PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB5998 Project Name. Leveraging ICT for Governance, Growth and Employment Project Region

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB5998 Project Name Leveraging ICT for Governance, Growth and Employment Project Region SOUTH ASIA Sector Information technology (40%); General industry and trade sector (30%);General education sector (30%) Project ID P Borrower(s) PEOPLE S REPUBLIC OF BANGLADESH Implementing Agency Ministry of Science and ICT Environment Category [ ] A [ ] B [] C [ ] FI [ ] TBD (to be determined) Date PID Prepared September 16, 2010 Estimated Date of February 2011 Appraisal Authorization Estimated Date of Board May 2011 Approval 1. Key development issues and rationale for Bank involvement The Government of Bangladesh (GOB) has developed its Vision 2021 and National Strategy for Accelerated Poverty Reduction (NSAPR II) with ambitious developmental targets. These include accelerating growth to 8 percent per year by 2013; ensuring participation, social inclusion and empowerment; promoting good governance; efficient delivery of public services; and achieving middleincome country status by GOB recognizes the need to leverage on Information and Communication Technologies (ICT) to achieve these development targets, and has undertaken a number of significant actions under its Digital Bangladesh agenda. Digital Bangladesh is the Government s program for using ICT as a development enabler, and has generated high expectations among citizens in spite of its rather ambitious nature in the beginning. However a number of policy and legal instruments have been approved in the last year; including the ICT Policy 2009, ICT Act, and Right to Information Act 1. An ICT Chapter has also been included in the Government s Secretarial Instructions, and the GOB has secured a $40 million loan from Korea to establish a government-wide network to connect all public agencies in Dhaka and all district headquarters electronically 2. The Government of China is also likely to assist Bangladesh with the InfoSarkar program to connect all government offices within districts. Benchmarked globally, Bangladesh ranks 107 out of 139 in the Global Competitiveness Index 3 (GCI), 118 out of 133 in the Networked Readiness Index; and 134 out of 183 in the United Nations egovernment Survey Bangladesh has significant room for improvement in a number of areas including: e- readiness in terms of infrastructure, accessibility of ICT to the population at large, and the effect of the 1 These include the new ICT Policy 2009, ICT Act 2009, and Right to Information Act 2009; and various other acts at the local government level. Source: MOSICT Digital Bangladesh Strategy in Action. Presented at BDF FutureGov Korea Lends Bangladesh US$200M for e-govt. 3 World Economic Forum Global Competitiveness Report

2 legal and regulatory framework on ICT use; innovation and technology readiness, enabling environment, IT skills, talent pool, and public support instruments for industry development. GOB recognizes the need to be holistic in its approach by leveraging ICT for governance, economic growth, and employment creation. This is reflected in its 4 strategic pillars for Digital Bangladesh, which broadly covers (i) Digital Government; (ii) ICT in Business; (iii) Connecting Citizens and (iv) Human Resource Development. In particular GOB has recognized the largely untapped potential of the global IT and IT-enabled services industry (IT/ITES) for Bangladesh s economic and social development. The global addressable market for IT/ITES is estimated at $500 billion per year and other developing countries, such as Egypt, Ghana, India, and the Philippines; have already benefitted tremendously from increased export revenues, diversified economies, and mass employment for youth and women. Findings from a World Bank study ( )on the IT/ITES industry in Bangladesh indicate that Bangladesh possesses significant comparative advantage due to the availability of a large, English-educated talent pool; and particular strengths in niche industry segments such as software programming, graphics and animation, and data entry services. However, the industry is also found to be performing far below its potential (refer to comparison table with India below) and is in need of targeted government assistance to (i) improve the skills and employability of the country s large labor pool; (ii) present the country s comparative advantage and build global linkages; and (iii) put in place key enabling policies and infrastructure to support industry development. IT/ITES Indicators & Country India 5 Bangladesh 6 Total number of direct employees (including export and domestic markets) 2.2 million ~20,000 Industry contribution to GDP 5.9% 0.20% Industry contribution to total exports 25% 0.44% The government also recognizes the need to leverage on ICT for governance, but the public agencies have systems and services that are largely silo-based, replicative, insufficiently secured, and do not leverage electronic services (e-services) sufficiently in support of public sector reform efforts. The lack of clear guidelines, standards and shared infrastructure has exacerbated this issue and presents a major barrier to providing seamless e-services. Hence there is a critical need for technology foundations to improve public sector efficiency, effectiveness, and information risk management - such as shared datacenter, interoperability framework, information security governance, and enterprise architecture. There is also a need to leverage on e-government services to support governance priorities in the country, especially for on-going initiatives to increase transparency, promote inclusion, and improve the business environment. In this context GOB has sought assistance in the following two areas related to ICT in business and in government. In particular, GOB has requested support to: 4 World Bank Leveraging ICT for Growth and Competitiveness in Bangladesh: IT/ITES Industry Development. World Bank Global ICT Department. Washington D.C Based on export and GDP data from World Bank for 2008, and industry figures from BASIS at and

