Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 81418 - SB

PROJECT PAPER

ON A

PROPOSED ADDITIONAL

IN THE AMOUNT OF US$1.29 MILLION

TO THE

SOLOMON ISLANDS

RAPID EMPLOYMENT PROJECT

November 8, 2013

Papua New Guinea, Timor-Leste, and Pacific IslandsSustainable Development DepartmentEast Asia and Pacific 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 September 30, 2013)

Currency Unit = Solomon Dollars (SBD)SBD7.3 = US$1

US$1.51 = SDR1

FISCAL YEARJanuary 1 – December 31

ABBREVIATIONS AND ACRONYMS

Vice President: Axel van TrotsenburgCountry Director: Franz Drees-Gross

Sector Director John RoomeSector Manager: Michel Kerf

Task Team Leader: Sonya Woo

SOLOMON ISLANDS

RAPID EMPLOYMENT PROJECT

PROJECT PAPER FOR ADDITIONAL FINANCING

CONTENTS

AF Additional FinancingAusAID Australian Agency for International DevelopmentBNPL Basic Needs Poverty LineCBSI Central Bank of the Solomon IslandsCPS Country Partnership StrategyEPP Emergency Project PaperHCC Honiara City CouncilIDA International Development AssociationIFR Interim Unaudited Financial ReportISR Implementation Status ReportMID Ministry of Infrastructure DevelopmentMIS Management Information SystemMTR Mid Term ReviewOP Operational PolicyPDO Project Development ObjectivePET Pre-Employment TrainingPRIF Pacific Region Infrastructure DevelopmentRAMSI Regional Assistance Mission for Solomon IslandsREP Rapid Employment ProjectRES Rapid Employment SchemeRFP Resettlement Policy FrameworkRoW Right of WaySIG Solomon Islands GovernmentSPC State and Peace-Building Fund TF Trust Fund

Project Paper Data Sheet

Project Paper

I. Introduction ……………………………………………………….……1II. Background and Rationale for Additional Financing ……………. .…..1III. Proposed Changes ...………………………………………………...….4IV. Appraisal Summary…………………………….………………….…....6V. Risks …….…………………………………….……………….……..6

Annexes

1. Revised Results Framework and Monitoring ………….………………72. Operational Risk Assessment Framework ……………………...…….13

SOLOMON ISLANDS

RURAL DEVELOPMENT PROGRAM

ADDITIONAL FINANCING DATA SHEET

Basic Information - Additional Financing (AF)Country Director: Franz Drees-GrossSector Manager/Director: Michel KerfTeam Leader: Sonya WooProject ID: P147541Expected Effectiveness Date: December 15, 2013 Lending Instrument: GrantAdditional Financing Type: Scale up

Sector: SocialThemes: Other social servicesEnvironmental category: BExpected Closing Date: June 30, 2015

Basic Information - Original ProjectProject ID: P114987 Environmental category: BProject Name: Solomon Islands Rapid Employment Project

Expected Closing Date: June 30, 2015

Lending Instrument: Grant

AF Project Financing Data[ ] Loan [ ] Credit [ x ] Grant [ ] Guarantee [ ] Other: Proposed terms:

AF Financing Plan (US$m)Source Total Amount (US $m)

Total Project Cost: PRIF Co-financing:

1.291.29

Source

Original With Additional Finance

Amount(US$

million)

Share of Total (%)

Amount(US$

million)

Share of Total (%)

IDA 3.2 44 0 37SPF 2.0 28 0 24PRIF 2.0 28 0 24PRIF AF 1.29 15

Total 7.2 100.0 1.29 100.0Client Information

Recipient: Solomon Islands GovernmentResponsible Agency: Honiara City CouncilContact Person: Mr. Charles Kelly, City ClerkTelephone No.: (677) 211-33Email: kellycharles74@gmail.com

AF Estimated Disbursements (Bank FY/US$m)

FY 2010 2011 2012 2013 2014 2015Annual 0.55 0.74Cumulative 0.55 1.29

Project Development Objective and DescriptionOriginal project development objective: to assist targeted vulnerable urban populations to: (i) increase their incomes through the provision of short term employment; and (ii) improve their knowledge, experience and basic employment skills that are valued in the workplace and society. The project emphasizes the participation of urban youth and women. Secondary benefits accrue to target communities and the general urban population from the infrastructure and services that are supported by the project.Project description: (i) Rapid Employment Scheme; (ii) Pre-Employment Training; (iii) Incremental Project Management

Safeguard and Exception to PoliciesSafeguard policies triggered:Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12)Safety of Dams (OP/BP 4.37)Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

[x]Yes [ ] No[ ]Yes [x] No[ ]Yes [x] No[ ]Yes [x] No[ ]Yes [x] No[ ]Yes [x] No[x]Yes [ ] No[ ]Yes [x] No[ ]Yes [x] No[ ]Yes [x] No

Is approval of any policy waiver sought from the Board (or MD if RETF operation is RVP approved)?Has this been endorsed by Bank Management? (Only applies to Board approved operations)Does the project require any exception to Bank policy?Has this been approved by Bank Management?

