica (2017). Page 60 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Discount Rate Component 2 0% 5% 10% a. Cost 63 53 46 b. Benefits 111 89 72 c. NPV 48 35 26 d. BCR 1.8 1.7 1.6 e. ERR 57% Component 2 a. NPV 590 176 72 b. BCR 5.7 2.6 1.8 c. ERR 29% Note: NPV in US$ millions. *Includes US$ 6 million of implementation and monitoring (Component 2.3 and 3). Subcomponent 2.1. Coastal Resilience 11. This subcomponent will address key gaps in Beira’s coastal protection system by repairing damage to the coastal protection and coastal road caused by Cyclone Idai; rehabilitating and strengthening the groynes, dunes, and flood walls; and conducting strategic sand nourishment to replenish the sand balance across the target area. Coastal resilience is important to reduce future damages and losses due to flooding and long-lasting negative effects due to diseases. (a) Cost. The investment to increase coastal resilience in Praia Nova and Beira East of Ponte Gea will cost US$60 million over five years. An additional US$3 million will finance the project implementation, M&E over five years (Component 2.3 and 3). The cost will be distributed as 4 percent in year 1 and 24 percent over years 2 to 5. (b) Reduced damages in Praia Nova and Beira East of Ponte Gea. We conducted preliminary estimations of the benefits in reduced stock damages due to the investment in coastal resilience in Praia Nova and Beira East Ponte Gea. Ponte Gea protects a certain area of the City of Beira against coastal flooding. The old part of the city and also northeast of the old part of the city, the topography is relatively high and these areas would not flood from coastal events since these areas lie above a very extreme water level (higher than for example, 1000 years-event). Current benefits of direct coastal risk (indirect effects are not included) to assets is in the order of US$185 million for reducing coastal flood risk. To derive the benefits from the intervention we assume the following: • For Ponte Gea: The average bed level in the flood-prone area due to coastal events is estimated around 3.5 meter above mean sea level (m+MSL). Current protection level of the existing coastal protection is estimated to be around 30 years; Cyclone Idai produced around a 4 m+MSL water level; the coastal protection was severely damaged, water level rose close to the crest of the protection system (with waves overtopping) but did not completely breach/was not completely overtopped; for higher return periods, the coastal protection is assumed to fail and severe flooding inside the city will be the result. For Praia Nova, the average bed level in the flood-prone area due to coastal events is estimated around 3,0 m+MSL. Page 61 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) • For Ponte Gea: The direct damage is estimated by assuming a constant m2 price (US$200) for houses in Beira based on available replacement cost information and some assumptions about the m2 per house, percentage of buildup area near the coast, and so on. A factor has been used to estimate the total asset damage since other assets (infrastructure, public houses). Typically, the building damage is the dominant part based on R5 study and other work, here a value of 75 percent is used. For Praia Nova: The direct damage is estimated by assuming a constant m2 price (US$80) for houses in Praia Nova based on a national-level risk assessment conducted under the Africa Disaster Risk Financing Program. • An investment in coastal protection of US$60 million may be sufficient to cover (a) rehabilitation and upgrade of existing groyne system and (b) strengthening the dune system with additional nourishment/widening of the dune profile. • The benefits are realized one year forward the investment and are obtained gradually in the same proportion of the cost distribution, until reaching 100 percent in year 6. The intervention is assumed to last 50 years. (c) Reduced health issues. The rehabilitation of coastal protection will likely enable a safer environment. This factor will contribute to reduce the diseases generated by the flooding in the without-project scenario. Cost-benefit analysis in the health sector is often based on the reduction in DALY associated with the cases of diseases the intervention could avert. DALY measure the number of years lost due to ill-health, disability or early death due to disease. Population Services International estimates the DALY avert for water treatments to prevent diarrhea-related morbidity and mortality in Mozambique. The treatment was estimated to prevent on average 0.04 DALY per person. We assume a more conservative number of 0.01 DALY per person. The estimated benefits of the project on health are evaluated based on the number of DALY that could be saved per person due to the intervention. Coastal protection would avert at least 20,300 DALY equivalent to US$9.5 million (costed at the level of gross national income per capita per 20 years). 12. The subcomponent in coastal resilience is expected to generate a positive NPV of US$141 million with a 3.6 BCR and an ERR of 20 percent. Subcomponent 2.2. Drainage Rehabilitation 13. This subcomponent will repair cyclone-induced damages to the drainage works and implement Phase 2 of the drainage rehabilitation. Cyclone Idai caused minor damages to the current drainage system that will be repaired under this subcomponent. (a) Cost. The total investment to drainage rehabilitation is assumed as US$60 million over five years. An additional US$3 million will finance the project implementation, M&E over five years (Component 2.3 and 3). The cost will be distributed as 4 percent in year 1, and 24 percent from years 2 to 5. Page 62 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) (b) Reduced damages, economic losses, and welfare negative impacts. The drainage investments financed by the World Bank in 2012 under the Cities and Climate Change Project (P123201) were effective in minimizing flooding during Cyclone Idai. Beira suffered flooding in January 2019 in areas without rehabilitated drainage infrastructure and saw additional flooding during Cyclone Idai in those areas not serviced by the rehabilitated drainage system. Thus, considering the intervention in drainage was effective and the urgent nature of our operation, we leverage its cost-benefit ratio31 to derive the estimations in this subcomponent. Based on its economic analysis, it is assumed that US$1 invested in drainage infrastructure in Beira leads to a benefit of US$2.1, which includes avoided damages in infrastructure, impacts on economic activity, and welfare due the reduction of diseases. Assuming that benefits are realized one year forward the investment and are obtained gradually until reaching 100 percent in year 3, the total discounted benefits of the subcomponent over 5 years will be US$88.6 million. 14. The component is expected to yield a positive NPV of US$35 million with a 1.7 BCR and an ERR of 57 percent. 31 World Bank. 2012. Project Appraisal Document: Cities and Climate Change. Mozambique. Page 63 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) ANNEX 4: Status of GBV Risk Rating and Recommended Actions The project was assessed according to the World Bank Good Practice Note (GPN) Addressing GBV in IPF involving Major Civil Works. The risk was rated as Substantial. The recommended actions and activities have been incorporated in the various safeguard instruments. This includes the development and implementation of the final GBV Action Plan prior to the initiation of construction activities. GBV GPN Risk recom- Level mended Budgeted Planned/ per GPN recommended activities for Ongoing/ Comments & Required Actions GPN activities already Yes/ No/ Implemented in N/A project Yes/No Not yet available but a consultant will be hired to undertake a risk analysis. The GBV Risk Assessment in ESIA Yes Planned Yes assessment should be finalized before any construction work starts. Consultations have not focused on GBV issues. Community awareness is planned Inform project affected under a Stakeholder Engagement Plan Yes Planned Yes communities about GBV risks and additional consultations will be conducted by a specialized consultant before civil works begin. Mapping of services and providers is part of tasks that will be included in the terms of references (ToRs) to be prepared for the GBV Consultant who will produce a GBV Action Plan under the Map out GBV Prevention and Substantial [16.5] Yes Planned Yes ESMF. It should be carried out before any Response Service Providers civil works begin and the information gathered presented in a user-friendly format and disseminated and discussed with project beneficiaries, PIU and the project team. Safeguard instruments will be prepared Reflect risks and identify after project effectiveness. Risks and mitigation measures in key Yes Planned Yes mitigation measures will be reflected in safeguards instruments ESMFs, RPFs, ESMPs and RAPs as well as (ESMP, C-ESMP, etc.) C-ESMPs. The capacity of the implementing agency Assess and strengthen to address GBV has been assessed by the implementing agency's Yes Planned Yes team as low. Each PIU will hire a GBV capacity to prevent and specialist and additional technical respond to GBV assistance will be hired as required. The inclusion of GBV-sensitive channels has been planned and should be GBV-sensitive channels for Yes Planned specified in detail in the GBV Action Plan. reporting in GRM Personnel to be in charge of the GRM should be appropriately trained. Page 64 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) Bidding documents will include the need Define GBV requirements in Yes Planned to present Codes of Conducts specifying the bid documents behavior related to GBV rules Budget for activities will be provided Budget for GBV activities in based on the GBV Action Plan to be Yes Planned relevant documents prepared by the specialized consultant in coordination with the project team. The need for all contractor workers to sign a Code of Conduct which specify rules and sanctions related to GBV will Ensure CoCs are signed and Yes Planned be included in ESMPs and C-ESMPs. The understood Project will ensure that all are signed and that rules are well understood before civil works begin. Separate facilities for men GBV action plan will include separate and women and GBV-free Yes Planned facilities as appropriate. zone signage GBV action plan with GBV Action Plan will be prepared as part accountability and response Yes Planned of ESMF within the first three months framework as part of ESMP after project effectiveness. GBV Specialist in IA Each PIU will have a GBV specialist to (Moderate Risk=consider, Yes Planned oversee the implementation of GBV Substantial and High Action Plan. risk=recommended) GBV Specialist in Supervision Consultant team (Moderate The GBV Action Plan will provide Risk=consider, Substantial Yes Planned guidance on this and High risk=recommended) This activity is planned for the bidding Evaluate GBV Response process. GBV Specialists to be hired by protocol in C-ESMP prior to Yes Planned each PIU will provide support in finalizing contract reviewing this documentation, in coordination with the Bank team. To be considered later in the context of Third Party Monitoring preparing the GBV Action Plan based on (Substantial Risk=consider, No the results of the final assessment being High risk=recommended) carried out by the specialized consultant. IA to recruit GBV Services To be considered later in the context of Provider (Substantial preparing the GBV Action Plan based on No Risk=consider, High the results of the final assessment being risk=recommended) carried out by the specialized consultant. Page 65 of 66 The World Bank Mozambique: Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040) ANNEX 5: Project Map Page 66 of 66