FOR OFFICIAL USE ONLY

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY PROJECT APPRAISAL DOCUMENT ON A PROPOSED GLOBAL ENVIRONMENT FACILITY GRANT IN THE AMOUNT OF US$1MILLION TO SAHARA AND SAHEL OBSERVATORY FOR A MENA DESERT ECOSYSTEMS AND LIVELIHOODS KNOWLEDGE SHARING AND COORDINATION PROJECT May 1, 2013 Report No: MNA This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's policy on Access to Information.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective April 17, 2013) Currency Unit = USD 1 USD = 1.50 TND 1 TND = 0.67 USD FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AARINENA CAS CEDARE COP EEAA GEF HFDJB IDM MATE MENA MENA-DELP MENA-DEL-KSC M&E NCARE NGO OSS PDO PIM RSCN SC SLWM UNCCC UNCCD UNCBD UNDP UNEP UNWTO WB Association of Agricultural Research Institutes for the Near East & North Africa Country Assistance Strategy Center for Environment and Development for the Arab Region and Europe Conference Of Parties Egyptian Environmental Affairs Agency Global Environmental Facility Hashemite Fund for the Development of the Jordan Badia Institut Deserts du Monde / World Desert Institute Ministere de l'amenagement du Territoire et de l'environnement / Ministry of Land Planning and Environment Middle East and North Africa Middle East and North Africa Desert Ecosystems and Livelihoods Program Middle East and North Africa Desert Ecosystems and Livelihoods Knowledge Sharing and Coordination Project Monitoring and Evaluation National Center for Agriculture Research and Extension Non-Governmental Organization Sahara and Sahel Observatory Project Development Objective Project Implementation Manual Royal Society for the Conservation of Nature Steering Committee Sustainable Land and Water Management United Nations Climate Change Convention United Nations Convention to Combat Desertification United Nations Convention on Biological Diversity United Nations Development Program United Nations Environmental Program United Nations World Tourism Organization World Bank Regional Vice President: Country Director: Sector Director: Sector Manager: Task Team Leader: Inger Andersen Jonathan D. Walters Junaid Kamal Ahmad Charles Joseph Cormier Taoufiq Bennouna

3 REGIONAL Middle East and North Africa Desert Ecosystems and Livelihoods Knowledge Sharing and Coordination Project TABLE OF CONTENTS Page I. STRATEGIC CONTEXT... 1 A. Country Context... 1 B. Sectoral and Institutional Context C. Higher Level Objectives to which the Project Contributes... 5 II. PROJECT DEVELOPMENT OBJECTIVES... 7 A. PDO... 7 Project Location and Beneficiaries PDO Level Results Indicators... 8 III. PROJECT DESCRIPTION... 8 A. Project Components B. Project Financing Lending Instrument C. Lessons Learned and Reflected in the Project Design IV. IM PLEM ENTATION A. Institutional and Implementation Arrangements B. Results Monitoring and Evaluation C. Sustainability V. KEY RISKS AND MITIGATION MEASURES...16 A. Risk Ratings Summary Table B. Overall Risk Rating Explanation VI. APPRAISAL SUMMARY A. Economic and Financial Analyses B. Technical C. Financial Management D. Procurement E. Social (including Safeguards) i

4 F. Environment (including Safeguards) Annex 1: Results Framework and Monitoring Annex 2: Detailed Project Description Annex 3: Institutional Analysis...26 Annex 4: Operational Risk Assessment Framework (ORAF)...38 Annex 5: Implementation Support Plan Annex 6: Incremental Cost Analysis Hi

5 PAD DATA SHEET Middle East and North Africa MENA- Desert Ecosystems and Livelihoods Knowledge Sharing and Coordination Project (P130343) PROJECT APPRAISAL DOCUMENT MIDDLE EAST AND NORTH AFRICA MNSSD Basic Information Date: May Sectors: General agriculture, fishing and forestry sector (30%), General water, sanitation and flood protection sector (30%), Other industry (30%), Other Renewable Energy (10%) Country Director: Jonathan D. Walters Themes: Biodiversity (20%), Rural development (20%), Sector Charles Joseph Cormier Environment and natural resources management Manager/Director: /Junaid Kamal Ahmad (20%), Water resource management (20%), Climate change (20%) Project ID: P EA C - Not Required Category: Lending Instrument: Technical Assistance Focal Multi-focal area Loan Area: Team Leader(s): Joint IFC: No Taoufiq Bennouna Recipient: Sahara and Sahel Observatory (for the Benefit of Algeria, Egypt, Jordan, Morocco and Tunisia) Responsible Agency: Sahara and Sahel Observatory Contact: M. Khatim Kherraz Title: Executive secretary of the Sahara and Sahel Observatory Telephone No.: (+216) boc@oss.org.tn Project Implementation Start Date: 24-June-2013 End Date: 23-June-2017 Period: Expected Effectiveness 24- June-2013 Date: Expected Closing Date: 31-December-2017 Project Financing Data(US$M) 111

6 ] Loan [X] Grant [ ] Other ] Credit [ ] Guarantee For Loans/Credits/Others Total Project Cost (US$M): 1.00 Total Bank Financing 0.00 (US$M): Financing Source Amount(US$M) R/RECIPIENT: Jordan, Tunisia and Morocco 0.18 OSS 0.30 Global Environment Facility (GEF) 1.00 Total 1.48 Expected Disbursements (in USD Million) Fiscal Year Annual Cumulative Global Environmental Objective(s) The proposed project development objective is to strengthen cooperation among selected organizations of beneficiary countries in areas of sustainable management of desert ecosystems. Components Component Name Cost (USD Millions) Knowledge Management and Sharing 0.80 Monitoring and Evaluation 0.10 Project Coordination 0.10 Policy Compliance Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [X] Does the project require any waivers of Bank policies? Yes [ ] No [X] Have these been approved by Bank management? Yes [ ] No [X] Is approval for any policy waiver sought from the Board? Yes [ ] No [X] 1v

7 Does the project meet the Regional criteria for readiness for implementation? Yes [X] No [ ] Safeguard Policies Triggered by the Project Yes No 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 X X X X X X X X X Legal Covenants Name Recurrent Due Date Frequency Description of Covenant Conditions N/A Bank Staff Team Composition Name Title Specialization Unit Taoufiq Bennouna Sr Natural Resources Team Leader MNSEN Mgmt. Spec. Lamyae Hanafi Benzakour Financial Management Financial Management MNAFM Analyst Hassine Hedda Finance Officer Finance Officer CTRLA Ruxandra Costache Counsel Counsel LEGAM Song Li GEF Regional Coordinator Environment MNSEN Melanie Argimon Pistre Junior Professional Junior Professional MNSEN Associate Associate Slaheddine Ben-Halima Procurement Specialist Procurement MNAPC Non Bank Staff Name Title Office Phone City V

8 Moez Makhlouf Financial Management Financial Management Consultant Analyst Analyst Locations Country First Administrative Location Planned Actual Comments Division Jordan Ma'an, Mafraq Muhafazat Ma'an, X X Muhafazat al Mafraq Egypt, Arab Republic Muhafazat al Qahirah Cairo X X of Algeria Wilaya d' Alger Algiers X X Morocco Region de Rabat- Rabat X X Sale-Zemmour-Zaer Tunisia Tunis Tunis X X Vi

9 I. STRATEGIC CONTEXT A. Country Context 1. The total population of the Middle East and North Africa (MENA) region, which has almost tripled since 1970, is estimated at about 355 million people (of which 85 percent live in middle-income countries, 8 percent in high-income countries, and 7 percent in low-income countries), and is expected to reach about 600 million by Over the last years, the region has made significant progress on key social and economic indicators. For instance, average life expectancy is 70 years, primary education completion is about 90 percent and the under-5- mortality rate is 38/1,000. Absolute poverty is relatively low (about 4 percent of the population living under $1.25 a day). 2 However, in the longer term, MENA countries are profoundly challenged by many of the structural problems that existed before the recent popular uprisings, particularly the following: inequitable growth and high unemployment rates. In spite of a reduction of the overall unemployment rate between 1990 and 2010, the region as a whole still holds the highest unemployment rate among developing countries. 3 The proportion of the population suffering from malnutrition has seen no significant improvement over the rates of The Arab Spring has started and continues to highlight the importance of promoting inclusive growth and good governance, as well as providing economic opportunities, particularly for a burgeoning youth population. Sustainable growth is a key element to ensuring that solutions to the challenges of social and economic inclusion are long-lasting, with good governance as the foundation. This suggests a paradigm shift in the Bank's work in MENA looking forward, intrinsically linking the environmental agenda to address these key thematic priorities in the region. 3. The MENA region is home to two of the world's largest deserts: the Sahara (4.6 million km2, i.e., about 10 percent of the African continent) and the Arabian Desert (2.3 million km2). Sustaining the capacity of desert ecosystems to provide goods, services and livelihoods in an integrated manner represents a critical cornerstone for long-term development prospects in fragile deserts at local, national and regional levels. Desert ecosystem goods are already being tapped for sustainable growth, namely for the generation of solar power, through concentrated solar power and other initiatives. Other goods and services also have the potential to be harnessed to further diversify growth sectors and improve livelihoods. One example is the development of ecotourism, which can provide concrete revenue opportunities for local populations and the private sector, with benefits to biodiversity conservation. Furthermore, a better understanding and development of the full value of agro-food chains specific to arid environments (such as cactus and olives) represents another example of maximizing productive and sustainable use of deserts goods and services. 4. Desert communities represent a small proportion of the overall population of the region. In spite of the fact that they possess a spirit of economic initiative and a highly sustainable level 1 Source: web.worldbank.org 2 Source: Source: 4 Source: UNDP (2009) Development Challenges: Human Development Approach (RBAS/UNDP) 1

10 of social cohesion, these populations are not fully integrated within development policies and plans and are not always able to capitalize on new economic opportunities and improve their livelihoods. Poverty pockets tend to be more prevalent in desert areas, where social and economic development has lagged, despite the fact that populations possess valuable know-how and have adopted a range of environmentally-sensitive practices and techniques to adapt to their arid environment. 5. To this end, the World Bank, in partnership with several countries and the Global Environment Facility, has recently launched the MENA-Desert Ecosystems and Livelihoods Program (MENA-DELP). This year program aims to contribute to the enhancement of livelihoods in desert ecosystems by harnessing their value in an environmentally and socially sustainable manner so that the flow of desert goods and services can be optimized. The MENA- DELP framework seeks to maintain and improve the flow of desert ecosystem services for sustainable development in a positive feedback loop. The Program will focus on piloting enabling economic opportunities specific to deserts that integrate the health and diversity of the desert biome with the vast potential for innovative livelihood opportunities that also sustain valuable repository knowledge linked to adaptive practices. It is intended that such an approach ultimately enhance desert livelihood opportunities and increase the resilience and adaptation responses of desert communities and ecosystems to projected pressures, in particular climate change impacts. The MENA-DELP is designed for multiple phases, with the first phase being a World Bank-GEF program to support investment projects in Algeria, Egypt, Jordan, and Morocco as well as knowledge sharing and coordination among these four countries, for which a US$21 million grant was approved by the GEF in November Tunisia requested the GEF and the World Bank to be part of this regional project in October 2012, the country will benefit from MENA-DELP Program through the Ecotourism and Conservation of Desert Biodiversity project (P120561) under implementation, and the Oasis ecosystem management project under preparation. 6. National projects in Algeria, Egypt, Jordan, Morocco, and Tunisia will focus on pilot investments to optimize the provision of desert goods and services for enhanced livelihoods. The focus of these projects is on different production sectors, from ecotourism to agriculture to oasis and rangeland management, and on improving the sustainability of these investments through an integrated ecosystem management approach. Emphasis is also placed on participatory approaches, capacity building and on harnessing local knowledge. 7. The proposed regional umbrella project aims to enhance knowledge and experience sharing on opportunities for enhancing desert livelihoods among participating pilot countries. The design of this project has benefitted greatly from the lessons of MENA's shared seas program, and shifts the focus to other shared natural resources, in this case desert ecosystems. B. Sectoral and Institutional Context Desert Ecosystem Goods and Services 8. On a global scale, deserts play an important role through their regulating ecosystem services namely air quality, atmosphere composition, and climate regulation. In the MENA region, deserts encompass unique and highly adapted ecosystems that continue to provide life- Source: UNDP (2011) Arab Development Challenges Report 2011 (UNDP). 2