[ ]Yes [x] No

[x]Yes [ ] No

[ ]Yes [x] No[ ]Yes [ ] No

Conditions and Legal Covenants:Financing Agreement

ReferenceDescription of

Condition/CovenantDate Due

4.01 N/A N/A

I. Introduction

1. This Project Paper seeks the approval of the Country Director to provide Additional Financing (AF) for a Recipient Executed Grant financed by the Pacific Region Infrastructure Facility (PRIF) Multi-Donor Trust Fund in the amount of US$1.29 million to co-finance the Solomon Islands Rapid Employment Project (REP, Project ID P114987, IDA Grant No. H575-SB, PRIF Grant TF96620 and SPF TF95966) in accordance with World Bank OP10.00.

2. The primary objective of the AF would be to support activities that scale-up the REP’s impact and development effectiveness through the provision of additional short-term employment opportunities for the vulnerable poor, including youth and women in Honiara. Secondary benefits would also accrue to neighborhoods and the general urban population from the expansion of the community infrastructure investments financed by the project. This would be achieved by scaling up project activities under the project’s Urban Works and Services mainly in the form of Sub-Grants for the implementation of pedestrian and access infrastructure sub-projects implemented by community groups.

II. Background and Rationale for Additional Financing

1. The Rapid Employment Project (REP or “project”) was designed as an emergency employment project using the World Bank’s OP/BP 8.0 to target the poor and vulnerable populations in and around Honiara, where it was feared that the negative effects of the Global Economic Crisis and other economic difficulties would cause greater unemployment and possible social unrest.

2. Project Development Objectives. The objective of the project is to assist targeted vulnerable urban populations to: (i) increase their incomes through the provision of short term employment; and (ii) improve their knowledge, experience and basic employment skills that are valued in the workplace and society. The project emphasizes the participation of urban youth and women. Secondary benefits accrue to target communities and the general urban population from the infrastructure and services that are supported by the project.

3. Project Components. The project has three Components:

(i) Rapid Employment Scheme (RES) provides short-term temporary employment opportunities for the vulnerable urban poor through labor-based public works. This component consists of 2 sub-components: Sub-Component 1a: Road Rehabilitation and Maintenance is implemented by Ministry of Infrastructure Development (MID), and Sub-Component 1b: Urban Works and Services is implemented by Honiara City Council (HCC). The Component would finance activities that have a high labor to non-labor ratio that would optimize wage transfer. Combined, these two sub-components will generate approximately 500,000 labor days over the life of the Project;

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(ii) Pre-Employment Training (PET) provides basic skills training to REP beneficiaries that facilitates their effective participation in the RES, and provides additional training on other basic financial and general skills that are valued in the workplace and society at large; and

(iii) Incremental project management costs for the two implementing agencies, MID and HCC. This involves technical assistance to both agencies; project staff in the areas of works supervision, community mobilization, financial management, procurement; independent monitoring of project progress and results; and incremental operating costs associated with the management and operation of the project.

4. Financing. The REP is financed through an IDA Grant (H575-SB) of US$3.2 million, which was approved on May 18, 2010, as well as a World Bank administered State and Peace-building Fund (SPF) Grant of US$2 million and a PRIF Grant of US$ 2 million, which were approved on March 24 and April 20, 2010 respectively. The REP was formally launched on June 1, 2010. The IDA Grant was declared effective on September 28, 2010; the SPF was declared effective on April 1, 2010; and the PRIF was declared effective on April 30, 2010.

5. Country and Sector Issues. In recent years, Solomon Islands has moved into a period of recovery and implementation of development projects. However, raising living standards remains a challenge as per capita income levels remain below those of the period prior to the “Tensions” and civil unrest that took place between 1998 to 2003 and again in 2006. Limited employment opportunities in urban areas and a sizable youth bulge continue to present a persistent risk. Only about 50,000 people out of a working population of over 250,000 are employed in the formal economy, with the bulk of the remaining population engaged in subsistence agriculture with periodic cash incomes. Rapid population growth - 2.3 percent per year - with 44 percent of the population below 15 years of age has outstripped job creation in the formal economy. An estimated 7,500 young people enter the workforce each year, but only one among every six school leavers will find paid employment. Unlike a number of other countries in the Pacific region, Solomon Islands has very low rates of migration to regional job centers. Many young people make their way into the urban and peri-urban areas particularly around Honiara, which have been growing at an average rate of 4.7 percent per year for the last ten years. Adding to its fragility, there remains deep long standing and unresolved disputes caused by tensions over increasing in-migration, limited land resources, unequal access to employment and other services, all of which have the potential to reignite conflict.

6. Consistency with the World Bank’s Country Partnership Strategy. The Government’s request for Additional Financing is consistent with the Country Partnership Strategy (CPS) for 2013-2017, which defines 2 areas of engagement, namely: (i) strengthening economic resiliency through programs that maximize sustainable growth and returns in agriculture, mining and fisheries while addressing key constraints to inclusive growth; and (ii) supporting improvements in the equitable and accountable delivery of basic services across the country. The Additional Financing for the REP was identified in the CPS1 and is intended to address underlying inequalities. While risks of a resurgence of tensions have declined over the past few years, they remain present, especially in light of the transition of the Regional Assistance Mission for Solomon Islands (RAMSI). Risks to security are posed by continuing inter-island migration, the

1 CPS 2013-2017, Table 2, “Tentative World Bank Group Pipeline in Solomon Islands, March 2013.”

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breakdown of social systems, and significant numbers of unemployed and under-educated youth in urban areas. Poor service delivery, demographic changes, and negative perceptions about benefit sharing from the exploitation of natural resources potentially heighten these risks. The World Bank is working with government and partners to mitigate risks.

