Read a pdf version of CIFs Monitor 9

PPCR progress

While the November 2013 sub-committee meeting noted progress in advancing PPCR, including “moving towards realistic projections for project and programme development”, the June semi-annual operational report was less optimistic. The report noted continued difficulties in providing realistic timelines, mainly due to “insufficient capacities in the countries, political uncertainties or unexpected natural events.” Furthermore, reason for slow disbursement of funds was assessed to include “the complexity of the PPCR projects due to the multi-sectoral focus, coordination of multiple stakeholders, insufficient government capacities and unexpected difficulties in moving activities forward (e.g. temporary shift in priorities; need for redefining activities).” The report also noted slow progress on the joint CTF and SCF decision “that stakeholder meetings should be held on an annual or biennial basis to discuss the progress in the implementation of the investment plan”, where only Samoa had held such a meeting to date.

Furthermore, the November sub-committee meeting had requested the CIF administrative unit to include a section on “how gender considerations have been included in PPCR projects and programmes” in the next semi-annual operational report, however, this section was not included in the June report.

Private sector funding

Two EBRD concept notes for the new private sector set aside (see CIFs Monitor 8, 7), both relating to Tajikistan, were endorsed during the November 2013 sub-committee meeting:

• Enhancing the climate resilience of the energy sector
• Small business climate resilience financing facility

A further four concept notes were endorsed, subject to further development:

• Haiti: Support for the building of a climate resilient sorghum supply chain (IDB)
• Jamaica: Financing water adaptation in new urban housing sector (IDB)
• St Lucia: Supporting climate resilient investments in the agricultural sector (IDB)
• Mozambique: Lurio sustainable forestry project (AfDB)

The revised concept note for the Lurio project in Mozambique was scheduled for approval in early June. The US raised several questions: “We understand that monoculture plantations and processing plants are often financed on a purely commercial basis; what are the unusual adaptation benefits of this project that justify PPCR funds? … Is there any land being planted that is not degraded or agricultural land? … With respect to the wood chip mill and the MDF mill, where will raw materials come from until the plantation can supply raw material? Will these mills possibly draw from natural forests?”

The November 2013 sub-committee meeting also agreed to launch a second round of call for proposals, with “at least $30 million in concessional lending” available, but tasked the CIF administrative unit and the MDB committee to first review and revise the procedures and criteria used for evaluating project concepts. In comments on the December 2013 draft, the UK asked for follow up on the expert group’s recommendation of “a split pot whereby half the funding goes to domestic financial institutions, to leverage more commercial co-financing”. The CIF administrative unit responded that it doesn’t make sense to split the already small pot further, moreover, in general “domestic financial institutions are very weak” and referred to several concerns that have been raised on “country-capacity and the involvement of the private sector” with the current set of pilot countries. The final document was agreed in mid January, including a timeline where projects submitted and proposed by the expert group will be considered by the sub-committee in the June meeting.

New pilot countries

In the November sub-committee meeting it was agreed that, while it would not be appropriate to consider potential new pilot countries, a discussion on how to use any new funding effectively would be welcome. This should also include considerations of uses, such as “deepening of existing pilot programmes” and “further rounds of the private sector set aside.” A May paper prepared by the CIF administrative unit and the MDB committee outlined three options for consideration: selection of new pilot countries; using existing pilot countries as a hub to expand to a multi-country or regional programme; or “demonstrating and further incentivising innovative private sector investments … by expanding to all CIF countries”. The paper, which will be discussed in the June sub-committee meeting, noted that as of March, 22 countries have expressed interest in participating in the PPCR.

Updates on investment plans

Cambodia: revision of investment plan

Revisions of Cambodia’s investment plan were approved by mail in mid February. As agreed in November 2012 the requested funding for the SPCR were increased by $5 million in grants (see CIFs Monitor 7), taking the revised total to $91 million ($55 million in grants, $36 million in loans). A $14 million project on rehabilitation of irrigation schemes was dropped and a new project on rural roads was introduced, with a requested $16 million ($9 million in grants, $7 million in loans). Furthermore, it was requested that funding for technical assistance component was increased by $3 million to $10 million in grants.