11 supporting services to the environment and the communities inhabiting them, linked with several productive sectors, including tourism and agriculture. Ninety percent of the region lies within arid, semi-arid and dry sub-humid areas Agriculture. From a land use and natural resource management perspective, desert populations have developed a range of traditional social, cultural and technological adaptations to their arid environment, which have resulted in sustainable land management practices, over generations. Such local knowledge and practices are invaluable, particularly as MENA countries face increased climate variability and change and associated desert livelihoods are disproportionately affected. 10. Traditional knowledge of agro-biodiversity, in particular the adaptive properties of desert landraces, can contribute to sustaining livelihoods in the face of adverse environmental and climatic events. For example, participatory plant breeding for the selection of drought tolerant crop genotypes has been encouraged successfully by the International Center for Agricultural Research in the Dry Areas (ICARDA) in the MENA region. This process leverages the knowledge, needs, and labor of the local community through a participatory approach to generate improved crop germplasms that are well adapted to the stressors of desert environments. 11. The careful use of plants in the recovery of degraded areas can also provide forage, food, or marketable products. Barbary fig in particular, has been used for the stabilization of degraded soils, as well as livestock feed and cogeneration, and export as dyes, food, and cosmetics. Cultivation of Barbary fig leverages traditional knowledge, and provides for increasing economic control in local communities, especially during drought. Another emerging example is the reuse of byproducts from olive cultivation, which can reduce the environmental impacts of olive waste disposal, while obtaining value from the entire olive agro-food chain. Byproducts are treated as resources in other production systems, namely livestock feed, fertilizing compost and/or for cogeneration. Co-benefits include the reduction of livestock pressure on natural rangelands, improvements to soil-based carbon stocks, and the replacement of non-renewable energy sources in rural areas. 12. Markets for plant materials from the MENA region may also be valued for their herbal or aromatic properties or the presence of secondary plant metabolites that can be used for medicinal or other purposes. The cultivation, processing, and marketing (labeling, etc.) of such plants can add substantially to local community revenues, especially as an activity for women, and can also benefit from local knowledge. 13. Tourism. The location of the MENA region, with its warm climate and rich and varied culture, within easy reach of Europe, has been the major source of the development of the 7 tourism sector, one of the biggest in the world. International tourism represents today an important economic resource for many MENA countries. However, the tourism sector has been severely affected by recent events and is perceived as contributing to natural resource challenges in the region, particularly in terms of water use and the degradation of natural areas. A new model is now needed, which would intrinsically link desert ecosystem integrity with 6 Balgis Osman Elasha (2010) Mapping of Climate change threats and Human development impacts in the Arab region (UNDP). 7 Mohamed Beriane (1999) Tourism, Culture and Development in the Arab Region (UNESCO). 3

12 socioeconomic benefits flowing to communities and would increase opportunities for smaller businesses to engage in the sector through a more transparent business environment. 14. The development of 'ecotourism' and 'cultural tourism' thus has the potential to provide concrete revenue opportunities for local populations and the private sector. Ecotourism, for example, can create local community support for nature and biodiversity conservation, especially around protected areas, while providing alternatives to hunting, overgrazing, or other activities which continue to pose threats to biodiversity Considering the arid and hyper-arid conditions of desert ecosystems, the fauna is relatively rich. In the Sahara desert, for instance, there are 70 mammalian species, 20 of which are large mammals; 90 species of resident birds, and around 100 species of reptiles. Desert biomes currently hold an abundance average of endemic species of 68 percent. 10 Many desert species in the MENA region are listed as vulnerable or worse on the IUCN Red List. Natural and Anthropogenic Pressures on Desert Ecosystems 16. Deserts ecosystems are not the final stage of a desertification process, but many deserts and their communities are currently under threat from both natural and anthropogenic pressures, particularly land and natural resources degradation and projected climate change impacts. 17. Climatic conditions. The MENA region is one of the driest regions on earth, with wide seasonal climatic and precipitation variations, which is typical of dryland ecosystems. Average annual temperatures vary from freezing to over 50 degrees Celsius, depending on the season and location. Rainfall distribution also varies between countries. However, even in areas with more significant rainfall, a large portion of rainwater is lost to evaporation and surface runoff (the highest losses occur in the desert and semi-desert zones)." In desert ecosystems, even moderate changes in precipitation and temperature may create severe impacts by shifting the intensity and frequency of extreme periods, and subsequently creating catastrophic effects on plants, animals, and human livelihoods Water scarcity. The MENA region is being increasingly affected by water scarcity, both economically and socially. 13 MENA is home to 5 percent of the world's population, with only 0.7 percent of the world's available freshwater resources (CEDARE, 2006). The increasing demands for water and the rapid population growth in the region are putting significant pressures on the resource. These pressures are the result of a number of factors including: shortages in the supply of natural renewable water resources, a deterioration in the quality of surface and groundwater, decreased capacity to provide food, dependency on rivers and groundwater reserves shared with other countries outside of the region, low water use efficiencies, as well as inadequate institutional and legislative frameworks and improper centralization and governance (CEDARE 2006 and 2007). In addition, the impact of water scarcity on rural livelihoods has increased migration to urban areas placing increasing pressure on these. It is projected that up to 100 million people could be under water stress by 2050, as a result of existing pressures Source: United Nations World Tourism Organization (UNWTO), Wild Jordan, business unit of RSCN to develop socio-economic programs in all of Jordan's nature reserves. 10 Source: Global Desert Outlook ( " B. 0. Elasha (2010) op. cit. 12 Source: Global Desert Outlook ( Source: Center for Environment and Development for the Arab Region and Europe (CEDARE),

13 exacerbated by projected climate change impacts. 14 Further, because of its reliance on rainfed agriculture, the region's agricultural output could decrease percent by 2080 with decreased rainfall Land degradation. Desert margins and key production systems namely oases, rangelands and other agricultural systems constitute a hotspot for land degradation, with common challenges across the MENA region. In oases for example, soil salinization due to over-pumping of groundwater and vegetation degradation due to drought, coupled with sand dune encroachment, are major challenges to be addressed. Further, the expansion of traditional cultures that may not be adapted to arid conditions put additional pressure on groundwater resources for irrigation. A general decline in the rate of expansion of irrigated areas is expected in the next decades due to increasing water scarcity issues, together with increased investments in drainage to fight salinization. 20. Pastoralist livelihoods and associated rangelands have been a critical part of traditional livelihoods in the MENA region. However, natural rangelands are also under threat from overgrazing, habitat encroachment for urban and agricultural development, and illegal collection. Grazing pressure on the desert, and especially on the desert margin, is considered the most extensive agent of land degradation.16 In addition, population pressure and recent changes in administrative structures have altered traditional desert pastoralism, often resulting in a situation where land tenure is poorly defined and resources are not well allocated and poorly controlled. C. Higher Level Objectives to which the Project Contributes 21. Employment creation is of paramount importance in the MENA region. The environment agenda intersects with the larger job creation agenda in the following three ways: (i) promoting environmentally friendly technologies (such as those related to renewable energies or energy efficiency) could generate new "green" jobs; (ii) optimizing underutilized environmental goods and services could result in new "classical" jobs, for example, ecotourism jobs, if cultural tourism routes are better linked with natural attractions around protected areas; and (iii) improving environmental management and governance helps to shift unsustainable practices towards greater sustainability or allows for greater access to markets for clean industry products, thus ensuring that "classical" are durable and are not reduced in number over time. The design of the MENA-DELP focuses primarily on the last two points, with this proposed regional project contributing in providing a forum for discussion to share the knowledge generated between participating countries. 22. The MENA region is also placing emphasis on social and economic inclusion and sustainable growth. In that regard, environmental assets (oil, gas, water, land) have been the basis for strong growth in the region. However, the same environmental assets are rapidly being degraded and/or are underutilized in other places, and the benefits accruing from the use of these assets may not be evenly distributed. Hence, focusing on policy levers to ensure that this growth is sustainable and long-lasting has to be an important focus going forward where environmental assets are being degraded. Also important is putting pilot investments into areas where environmental assets are not fully utilized, such as in desert ecosystems, particularly in lagging 14 Source: " Source: 16 Source: Global Desert Outlook ( 5

14 and high poverty regions where poor and vulnerable groups depend on these assets for their livelihood. The proposed regional project will contribute to supporting participating countries in developing a better understanding of the policy levers needed to achieve an optimal use of natural resources in desert ecosystems, through learning experiences with pilot investments. 23. Specifically, the proposed regional project is in line with the following: (i) The World Bank's strategy and assistance in the MENA region, which includes a range of products including, among others: a) A rapid investment response to support required poverty interventions; b) Help with employment generation and special areas programs; c) Advisory support; d) Strengthening of institutional capacities; e) Provision of entrepreneurship and other training programs. Key to the sustainability of a manageable transition in MENA countries is a strengthening of the region's governance framework (transparency, accountability, and social justice), fostering inclusive growth, establishing sustainable social protection, helping reduce food price volatility and supporting global and regional economic integration. The Bank's environment agenda intersects with the much larger job creation agenda ('green' jobs and new jobs for ecotourism and cultural tourism). 17 In the case of Algeria, the Country Partnership Strategy (Report DZ) (FYI1-14) discussed by the Board of Executive Directors on January 10, 2011 focuses, among others, on promoting sustainable development (environment protection) and reducing spatial disparities (through ecotourism projects). (ii) The objectives of the New Environment Strategy for the World Bank Group, which was elaborated through an extensive consultation process with global stakeholders, and through the preparation of a series of analytical papers to inform the strategy. By highlighting the importance of green, clean and resilient growth, the strategy focuses on a "new development paradigm" that better balances growth with environmental and social sustainability, whereby economic growth does not necessarily guarantee quality of life or ensure that the needs of the poor and marginalized are always met. 18 Finally, the World Bank's new Environment Strategy places emphasis on green, clean and resilient growth. In particular, it focuses on better biodiversity management in the context of production landscapes, as well as on improved climate resiliency. These are both important aspects for the design of the MENA-DELP as a whole. (iii)the objectives of the Arab World Initiative, which has been jointly launched by the World Bank and the League of Arab States. It aims at producing the first body of knowledge addressing adaptation to a changing climate for all the Arab countries and assessing the ways climate change threaten the economic development and may exacerbate the vulnerability of the poor 'Eco-tourism' defines travels to natural areas in a way that conserves the environment and improves the wellbeing of population (International Society of eco-tourism).'cultural tourism' refers to a type of tourism that takes account of other people's cultures (UNESCO)