7. Contribution to Poverty Reduction. The REP targets urban and peri-urban poor, specifically those households living below the Basic Needs Poverty Line (BNPL). It is also expected that the project participants include at least 50 percent youth (ages 16 to 29)--considered to be a potential source of social unrest--and also support equitable gender participation (i.e. participation rates for men and women in line with their representation in the general population). The project aims to ensure the participation of the most vulnerable through two mechanisms: (i) Self-Selection by: (a) applying a wage-rate considered to be at or below a market-clearing level (currently this is the legal minimum wage) and (b) through the nature of labor intensive work (that tends to attract a majority of youth and women); and (ii) Geographic Targeting to facilitate the participation of those people from poor areas of the city, (which were also the sites of previous violence). In addition, the project monitors the socio-economic status of participants through the PET and a Semi-Annual Progress Survey, which will enable it to make adjustments in selection procedures if required.2

8. Project Performance. Overall, the project is performing well and is well on its way to meeting or exceeding its main output targets. The last 3 Implementation Status Reports (ISR) of March 2012, February and September 2013 rated progress towards the achievement of Development Objectives and Implementation as Satisfactory; and based on the most recent Financial Management (FM) review carried out in February 2013, the project's FM is rated as Moderately Satisfactory. In addition, the project’s safeguards compliance is rated as Satisfactory. Under the RES (Component 1), the project has already generated close to 400,000 days of work for nearly 7,000 people and transferred about US$1.6 million in wages. The project has targets of 33 percent participation for women but is exceeding this target. Under the PET (Component 2), the project has provided basic skills for employment training to about 7,450 beneficiaries, including vulnerable urban youth and women who currently comprise about 58 and 52 percent of the total number of beneficiaries. Most of those employed would have had substantially less income without the short-term employment opportunities under the project, and initial feedback suggests very high levels of satisfaction with the knowledge and skills provided through the PET. Under Project Management (Component 3), the project has complied with all legal covenants and audit reporting requirements. In addition, the project is routinely collecting data and reporting on its key performance and monitoring indicators through the regular submission of Quarterly Performance and Semi-Annual Progress Reports. It has also commenced and completed 3 rounds of its Semi-Annual Progress Survey, which includes both a beneficiary tracking and community leaders’ perceptions survey, and covers about 90 communities (or 1,275 respondents). Findings from the Semi-Annual Progress Survey will serve as a key input into the upcoming Mid Term Review scheduled in November 2013.

2 The Semi-Annual Progress Survey is carried out by a third party organization and includes a beneficiary tracking, contractor and community perceptions surveys.

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9. Compliance with Bank Policies and Grant Covenants. Under Component 3, the project has complied with all legal covenants, audits and financial management reporting requirements. All project audits have resulted in unqualified opinions.

10. Disbursement. Disbursements from the combined funding sources are shown in Table 1. Overall, disbursements under the Urban Works and Services Scheme (Sub-Component 1B) and Pre-Employment Training (Component 2) have progressed at faster rates than expected. As Table 1 indicates, HCC is close to exhausting is budget under the SPF and IDA. The SPF Grant Agreement closes in December 2013, and based on current projections, HCC will exhaust its remaining IDA budget used to finance its Sub-Grants Scheme by March 2014. In addition, although slower progress has been made under the existing PRIF, which co-finances MID’s Road Repair and Rehabilitation Scheme (Sub-Component 1B), disbursement has increased from 11 to 39 percent in the past 6 months and MID is expected to fully disburse the PRIF Grant by the project’s current Closing Date of June 2015.

Table 1: Disbursements as of October 7, 2013

Source of Funds

Implementing Agency

Credit Amount

(US$)

Amount Cancelled

Amount Disbursed

% of Funds Disbursed

IDA H575-SB HCC & MID 3,200,000 0 2,555,554.8 76%SPF TF959663 HCC & MID 1,821,250 0 1.641.256.56 90%PRIF TF96620 MID 2,000,000 0 786,845.30 39%11. Rationale for Additional Financing. The main rationale for the AF is to support activities that scale-up the project’s impact and development effectiveness through the provision of additional short-term employment opportunities for the vulnerable poor, including youth and women in Honiara. Secondary benefits would accrue to neighborhoods and the general urban population from the expansion of the community infrastructure financed by the project.

12. As illustrated in Table 1, disbursement under HCC’s Urban Works and Services Scheme (Sub-Component 1B) has progressed rapidly and there is growing demand expressed by communities for scaling up the pedestrian and access infrastructure investments under this Scheme. The popularity of these activities are characterized by the rapid generation of labor-days, high labor content, strong community participation and the construction of small scale pedestrian infrastructure, such as steps, pathways and water crossing structures that are strategically designed to provide communities with improved and safe access to main roads and other key facilities such as clinics, schools and churches. The average labor (wage) to non-labor ratio of activities under the community infrastructure access scheme of 45 percent also confirms the suitability of the menu of works and efficiency in using a community contracting approach.