3 (i) Increase skills and institutional capacity for developing the country s IT/ITES industry, in order to increase exports, diversify the economy, and create mass employment of women and youth; and (ii) Establish e-government foundations and develop e-services to support their public sector reform and modernization efforts, and provide priority electronic services to Bangladeshi citizens and businesses. Each of these two components is expected to have significant development impact for Bangladesh in the coming years. The IT/ITES component is expected to create 30,000 direct jobs (and an estimated 60,000 indirect jobs) for Bangladeshis; and increase the country s IT/ITES exports to $500 million per year by IT/ITES is also expected to have significant social development impact for Bangladesh as the industry is biased towards to employment of women and youth. For example women account for about 35 percent of the workforce in India and 65 percent in the Philippines, representing a higher female participation rate than most other service industries in these countries. With regards to youth, India s IT/ITES employees have an average age of only 28.9 years. In addition the e-government component is expected to provide GOB with the critical technology foundations for governance reforms in the next 5 years, and the provision of selected e-services will support the country s current governance and anti-corruption priorities. This is because these basic technology foundations can significantly improve the GOB s efficiency and effectiveness by enabling all ministries/agencies to have a shared datacenter for hosting their systems and information; exchange information and collaborate amongst themselves using standardized interoperability frameworks; improve the public sector ability to secure electronic information through information security levels by using ready policies, guidelines, and standards, etc. At present the lack of these horizontal enablers is already impacting GOB s ability to leverage ICT for governance priorities in the country - including on-going and planned initiatives such as access to information, national identification program, decentralization, and local government service delivery. The e-services to be provided under this project will also be selected to support the GOB s efforts for governance reforms in the areas of increased transparency, promotion of inclusion, and improved business environment. The proposed project is fully aligned with Bank s new CAS for Bangladesh for FY The IT/ITES component fully supports the CAS s strategic objective of accelerated and inclusive growth through increased exports and economic diversification. It will also contribute to the cross-cutting dimensions of the CAS as the industry enhances the opportunity for export diversification, service sector development, and employment of women and youth. The industry could also become a transformation investment in the longer term as building a strong services sector is likely to be the major factor to bring Bangladesh to middle-income status by Furthermore, the proposed e-government component is fully aligned with the cross-cutting governance pillar of the CAS. The CAS recognizes that weak governance in Bangladesh continue to pose major challenges for its economic growth and social development. Hence this component will provide critical technological foundations for the country s governance agenda for the years ahead, and support the other three pillars of the CAS as their achievement depends in large part on improved governance within the 7 A newly released McKinsey study has concluded that governments should focus on the services sector for growth and jobs - as it creates 85 percent of net new jobs in middle-income countries, and all of net new jobs in highincome countries (refer to McKinsey & Co How to Compete and Grow: A Sector Guide to Policy.

4 public sector 8. The e-services proposed can also directly support the country s governance priorities as identified in the CAS 9. The proposed project also builds on detailed analytical studies that provide a sound basis for each of these components. The IT/ITES component will be designed based on the Bank s AAA provided detailed assessment, analysis, and recommendations for IT/ITES industry development and increasing women and youth participation in the sector. In addition, the Bank has supported the development of a National e- Government Strategy in 2009 for the country, which recommended the e-government foundations and e- Services to be provided, and proposed approaches for their development. 2. Proposed objective(s) The project development objective is to: (i) (ii) Increase the skills and institutional capacity of Bangladesh s IT/ITES industry for economic growth, export diversification, and employment creation; and Establish key e-government foundations and selected services to facilitate governance reforms The following are the proposed results for the project: Indicators IT/ITES Industry Development Number of trainees who complete at least one IT/ITES skills development course Number of students to be assessed as per international benchmarks for IT/ITES Employment rate of women in the IT/ITES export market Institutional capacity of implementing agency and industry associations in global linkages and industry visibility Baseline (2010 or latest) Estimated 20,000 employees currently in industry Nil Estimated at less than 10%; baseline data will be collected Lack of dedicated unit in government for industry development, limited global linkages with industry associations, exclusion from global ranking reports, and lack of statistical reports on key industry indicators. Target (2016) 30,000 additional trainees 2, 5 and 8% of graduates in the major urban centers of Dhaka, Chittagong and Khulna, by years 3, 4 and 5 respectively 20% Operational unit in government for industry development, established industry linkages with major industry associations in USA and Europe, improved inputs into parameters for global ranking, and available statistical report on key industry indicators. e-government Foundations Availability of major ICT foundations for governance; Nil Establish 5 major ICT 8 Refer to governance narrative in the CAS. 9 As mentioned above and included in the CAS - this includes increased accountability, promotion of inclusion, and improvement in the business environment.