15 (iv)the general objectives of TerrAfrica (Regional Sustainable Land Management), which aims at addressing land degradation in Sub-Saharan Africa by scaling up harmonized support for effective and efficient country-driven sustainable land management. TerrAfrica, conceived as a multi-partner, dynamic platform allowing the participation of country partners, institutions and civil society, could support innovative forms of southsouth cooperation. 20 (v) The general and specific priorities of key environmental and social policies of the participating countries, particularly the following: a) Algeria: Support to the integration of climate change adaptation into the current Five Year Agricultural Plan ( ), (including food security and the creation of employment for vulnerable rural communities); and the National Territorial Planning Scheme to b) Egypt: Support to the objectives of the National Environmental Action Plan. c) Jordan: Support the objectives of Jordan's National Rangeland Strategy (2001), the National Tourism Strategy, as well as the National Biodiversity Strategy and Action Plan (2003) and National Strategy and Action Plan to Combat Desertification (2005), among others. d) Morocco: Support Enhance the sustainability of the national agricultural strategy, the Plan Maroc Vert (PMV), which is supported by the World Bank through an ongoing programmatic Development Policy Loan (DPL) series and a GEF project on Integrating Climate Change in the implementation of the PMV (PICCPMV); P and P e) Tunisia: support the objectives of the Ecotourism and Conservation of Desert Biodiversity project (P120561). 24. The following is a summary of the proposed Project alignment with MENA-DELP program expected outcomes: MENA-DELP Expected Outcome Proposed Regional Project Expected Outcome - Improved knowledge of the linkages existing between ecosystems and livelihoods in desert areas; The linkages between desert ecosystem - Improved systems of knowledge sharing on issues related to services and desert livelihoods are desert ecosystem and livelihoods; better understood and inform decision - Improved networks and program level information flow on maldng desert ecosystems at national and international level. II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 25. The development objective of the proposed regional project (PDO) is to strengthen cooperation among selected organizations of beneficiary countries in areas of sustainable management of desert ecosystems

16 Project Location and Beneficiaries 26. The direct/end beneficiaries of the proposed regional project, which has an implementation period of 4 years, will be a number of selected national and regional organizations, involved in the implementation of the MENA-DELP national projects. The proposed project will contribute to fill the institutional and knowledge gaps that currently exist in terms of sustainable desert ecosystem management. These organizations and institutions include, but are not limited21 to: (i) Algeria: World Desert Institute (IDM) 2 2 and Ministry of Land Planning and Environment (MATE) 23 ; (ii) Egypt: Egyptian Environmental Affairs Agency (EEAA); (iii) Jordan: National Center for Agriculture Research and Extension (NCARE); (iv) Morocco: Ministry of Agriculture and Maritime Fisheries; Agriculture Development Agency (ADA); Institut National de Recherche Agronomique (INRA), and the << Agence Nationale de d6veloppement des zones oasiennes et de l'arganier ANDZOA >>. (v) Tunisia: State secretariat of Environment. 27. Indirectly, other potential beneficiaries of the regional project include non-governmental organizations, community-based organizations, regional and local authorities, research institutions, and universities in the participating countries, that would participate in the thematic networks created and strengthened by the proposed project. Individual technical experts could also participate and thus benefit. PDO Level Results Indicators 28. The PDO will be measured against the following key indicators: (i) Number of Workshops organized on issues related to desert ecosystems (ii) Number of virtual meetings held through the dedicated Desert Information System on desert related issues. (iii)number of knowledge products related to desert ecosystems issues developed through the project III. PROJECT DESCRIPTION A. Project Components 29. The proposed project would consist of the following three components. Component 1: Knowledge Management and Sharing (GEF: US$800,000). 21 The PIM provides specific criteria to select other beneficiaries. 22 Institut des Deserts du Monde. 23 Ministere de l'amenagement du Territoire et de l'environnement. 8

17 30. The aim of this component is to establish and strengthen existing networks between national institutions to encourage management and sharing of knowledge on key issues related to sustainable desert ecosystem management and their associated livelihoods. It will contribute to respond to the main questions related to desert issues as presented in table 1 below (Table 1). This will help build a community of practice aimed at providing guidance to policy-makers on matters related to the sustainable development of desert ecosystems. 31. Institutions in the five participating countries will submit eligible activities for financing to the OSS, among them the following: (i) Workshops: Organize workshops (with a sectoral or a multi-sectoral focus with deserts as a central theme) bringing together relevant stakeholders from MENA-DELP participating countries to share knowledge and information about pilot MENA-DELP country projects, other relevant desert ecosystem and livelihood enhancement experiences (in participating countries as well in other countries), as well as emerging knowledge on related policy guidance. (ii) Study tours: Organize study tours to share information on pilot MENA-DELP country projects or other similar projects (in participating and/or other countries). (iii) Web-based Networks: Organize moderated internet discussions through web-based networks between sectoral experts on key issues, emerging lessons and related policy implications related to the sustainable use of desert goods and services in the context of a given productive sector The organization of the project workshops as well as the steering committee meetings will be, when possible, associated to international conferences such as UNCCD, UNCCC or UNCBD COP. 33. The OSS will implement this component with the support of an expert to be hired by the OSS. This expert will be part of the project coordination team and will work closely with the five national institutions, the World Bank and the GEF. 34. An additional responsibility of the OSS would be to prepare a short summary report of the activity and publish it for broader dissemination. Component 2: Monitoring and Evaluation (GEF: US$100,000). 35. The proposed objectives of this component are two-fold: (i) Establish a Programmatic level monitoring system for the MENA-DELP program based on aggregating national project level indicators and results, (ii) Establish a specific M&E system for the regional project. The implementing regional organization, the OSS, will be responsible to develop these 2 M&E systems and will elaborate a comprehensive annual progress reports on program level results, to be disseminated to all the stakeholders, including the Bank and GEF. 36. In order to create a positive feedback loop between M&E and knowledge management, the regional project M&E system will incorporate a dedicated information system which will: (i) allow for the collection of data and information on desert ecosystems, livelihoods and sustainable management practices; (ii) disseminate information through a dedicated website; (iii) provide a 24 Such as the network on ecotourism in desert environments administered by RSCN in Jordan. 9

18 link and a platform for exchange of information between partners; (iv) include a monitoring evaluation with predefined indicators to facilitate analysis, consistency and monitoring of activities; and (v) moderate virtual discussions through existing or new web-based networks, as proposed under Component The dedicated desert information system will benefit from and establish linkages with similar knowledge management existing platforms such as the World Overview of Conservation Approaches and Technologies (WOCAT) and TerrAfrica Knowledge bases. This will support national reporting needs for best practices and further enhance the wider dissemination and knowledge sharing of desert ecosystem technical and approach solutions. The proposed Information system will also contribute to the learning of the GEF-5 land degradation, biodiversity, and climate change portfolios, and help shape these future focal area strategies by enhancing the knowledge base on global environmental benefits generated by GEF investments on desert ecosystems and livelihoods. 38. This component will be fully implemented by the OSS. The OSS will contract an M&E specialist which will part of the project team and will work closely with the national implementing institutions, the World Bank and GEF staff to agree on the structure and content of the 2 M&E systems to be established in conformity with MENA-DELP Project Framework Document. Component 3: Project Coordination (GEF: US$100,000). 39. This component will mainly finance project management fees of the OSS (amount: US$44,000), as well as all costs related to the organization of meetings of the Steering Committee of the project (travel of all participants (members, observers, guests including OSS), accommodation, etc.) and audit costs. The project management fees will be paid to the OSS in lump-sum with a total amount of US$11,000 each year. 40. All consultants and experts to be hired on the project will be recruited according to the administrative procedures of OSS. Table 1: Key issues related to desert ecosystems Key questions to be addressed are, among others, the following; * What are the relationships between a democratic society and a sustainable approach to eradicate poverty and create growth in desert areas? * Who are 'the winners' and 'the losers' of current policies concerning deserts ecosystems and livelihoods? * What are the negative impacts and spillovers of current development policies and programs on desert ecosystems and livelihoods? * What are the main aspects of climate risks on local production systems? * What are the main forms of adaptation to climate change and variability that have to be supported in desert ecosystems in a sustainable manner? * What are the main aspects of innovative policies aimed at supporting the diversification of livelihoods in desert areas? * How can environmental policies and regulations be better designed to allow for the sustainable use of natural resources in order to generate employment and improved 10

19 livelihoods while preventing the degradation of the resource? * What policy levers are important to encourage ecotourism and cultural tourism? * What is the current experience in incorporating a focus on ecotourism in a country's tourism strategy, and what elements are important to increase the market share of ecotourism? * What are different income generation options for desert communities that use desert goods and services optimally and what policies and actions are needed to make sure these are realized in a sustainable way? * How can policies and related regulations be designed to encourage better water management and protection of biodiversity? B. Project Financing 41. The Project is a medium-sized GEF Grant in the amount of US$1.0 million and implemented over a period of 4 years. The total amount of co-financing is US$487,500 and is available from the following sources: (i) total in-kind contributions estimated at US$187,500 from Jordan, Morocco and Tunisia (US$62,500 each), mainly staff time, national institutions selected to carry out knowledge management and sharing activities; and (iii) in-kind contribution estimated at US$300,000 from the Sahara and Sahel Observatory, mainly staff time and products generated by its programs on environmental monitoring, early warning, management of water 25 resources and monitoring and evaluation. Project Cost and Financing Project Costs GEF Financing Co- Financing Project Components (US$M) (US$M) (US$M) 1. Knowledge Management and Sharing Monitoring & Evaluation Project Coordination Total Project Cost The GEF Grant will be entirely managed by the Sahara and Sahel Observatory (OSS). Algeria, Egypt, Jordan, Morocco and Tunisia have already expressed their interest in the Project and will benefit from the Project. Other countries could join the Project throughout its implementation. OSS will be responsible for managing the Project funds and all related financial transactions, and there will be no transfer of funds to the Beneficiaries. Given the demand-driven approach of the Project, Beneficiaries will jointly identify the activities to be implemented under the Project. C. Lessons Learned and Reflected in the Project Design 43. The proposed regional project is designed as a first step towards strengthening long-term capacity and coordinated knowledge sharing in the MENA region to sustainably harness and 25 These products will consist of methodologies, studies, publications, and spatial data. 11

20 manage desert ecosystem services for the benefit of associated livelihoods. Given that governments are in place for shorter time frames compared to institutes and centers of excellence, efforts to support these relevant entities in the five participating countries are important, as this provides an opportunity to create local capacity for policy analysis and influence over the longer time frame. 44. The proposed regional project's focus on institutes is also complementary to the focus on national agencies in each of the national country projects, and will allow for objective exchanges of lessons learned from field-level experiences. The proposed project is also an opportunity to link relevant national organizations across the five participating countries to lay the foundations of a network for the entire region. The project also aims to specifically build the capacity of one institution to take a leading role on program level information flow (including M&E), so that the replication potential of good practices is enhanced. 45. Given the proposed project objectives and level of funding, it is essential to design the project in such a way that the Grant is used efficiently and effectively. Key project design principles have thus been developed in this light, drawn from experience with other knowledge sharing projects in the MENA region26 (i) Activities to be financed should be beneficial to at least two or more participating countries. (ii) A Project Steering Committee (PSC) will be responsible for general strategic issues and decision making. It will be made up of one representative from each participating country. The PSC will approve the activities to be financed under the regional project. (iii) Simplicity of the proposed implementation arrangements, so that the project can be prepared quickly and funds can flow easily. (iv) No funds will be pre-allocated by country or by component, and no funds will be transferred to specific countries (all funds should flow through the Regional Implementing Entity which is the OSS). (v) Program monitoring capacity needs to be created, with a formal mechanism for countries to share national level indicators and results to be aggregated at the program-level (to fulfill reporting requirements under the GEF program). 46. The proposed Project will build on previous relevant initiatives, particularly the Resources Management in the Middle East and North Africa Region Program (MENARID Program) and the "Regional Initiative for Dryland Management" led by the International Center for Agricultural Research in the Dry Areas ICARDA, in partnership with the World Bank and FAO, implemented between 1996 and Moreover, the regional project will also capitalize on the: (i) Sahara and Sahel Observatory knowledge and programs, mainly those related to the Environment program: Long term ecological monitoring observatories network project whose objective is to build capacities in ecological surveillance and environmental monitoring in circum-saharan Africa; the project on the establishment and strengthening of national mechanisms for environmental surveillance and the Drought Early warning project in Maghreb countries; the shared water resources program, mainly with the North-Western Sahara Aquifer System (NWSAS) project which is in its 3rd phase; and the activities of the Information and communication program; (ii) the regional - governance and knowledge generation project whose 26 Notably the Sustainable MED Regional Governance and Knowledge Generation Project (P118145). 12

21 objective is to foster the integration of environmental issues into sectoral and development policies of the Beneficiaries; (iii) the "Plan Maroc Vert" or Green Plan which is the country's strategy to bring better opportunities to small and large-scale farmers by transforming its agrifood sector into a stable source of growth, competitiveness and broad-based economic development in rural areas; and (iv) the Tunisian Oasis Project (P132157). IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 47. The project team conducted a desk review of national and regional institutions related to desert topic in order to identify the regional implementing agency. This analysis shows clearly that institutional mandates are linked closely with productive sectors (specifically agriculture or tourism) or are focused on local community development. This suggests that, as a first step, it would be beneficial for networks to be established that are sectoral in nature, as the lessons learned should ultimately lead to policy and investment recommendations that are of interest to a sectoral audience. At the same time, capacity clearly needs to be built in an institution with a mandate that is multisectoral, which can take on the role of champion of the deserts agenda and can play a role as coordinator of the sectoral networks in the longer term to facilitate the dissemination of the policy-related knowledge linked with desert ecosystems. The only institution in the region with a clear mandate on desert issues is the 'Institut des Deserts du Monde' (IDM), based in Algeria. However, IDM is at an early stage in its development, and the Algerian Government has requested a Reimbursable Technical Assistance (RTA) from the Bank to help build its capacity. The Algerian Government has also championed the deserts agenda and sees the IDM as rising to play a regional role in this agenda. It is however, at too early a stage of establishment to take on the administrative role of potential regional implementing agency. However, given recent commitments to strengthen information systems at IDM, there is a strong possibility that it could take on the role of program level M&E. The analysis concluded that the best regional institution that could ensure the role of the regional project coordination, thanks to its capacities and knowledge on monitoring and evaluation, desertification and land degradation, dedicated information systems on environment and strong fiduciary capacities is the Sahara and Sahel Observatory (OSS) based in Tunis, Tunisia. 48. The choice of the OSS is due to a number of reasons: (i) OSS has over 20 years of experience promoting environmental regional cooperation, mainly on desertification and desert issues; (ii) its mandate is to give impetus to the combat against desertification and the mitigation of drought by providing member countries and organizations with a forum where they can share experiences and harmonize the ways in which data is collected and processed to feed into decision-support tools, thus entirely aligned with the Project objective; (iii) its geographical scope is similar, and goes beyond, the Project; (iv) it has well known economic-analytical capacity on environmental issues and environmental policy discussions; (v) it has broad experience with other development agencies who conduct similar work (i.e. AfDB, FFEM, AFD, EU, GIZ, CIDA, FAO, etc.) and has adequate institutional capacities and experience (M&E and fiduciary capacity); (vi) it is one of the Regional Activity Centers for the implementation of the UNCCD regional action plan, (vii) it has a network of focal points in the DELP countries and beyond, and (viii) it is located in the region, in proximity with participating countries. 13

22 49. The Project Management Team (PMT) will be hosted in the OSS and the Beneficiaries will be represented in the Project Steering Committee. The role and responsibility of OSS, the PMT, and the Steering Committee, is described below and in more details in Annex 3. The World Bank will carry out the supervision of the Project, according to the Implementation Support Plan presented in Annex Project Management Team (PMT) - The PMT will be housed in the OSS. It will manage the implementation of the Project. OSS staff will be assigned to the following PMT roles: Project coordinator, procurement specialist and financial management specialist. A desert expert and a Monitoring and Evaluation specialist will be hired under the project and will be part of the PMT. If needed, other consultants will be hired to carry out specific tasks. Inside the OSS, the PMT will be responsible for the following tasks: (i) Implementing the project according to the Project Implementation Manual (PIM), which identifies eligible initiatives and bidders, and include guidelines for the preparation and submission of activities to be carried out under Component 1, as well procurement mechanisms; (ii) Ensuring the financial management of the project funds and procurement activities in accordance to Bank's guidelines; (iii)prepare procedures for submission of tenders concerning activities to be financed at the level of one or more countries (tenders will be addressed in an agreed list of eligible institutions of each of the participating countries); (iv)analyzing proposals received from the National institutions concerning eligible activities to be financed under Component 1, and submit them to the approval of the SC; (v) Preparing a comprehensive annual progress report (to be submitted to the SC) based on the annual project progress reports prepared by the National Implementing Institutions of the participating countries for respective national projects. (vi)defining the general modalities of a common M&E system (the same indicators will be used in the participating countries); (vii) Directly supervising (or, alternatively, ensuring) M&E activities at the regional level, on the basis of M&E activities at country level (Component 2). (viii) Ensuring the implementation of all the activities related to project coordination (Component 3); (ix)organizing the SC meetings and assuming a secretarial role. 51. Project Steering Committee (PSC) will be responsible for general strategic issues and decision making. It will be made up of one representative of each participating country. A representative of the OSS will also participate in the meetings of the SC as an observer and assume a secretarial role. 52. The organization of the project workshops as well as the steering committee meetings will be, when possible, associated to high-level ministerial conferences during international fora (such as UNCCD or UNCCC or UNCBD COP). The Project Steering Committee will be responsible for the following activities: (i) Validation of the project annual action plan (prepared by the OSS) and make decisions on activities to be funded on an annual basis that are proposed by the core list, to be put forward for non-objection to the Bank; (ii) Validating decisions on the allocation of funds; 14

23 (iii) Facilitating a two-way communication process between the OSS and the National Implementing Institutions of the MENA-DELP national projects in the participating countries; and (iv)reviewing and approving annual regional project progress reports. 53. At the level of each of the participating countries, National Implementing Institutions 27 will facilitate the implementation of the proposed project, by: (i) Encouraging and supporting, at national level, the identification and the preparation of eligible proposals by local eligible institutions for activities under Component 1. (ii) Consolidating eligible proposals and submitting them to OSS. (iii)supporting the project implementation according to the Project implementation Manual. (iv)ensuring M&E activities at the country level, as per the design of respective national projects. (v) Preparing a comprehensive annual progress report, as per the design of respective national projects (to be submitted to the OSS). (vi)strengthen the links with the implementing institutions of other countries to foster joint initiatives. B. Results Monitoring and Evaluation 54. All the project interventions will be monitored through systematic Monitoring & Evaluation (M&E) activities, in order to assess their performance and ensure that lessons learned are used throughout project implementation. The M&E system will enable the project to take adequate remedial action. 55. The M&E system will highlight the role of different actors in collecting, processing and communicating essential data concerning the implementation of the different activities, namely that of the National Implementing Institutions at the level of each of the participating MENA- DELP countries, and the implanting entity at the regional level. 56. By producing timely and pertinent information, the M&E system will be a key management instrument, aimed at helping the decision making process. The monitoring of all investment actions will be done at real -time by using different mechanisms and tools to be defined over the first semester of the project. C. Sustainability 57. Institutional sustainability of project interventions mainly relies on the full participation of key national stakeholders in designing the project, thereby ensuring relevance (they have already gained significant experience from past and on-going programs/projects). Implementation will be mainstreamed into Ministerial departments of participating countries that have expressed their interest for the approach and willingness to provide adequate human and financial resources. All agencies and institutes consulted expressed interest in participating in the regional project, and formulated very specific suggestions. By highlighting the comparative 27 The five National Implementing Institutions are the Ministry of Land Planning and Environment (Algeria), the Egyptian Environmental Affairs Agency (Egypt), the National Center for Agriculture Research and Extension (NCARE) in Jordan, the Ministry of Agriculture and Fisheries (Morocco) and the Direction Generale de l'environnement et de la Qualite de la Vie (DGEQV) in Tunisia. 15

24 advantages of each institutional level, the subsidiarity principle will guide decisions concerning the participation of the different stakeholders in the implementation of the activities. 58. In terms of technical sustainability, the project will build upon the experience of past and on-going projects and the knowledge and track record of the OSS and participating national institutions. Furthermore, the project will support capacity-building of national and local institutions, including ministerial departments, local authorities and community organizations, in order to facilitate full local ownership of project activities. 59. In terms of economic and financial sustainability, the project will support the dissemination of specific desert ecosystem Sustainable management practices, technologies and techniques, which are expected to consistently improve the productivity and the resilience of such ecosystem. Furthermore, through activities aimed at sharing knowledge on diversifying local livelihoods, the project will contribute to improve the resilience of local households/ communities to climate risks and reintegrate them into the dynamic of economic growth. V. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Table Risk Rating Stakeholder Risk Moderate Implementing Agency Risk - Capacity Low - Governance Low Project Risk - Design Moderate - Social and Environmental Low - Program and Donor Substantial - Delivery Monitoring and Sustainability Moderate Overall Implementation Risk Moderate 60. Risks that are likely to affect project implementation are the following: (i) Civil unrest and political situations: Because of current events in some countries, project implementation could be delayed. However, the Bank will closely monitor the situation in each participating country and identify openings and alternatives. (ii) Monitoring & Evaluation activities. National institutions of participating countries have expressed little interest in carrying out M&E activities (Component 2). Some of them also lack key technical expertise, especially in order to align national and regional M&E systems. However, additional consultations will be held during the preparatory phase. The Steering Committee and the OSS are likely to efficiently facilitate communication with core institutions. (iii)institutional linkages. As the achievement of the regional project objective is partially linked to the success of the national projects under the MENA-DELP Program, the risk is that reporting national project outcomes and results will be simply aggregated at the programmatic level. 16

25 B. Overall Risk Rating Explanation 61. In view of the above, and notwithstanding the political uncertainties related to recent events in the region, the overall project risks are rated 'Moderate'. Potential risks and mitigation measures are further detailed in the Operational Risk Assessment Framework in Annex 1. VI. APPRAISAL SUMMARY A. Economic and Financial Analyses 62. A general economic and financial analysis of the proposed project indicates that: (i) Inherently limited resources may have relatively large benefits and spillovers. (ii) A better understanding of key issues affecting desert ecosystems and livelihoods (in terms of constraints and potentials) may have a considerable economic impact on key sectoral policies of each participating country. (iii)proposed interventions may have not only positive impacts on one specific sector; but also translate into multi-sectoral changes. (iv)given the limited resources, the merits of the different initiatives (or sub-projects) should be mainly measured against the extent to which they contribute to general national and regional objectives. (v) Finally, the interventions of the proposed project will enhance the institutional capacity of the participating countries to make effective use of their limited human, financial and natural resources. B. Technical 63. The project's design and implementation do not present major technical issues or challenges. It is built upon the considerable amount of skills and know-how as well the expertise of the different institutions of the participating countries. However, the importance of regional initiatives will be stressed in order to promote greater coherence and avoid fragmentation. C. Financial Management 64. Assessment of financial arrangements including the accounting system and accounting policies and procedures, budgeting system, reporting, staffing, internal controls policies and procedures, internal auditing and external auditing arrangements of the Sahara and Sahel Observatory - Observatoire du Sahara et du Sahel (OSS) reflected that these arrangements are satisfactory and meet the Bank's minimum requirements. However, some risks have been identified and the following actions would be taken to mitigate these risks: * Building the capacities of project staff members of the project, with qualified executives and targeted training programs on project financial management procedures. * An operational manual for the project will be prepared that clearly describes: a) the interrelationships and the responsibilities of each party; and b) specific transmission of financial reporting procedures between the OSS department. 17

26 * The IFR will be produced on Excel sheet on the basis of information extracted from the accounting system. 65. Given the set of measures that will be taken to mitigate identified risks and weaknesses, the financial management residual risk at this stage is deemed moderate. 66. The Project will be implemented by the OSS, through a Project Management Team (PMT). It will be responsible for managing the project funds and related financial transactions, and it will be in charge of following on the project finances including the project accounting function and reporting. 67. In addition, the OSS will be responsible to prepare and furnish to the Bank not later than forty five (45) days after the end of each calendar semester, unaudited interim financial reports (UIFR) for the Project covering the semester, in form and substance satisfactory to the Bank. 68. The Project's financial statements, including the reconciliation of the designated account (DA) will be audited annually by an external independent auditor, acceptable to the Bank, in accordance with internationally accepted auditing standards. The OSS will submit the audit report to the Bank, no later than six months following the closing of the fiscal year subject to the audit. The audit's TOR will be prepared and submitted for the Bank's no objection. 69. In addition, the OSS audit report reflecting its annual financial statements, operating results and internal control will be remitted to the Bank within 6 months from the end of each fiscal year. 70. To ensure that funds are readily available for project implementation, the OSS will open, maintain, and operate one designated account (DA) in US$at a commercial Bank in Tunisia. It will finance the activities of the project. 71. Withdrawals of grant amounts will be based on the Bank's disbursement methods and will be used to finance project activities by means of the disbursement procedures currently used, that is, requests for withdrawals for direct payments, requests for special commitments and/or requests for reimbursement, either with documentary evidence or expenditure statements, in accordance with the procedures described in the Bank's Disbursement Letter and Disbursements Manual. D. Procurement 72. Procurement under the project would be carried out in accordance with the Bank's Procurement Guidelines: "Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 and the Bank's "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 and the provisions stipulated in the Legal Agreement. Project activities would involve relatively small amounts of funds, with the exception of major studies (which will be submitted for bidding). The adopted PIM clarifies adequate procurement mechanisms and modalities. 73. The World Bank conducted an assessment of the procurement capacities of the OSS and concluded that the execution agency would have the capacity to carry out and manage the procurement under this financing, provided that the recommended actions are taken before 18

27 effectiveness. The Procurement Plan for the first 18 months of implementation was prepared by the OSS and approved by the Bank on December 12, Given the current procurement capacity of the implementing agency, the project is rated as "Moderate" providing the implementation of the following recommendation: The staff to be involved in procurement will attend, at the beginning of the project, the launch to be acquainted with applicable Bank procedures and particularly keep close contacts with the Bank procurement staff assigned for the project. E. Social (including Safeguards) 75. In order to ensure social sustainability, consultations were conducted with key stakeholders for the definition of the nature and the scope of the proposed project. The same stakeholders will remain engaged during implementation, supervision and evaluation stages of the project. 76. The intervention of the proposed project will particularly focus on the situation and priority needs of vulnerable and poor populations living in desert areas and at the edge of the deserts, including youth and women, and will contribute to a better understanding of opportunities and constraints. From a social point of view, the project is expected to achieve a better understanding of key factors leading to poverty in desert areas, in order to reduce environmental degradation and improve livelihoods. Specific analysis and consultations will provide insight into social diversity and gender, institutions, rules and behaviors, stakeholder dynamics, participation concerns, and social risks. F. Environment (including Safeguards) 77. The project is rated category C. The project will have a global positive impact on sustainable development of desert ecosystems. It integrates a strong dimension of political and institutional participation and capacity building. Furthermore, it supports current and future initiatives, at sectoral and multi-sectoral levels, with positive cumulative impacts. The proposed project brings a real added value to on-going initiatives and puts a strong emphasis on disseminating value-added technologies and techniques. It will ultimately contribute to disseminate initiatives aimed at diversifying local livelihoods. 19

28 Annex 1: Results Framework and Monitoring REGIONAL Middle East and North Africa Desert Ecosystems and Livelihoods Knowledge Sharing and Coordination Project PDO: The development objective of the proposed regional project (PDO) is to strengthen cooperation among selected organizations of beneficiary countries in areas of sustainable managemnent of desert ecosystemns. PDO Level Results ~ nto esr adlecumulative tar~get value Frequency Repniiiyfr Description C nto esr aeiemethodology Repniii'fr (indicator Indicators* YRI YR 2 YR 3 YR4 Data Source/ Data Collection definition etc.) Indicator One: Annually Project External reviews Number of Workshops documentati organized on issues related on & MTR to desert ecosystems Number reports. External Final evaluation reports Reports of supervision mission Indicator Two: Project Number of virtual meetings Number Annually documentati External reviews held through the dedicated on & Desert Information System reports. MTR on desert related issues E External reports Final evaluation Reports of supervision mission Indicator Three: Project Number of knowledge Number Annually documentati External reviews products related to desert on & ecosystems issues reports. MTR developed through the E External project reports Final evaluation Reports of supervision mission 20

29 INTERMEDIATE RESULTS Component 1: Knowledge management and sharing Cumulative target value PDIO Level PDOLeelReuls Results Unit of Measure Baseline Frequencyvp~~fi o Description Indicators YRI YR 2 YR 3 YR4 ' raque Methodology Responsibiliy for (ndicar Iata Source/ Ita Collection idefinition etc.) Number of participants to Twice a year Progress Project M&E Cumulative workshops organized by the reports & number of t reports. people (by projec Number External session, topics assess, and, if possible, Reports of by gender) over supervision implementation mission Progress Number of participants to Number Twice a year reports & Project M&E Cumulative study tours organized by the reports. number of project External assess. participants (by type of Reports of institution, supervision gender, etc.) mission 21

30 Component 2: Monitoring & Evaluation INTERMEDIATE RESULTS Cumulative target value PDO Level Results ounit of Measure Baseline Description Indicators' YRI1 YR 2 YR 3 YR 4 Frequencvy ehdlg Responsibility for (indicator Data Source/ Data Collection definition etc.) Twice a year Number of External reviews Number of users of the connections to established information system the web server MTR (web server) Number Project documentatio Final evaluation n & reports. External reports Reports of supervision mission Twice a year Number of members of national Project External reviews institutions trained on M&E documentatio system and Information system n & reports. MTR (by country) Number External reports Reports of supervision mission Final evaluation Twice a year Number of comprehensive Project External reviews M&E reports prepared at documentatio Program and project levels n & reports. MTR Number External reports Reports of supervision mission Final evaluation 22

31 Annex 2: Detailed Project Description 1. The development objective of the proposed regional project (PDO) is to strengthen cooperation among selected organizations of beneficiary countries in areas of sustainable management of desert ecosystems. The proposed project would consist of the following three components: Component 1: Knowledge Management and Sharing (GEF: US$800,000). 2. The aim of this component is to establish and strengthen existing networks between national institutions to encourage management and sharing of knowledge on key issues related to sustainable desert ecosystem management and their associated livelihoods. It will contribute to respond to the main questions related to desert issues as presented in table 1 below. This will help build a community of practice aimed at providing guidance to policy-makers on matters related to the sustainable development of desert ecosystems. 3. Institutions in the five participating countries will submit eligible activities for financing to the OSS, among them the following: (i) Workshops: Organize workshops (with a sectoral or a multi-sectoral focus with deserts as a central theme) bringing together relevant stakeholders from MENA-DELP participating countries to share knowledge and information about pilot MENA-DELP country projects, other relevant desert ecosystem and livelihood enhancement experiences (in participating countries as well in other countries), as well as emerging knowledge on related policy guidance. (ii) Study tours: Organize study tours to share information on pilot MENA-DELP country projects or other similar projects (in participating and/or other countries). (iii) Web-based Networks: Organize moderated internet discussions through web-based networks between sectoral experts on key issues, emerging lessons and related policy implications related to the sustainable use of desert goods and services in the context of a given productive sector The organization of the project workshops as well as the Steering Committee meetings will be, when possible, associated to international conferences such as UNCCD, UNCCC or UNCBD COP. 5. The OSS will implement this component with the support of an expert to be recruited for the total duration of the project. This expert will be part of the project coordination team and will work closely with the five national institutions, the World Bank and the GEF. 6. An additional responsibility of the OSS would be to prepare a short summary report of the activity and publish it for broader dissemination. 7. The decision making process for this component are detailed in the project Implementation manual. The main steps are as follows: 28 Such as the network on ecotourism in desert environments administered by RSCN in Jordan. 23

32 * The national Implementing Institutions will consolidate eligible proposals for study tours, workshops as well as discussion forum through the Desert information system and submit them to the OSS; * The OSS will analyze the submitted proposals from the National Implementation institutions based on the criteria established in the PIM. The selected ones will be on Desert related issues as summarized in the DELP PDF and Table 1 below, at least up to 2 countries will benefit from the activity. Based on this analysis, the OSS will produce a summary report describing the received proposals and suggesting, with obvious justification, the ones to be retained and those to be rejected. * The OSS will submit the summary report to the upcoming meeting of the PSC * The PSC make decisions on activities to be funded * The OSS with support from national implementing Institutions will elaborate the TORs of the activities to be achieved, identify consultants and contract them based on the WB procurement guidelines. * Consultants will work in close collaboration with the OSS and the national implementing institution to finalize the agreed activity * The OSS will be responsible for the dissemination of the results Component 2: Monitoring and evaluation (GEF: US$100,000). 8. The proposed objectives of this component are two-fold: (i) Establish a Programmatic level monitoring system for the MENA-DELP program based on aggregating national project level indicators and results, (ii) Establish a specific M&E system for the regional project. The implementing regional organization, the OSS, will be responsible to develop these 2 M&E systems and will elaborate a comprehensive annual progress reports on program level results, to be disseminated to all the stakeholders, including the Bank and GEF. 9. In order to create a positive feedback loop between M&E and knowledge management, the regional project M&E system will incorporate a dedicated information system which will: (i) allow for the collection of data and information on desert ecosystems, livelihoods and sustainable management practices; (ii) disseminate information through a dedicated website; (iii) provide a link and a platform for exchange of information between partners; (iv) include a centralized Geographic Information System (GIS) database; (v) include a monitoring evaluation with predefined indicators to facilitate analysis, consistency and monitoring of activities; and (vi) moderate virtual discussions through existing or new web-based networks, as proposed under Component The dedicated desert information system will benefit from and establish linkages with similar knowledge management existing platforms such as WOCAT and TerrAfrica Knowledge base. This will support national reporting needs for best practices and further enhance the wider dissemination and knowledge sharing of desert ecosystem technical and approach solutions. The proposed Information system will also contribute to the learning of the GEF-5 land degradation, biodiversity, and climate change portfolios, and help shape these future focal area strategies by enhancing the knowledge base on global environmental benefits generated by GEF investments on desert ecosystems and livelihoods. 11. The OSS will contract an M&E specialist which will work closely with the national implementing institutions, the World Bank and GEF staff to agree on the structure and content of 24

