PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No.:AB6781
(The report # is automatically generated by IDU and should not be changed)
Project Name
/ Private Sector Development ProjectRegion / AFRICA
Country / South Sudan
Sector / FIP – Financial Inclusion Practice
Lending Instrument / Emerg. Recovery Loan
Project ID / P128239
{If Add. Fin.} Parent Project ID / }
Borrower(s) / Government of South Sudan (GoSS}
Implementing Agency / Ministry of Commerce Industry and Investment
Environmental Screening Category / { }A {X }B { }C { }FI
Partial Assessment
Date PID Prepared / September 5, 2011
Estimated Date of Appraisal Completion / September 13, 2011
Estimated Date of Board Approval / October 21, 2011
Decision / {Insert the following} Project authorized to proceed to negotiations upon agreement on any pending conditions and/or assessments. {the text is automatically generated after PID is filed}.
Other Decision {Optional} / Teams can add more if they wish or delete this row if no other decisions are added
I. Country Context
1. The Republic of South Sudan became a new country on July 9th, 2011, following a referendum on self-determination in January, 2011. South Sudan, with an estimated population of 8.3 million, is bordered by Ethiopia to the east, Kenya, Uganda, and the Democratic Republic of the Congo to the south, and the Central African Republic to the west. At 644,329 sq. km, it is roughly the size of Afghanistan (647,500 sq. km) but with just under one third of the population, giving it a population density that is less than one tenth of neighboring Uganda. The population is very young, with 16% under the age of five, 32% under the age of ten, 51% under the age of 18, and 72% under the age of 30[1]. The population is largely rural with 83% residing in rural areas.
II. Sectoral and Institutional Context
2. Troubling Socio-economic Indicators. Human development indicators are among the worst in the world. Only 27% of the 15 years and above population is literate. In 2009, there were 129 students per classroom. The literacy rate for males is 40% compared to 16% for females. Infant mortality rate is 102 (per 1,000 live births), maternal mortality rate is 2,054 (per 100,000 live births), and only 17% of children were fully immunized. Fifty five percent of the population has access to improved sources of drinking water, but 38% of the population has to walk for more than 30 minutes one way to collect drinking water. Eighty percent of the population does not have access to any toilet facility. Meanwhile, 15% of households own a phone—59% in urban areas compared to 8% in rural areas. South Sudanese want to see marked improvements in these indicators, and in job opportunities and economic prosperity, and have high expectations that independence will deliver them.
3. Government capacity is weak despite improvements, and the pace of implementation of reconstruction programs during the Comprehensive Peace Agreement (CPA) period has been short of popular expectations. The combination of poverty, insecurity, unstable relations with Sudan, and poor governance means the GoSS faces daunting challenges in taking the development plan forward.
4. Even after independence, South Sudan is experiencing a highly fragile and vulnerable transition, including spurs of violence from breakaway militias and a delicate situation in its border with Sudan. Moreover, a number of issues are still being negotiated with Sudan, including the distribution of assets and oil revenue, external debt, citizenship, freedom of movement, the North-South border, and the status of Abyei.
5. In the private sector, the majority of indigenous enterprises in South Sudan consist of small and micro enterprises working in low value sectors (e.g. trade, retailing and rudimentary transformation of food products) that remain mainly informal. Most of these enterprises are led by women, and can play a major role in achieving higher economic growth and employment as well as reduced poverty by improving their business performance. Additionally, the returnees to the region and ex-combatants form a pool of potential entrepreneurs that could further stimulate economic activity. During the CPA period, many Ugandan, Kenyan, and Ethiopian, traders (as well as ones from other countries) have quickly established themselves to provide the necessary goods and services ranging from food (e.g. cooking oil, water, beer) to construction materials and housing. However, the emergence of South Sudanese entrepreneurs has been far less visible.
Independence is an opportunity for South Sudanese to channel their desire for change into efforts that will bring them, and the new state, into a dynamic partnership that helps realize the new country’s geopolitical and economic potential, generating rapid improvements in terms of reducing poverty and broad-based growth. Helping South Sudan break away from that past and embark on a cycle of inclusion and development will therefore have positive development externalities for all its neighbors
III. Project Development Objectives
6. The project development objective (PDO) is to improve access to finance for private sector development and increase employment opportunities in South Sudan.
IV. Project Description
7. The project consists of the following four components
Component 1: Establish Commercially-Viable Microfinance Institutions (US$ 2.8 million). There are two sub-components under this component. The first sub-component will provide technical and financial support to MFIs, promoting the start up and expansion of microfinance providers and services throughout South Sudan. The MFIs will provide micro-lending to micro-borrowers for various commercial activities that are concentrated on trade.[2] The second sub-component will support the operating costs of the South Sudan Microfinance Development Facility (SSMDF) for a period of 3 years in an amount of US$0.7 million. The SSMDF is a microfinance Apex institution established in 2009, under the MDTF-SS funded PSD project and serves as a wholesale microfinance body for South Sudan.
Component 2: Promote Micro-Entrepreneurship (US$ 4.4 million). This component will catalyze entrepreneurship through a Business Plan Competition (BPC) for existing businesses and start-ups. A total of $4 million will be earmarked to support 200 entrepreneurs with sub-grants in the amount of US$20,000 to be used as block collateral for loans provided by commercial banks. Another $0.4 million will be allocated for the preparation, technical assistance and M&E for the BPC. Under this component, some of the loans will be used to finance activities across different sectors such as light manufacturing, services, poultry farms, and agriculture.
Component 3: Mobile Payments and Trade Policy Support (US$ 0.3 million). This component will support the development of a regulatory framework for mobile banking and payments and provide long term advisory services on trade policy for South Sudan, including consideration of South Sudan’s potential membership to the East African Community (EAC).