13. The AF will therefore enable the HCC to meet this growing demand and implement a number of such activities already proposed by communities, for which the HCC has prepared work plans, a procurement plan and budget extending to the current closing date of the project – June 30, 2015. This represents a significant scaling up of outputs (work days) under Sub-

3 Of the total amount of $2 million financed by the SPF, $178,875 was executed by the Bank on behalf of the project.

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Component 1B, generating an additional estimated 100,000 person days of work, transferring construction skills and access improvement provisions for 28 communities.

14. As the project’s Pre-Employment Training (Component 2) is on track to exceed its original training target of 7,500 beneficiaries, HCC had already made plans within the current project scope to accommodate an additional 2,500 beneficiaries by project closing (bringing the total to 10,000 beneficiaries), and as such, the AF will not include additional provisions for training. However, while it was noted that the PRIF was limited to infrastructure activities, both the Government and World Bank are exploring other alternatives for grant financing, including the World Bank administered State and Peace-Building Fund, to expand the skills development component of the project. Subject to further grant financing, it was agreed that a rapid assessment of the training and skills market would be undertaken within a 6 month period and within the current project scope. The rapid assessment would be used to inform the likely preparation of a follow up operation.

15. The Additional Financing will benefit from experience gained through the implementation of the parent project. Key lessons are summarized below:

a. Maintaining simplicity in design and execution. The project was able to demonstrate results from the outset by building on existing platforms and maintaining simple implementation arrangements and procedures. This approach helped to strengthen existing institutional structures and community engagement while testing out different types of sub-projects, which would yield high rates of labor efficiency, and at the same time, demonstrate the potential for delivering benefits to the wider Honiara community;

b. Strengthening communication, outreach and the disclosure of information. Ensuring transparency and the disclosure of rules and regulations of the project has been key to the project’s engagement with communities and securing their participation and support;

c. Using community contracting arrangements to maximize labor efficiency rates. Although a detailed analysis has not yet been carried out, the project appears to be operating efficiently. Project records show that the average labor (wage) to non-labor ratio of sub-project activities under the community sub–grants (cleaning and waste collection) is about 90 percent, and even the community access infrastructure scheme reaches labor efficiencies of an average of 45%, which confirms the suitability of the type of works that are being supported under the Urban Works and Services Scheme and efficiency in using a community contracting approach to transfer wages, deliver training and other benefits, such as the infrastructure and access improvements;

d. Partnering with the HCC and Ward Councilors in sub-project selection. Some of the costs, including base course materials (e.g., cement) to finance the community infrastructure investments have been off-set by counterpart funding from the HCC and Ward Councillors. Additional infrastructure investment and services could be designed and scaled up using this model; and

e. Twinning training and work placement activities. Programs that include a cohesively designed set of activities─work placements coupled with short term skills training and life skills training, peer learning and social support (counselling, facilitation and mediation)─have proven to be more effective in sustaining beneficiary participation and interest than programs that focus on a single aspect exclusively.

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16. Alternatives Considered. Given the different rates of disbursement between Sub-components 1A and 1B, a restructuring of the project to enable a reallocation of funds from MID to HCC was considered as an alternative to AF. While disbursements under MID’s Road Repair and Rehabilitation Scheme were initially slow, primarily due to difficulties in procuring works contractors in the local market, the rate of disbursement has increased from 11 to 39 percent in the past 6 months, reflecting the effects of a number of improvements in the design of works packages, contractor engagement and training, and procurement approaches. Given recent progress, MID is expected to fully absorb and disburse the remaining funds by project closing. This assessment is based on the pipeline of 12 contracts that are already under implementation (7 of which would continue into 2014); and the fact that preparation of 3 new contracts for 2014 is well advanced. Additional alternatives were also considered. They include seeking additional Government Counterpart Funding. However, while HCC currently provides counterpart funding of around SBD 200,000 per year, this amount is not enough to finance activities at the planned level. As such, given these circumstances, HCC’s capacity to accommodate the scale up under existing implementing arrangements and AusAID’s interest in increasing its overall contribution to the project through the PRIF, AF is the preferred source of funding.

III. Proposed Changes

1. Under the proposed AF, no changes to the project design are envisaged, including the Project Development Objectives or project Closing Date. The AF would support the existing Components implemented by the HCC, amounting to US$1.29 million:

Sub-Component 1B: Urban Works and Services (US$1.09 million). Financing will be used to support: (a) the payment of wages in the form of Sub-Grants to the vulnerable poor that are engaged in the implementation of community infrastructure sub-projects generating an additional 100,000 person days of work (US$0.47 million); and (b) the procurement of goods (materials, tools and safety gear) that is required to implement the sub-projects (US$0.62 million); and

Component 3: Incremental Project Management (US$0.2 million). Financing will be used to support staff supervision costs and technical assistance (consulting services) to strengthen HCC’s capacity to effectively design and oversee the implementation of the Urban Works and Services Scheme as well as incremental operating costs (IOCs) incurred by HCC.

2. Additional Financing Project Costs and Financing Arrangements. A revised financing plan is shown in Table 2 and Table 3 provides revised costs by Component.

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Table 2: Project Financing Plan

Source

Original With Additional Finance

Amount(US$

million)

Share of Total (%)

Amount(US$

million)

Share of Total (%)

IDA 3.2 44 0 37SPF 2.0 28 0 24PRIF 2.0 28 0 24PRIF AF 1.29 15

Total 7.2 100.0 1.29 100.0

Table 3: Revised Costs by Component

Component Original Cost (US$ million)

AF (US$ million)

Total (US$ million)

1. Rapid Employment Scheme (5.4) a. Road Repair and Maintenance (MID) 2.8 2.8 b. Urban Works and Services (HCC) 2.6 1.09 3.692. Pre-Employment Training 0.9 0.93. Project Management (0.6) a. MID 0.3 0.3 b. HCC 0.3 0.2 0.54. Unallocated 0.3 0.3

Total 7.2 1.29 8.49

3. Results Framework and Enhanced Intermediate Outcome Indicators under Urban Works and Services Delivered. The AF would provide the opportunity to include additional performance indicators associated with Urban Works and Services Delivered under the Rapid Employment Scheme (Sub-Component 1B). The additional performance indicators are designed to capture the associated community infrastructure investments to be financed under the AF. They include: (i) Number of community infrastructure sub-projects completed; and (ii) Estimated number of beneficiaries (users) served. The current total output target of 500,000 person days of work will not be increased given the challenges in increasing the labor efficiency rates (non-labor to labor costs) of sub-project activities implemented under MID’s Road Repair and Rehabilitation Scheme. Based on implementation progress achieved under Sub-Component 1A, the project expects that MID will generate a total of 100,000 person days of work compared with the earlier estimate of 250,000 labor days. Under these circumstances, the additional 100,000 labor days to be generated under the AF will partially compensate for the envisaged short-falls under MID’s Sub-Component. In addition, while the Project Development Objective, Results Framework and intermediate outcome indicators developed under the original project continue to be relevant, a re-structuring of PDO indicators will be undertaken separately from the AF (and after the project's forthcoming MTR) to: (a) better align the project’s results and monitoring data with progress and available data; and (b) eliminate the promise that the project

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will result in an average increase in household incomes (rather than provide a short-term injection of income).

IV. Appraisal Summary

1. Technical. It was confirmed that the AF would not require any changes to the technical design, institutional arrangements, and fiduciary aspects of the on-going project; and that the existing Project Operational Manual (POM) is satisfactory and would not require any further changes to implement the additional activities planned under the AF. As in the case of the original parent project, the scope of the sub-project investments under the AF will be limited to minor civil works and small scale infrastructure. Sub-projects will be implemented by community groups through Sub-Grants (where the eligibility criteria and implementation procedures have already outlined in the POM) and overseen by the Works division. While the execution of the proposed work plan under the AF does not require an increase in capacity or additional skills, the AF does provide some contingency resources to support short-term technical assistance to help strengthen capacities or fill gaps in key technical and fiduciary areas, as needed.

2. Economic Justification. The economic justification of the on-going project will continue to apply under the AF.

3. Fiduciary. No material Financial Management (FM) issues have arisen and Procurement and FM systems, acceptable to the Bank, are already in place. However, given the recent turn-over in FM staff, the task team and project team have agreed on an action plan to ensure that FM reporting can be maintained and the project’s FM rating increases from Moderately Satisfactory to Satisfactory.

4. Based on the project's most recent Post Procurement Report and ISR carried out in May and September 2013 respectively, the project's procurement is rated as Satisfactory and procurement arrangements established under the original project will be used to support the AF activities. The Bank assesses the fiduciary risks associated with the AF (and project) as “Moderate.” The procurement of goods (materials and tools) will follow the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits,” dated January 2011 (Procurement Guidelines); and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers,” dated January 2011 (Consultant Guidelines). It is estimated that a total 6 packages will be procured and used to support the implementation of 24 community access sub-projects under the AF. The Project Implementing Unit (PIU) established within HCC would continue to be responsible for procurement for AF activities, which is mostly limited to the use of Shopping, given the nature of the works and activities to be financed. In addition, sample documents and templates as provided in the World Bank’s Guidance Manual “Making Procurement and Financial Management Work for Fragile and Small States in the Pacific,” dated January 2013 will be followed. To this end, HCC has prepared a Procurement Plan for the AF, including procurement thresholds and prior review methods, which is available in the project and Bank web-sites. The Procurement Plan will be updated by HCC (and agreed with the Bank)

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annually or as required to reflect project implementation needs and improvements in institutional capacity.

5. Environmental and Social Safeguards. The proposed activities under the AF will not change the Environmental Category of the project (Category B), trigger any new safeguard policies, or require any exceptions to Bank policies. As the type and location of investments proposed under the AF will be similar to those of the parent project, no additional unforeseen adverse impacts are expected. Any potential negative impacts and risks associated with the AF can be managed under the project’s Environmental and Social Management Guidelines (ESMG). Overall, the project has brought about positive social and environmental impacts such as job and income creation, improved local sanitation, vegetation control and waste collection. Given the labor intensive and small-scale nature of the project and non-use of heavy equipment, the negative impacts of project activities that have been recorded in project documents or those observed during implementation support missions were mainly temporary and minor (non-significant). Potential and anticipated social safeguards issues under the AF mainly revolve around, in the first instance, land acquisition for Right of Way (RoW) and incidental temporary effects of works; and in the second instance, grievances related to beneficiary selection and payment. However, to date, there has been no ROW-related issue reported. To this end, the project has adopted a strategy of prioritizing sub-projects within existing RoW arrangements and has avoided proposed works that may potentially require compensation for land or asset acquisition, especially in the case of informal settlers. This is consistent with the project’s Resettlement Policy Framework (RPF) given that the Land and Title Law of the Government does not provide compensation for households illegally occupying or encroaching on the RoW. Future implementation support missions will continue to monitor the satisfactory implementation of the project’s safeguards compliance and follow-up on any corrective action, as necessary, should the project encounter such an issue in the future. The last Environmental Safeguards training carried out by the World Bank took place in September 2012; and a Social Safeguards training aimed at enhancing the project’s familiarization of the RPF and ESMG was carried out in September 2013.

6. Monitoring and Evaluation. A Monitoring Information System (MIS) has been developed and implemented which captures data at key points of the project's work processes including award and completion of sub-projects, and also maintains data on beneficiaries gathered at enrollment and subsequent surveys. No significant changes to the MIS or to the surveys will be required in order to monitor the additional performance indicators.

7. Sustainability. The project’s implementation arrangements have been designed to maximize ownership of the project’s activities by the implementing agencies, build internal institutional and technical capacity as well as to ensure the sustainability of activities within their respective institutional priorities and mandates. For this reason, the project’s implementation is embedded in each implementing agency’s own institutional structure and builds upon their existing work programs and systems. The project is now recognized by the Government as being an important vehicle for providing key urban services in Honiara. In addition, while not a requirement, Solomon Islands Government through MID and HCC have contributed Counterpart Funding to the project, both cash and in-kind amounting to SBD2.4 million, to date. A further Development Budget allocation is also being considered for 2014. Given these circumstances,

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and the ongoing fragile environment in which the project continues to operate, it is assessed that with the experience gained through the REP parent project and AF, the Government has both the political will as well as the institutional and financial capacity to maintain a safety net or community driven-development operation of this type. The Government and World Bank would review and discuss these strategic options during the project’s forthcoming MTR, which would lay the foundation for the next phase of the project.

V. Risks

8. As per the attached Operational Risk Assessment Framework (ORAF) in Annex 2, the overall Risk Rating is Moderate, which remains unchanged from project inception. Many of the implementation risk areas originally identified have been addressed during project implementation and associated processes and policies regularly reviewed and refined. Future implementation support missions will monitor the satisfactory implementation of the above and follow-up on any corrective action as necessary.

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Annex 1: Results Framework and Monitoring

Solomon Islands Rapid Employment Project

Activity Description Expected Results Current Performance Indicators (As per EPP)

Change Comments / Rationale for Change

Project Development Objective

To assist targeted vulnerable urban populations to: (i) increase their incomes through the provision of short-term employment; and (ii) improve their knowledge, experience and basic employment skills that are valued in the workplace and society.

Average increase in participant household income related to the Project.

No change

Percent of participants at or below the poverty line

No change

Percentage of youth and women participating in the Project

No change

Component 1: Rapid Employment Scheme

To increase incomes of targeted vulnerable urban populations through the provision of short-term employment.

Average number of labor days worked per person

No change

Average labor input (as a percentage) of sub-projects

No change

Kilometers of roads rehabilitated or maintained

No change

Roads Rehabilitated and MaintainedNo. and value of works contracts tendered and awarded

No change

No. of works completed and certified No change

Urban Works and Services delivered

No. and value of works contracts tendered and awarded

No change

No. and value of community grants provided

No change

No. sub-projects completed and certified No change

New Number and value of community access infrastructure sub-projects completed.

Additional Financing specifically supports this work. It would therefore useful to disaggregate it from other Urban Works and

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Activity Description Expected Results Current Performance Indicators (As per EPP)

Change Comments / Rationale for ChangeServices. The number of sub-projects would also be indicative of the number of communities served.

New Estimated number of beneficiaries served by completed Community Access Infrastructure.

Community infrastructure sub-projects will benefit members of the community well beyond the direct beneficiaries. This is currently not captured

Improved management capacity

Timely preparation of procurement and Financial Management documentation

No change

Satisfactory implementation of performance -as per ISRs

No change

Component 2: Pre-Employment Training

To improve the knowledge and basic employment skills of program beneficiaries that are valued in the work place and society.

Level of satisfaction of Works Contractors with PET trainee performance/behavior

No change

Level of satisfaction of trainees with training

No change

Pre-employment training deliveredNumber of PET classes completed No change

Number of trainees certified

RES Socialization and Community Information

Location and numbers of Community Awareness Activities

No change

Percent of community members aware of program activities and objectives

No change

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Revised Results Indicators

Project Development Objective (PDO): To assist targeted vulnerable urban populations in the Recipient’s territory to: (i) increase their incomes through the provision of short-term employment; and (ii) improve their knowledge, experience and basic employment skills that are valued in the workplace and society.

PDO Level Results Indicators* C

ore

D=DroppedC=ContinueN= New

R=Revised

Unit of Measure

Baseline

Cumulative Target Values4

Frequency Data Source/Methodology

Responsibility for Data Collection

YR 1 2011

YR 2 2012

YR 3 2013

YR4 2014

YR5 2015

Indicator One: Average increase in participant household income related to the Project.