33 the 2 M&E systems to be established in conformity with MENA-DELP Project Framework Document. Component 3: Project Management (GEF: US$100,000). 12. This component will mainly finance project management fees of the OSS (amount: US$44,000), as well as all costs related to the organization of meetings of the Steering Committee of the project (travel of all participants (members, observers, guests including OSS), accommodation, etc.) and audit costs. The project management fees will be paid to the OSS in lump-sum in the total amount of US$11,000 each year. 13. The project will be implemented by the Sahara and Sahel Observatory (OSS) over a four year period, from 2013 to The Steering Committee's meetings will be associated to high-level ministerial conferences during international fora (such as UNCCD / UNCBD or UNCCC COPs, ministerial meetings, etc.). Table 1: Key questions related to sustainable desert ecosystems Key questions to be addressed are, among others, the following; * What are the relationships between a democratic society and a sustainable approach to eradicate poverty and create growth in desert areas? * Who are 'the winners' and 'the losers' of current policies concerning deserts ecosystems and livelihoods? * What are the negative impacts and spillovers of current development policies and programs on desert ecosystems and livelihoods? * What are the main aspects of climate risks on local production systems? * What are the main forms of adaptation to climate change and variability that have to be supported in desert ecosystems in a sustainable manner? * What are the main aspects of innovative policies aimed at supporting the diversification of livelihoods in desert areas? * How can environmental policies and regulations be better designed to allow for the sustainable use of natural resources in order to generate employment and improved livelihoods while preventing the degradation of the resource? * What policy levers are important to encourage ecotourism and cultural tourism? * What is the current experience in incorporating a focus on ecotourism in a country's tourism strategy, and what elements are important to increase the market share of ecotourism? * What are different income generation options for desert communities that use desert goods and services optimally and what policies and actions are needed to make sure these are realized in a sustainable way? * How can policies and related regulations be designed to encourage better water management and protection of biodiversity? 25

34 Annex 3: Institutional Analysis REGIONAL Middle East and North Africa Desert Ecosystems and Livelihoods Knowledge Sharing and Coordination Project 1. The MENA-Desert Ecosystems and Livelihoods Program (MENA-DELP) is a year World Bank program aimed at contributing to the enhancement of livelihoods in desert ecosystems by harnessing their value in an environmentally and socially sustainable manner so that the flow of desert goods and services can be optimized. The Program will focus on piloting enabling economic opportunities specific to deserts that integrate the health and diversity of the desert biome with the vast potential for innovative livelihood opportunities that also sustain valuable repository knowledge linked to adaptive practices. Such an approach would ultimately enhance desert livelihood opportunities and increase the resilience and adaptation responses of desert communities and ecosystems to projected pressures, in particular climate change impacts. 2. The MENA-DELP is designed for multiple phases, with the first phase being a World Bank-GEF program to support investment projects in Algeria, Egypt, Jordan, and Morocco as well as knowledge sharing and coordination among these four countries, for which a US$21 million grant was approved by the GEF in November In October 2012, Tunisia requested officially the GEF and World Bank to join this program. In this first stage, five projects are being prepared as part of this WB-GEF program. Proposed projects in Algeria, Egypt, Jordan, Morocco and Tunisia (all under preparation) would focus on pilot investments to optimize the provision of desert goods and services for enhanced livelihoods. The focus of these projects is on different production sectors, from ecotourism to agriculture to livestock management, and on improving the sustainability of these investments through an integrated ecosystem management approach. Emphasis is also placed on participatory approaches, capacity building and on harnessing local knowledge. 3. The proposed 4-year MENA-Desert Ecosystems and Livelihoods Knowledge Sharing and Coordination (MENA/DEL-KSC) Project is a regional umbrella initiative aimed at enhancing knowledge and experience sharing on opportunities for enhancing desert livelihoods among the participating MENA-DELP pilot countries (Algeria, Egypt, Jordan, and Morocco and Tunisia). Tunisia will also benefit from the project through its ecotourism and conservation of Desert Biodiversity project and the new GEF5 project focusing on Oasis management (P132157). 4. The Bank conducted a desk review of national and regional institutions related to desert topic in order to identify the regional implementing agency. This analysis shows clearly that institutional mandates are linked closely with productive sectors (specifically agriculture or tourism) or are focused on local community development. This suggests that, as a first step, it would be beneficial for networks to be established that are sectoral in nature, as the lessons learned should ultimately lead to policy and investment recommendations that are of interest to a sectoral audience. At the same time, capacity clearly needs to be built in an institution with a mandate that is multisectoral, which can take on the role of champion of the deserts agenda and can play a role as coordinator of the sectoral networks in the longer term to facilitate the dissemination of the policy-related knowledge linked with desert ecosystems. The only institution in the region with a clear mandate on desert issues is the 'Institut des Deserts du Monde' (IDM), based in Algeria. However, IDM is at an early stage in its development, and the 26

35 Algerian Government has requested an RTA from the Bank to help build its capacity. The Algerian Government has also championed the deserts agenda and sees the IDM as rising to play a regional role on this agenda. It is however, at too early a stage of establishment to take on the administrative role of potential regional implementing agency. However, given recent commitments to strengthen information systems at IDM, there is a strong possibility that it could take on the role of program level M&E. The analysis concluded that the best regional institution that could ensure the role of the regional project coordination, thanks to its capacities and knowledge on monitoring and evaluation, desertification and land degradation, dedicated information systems on environment and strong fiduciary capacities is the Sahara and Sahel Observatory (OSS). 5. The choice of the OSS is due to a number of reasons: (i) OSS has over 20 years of experience promoting environmental regional cooperation, mainly on desertification and desert issues; (ii) its mandate is to give impetus to the combat against desertification and the mitigation of drought by providing member countries and organizations with a forum where they can share experiences and harmonize the ways in which data is collected and processed to feed into decision-support tools, thus entirely aligned with the Project objective; (iii) its geographical scope is similar, and goes beyond, the Project; (iv) it has well known economic-analytical capacity on environmental issues and environmental policy discussions; (v) it has broad experience with other development agencies who conduct similar work (i.e. AfDB, FFEM, AFD, EU, GIZ, CIDA, FAO) and have adequate institutional capacities and experience (M&E and fiduciary capacity); (vi) it is one of the Regional Activity Centers for the implementation of the UNCCD regional action plan, (vii) it has a network of focal points in the DELP countries and beyond, and (viii) it is located in the region, in proximity with participating countries. 6. During the project appraisal, the 5 participating countries validated the choice of OSS as implementing agency for this project and confirmed their commitment and agreement to cooperate under this Project. 7. Project Management Team (PMT) - The PMT will be housed in OSS. It will manage the implementation of the Project. OSS staff will be assigned to the following PMT roles: Project coordinator, procurement specialist, and financial management specialist. A desert expert and a Monitoring and Evaluation specialist will be hired under the project and will be part of the PMT. If needed, other consultants will be hired to carry out specific tasks. Inside the OSS, the PMT will be responsible for the following tasks: (i) Implementing the project according to the Project Implementation Manual (PIM), which identifies eligible initiatives and bidders, and include guidelines for the preparation and submission of activities to be carried out under Component 1, as well procurement mechanisms; (ii) Ensuring the financial management of the project funds and procurement activities in accordance to Bank's practices; (iii)prepare procedures for submission of tenders concerning activities to be financed at the level of one or more countries (tenders will be addressed to an agreed list of eligible institutions of each of the participating countries); (iv)analyzing proposals received from the National Implementing Institutions concerning eligible activities to be financed under Component 1, and submit them to the approval of the SC, 27

36 (v) Preparing a comprehensive annual progress report (to be submitted to the SC) based on the annual project progress reports prepared by the National Implementing Institutions of the participating countries for respective national projects. (vi)defining the general modalities of a common M&E system (the same indicators will be - 29 used in the participating countries). (vii) Directly supervising (or, alternatively, ensuring) M&E activities at the regional level, on the basis of M&E activities at country level (Component 2). (viii) Ensuring the implementation of all the activities related to project coordination (Component 3). (ix)organizing the SC meetings and assuming a secretarial role. 8. Project Steering Committee (PSC) will be responsible for general strategic issues and decision making. It will be made up of one representative from each participating country. A representative of the OSS will also participate in the meetings of the SC as an observer and assume a secretarial role. The organization of Steering Committee's meetings on issues related to the regional DELP will be associated to high-level ministerial conferences during international fora (such as UNCCD or UNCCC or UNCBD COP). The Project Steering Committee will be responsible for the following activities: (i) Validation of the project annual action plan (prepared by the OSS) and make decisions on activities to be funded on an annual basis that are proposed by the core list, to be put forward for non-objection to the Bank; (ii) Validating decisions on the allocation of funds; (iii)facilitating a two-way communication process between the OSS and the National Implementing Institutions of the MENA-DELP national projects in the participating countries; and (iv)reviewing and approving annual regional project progress reports. 9. The National Implementing Institutions of the MENA-DELP national projects 30 Will facilitate the implementation of the proposed project, by: (i) Encouraging and supporting, at national level, the identification and the preparation of eligible proposals by local eligible institutions for activities under Component 1. (ii) Consolidating eligible proposals and submitting them to the OSS. (iii)supporting the project implementation according to the Project implementation Manual. (iv)ensuring M&E activities at the country level, as per the design of respective national projects. (v) Preparing a comprehensive annual progress report, as per the design of respective national projects (to be submitted to the OSS). 29 Preliminary desk reviews indicate that the Institut des Deserts du Monde (IDM) (established in 2003 by the Fondation des Deserts du Monde in Gharda1a, Algeria) could play an active role in M&E activities (provided it receives substantial technical support). 30 The National Implementing Institutions are the Ministry of Land Planning and Environment (Algeria), the Egyptian Environmental Affairs Agency (Egypt), the National Center for Agriculture Research and Extension (NCARE) in Jordan, the Ministry of Agriculture and Fisheries (Morocco) and the Direction Generale de l'environnement et de la Qualite de la Vie (DGEQV) in Tunisia. 28