Spain and Germany expressed “concerns about and objections to the changes as presently proposed”, noting particular surprise that the project on irrigation has been dropped, given the original SPCR “had gone to great length explaining the cross-sectoral importance of investing in climate resilient water resources”. ADB responded that the reallocation of funds “is not to reduce the importance” of the water resources project, but to “quicken the process of SPCR implementation, fund disbursement and effective SPCR coordination by allocating funds to a critical project, which is ready to be implemented quickly.”

Selected project updates

Bangladesh: concerns over serious fiduciary risk

Project details

“The project will strengthen climate resilience and disaster preparedness in eight vulnerable coastal pourashavas (secondary towns) of Bangladesh. The project … will (i) provide climate-resilient municipal infrastructure, and (ii) strengthen institutional capacity, local governance, and knowledge based public awareness, for improved urban planning and service delivery considering climate change and disaster risks.”

Key donor questions and concerns prior to approval

The UK: “there was recently a report published by Transparency International Bangladesh (TIB) which identified serious fiduciary risk in relation to the Local Government Engineering Department (LGED). LGED has been identified as lead agency in this PPCR project. The risks identified include:

• Irregularities in human resource management;
• Irregularities and limitations in project planning processes;
• Corruption in project implementation;
• Limitations in project monitoring and evaluation.

We are worried (particularly given the large proportion of UK funds in this project) that the documentation does not appear to address these concerns and will not be able to endorse the project unless we are convinced that appropriate safeguards have been put in place.”

ADB responded: “LGED hosted a roundtable discussion with development partners on the TIB Report … LGED attended the roundtable and took criticism in a positive way requesting concrete measures, for example requesting all procurement as e-procurement from 2014 (one recommendation by TIB). ADB is committed to supporting LGED in addressing any shortcomings and concerns identified in the TIB report.” The UK responded that they are happy to endorse the project based on the response, subject to the fiduciary concerns being addressed, which was confirmed by ADB. The UK also added a number of questions for further clarification, including: “How the smaller local contractors will get access if the model of procurement that is used targets large businesses through e-procurement and business fairs?” ADB responded that traditional media will also be used.

Haiti: PPCR justification questioned

Project details

“The project would facilitate transport and trade, domestically and internationally, and build all-weather and climate resilient infrastructure. It would: (i) connect producers and inhabitants to local markets, services, and towns within the region, (ii) connect the region to the leading economic poles of [Port au Prince], the [Dominican Republic] and the north, (iii) improve selected marketplaces, (iv) develop and disseminate territorial knowledge and provide technical assistance and tools to guide the actions and investments of the public and private actors in the region.”

Key donor questions and concerns prior to approval

Germany and Spain: “there appears to be rather little that sets the project design apart from a ‘standard issue’ infrastructure improvement project, which in turn raises the question why such a design would justify a PPCR investment.” The UK added: “The case for PPCR funding of this project is not convincing. … Building in climate resilience to the building and refurbishment of infrastructure should be standard practice, why is the World Bank not doing this as a matter of course? How is PPCR funding justified for these activities, rather than standard development finance?”

The IBRD and government of Haiti responded: “Protecting investments in the road network with a climate-aware design (hard investments) and providing support to planners and policy-makers so they can make informed decisions that promote climate resilient development strategies (soft investments), is the strategic contribution of PPCR funds to this operation, and what makes it different from a standard issue infrastructure improvement project.” Furthermore: “This investment project should not be understood as a stand-alone project, but in connection to the other SPCR investment projects.”

The UK asked: “How will the project ensure it targets the poorest and most vulnerable? There is a risk they will be sidelined with the focus on producers that already have access to agricultural land. … the gender analysis is quite thin, and women’s empowerment (e.g. in decision making on selection of roads to improve) does not appear to be measured.” The IBRD and government of Haiti responded: “The investments in the road network contribute to ensuring connectivity and enhancing access of poor rural households to essential services”. On gender: “The lack of gender-disaggregated data has been acknowledged as a difficulty in the formulation since the SPCR phase”.

Grenada: questions on debt burden

Project details

The additional finance refers to a decision in the November 2012 meeting (see CIFs Monitor 7). Grenada requested that the funding would be made available to the regional disaster vulnerability reduction programme, but to expand the scope of a separate forest rehabilitation project “to support a surface-water/groundwater supply assessment/hydrological instrumentation activity and physical (mitigation) works in addition to the originally identified reforestation activities. … The proposed additional activities would contribute to the conservation of biological diversity, significantly increase carbon sequestration, support and improve the functioning of eco-systems, provide sustainable livelihoods, amplify eco-tourism initiatives, contribute to environmental stability and alleviate poverty.”

Key donor questions and concerns prior to approval

Spain and Germany: “we would appreciate a rationale being provided for combining the previously separate investment projects … into one overall project.” The UK added: “[is this] a request for approval of this project, rather than just allocation of extra resources to it (for which further project documentation will follow for approval)?” Furthermore, “We would also like reassurances on the appropriate use of PPCR finance for the RDVP overall – that it is being used to supplement and not substitute for IDA resources”. Moreover, “the letter of support from the government of Grenada includes reference to their intention to co-finance the RDVP with further IBRD loans, given that Grenada has a high debt burden can the team confirm that if this is taken forward the principles in the ‘use of concessional finance in the PPCR’ document will be followed?”

IBRD responded: “Once the concept is endorsed, an additional financing project paper will be prepared in accordance with World Bank policy and submitted to the PPCR sub-committee for approval. Project paper submission to the PPCR sub-committee is expected in October 2014.” On IDA it clarified: “through leveraging additional IDA financing, PPCR resources are able maximize the scale of impact, and provide the optimal instrument that both reduces transactions costs on the government and ensures close coordination of Grenada’s SPCR activities.” It did not directly address the question on debt burden, but responded that “Grenada may choose to co-finance PPCR resources with WB IDA resources (0.75 per cent interest with a 40 year maturity period), which is nearly as concessionary as PPCR loans.”

Furthermore, Spain and Germany asked: “gender aspects should not only be discussed in the narrative, but should be explicitly addressed in the results framework and its indicators.” The IBRD responded “the government of Grenada (with support from the PPCR) is undertaking a process at the country level (supported by the CIF) to align the project indicators with the PPCR core indicators, including gender indicators.”

Mozambique: weak stakeholder engagement plan

Project details

“The project will seek to build climate resilience [in the city of Beira] by supporting the planning and sustainable management of green infrastructure. This will reduce urban flooding and deliver a range of other environmental benefits to the inhabitants of the city.”

Key donor questions and concerns prior to approval

Germany: “While the project documents mention stakeholder meetings to ensure participation, no reference is made to the involvement of the general population, e.g. the population living within the settlements along the river banks.” Furthermore: “Gender issues are mentioned in the document and indicators are designed accordingly, but a gender differentiation of the impacts of climate changes is lacking.”

Saint Vincent and Grenadines: Lessons learned from disaster

Project details

“Additional financing is required to cover the financing gap for completion of the on-going RDVRP activities and the project scale up is required for financing new activities of similar type and objective to activities already included in RDVRP. There would be no change in the overall project design the project components would remain the same.” The main causes for cost overruns include inflation and increased scope of work due to damages caused by “heavy rain events” since 2011.

Key donor questions and concerns prior to approval

The UK: “With this extension the PPCR … is now a large sum of funding. Can the Bank please clarify that this money can be programmed and disbursed quickly – otherwise perhaps a more phased approach would be recommended.” Furthermore, “we would like to be clear about the amount of IDA funding on the table and the amount of climate finance being made available.” Germany and Spain recommended “carefully assessing the possible indications of the recent [December 2013] disaster for the project implementation, including possible increase of costs. Also, lessons learned from the disaster event should be included in the further planning and implementation of the proposed activities.”