C Number Zero 800

( 448 )

960

( 448 )

1,280

( 1664 )

1,600 1,600 Semi-annual Baseline (MIS) and Semi-annual survey

PMU; Survey consultants

Indicator Two: Percent of participants at or below the poverty line

C Percentage N/A 30% 35% 40% 45% 50% Ongoing MIS PET; PMU

Indicator Three: Percentage of youth & women participating in the Project

C Percentage

Percentage

Zero

Zero

50% (56%)

50% (52% )

50% (57% )

50% (56% )

50% (57%)

50% (56%)

50%

50%

50%

50%

Ongoing MIS PET; PMU

INTERMEDIATE RESULTSIntermediate Result (Component One): To increase incomes of targeted vulnerable urban populations through the provision of short-term employment.

Core Indicator Number One: Beneficiaries of safety nets programs

C Number Zero -(4426)

-(7735)

-(9796 )5

- 11,000

Core Indicator Number Two: Beneficiaries of safety nets programs (female)

C Number Zero -

( 2298)

-

(4366 )

-

(5456)

- 3,667

Intermediate Result indicator One: Average number of labor days worked per person

C Number Zero 20(14)

25(14)

40(52)

50(52)

50(52)

Ongoing MIS PMU

Intermediate Result indicator Two: Average labor input (as a percentage) of sub-projects

C Percentage Zero Ongoing Semi-annual reports

PMs – 1A & 1B

4 Previous years’ results / actual shown in parentheses; 2013 figures as recorded up to 30 June 20135 Includes numbers for two months in 2010 and non-PET trained beneficiaries from the period up to June 2011

1A - Roads Rehabilitated and MaintainedIntermediate Result indicator Three: Kilometres of roads rehabilitated or maintained

C Number Zero -

(2.8)

-

(23.5)

-

(84.1)

95 95 Ongoing MIS, Semi-annual reports

PM – 1A

Intermediate Result indicator Four: No. and value of works contracts tendered and awarded

C Number

SBD

Zero -

(2532,605)

-

(135,257,965)

2110,904,940

2412,939,900

2412,939,900

Ongoing MIS/FMIS PM – 1A, FO

Intermediate Result indicator Five: No. of works completed and certified.

C Number Zero

(0) (4) (13)

21 24 Ongoing MIS PM – 1A

1B - Urban Works and Services

Intermediate Result indicator Six: No. and value of works contracts tendered and awarded (Community Access Infrastructure)

CNumber

SBD

Zero 3

(3,

513,544)

8

(10,

1,623,377)

18

3,415,310

(14,

2,134,207)

37

9,500,552

43

11,422,207

Ongoing MIS/FMIS PM – 1B, FO

Intermediate Result indicator Seven: No. and value of community grants provided (Cleaning etc.)

CNumber

SBD

Zero 320

(344,

4,953,386)

640

(647

9,262,207)

845

11,841,850

(716

9,953,085)

8526

11,941,850

8607

12,041,850

Ongoing MIS/FMIS PM – 1B, FO

Intermediate Result indicator Eight: No. sub-projects completed and certified

CNumber Zero

(334)

618

(637)

861

(705)

889 903 Ongoing MIS PM – 1B

Intermediate Result indicator Nine: Number and value of community access infrastructure sub-projects completed.

NNumber

SBD

Zero 1

(1

48,640)

8

(7

937,259)

16

(11

1,836,746)

37 43 Once MIS PM – 1B

Intermediate Result indicator Ten: Estimated number of N

Number Zero - - - Ongoing Contract Data PM – 1B

6 Assumes grants funds exhausted in 2013 and SBD 100,000/year of counterpart funds available.7 As for 2014

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beneficiaries served by completed Community Access Infrastructure.

Improved management capacityIntermediate Result indicator Twelve: Timely preparation of procurement and Financial Management documentation.

C Text N/A Quarterly IFRs, Semi-annual reports

PM – 1A & 1B

Intermediate Result Indicator Thirteen: Satisfactory implementation performance -as per ISRs

C Text N/A Semi-annual ISRs PM – 1A & 1B

Intermediate Result (Component Two): To improve the knowledge and basic employment skills of program beneficiaries that are valued in the work place and society.

Intermediate Result indicator One: Level of satisfaction of Works Contractors with PET trainee performance/ behavior.

C Text N/A

(98%) (98%) (98%)

Ongoing; Semi-annual

Semi-annual survey

Semi-annual survey consultants

Intermediate Result indicator Two: Level of satisfaction of trainees with training.

C Percentage Zero Ongoing Post-PET evaluation; Semi-annual survey.

Semi-annual survey consultants, PET

Pre-employment training deliveredIntermediate Result indicator Three: Number of PET classes completed

C Number Zero(49) (143) (199)

7,500 7,500 Ongoing MIS PET

Intermediate Result indicator Four: Number of trainees certified

C Number Zero(1715) (4893) (6577)

Ongoing MIS

RES Socialization and Community InformationIntermediate Result indicator Five: Location and numbers

C Text Semi-annual Semi-annual reports

PMU – CLOs

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of Community Awareness Activities. Number

75 150 150

Intermediate Result indicator Five: Percent of community members aware of program activities and objectives

C Percentage Zero Semi-annual Semi-annual survey

Semi-annual survey consultants

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Annex 2: Operational Risk Assessment Framework (ORAF)Appraisal Stage

1. Project Stakeholder risksRating Low

Description: The Solomon Islands Government and the project’s implementing agencies (HCC, MID) as well as partners have demonstrated a strong commitment to the parent project as well as to the proposed additional financing.

Risk Management : i. The Project Steering Committee, comprised of inter-agency representatives will continue to

provide the basis for shoring up political support and commitment to the project.ii. Regular public consultations and semi-annual inter-agency workshops will continue to be

organized to disseminate information on project progress and solicit feedback.

Resp: Recipient Stage: Implementation Due Date : Ongoing Status: In progress

2. Implementing Agency Risks (including Financial and Fiduciary)A. Capacity Rating: ModerateDescription: The Project Implementing Unit (HCC) has built up capacity during the implementation of the original project (P114987). Internationally-recruited Project Management staff are overseeing national staff on project implementation. However, there has been some turn over in project staff to date, including in the finance unit as well as works supervisors.

Procurement and FM systems, acceptable to the Bank, are already in place. Procurement will be limited to the use of Local Shopping for materials and tools as the HCC will directly contract community groups through Sub-Grants. However, there has been turn-over in the PIU’s FM unit.

Risk Management : i. The current project management structure will continue during the Additional Financing and its

effectiveness will be monitored by regular implementation support missions.ii. On the job training and mentoring by international specialists will continue.iii. Regular procurement and FM implementation reviews will be conducted by Sydney-based WB

staff, to ensure, inter alia, timely submission of IFRs.iv. Regular fiduciary workshops and clinics will be conducted by Sydney-based WB staff.

Resp: Recipient and IDA Stage: Implementation Due Date : Ongoing Status: In progress

B. Governance Rating: ModerateDescription: The high degree of social stratification and persistence of the “wontok” system create the risk of elite capture of the project’s resources. While the project has demonstrated its effectiveness in targeting a high

Risk Management : i. Transparent and inclusive planning and tender processes already established under the on-going

project would be continued, and routine community consultations to announce the project’s activities, list of works and rules of participation would be augmented by further training of project participants; as well as monitoring and certification of sub-project activities.

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percentage of youth and women, this may limit access and benefits to targeted poorer groups.

ii. The parent project’s geographic targeting of areas that have a higher poverty density as well as a self-selection mechanism for the poor through the setting of the wage at or below the market clearing rate, (the current rate is the minimum wage) will be continued under the additional financing.

iii. The project MIS provides detailed information on repeat contracts awarded to community groups (and beneficiaries).

iv. Implementation support missions will monitor the satisfactory implementation of the above and follow-up on any corrective action necessary.

Resp: Recipient Stage: Implementation Due Date : Ongoing Status: In progress3. Project Risks

A. Design Rating: ModerateDescription: Project design has been fine-tuned during the implementation of the parent project. However, based on experience to date, the wage rate may be too high, undermining self-selection and targeting of the poorest households.

Risk Management : i. The project has re-established guidelines governing working hours to avoid the potential for

displacement/”double-dipping.”ii. The project and the Bank will explore the possibility of reducing the wage rate, while offering

additional benefits to off-set the wage reduction. E.g., training.Resp: Recipient and Bank

Stage: Implementation Due Date Ongoing Status: In progress

B. Environmental Rating: LowDescription : Screening and monitoring procedures are in place, documented in the ESMG, and are being satisfactorily applied for community infrastructure projects.

Risk Management : i. Environmental safeguards compliance will continue to be monitored by Bank missions.

Resp: Recipient and Bank

Stage: Implementation Due Date : Ongoing Status:

C. Program & Donor Rating: ModerateDescription: The project is co-financed by AusAID and EU through the PRIF and SPF. There is regular communication and knowledge sharing with the donors on project progress and developments. Contributors to the PRIF (AusAID, ADB and EU) as well as other donors (NZAid) are routinely visited during implementation support missions and invited to wrap up meetings or project workshops organized by the PIU.

Risk Management : i. Existing arrangements to keep donors fully engaged in the project will be continued. The Bank will: monitor timely provision of Government counterpart funding as budgeted; and process Additional PRIF Grant Financing as soon as possible to minimize disruptions to implementation; and prepare SPF proposal.

Resp: Recipient and IDA

Stage: Implementation

Due Date : Ongoing Status: In progress

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Government and the donors have committed funds for the original parent project and the Additional Financing but there is a risk of a small funding gap emerging for D. Delivery Monitoring & Sustainability Rating: Moderate Description: Arrangements are already in place for enhanced project delivery monitoring, M&E, as well as counter-part funding for maintenance and infrastructure investments. These include: (a) routine QPRs and Semi-Annual Progress Reports; and (b) Semi-Annual Progress Survey which includes a beneficiary tracking and community perceptions surveys.

Risk Management : i. Project agencies will continue with the existing arrangements for delivery monitoring and

sustainability. ii. The PIU will shore up support and counter-part funding through the Government’s Development

Budget process.iii. Additional co-financing will be identified through funding sources such as the SPF.iv. Bank implementation support missions will monitor the status of project delivery, sustainability

and M&E arrangements.Resp: Recipient and Bank.

Stage: Ongoing Due Date : Ongoing Status: In progress

4. Overall Implementation risk Rating: Moderate

The overall Risk Rating is Moderate, which remains unchanged from project inception. Many of the implementation risk areas originally identified have been addressed during project implementation and associated processes and policies are regularly reviewed and refined. However, given the on-going fragility, the overall risk rating remains as Moderate. Future implementation support missions will monitor the satisfactory implementation of the above and follow-up on any corrective action necessary.

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