37 (vi) Strengthen the links with the implementing institutions of other countries to foster joint initiatives. Financial Management, Disbursements and Procurement Financial Management 10. Assessment of the Financial Management System - An assessment of the financial management system in place at OSS was carried out. 11. OSS - will be responsible for managing the Project funds and all related financial transactions. OSS will maintain appropriate Project accounts; prepare annual financial statements, and periodic financial reports by component, category, and source of funding. 12. Budgeting - The OSS is responsible for preparation of the project annual budget (operating and investment) and it is approved by the PSC. 13. Staffing - The PMT will manage day-to-day implementation of the Project. The PMT is composed of OSS staff. Staff who will be assigned for a share of their time to the Project while working on other activities in parallel. The OSS will (i) assign a Project coordinator, procurement specialist and a financial management specialist, (ii) recruit a desert expert and M&E expert for the total duration of the project, these 2 experts will be paid by the project. OSS will allocate its own staff on part-time basis for the implementation. OSS staff does not have knowledge of the World Bank procedures, thus the PMT will receive intensive training and assistance from the World Bank. 14. Accounting - The OSS uses an accrual accounting method as required by the Accounting System for Enterprises promulgated by Tunisian Law of December 1st, The OSS financial statements are reconciled by December 31 of each fiscal year as follows: a balance sheet statement; an income statement; a statement of treasury flows; and financial statement notes. 15. Reporting- The information to produce Interim Unaudited Financial Reports (IUFRs) of the project, which needs a cumulative statement since the beginning of the implementation, will be prepared on Excel sheet, compared with the accounting system. 16. The Interim Unaudited Financial Reports (IUFR) will cover all activities and sources of funds of the Project. These reports will include: (i) a statement of sources and uses of funds for that period and in aggregate value, (ii) a statement of the use of funds by component and expenditure category (iii) a budget statement indicating forecasts and deviations from implementation. The format and precise content of these IUFR are detailed in the PIM and established in accordance with World Bank guidelines. OSS will prepare the IUFR each semester and submit it within 45 days after the end of each period to the World Bank. The Financial Statements of the Project (FSP) will be prepared in accordance with General Accounting Standards acceptable to the World Bank. 17. The FSP will be produced annually by OSS. They must include: (i) a cash flow statement, (ii) a financial closing, (iii) a statement of on-going commitments, and (iv) an analysis of payments. These external annual audit reports of the Project accounts and the management 29

38 letter covering recommendations to improve the internal controls and the accounting system will be transmitted by OSS to the World Bank no later than six months after the end of each exercise. The annual audit report of the Project accounts will be carried out in accordance with the World Bank guidelines by an acceptable auditor and according to acceptable terms of references by the World Bank. OSS will also transmit to the World Bank the external annual audit reports of its annual audited financial statements no later than six months after the end of each exercise. The PIM provides proper guidelines for appropriate valuations to determine the amounts to be recorded in the FSP. 18. Internal controls - The OSS does not have an internal audit department, but it has a department which ensures the control of the expenses, it checks all the payment orders before their submission to the Executive Secretary for signature. The financed project-related transactions will be subject to his regular reviews. The internal control system set within the OSS guarantees the separation of the functions through several levels of independent controls: (i) formal organizational structure, which clearly separates specific functions from independent control mechanisms; (ii) the authorization by the expenses control and the Executive Secretary, who are the signatories of all payment orders. This internal control system has been deemed satisfactory by the Bank. 19. As requested by the World Bank, the PIM includes a Financial Management section which describe the accounting system including: (i) the major transaction cycles of the Project; (ii) funds flow processes; (iii) the accounting records, (iv) chart of accounts; (v) authorization procedures for transactions; (vi) the financial reporting process used to prepare the IUFR; and (vii) the financial statements procedures. 20. External audit - OSS external audit is performed by an independent private auditor, and no specific issue has been flagged during the last three years. During Project implementation, OSS will be audited annually in accordance with international standards. The statutory audit report for OSS must be approved by OSS Board of Directors and must include financial audit report and a management letter. The auditor will express a professional opinion on the annual financial statements and submit the report to OSS which will submit it to the World Bank within six months after the end of each accounting period. The arrangements for the statutory audit of the financial statements of OSS should be communicated to the World Bank through agreed terms of reference. Appropriate terms of reference for the external auditor must be developed and agreed within 2 months from the effectiveness of the Project, and will cover all Project operations. OSS will annually transmit to the World Bank two external audit reports, one for the project financed by the GEF and one for OSS. 21. Flow of funds - The funds flow mechanism is very simple as an advance of the funds will be transferred to a Designated Account, while a justification of the funds usage will be documented when a replenishment of the World Bank account will be requested. The Project is financed by a GEF grant in the amount of US$1.00 million. Financial flows of the GEF grant between the World Bank and OSS will be organized according to disbursement procedures of the World Bank. The flow of funds' mechanism of the grant will involve the establishment of a denominated Designated Account with the "Banque Internationale Arabe de Tunisie - BIAT" under OSS name. The ceiling of the Designated Account will be US$100,000 equivalent which represents approximately four months of Project forecasted expenditures. Detailed disbursement procedures are defined in the PIM prepared by OSS and approved by the Bank. 30

39 22. Disbursement Arrangements - The proceeds of the Grant would be disbursed in accordance with the traditional disbursement procedures of the World Bank and will be used to finance Project activities through the disbursement procedures currently used: i.e. Advances, Direct Payment, Reimbursement, and Special Commitment accompanied by appropriate supporting documentation (Summary Sheets with records and/or Statement of Expenditures, SOEs) in accordance with the procedures described in the Disbursement Letter and the World Bank's "Disbursement Guidelines". The minimum application size for direct payment, reimbursement, and special commitment will be the equivalent of 20 percent of the Advance ceiling amount. The World Bank will honor eligible expenditures for services rendered and goods delivered by the Project closing date. A four months' grace period will be granted to allow for the payment of any eligible expenditure incurred before the Grant closing date. 23. Statement of Expenditures (SOEs) - Necessary supporting documents will be sent to the World Bank in connection with contracts that are above the prior review threshold, except for expenditures under contracts with an estimated value of (i) US$100,000 or less for consulting firms; and (ii) US$50,000 or less for individual consultants, as well as Incremental Operating Costs and audits, and Training and Studies, which will be claimed on the basis of SOEs. The documentation supporting expenditures will be retained at OSS and will be readily accessible for review by the external auditors and periods World Bank supervision missions. All disbursements will be subject to the conditions of the Grant Agreement and disbursement procedures as defined in the Disbursement Letter. 24. Allocation of grant proceeds - The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Grant ("Category"), the allocations of the amounts of the Grant to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Category Amount of the Grant Percentage of Allocated (expressed in USD) Expenditures to be Financed (inclusive of Taxes) (1) Goods, non-consulting 900, % services, consultants' services, training and study tours under Parts A and B of the Project (2) Incremental Operating 56, % Costs and audits under Part C of the Project (3) Management fees under 44, % Part C of the Project TOTAL AMOUNT 1,000, Risk assessment - The risk is assessed as Moderate as the following main risks have been identified: 26. The evaluation identified the following risks: 31

40 Inherent Risks Risk Country level Risk After MM Tunisian public finance system is Low Low governed by an elaborate legal and regulatory framework that offers strong reliability and transparency safeguards. The Tunisian public expenditure system presents a low budgetary and financing risk factor. Project level Lack of experience in managing Substantial Building staff capacity on Moderate Bank projects financial management by providing tailored training. Preparation of an operational manual for the project which clearly describes: (i) the interrelationships and the responsibilities of each party; (ii) Financial management and disbursements procedures; and (iii) Specific transmission of financial reporting procedures between the OSS departments involved in the project implementation. Inherent Risk Before MM Moderate Inherent Risk after MM Moderate Control Risks Risk Risk before After Risk MM Mitigating Measures (MM) MM Budgeting 32

41 Risk Risk before After Risk MM Mitigating Measures (MM) MM The OSS is responsible for Low Low preparation of its annual budget (operating and investment) submitted for approval by the Executive Board. Low Low The project budget is prepared by each project coordinator and submitted for the approval of the Executive Secretary and the Steering Committee of each project. Accounting The OSS uses an accrual accounting Low The OSS will communicate on Low method as required by the yearly basis audited financial Accounting System for Enterprises statements. promulgated by Law of Decemberl, Financial Reporting The accounting system does not Substantial The IFR will be produced on Moderate allow producing IFR. Excel sheet on the basis of information extracted from the accounting system. Controls will be performed to ensure that the information is accurate and complete. Flow of funds Financial flows come from the Low World Bank. Flows of funds from the World Bank are organized according the traditional disbursement procedures of the Bank. Internal control Low risk due to the OSS Low organization and experience in previous projects with other donors. Auditing 33

42 Risk Risk before After Risk MM Mitigating Measures (MM) MM No delay risk to produce and submit Low Low the project audit report to the Bank. Control Risk Before MM Moderate Control Risk after MM Moderate 27. Given the set of measures that will be taken to reduce exposure level, to manage and to reduce identified risks and weaknesses, the financial management residual risk at this stage is deemed moderate. 28. The risk will be assessed as Moderate after mitigation. 29. Implementation support - Implementation support missions will be conducted at least semi-annually. The mission will: (i) ensure that strong financial management systems are maintained for the Project throughout its implementation; and (ii) review semi-annual IUFRs, annual audited FSP, and management letters. Disbursements 30. Disbursement Methods and Procedures - At grant effectiveness, OSS will submit a withdrawal application for the initial advance (up to the ceiling amount) to be disbursed into the Designated Account held at a Bank acceptable to the World Bank. Subsequent advances will be disbursed by the World Bank upon receiving from OSS adequate reporting on the use of the initial/previous advance. Each application for replenishment of the Designated Account will be supported with records evidencing eligible expenditures (i.e. invoices, receipts for payments) or Statements of Expenditures (SOE) when the amounts are below the SOE documentation limit specified in the Disbursement Letter. OSS may also request payments to be made directly to vendors/suppliers for eligible Project expenditures provided the service has been rendered or the goods delivered to the Project. OSS may also submit applications for reimbursement for any expenditure that it has pre-financed from its own resources. Lastly, OSS may request the World Bank to issue Special Commitments when needed to cover a letter of credit issued by a commercial bank on its behalf. The minimum value of applications for direct payment, reimbursement, and special commitment is 20 percent of the Designated Account ceiling. Applications can be submitted electronically using the World Bank's Client Connection website. Detailed disbursement procedures are available in the Disbursement Guidelines for World Bank Projects, dated May Procurement Overview An assessment of the procurement capacities of the OSS was conducted by the World Bank on September 20, The Procurement Plan for the first 18 months of implementation was prepared by the OSS and approved by the Bank on December 12, Capacity of the Implementing Agency was assessed and found satisfactory to the Bank. 34