Component 4: Institutional Strengthening of the South Sudan Business Forum and Project Management (US$ 1.5 million). This component will finance the activities and operating costs of the Project Coordination Unit (PCU) which is responsible for coordinating and monitoring activities implemented by the project. It will also support technical assistance and training to build the institutional capacity of the MCII staff responsible for the development of the Private Sector in South Sudan.
This component will also cater for the operating costs of the South Sudan Business Forum (SSBF), a Public-Private Sector Development Forum, established in 2009, under the MDTF-SS PSD Project.
V. Financing
Source:Borrower/Recipient
IBRD
IDA / ($m.)
Others Special Financing (specify) / 9.0
Total 9.0
VI. Implementation
8. The implementation arrangements of PSDP described earlier will continue under PSDP with some adjustments. At the operational level, the project is led by MCII, in particularly, by its Directorate for Private Sector Development. The PCU is housed in the MCII.
9. The PCU will include a Project coordinator, a Project Accountant, and a Procurement/M&E Officer. Given the low level of procurement in the project, the procurement officer will also play the role to monitor and evaluate the progress of the project. A project office has already been established within the MCII compound for use by PCU/PIU staff and consultants supporting project components, as well as meetings between project teams and stakeholders.
VII. Safeguard Policies (including public consultation)
A. Summary of Key Safeguard Issues
10. This is a category B (Partial Assessment) project. The activities under this project will primarily focus on job creation opportunities revolving around up-scaling the establishment of a commercially viable microfinance sector and catalyzing entrepreneurship through Business Plan Competition (BPC).
11. Under Component 2, Promote Micro-Entrepreneurship, some of the loans will be used to finance activities across different sectors such as light manufacturing, services, poultry farms, and agriculture. These activities are likely to generate negative social and environmental impacts, but the potential impacts are likely to be small and localized in effect and can be easily mitigated as per the recommendations in the sectoral ESSAF that will be developed by the client with technical support from the Bank three months after project effectiveness.
12. A draft Environmental and Social Safeguard Assessment Framework (ESSAF) has been prepared for this operation and included as an annex to the project paper. Additional material on potential impacts and mitigation measures will be include, as necessary, during project implementation and appropriate safeguards documents prepared (e.g. Environmental and Social Management Plans). The ESSAF explains the OPs triggered, safeguard screening and mitigation based on the possible types of sub-projects, responsibilities for safeguards screening and mitigation, capacity-building and monitoring of safeguards framework implementation, and consultation and disclosure.
13. Sources of negative environment impact may relate to the following activities:
Sources of negative environment impact may relate to the following activities:
(i) Land clearing and physical construction: The project may finance some activities that could indirectly result in farm expansions through conversion of other lands into crop farming. The project might support the construction of small-scale irrigation facilities, village-level agro-processing plants, and post-harvest storage facilities, which could also lead to impacts on the biophysical environment and manifesting through loss of vegetation cover, biodiversity, land degradation, and soil erosion. The project will not support any sub-project that will require acquisition of land.
(ii) Agro-processing: Potential negative impacts will be solid and liquid wastes from processing that can cause soil and water contamination. Depending on the type of processing adopted, it may result in the generation of gaseous fumes and smoke and odors which could be detrimental to the health and safety of workers.
14. In order to address the anticipated impacts, the project includes an ESSAF; ESMPs will be prepared during project implementation to mitigate the impacts from use of inputs (pesticides, fertilizers and etc) the project (BPC) will ensure every agricultural activity applies a best practice standard and conducts environmental screening to identify potential negative environmental impacts.
15. Currently, the PCU does not have the capacity to manage safeguard issues, therefore to fill the gap under the capacity development component, the project will recruit a safeguards specialist who will develop, implement and monitor the environmental and safeguard tools and provide technical support to the PCU and other respective line ministries to build capacity for safeguard compliance.
16. Key stakeholders include the Ministry of Commerce, Industry and Investment as the implementing agency, MFIs and their clients, BPC winners, Kenya Commercial Bank-South Sudan, and Equity Bank which will provide the BPC loans, and the GOSS in general.
Safeguard Policies Triggered by the Project / Yes / NoEnvironmental Assessment (OP/BP 4.01) / X
Natural Habitats (OP/BP 4.04) / X
Pest Management (OP 4.09) / X
Physical Cultural Resources (OP/BP 4.11) / X
Involuntary Resettlement (OP/BP 4.12) / X
Indigenous Peoples (OP/BP 4.10) / X
Forests (OP/BP 4.36) / X
Safety of Dams (OP/BP 4.37) / X
Projects in Disputed Areas (OP/BP 7.60)[*] / X
Projects on International Waterways (OP/BP 7.50) / X
VIII. Contact point at World Bank and Borrower
World Bank
Contact: Alwaleed F. Alatabani
Title: Sr. Financial Sector Specialist and Task Team Leader
Tel:
Email:
Borrower/Client/Recipient
Contact: Ministry of Finance
Title:
Tel:
Email:
Implementing Agencies
Contact: Ministry of Commerce, Industry and Investment
Ms. Mary Akech Taban
Title: Director, Private Sector Development directorate
Tel: +249 907710111
Email:
For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www.worldbank.org/infoshop
[1] Key Indicators for South Sudan. South Sudan Centre for Census, Statistics and Evaluation,
(http://siteresources.worldbank.org/INTSUDAN/Resources/Key-Indicators-SS.pdf).
[2] The bulk of MFI’s portfolios in South Sudan is concentrated in trade and services.
[*] By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas