World Bank Document...implementation in 36 informal settlements in 11 urban centers and about 791,500 people were benefiting from the improved infrastructure. KISIP has also undertaken

The World BankKenya Informal Settlements Improvement Project (KISIP) (P113542)

REPORT NO.: RES32559

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF THE

KENYA INFORMAL SETTLEMENTS IMPROVEMENT PROJECT (KISIP)

APPROVED ON MARCH 24, 2011

TO THE

OFFICE OF THE DEPUTY PRIME MINISTER AND MINISTRY OF FINANCE

SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE

AFRICA

Regional Vice President: Makhtar Diop Country Director: Diarietou Gaye

Senior Global Practice Director: Ede Jorge Ijjasz-VasquezPractice Manager/Manager: Bernice K. Van Bronkhorst

Task Team Leader: Sheila W. Kamunyori, Abebaw Alemayehu

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ABBREVIATIONS AND ACRONYMS

AFD French Development Agency (Agence Française de Développement)IDA International Development AssociationKISIP Kenya Informal Settlements Improvement ProjectRAPs/ARAPs Resettlement Action Plans/Abbreviated Resettlement Action PlansSida Swedish International Development Cooperation Agency


BASIC DATA

Product Information

Project ID Financing Instrument

P113542 Investment Project Financing

Original EA Category Current EA Category

Partial Assessment (B) Partial Assessment (B)

Approval Date Current Closing Date

24-Mar-2011 31-May-2018

Organizations

Borrower Responsible AgencyOffice of the Deputy Prime Minister and Ministry of Finance Ministry of Land, Housing, and Urban Development

Project Development Objective (PDO)

Original PDOThe overall project development objective of the KISIP is to improve living conditions in informal settlements in selected municipalities in Kenya. This will be achieved by enhancing security of tenure and improving infrastructure based on plans developed in consultation with the community.

Current PDO

To improve living conditions in informal settlements in selected urban centers in selected counties in Kenya.OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing

Ln/Cr/Tf Approval Signing Effectiveness ClosingNet

Commitment Disbursed Undisbursed

COFN-C1440 17-Nov-2014 17-Nov-2014 28-Jul-2017 31-Dec-2020 45.00 6.77 38.23

IDA-48730 24-Mar-2011 23-May-2011 30-Jun-2011 31-May-2018 100.00 93.17 .12

TF-18327 08-Jun-2015 07-Jul-2015 07-Jul-2015 31-May-2018 8.30 8.30 0


Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)?No

I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

A. Background

1. The restructuring of the Kenya Informal Settlements Improvement Project (KISIP) is required to (a) extend the closing date from May 31, 2018 to November 30, 2019 to allow the Bank to fulfill its agreement to the Agence Française de Développement (AFD) to oversee implementation of its funds for KISIP and to allow the Bank to supervise implementation of resettlement action plans/abbreviated resettlement action plans (RAPs/ARAPs), and (b) revise the results framework to reflect the results to be achieved with AFD funding. The RVP agreed in-principle to the extension on May 2, 2018 in response to a memo dated April 18, 2018 requesting guidance on the project closing date. The National Treasury requested an extension of 18 months in a letter dated November 29, 2017 to allow IDA to oversee activities financed by the AFD under World Bank policies. The proposed restructuring is a level 2 restructuring.

2. KISIP was approved on March 24, 2011, with an original closing date of June 30, 2016. The Project was restructured through Additional Financing on July 7, 2015 to reflect additional financing from a Swedish International Development Cooperation Agency (Sida) Trust Fund in the amount of US$8.3 million.

3. The AFD is providing co-financing to KISIP of €35 million (about US$42 million) disbursed directly to the Government of Kenya through a Credit Facility Agreement signed on December 17, 2015. AFD has asked the World Bank to provide overall implementation support, including fiduciary and safeguards, for the expanded project activities. For this purpose, the World Bank and AFD signed a Co-financing Agreement on November 17, 2014. The co-financing agreement was signed in anticipation of the signing of the Credit Facility Agreement as it was not expected that the latter would take so long to be signed. This Agreement provided for joint co-financing of KISIP in the proportion to which each development partner was providing funds for the project. Disbursement arrangements were modified such that AFD would pay 39% of each contract.

4. KISIP was restructured in March 2016 to reflect the AFD co-financing. This restructuring also extended the project by 23 months to a new closing date of May 31, 2018 to allow sufficient time to implement activities financed under AFD funds. Due to delays by the government in meeting the effectiveness conditions, the AFD financing agreement only became effective on July 28, 2017.

5. This delay in AFD effectiveness made joint co-financing impractical as nearly all IDA/Sida funds had been disbursed. Therefore, KISIP was restructured a third time in December 2017 to allow for sequential financing of contracts, with IDA and Sida funds to be used first, and the AFD funds to finance 100 percent of expenditures thereafter (AFD will now provide parallel co-financing, not joint co-financing). This change will apply retroactively to expenditures incurred on or after July 7, 2015 to allow IDA/Sida to retroactively finance 100 percent of each contract. This amendment will only take effect after the Co-financing Agreement has been amended to reflect the sequential


financing where IDA and Sida funds would be used first, and the AFD funds to finance 100 percent of expenditures thereafter.

6. The Project is classified as Category B and triggers OP/BP 4.11, Physical Cultural Resources and OP/BP 4.12, Involuntary Resettlement.

B. Project status

7. Despite initial delays, as of April 30, 2018, the project had disbursed 99.9 percent of the US$100 million credit from the International Development Association (IDA) and 100 percent of the US$8.3 million grant from the Sida Trust Fund.). All remaining funds (approximately US$120,000) are expected to be fully utilized by May 31, 2018.

8. The project is steadily progressing towards achieving its development objective. Civil works are complete or under implementation in 36 informal settlements in 11 urban centers and about 791,500 people were benefiting from the improved infrastructure. KISIP has also undertaken preparation of settlement-level development plans, surveys, registry index maps, and letters of allotment/titles that has strengthened security of tenure for some 49,000 people.

9. The project has consistently been rated satisfactory or moderately satisfactory for progress towards achievement of the Project Development Objectives and for overall implementation progress. The government is committed to the project, and has complied with the covenants specified in the Financing Agreement. There are no outstanding or unresolved fiduciary problems. An assessment of the project’s financial management arrangements, including compliance with the legal covenants related to financial management, found that they provide reasonable assurance that the project funds are being used for the intended purposes. The project account has been audited for the fiscal years ending June 30, 2011, 2012, 2013, 2014, 2015, 2016, and 2017, and an unqualified report has been issued for each year. Recent Implementation Status and Results (ISRs) rate financial management as satisfactory and procurement as moderately satisfactory. Compliance with environmental and social safeguards has been rated satisfactory or moderately satisfactory throughout most of the project life, although the OP 4.12 rating was downgraded to moderately unsatisfactory following the mission of February 2018, due to incomplete implementation of agreed actions from earlier missions. The implementing agency is making significant advances on the safeguards issues reported in the last ISR and the action plan agreed to since the February mission has significantly advanced. A matrix that shows the progress of the February action plan to date is included in this restructuring package as a separate document.

C. Rationale for restructuring

10. This restructuring is required to extend KISIP’s closing date by 18 months, from May 31, 2018 to November 30, 2019. Extending KISIP’s closing date will allow the Bank to fulfill its agreement with the AFD to supervise their funds as agreed in the Co-financing Agreement. It will also allow the Bank task team to oversee implementation of 86 RAPs/ARAPs currently under preparation in the Project’s tenure regularization component. It will also allow for supervision of the other Safeguard issues observed during the last mission in February 2018.

II. DESCRIPTION OF PROPOSED CHANGES

11. The proposed changes are to extend KISIP’s closing date, and to revise the results framework to reflect additional outcomes and outputs resulting from AFD’s funding.


12. Extension of the Project closing date. An extension of 18 months in the KISIP closing date has been agreed with the government. This will allow time to complete activities to be financed with funds from the AFD and to finish supervision of RAPs/ARAPs. Currently, US$23.8 million of the US$42 million of the AFD financing is committed. In addition, tender documents for works amounting to US$5.2 million are ready, and engineering designs are under development for 31 settlements in four urban centers. Thus, the AFD funds are expected to be fully committed by December 31, 2018. The RAP/ARAP implementation process is expected to be complete by May 31, 2019.

13. Changes in the results framework. Revisions have been made in the results framework to reflect the outcomes and outputs to be achieved with AFD’s funds. See Section IV below for details of the changes.

III. SUMMARY OF CHANGES

Changed Not Changed

Change in Results Framework ✔

Change in Loan Closing Date(s) ✔

Change in Implementing Agency ✔

Change in DDO Status ✔

Change in Project's Development Objectives ✔

Change in Components and Cost ✔

Cancellations Proposed ✔

Reallocation between Disbursement Categories ✔

Change in Disbursements Arrangements ✔

Change in Disbursement Estimates ✔

Change in Overall Risk Rating ✔

Change in Safeguard Policies Triggered ✔

Change of EA category ✔

Change in Legal Covenants ✔

Change in Institutional Arrangements ✔

Change in Financial Management ✔

Change in Procurement ✔

Change in Implementation Schedule ✔

Other Change(s) ✔

Change in Economic and Financial Analysis ✔


Change in Technical Analysis ✔

Change in Social Analysis ✔

Change in Environmental Analysis ✔

IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_RESULTS_TABLE

RESULTS FRAMEWORK

Project Development Objective Indicators PDO_IND_TABLE

People benefiting from improved tenure security under component 2 of the KISIP.Unit of Measure: NumberIndicator Type: Custom

Baseline Actual (Current) End Target Action

Value 0.00 49180.00 100000.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

Direct project beneficiariesUnit of Measure: NumberIndicator Type: Custom


Value 0.00 791500.00 1170000.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

Female beneficiariesUnit of Measure: PercentageIndicator Type: Custom Supplement


Value 0.00 395750.00 585000.00 Revised

People in informal settlements provided with access to improved drainage infrastructure under KISIPUnit of Measure: NumberIndicator Type: Custom



Value 0.00 526000.00 1100000.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

Number of people in urban areas provided with access to all-season roads within a 500 meter range under the projectUnit of Measure: NumberIndicator Type: Custom


Value 0.00 526000.00 1100000.00 Revised

Date 03-Apr-2012 19-Feb-2018 30-Nov-2019

Number of people in urban areas provided with access to Improved Water Sources under the projectUnit of Measure: NumberIndicator Type: Custom


Value 0.00 226000.00 162000.00 No Change

Date 03-Apr-2012 19-Feb-2018 31-May-2018

Intermediate IndicatorsIO_IND_TABLE

Informal settlements benefiting from enhanced tenure security under KISIP.Unit of Measure: NumberIndicator Type: Custom


Value 0.00 86.00 86.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

GIS lab at the ministry upgraded and operational.Unit of Measure: Yes/NoIndicator Type: Custom


Value No Yes Yes No Change

Date 25-Oct-2010 19-Feb-2018 30-Jun-2016

People in settlements provided with access to improved shared sanitation facilities under the KISIP.Unit of Measure: Number


Indicator Type: Custom


Value 0.00 1980.00 3030.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

Policies, frameworks, and guidelines for slum upgrading developed and adopted by the MLHUDUnit of Measure: NumberIndicator Type: Custom


Value 0.00 1.00 1.00 No Change

Date 25-Oct-2010 19-Feb-2018 30-Jun-2016

Database with slum inventory operational and accessible to the public.Unit of Measure: Yes/NoIndicator Type: Custom



Date 25-Oct-2010 19-Feb-2018 30-Jun-2016

New piped household water connections that are resulting from the project interventionUnit of Measure: NumberIndicator Type: Custom


Value 0.00 6651.00 6000.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

Roads rehabilitated, Non-ruralUnit of Measure: KilometersIndicator Type: Custom


Value 0.00 57.50 93.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

New street or security lights put into place under the KISIP.Unit of Measure: NumberIndicator Type: Custom



Value 0.00 100.00 134.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

New Sewer connections constructed under the projectUnit of Measure: NumberIndicator Type: Custom


Value 0.00 4228.00 4600.00 Revised

Date 25-Oct-2010 19-Feb-2018 30-Nov-2019

Drainage System RehabiliatedUnit of Measure: KilometersIndicator Type: Custom


Value 0.00 67.90 100.00 Revised

Date 04-Jan-2016 19-Feb-2018 30-Nov-2019

Footpaths RehabilitatedUnit of Measure: KilometersIndicator Type: Custom


Value 0.00 53.90 120.00 Revised

Date 04-Jan-2016 19-Feb-2018 30-Nov-2019

Situational AnalysisUnit of Measure: Yes/NoIndicator Type: Custom



Date 04-Jan-2016 19-Feb-2018 30-Jun-2016

Housing SurveyUnit of Measure: Yes/NoIndicator Type: Custom




Date 04-Jan-2016 19-Feb-2018 30-Jun-2016

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE

LOAN CLOSING DATE(S)

Ln/Cr/Tf StatusOriginal Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

COFN-C1440 Effective 31-May-2018 31-Dec-2020 31-Dec-2020 30-Apr-2021

IDA-48730 Effective 30-Jun-2016 31-May-2018 30-Nov-2019 30-Mar-2020

TF-18327 Effective 30-Jun-2016 31-Mar-2018, 31-May-2018 31-May-2018 30-Sep-2018

Note to Task Teams: End of system generated content, document is editable from here.

World Bank Document...implementation in 36 informal settlements in 11 urban centers and about 791,500 people were benefiting from the improved infrastructure. KISIP has also undertaken

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