43 31. Organization. The OSS is a specialized inter-governmental agency, with membership from 22 countries from the south and 5 from the north. The agency resources come from contributions of the member countries and grants from bilateral and multilateral sources. It is headed by an Executive Secretary (ES) who reports to a Steering Committee/Board. The agency has a light organization with mainly two departments: a Technical Department and a Financial Department. OSS has experience with managing projects funded by bilateral and multilateral sources (World Bank, GEF, UE, ADB and several countries). Their portfolio comprises several projects amounting several million US$equivalent. 32. Facilities and Staffing and Professional Experience. The Administrative and Financial Department Affairs has two units in charge of financial management and purchases respectively. They have sufficient space in equipped and furnished offices to accommodate the staff. They also have experience with project management. They are used to applying the procedures, in terms of financial management and procurement, to comply with the specific procedures of the financing institutions. It is recommended to carry out a training to brief and update the staff, to be involved in project, on the Bank procedures for the main procurement ones (Shopping and Selection of Consultants Individuals/Firms) expected to be used in the project implementation before its start. 33. Record Keeping and Filing System. The records were found properly kept in folders with indication of the contract processing stages. 34. Procurement Planning. The Administrative and Financial Department together with Project Manager will be responsible for preparing the budget every year on the basis of the Yearly Action Plan. The Procurement Plan was prepared by the OSS and approved by the Bank on December 12, Monitoring/Control Systems. The overall responsibility will fall on the Executive Secretary of OSS, while the actual day-to-day monitoring will fall on the Project Manager with the involvement of the relevant Departments. In terms of controls, the OSS has a Manual of Procedures and a Controller (under contract) is in charge of examining procedures are complied with. In addition, a yearly audit is carried out by an independent auditor. Capacity to meet Bank's Reporting Requirements. It is expected that the Executing Agency will have the capacity to meet this requirement and produce adequate reporting on the procurement processing as well as the contract management. To ensure that this is done properly, it is recommended to confirm that the ES is the person/staff responsible for the reporting as well as to clearly define the content of the report. 36. Conclusion: The assessed executing agency, OSS, has the capacity to carry out and manage the procurement under this financing, provided that the recommended actions are taken. This does not apply to the Procurement Plan which was prepared by the OSS and approved by the Bank on December 12, Risk Assessment: Given the current procurement capacity of the implementing agencies, the project can be rated as "Moderate" providing the implementation of the following recommendations (i) The staff to be involved in procurement will attend, at the beginning of the project, the launch to be acquainted with applicable Bank procedures and particularly keep close contacts with the Bank procurement staff assigned for the project, (ii) A Project Implementation 35

44 Manual (PIM) which has been prepared by the OSS and approved by the Bank will be discussed at the initial stages of project implementation at Project launch. Procurement Procedures 38. Procurement under the project would be carried out in accordance with the Bank's Procurement Guidelines: "Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 and the Bank's "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 and the provisions stipulated in the Legal Agreement. Project activities would involve relatively small amounts of funds, with the exception of major studies (which will be submitted for bidding). A PIM prepared by the OSS and approved by the Bank clarify adequate procurement mechanisms and modalities. 39. The methods to be used for the procurement under this project, and the estimated amounts for each method, as well as the threshold contract values for the use of each method are set in the table below. 40. The table below presents the approved Procurement Plan for the first 18 months (December 12, 2012). Description of Estimated Selection Coslain bybnoinngtate ReviR Cnrc Ref. No. Assignment Cost S US Method TOR Consultation n Sii te C plen (Prior / Post) Date SC1.1 Support to component IC 31/01/13 01/02/13 23/02/13 02/04/13 01/04/17 1 Management SC1.2 Analytical works to IC 30/08/13 31/08/13 Post 30/10/13 30/01/14 be achieved in the first year SC1.3 Analytical works to IC 30/06/14 01/07/14 Post 30/08/14 30/11/14 be achieved in the second year SC2.1 Monitoring and IC 31/01/13 01/02/13 23/02/13 02/04/13 01/04/17 Evaluation studies SC2.2 Contracts with IC 30/06/13 15/07/13 Post 20/08/13 16/02/14 consultant services for the development of an IS (Component 2) (6 months) ToRs be validated by the first CP SC2.3 Information System DA Prior 1st development contract SC3.1 Translation for 2000 IC 01/05/13 02/05/13 Post 24/06/13 08/07/13 Steering Committee (Year 1) SC3.2 Translation for 2000 IC 01/03/14 02/03/14 Post 24/04/14 08/05/14 Steering Committee (Year 2) SC3 To Audit for total project IC be duration defined 36

45 CF1.1 Laptop for 1300 CP 01/04/13 22/04/13 16/05/13 23/05/13 22/06/13 Component 1 support CF 1.2 Regional workshops 8250 DA (Year 1) CF1.3 Regional workshops 8250 DA (Year 2) NA Perdiems Year NA NA NA NA NA NA workshops NA Perdiems Year NA NA NA NA NA NA workshops CF 1.4 Workshops logistics 5000 DA Post year 1 CF1.5 Workshops logistics 5000 DA Post year 2 CF1.6 5 study tours (year 1) 6000 DA Post CF1.7 6 study tours (year 1) 6000 DA Post NA Perdiem study tours NA NA NA NA NA NA year 1 NA Perdiem study tours NA NA NA NA NA NA year 2 CF1.8 Meeting Room rent 500 DA (year 1) CF 1.9 Meeting Room rent 500 DA (year 2) CF1.10 Support virtual 2500 DA meetings, year 1 CF1.11 Support virtual 2500 DA meetings, year 2 CF3.1 Steering committee 4200 DA 10/06/13 NA 17/06/ meetings 1 CF3.2 Steering committee 4200 DA 10/04/14 NA Post 0 0 meetings 2 CF3.4 logistics for Steering 1300 DA 10/06/13 NA Post 0 0 committee meetings 1 CF3.5 logistics for Steering 1300 DA 10/04/14 NA Post 0 0 committee meetings 2 NA perdiems Steering 7200 NA NA NA NA NA NA committee 1 NA perdiems Steering 7200 NA NA NA NA NA NA committee 2 Management cost Other costs 1900 DA - Direct Agreement IC - Individual Consultant CP - Consultation with Providers 37

46 Annex 4: Operational Risk Assessment Framework (ORAF) REGIONAL Middle East and North Africa Desert Ecosystems and Livelihoods Knowledge Sharing and Coordination Project 1.1 Stakeholder Risk Rating Moderate Description: Little buy-in for the regional project from core national institutions. Risk Management: During preparation, the Bank held bilateral consultations with each relevant institution. Consultations have already been undertaken in Algeria, Tunis, Egypt, Morocco and Jordan, where institutions confirmed their interest to participate in the regional project and gave concrete propositions on how to enhance the project design. During implementation, the project will rely on the convening power of the project Steering Committee and the OSS and regional implementing agency to facilitate communication and access between core institutions. In Resp: Both Stage: Both Recurrent: Date: FStatus: Progres s 2.1 Capacity Rating Low Description: Lack of familiarity of the selected regional implementing agency (OSS) with Bank procurement and financial management procedures and standards. Risk Management: The project operations manual (called PIM) includes a procurement and financial management section outlining relevant procedures and standards to follow. Furthermore, the selected regional implementing agency, the OSS, will include a financial management and procurement specialist, and training will be provided as needed. It should be noted that the project is simple in nature, with no physical works or large goods contracts, but entails rather small activities that should require simple procurement procedures. It should also be noted that the OSS has been the recipient of a number of Bank, GEF, French GEF and other development agencies managed grants. Imple Due Frequency Not Resp: Both Stage: menta Recurrent: 0 Date: Status: Yet tion Due 38

47 2.2 Governance Rating Low Description: Risk Management: No risk identified under this category at this stage. Resp: Stage: Recurrent: 0 Date: F 3.1 Design Rating Moderate Description: Risk Management: The regional Steering Committee will meet regularly to take decisions on the activities to be funded on an annual basis that are proposed by the core list of participating institutions. The SC will thus facilitate communication between the agencies selected to take the lead on respective activities and the OSS that Lack of agreement on the specific activities will channel the funds. to be funded. Imple Due Frequency Not Resp: Client Stage: menta Recurrent: 0 Date: Status: Yet tion Due 3.2 Social and Environmental Rating Low Description: Risk Management: Project activities will not result in any adverse environmental and social impacts. Resp: Stage: Recurrent: 0 Due Frequency Status: 3.3 Program and Donor Rating Substantial Description: Risk Management: The Bank will coordinate with the national projects' task teams to monitor developments at the project Partial linkage of the achievement of the and program level in order to ensure consistency between these two levels during implementation. regional project objective to the success of Furthermore, grant agreements for the national level projects will require that information on indicators the national projects under the MENA- is also shared with the agency taking the lead with this component. DELP Program, particularly in terms of Not reporting national project outcomes and Resp: Both Stage: Both Recurrent: Due Frequency Status: Yet results to be aggregated at the Date:. Due 39

48 programmatic level. Poor capacity to carry out M&E functions. Risk Management: Parallel RTA will help to strengthen the M&E capacity. Imple Due Frequency Not Resp: Both Stage: menta Recurrent: 0 Date: Status: Yet tion Due 3.4 Delivery Monitoring and Rating Moderate Sustainability Description: Risk Management: Relevant staff of the OSS will be trained/updated on Bank procurement and financial management procedures. The procurement plan will be revised on an annual basis based on the work plan approved Limited budget allocated to project by the Steering Committee, so as to maximize efficiency in terms of the number of transactions management costs of the OSS under required. Component 3. Imple Due Frequency Not Resp: Both Stage: menta Recurrent: Date: Status: Yet tion Due 4.-erl..s Implementation Risk Rating: Moderate 40

49 Annex 5: Implementation Support Plan REGIONAL Middle East and North Africa Desert Ecosystems and Livelihoods Knowledge Sharing and Coordination Project 1. The strategy for the implementation support has been developed based on the nature of the Project and its risk profile. It aims to make implementation support to OSS more flexible and efficient, and it will focus on implementation of risk mitigation measures defined in the ORAF (Annex 4). 2. Budget - In addition to the budget made available by the GEF for Project supervision, World Bank Budget (BB) will be allocated to ensure adequate implementation of the Project. BB will be made available to cover for staff time (in Headquarters, and World Bank country offices in the Region), in addition to office space, other facilities, and logistic and communication services. In addition to the BB, the World Bank Project and Program Task Teams will multiply the existing efforts to identify opportunities for synergy with other partners and other initiatives to leverage on the Project and the overall DELP Program, allowing more budget to be available throughout Project implementation. 3. Supervision missions - Regular supervision missions by the World Bank Project Task Team will be carried out at least semi-annually to monitor progress per the results indicators (Annex 1) and to provide necessary assistance. Whenever possible, supervision missions will: (i) take place back-to-back with Project's trainings; and (ii) include site visits of OSS and the field. As part of the Project supervision, the Project and the Program Task Teams will attend the Project Steering Committee meetings. 4. Fiduciary requirements and inputs - The Bank Financial Management Specialist, the Disbursement Specialist, and the Procurement Specialist will provide regular support to OSS, in particular during the first period of implementation of the Project. Technical inputs are required to review bid documents, monitor quality of data and reports generated by consulting firms, and ensure fair competition through proper technical specifications and fair assessment of the technical aspects of bids. All selections of consultants, and procurement procedures for nonconsultant services and goods, will be subject to prior review during the first year and a half of the Project. Whenever possible, the Financial Management Specialist, the Disbursement Specialist, and the Procurement Specialist will join supervision missions. From a Financial management perspective, the mission will: (i) ensure that strong financial management systems are maintained for the Project throughout its implementation; and (ii) review semi-annual IUFRs, annual audited FSP, and management letters. 5. Technical inputs - Through the review and no objection of all Terms of Reference, the Project Task Team will provide technical inputs in order to facilitate the achievement of high quality products. In addition, the Project Task Team will remain available to act as peer reviewer at OSS request. 41