5 including shared datacenter, interoperability framework, web-standards, enterprise architecture, public key infrastructure (to be confirmed during project preparation) Percentage compliance with interoperability, open standards, and open data architectures for e-government services that are implemented Availability of transactional e-services aligned with governance priorities in Bangladesh e-government Resource Center with depository functions, and support arm for line ministries on e- Government initiatives foundations for governance 0% 75% Nil Implemented 3 transactional e-services directly aligned with governance priorities Nil Operational e- Government Resource Center 3. Preliminary description The proposed project covers both the IT/ITES and e-government components as they are highly complementary and are to be implemented by the same agency. The total estimated cost of $50 million will be financed by an IDA credit through a Specific Investment Loan. The project s design will be based on analytical work that the Bank has supported; hence the preliminary project scope is envisaged to include the following main components: Component 1: IT/ITES Industry Development (~ $40 million) i. Sub-component 1: Skills Development, Certification, and Registration This skills development component will focus on ramping up the numbers and quality of available talent over the next 5 years based on strategic programs to improve the skills and availability of qualified workforce. The program covers mainly strategic activities for skills development, certification, and registration. It will be developed based on mapping of demand and supply of skills by the IT/ITES industry, and result in globally benchmarked skills relevant for the industry. It will be designed based on Bank s AAA activity described above, and be informed by the Bank s similar programs in countries such as Mexico, Nigeria, and Ghana (refer to example IT/ITES skill development frameworks below). It will also target high-impact interventions such as finishing schools for students and training of trainers; and be based on international standards at the individual and company-level; and designed to increase women s participation and accountability for employment results. However the types of skills to be supported will be determined based the skills mapping exercise and on the industry s needs and demand through cost-sharing/subsidy mechanisms. For Bangladesh, the main areas of skills development needs are expected to be for training in specific technologies, national assessment of competency programs, and industry certification. Skills Development Framework for IT Services

6 Source: Global ICT Department, World Bank Skill Development Framework for IT-Enabled Services (ITES) Source: Global ICT Department, World Bank ii. Sub-component 2: Institutional Capacity Building and Strategic Infrastructure Development Strengthening institutional capacity of government agencies and industry associations 10 - through improving governance structures, creation of necessary global linkages with related institutions; identification of industry niches, development of branding and communications programs and plans, increasing visibility in global IT/ITES rankings, and statistical reporting. TA and limited investments to support the industry s need for quality IT space within Dhaka, Khulna, Sylhet and Chittagong 11. Component 2: e-government Horizontals and Services (~ $10 million) i. Sub-component 1: Establish horizontal foundations and promote e-services Establish major technology, legal and regulatory foundations for e-government; in the areas of shared datacenter, interoperability framework, enterprise architecture, information security, web portal and standards. 10 The main institutions are the Ministry of Science and ICT (MOSICT), Bangladesh Computer Council, Ministry of Commerce s Export Promotion Bureau, Bangladesh Association of Software and Information Services (BASIS), and Bangladesh Association of Call Center Operators (BACCO) 11 These can be developed relatively quickly based on refurbishment or extension of existing buildings. The industry has indicated the urgent need for such facilities to be set up within the next 1 2 years, while the Kaliakor High Tech Park is being considered under the Private Sector Development Support Project (P120843) of the World Bank. Initial studies indicate that the parks can be set up possibly through PPPs with an estimated budget of about $2 to $3 million per park.

7 Identify and assist in rollout of 3 e-services that supports Bangladesh s governance priorities; and be focused strategically on mobile-based applications for mass access and participation in areas such as reporting of governance transparency issues and public services. ii. Sub-component 2: Build e-government institutional capacity Capacity building program for MOSICT/BCC s ICT staff in specific technologies, project management, and other relevant skills. Establish an e-government resource center (including the possibility of a public-private partnership basis) to facilitate the planning, design and monitoring of e-government programs; and promulgate the use of the horizontals across government. Component 3: Program Management i. This component will support the MOSICT and BCC to better manage the program. It will support the set up the Project Coordination Unit (PCU) and hire the required procurement and financial management personnel, communications expert, monitoring and evaluation expert and support staff. This component will also explore public-private partnership arrangements, and recruit requisite technical specialists to support the implementation of the main components of the project. 4. Safeguard policies that might apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples ( OP/BP 4.10) Forests (OP/BP 4.36) Safety of Dams (OP/BP 4.37) Projects in Disputed Areas (OP/BP 7.60) * Projects on International Waterways (OP/BP 7.50) 5. Tentative financing Source: ($m.) BORROWER/RECIPIENT 5 International Development Association (IDA) 50 Total Contact point Contact: Tenzin Dolma Norbhu Title: Senior ICT Policy Specialist Tel: / * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties claims on the disputed areas

8 Fax: Location: New Delhi, India (IBRD)